In this recent interview below, Dr. Paul Craig Roberts describes the “house of cards” that is today’s global regime of money, banking and finance. Since the financial crisis of 2008, the major central banks around the world—the Federal Reserve, the Bank of England, the European Central Bank, the Bank of Japan—have all been active in the securities markets, buying huge amounts of government and corporate bonds and shares of private companies, a process that is euphemistically called “quantitative easing.”
As Roberts points out, these actions are being taken to support the big banks. I agree, but it goes much deeper than that. The underlying objective is to preserve the global interest-based debt-money system which requires continual expansion if debt, an inherent systemic flaw which I call the “debt growth imperative.” The result of these market manipulations, of course, has been the inflation of market bubbles in bonds, stocks, and real estate, and the massive transfer of wealth into the hands of a small segment of the population.
Roberts does not mention it, but the recurrent waves of tax cuts for the rich likewise seem to be designed to keep these market bubbles pumped up. The wealthy class, for the most part, does not spend these windfall gains, they invest them in, you guessed it, bonds, stocks and real estate. If tax cuts were to go mainly to the lower and middle classes, what would they do with the money? They would surely spend much of it, which would stimulate consumption of consumer goods and restore the real economy, but much of it would go toward reducing the massive amounts of debt that these people carry and make it unnecessary for them to borrow even more. A system that requires perpetual expansion of debt cannot tolerate that.
Now, do you understand?
This recent report on the popular TV show, CBS Sunday Morning, highlights the effectiveness of direct credit clearing among buyers and sellers of goods and services–a way of doing commerce without the need for money or banks.
See also my own report from my 2015 visit to Sardex.
Most economies suffer from a lack of liquidity, especially outside the large corporate and government sectors. This lack of means of payment (liquidity) is a fundamental cause of unemployment and failures of small and medium sized businesses (SMEs). It generally derives from flaws that are inherent in the centrally controlled systems of money and finance and the increasing indebtedness of both the private and public sectors. The surrender of monetary sovereignty by national governments to central banks, and to currency unions, such as the Euro, and their increasing indebtedness, as in as in the case of Greece, have made it virtually impossible for their economies to thrive.
This article describes how domestic or community liquidity, i.e., means of payment, that enable the process of reciprocal exchange of value, can be created by various entities at various levels, from communities and business associations, to municipal governments and agencies, to national governments. The main obstacles to their implementation are not economic, but organizational and political, yet there is still considerable leeway within which the value of local production can be monetized in the form of circulating private currencies and trade credits created within associations of buyers and sellers. This article describes how that can be done.
Read the complete article here.
This subject will be the main focus of my upcoming workshop in Greece, 16-23 June. You still have time to register and space is still available.
During my October tour, I gave three presentations in Kuala Lumpur, Malaysia and another in Sardinia, Italy. Two of the Malaysia presentations were at the International Forum on Inclusive Wealth, but I do not yet have recordings of those. The third was an extended presentation and discussion (on October 10) at the Institute of Advanced Islamic Studies titled, A World Without Money and Interest: A pathway toward social justice and economic equity. Here below is the video of the proceedings, or you can watch it on YouTube at https://youtu.be/8BejigzDAVY. The audio only is here, and the slides that were used in that talk can be viewed here.
Posted in Basic Concepts, Developing Alternatives, Emerging paradigm, Exchange Design, Finance and Economics, Prescriptions, The Debt Imperative, The Political Money System
Tagged credit clearing, end of money, interest, private currencies
In this engaging fast-paced video, John Green explores important questions like: What is money? What is it for? How and why did it evolve? What is the relationship between money, nation states and slavery? And perhaps, most importantly, where do trust and credit enter the picture, and what role do they play in today’s world?
Society is Exchange! – Frederic Bastiat.
All the perplexities, confusions and distresses in America arise not from defects in the Constitution or Confederation, not from want of honor or virtue, as much as from downright ignorance of the nature of coin, credit and circulation.
– President John Adams, from a letter to Thomas Jefferson (1787-08-25), in The Works of John Adams
As the time grows near I want to remind everyone that my workshop on innovative finance and exchange is set to begin in about 10 days time at Kalikalos Holistic Summer School in Greece (http://www.kalikalos.org/exchange-finance). It will start on the evening of 24 June and conclude on the morning of 1 July.
While it is described as a “course,” the format will be that of a workshop/colloquium in which everyone plays an active role in an intensive process of inquiry, discovery, sharing and collaboration aimed at:
1. achieving a deeper understanding of sound principles of credit, finance, and the exchange process, and,
2 developing action plans for the design and implementation of robust systems that can be widely proliferated and quickly scaled up to global dimensions.
3. assembling a knowledge base that can provide guidance to others on the same path toward achieving more equitable and sustainable economic structures.
There is still space available for those who feel moved to participate.
Details about the course, fees, and booking are at http://www.kalikalos.org/exchange-finance.
Some of the areas that we will explore include:
- The essence, function, and forms of money
- The concepts of currency, credit, credit clearing, liquidity, monetization, and basis of issue
- Various models of private currencies and moneyless exchange
- Value measurement and units of account
- Exchange networks and inter-trading
Don’t let finances stop you as will be able to offer a limited amount of bursaries. Please write an application for that to our team at email@example.com.
We offer Greek participants who take part in the week-long workshop a discount of 30%.
The weekend Saturday, 25 and Sunday 26 is being offered to Greeks on a Gift Economy basis which means that you offer what you are able to give. If you want to participate on these terms please send a mail to: firstname.lastname@example.org.
I look forward to working with you. –Thomas
Posted in Basic Concepts, Developing Alternatives, Emerging paradigm, Exchange Design, Finance and Economics, Implementation Strategies, My activities
Tagged credit clearing, currency, Greece, money, trade exchange
This is a question I answered more than a quarter century ago in Part I of my book, Money and Debt: A Solution to the Global Crisis. It is a question that gets scant attention from politicians and economists who are willing to speak only about the need for perpetual economic growth and keeping the government debt at “manageable” levels, never asking why government debt is necessary or how it might be eliminated.
When I first undertook to answer this question, the debt crisis was already well underway and global in scope. Since then the situation has become more critical with debt levels reaching astronomical levels.
What I said in 1990 began with this:
The whole world today seems to be awash in a sea of debt which threatens to drown us all. Many Third World countries, despite their huge increases in production for export, are unable to pay even the interest due on their accumulated indebtedness to Western banks and governments. In the U. S., the levels of both public (government) and private debt are increasing at alarming rates. The Federal budget deficits of recent years far exceed anything thought possible just a decade ago. Why is this happening and why is it a problem? In order to understand that, one must first understand some financial facts of life.
Here are the essential points of my argument:
- Almost all of the money in every country is created by commercial banks when they make loans either to the private sector or to governments (by purchasing government bonds, notes, etc.),
- Money is extinguished when loan principal is repaid,
- The interest that banks charge on these loans causes the amount owed to grow as time passes,
- Causing the aggregate amount owed to banks to always exceed the supply of money in circulation,
- Requiring that banks make additional loans to keep the supply of money in circulation from falling behind the amounts needed for existing loans to be “serviced” (repayment of part of the principal plus the interest due) in order to avoid a cascade of defaults and economic depression,
- And that this “debt imperative” that is built into the global money system is the driver of the economic “growth imperative” that results in superfluous economic output and its attendant depletion of physical resources, despoliation of the environment, increasing disparities in income and wealth distribution, and many other problems that plague modern civilization.
- That physical limits to economic output on a finite planet make this money system unsustainable over the long term.
- That there are practical limits to the amount of debt that the private sector is able or willing to incur.
- That chronic government budget deficits are therefore a political expedient that is necessary to keep this flawed system from collapsing as governments assume the role of “borrower of last resort.”
- That politicians are quite willing that governments play this role since it gives them the power to take much more value out of the economy than the revenues available by means of overt taxation.
- That bankers, for their part, by monopolizing the allocation of credit in the economy and charging interest on it, are able to enrich themselves and exercise tremendous power over the political process making a sham of democratic government.
The empirical evidence strongly supports my analysis. You only need to look at charts showing the growth of debt over time to see it growing at an accelerating rate (geometrically), a pattern that reflects the compound interest function that is an inherent feature of our global political money system.
You can read my original 1989 exposition of these points at Money and Debt: a Solution to the Global Crisis, Part I, and their subsequent elaboration in my latest book, The End of Money and the Future of Civilization, https://beyondmoney.net/the-end-of-money-and-the-future-of-civilization/.
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