[ExI] Print Your Own Money

Emlyn emlynoregan at gmail.com
Thu Sep 25 02:13:21 UTC 2008


A nice piece for discussion:

http://www.boingboing.net/2008/09/23/what-went-wrong.html

Print Your Own Money
Douglas Rushkoff

"Everyone seems to want to know about the economy these days, so we
may as well go there. It's as great an example as any of a program
that not only got out of control, but became so prevalent - so
accepted - that we came to take it for granted. We think of the
economy and its rules as given circumstances, when they are actually
constructions.
In brief, the money we use is just one kind of money. Invented in the
Renaissance, and protected with laws banning other kinds of money, it
has very particular biases that lead to almost inevitable outcomes.

I just finished a book (more on that later in the week), where I make
the case that our highly corporatized society was really forged during
the Renaissance. Aristocrats were losing power just as a new merchant
class was gaining it. So they made a series of deals through which
merchants' companies were granted monopoly charters from the monarchs
in return for a sweet cut of the proceeds. Merchants got to lock in
their status as newly rich, while monarchs stopped their own descent.
Merchants supported the monarchs whose charters granted them exclusive
access to new territories or industries, and monarchs got to do
colonial expansion once-removed.

The invention of centralized, national currency was meant to support
all this. Where localities had previously been free to mint their own
currency based on the crops they had grown, now they were forced to
borrow money from a central bank. This allowed the issuer of currency
- the crown - to extract value from every transaction. Anyone who
wanted to buy anything from anyone else had to run it through the
central authority - coin of the realm - one way or the other.

This engendered competition for money, which was now a scarce currency
issued at interest, instead of a local currency as abundant as the
year's crop. Moreover, any business wanting to borrow money for
equipment or development had to pay back several times what they had
borrowed. This meant bankruptcy was built into the currency system. If
a business borrows $100,000, for example, they'll have to pay back
$300,000 by the time the loan is due. Where does that money come from?
Someone else who borrowed.

Meanwhile, local currencies had the opposite bias of centralized
currency. Local currencies lost value over time. They were really just
receipts on the amount of grain that farmer had brought to the grain
store. Since some of that grain was lost to rats or water, and since
the grain store had to be paid, money devalued each year. This meant
the money was biased towards being spent. That's why reinvestment in
infrastructure as a percent of total revenue was so high in the late
Middle Ages. It's why they built those cathedrals. They were local
efforts, by people looking to invest their abundant wealth into real
assets for their communities' future. (Cathedrals were built to
attract pilgrims and tourism.)

Unlike local currencies, centralized currencies were biased towards
retaining their value over time. Capitalism (in addition to being a
lot of other things) is the way people get rich simply for being rich.
Capital becomes the most important component in the
capital/labor/resources equation. Since the purpose of the Renaissance
innovations was to keep the currently wealthy wealthy, the currency
was biased to favor those who had it - and could mete it out at high
interest rates to those who needed it for their transactions.

What we witnessed over the past decades has been the necessary endgame
of the scenario.

Today, in essence, the central bank lends money to a federal bank,
which loans it to a regional bank, and so on, each bank paying
interest to the bank above, and charging more to the one below. By the
time the person or business who needs the money gets it, they're
paying an awful lot of interest - so much, that it amounts to a drag
on their ability to do business. The speculative economy, rather than
fueling the real economy, drags it down.

The only way for banks - who run such an economy - to make more money
is to lend more out. So they looked for more borrowers, as well as
more places to park their cash. As a result, the things you and I
depend on in the real world became investment vehicles. Homes, oil,
resources...you name it. So the costs of all these things went up not
because of any real laws of supply and demand, but because they had
become new classes of investment.

As for finding new borrowers, well, that's why Bush kept talking about
"home ownership" as the right of every American, why lending standards
were lowered and, of course, why bankruptcy for individuals was made
so much harder. They wanted to lend more money, but didn't have any
more qualified borrowers. By changing bankruptcy laws, they meant to
make it impossible for borrowers to cry uncle. (This was a
150-million-dollar lobbying effort by the credit industry, over the
course of an entire decade.)

Eventually, the tension between the speculative economy and the real
economy simply had to become too great. Lending money, in itself,
doesn't actually produce anything. On the contrary, it strains those
few who are still attempting to produce things. It's what turned so
many companies into balance-sheet-driven outsourcing operations. Only
so many bankers and investors can be supported by industry and
homeownership.

We're not really watching an entire economy fail. We're watching a
particular program fail. Only because it's not sandboxed like a bad
plug-in in Google's Chrome browser, the resource leak sucks money from
everywhere.

If we can adopt what we Boingers might call the "Happy Mutant
Approach" to this crisis, however, this is not an entirely hopeless
situation. Yes, corporations may lose the ability to keep us employed
as the banking investment they depend on to operate dries up. But this
corporate activity was always extractive in nature, getting (or,
historically, forcing) people to buy mass-produced, and nationally
distributed food and other goods that were once produced locally.

The collapse of centrally controlled commerce and currency simply
creates an opportunity for local commerce and currency to revive. For
people to learn to work and live together on a human, local scale - as
the original free market advocate, Adam Smith, actually suggested.
Admittedly, this would be a painful transition for many - but it's
better than maintaining dependence on a fiscal system designed from
the start to turn people and communities into extractable corporate
assets. (Think about that the next time you're called up to "human
resources.")

Whether or not we've had time to fully embrace the
Craft/Maker/cyberpunk/Boing ethos, our ability to provide for
ourselves and one another directly, locally, even socially instead of
entirely through centralized commerce, will determine how well we can
navigate the near future.

For starters, check out the LETS system and other complementary
currencies for how to make your own currency, Bernard Latier's book
The Future of Money free online, and Local Harvest for Community
Sponsored Agriculture opportunities near you.

Money can be just as open source as any other operating system. It used to be."

-- 
Emlyn

http://emlynoregan.com - my home
http://point7.wordpress.com - downshifting and ranting
http://speakingoffreedom.blogspot.com - video link feed of great talks
on eCulture



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