MONEY POWER and the Green Future
“Since the dawn of times, monetary systems have been shaping the flows of human activity in every realm of endeavor; food production, education, health, business etc., by determining how we value, apply and exchange our creativity, and the fruits of our labor. It is for this reason the most influential of all human-made systems.” — Bernhard Lietaer
THE PROBLEM Buckminster Fuller used to point out that the world’s problems were based on the fear of there not being enough to go around and he believed that through design we could prove that was not the case. This fear, “not enough to go around” is not a feature of indigenous native cultures but is unique to civilizations. Despite the massive production capabilities of our society this idea of scarcity remains a central feature, a belief that we don’t have enough time or money to fulfill people’s needs or to restore and protect our environment. In the new/old systems design science known as ‘permaculture’ there is a principle; ‘The problem is the solution,’ which suggests we look at the system from which any particular problem has emerged. It is easy for Greens to recognize that money is a problem in our culture and it is time we took a close look at how our money system works to create the problem of scarcity and how we might redesign it to accommodate the needs of humanity and the planet. Money is an agreement within a community, be it city, state or nation, to use some item as a means of exchange. It came into existence to facilitate trade more efficiently than barter and became even more essential as a result of the division of labor. Once people focused on making one thing well, and then making many of them in order to trade them for the other things they needed to survive, money became the way to facilitate the many exchanges between people. Money has taken a number of different forms and been made with a variety of materials from sea shells, wood, clay, with smelting technology came metal money, with the printing press came paper money and with the computer, electronic money. Most the money in the world today, trillions of dollars, is just electronic bits and bytes in a computer accounting system. History demonstrates that money works best when it is simply a means of exchange, ratherthan also being a store ofwealth, aswhen precious metalswere used for money problems of inequity soon arose. If money is a store of wealth it can be withheld from the economy creating scarcity and it is withheld massively today. It is often said there is not enough money for this or that but what we really lack is a better agreement about the issuing, distribution and characteristics of money. It is the same with food, there is plenty of food, half the food produced is wasted,so the problem is in the distribution and the way in which it is produced. The scarcity and misdistribution of money is built into our money system.
MUSICAL CHAIRS By far the greatest generator of inequity and economic misery the world has ever known is our current monetary system.In this system money is created out of thin air, based on the promise to repay when an individual, business or government borrows money. However, while the principle is created the money needed to pay the interest is not. This means that the money to pay the interest needs to come from money created when someone else borrowed money. It does not take a mathematician to see that there is a problem with this kind of a system as it can never grow fast enough to pay all the interest and even more so when compounded, that is, interest paid on interest. This system can be likened to a game of musical chairs but with many fewer chairs than needed to seat everyone. The effect is to generate predatory competition, a demand for constant economic growth, short term thinking and a devastating concentration of wealth into the hands of only a few. This is because the interest paid to the banks goes to their largest depositors, often the bankers themselves, who then get to decide which loans are made, giving them a unique advantage in the market place and further exacerbating the problem. In the excellent movie, ‘The Cradle Will Rock,’ based on the 1937 musical by Marc Blitzstein, there is a scene where some industrial magnate is bragging at a party among clinking Champagne glasses and cigar smoke that, “You can’t beat our system, we get paid to be rich.” The late Margaret Kennedy noted that interest is embedded in the cost of everything we buy, as much as 45% of the price we pay for goods and services is interest. If you look at a chart of interest flows across 10 income brackets you will see that 90% of us pay tribute to the top 10% via interest to use their money. Because big money translates into power it is not hard to see why the system has been difficult to change.
“Let me issue and control a nation’s money and I care not who writes the laws.” — Mayor Amschel Rothschild
HOW WE GOT HERE The story of how this Money Power came to be goes far back in history but the modern form of it began in the mid-1600s when those who had accumulated great sums of money began lending money to nations to pursue wars. Such massive debts to the banks soon allowed them to gain control over governments. This began in Sweden, then England and progressed to envelop the world as it does today. However, the founding of our nation represented a brief but significant challenge to the Money Power. From the beginning the colonies had severe money problems and the Crown refused to allow them a monetary system. Out of necessity the colonies became a laboratory for monetary solutions. The states devised many monetary systems and many failed but the successful ones created intense tensions with England. While some believe the relatively minor skirmishes at Concord and the Boston Tea Party were the cause of the American Revolution, Benjamin Franklin and others have stated it was actually the Crown’s suppression of the colonist’s paper money systems, plunging them into economic misery that precipitated the war. The primary purpose of writing our nation’s Constitution was to devise a way to avoid authoritarian rule, which we had just fought a war to defeat. The Separation of Powers and the Bill of Rights seemed to do that but did not. The private financial interests of the day lobbied hard to prevent the nation from being able to issue its own paper money. This was strange since it was that very power, established by the first Continental Congress to issue the Continental currency, which was spent into the economy interest free that funded the revolution. In the end, by not clearly defining the nation’s monetary system, a back door was created in the Constitution that allowed the private financial interests to enter and establish an authoritarian government. While the Founding Fathers had managed to keep authoritarianism out politically and religiously, they had allowed it to sneak in monetarily! James Madison joined Jefferson in opposing the actions of the first U.S Secretary of the Treasury, Alexander Hamilton, to charter a National Bank modeled after the privately owned Bank of England which gave good reason for Thomas Jefferson to say, “I believe that banking institutions are more dangerous to our liberties than standing armies.”
“Bankers own the earth. Take it away from them, but leave them the power to create money and control credit, and with a flick of a pen they will create enough to buy it back.” — Sir Josiah Stamp, former President, Bank of England “Despite the massive production capabilities of our society this idea of scarcity remains a central feature…”
THE CHALLENGES Today there are proposals to amend the Constitution to eliminate “Corporate Personhood’ and “Money as Free Speech.’ Both of these are effects of what Martin Van Buren called “The Money Power’ being left in private hands. Thus it is critical that we address the problem of Money Power. The Need Act, HR2990, courageously introduced to Congress by Dennis Kucinich in 2010, contains all of the essential monetary measures proposed by the American Monetary Institute, also in the platform of the Green Party of the United States, which would do just that. This bill would return the Money Power to Congress, eliminate the FED and the national debt crisis, repair and update the nation’s infrastructure and the banksters would all be disempowered.While ignored by the press it was most likely the reason Kucinich lost his seat, as big money poured into Ohio to gerrymander his seat away from him, another effect of our government being in the grip of Money Power. Electing a Congress full of Greens to solve the problem seems politically unlikely at this point but big changes can happen fast when even a percentage as small as 3.5% of the people, intent on change, become politically engaged. Our current money system is a ‘positive interest system’ and The NEED Act proposed an ‘interest free system’ but the most successful money systems from history all shared a feature known as demurrage, a ‘negative interest system.’ Egypt once had a thriving economy with broad based prosperity that lasted for 3000 years using a negative interest local money system. Another negative interest system was the silver “Bracteates” of central Europe between 1150 and 1350, which emerged during the Central Middle Ages, also known as the “Real Renaissance.” It produced a thriving prosperity that allowed all those wonderful Cathedrals named after women to be built. The idea did not reemerge until the 1930’s in response to the Great Depression. One such money system was a complementary currency issued in Wörgl, Austria.
“Only money that goes out of date like a newspaper, rots like potatoes, rusts like iron, evaporates like ether, is capable of standing the test as an instrument for the exchange of potatoes, newspapers, iron and ether. For such money is not preferred to goods either by the purchaser or the seller. We then part with our goods for money only because we need the money as a means of exchange, not because we expect an advantage from possession of the money. So we must make money worse as a commodity if we wish to make it better as a medium of exchange.” — The Natural Economic Order, Silvio Gesell
On July 31, 1932 the town mayor of Wörgl, who had been reading Silvio Gesell’s book, The Natural Economic Order, decided to implement Gesell’s ideas. He issued script money in the amount of 1,800 Schillings and used it to pay wages. The first wages paid out were returned to the community on almost the same day as people paid their back taxes and the money was paid out again. By the third day it was thought that the money was being counterfeited because the 1800 Schillings issued had already accounted for 5,100 Schillings in paid taxes. The mayor knew better, he knew the velocity of money had increased and the money was working as designed, continually circulating doing useful things for the community. The bill had 12 small boxes printed on one side and was only valid if a stamp for the current month was purchased and applied to the back of the note. This small 1% charge collected each month prevented hoarding of the currency. Over the 13-month period the money was in circulation, the mayor carried out all his intended works projects, renovating city hall, paving the streets, putting up street lights, new sewers and planting trees along the streets.They built new houses, a new city reservoir, a ski jump, and a bridge. The people also used the currency to replant forests, in anticipation of the future cash flow they would receive from the trees. This miraculous phenomenon in the midst of the depression spread like wild-fire as hundreds of other towns began to issue similar money. At that point the central bank panicked and the government, enforcing the central banks monopoly on money, banned its use in 1933 plunging the towns back into severe depression with 30% unemployment. Word of the phenomenon had even spread to the U.S. and soon there were some 400 emergency currencies proposed in cities and towns across the nation based on the system. Because the banks weren’t lending money, the only way our money is created, there was no money and communities needed money for business to continue and provide for people’s needs. However, instead of giving them the boost they deserved, FDR, at the behest of the FED, banned the emergency currencies as “…the most successful money systems from history all shared a feature known as demurrage…” happened in Austria. Had he allowed the currencies the depression might have ended in a few weeks, as Erving Fisher, a prominent economist of the day, predicted. Instead FDR was forced to borrow money from the banks at interest to try and spend us out of the depression which saddled the nation with huge debt and did not fix the economy. It took the war to end the depression as again Money Power strengthened its grip on the nation.
“The money system we have today is a manifestation of the scarcity mentality that has dominated our civilization for centuries… it rests on a foundation of separation” — Charles Eisenstein
CRITICAL FACTORS Today there are a growing number of complementary currency systems, some 4000 being used around the world, a number of them in this country, and while they provide for some community needs their effect has been limited. There are many monetary models to choose from, however here is some critical criteria to be considered. The main limiting factor of many local currencies is revealed by Aristotle,“Money exists not by nature but by law.” The Wörgl’s incredible success demonstrated three important factors for a local monetary system to build community prosperity, resilience and sustainable long term thinking. (1) it was a function of democratic governance, issued and spent into the economy by local government and accepted for taxes, (2) it was negative interest to eliminate hoarding and generate high velocity circulation (3) it was complementary to the existing system making transition simple and smooth. Such a system would allow a decentralization of the economy and would, because “all politics are local,” decentralize power as well. It would also allow Green values to come to the fore and build the local infrastructure for food and fuel production, closing the nutrient loops critical to maintaining a healthy natural ecosystem for a happy human presence on planet Earth. As Greens become involved in local governance, being elected to city councils and mayor’s offices, they will be a position to create thriving local economies by implementing ecological money systems such as those described above. The urgency for more radical action to build parallel systems as the increasingly centralized and destructive systems of scarcity collapse is a logical and ethical necessity. We need a reunion of humanity and a reunion with nature. To do so we must change our money system, the key to changing society from one of scarcity to one of abundance, a challenge worth pursuing.