A. Functions of money as a tool/ technology
(1) A medium of exchange
(2) A store of value
(3) A unit of measurement
(4) Source of political and social power
B. Essence of money
(1) as a commodity, such as gold or silver - Money as a thing
(2) as a legal concept created by legislation - Money as an agreement, I.e. an IOU.
(3) “Money has value because of skilled people, resources, and infrastructure, working together in a supportive social and legal framework. Money is the indispensable lubricant that lets them “run.” It is not tangible wealth in itself, but a power to obtain wealth. Money is an abstract social power based in law; and whatever government accepts in payment of taxes will be money. Money’s value is not created by the private corporations that now control it. As Aristotle wrote: “Money exists not by nature but by law.” [All citations from HR2990]
C. Source of money
(1) “In our present system, the Federal Reserve Bank of New York, one of the 12 private Federal Reserve branch banks, begins the process by creating money out of thin air. Then using this money as a reserve base, the rest of the banks create about ten or more times that amount of money out of thin air by what’s called “fractional reserve banking.” When banks issue loans, they are creating money (as debt). By deciding who gets the money, and how cheap that money is, they get to decide the direction our society grows in.
(2) “Will society’s money be issued as credit/debt when banks make loans, and be controlled by the few, to favor the few; or will it be issued as money (not debt) by government, and be spent into circulation for the common good?”
D. Ethical Problems with Privately-controlled Fractional Reserve Banking
(1) It’s immoral. It takes from the whole society and gives to a privileged few, apart from their not doing anything to deserve it. They get it for cleverly manipulating accounts, without creating any values useful for life. This has concentrated wealth to obscene levels in our society.
(2) Second, the interest on money created along with debt creates an unnecessary initial cost on all money in circulation. This is like a ball-and-chain on the leg of every person working to create values for living.
(3) Third, whoever controls the money system controls the direction of society; if it’s government, then in a democracy citizens can decide what to do with it, and it will function under our constitutional system of checks and balances. If it’s banks, then only bankers will decide what to do with it, most likely in their own interest.
(4) “Private money creation through “fractional reserve” banking fosters an unprecedented concentration of wealth which destroys the democratic process and ultimately promotes military imperialism. Less than 1% of the population now claims ownership of almost 50% of the wealth, but vital infrastructure is ignored. The American Society of Civil Engineers gives a D grade to our infrastructure and says it will soon be a D-; and estimates that $2.2 trillion is needed to bring it to safe levels over the next 5 years! That fact alone shows the world’s dominant money system to be a major failure crying for reform…”
E. “Usury” – abuse of the money system for personal gain, by charging interest on the use of money
The historically-proven effects of charging interest on private money:
(1) makes money artificially scarce, forcing people to compete with each other
(2) Imposes hidden tax on society
(3) Makes rich richer and poor poorer
(4) Requires the economy to grow exponentially – unsustainably - in order to service debt
“Any time money is created through debt, a need to create even more money in the future is also created. The amount of money must grow over time, which means that the volume of goods and services must grow over time as well." (After Money, p.15)
(5) Creates permanent debt peonage for the masses
- Debt servitude - a person's pledge of their labor or services as repayment for a loan or other debt.
- Has been the common lot for many people for 5,000 years
- An effective way to enslave people by making them feel responsible for their own indebtedness.
Solutions
F. HR6550: Nationalize the Fed, End Fractional Reserve Banking and Create Public Money
(1) Incorporate the Federal Reserve System into the U.S. Treasury where all new money would be created by government as money, not interest-bearing debt; and be spent into circulation to promote the general welfare. The monetary system would be monitored to be neither inflationary nor deflationary.
(2) Halt the bank’s privilege to create money by ending the fractional reserve system in a gentle and elegant way. All the past monetized private credit would be converted into U.S. government money. Banks would then act as intermediaries accepting savings deposits and loaning them out to borrowers. They would do what people think they do now.
(3) Spend new money into circulation on 21st century eco-friendly infrastructure and energy sources, including the education and healthcare needed for a growing and improving society, starting with the $2.2 trillion that the Civil Engineers estimate is needed for infrastructure repair; creating good jobs across our nation, re-invigorating local economies and re-funding local government at all levels.
Example: Abraham Lincoln’s “Green Backs” - silver-backed US Govt money issued during the Civil War.
G. Retrieving Gift Economics (Decommodifying Land, Labor and Money)
(1) The word "community" is derived from the Old French communité which is derived from the Latin communitas (com, "with/together" + munus, "gift"), a broad term for fellowship or organized society.
(2) “Community is woven from gifts. Unlike today's market system, whose built-in scarcity compels competition in which more for me is less for you, in a gift economy the opposite holds. Because people in gift culture pass on their surplus rather than accumulating it, your good fortune is my good fortune: more for you is more for me. Wealth circulates, gravitating toward the greatest need. In a gift community, people know that their gifts will eventually come back to them, albeit often in a new form. Such a community might be called a "circle of the gift.”” [From Charles Eisenstein, “A Circle of Gifts”]
(3) Money creates separateness, can be hoarded and controlled, is quantified, promotes individualism and independence and selfish behavior. Gifting creates relationship, promotes cycling, is democratic, promotes community cohesion and self-full (vs. self-ish behavior (i.e. a more expansive experience of self. There are now many experimenting with how to balance out our monetary economy with more traditional patterns of gifting. When the way we connect with each other transcends fee-for-service, it’s more powerful than anything money can buy. Some Modern Examples: Pay-what-you-can policies, Complementary currencies, Gift Circles.
H. Community-based Local Currencies and Mutual Credit Systems
(1) Designed not to replace but to complement bank-issued debt money
(2) Connect unused skills & resources to unmet needs
(3) Act as a community IOU system
(4) Build community through acts of giving
(4) Create a tool for people to give and to receive from each other
(5) Examples: Berkshares - Issued by local banks and businesses, value pegged to the US$
Ithaca Hours - Issued by a non-profit organization, based on Average hour of human labor (=$10)
CT Sound Shares - Web-based exchange system, pegged to US$, tradable globally on CES platform
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