I’m a little late in posting this here, but if you didn’t see it when I first sent it out, I think you will find it interesting and useful.
2022 June Newsletter ― Reconnecting the Monetary Economy to the Real Economy
In this issue:
Reconnecting the Monetary Economy to the Real Economy
The Banker’s Last Gasp and the Great Monetary Reset
The Usury Conjecture on the centralized, interest-based, debt-money system
What about China?
Is this a clear picture of the New World Order?
Take responsibility
Food security
Friendly, kind, and generous
If you want keep tabs on what I’m been thinking, feeling, and doing, you can follow me on twitter (tomazgreco), or Facebook (thomas.h.greco), or follow my blog at https://beyondmoney.net/. _____________
Reconnecting the Monetary Economy to the Real Economy
Money is the “hole” that is defined by the “doughnut” of real goods and services; it is the nothing that serves only to account for that which is available in the real economy. When pseudo-money can be created by fiat, apart from anything of real value, confusion and madness ensue. — T. H. Greco, Jr.
I’ve been arguing for more than 40 years that the global system of money, banking, and finance is fatally flawed, and now its condition has become acute. Since 2008 it has been on life support. The connections between the monetary economy and the real economy have long been tenuous, but in recent years have been severed to the point of non-existence. When banks and governments can create quasi-money out of nothing without any real value basis and allocate it selectively to advance political agendas, you know the end is near. The last vestiges of budgetary restraint on federal government spending have been eliminated along with any concern about what people really need and want. The results have been the ever-increasing centralization of power at the federal level, central planning of the economy, worsening price inflation, declining purchasing power of fiat money, increasing corporate ownership of real assets, especially residential real estate, zero or negative returns on people’s savings, and increasing disparities of income and wealth. The only way this system can be perpetuated is by the complete elimination of any semblance of democratic government. As E. C. Riegel observed almost 80 years ago:
“Society is in the twilight of a passing day. The state now undertakes to finance the
economy, and, since a free economy is manifestly impossible where the state assumes the responsibility of supplying the money circulation, the politician is compelled to choose between fascism and communism.” – Private Enterprise Money
— Read the entire newsletter <here>.
Beyond Money 
Thanks for another good and educational big-picture piece on money.
It raises one question, for me at least:
As companies issue their own private credit instruments in the economy – the well-known “self-issued credit” concept (“spent into circulation” is the term you use), the value metric is of great importance, as the current fiat metrics are just a bunch of cross rates largely disconnected from the real economy and constantly abused by those in power. And you can’t build on a foundation of sand.
The metric you propose – a basket of real goods/commodities – while appealing at first sight, I find rather … awkward? to use (I am a practitioner): the initial selection of the goods/commodities, the need for constant rebalancing of the composition as certain commodities lose/gain importance in the economy (i.e. oil with the advance of electric cars and alternative energy sources, rare earth elements for military and high-tech equipment, etc), and also the confusion what the credit instrument is a claim on – the goods and services of its issuer or the goods/commodities in which it is denominated in?
As you are well aware, alternative value metrics have been explored since forever – labor comes easily to mind with the work of Marx, Proudhon, Edgar Kahn, the work certificates in the Worgl experiment to an extent, various community currencies, etc.
Have you thought of alternative value metrics, more abstract maybe and hence easier to use than a basket of commodities?
Thanks,
Svet
http://www.bartex.org
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As you say “the value metric is of great importance,” but mainly in the matter of long term credit. I make a distinction between short-term exchange credit and long-term investment credit. Banks did likewise at one time but they have largely abandoned sound principles of credit allocation and management. If a currency is being spent soon after it’s earned, the unit of denomination is not nearly as important. The composite commodity standard is quite manageable given the computing power we now have at our disposal and the ability to collect “big data.”
While it is true that labor is the basis of all (market) value a labor hour is a poor measure. As has been often repeated, “The value of labor is inherent in the product.”
I’d suggest you read E.C. Riegel and my annotated critique of his book, Private Enterprise Money, on this website under the “Library” menu item.
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