The latest chapter in my new 2024 edition ofThe End of Money and the Future of Civilization, has now been published. Here is an excerpt:
The entirety of money, banking, and finance is comprised of claims and obligations. — Thomas H. Greco, Jr.
It was in a dusty old bookshop close to the British Museum in London that I discovered a slim volume that was to complete for me the picture of how money has evolved over time. I had been traveling in Europe and the United Kingdom in the summer of 2001 with my then partner, Donna, attending conferences, meeting with friends and cohorts, and enjoying the sights, sounds, and cultures of the Old World. It was actually Donna who discovered the book in the basement stacks and brought it to me, saying, “What about this one?” The book was The Meaning of Money by Hartley Withers. Although I had already been engaged in intensive research into the subjects of money and banking for more than twenty years and had written three books of my own on the subject, I had not previously heard of Withers, but it was evident that he must have been, in his day, a recognized authority on the subject, and that his book must have served for a long time as a leading text; I surmised that from the fact that the volume I held in my hands was the seventh edition, published in 1947, of a work first published in 1909, and that Withers had been the editor of The Economist magazine from 1916 to 1921. Reading Withers crystallized my understanding of the double transformation that money had undergone during the previous three hundred years, an understanding that afforded a clearer comprehension of the nature and significance of the changes that have taken place, an understanding that prepares the ground from which to launch the next great improvement in the exchange process.
For now, you can read or listen to the entire chapter at Future Brightly:
Chapter 9—The Evolution of Money—From Commodity Money to Credit Money and Beyond-Text
Chapter 9—The Evolution of Money—From Commodity Money to Credit Money and Beyond-Audio narration
It will also be published soon here, and on my own Substack channel. Further chapters will continue to be posted as they are completed. Watch for Chapter 10 to be posted soon.
As always, your comments and suggestions are welcomed,
Thomas
Beyond Money 
The ‘abuse of the credit creation function’ perverted by a ‘financial regime that designed it to centralise power and concentrate wealth’ doesn’t help to explain the reasons why central banks exist. Credit carries interest, so the lender must return more. On a large scale, the scheme runs into trouble.
It is not that hard to see. Nowadays most money is debt. Money is loaned into existence and must be repaid with interest. If the interest rate is 5% and there is € 100 in existence then € 105 must be returned. But where does the extra € 5 come from?
Here are the options:
– Lenders spend some of their balance so borrowers can pay the interest.
– Some borrowers default so a part of the balance is not returned.
– Borrowers borrow more.
– The government borrows more (fiscal policies).
– The central bank creates the shortfall out of thin air (monetary policies).
And money being credit is a natural development as credit is, by far, the most flexible money. But you may not need interventions if interest rates are negative and capped at zero (the maximum interest rate).
And so, you see that usury, or charging interest, is the problem.
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You have correctly understood the problem. The reasons why central banks exist is described in the previous Chapter 4—Central Banking and the Rise of the Money Power. Did you read it?
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Yes, I did. But Americans are inclined to see central banking as a conspiracy rather than an evolution under the force of competition. That is probably because of how the FED came into existence against popular will. Central banking was crucial in Great Britain’s success in the previous centuries. This is my take on the matter.
Economic power and financial power translate into military power. The Europeans didn’t finance their conquests with taxes like previous empires but with the profits from their colonies. No one likes to pay taxes, but everyone wants a profit, so it became a great success. The Europeans reinvested these profits, so their capital grew, and their financial and military strength increased. After the bourgeoisie took control of the British government during the Glorious Revolution, the British state became a venture of the propertied class, like the Netherlands. In the following centuries, it became the world’s largest empire ever.
The bourgeoisie benefited from a functioning state and was willing to pay for it. Taxation thus became seen as legitimate as it came with the consent of the taxed. With its secured and enlarged tax base and a newly established central bank that could stabilise financial markets, Great Britain could borrow more in financial markets at lower interest rates. The bourgeoisie didn’t like to pay for corruption or ineptitude, so the quality of the British state improved significantly. And so, trade and finance came to dominate government.
That allowed Great Britain to defeat France, a country with more wealth and a larger population. In France, the wealthy didn’t pay taxes, and the government was always short of funding. France defaulted on its debts several times. Its government was inept and corrupt, so lenders were unwilling to lend to the French government. With its dominance over the seas, Great Britain controlled the largest market, which enabled the Industrial Revolution because large-scale mechanised production required sizeable markets. In this way, Great Britain could pay the interest on its debts.
The United States is a venture of the propertied classes like Great Britain once was. Contrary to Great Britain, wealthy people pay little in taxes. World War II handed over power to the US. The reserve status of the US dollar rather than an effective government is the primary asset of the US empire. The corruption in US politics is a boon to the elites. They bribe politicians to pass legislation they desire. They finance the think tanks that advise on policy matters. The desire to pay fewer taxes rather than having a good quality government was the reason for the American Revolution. The US government institutions are now of mixed quality. Most developed countries do better.
The United States is the centre of a global empire financed not by taxes but by borrowing in the international financial system, of which the US dollar is the central pillar. These expenses add to the debt pile. The US promises to pay interest on that debt. As a result, the US is the world’s greatest debtor, and its debt is the world’s savings. The US dollar reserve currency status allowed the US elites to dictate economic policies around the globe via institutions like the IMF and the World Bank, allowing the US elites to take much of the surplus production of the rest of the world. Soon, resources may be in short supply, as were trees on Barataria, and the world’s savings will be worth nothing.
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