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alstry (< 20)

The End Of Money



June 04, 2012 – Comments (0)

Money is simply an instrument of debt. It is an IOU. It is a claim against the future production of society.

In an industrial system....we were able to borrow money based on the reasonable expectation of OUR future production. Essentially, when we borrowed money we were exchanging our future work/output for the present use of others' production via IOUs/money.

When lending m...oney, the banks created new IOUs essentially out of thin air backed by our expectation of production. The banks job was to identify the members of society who were deserving of loans and increase the productivity of the industrial economy through the increase of IOUs/money.

If the banks made loans which couldn't be repaid, both the borrower and the bank suffered.  
In additon to borrowing money, we could work/trade for money....or the IOUs of others.  With more money floating around, more people could work and production increased dramatically.  In America, most of us worked for each other in a market driven legal, political, and economic structure.  The system functioned for a few hundred years with increasing amounts of work, production and money floating around.  As time passed, most simply had faith in the system and few really understood how it worked.. 

The problem was as technology kept improving, the need for people to work industrially decreased.   So did the people's ability to borrow money and expand the industrial economy due to lack of jobs. This issue was especially acute after the crash in 2001.

So in order to keep the system going, the banks started lending money to housing in many different ways...and often without regard to the borrowers ability to pay the loan back. Trillions of new IOUs/money were created and for a few years the economy boomed as everyone accepted these IOUs for their production.  We had become so used to not questioning the validity of the IOUs....just like few of Bernie Madoff's clients questioned his legitimacy.
In addition, contemperaneously some crazy Arabs conveniently terrorized America which just happened the create an unprecedented boom in military and security spending/jobs forcing our government to borrow/spend and create even more IOUs. Much of this spending didn't show up in a government deficit initially because lending to housing generated incredible amounts of new tax dollars which consumed any budget surplus.

This kept going....until the banks slowed lending to housing and the whole system collapsed in 2007/08. Those of us who understood the system, forecasted the crash far in advance.  A number of us publicly wrote about it.

When it happened, instead of forcing the banks to suffer along with the borrowers...WE THE PEOPLE bailed out the banks and let the people suffer. WE also bailed out all of the Wall Street companies and their executives.

The collapse caused tens of millions of people to lose their jobs and made it impossible for them to pay back loans. Millions of homes were foreclosed and taken by the same banks that made all of the fraudulent loans in the first place.

Since the banks weren't lending very much to the people, to keep people in jobs the government started borrowing WE THE PEOPLE's money to pay people to work.  It is amazing if you really think about it...government is borrowing the society's money to pay a relative few in society to work for money...while others get little or nothing of their own money. 
And to make a complex problem even more volitile...efficient technology is replacing millions of jobs around the world making it impossible for more and more to get IOUs/money to maintain their survival...unless of course one works for or benefits from taxpayer bailed out Wall Street or bailed out government.

As the technology gets better and better...fewer and fewer will need to work.....and our system of IOUs to each other will collapse as too few will control too many...and the many will reject the few and their fraudulent IOUs either through violence or some other means.

We are now seeing it all around the world....civil and not so civil unrest is spreading rapidly as everyone is trying to figure out what will get them production. As more and more production is technologically driven, the need for money/IOUs will decrease as money/IOUs are simply something humans need to control the production/lives of other humans.

Hang on...the change from an Unsustainable Industrial Economy to a Sustainable Knowledge System will be dynamic and very convulisve. In the end, we will build a technologically driven world where we don't need to control each other anymore and everyone can be free.

That world will be a

A world where we all sustainably milk off one planet

There is a viable solution to this mess, but we will save that for another post.

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