Not metal, but trust - Maltese Knights imprinted it on their coins back in 1656...

The global crisis that the world has been facing since the beginning of 2022 is a critical point that threatens to undermine the achievements of globalization. We are currently witnessing that the value of money is also affected by the crisis. Periods of crisis always bring dilemmas about whether to buy gold, how and whether to invest and how to secure oneself. When embarking on this path, one encounters many crossroads and conflicting opinions without clear facts on which to make the right decision.

When we start talking about the value of money, in most cases, we mean banknotes, gold, and funds in bank accounts. In recent years, thoughts have also turned to cryptocurrencies and values that do not have a foundation in state institutions. However, it is correct to think about trust in the institution that issues the money and what secures it.

The Knights of Malta in 1656 engraved the motto on their coins: "Not metal but trust." It refers to trust that the debt will be repaid.

To better understand the meaning of the Knights of Malta's motto, we must start from the period of ancient Mesopotamia and Babylonian priests. The ancient Mesopotamians were the first to introduce primitive money, becoming the founders of primitive finance. We have emerged from such finance, lending and borrowing, as well as credit relationships, creditors, and debtors.

Loans were provided for various purposes: to buy livestock, seeds, for irrigation, and more. Such loans were given as a service that needed to be paid for. It was not tied to an individual's wealth or family; instead, it was a value expected to be repaid from future earnings. Thus, interest was born, a new instrument in civilization.

With the emergence of debt and, along with it, interest, a different relationship also arose. Those who lent money became creditors, which was very unusual at that time in civilization because it put people and families in a subordinate position. Interest rates ranged from 20% and higher, and in cases of inability to repay the loan, debtors lost their property or entered a new form of slavery - debt slavery. In this new form of slavery, debtors and their entire families entered slavery until the debt was repaid or forgiven.

Such relationships quickly led to a situation where the rich, who provided the funds, became even more decadent, while the poor, who borrowed money, became even more inadequate. No matter how hard institutions of that time tried to control and establish a sustainable lending system that would benefit both creditors and debtors, it quickly became evident that there needed to be sufficient liquidity among debtors to continue and generate profits for creditors.

Thus, as early as 2000 BCE, the first "debt forgiveness" was introduced, achieving normalization of the lending system so that the system could continue to function.

This practice was even incorporated into some religions and religious communities. For example, Jewish community members had debt forgiveness every 50 years. All religions fought against such a way of enriching oneself, from Christianity, where usury was prohibited in the Old Testament, to Jews, who were not allowed to charge interest on loans to members of their community, and to the Muslim faith, which clearly states in the Quran that interest is equal to the work of the devil.

Is it better to hold value in goods? As the saying goes, "You can't eat gold and silver," when you're hungry in crisis, the only value is commodity money. Since 1971, when the United States removed the dollar's value from gold, money has become purely debt. Does this mean that the only smart thing to do is buy debt, hope for a yield greater than inflation, and trust the debtor to repay the debt?

Suppose we stop investing and convert money into goods. In that case, we lose its primary function: money is the central mediator of the exchange of value and expected future earnings. Therefore, as we have already noted, it is best to think about trust in the institution that issues money and what secures it.