Money Rules

This discussion of the money system supplements "A Living Wealth Money System" on the website of the New Economy Working Group, which goes deeper into the design options.

Ask an economist "What is money?' and the answer will likely be: "A medium of exchange, a measure of wealth, and a storehouse of value." You are not likely to hear that money is a system of power, an accounting entry, and the world's largest and most profitable con game based on the illusion that money is wealth and people who make money are creating wealth. 

Money is one of the most mysterious of human inventions. Most of us use it many times each day, yet few of us give much thought to the reality that it is a mere number of no intrinsic value or utility that as no existence outside the human mind. This makes us easy victims of the con. Indeed, we have become so entranced in the illusion that money is a measure of real wealth and a storehouse of value that we have allowed it to displace life as our object of sacred veneration and become the ultimate arbiter of human priorities.

Where Does Money Come From?

Modern money is created from nothing with a simple accounting entry when a bank issues a loan. As economist John Kenneth Galbraith once famously observed, the process by which money is created is “so simple it repels the mind.”

When you take out a loan from a bank, the bank opens an account in your name and enters the amount of the loan in its ledger. That becomes a liability on the bank’s accounts, off set by the corresponding asset of your promise to repay with interest. Two simple accounting entries and money magically appears from nowhere. This simple fact is the key to the ability of the institutions of Wall Street and its global counterparts, to rule the world. It also makes banking a very profitable business.

Money, particularly money created from nothing without any direct contribution to the creation of anything of corresponding value, is phantom wealth—it has no substance or intrinsic utility. In alliance with the Federal Reserve, Wall Street and its global counterparts control the creation and allocation of money.

Where Does Money Go?

Follow the money and you map the flow of power in society. Decisions made by Wall Street institutions and their global counterparts determine the fate of nations and shape the boom and bust cycles of economic life. Those individuals whom these institutions favor with large allocations of the magic numbers we call money live in grand opulence in the midst of scarcity. Those from whom they choose to withhold these numbers face death by starvation in the midst of plenty. 

Where money flows, there are jobs. Where it doesn't flow, there are not. The politicians to whom it flows get elected and favor those who fund them. Those to whom it does not flow face defeat.

There was a time when the banking system was in the business of funding productive investment. No more.

Wall Street is in the business of funding financial bubbles, creating fictitious assets to serve as collateral for debt pyramids, and forcing working people and Main Street businesses into debt slavery. When the Federal Reserve gives Wall Street virtually free credit, as it has been doing since the 2008 crash, it becomes an accomplice to a legalized crime syndicate that serves no beneficial end.

Control of the creation and allocation of money gives enormous power to Wall Street, which is devoted to using it to expropriate the real wealth created by others. It is difficult to imagine a more perverse way to organize human societies.

A Living-Wealth Money System

We hear frequent mention of the perverse Wall Street incentive system that encourages excessive risk taking. We rarely hear public discussion, however, about how the institutional structure of the money/banking system favors speculation and financial manipulation over productive investment.

The current structure has been created by those who profit from it for the sole purpose of building their personal financial fortunes. Entranced by the illusion that money is wealth, the public has taken little notice of the consequences. We are told it is simply the market at work and the market can do no wrong. We the people, however, have the right and the means to create a real-wealth money system that serves the needs of a real-wealth economy.