Money is...

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...a System of Power

Mayer Amschel Rothschild, founder of the Rothschild banking dynasty, once proclaimed, "Permit me to issue and control the money of a nation and I care not who makes its laws."

Modern money is perhaps the most mysterious of human inventions. It is nothing but a number of no substance or intrinsic worth. Yet in contemporary societies, money determines our access to virtually every essential of life. The decisions of those who control the creation and allocation of money determine the fate of nations and shape the boom and bust cycles of economic life. They determine who among Earth’s people will have food, shelter, education, and health care and who will not.

Although it is only numbers and creative accounting, the system that generates and allocates these special numbers is the most effective and undemocratic of tyrannies because it controls virtually everything and its inner workings are invisible. Indeed the system itself largely defies understanding, because it is based on illusions, beginning with the illusion that money itself is wealth and that people who make money are thereby creating wealth.

...an Accounting Entry

In our current system, money is created from nothing with a simple accounting entry when a bank issues a loan. As economist John Kenneth Galbraith 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, offset by the corresponding asset of your promise to repay with interest. Two simple accounting entries and money magically appears from nowhere. This makes banking a very profitable business and is the key to the ability of the institutions of global finance to rule the world.

Those to whom this system allocates money in abundance can live in grand opulence in the midst of scarcity. Those from whom it is withheld may die of starvation in the midst of plenty. International money flows determine the fate of nations and shape the boom and bust cycles of economic life even though they may involve nothing more than moving some numbers from one computer file to another, even in the same computer.

Over a period of millennia, money came to substitute for caring relationships as the primary medium of exchange, with far reaching implications. Now the flow of money as numbers stored in computers determines how we humans allocate the real wealth of the whole of Earth and has become the ultimate instrument of power,social control, and environmental devastation.

...a Measure of Our Value

We are taught that money is an objective measure of value. We may say "My time is worth $30 an hour" to refer to the worth of our labor; or "He's worth several million dollars" to refer to a person's financial net worth. Such phrases imply that our personal worth is defined by our financial worth. This unconsciously distorts our sense of our human identity and self-worth.

Another revealing phrase is "I'm making a lot of money" or "I'm not making much money." Rather than speaking of our contribution to creating a livelihood by producing a useful good or service, we reduce our labor to the making of money. But of course, although our labors may be compensated financially, we are not literally making money unless we are a bank or the Federal Reserve.

Our very language discourages us from asking the crucial questions: Where does money come from? Who controls its creation and decides who gets it? Why should I allow it to define my self-worth?

...A Phantom Wealth Illusion

Modern societies have come to confuse money, a mere number of no intrinsic value or existence outside the human mind, with the things of real value that money will buy. The result is a kind of enchantment that leads to the pursuit of monetary gain at the expense of the health and well-being of people, community, and nature.

Money created out of nothing unrelated to the creation of anything of corresponding value, is phantom wealth. In the United States, Wall Street has built a whole industry devoted to creating phantom wealth. They call it financial innovation. It is a form of theft and should be treated accordingly. Wall Street gets away with it in part because the crucial distinction between phantom wealth and real wealth is rarely discussed.

Real wealth has real intrinsic value: land, labor, food, and knowledge are all examples. The most valuable of all forms of wealth are those that are beyond price: love, a healthy happy child, a job that provides a sense of self-worth and contribution, membership in a strong caring community, a healthy, vibrant natural environment, peace.

None of these most valuable forms of real wealth find any place on corporate balance sheets or in our calculations of Gross Domestic Product. Therefore, they rarely receive explicit consideration in most institutional resource allocation decisions. This is why we so often make decisions as a society we believe will make us richer that in fact diminish our real well-being.