Banks should protect our money, not fleece us for their profit

Our money is loaned into existence and then must be paid back, plus interest. This interest can only come by earning (taking) money from other loans in the system, thereby installing inherit competition and scarcity in our society. Could you imagine a society in which we didn’t have to compete for a scarce amount of funds? How could this alter our communities or the way we treat each other?

An ethical banking system is one that upholds the value of the people who use it. Instead of a institution that values only profit, an ethical bank would value the people that support it. This really shouldn’t be too crazy of an idea, but our banks today do everything in their power to leverage greater profits. The recent economic crash being a prime example. We should support and create banks that support our societal and economic well being, not their CEO bonus checks.

The Reason We Need It

It seems like second nature to me that systems we create as a society should function with the ethics we value, but there is obvious room for improvement. When a lot of our organizations and industries started the room for growth seemed limitless, so it was much easier to gain advantage in the market and grow without sacrificing ethics. Like many things in this era, we’ve run out of that room and the only way to make a higher market share this year and next year is to start finding ethically gray (or black areas) for expansion (e.g. derivatives).

Paper exchanging for paper is now 20 times greater than exchanges of paper for real commodities. This distortion of value from real wealth to phantom wealth encourages a financially dependent system, driving up debt and down real value. Eventually those claims on wealth will be exchanged for actual wealth – even if there are no longer enough. An ethical banking system supports a more realistic approach to real wealth and the money that represents it – as well as environmental concerns with investment and social justice.

An Ethical Banking System is one that encourages stable and equal amounts of material wealth. If you haven’t clued into it yet, our current banking organizations do not function in an ethical way. Our banking system encourages debt, competition, scarcity, and unequal distributions of wealth. What if we created a bank in line with our values? One that supported the people, community, and real wealth?

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I might be amongst a rare few who believe that the real worth of a person is based outside of material possessions and economic status. Perhaps our society is right to place value in material wealth and pull away from centuries of teachings valuing integrity, ethics, and community (see valuing what matters). There is strong argument that this skewed approach to valuing material wealth is, in part, why our generation is suffering from a rising “social recession.” What we value, how we value, and where we place the concept of wealth are drastically important parts of our lives and our society.

The chemist turned rogue economist Frederick Soddy was one of the first to lay out the difference of real wealth and, what he termed, “virtual wealth.” Today, “real wealth” is a term being used by the planners of the coming “new economy” to represent physical wealth in the real world. “Phantom wealth” (or Soddy’s “virtual wealth”) is the monetary representation, or store, of real wealth. It is being described as phantom because we have inflated our system to allow money to make more money – money out of thin air is virtual, phantom wealth. But isn’t that money is a store for real, physical value?!

So if we create new money, either by printing it, loaning it into existence, speculative trading, or some other devilish creation of the private banking system, do we also create correlating real wealth? No. This means as we allow money to earn more money, without ever being traded for a real, valuable good or service, we are devaluing those real goods. Banks are essentially stealing real wealth by creating more phantom wealth for themselves. (All the more reason for a Robin Hood Tax)

I just picked up one of Soddy’s books that outlines these concepts: Wealth, Virtual Wealth, and Debt. Soddy set a lot of the ground work for today’s ecological economists and his work was greatly expanded upon by Herman Daly, Richard Douthwaite and Nicolas Georgescu-Roegen. I am excited to read some of Soddy’s work and in researching his (spot-on) views of money, debt, and the banking system I found more great quotes on the subject I wanted to share.

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Taking inspiration from economist James Tobin, the new UK campaign for a “Robin Hood Tax” is a great example of the type of social movement for economic reform we need across the world. A global Robin Hood tax is a crucial part of transition from a growth-based economy to one that is people-based. This type of financial policy can be instuted to actually help eliminate poverty and hunger, fight climate change, and put social equality into a system that rewards greed instead of good.

By taxing a minuscule amount of each financial transaction (we’re talking half a percent – 0.5%) you could raise up to $500 billion or more a year, reduce speculative investing (the kind that promoted the recent Great Recession), and put the banks in check (those guys we just bought out with taxpayer money that made $5 million bonuses).

Check out the video here:

Debt-money creates competition and scarcity

Money. We use it everyday yet our concept of it is limited. When we talk about money, we talk in terms of what it does, not what it is. Despite our ignorance of money it rules most of our lives. I recently finished a great documentary about money that I would like to share with you. “The Money Fix” goes into the detail of money and describes how our system creates money out of thin air, embeds each of us with a “scarcity complex” and incites competition instead of cooperation.

I described in a previous post how money is created by banks out of thin air. We exist in a debt-money system, using bank account ledgers more often than paper money. The way I had previously explained the concept of money creation the banks create money out of thin air through interest on debt. “The Money Fix” describes this differently. The money of the loan is created – all of it, be it $500 or $5 million – while the interest is “earned” money. When the loan is paid back the created money is canceled by the payment on the principle. But where does the interest come from? More debt.

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One year ago I started writing out of passion (and some anger). My how things have evolved! This blog has seen 75 posts in the last year, some of them great, some of them alright, some perhaps less so. I have tried my best to write about the issues important to me: a sustainable society, a healthier planet, a ethcial economy, and a more just world.

I have also learned so much about life, happiness, sustainability, and where I want to be in the world. More importantly, I have learned there is quite a large group of people out there feeling the same way, and we are all beginning to see the division between economic growth and true prosperity. What do you think? I would really value your input on ways I could make this blog better, both in function and in form. Please comment on this post or email me!

Since today marks Steady State Revolution‘s one year blogiversary I decided to take a look at the very first post and revise it with some fresh ideas (and hopefully improved writing skill). Here’s the 75th post on the 1-year blogiversary!

Citizen or Consumer?

The US Consumer Unit

Yesterday was the start of the “Christmas Shopping Season.” Aside from the typical trampling of an elderly person at a Wal-mart, this day signifies the beginning of the American Consumer’s busiest time of the year. Between today and New Years we Americans will increase our waste by 25%.

Each year we start sooner and sooner with our Christmas consumption, this year marketers started preparing for the season around Halloween. The average consumer spends about $1,100 a year on gifts, over $800 worth of which is holiday-related purchases. This means 73% of all our gift-related buying is done in the holiday season. That’s a lot of consumption.

Consumerism accounts for a large cog in the economy. Consumption drives the sales of goods, which is incentive to produce more goods. Producing goods is the basis our growth model. In order to grow the throughput (GDP) of our economy, we must increase the production and consumption cycle. What better way to do so than to make it your intuitive nature to spend? What if we could find a way to move people from identifying as themselves, or their jobs, but instead as what they buy? From this the American Consumer is born.

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Greedy Banks Create Inflation

Our money was once valued by the worth of goods, but today it is our goods that are valued by their worth in money. Banks create money out of thin air by loaning it into existence. Increasing the money in the market creates inflation. This also means the system is required to continually grow in order to offset this inflation.

Money is not a real object, its value is abstract, and controlling large sums of it is imaginary wealth. We have given the power over our currency to private companies – they are greedy black holes, constantly starved for more. The good news for them is they can create more money. The bad news for us is that they can create more money.

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The Fed is the Problem

The U.S. Federal Reserve is our nation’s bank, created at the beginning of the last century (big thanks to President Wilson) to centralize our banking system and stabilize our currency. It is quasi-public, having both private corporations and public agencies with controlling interest.

“The Fed,” as they call it on the street, controls our money, interest rates, “supervises” banking institutions, and has other means to inflict chaos into our economy. Despite being a blend of private and public the Fed keeps its business behind locked doors. It is hard for a government by the people, for the people to have a functioning banking system if they have no control or oversight of it. We should do something about it!

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Hardwired Into Our Brain

New Scientist this week features an article casting money as a psychologically-rooted instrument. It may be a tool in the market to trade for goods, but it can be perceived by our minds as something with deeper significance and even activate the same centers of the brain as addictive drugs like cocaine and nicotine.

We have long associated money as the “root of all evil,” but perhaps it is more accurately a source for bad behavior. In the article, author Mark Buchanan explores the recent studies done in the fields of marketing, anthropology, and psychology showing an interesting trend linking money with narcissistic and competitive behavior. Of course, this might not be news to you. Turns out some of us are predisposed to this type of behavior, while others are inclined to treat money as an friend rather than a drug or compulsion.

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