Relinquishing of the public’s right to issue its own currency – Part 2
|April 7, 2011||Posted by dan under Money|
o now we have covered the mechanism by how banks lend credit into circulation in part 1 we can now look at why this is so detrimental to the people. When money is borrowed the exact amount borrowed is created from nothing, so what is the effect of this on the economy as a whole? There is at any one time a specific money supply in circulation within the global economy. The total supply of money allows us to determine the price of goods and services overtime. So if there’s X amount of pounds in the economy we come to know that a loaf of bread cost X amount, this is what economist call price discovery. However whenever anyone borrows money, new money is being created and thus the total money supply is diluted by exactly the sum you borrowed commonly known as inflation. And as previously mentioned money is debt which is a promise which is your time and energy.
Money = Debt = Promise = Time/Energy
Therefore the time and energy you use to create value is completely consumed to a zerosum by this mechanism of diluting the money supply as the total money supply represents the time and energy of everyone. It Insures that your time and energy used within the economy is wasted. Did you follow that? Lets say you borrow $10,000 using it productively to build up a business and therefore create $10,000 additional value within the economy. Great, but now I borrow $10,000 and dilute the value of the total money supply by exactly how much you just spent your time and energy on creating, thus we are back to the starting point in terms of the value of the money. It is a zero sum game you see? And this is why we find the strange situation where we do not seem to be benefiting from the additional creation of new technology’s, manufacturing, and creativity. Because all the value created from these new innovations such as the advent of the computer and the huge amount of wealth this created did not translate into ease and comfort for human beings but instead the additional wealth it created was consumed by the money system itself.
A quick point to note also is that wealth has to be in direct relation to poverty within this system. Because within this system somebody’s wealth has to be someone else’s debt. So the more money you hold the more other people by necessity need to be indebted to you, because the money in your hand is a unit of account for other peoples debt. To make yourself rich by contrast others must be made equally poor to the extent you are made rich. It is a simple equation of the money system.
What would be the antitheses of this? Well quite simply it would be to have a constant money supply that could have limited controls but that essentially maintains a constant supply of money. What would the effect of this be? Quite simply again if the money supply is constant and the money you are borrowing from the banks is part of this money supply of other peoples deposits and not created when borrowed then when you go out and spend that money and create value that value becomes additional! value within the current money supply, thus continuously increasing the value of money, and hence you do see the benefits of additional productivity, innovation and technology in the fact that your money is becoming ever more valuable over time. It becomes an upwards spiral of wealth creation.
Now if it wasn’t bad enough that the money system is designed to be a zero sum game it gets even worse and that is the application of interest. When you borrow money they create only the principal amount which is the amount borrowed but not the interest. So looking at this from a global perspective the current global money supply could not pay off the global debt burden because it would be lacking the amount needed to pay the additional interest and therefore the system insures that you have to come back to the banks to borrow more money to pay the interest on your old debt and thus of course incurring more debt and interest, or what you might call a downward spiral. But as I like to look at things on a root level which is an energetic level of money being the time and energy of human beings then I hope you can envision this as a black hole of compounding interest sucking in the time and energy of the collective of all human beings. This is our current financial model. It is way beyond something that is simply not designed right or not working right it has the absolute optimum negative effect it can without collapsing in on itself, to put simply you couldn’t have a worse monetary system if you tried.
See part 3 to see how the history of how this come about.