A Tale of Stored Value
In the Abstract
Take a bit of money and clutch it in your hand, "what are you?"
Essentially it's a means of storing extrinsic value. Sometimes it's material, in the form of graphically inscribed pieces of flattened tree or circular molding of metals (copper, nickle), and sometimes it's immaterial, in the form of digital binary code.
To invoke a dead authority, Aristotle wrote "money exists NOT by nature, but by law". It's based on the idea that certain objects can be given value (extrinsic-value) so they can be traded among a collective of people for the purpose of infrastructure building.
To invoke a dead authority, Aristotle wrote "money exists NOT by nature, but by law". It's based on the idea that certain objects can be given value (extrinsic-value) so they can be traded among a collective of people for the purpose of infrastructure building.
Historically, the minting of coin for the purpose of money crops up during the 600s BCE in China, India, and present-day Turkey. According to some monetary mythology, the invention of money comes as an outgrowth of earlier barter societies, it's simply a more efficient way of keeping tabs on the barter networks. The fact that none of these strictly-barter societies have ever been found leads David Graeber to make a compelling case against the idea, arguing that pre-money cultures relied on gift-economies and an elaborate system of debt to trade goods and build infrastructure.
Either way, the historical progression of money has led to the present day situation where a cadre of creation-agencies (central banks) write the software code, inscribe the flattened tree, and mint the coins that we are to believe contain legitimate "value". This "value", especially in fiat-currency, is created by maintaining the belief that value has been created... a bit of the ol' circular logic loops, don't ya think?. This belief entwined with the physical/nonphysical object is then spread among a group of people.
Through the coordination of creation-agencies and dispersal-agencies, money fulfills its purpose as a means of value-exchange (a receipt tied to a claim on human effort/labor) that can traded to facilitate infrastructure-building (architectural, social, economic). However, this infrastructure-building potential has been centralized so that only a powerful few determine what gets funded. Whoever controls the money supply controls those who must use the money supply.
In the United States
In the United States, the "who" that controls the money supply is the Federal Reserve. This amalgam of complex software, economists and bankers, gray geometric buildings, bank vaults, business suits, and a hierarchy of management (Board of Governor's, Federal Open Market Committee, Reserve Banks, and Member Banks), creates the money supply we use.
On the 23rd of December 1913, the Federal Reserve Act was signed into law and voila, a private central bank is born. The murky genesis of the document reaches back to J.P. Morgan and his cohorts secretly meeting on Jekyll Island to formulate a plan for creating a centralized bank --- a nefarious sequence of events well detailed in G. Edward Griffin's classic book. A crop of shiny buildings pop up to house this new model.
Although the Money Trust had a wet dream fantasizing about the revenue-potential of this new act, the realization that the U.S. Government (theoretically its citizens) would borrow the use of its own money and the pay interest on it, was anything but pleasurable --- a dry nightmare perhaps? Beyond the pale of regulation, this new entity largely determines the economic fate of the United States.
In order to serve the purpose of the ancient historical fetish of concentrating vast wealth into a few hands, the Federal Reserve system employs some quite powerful monetary tactics. In particular, they:
In the United States
In the United States, the "who" that controls the money supply is the Federal Reserve. This amalgam of complex software, economists and bankers, gray geometric buildings, bank vaults, business suits, and a hierarchy of management (Board of Governor's, Federal Open Market Committee, Reserve Banks, and Member Banks), creates the money supply we use.
On the 23rd of December 1913, the Federal Reserve Act was signed into law and voila, a private central bank is born. The murky genesis of the document reaches back to J.P. Morgan and his cohorts secretly meeting on Jekyll Island to formulate a plan for creating a centralized bank --- a nefarious sequence of events well detailed in G. Edward Griffin's classic book. A crop of shiny buildings pop up to house this new model.
Although the Money Trust had a wet dream fantasizing about the revenue-potential of this new act, the realization that the U.S. Government (theoretically its citizens) would borrow the use of its own money and the pay interest on it, was anything but pleasurable --- a dry nightmare perhaps? Beyond the pale of regulation, this new entity largely determines the economic fate of the United States.
In order to serve the purpose of the ancient historical fetish of concentrating vast wealth into a few hands, the Federal Reserve system employs some quite powerful monetary tactics. In particular, they:
1. Create "money" out of thin air ("open market operations") through a little sleight-of-hand maneuver: they credit the U.S. Treasury/Bureau of Engraving and Printing with a debt that needs to be paid back --- with interest! With interest not being created at the same time, this ensures that more debts must be taken out, thus making it impossible to ever pay off and leading to an entangled spider web of debt-traps.
2. Employ a fractional reserve banking model to expand the debt-money supply. They do this by loaning up to 9 times as much as they actually have in reserve, thus creating elastic currency that can expand-inflate (more tickets = less value each) and contract-deflate (less tickets = more value each) based off the business needs of this private corporation and, maybe, some consideration for the economic health of our whole society.
3. By speaking in that "turgid dialect of English" called Fedspeak. This art of speaking while saying nothing is a specific form of the old technique of disinformation, packaged to fit the battlefield of monetary warfare.
2. Employ a fractional reserve banking model to expand the debt-money supply. They do this by loaning up to 9 times as much as they actually have in reserve, thus creating elastic currency that can expand-inflate (more tickets = less value each) and contract-deflate (less tickets = more value each) based off the business needs of this private corporation and, maybe, some consideration for the economic health of our whole society.
3. By speaking in that "turgid dialect of English" called Fedspeak. This art of speaking while saying nothing is a specific form of the old technique of disinformation, packaged to fit the battlefield of monetary warfare.
Along with all the legal loopholes and physical forms that drive the Federal Reserve's engines is our belief, however ingrained and unconscious, in its legitimacy. This same belief backs the fiat currency that we depend on. This doesn't mean that if you stop believing, it will simply collapse, but then again if you never stop believing in its legitimacy, where does that lead?
As a former Chairman of the Housing Committee on Banking and Currency said many years ago: "I have never yet had anyone who could, through the use of logic and
reason, justify the Federal Government borrowing the use of its own
money….I believe the time will come when people will demand that this be
changed. I believe the time will come in this country when they will
actually blame you and me and everyone else connected with the Congress
for sitting idly by and permitting such an idiotic system to continue".
Alternatives and Solutions
Clearly the present system of private, centralized banks issuing debt-money with a built-in impossibility of ever paying it back, is flawed. Relying on this broken and inherently undemocratic system is insane, the time for monetary reform is now.
Stephan Zarlenga and the American Monetary Institute (AMI) describe how to reform the private Federal Reserve banking system within the United States. Their bill, H.R. 2990, advocates a three-part process for reform: 1. Incorporate the private Federal Reserve into the public U.S. Treasury 2. End fractional reserve banking 3. Eliminate the debt-with-interest-to-be-paid model and spend the money into circulation to fix our faltering infrastructures.
Just as a healthy ecology thrives with a diversity of value-givers, so should a healthy monetary landscape. Nowhere in Nature do we find just one value giver --- monotheism is a stranger, time to diversify. Complimentary currencies are key, we need digital networks like BitCoin, Digital Coin, and the LETSystem, as well as physical currencies like the Ithaca Hour and BerkShares.
The ethic of decentralization and resilience runs through all these innovations. It's about creating currencies that do not get siphoned off into private vaults. The central tenet of monetary reform is to get more people to determine what gets funded and how.
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