08011 The Money Games

Seven Deadly Sins:
Wealth without work
Pleasure without conscience
Science without humanity
Knowledge without character
Politics without principle
Commerce without morality
Worship without sacrifice.
— Mahatma Gandhi

Money is an invisible structure. It is first and foremost a matter of what people believe to be money.

A traditional economic textbook defines three components of money —

  • It is a unit of account, a way to keep track of values expressed in monetary units.
  • It is a store of value that can be created/acquired in the present and spent in the future.
  • It is a medium of exchange, facilitating commerce and trade.

A less traditional textbook might add these additional features —

  • It is a method of theft. By politically manipulating the value of money (or even the definition of money), value can be stolen by people with access to political influence.
  • It is a measure of energy flow. People, institutions, and businesses who spend more money use more energy.
  • It is a system of oppression. In a society based on money, throughout history the have-nots have been oppressed by the have’s.
  • It is a driver of environmental degradation. By pretending that the only unit of accounting that matters is money, we exclude all other values and issues from consideration.
  • It can be a measure of criminality. In kleptocracies (societies ruled by criminals and thieves), wealth is a measure of the criminal activities of the wealthy.

Traditionally, we identify three kinds of money:

  • Commodity money recognizes certain items or substances as money. Gold, silver, and copper come readily to mind, but other commodity items used as money over the years include decorated belts, large stones, tobacco, salt, and peppercorns.
  • Representative money is a system where people use paper receipts for commodity money as if they were the commodity money. Older people in the United States may recall that our currency used to have an inscription — “Redeemable in lawful money of the United States.” Instead of handing over 10 silver dollars, we spent a ten-dollar warehouse receipt. Somewhere there were ten silver dollars in a vault making that paper worth ten silver dollars. Or at least, the government claimed they had one silver dollar in a vault for every paper silver dollar note in circulation.
  • Fiat money is money that a recognized authority declares to be money. United States currency notes today carry this inscription: “This note is legal tender for all debts, public and private.” People recognize US currency and coins as money, even thought the notes and coins have no commodity money value, so the US dollar is valuable. Fiat money has no relationship to any commodity money. I remember my grandfather saying that no good would come from the switch from commodity (and its corollary, representative money) money to fiat money and it looks like history has proven him correct. For one thing, war is expensive. If money had remained limited to gold and silver, governments would not have been to able to afford the large military expenditures of the second half of the 20th century. The military expenditures and wars of the first half of the 20th century clearly bankrupted the gold and silver money system that prevailed at the time.

Depending on the amount of oppression and injustice in a society, the value of money may be in the eye of the beholder — or in the eye of the holder — or in the eyes of both.

During times of inflation of the money supply (more money circulating), the value of money decreases. More money is available so people pay more for the items. The price rise is not the inflation. It reports the previous inflation of the money supply.

During times of deflation, the value of money increases. Less money is available, so people do not pay as much for what they need or want. The price decrease is not the deflation. It reports the deflation of the money supply.

The destruction and creation of credit is the same as creating or destroying actual money. Credit works the same as money when it comes to inflation and deflation because you can spend or save it immediately.

The history of civilization is a history of changes in the value of money — and in what is considered to be money.

Fiat money systems — which depend entirely upon due process and manufactured consent — can be brittle when placed under stress.

One day green notes of a certain design are legal tender — but with a stroke of a pen, the issuing authority can make all of the green notes of a certain design worth nothing, and issue new notes, with a different design and color, as money. This happens frequently in the history of money, especially during times when its value falls quickly to low levels (known as hyperinflation).

I have some stamps from Germany after World War I that cost one billion marks each. Before the war, four German marks bought one US dollar and twenty US dollars bought one ounce of gold. If someone had sold US dollars and bought German marks, during and after World War I they lost all their money. They would still have paper notes in the form of marks, but their value would be effectively zero.

Before the war, one billion marks would have bought 12,500,000 ounces of gold. After the war, it could mail a letter.

Psychologies of Money and their Consequences

In the modern world, money has come to be an all-encompassing god.

Everything revolves around money — getting it, spending it, investing it, earning it, losing it, stealing it. We look up to the wealthy and we scorn the poor.

But as the importance of money increased, so did the problems of money.

Lifestyles of gluttony and excessive consumption of material goods, fueled and financed by money, rape and ruin the natural environment.

As our society moves closer to collapse, there is a growing centralization of wealth, with the top 1% of households making out like Phat Rat while the rest of society experiences a rapid decline in purchasing power and household wealth.

Money is the prime mover and controller of our political system, with billions of dollars spent on campaigns. Those without money have little or no voice in political affairs.

Wealthy elites manipulate the political system to transfer wealth to the top of our economic pyramid at the expense of everyone else. As just one example among many that could be listed . . . The Federal Reserve manipulates interest rates, holding them at excessively low rates for a long period of time. This subsidizes debt. It penalizes those who defer pleasure for future gain and save their money rather than wasting it.

Elites own the banks and profit from this transfer of wealth from the productive to the financial class. They prefer that we borrow money and pay them interest. When we make them loans by depositing money in their banks, they don't pay much interest to depositors. Why should they worry about paying us a just price for our money when the Federal Reserve loans them money at nearly zero interest rates? Since the Federal Reserve does the bidding of the economic aristocracy, it obediently keeps the interest rate low. In other words, the Federal Reserve and the banks conspire to subsidize the grasshoppers at the expense of the ants.

Money is the primary driver of environmental degradation. When considering whether to clear cut a forest or harvest it in a more sustainable method, the only calculations that corporations use are profit and cost. How much money will they make by clear cutting versus sustainable harvesting? Accountants do not record the value of the forest, as a natural system, and its constituent creatures and plants. Nature has no value in and of itself in the modern world of finance.

As we gain control over our lives by implementing permaculture design principles, we reduce the power of money. By withdrawing your consent, one small step at a time, from the money system, we help build a better future no longer dependent upon big money and big banks.

Here are some practical money tools to help you care for people, care for the planet, and have a care for the future.

Never bank at a big national bank. Use a locally owned credit union, or a locally owned bank, for your financial needs.

Never use a credit card. If you have any, cut them up, pay them off, close the accounts. Minimize your use of debit cards to transactions where you can’t pay cash or write a check. Every time you use a card, the financial elite gets a cut of the transaction. Over time, this transaction cost siphons money out of the real economy and into the accounts of the economic elites.

For online transactions, consider signing up for Dwolla — http://www.dwolla.com/ — through which you can do online business via checking account transfers, without the use of credit or debit cards. Their fees are low.

If at all possible, work for your living in a local or regional economy and avoid the national and transnational economies.

Shop and produce as much as possible in your local real-person economy. Avoid franchises and corporation chain stores.

Spend your money intentionally. Every dollar spent is a vote. Be wise in your voting.

Never willingly invest in the stock market. Invest in real activities with real people. If your work has a retirement plan invested in the national stock markets, lobby your employer to provide an alternative in the form of a local account at a credit union or local bank.

Explore alternative investment structures that can benefit your local economy.

Save money for emergencies, life changes, big purchases, and retirement. Use a credit union or locally owned bank. Aim for at least a full year’s of expenses for your “money storage.” Keep some cash hidden outside of a bank in case of a “bank holiday” due to an extreme financial crisis.

Keep some of your savings in the form of food storage and some of your savings in the form of gold and silver as a hedge against seriously hard times.