The Leading Indicator

The story you know of money is both tidy and wrong. Economics textbooks describe a neat progression from primitive barter to commodity money to modern currency, each step solving inefficiencies in exchange. This narrative feels intuitive because it mirrors our assumptions about progress—that complex systems emerge from simple beginnings through rational improvement. The comfortable fiction persists because it transforms money into a neutral technology, a lubricant for commerce that emerged naturally from human ingenuity.

The archaeological record tells a very different story.

Money did not emerge from trade but from blood—specifically, from the need to stop the flow. Before the first coin was minted, or the first market opened, or the first merchant calculated profit, money existed as a technology to measure loss and convert violence into obligation. To read money’s true nature is not academic curiosity but practical skill, the speculator’s edge that reveals where social energy pools and where it runs.

Anthropologists have spent decades searching for the barter economies that supposedly preceded money, yet none exist in the historical record. Extensive research reveals that debt and credit systems appeared before money, which itself appeared before barter. Small-scale societies operated through gift economies based on three obligations:

• to give
• to receive
• to reciprocate

These weren’t mechanical exchanges but social bonds that created lasting relationships through “positive debt”—obligations that purposefully entwined lives and communities together.

The word “currency” itself exposes the truth. Derived from the Latin currens, it literally means “that which flows”. Money represents the circulation of human energy through social networks—labor, trust, obligation, and power coursing through the arteries of civilization. The barter story ignores this, presenting money as a static medium rather than a dynamic system for managing social forces. The double coincidence of wants—the economist’s explanation for why barter required money—describes a world that never existed. Human cooperation operates through rhythms of mutual aid and deferred repayment, creating currents of trust and social obligation that form money’s invisible scaffolding. The mechanical precision of immediate exchange belongs to markets, not to the social bonds that money was invented to encode and enforce.

The force that cracked open human social networks and demanded measurement was loss, amplified by its dark companion, conflict.

Consider a tribal hunter who dies in an accident or dispute ten thousand years ago. His family loses more than a person—they lose the energy of his labor, his protection, his contribution to survival. That loss ripples through the community like a slow-burning fever, creating an energy deficit that demands compensation. Unresolved loss sparks cycles of blood revenge that spread through generations like wildfire. Germanic tribes knew this reality intimately: a killing demanded either blood vengeance or compensation through the weregild system. It assigned specific monetary values to human life—a king worth 30,000 thrymsa, a common farmer worth 200—creating the first systematic conversion of social energy into measurable units.

These payments served as alternatives to “blood revenge,” where families would fight each other across generations, sapping the tribe’s strength and draining vital energy from the collective.

Blood feuds represented the ultimate waste of social energy, a hemorrhaging of productive capacity that could destroy entire communities. The original problem money was invented to solve was not facilitating trade but arresting destruction—converting the raw energy of grief and rage into structured obligations that restored balance and prevented social collapse. The solution required institutions capable of measuring intangible losses and converting them into tangible obligations. Tribal councils emerged as society’s energy auditors, composed of respected elders who could transform raw emotion into structured compensation. These councils operated through consensus according to traditional codes like Pashtunwali, making decisions that channeled destructive energy into constructive resolution. The jirga system, still active in Afghanistan and Pakistan, demonstrates money’s original function as energy management technology. A jirga consists of “Spingiris” (white-bearded elders) who “endeavor to find an agreeable and acceptable solution to the conflict as early as possible”. The system includes concepts like “Teega” (truce), representing “a ground rule that defines transition from violence to peaceful negotiations.” Modern examples prove the system’s continuing relevance: in 2021, a Pakistani jirga settled a two-year tribal dispute that had claimed eleven lives by imposing a Rs26 million penalty on both warring tribes.

These ancient mechanisms reveal money’s fundamental nature as social technology for managing energy flows. The weregild payment was money’s first incarnation—a social measurement system that codified loss and bound communities together through enforceable obligations. Before coins, before markets, before written ledgers, money existed as a system for converting chaos into order, channeling the destructive energy of conflict into the constructive rhythms of social cooperation.

Money’s circulation is never neutral—power runs beneath every transaction like voltage behind electrical current. Energy is, by definition, the ability to do work, whether physical force, social influence, or political enforcement. Power is the rate of flow of energy that, in social terms, transforms promises into obligations enforceable through ritual, custom, or coercion. Without power backing them, monetary obligations collapse into empty symbols.

The evolution from personal trust to institutional authority transformed money from intimate social bonds into abstract legal contracts. Trust shifted from personal reputation built over years to social contracts backed by enforcement mechanisms. Tribal councils evolved into states, becoming money’s “pulsekeepers”—institutions that wield currency as both measurement tool and control mechanism, directing social energy while enforcing compliance through organized power.

Modern chartalist theory explains how states create demand for their currency through taxation. The state doesn’t merely issue money—it creates the fundamental need for that currency by imposing taxes payable only in the state’s money. This mechanism “pumps the circulatory system of money” by anchoring currency flows in political authority rather than commodity backing. Even fiat currencies stripped of gold backing command value because the state enforces obligations through fiscal and military power.

Mesopotamian societies understood that debt systems naturally create instability as obligations mount faster than the ability to pay. From 2400 BCE to 1400 BCE, rulers proclaimed at least 39 royal debt cancellations, serving as periodic social energy resets. These “clean slate” proclamations—called amargi in Lagash, misharum in Babylon, and andurarum in Ashur—prevented the concentration of wealth and power that would destabilize social order.

Hammurabi’s reign included four general debt cancellations in 1792, 1780, 1771, and 1762 BCE. These weren’t random acts of mercy but systematic responses to the mathematical reality that compound interest creates unpayable debt loads. The proclamations typically included three elements: cancelling agrarian debts, liberating bondservants, and restoring land tenure rights. The biblical Jubilee system encoded this wisdom into permanent law, institutionalizing debt forgiveness and land redistribution every fifty years.

These ancient practices reveal money’s function as social technology for preventing energy imbalances that could tear communities apart. The debt cancellations worked like pressure release valves, preventing the buildup of social tensions that would otherwise explode into violence and chaos. Modern central banking follows the same principle—creating new money to absorb economic damage and convert potential social collapse into managed obligation through mechanisms like quantitative easing.

The connection between money and energy extends beyond metaphor into measurable physics. Biophysical economists have demonstrated complete correspondence between energy expenditure and market prices within homogeneous socio-economic environments. Money represents the ability to command energy to accomplish work, serving as the social mechanism for controlling and directing energy flows through complex systems. Savings constitute claims on society’s future production, which means claims on future energy flows—without available energy, monetary wealth becomes meaningless abstraction.

Energy futures markets demonstrate this principle directly through the behavior of speculators and hedgers. Research shows that speculative sentiment generates greater market fluctuations in energy futures markets than hedging sentiment. Speculators create volatility by buying and selling in large quantities, generating frequent transactions and price fluctuations, while hedgers reduce speculation and limit profit opportunities, thereby relieving market volatilities. The speculator’s craft involves reading where social energy tension builds and breaks, recognizing that disorder represents not the absence of order but a higher order of energy regulation.

Volatility signals energy pooling, leaking, or rapidly changing direction through financial systems. Markets pulse with currents of human energy—fear, greed, cooperation, and conflict—creating opportunities for those skilled in reading these flows. The ancient rhythm that once channeled blood feuds into structured compensation now manifests as market movements that reward speculators who understand money’s deeper nature as social energy management technology.

Sophisticated speculators already practice what they may not consciously understand. While they read the pulse of institutional energy management, central bank interventions function as modern weregild—attempts to measure and manage social loss through monetary policy. Quantitative easing creates new money to absorb economic damage, converting potential chaos into managed obligation. Interest rate adjustments signal where authorities perceive energy imbalances requiring correction.

The skill lies in recognizing these interventions as tribal council decisions writ large, watching how monetary authorities attempt to balance social energy flows. Political tensions, economic stress, and cultural conflicts create pressure points where money’s energy-balancing function will activate—and where profits wait for those positioned to capture the resulting flows. The speculator who understands money’s origins in conflict resolution possesses an edge unavailable to those who still believe the comfortable fiction of neutral exchange. Every market movement echoes the ancient rhythm of loss and compensation, violence and resolution, chaos and order. The same energy that once sparked blood feuds now drives currency fluctuations, commodity prices, and equity valuations.

What we call civilizational progress is actually the progressive sophistication of violence management systems. Money did not evolve from primitive barter to modern finance, but from crude blood payment to elegant energy harvesting. The weregild measured death; modern derivatives measure the probability of death across entire populations. The tribal council converted grief into obligation; central banks convert social anxiety into asset price inflation. The comfortable myth of money as neutral technology serves to obscure this reality, allowing modern populations to participate in sophisticated violence management systems without recognizing their true nature.

Every transaction remains, at its core, a measurement of energy differential—someone’s loss converted into someone else’s obligation.

Speculators who understand this possess the ultimate edge: they see through the illusion of progress to the ancient patterns that still govern human social energy, patterns that repeat across every timescale from milliseconds to millennia. The rhythm beneath the noise has never changed—only its instruments have grown more complex and its reach more extensive. The speculator who learns to read this rhythm discovers that money’s deepest secret is not the sophisticated social technologies that convert human energy into measurable, tradeable, and ultimately profitable flows, but its permanence as a means to manage organized violence..