…Economic lackeys and government minions will tell you that “greed is good” and that acting in self interest is beneficial the world over, but curiously enough, when you lay out the above line of logic, they will dismiss it as the “rants of a loser, pushing his own self-interests.” At least that’s what I have been told. I took it to mean that I was on the right track…
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Hey – that’s right. Real Money grows on trees! And you can grow more Real Money from Real Money. This doesn’t sound right does it? That’s because you should have taken the Red pill. We need to pinpoint your input/output carrier signal and transmogrify your brain.
Look, let’s start with the principles first. Suppose you decide to build a chocolate cake and you start with 5 pounds of Portland Cement. You don’t have to be Mister Wizard to see that all that follows will be bunk. All science is that way. If the fundamental, foundational assumptions are wrong then virtually everything that follows will be wrong. And so it is with money versus Real Money.
The barter system is, indisputably, humanity’s first, last, and only Natural money system. There is no other. And as such, it serves as a faithful yardstick with which we can measure the reliability of any other money system. This paper does not argue for a return to the barter system, but it is hard to deny that barter is a far simpler and more equitable system than that used by the US Federal Reserve Bank today.
Barter is what I call Real Money, because it’s … um, … real. When Smith trades Jones a bushel of wheat for a bushel of corn, economists tell us (it’s what they teach in college economics classes, no kidding !) that we have a “moneyless barter transaction”. That is such an inconceivably gross error that its hard not to view it as anything but an obvious attempt at deception.
In TRUTH, what we have in a barter transaction, is two sales and two purchases, in one concise, efficient, transparent, equitable transaction. Where is the money? The money is the corn and the wheat. In the barter system, commodities were used as money. Smith is using wheat AS money; Jones is using corn AS money. You can also use labor as money, and trade a days labor for a ton of bricks.
What we are forcibly trained to neglect is that the word “money” like the word “medicine” is a collective noun; you can use something AS medicine, just as you can use something AS money. You can use peaches AS food, AS medicine, or you can use them AS money – and you can grow more peaches from peaches. Throughout human history people have used all kinds of things AS money: seashells, rocks, beads, metals … even fancy engraved colored paper in some primitive societies . In the U.S., tobacco was used AS money for 200 years in Virginia and the leaves – until recently – decorated U.S. notes to attest to that fact (Were you wondering why the sudden need to change the layout of the dollar? This is a clue). That is to say, Virginia was happily on a successful barter system for a good long period – no problem.
Economic lackeys and government minions will tell you that “greed is good” and that acting in self interest is beneficial the world over, but curiously enough, when you lay out the above line of logic, they will dismiss it as the “rants of a loser, pushing his own self-interests.” At least that’s what I have been told. I took it to mean that I was on the right track.
One of the points that I hope to get straight here is the misguided claim by various groups and individuals around the world, that “you can’t grow money from money” and “money doesn’t grow on trees,” or they insist on a return to the gold standard. It’s clear to most that the Fed’s system functions only to the benefit of a few, but when people make such demands … well,… the Governmental Money Cabal has a good laugh and passes out the cognac and cigars. These claims are too simplistic to address. Their smugness is unjustified of course, but since the general public is so uneducated in this area, the Money Men and their system are never really challenged. And since their system is infinitely worse than the barter system — invented, as it was, over thousands of years by a bunch of inbred, criminally insane neolithic mutants — that smugness is an enormous, and even catastrophic, danger.
For a more level-headed assessment of the psychological state of the U.S. see:
- Psychoanalysts for Peace and Justice
http://psychoanalystsopposewar.org/ - Kurt Vonnegut
http://www.informationclearinghouse.info/article13659.htm
If you are with me so far you should notice that notice a couple things become clear about the barter system:
1) Anyone who produces a product or service is the potential creator of Real Money – it’s not the job of banks or governments to create it. Conversely people who produce no usable product or service (economists or politicians, for example) have no means to create Real Money and poverty is their lot.
2) Since Real Money is everything and anything, using gold and silver as money has a problem. Metals are PART of the system and a PART can never represent the WHOLE. When you are doing things like building space shuttles or rebuilding Moslem cities you have just nuked, you run out of gold and silver. A money system has to be larger than allowed by precious metals. If you question this then just try to figure out how much gold would be needed to pay roughly 3 billion paychecks each week. I won’t bother because I already know there is not enough gold – even at $1000 / ounce.
3) The barter system cannot collapse — has never collapsed.
4) There is such a thing as “excess money.” Notice that in the barter system, the designation of a product as “money” is ephemeral. One minute it’s money; the next minute it is NOT money; its food or medicine etc. There is such a thing as “excess money.” Nobody has ever addressed this conundrum, and I will continue that tradition here.
The system U.S. economists use today is “CREDIT;” they create money by lending it into existence (remember “monetize the debt” ?). For example – when you buy a house through a bank, the banker will hand the seller a check for the sales price, 90% of which money never existed before. It’s called “Fractional Reserve Lending” (google it!). Since most people are required to put 20% cash down on a house, banks have a virtually unlimited ability to create money from ether. There’s (obviously) a HUGE number of problems with that. Here are just a few:
1) It cripples the individual by taking money creation out of their hands and concentrating that power into the hands of a few fat vain domineering white men who then decide whether a white man, or a black man, or any minority, or a woman is “creditworthy.” Guess who always wins. (SEE: “Blacks And Hispanics Pay Higher Interest On Mortgages” June 1, 2006)
The same applies to ‘loans’ from one nation to another. Charging South American countries 26% interest for a “loan” of dollars that was simply invented by an American bank, is still not a crime in the US. Most manufacturers sell products that require time, labor and material to produce. Cars cannot be invented from nothing; groceries cannot be invented from nothing … but somehow money can . . . . and worse, . . . . exorbitant rates of interest are charged for this fictional money.
2) Credit is infinite; the world is not. Credit has its place, but to use unregulated credit as the whole of the circulating money system for a nation, can only be described as certifiably and criminally insane. Credit and Real Money are two different things and the currencies that result from them must logically be separated. For the more curious thinkers on this subject I recommend the story of John Law. The reason his scam failed was that there was, at that time, ANOTHER money system, an alternative, through which people could save themselves. Today, in what the Fed Boys consider a masterful stroke, that alternative has been utterly removed: the system “cannot” crash. (SEE: http://www.litrix.com/madraven/madne002.htm)
3) It avoids the term “fiat (issued on a whim) money” on a technicality, while maintaining all the negative traits of a fiat currency.
4) It guarantees that the most rapacious projects will be funded by considering profitability as the ONLY deciding factor for a loan — and thus for money creation. Given the choice between lending to a company that will cut down the entire Amazon rain forest (mucho profits) or lending to a community for a school (nil profits), it’s the school that will always lose to the profitability of the rain forest. So the deforestation MUST continue (because we HAVE to have money circulating) while schools and other civic projects will always need to be funded by money already in circulation — a permanent handicap. Since the system requires circulating money from somewhere, there must always be those onerous devastating businesses to create it.
5) The standard refrain is: “Barter is too complex and there’s no wiggle room” but that is exactly what is wrong with the credit money system: it is infinitely more complex than barter, and there is way too much wiggle room for bankers, who essentially do as they please.
6) Real Money is everything. Your house, your cows, your labor, your trees, your jewelry — all can be used as Real Money. So managing Real Money becomes a strategy: If you store gold, it will keep its value better that storing tobacco; chickens grow and multiply; gold does not,- and so on. So to use a system of credit to turn out generic one-size-fits-all notes called “money” cannot help but present problems.
And the REAL problem is that people who have credit money in the bank think they are rich when only the inverse is true; credit money is debt and offers no security whatsoever.
There’s more, much more, but you get the gist . . . none of the benefits that can be found in the barter system can be found in today’s Credit Money because the fundamentals of the recipe is wrong. If you want a chocolate cake, then don’t start with 5 pounds of cement.
Written by J. Walter Plinge [send him email] who is a writer / researcher / monetary theorist / plumber / electrician, and a U.S. refugee living in France. He says: “20 years after I got my MFA in art, I realized I was more interested in writing.” Walter is a regular contributor to www.populistamerica.com