Way back in the dawn of economic prehistory, there was the coin.
Some of the first coins in the world were created in the kingdom of Lydia, in what is now Turkey, but was then part of the Greek sphere of influence.
Trading chunks of metallic ore was one way to pay the goat merchant. Coins were easier to carry and standardized, and you could stamp the face of the king on them, too, creating evercirculating propaganda.
Around the same time, independently, someone in China was doing the same thing. Remember that, it'll be important later.
Coins eventually became important because they were preferable to chunks of metal. More than 2,000 years after the first coining, ur-economist Adam Smith noted that 20 pounds of pure silver was less valuable than the equivalent amount of silver coins, due to the trustworthiness and ease of spending the coins.
Money was becoming abstracted. It could also be abstracted further into paper currency - banknote used to be, literally, a note from a bank saying that owner had some gold or silver locked up.
But eventually the paper became just as important, and money was finally decoupled from precious metals, about 2,500 years after the first coins were stamped.
From there, it was an easy step to money that only existed as electrons.
Which brings us to the great big world of imaginary value, the realm of bonds and debt, interest and collateralized debt obligations.
Each abstraction of money has created a boom. The first Lydian king to create really pure and standardized coins was Croesus, whose name became a byword for wealth.
Paper money - and not just banknotes, but interest, bonds, and stockmarkets - made the industrial revolution possible.
It also made speculative bubbles easier than ever to create. In the early 1700s there was a kind of stock market mania in England, with the gigantic South Seas bubble at the top, but also stocks floated that raised a million pounds to develop a perpetual motion device, and another "company for carrying on an undertaking of great advantage, but nobody to know what it is."
The creator of that scheme collected 2,000 pounds and vamoosed.
People aren't so stupid as to do this kind of investing anymore, of course. (Not people with lots of money, but the stupid and gullible can always be found who will give up a few thousand dollars to a Nigerian scam.)
Now the really clever people have to believe their own nonsense.
That's how we got the sub-prime mortgage meltdown. People convinced themselves the price of housing would always rise.
They must have believed that, after all, or the entire sub-prime business would have been insane on the face of it.
Of course, nothing goes up forever.
Hey, remember how China invented coins independently?
It appears they've also independently invented an insane housing boom. After trying communism for a few years, the Chinese are ready to follow us right off a different, capitalist cliff.
Chinese government regulations keep interest rates low, making socking your money in a bank a poor investment.
The stock market is not seen as fair or transparent. But housing has been booming, so many, many people have been buying an extra apartment with their savings.
The question about the Chinese housing bubble is increasingly if, not when, it will burst.
There are those who say nothing is wrong. But frankly, they should buy some perpetual motion stock.
Matthew Claxton is a reporter with the Langley Advance.
