"When the people of the world have a common monetary language, completely freed from every government, it will so facilitate and stabilize exchange that peace and prosperity will ensue even without world government." "A union of peoples, rather than a union of political governments, is what this world needs." "~E.C Riegel, monetary theorist The New Approach to Freedom 1949" "Money as Debt III" "Evolution Beyond Money" "The Challenge" "Life has always been a challenge." "When one has a problem and wishes to solve it, first one must determine what is the root cause of the problem." "Simple problems have simple solutions, complex problems are, well..." "more complex." "An obvious problem with our current financial system is that it rewards greed and corruption." "Greed and corruption seem to be everywhere." "But are greed and corruption the root causes of the problem or are they the result of the way the system is built?" "Logically, one should first ask are there built-in reasons why the system works the way it does, and if there are, can they be built out?" "Interest Stock  Flow" "Some say the basic reason the system is unstable, and leads inevitably to corruption, is the charging of interest." "As explained earlier in this series, in our current bank credit as money system, the principal amount of a bank loan is simply created from the borrower's promise to pay back the principal plus interest in money." "But the money to pay the interest is not created." "The obvious, but untrue conclusion, is that it would therefore be mathematically impossible to pay off all debts." "Many who call for money reform call for the abolition of interest as the solution to the problem." "But is interest really the problem?" "Yes, there would be a serious mathematical shortage if all loans where concurrent and had to be paid back in one lump sum." "That problem might apply to gangland loans and sometimes to farm loans but that's not how the banking system works in general." "Bank loans usually get paid back in a series of payments over a period of time, and for good reason." "Money is both a stock, the amount in existence at any one time, and a flow, the transactions over time that the money is used for." "Flow works like this:" "if I, the rich guy, lend you a dollar and that was the only dollar in existence, the stock, could you pay me back 100 dollars?" "Well, if it had to be paid in one lump sum, no." "That other 99 dollars, the interest on the loan, would be impossible to pay." "It would be impossible to pay even in 2 dollar payments because there's only 1 dollar in existence." "But if I let you pay me the 100 dollars in 1 dollar payments, magic happens." "In fact, in 1 dollar payments you could pay me back any amount of interest, if you lived long enough." "The only condition required to make full payment of a 100 dollar debt with only 1 dollar in existence is that I give you the opportunity to earn, or otherwise get that dollar back, each time you pay it to me." "This is the flow." "And by means of the flow, the same dollar can be paid any number of times and becomes effectively many dollars, all legitimately representing the work done to earn them." "It is always the work, the real value, that pays the debt and gives the dollar its value, not the dollar itself." "The relationship in our example is dreadfully unequal because the man with the money has enslaved the man without it, just like the real-world, some would say." "But a simple loan at interest need not produce a shortage of money or cause unpayable debt if flow is 100 percent, as in our example." "Flow is the real measure of economic activity." "It's much more significant than the stock in the money system because it multiplies the effect of money in circulation." "Given that today we use an exclusively debt money system, what is flowing in all these transactions is credit or promises to pay money." "This credit is ultimately nothing more than promises of borrowers to pay this credit back, usually according to a time schedule, and usually with interest added." "To pay this credit back, most of us will have to work and earn it by being productive." "So, therefore the real value of the money that flows in our economy today is created by our promises of future productive work." "We take a loan in order to have something now rather than later." "We agree to pay interest on into the future, thus reducing our future spending power, often by more than the amount of the original loan." "However, with an understanding of flow, we see that there is no intractable arithmetic problem with the charging of interest." "The problem is a social and systemic one." "Lenders have neither obligation nor incentive to spend all their interest income so that the borrowers can earn it again and again." "In fact, money lent once into existence is lent as existing money a second and third time in expectation of more gain." "The problem is basically one of incomplete recycling, where money needs to be spent, earned and used to extinguish the debt that created it, it is instead lent or invested for gain." "In other words, money that must be extinguished is instead expected to grow forever." "Money Lent Twice" "Here's another simple example of a basic mechanism inherent to all lending." "Let's say I lend you 100 dollars and you spend it into circulation." "It eventually ends up in the possession of someone who doesn't need to spend it and decides to lend it instead." "Now, once again, let's say this is the only 100 dollars in existence." "So you have to borrow it from the secondary lender in order to pay off your debt to me." "But now you have to borrow it from me to pay the secondary lender." "This twice lent money has become a perpetually unpayable debt." "This debt can never be extinguished, nor even reduced without a default." "Notice that interest doesn't even enter into this equation." "The problem of perpetual debt remains, interest or no." "And even if the money itself is of intrinsic value, like gold or silver, or if it is issued by governments as cash, twice lent money creates perpetual debt exactly the same way." "When the same money is lent at interest, several times simultaneously, not only is the debt perpetual, society as a whole is paying moneylenders multiples of the interest-rate for the use of the same money." "There's an expectations that existing money should increase indefinitely by being lent at interest." "But thisr equires us to mentally divorce the money from the debt from which it came." "However, the reality is, every dollar created today has a scheduled appointment to be extinguished as a principal payment on the loan that created it." "And that's why debt money can't be separated from the debt that created it." "It's like a yo-yo spun out into circulation in the economy for a while and then pulled back in at the appointed time." "In order for the yo-yo to be free to return, all of the debt money needed to extinguish the debt has to be available to be earned." "The flow must be complete." "Can't we just pay off these debts with other money?" "But what would other money be?" "Today, the amount of physical cash and coin in circulation is very small." "Almost all money is bank credit, debt money." "So if almost all money comes into existence the same way, then its a valid to picture each debt money dollar as having its own cycle, from creation to destruction." "So, the question, can we pay off debts with other money?" "No, there is no other money!" "Because all of it is similarly committed to debt in one form or another." "Therefore, the only way to insure current payments can be made is to constantly increase the total amount of money in the system." "But more money in a debt money system means more debt, so the debt hole in reality just deepens." "Since debt is money in this system it creates the fantasy of wealth... for a while." "But fantasies must come to an end." "The day of reckoning can be pushed back but only by passing the debt onto generations yet unborn, which is precisely what we're doing now." "Government debt piles up endlessly." "Corporate debt piles up, consumer debt too." "As long as total debt keeps increasing, the system can stay ahead of the debt monster." "But all of this debt is an absurd fantasy that our descendants will surely never repay." "Nor would they be advised to as repayment of debt would eliminate the money stock and plunge the world into a depression." "Once real growth levels off due to the inherent limits of human productivity, or the limited resources of a finite planet, this growth dependent money system can only resolve its impossible arithmetic in the destruction of value." "This can either happened through a deflationary spiral of credit defaults, falling prices or by the devaluation of the money unit." "Taken to extremes, either course of events will destroy an economy and even a civilization." "The only other choice is debt forgiveness." "In the ancient world, a regular debt jubilee, a society wide forgiveness of debts, was a common practice to deal with these unavoidable problems with lending." "It was considered normal, even by the rich and powerful, that the general good of society took precedence over the rights of those rich enough to be lending money for profit." "Neither a borrower nor a lender be." "~William Shakespeare, Hamlet" "Hard Money" "Some say that the money systems problems would be solved if we returned to using gold for money, or silver, or some other limited or hard commodity like oil or energy in general." "They argue that this prevents money from being created in excess and backs it with real value." "However, it also makes those who actually possess the selected physical substance, the only ones with real money." "Everyone else would only have a claim on real money." "For instance, gold." "How would we ever transition back to a honest gold economy with a natural distribution of gold among the population?" "That's long gone." "And why would we want to do that?" "The gold based money system is our past, it's how we got to where we are today." "Gold is inconvenient, even more so was a barrel of oil." "Therefore, whether gold, oil or kumquats, trade will be carried out in promises." "The real question is if we are going to trade using promises of delivering something of real value, why gold?" "In fact, why any single commodity?" "At this time in our evolution, doesn't this very old idea of money merit serious re-examination?" "Debts  Promises" "It can be argued, that our current elastic debt money is backed by real value, every bit as meaningfully as gold." "That's because money, most of which is created as mortgages, represents the value of the assets pledged as collateral." "So is bank credit money actually a claim on the real-estate pledged to create it?" "Not directly." "Bank credit money can be a claim on anything." "Now, anything includes the real-estate pledged as collateral, so it can be a claim on the real-estate that was pledged to create it." "So how is a promise of real-estate any less valid than a promise of gold?" "Both gold and real-estate can change value relative to other commodities." "Neither is a permanent standard." "In fact, there can never be a permanent standard of value because value is always subjective and variable." "So it would seem that the crucial difference between a claim on gold and bank credit is that bank credit is not a claim on any specific real thing, while the promise of gold is." "The promise of gold has to be a promise of a specific amount of a specific real thing from a specific promiser." "Isn't that the essential reason why many people would consider a promise of gold the better promise?" "But that is only true if the promise is reliable and what is delivered is really gold." "With the discovery that some of the gold bullion sitting in central banks is actually relatively worthless tungsten plated in gold, the whole argument that gold is the most solid reliable money is shown to be neither solid, nor reliable." "Precious metal is susceptible to counterfeiting, it's heavy and it's vulnerable to theft." "So to return to commerce via the physical exchange of precious metal coins would mean civilization had reverted to a pre-electronic level of technology." "In the absence of such a collapse, the economy would still windup running on promises, just as it does now." "So once again, money would only be as good as the promises made and there would be no need of actual precious metal coins if all transactions were carried out with promises." "The VALUE of the coin is the MEASURING UNIT" "Money is the Measure by which Goods are Valued, the Value by which goods are Exchanged, and in which Contracts are made payable." "Every thing receives a Value from its use, and the Value is raised, according to its Quality, Quantity and Demand." "Money is not the Value for which Goods are exchanged, but the Value by which they are Exchanged." "~John Law, political economist, 1705" "The Fundamental Questions" "The fundamental question is:" "What does the need for money, to enable trade, have to do with the amount of some shiny metal there is?" "Or the amount of any single natural resource or commodity, or real-estate, for that matter?" "Where is there any meaningful relationship between the functional need for money and any of these things?" "To answer that question, let's go back in time and find out when money started and why it became what it is today." "We know that Stone age people had money." "In the Stone age, before writing was invented, money had to be a portable object of value, because that was the only technology available." "That's why rare shells and stones, from which jewellery could be made, were ideal as money." "A rough standard of value for these money objects developed over large areas, enabling extensive networks of indirect trading." "This way people could obtain specialty items not available in their own environment and looked good doing it." "The popular concept of jewellery as a store of value has continued to this day." "In later agricultural civilizations, cattle were often the standard value objects for large transactions and salt for small ones." "Salt was rare in those days and valuable." "Roman soldiers were paid in salt, thus the term "salary", meaning payment for services." "With the invention of writing, trade and other commodities could be carried out using promises of cattle and salt." "The cattle and salt weren't necessarily what was finally delivered." "They were just commonly understood units of value in which the real trade goods could be conveniently priced." "Written credits were expressed in these two common units, although they represented a variety of real goods and services." "This form of money was ideal for local economies, where traders were known to each other and pledges could be collected upon." "This voucher redeemable for pottery  tile - potter" "This voucher redeemable for boats  sails - boat builder" "Agricultural surpluses allowed some people to leave the farming to others and specialize in particular crafts." "This resulted in improved skills and better tools and that led to further gains in productivity." "This specialization of labour required increased trade, as more people opted to produce a single item of enhanced value." "They would then need to trade their specialty for the broad spectrum of necessities that past generations had produced for themselves." "But direct barter was inefficient." "So more trade lead to a greater need for money." "Over many centuries, various forms of money where tried." "Eventually, gold and silver coins proved to be the most useful money objects because they were conveniently portable, and similarly valued across large areas of the civilized world." "They where also easily standardized for weight and purity, and did not require enforcement of value by some authority, nor redemption in goods from someone far away." "Thus, for very good reasons, gold and silver became the universally successful international currencies, accepted as final payment of debt almost everywhere." "Money as a Single Uniform Commodity" "The problem with a system in which money is a standard commodity is that it is most efficient when only one standard commodity is used, but if you do that, it makes the value of money exclusively dependent on the quantity of that one commodity" "in relation to all other commodities." "For example, the Spanish thought they would be fabulously wealthy with all the gold they stole from the Aztecs and the Incas and then turned into money back home." "But when the gold got back to Europe, sure, the amount of gold increased, but it didn't increase real productivity and proportion." "Fertilizer would have been more useful for that." "So, because there was no big increase in real stuff to buy with it, the value of gold decreased, and the Spaniards discovered that gold had no absolute money value in itself as many people had imagined it would." "Its value was determined by its abundance relative to the value of real goods and services to be bought." "Yet many continue to argue that the value of gold, a luxury item of no practical use to most people, should be the measure of value for all the real goods and services essential to our lives." "While some campaign for a return to gold, others mistakenly believe that today's money still does represent gold held in a vault somewhere." "That hasn't been true for decades." "In our current money system, we use national fiat currencies and bank promises to pay in national currencies as the standard commodity instead of gold." "National currencies used to be promises to pay in gold or silver." "But way more promises were made than could be honoured... so that system fell apart." "Today, national currency is just legally enforced money, what they call "Fiat Money"." "That is, it's money you have to accept because the government says so." "To many, this government fiat money is just worthless paper." "But is it really?" "We can pay our taxes with it, and governments, especially local ones, provide essential services paid for with those taxes, like roads, schools, hospitals, libraries, police and military." "So government fiat money isn't worthless at all." "Now it is true that consumers of government services have no individual free market choice as to what their tax money is spent on and what services they receive." "In fact, many taxpayers may not want those services." "So, therefore, this money can rightly be accused of being monopolistic, coercive and socialist." "But government is coercive, monopolistic and socialist by nature, isn't it?" "What else should it be?" "Government in a democracy or a republic is ideally a single authority, empowered by society to enforce laws agreed upon by society for its own collective benefit." "In a free market economy, government must provide the level playing field of law within which the free market can function." "And it also has to provide the referees to enforce the rules of the game." "Those who are nostalgic for the freedom of the frontier, should recall that the first thing early settlers usually did was elect a sheriff, and build a jail and collect taxes to pay for both..." "for good reason." "So government fiat money isn't inherently worthless by nature." "Governments at all levels offer vital services in exchange for it." "It only becomes worthless when government creates too much of it." "Which it often does and for the worst reasons." "While many reformers are fixated on the differences between gold and fiat currency, what's more important is the essential similarity." "Being single uniform commodities, gold, silver, national currencies and bank credit, all share the characteristic common to moneis for millennia past:" "the more money there is relative to the real things available to buy, the less the money unit is worth." "Thus the total quantity of money in circulation is extremely important to maintaining the general price levels." "And today, this quantity is largely determined by the demand for new money to purchase real estate and speculative equities." "This makes the supply of money for general trade particularly vulnerable to real estate and stock market bubbles." "fantasy wealth real wealth destruction" "OH NO, IT HAPPENED AGAIN!" "The Concentration of Wealth" "Perhaps the most significant problem with money as a single commodity is its tendency to concentrate wealth." "Those who have no money must get it from those who have it to lend." "Anyone with extra money can lend it at interest and if, rather than spending all of the interest, they add any of it to their lending capital, they will accumulate even more money to lend." "One reputable study counted all the ways we pay interest, directly on our own debt, and indirectly in prices and taxes for corporate and government debt." "This was compared to the interest we earn from all sources." "This study found that only the richest ten percent come out ahead." "The next ten percent do little better than break even and the remaining 80% pay more than they receive, the poorest losing out the most." "Payment in Money" "Now, in our current bank credit system, money is created as debt to banks." "This debt is required to be repaid to the banks in money, either fiat cash or bank credit." "Therefore, the ability of all borrowers to repay depends on the availability of fiat cash or bank credit." "The supply fiat cash is controlled by the nation's central bank." "But flat cash makes up only a very small proportion of money." "Usually about 95% of all money is bank credit." "And who controls the availability of bank credit?" "The banks?" "!" "Well, on the one hand, what the banks can do is constrict the supply of credit anytime they want to, with high interest rates or by just not granting loans." "On the other hand, the banks could lower interest rates and encourage borrowing, but, they can't expand the money supply, unless borrowers are willing to borrow." "If cautious and reliable borrowers are in short supply, banks must take bigger risks as interest must be paid to depositors and banks cost money to run." "The bank credit money supply is, as they say, "highly elastic"." "And, because its based on the willingness of borrowers to borrow and the reliability of borrowers' credit, it is vulnerable to both rapid expansion and drastic shrinkage." "Also, everyone is legally obliged to pay in money." "Now money, in reality, is just an accounting of debt." "And accounting follows strict rules." "So the whole situation is governed by inflexible numbers." "That's why a sudden shrinkage in the money supply caused by some defaults has the inevitable follow-up effect of causing more and more defaults and even more shrinkage of the money supply." "This self reinforcing downwards suction leads us into economic collapse and the economic and social absurdity of unemployed, dispossessed people camping outside their empty, vandalized homes." "And what does the government do about it?" "It loads bankrupt taxpayers with astronomical fantasy debt that will never even be reduced, never mind paid off." "A TRILLION used to be a big number" "Not anymore!" "The BANK ASSETS lost were PROMISES to pay legal tender the banks NEVER HAD" "All this is done to fill up the negative balance sheets of the banks with money the banks never had in the first place." "Now you, the taxpayer, will pay interest on those "losses" FOREVER!" "And then they use it to pay themselves obscene bonuses!" "Life is GOOD..." "Life is good for those who know how to play the system." "when the PROFITS are YOURS... the losses are forced onto the taxpayers" "The bailout scam was the biggest daylight robbery in the history of the world..." "so far!" "and the government puts YOU in charge of making sure it "never happens again"!" "It's the System!" "All of these tendencies of the money as commodity system are features of the system itself." "The greed and corruption comes in as those who understand the system profitably surf the inevitable waves of boom and bust." "Those who understand the system know what's coming, and even precipitate it when the time is ripe for them to take advantage of disastrous mass events for their personal and political gain." "But it's the structure of the system itself which gives them the opportunity." "Without the wave, there would be no surfing!" "And they've taken this opportunity over and over again since ancient times." "People complain of the injustice..." "blame each other, blame the Left or the Right or whoever the scapegoat of choice is." "But they never really catch on to the reasons this keeps happening." "That's because most of us shy away from trying to understand the true nature of money and of freedom." "The basis of freedom is essentially the freedom to exchange... goods, services, ideas." "If you create something in proven demand, you and only you, should have the right and the freedom to create and spend the credit money needed by someone to buy it." "Money as a portable uniform commodity was invented a very long time ago." "Pretty stone..." "maybe good for trade" "It was the only choice using the technological means available at that time." "But times have changed." "So why is this outmoded technology still the prevailing concept we have for money?" "Could we go beyond money as we've known it?" "Could there be a new basis, a fresh concept, a design that could more effectively address the real purpose of money in the 21st century?" ""We cannot solve our problems with the same thinking we used when we created them. " ~Albert Einstein" ""I am enough of an artist to draw freely upon my imagination." "Imagination is more important than knowledge." "Knowledge is limited." "Imagination encircles the world." "~Albert Einstein" "Only a revolution in the mind of the individual is needed to accomplish the greatest stroke for freedom of all time." "It is a remarkable fact that no constitution of any state, nor any declaration of human rights, has ever proclaimed the right of freedom of money issue." "Yet this right is inseparable from the right of bargain or exchange, which is the very foundation of liberty." "Man's ignorance of the laws of money has blinded him to the very touchstone of freedom." "You are indeed sovereign, if you but realize that your money power is your sovereign power." "You need no political laws to liberate your power for prosperity and peace;" "you are the master of your fate by natural law, if you but discover that law." "As you scan the world scene with all its miseries, its drab outlook, the discouraging prospect of a solution for humanity's problems by political means, and the remoteness from you of the capitols through which promised salvation is desperately hoped for, you are saddened be a sense of frustration." "But if you realized that the citadel of power is your own home and that yours is the majesty and sovereignty, sadness will be dispelled by gladness." "To bring this transformation you must comprehend the power of money and that you are the money power." "~E.C. Riegel, monetary theorist The New Approach to Freedom 1949" "Monetary Reform Movements" "Gold" "Awareness of the need for real change in the money system is growing." "But what direction to take, what exactly is the problem and how can it be solved?" "The safest and only real choice, many people argue, is to return to gold or a gold standard because this worked for millennia in the past." "But gold itself is impractical for transactions in the modern world." "It was impractical centuries ago, which is why the promise to pay gold system developed." "And so it is certain that, in practice, transactions would be conducted in promises to pay gold, not gold itself." "Thus, the promises to pay gold money will only be as reliable as the promises." "So, in reality, it isn't the gold that makes the system work, it's the reliability of promises." "Would they be reliable promises?" "Maybe." "But what we would be using as money would be like the old goldsmiths promises, made in the knowledge that only rarely does anyone ever ask for real gold." "This was the problem with the goldsmiths situation." "The real gold was seldom claimed, allowing fraudulent promises of gold to be made and used as money." "Why would history not repeat itself if all the same elements remained in place?" "Another thing." "What most people say they like about the gold system is that the promise of gold money is a promise of a specific amount of real value." "Now this is an odd idea, given that the vast majority of us have no use for gold." "So how much real value can it have for us?" "Wouldn't a promise redeemable in food, clothing or shelter be much more real?" "People also like the idea that gold is just gold, it doesn't need a government to create it." "However, it does need miners." "In a gold money system, mining discoveries, jewellery making, industrial use, hoarding and counterfeit bars of gold-plated tungsten, would all influence the money stock." "What on earth does any of that have to do with the need for money for trade?" "Lastly, gold as money is a single uniform commodity manifesting all the inherent mathematical defects of lending, demonstrated in part one of this movie." "Being a coin with intrinsic value doesn't make any difference." "A lot of gold and silvers appeal comes from a belief in an oversimplified version of history." "People assume that coins were invented to standardize the inherent value of the metal they contain." "This is true, but right from the beginning, some of the earliest coins were created based on a diametrically opposed idea." "This was done because the rulers at that time foresaw the inevitable negative consequences of using limited supplies of precious metals as money." "Therefore, they chose to avoid that route." "Instead of precious metals, these rulers struck coins of iron or copper and defined their value by decree." "What's more, these coins by decree were heated and dipped in vinegar, so the metal they contained would have no intrinsic value." "These coins were in fact the original and true fiat money." "They were merely tokens of value, money created by law and enforced by the ruler's authority." "And I can force my subjects to accept it" "Fiat Monopoly" "Pure flat money is the other main idea favoured by money reformers." "They would restore flat money to its true status as a national government monopoly on money creation." "This current of money reform, in stark contrast to the the gold advocates, insists that true money is fiat money by authority of the State." "This money is to be simply spent into existence as a promise by the State to accept the same money back in payment of taxes." "The taxes are compulsory and the State also promises to enforce the acceptance of this money in court." "These are very reliable promises and can result in very reliable money, if not abused." "The problem these flat money reformers have with the current system is that government has given away this power to private bankers and is now borrowing at interest money it could create itself with a few keystrokes, just like the banks do." "This results in a massive unplayable national debt on which interest will forever be paid." "This ever growing national debt expands the money supply when new money is created by the Central Bank to buy more government debt." "And the interest burden passed on through taxes adds to the cost of almost everything we buy one way or another." "In contrast to money being created as national debt, fiat money simply spent into existence would save the taxpayers immense sums of interest." "It would free future generations from impossible debt and it would forestall the tendency to inflation because the money supply would not grow forever with the national debt, as there would be no national debt." "In the fiat money system, taking flat money out of circulation by means of taxes preserves or restores the value of the remaining money in circulation." "Not taxing it back sufficiently would devalue it." "Understanding the proper use of government fiat money is a revelation." "If you can charge prices or taxes for something in the future, you can issue that much new money now because it is your valuable services to others and the reliability of your promises that create the real value of any money." "The government can honour its promises to accept its money back in taxes and it will make your debtors pay you in government fiat money if you take them to court." "These are good reasons why government issued money works now and why it would work if governments just self issue this credit, instead of borrowing it from banks." "But in this pure fiat money system, the money supply must still be determined by a central authority." "Therefore, the money supply is still limited, monopolistic and managed from above." "They have the power to create money and you have to get the money for them." "They also have the power to create way too much money and spend it on wars and other unproductive activities without the approval of those whose productivity gives that money its value." "In the current system, these inflationary debts are now beyond absurd, threatening to crash the entire system and drag the whole world into chaos." "To save themselves, governments are now laying impossible claims upon the productivity of generations yet unborn, a truly hopeless cause given the overall world situation." "Witnessing government performance to date, many people believe that returning the full power to create money to corrupt, incompetent politicians, would not only fail to solve our problems, it would be the height of insanity." "It would really all depend on the quality of the people in government." "Fiat money reformers believe there would have to be a substantial revolution in government to rest this power back from the banks." "Therefore, they believe it would be reasonable to expect that honest and competent people with a sincere concern for the public good would be in charge." "But, good guys or bad, we would still be dependent on some distant someone else to maintain the value of our money." "And they would have a thousand pressures and temptations to enrich themselves by not doing so." "And like gold is money, government fiat money is a single uniform commodity manifesting all the inherent mathematical defects of lending at interest and twice lent money." "Once the government creates the fiat money and it goes into the banking system to be lent at interest, the problems created in the current system will continue as before." "So, this pure fiat money idea might be very useful in rescuing governments from their own hopeless financial positions, and it is a limited example of the self-issued credit principle being advocated here." "But pure fiat money would not address the root problems inherent in the math of lending unless the principal were expanded beyond government." "Advocates of pure fiat money like to claim it is money created by law, as if it were independent of economics." "But if new fiat money were just spent into existence, year after year, without being removed from circulation as taxes, it would become worthless." "What these flat reformers tend to ignore when quoting history is that, in ancient money created-by-law systems, the prices of critical commodities were also dictated by law." "In fact, the value of money was defined by the ruler as so much of a certain commodity." "Charge more or less for the designated commodities and it could be off with your head!" "Today, price controls like this, could only be achieved in a self isolated and totally bureaucratically controlled economy, like Soviet communism." "In a free market global economy, money created by law is bound by the same laws of supply and demand as any other single uniform commodity money." "In other words, pure fiat money in a free market is an illusion." "There is no such thing." "Self-Issued Credit" "In the third stream of money reform are the various types of so-called "alternative" currencies, all of them based on some concept of money being created as self-issued credit." "Many examples of such systems exist today all over the world." "Some are very successful business to business barter networks, in which businesses create product credit money to use among themselves independent of banks and government and usually interest-free." "Such systems are tolerated, and in Switzerland, the existence of the WIR system is generally credited with stabilizing the banking system by expanding when the conventional system contracts and vice versa." "But in the past, when they became too successful, alternative currencies were usually suppressed by the banking system or even outlawed by government." "So, "act of suppression", is the most significant external problem." "The most common inherent problems with these systems are their limited scope and acceptance, their operating costs and the unreliability of member credit." "What the conventional banking system provides, worldwide reach, affordability, credit checks and debt enforcement, are the necessary services that are usually inadequate or prohibitively expensive in the alternative systems." "Once the small group of idealistic and honest originators are joined by members exhibiting the full range of human behaviour, alternative systems discover they must deal with cheaters." "Some are deliberately cheaters, others just not to conscientious about their debts." "And at the opposite end of the spectrum are the hyper conscientious people who wont issue credit because they are afraid they wont be able to fulfil it." "The self-issued credit system cannot work if the members are afraid of issuing credit." "And that is why it makes far more sense that government and essential industries like farming, forestry, mining, manufacturing and construction should be the main and widely accepted sources of self-issued credit, not vulnerable individuals trading haircuts for pottery." "However, we are talking about creating a truly liberated system of exchange." "Therefore, in this proposed new system, anyone would have the freedom to issue credit, because only voluntary acceptance would determine the circulation of it." "The cost of accounting in self-issued credit systems could be overcome entirely by emerging technologies allowing the creation of a digital coin." "Digital coins could be passed from one owner to another, peer-to-peer, so that no bookkeeping and no third party involvement, like banks and pay-pal, is required." "This leaves only the problem of achieving global spread." "Thanks to technology again, this could now be achieved at little cost and at the same rate and with the same ease that the existing social networks, like facebook and twitter, have spread." "So there is a positive answer to all the questions we have posed in this movie." "And there is a solution that has the potential to unite the three seemingly conflicting schools of money reform into one cohesive movement for fundamental monetary change." "Because, when examined closely, be it gold, tax receipts or someone's goods and services, all three schools of money reform are really calling for the same thing:" "money that is redeemable for something specific from someone specific." "Once one comes to that realization, it becomes obvious that self issued credit, for the full range of goods and services in demand, would necessarily include gold, silver and government tax receipts, as these are also things in demand." "We just need to look beyond obsolete beliefs to see the heart of the situation." "The all-inclusive self-issued credit system, the basis for almost all so-called "alternative" currencies, could contain within it both the precious metal and the payable-for-tax models of money without any contradiction." "Self-Issued Credit Taxes PAID" "Conclusion" "Money has both religious and social histories that are fascinating and go well beyond just the need for trade." "But for our practical purposes in this presentation, money is the invention that overcame the limitations of direct barter." "Money is, therefore, a technology, a way to solve a problem." "Most of us would agree that we have a problem with our money system." "This is no surprise once we realize the current system was designed by bankers in their own interest and governments wanting to pump out artificial money to wage war and pay for it with a hidden form of taxation called inflation." "It was not a well-thought-out project of mathematicians and engineers seeking to create a money system for the general benefit of humankind." "There are now many people, including mathematicians, engineers, and even cartoonists, trying to rethink money, as the need to do so becomes obvious." "In this presentation, we've proposed that we return as close to direct barter as we can, because doing so would anchor the money system directly to the real world things we want to exchange." "The destructive flights of fantasy money, that have brought the current system to its breaking point, would not be possible." "Self-issued credit is not a new idea." "It is, in fact, an idea as old as numbers and written record keeping, that is very old." "However, only with our new technologies can it finally achieve its full potential as an international medium of exchange." "And this transformation is already underway." "Extensive electronic barter networks, some with their own currencies, exist among businesses right now." "These could grow into a new global money system." "In Canada, Canadian Tire money has been a self-issued credit for goods currency for decades." "This money is redeemable for merchandise at Canadian Tire stores only." "But is widely exchanged as payment by third parties, because almost everyone eventually buys something at Canadian Tire." "Like air miles and other bonus-point systems, it is only a Customer Reward Program at present, but anything that can serve the purpose of money can be money." "Private enterprise self-issued credit money already exists in several forms all over the world and more private enterprises are going in this direction." "Money becomes money by acceptance." "So, one could say, the path to freedom lies before us if we can only accept new and broader ideas of what money is." "Looked at logically, why wouldn't a legally binding contract for delivery of specific goods and services from a specific supplier be much more acceptable as a medium of trade than the much abused government bank Monopoly money we are using now?" "And does it not seem natural and logical that the source of money should be the same as the source of real wealth, the productive members of society?" "And does it not seem natural and logical that the value of anyone's credit should be determined solely by their own proven success at living within their means, no one else's?" "And does it not seem natural and logical that the value of what we have earned with our work and productivity should not be susceptible to being destroyed or stolen by the gambling of some very greedy people?" "We hope that watching the Money as Debt series has given you insights into why our money system functions the way it does." "We also hope that we've demonstrated how a return to gold or a switch to any single uniform commodity as money does not solve the fundamental problems with money." "Manipulation of single commodity money has milked productive people of their life energies and prosperity for millennia." "That this predatory wealth extraction system could soon take the form of a single global bank emerging as an unaccountable big brother world dictatorship, should concern everyone." "We hope you're encouraged to do your own thinking about money, a subject that has been ignored and misunderstood by the public for much too long to our great disadvantage." "And, not to criticize without offering an alternative, we have, in this final movie of the series, offered a comprehensive and detailed picture of how a radically new economic system might work, if interest-bearing product vouchers where the medium of exchange," "thus eliminating money as a commodity in itself." "Instead, money would be a global measurement unit like minutes, meters and tons." "The existing physical situation on this planet is not sustainable and the number one technical obstacle to doing anything serious about it is the current growth addicted money system, which is itself unsustainable." "The crisis is upon us." "If you'd rather think about solutions than despair about the problems, think about taking back our money power with self-issued credit." "Join with others who realize the need for radical change and spread this knowledge and understanding as fast and as far as you can." "The masses of people must take upon themselves the responsibility to wake up, realize our power and create something better." "The WORLD belongs to us ALL" "To trade goods and services is a natural right of all people." "To issue the money necessary to make these exchanges is also the natural right of all people who are intelligent enough to do so." "We need not beg for money." "We do not need to be money slaves:" "we can be money masters." "~E.C Riegel" "In nature's economy, the currency is not money, it is life." "~Vandana Shiva environmental activist, author." "Earth Democracy:" "Justice, Sustainability and Peace 2005 corrected by:" "Tio Beto from Brazil" "Money As Debt 3:" "Evolution Beyond Money"