»We are
stardust, we are golden, we are caught in the devil's bargain,
and we got
to get ourselves back to the garden.«
– from the song »Woodstock«
by Joni Mitchell
The present economy constructed by humans works
quite differently from nature. Better expressed, it does not work! For when
nowadays two-thirds of humankind live below the poverty line, 24,000 people die
of starvation each day and our environment is being destroyed at the same time,
we cannot speak of a functioning economic system.
In the first chapter we speak about some things
which are going wrong on this earth at present. We will learn something about
why the situation is still as it is today and why it is guaranteed that it
cannot continue in this way. In this we will refrain from blaming anyone. We
have all played the game. True, we have played different roles in the theatre
of life but we have played in it. Our greatest appreciation and recognition go
to all players.
Today’s money is created from debt
Did you know that our present money is
primarily created from debt? In a simplified manner we can imagine it as
follows: two people each have a bank account with nothing in either account.
They make a deal with each other and then one of them transfers €100 to the
other. After that one has a credit of €100 on their account and the other has a
debit balance of €100. In this way money which did not previously exist has
been created.
The technical term for this is scriptural
money creation. If the two people were to make a counter-transaction of an
equal amount the accounts would be balanced again and the money which had just
been created would disappear. We could also imagine that a large number of
people participate in the market and that the transactions more or less offset
each other. So it is a perfect payment system?
Some people will be more successful on the
market than others. This will lead to more and more money being concentrated in
their accounts while the others have the related debts. In this system the
wealth of one person always means debts for many others. Yes, it even means
that economic activity is only possible with debts. And as the successful
people constantly improve their skills and thus take in even more money, the
concentration of money becomes greater all the time.
Now some of the people who have up to now been
less successful might have the idea of also improving their skills so as to
gain money for their own purposes. One or other of them may succeed in doing
this after expending great efforts. We read about such people in the famous
success stories. But the large majority cannot succeed in this on account of
the system. For the system of debt money requires the majority to have debts to
offset the assets of the few. To conceal this fact nations bear the debts on
behalf of their citizens. Virtually all nations are indebted, even and
particularly the rich countries. And more than two-thirds of the world
population live below the poverty line.
The great wealth of this world is concentrated
on a small number of super-rich families. But before we get the idea of blaming
these families, we must not forget that we are all players in this big game. If
these few super-rich families did not exist, there would always be some people
who were cleverer than others and would exploit the money streams for their own
purposes. The situation would be just the same as now and only the names of the
super-rich would be different. For the situation we are experiencing at the
moment is the logical consequence of a monetary system which creates money from
debt.
It is often claimed that the present state of
affairs came about because of interest and compound interest. It is true that
interest and compound interest reinforce the development but the current
situation would also have arisen without the introduction of interest. Don’t
let us fool ourselves: there are countries where it is forbidden to charge
interest. But in these countries as well there are a few super-rich people and
a large number of poor people. Interest and compound interest are not the »main
mistakes of the monetary system«. They merely reinforce the logical
consequences which are bound to occur in any system of creating money through borrowing.
“If that was indeed the case,“ I can hear you
saying now, “almost everybody must have debts on their bank account. But
particularly the poorest of the poor do not even have a bank account.” You are
absolutely right, dear reader. But I already mentioned that the nations have
assumed the debts for their citizens. It was not possible for them to do
otherwise, for mathematics requires them to do so. That is the reason that virtually all nations
of the world are highly indebted. In Germany we currently have a government
debt of approximately 20,000 euros per capita. This means that even before a
new-born baby can delight its parents with its first cry, it already has a debt
of 20,000 euros.
In the course of its life it will have to
service this debt by paying taxes and other levies. The largest part of the
work done by a person goes to servicing a debt which they cannot even see on
their account. Not only the taxes are high; the costs of servicing the debt are
also hidden in the prices. For the companies get their money either from a bank
or from shareholders, who expect an even higher return than what they would
have got from a bank. In addition, there are the taxes that the companies
themselves have to pay. Even if clever companies pay relatively little tax,
they pay wages and salaries, on which there is a high tax.
You can live relatively well in this system if
you have a good income. And in a welfare state like Germany even people without
income from work can live – from welfare benefits. Social benefits are paid by
the government, which thus has to incur additional debt or recoup the money
through higher taxation. This, in turn, fires the envy debates which are
well-known to us. But the social network is getting increasingly flimsy in
countries such as Germany, not to mention poor countries.
Let’s have a brief look at the so-called »good«
incomes. In this context good means »more than average«. There is an enormous
explosive force inherent in the small word »more«, for having more than average
means that the majority have less. This would not be bad in principle. People
are different and also have different needs. But when you have to have more
than others just to be able to lead a reasonably agreeable life, it means that
the majority cannot lead agreeable lives. And since everybody has the natural
interest to lead an agreeable life, conflict is pre-programmed as
»competition«.
Let’s summarise what has been said so far:
- Our money is mainly created through debt.
- Since some people use their money more cleverly than others, more and more money is concentrated on the few, while the remaining many have to share the debts, either in the form of private debt or governments debt.
- This leads to increasingly fierce competition among people.
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