Peningakerfið.
Nýta hvern einstakling, og nota
náttúruauðlindir á þann máta,
að allt efni gangi í hring, og sé notað aftur og aftur.
Við höfum oft á undanförnum öldum, lent í miklum kreppum,
af því að það var skortur á peningum, til að greiða fólkinu fyrir
vinnu,
til að framleiða vörurnar og síðan er fólkið neytendur sem kaupir vörur
og þjónustu.
Þessi grein er mjög lærdómsrík.
Egilsstaðir, 06.01.2013 jg
by Roger Langrick
The Debt Engine is a phrase
to describe unrelenting, forever increasing private and government debt. The
need to stay ahead of escalating debt fuels practically everything we do; it
forces us out of bed in the morning to go to jobs that most of us despise.
Corporations make all their decisions around first how to service their
snowballing debt, and secondly around profit. Governments spend all their time
worrying about how to meet their social agendas while at the same time service
the increasing debt load of deficit spending.
As a
motivating force, the Debt Engine now exceeds all others in the insane dash of
the planet towards self destruction. Universal
unrepayable debt creates a social environment in which certain types of behavior flourish and inhibits or destroys any tendency
towards long term concerns and nourishment.
Unrepayable
Debt is different than the everyday debt of normal life. Unrepayable Debt is an
actual built in flaw of our present monetary system: The Fractional Reserve System.
It benefits no-one except
those intimately connected with the banking industry and in spite of its
devastating repercussions, it is a flaw that can be fixed.
Everyone has
some ideas about money, who controls it, where it comes from and how it
operates. Some say the government prints it; others say hard work makes money,
while others would guess that it's something to do with gold. They might also
picture it as a vast pile with everyone competing for as much as they can get.
Bankers sometimes inflame our passions by claiming that the government has
grabbed all the money and there is none left for private industry.
It's all
poppycock.
Our
money supply
isn't created by the government;
a brilliant idea
doesn't make money
and neither does
hard work (unless you happen to be in the counterfeiting business.)
Our money is a
national accounting system of who owes what to whom,
and it is a system
that is owned and operated by the private banking industry.
There is no
such thing as a static heap of money created by hard work and business cunning.
Money flicks in
and out of existence as credit and debit balances; the money supply swells and
contracts continuously as loans are created and then destroyed.
Money is simply
a bookkeeping system; a man created device.
The man who invented the monetary system which we use
today was a Scotsman, John Law, who lived during the 18th. century.
He invented a new type of money to replace the old one of specie (the use of
coins). In doing so he created the mechanism to finance the industrial
revolution, and ultimately our modern technological world.
Much has been made
of the astounding inventions of that era but what is often forgotten is that
most of them would have never have seen the light of day without John Law and
his invention: the Fractional Reserve Money System.
Without it, there would
have been no railroads, no Nissans or G.M.'s, nor would there have been any
super highways to drive them on. There would have been no space shuttle, no
What John Law
did with his invention of a new money system was enable the Industrial
Revolution, with all of its good and bad aspects, to take place. Without him,
the Revolution would have fizzled and died and with it, our technological
world.
Here was the problem which John Law solved. In the
early 1700's the newly industrializing nations of the world were in a perpetual
state of economic crisis because their coinage system of money could not keep
up with demand. Governments tried everything to increase the money supply. One trick was to make new coins much
smaller than the old thereby getting more per ounce, but it was a stop gap
measure at best.
To grasp the magnitude of
the problem, try to imagine building just one modern skyscraper using only gold
coins as finance. The industrialists of the Industrial Revolution were faced
with a similar problem; how to build their factories, mills and railroads using
only scarce gold coins.
John Law's solution was to create a national paper
money supply; banknotes that would be officially recognized as "real
money". The advantages were obvious. Paper money could be expanded
indefinitely and was much cheaper than specie to make. To get and keep initial
public confidence, Law suggested a fraction of gold be always kept on hand for
the few people who wanted to redeem their notes.
Through a process of trial
and error it was found that specie could support about ten times its value in
paper money. That is, a bank which held $10 in gold could safely print and loan
out about $100 in paper money. The gold held in reserve was obviously a mere
fraction of the banknotes which it supported and so the system became known as
the Fractional Reserve System. The private banking industry was chartered by
government to create the new money supply of paper notes. Until earlier in this
century, banks literally printed their own supply against their own gold
reserves with their name on each note, and lent them out to the public and
government. Now the federal government has taken on the printing job but the
notes are still drawn on private banks.
In the 1930's the convertibility of bank notes was
dropped but the Fractional Reserve System is alive and well today, albeit in a
more sophisticated form. Cheques or credit cards have largely replaced paper money but the
principle remains the same; the banking industry creates the money which
government and society then borrows.
John
Law's method of money creation is still the dynamo that powers our present
world. By replacing specie with a simple national accounting system of credit
and debit, he made money infinitely more flexible, able to be contracted or
expanded to meet any situation.
However, using
the Fractional Reserve System has not been a universally happy experience. It
has a built in mechanical flaw that always keeps total national and private
debt ahead of the money available to repay it. In fact the more a nation
expands, the more it automatically goes into debt to the system over and above
the money that it borrows.
To
explain, imagine the first bank which prints and lends out $100. For its
efforts it asks for the borrower to return $110 in one year; that is it asks
for 10% interest. Unwittingly, or maybe wittingly, the bank has created a
mathematically impossible situation. The only way in which the borrower can
return 110 of the bank's notes is if the bank prints, and lends, $10 more...at
10% interest.
When presented with this
scenario, there is often a tendency to think :"Ah,
but the borrower can always make the extra $10 somewhere else, through hard
work or a deal overseas." However, although we frequently inter change the
two sayings, earning money is not the same as making it. Earnings are simply a
transfer of money from on ownership to another and neither increase nor
decrease the total money in existence. Making money actually does increase the
nation's money supply but no-one can do that but the banking industry itself as
laid down in its charter from the federal government.
The result of creating 100
and demanding 110 in return, is that the collective borrowers of a nation are
forever chasing a phantom which can never be caught; the mythical $10 that were
never created. The debt in fact is unrepayable. Each time $100 is created for
the nation, the nation's overall indebtedness to the system is increased by
$110.
The only solution at
present is increased borrowing to cover the principle plus the interest of what
has been borrowed. The business or government that cannot expand its borrowing
every year is seized by its increasing debt load and dragged under.
Many economists are not
unmindful of the problem but pass it off as irrelevant. They say that if the
marketplace economy keeps expanding, thereby fuelling an increase in the total
money supply, there is no problem with meeting interest payments on an
increasing debt load. But under such circumstances, economic expansion is not a
luxury but an imperative to stay ahead.
In John Law's
day, the need to continuously expand to meet growing debt repayments was seen
as a minor problem of no consequence. Today however we all know the planet
cannot sustain unlimited growth. Even so, we are stuck with a monetary system
that demands continuous expansion or face the chaos of total economic collapse.
The consequences of the
Debt Engine are everywhere. Political and business leaders are sacrificing the
planet to stay ahead of bankruptcy. Technology is not being used to create a
sane and sustainable lifestyle for us all but is being channeled
into the most narrow band of activity: the market
place activity of "making" money. Just as governments are forced into
ignoring vital social and environmental questions in their efforts to balance
the books, so many corporations are putting to one side such things as resource
depletion and the destruction of the ecosystem in their frantic efforts to
remain economically alive.
But the situation is not completely bleak. Just as
John Law found a way around the impasse of coinage, so there are solutions for
the problem of unrepayable debt. Obviously the first thing to do is make sure
that the ratio of credit to debt is always the same. Under the Fractional
Reserve System, $100 credit is created and $110 debt is demanded in return; that
is, there is always more debt than credit. This equation should be $100 credit
equals $100 debt.
The mechanics
of how to achieve this were proposed over one hundred and fifty years ago. It
was proposed that the nation's money be created by two agencies: the banking
industry and government.
Instead of
taxes, government would be empowered to create money for its own expenses up to
the balance the debt shortfall. Thus, if the banking industry created $100 in a year, the government
would create $10 which it would use for its own expenses. Abraham Lincoln used
this successfully when he created $500 million of "greenbacks" to
fight the Civil War.
A government which creates
its own money supply becomes independent and the most important result of
freeing government from its present debtor relationship to the banking industry
would be to make it more able to respond to social pressures for reform. A
financially independent government would be able to pursue long term agendas
for the betterment of society. For instance, a twin source of money creation
could not only rapidly reduce taxes, but create additional funding for other
initiatives. A government having the same right of issue as is now monopolized
by the banking industry could fund vital job creating initiatives such as
environmental repair and sustainable technology on a scale that is hard to
imagine.
The
world has passed beyond an age of scarcity and the challenge of the new era is
not about solving problems of want, but dealing with abundance and how to use
it to create a sustainable future. Above all we need the visionaries able to
point the way.
In my forthcoming book Superproduction I try
to address the potential which is now in our grasp. With computerization,
robotics, advances in genetics and food growing, we have the potential to turn
the planet into a sustainable ecosystem capable of supporting all. We have the
technology to genuinely contemplate colonizing the solar system.
This
is not a time to be saddled with an 18th century money system designed around
the endless rape of the planet. John Law enabled humanity to scrabble out of
scarcity but now his system is antiquated. Philosophically it is based on the
robber baron mentality and technically it is flawed with Unrepayable Debt. As
such it is unable to respond either to the abundance which it created or the
problems which it spawned.
The Debt Engine has
distorted the potential of the Industrial Revolution and forced us into a
narrow focus of marketplace ethic. A new monetary system with enough government
control to ensure funding of vital issues could unlock the creative potential
of the entire nation. By redirecting the focus of our national economy, a new
monetary system would enable men and women who can think in terms of abundance
not only for themselves but how also to use it for the benefit of the entire
planet. I know John Law would approve.
Roger Langrick
963 Maple St. White Rock
B.C.
(604) 531-1004
roger.langrick@dafbbs.com