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.
Stealing From One to Pay Another? There are Better Ways
The unfortunate part of this system is that all our money is a debt in the system. In order to earn money you must compete for it. You go earn it to pay of yours, plus interest. The interest comes from the system. This means you are taking money that someone else owes to pay off your interest. This creates an inherit competition and scarcity. The only people who pseudo-profit from this system are the banks, while the people compete to pay off debts.
A great alternative is found in local currencies and mutual credit systems (similar to time banks). Local currency and barter systems are a great way to step outside of the inflationary debt-money system our society uses. Local currencies keep the money in the local economy, creating more stability locally and encouraging community.
Mutual credit systems are similar to bartering without a direct trade one-to-one. I do something for you. Then you have a debt in the system and I have a credit. Together our credit/debt cancel out, creating a closed loop system. As the number of people using the system grows, so does the complexity in exchanges. However, instead of using a scarcity model, mutual credit system users each gain something from the system and in the end the balances even out. I can build you a barn, then get some dental work from another person, who then in turn gets grain from your farm.
The Money Fix
I encourage you to take the time to watch this documentary by Alan Rosenblith. It is a very illuminating, and at the same time encouraging, film.