The love of money, we are often told, is the root of all evil. Yet it is also the main driving force of our society. Does this mean that we and most of our fellow citizens are evil? The reality is rather more complicated and, although it is hard to understand why people dedicate the majority of their short span on this beautiful planet to accumulating cash, a brief study of money, where it came from and who controls it, can help to explain this conundrum.
It is astonishing, given how important money is to a capitalist economy, that so few questions are asked about where it comes from, how it is created and who controls it. Money operates both as the fuel of this economic system and as a fig-leaf, a system which justifies inequality which would otherwise attract civil disgust and political opposition.
So now is the time to find out about money. At first sight this does not seem an attractive task. Economics as a whole, and banking and money creation in particular, are fenced off by a complex jargon. Who can converse with any familiarity with concepts like fractional reserve banking, seignorage, and velocity of circulation? As Galbraith identified, this jargon works like window, concealing the amazing scam that bank money creation is: 'The process by which banks create money is so simple the mind is repelled. Where something so important is involved, a deeper mystery seems only decent.' We feel unworthy when confronted by the complex terminology that operates like a warning: Trespassers will be Humiliated.
But learning about money is worth the
effort. It allows us to answer some puzzling questions about the modern economy.
Why does it have to keep growing when this clearly runs counter to our
well-being? Why are banks so desperate to lend us money? How can the USA run a
massive budget deficit and yet a country like Argentina, with all its human and
natural resources, become bankrupt? Why do the rich countries get richer and the
poor countries poorer? You can find out what I've learned about money so far
from a powerpoint presentation to download.
We are not short of allies in this endeavour. There is a whole community of monetary reformers who have tackled the problem and provided useful guides. My own favourite is The Ecology of Money by Richard Douthwaite (Green Books, £5). It has the unquestionable bonus of being short and, in common with Richard's other works, offering plenty of real situations to make the ideas accessible. Brian Leslie has produced a useful booklet: Where's the Money to Come From? If you have more stamina you might try the cheerfully titled Grip of Death by Michael Rowbotham (Jon Carpenter, £15), The Politics of Money by Frances Hutchinson, Mary Mellor and Wendy Olsen, or J. K. Galbraith's Money: Whence it Came, Where it Went (Penguin).
There are a few other pages on themes relating to money on this website with articles to download. These are concerned with the idea of creating a currency backed by CO2 to replace the dollar in world trade, called the EBCU, an article about just what happened when Argentina's financial system went through the floor (Argentina in the Red); some really zany ideas from Michael Linton about a possible future for money (open money); and an empowered approach to banking from Sweden (the JAK bank).