Citizen Action Monitor

The trouble with money – A short video introduction by Thomas Greco

There’s always a growth in the amount of debt over time, but the amount of money doesn’t grow over time.

No 1921 Posted by fw, March 28, 2017

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“So, we have stagnation, monopoly, inequality. All raging. That’s real-world capitalism. That’s where we’re living it, right now. —Robert McChesney, How capitalism creates an extraordinarily corrupt and extraordinarily undemocratic political economy

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“The fundamental flaw in the current monetary system is the fact that money is created as interest-bearing debt. When a bank makes a loan that’s the way money gets created. And it’s virtually the only way money gets created – by banks making loans. But banks charge interest on those loans. So, there’s always a growth in the amount of debt simply with the passage of time. But the amount of money doesn’t grow automatically with the passage of time. The amount of money grows only when banks make additional loans and create additional debt. So, you always have this deficiency that exists between the amount that’s owed and the amount that’s available to repay, which is an impossible situation. It’s impossible for people to win in this game.”Thomas Greco

For those who have been paying attention, “real-world capitalism” has, in Robert McChesney’s words, created “stagnation, monopoly, inequality. All raging…. That’s where we’re living it, right now.” That’s the bad news. The good news is that there are people out there hard at work trying to devise and promote alternatives that will contribute to social and economic justice for the commons.

Yesterday’s post showcasing Quebec’s emerging “social economy”, which now accounts for 8- to 10-percent of its gross domestic product, is one such good-news alternative.

Today’s post features an introduction to another good-news alternative. Thomas Greco has spent most of his career investigating the role that money plays in driving unsustainable rates of economic growth and resource consumption in our broken capitalist system. As he says below in the 5-minute embedded video: “I’m just grateful that I’ve been able to live long enough to see this begin to come to fruition. For a long time, I felt like a voice crying in the wilderness. But now conditions are changing and there’s a heightened awareness and people are looking for answers and find that this is a good approach.

To learn a bit more about his “good approach” watch the video below. My transcript is included. For a more detailed explanation of Greco’s thesis, read his March 3, 2017 article reposted on this blog under the title, The explosion of debt is the prime cause of recurrent financial and economic crises In addition, check out the SEE ALSO reference at the end of this post for links to the copious resources on his website.

Anybody who is criticized for heresy by the “vast majority of economists, bankers and politicians” must be doing something right.

Thomas H. Greco, Jr., is an independent scholar, community economist, educator, and author. His latest book, The End of Money and the Future of Civilization, provides detailed explanations and prescriptions for communities, businesses, and governments.

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A Fundamental Flaw: Toward a More Sustainable System of Exchange by Thomas Greco, 2nd International Conference on Complementary Currency Systems, The Hague, June 19-23, 2013, Published September 11, 2013

Thomas Greco explains why our current money system is a major cause of our continuous need for economic growth

TRANSCRIPT

I feel we’re at a critical point in time where we have a multidimensional crisis that needs to be addressed and I don’t think we can gain any headway in addressing that crisis under the current monetary system.

My name is Thomas Greco. I’m a former engineer, entrepreneur and academic, but I’ve been working for the last thirty-plus years independently as a researcher, scholar, educator, writer, movement activist. I’ve been involved in the alternative exchange movement for more than twenty-five years.

The Debt Growth Imperative

The fundamental flaw in the current monetary system is the fact that money is created as interest-bearing debt. When a bank makes a loan that’s the way money gets created. And it’s virtually the only way money gets created – by banks making loans.

But banks charge interest on those loans. So there’s always a growth in the amount of debt simply with the passage of time. But the amount of money doesn’t grow automatically with the passage of time.

The amount of money grows only when banks make additional loans and create additional debt. So, you always have this deficiency that exists between the amount that’s owed and the amount that’s available to repay, which is an impossible situation.

It’s impossible for people to win in this game. It’s a negative sum game*. And it’s impossible for the environment to win in this game, because it means that those who are in debt – and I’m talking not only about individuals but corporations as well – they have to vie in the marketplace to try to get enough money to keep from going bankrupt. [*negative sum game – all participants lose]

In the process, they’re trying to increase their production, increase their sales and this is the “growth imperative” that results from the debt growth imperative. This is the thing that has generally been unrecognized in our money system.

If we don’t solve this problem, we’re going to continue on the path to debt growth and environmental destruction and increasing disparities in income and wealth and more and more conflict over remaining resources.

How To Get Away From The Debt Growth Imperative

We need to stop thinking of money in physical terms. We’re conditioned to think of money as a thing – a thing that you have to acquire before you can obtain whatever you might need or want.

But money is not a thing. It’s simply an information system. It’s a way of keeping score in the reciprocal exchange process. For example, when you go to work your employer pays you with perhaps a direct deposit to your checking account. So now you have a plus number added to your account. It goes up. When you take your checkbook and your debit card and you go shopping you write checks or turn over your debit card for the things that you want to purchase and your account goes down by the amount of the purchase price.

So really, it’s just an information system. And yet the banks say you cannot go negative on your account. If you go negative on your account, we’ll call that a loan and we’re going to charge you interest on it.

Well, that’s the problem. We can allow each other to go negative to a certain extent on our accounts and not charge any interest. This will maintain a stable system without the growth imperative built into it.

I’m just grateful that I’ve been able to live long enough to see this begin to come to fruition. For a long time, I felt like a voice crying in the wilderness. But now conditions are changing and there’s a heightened awareness and people are looking for answers and find that this is a good approach.

SEE ALSO

For more presentations by and interviews with Thomas Greco, visit his website, Beyond Money, where you will find these links:

Greco’s Videos and Sites

A World Without Money and Interest: A pathway toward social justice and economic equity. Video of presentation to the Institute of Advanced Islamic Studies, Kuala Lumpur, Malaysia, October 10, 2016. Links to the audio file and Power Point slide show.

My Videos at Vimeo — Several of my presentations are available in video format. Over time I will be converting several more of my Power Point  presentations and adding them to my Vimeo site.

My YouTube Playlist — My Presentations and Interviews on YouTube.

ReinventingMoney.com — My archival site for resource materials on the theory, history, and practice of money, exchange, and finance.

Community Information Resource Center — My non-profit organization.

Tom’s News and Views — My news and comments on a broad range of topics.

FAIR USE NOTICE – For details click here

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This entry was posted on March 28, 2017 by in counterpower of one, economic counterpower, information counterpower, political action and tagged , , .
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