Thursday, November 29, 2018

Money is an agreement, within a community, to use something as a means of payment.

Today, money is an agreement, within a community, to use something as a means of payment.

Sadly, today's money is used mainly as a means of payment rather than a "medium of exchange" which is used in the past.

4 features of (normal) money today:

1) Money is geographically attached to a nation state.
2) Money is 'fiat' money -- created out of nothing.
3) Money is created by bank debt.
4) Bank debt against payment of interest.

1) (Normal) Money creates a bond between countries divided by an invisible line. This arrange has serious consequences for all participants and value and exchange can change drastically, affecting the lives of many people without their ability to do anything about it.

Political corruption, chronic shortages of food and medicine, closure of companies, unemployment, deterioration of productivity and high dependence on oil have also contributed to the worsening crisis. Currency devaluation makes everything not affordable my the locals and causing a hyper inflation. (Instability of national currencies)

2) Money is created out of nothing -- like magic. Central bank can create money when needed.

3) The dollar started out as a bank loan. When you buy a car and request for a loan, the bank will magically create a deposit in the seller's account and you have to reimburse the loan until it is destroyed.

Debt money derives its value from scarcity relative to its usefulness. The scarcity has to be artificially and systematically introduced and maintained. Central banks play a role in their currency intentionally scarce to maintain relative value and this system in a fiat currency system is not self regulating.

4) Interest is a recent phenomena and the effects (to service the loan) are pervasive and powerful.
a) Interest indirectly encourages systematic competition among the participants in the system.
b) Interest fuels the need for endless economic growth, even when living standards remain the same.
c) Interest concentrates wealth by taxing the majority in favor of the rich.

In the fourth industrial revolution, a bold change to what we know as money is needed, otherwise the concentration of wealth and income inequality would be exponentially worse. Coupled with a climate change, an aging population and uncontrolled population growth, it is true that while money has the potential for abundance, sustainability and peace of mind; it can also engender unending suffering and hardship.

-- Robin Low


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