Why money is not the best store of value

credit: http://i.telegraph.co.uk/multimedia/archive/02760/money_2760495b.jpg

credit: http://i.telegraph.co.uk/multimedia/archive/02760/money_2760495b.jpg

Thesis: money is a strange human made concept that has no real representation in our biosphere or the universe for that matter

Here I try to show how it breaks our connection with the real world (by real I mean the physical, the natural, and even the relations between us) through the lack of representation of actual value in terms of energy, matter or services we give to each other.

Energy for a start: a plant will take Sun’s energy, use some for assembling molecules into its form, and some for ensuring its future survival. This can be in the form of seeds, tubers, leaves, sap (in case of trees) or a combination there of. If we take the example of wheat seeds, which we use as a staple carbohydrate, there is a stark difference between the energy balance sheet vs the finance balance sheet. We now have an industrial mass agriculture model, in which we use non-renewable energy to produce the fertiliser, use energy to transport it, produce all machinery involved, produce and spray biocides, harvest, etc. All this energy use is negative to the energy stored in the wheat. Money, on the other hand is in the positive, because all businesses along the supply chain have prospered. This just shows that money in no shape or form can ever represent real, physical energy.

Matter: Go to any store on the high street, buy a mass made trinket for £10. Walk out and try to sell it back to someone. You can’t. They don’t want it, don’t need it. It’s now worth £0. The amount of atoms have not changed. Look at cars, electronics, everything designed to have a set lifespan, so that you would buy new over and over again. Tossing out the old. The amount of atoms not changing. How is it that a car that was new a year ago, now have lost half of its monetary value? It has barely run in. The engine is in perfect condition. It probably runs better than when it was new. If you were to sell it, you would have received only half of the money you put in.

Human work (service): this is the easiest to show. How is it that the same work, performed by individuals with similar education, can be priced differently only based on their geographical location?

The often quoted excuse is “just doing a job”

Exploitation: inflation is a multigenerational tax allowing for money creators to game the system. To avoid misunderstanding my last point – it is not the money that exploits people – it’s people exploiting other people and the biosphere. Money is only a tool for global power and control, used often by well-meaning people. Often times we call these well-meaning people business owners or CEOs. All they are doing (at least in their minds) is coming up with an idea and having the drive to pull others along, making themselves rich in the process. The issues arise when in their quest for wealth they are detached from the real world. This is because collecting money does not feel like killing someone, but without imposing self limitation, and without visibility of what’s happening to people down the line, this is often what happens. Land is taken away from resident tribal people for cattle. Rainforests are logged and planted with palm oil. If all you see is a balance sheet and promises to shareholders, then more and more, people in distant lands become externalities. The often quoted excuse is “just doing a job”.

Money is the only thing actually created by man

We cannot create anything within our universe, yet the value of all which is tangible changes due to the intangible will of the collective human brain. By creating I mean physically create the matter that we use to make things with.

We take money for granted, and we treat our financial system as the only viable option, but in reality we are being lazy and stuck in our ways. “We need banks”, I heard from my work colleagues when I suggested that banks make money out of thin air – something, that if you and me did, we’d get arrested and charged for fraud. Sure, banks can be useful, they are businesses that help recycle surplus cash back into the economy. If that’s all that they do. But at the moment they have the power to create money out of thin air and charge interest for it. There has much been written about money creation, so I will avoid repeating here.

Not all is grim, but it’s up to us to create the solutions

There are several solutions, from crypto-currencies to time banks. My two favourites are gift economy, and then interpersonal debt counting (“money” created on the fly at the point of transaction – controlled by a closed community, can be accounted digitally, with debts reconciled annually). After that time banking, local currencies and crypto currencies last.

A compliment to the monetary economy – the gift economy (not barter): Daily we hear uplifting stories how people gave from their hearts, not wanting anything in return. There are many with people who have very little, and they still give. It’s heart warming, but this used to be the societal norm and still is in many tribal societies. David Greaber writes in “Debt: the first 5000 years” that a form of a gift economy is the natural way of exchanging value and storing it dynamically. He writes that money comes in along with violence.

Many people seem to think that without money, all their gifts may go into void and they would never get anything in return. Tribal people participating in the gift economy would not tolerate unfairness and abuse just like we would not tolerate stealing. On the other hand, the lack of accounting of value meant that the person who gives the most is the richest. In the current system, if I accumulate the most, it needs to happen at the expense of all of you. You will have the same feeling of unfairness as towards the person who takes without giving any gifts in return.

No years of paying interest by anyone due to separate debts

Debt counting (mutual credit). This has been done with money in a closed community. In the past when money supply was scarce, but people knew each other (unlike today’s atomic family society – divided to the grain), they would keep a tab of their debts. Then at a given time in the year, they would sit down, and each would state how much they are in debt and to whom. The result was a kind of squaring of debt. Johnny needed to pay Tom 3 shillings, Tom was it debt to Mark 4, Mark had 2 to pay to Johnny. The result is that Johnny now can give his 3 shillings to Mark, and Tom then needs to add only 1. But because Mark is in debt of 2 shillings to Johnny, then both Johnny and Tom need to give Mark one shilling each, and that is the end of this debt.

Both solutions historically have only been viable with a tightly knit community, but there are now digital solutions that could allow for the wide-spread adoption of mutual credit (gift economy needs no accounting). A simple app could facilitate the process, and a low interest could be placed to pay for the development (the down side is that there needs to be a way to create the money for the interest – perhaps the act of development of the app could be used for that – a debt by the users to developers. If users provide things and services that developers buy through the app, then the debt is repaid) Perhaps this interest could be void altogether and be substituted with debt squaring instead. Perhaps the app could oversee people’s debts and suggest squaring dynamically.

Much has been said about crypto-currencies and time banks, so I will only say that a google search will give you all the answers.

Providing that governments, banks, and people with guns don’t interfere, we can implement any of these solutions and have a much more equal world in the end.

Do we need to just toss out the old?

The current system is rigged to benefit a small group of people, and it’s well protected, enough to make any fight against it futile. I for one am not for fighting but for blending solutions. I use the money that’s circulating now, and that won’t change for a while. I understand that I can use it as a form of energy and channel it from wealthier sources into my community. Having said that, I’m interested in using the alternatives within my community. This is me showing – I love you, I wish to be friends with you. I want to build with you, and not compete against you. We could play sports for that. No need for me to take away your ability to support yourself. Divided we fall.

What will our solutions look like?

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