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Graffiti near Queen St. S.

This is one of my favourite local stencils, up for ages despite the site clearly having graffiti painted over before. No idea who did it and I haven’t seen any others like it, but it’s an unbelievably deep question and it really stands out nicely.

What is money?

Money is power. It dominates all of our lives and the society around us. It can literally buy us by the hour. Money might be the most insidious, effective and resilient form of control ever devised. It takes the burden off those in power and drives us to manage ourselves and each other in the most “rational” and “efficient” way possible. Whether the currency is dollars, Soviet ration tickets or Roman gold coins, the value it represents stems from the government’s ultimate control of everything around us. Money is tiny, quantified, state-sanctioned units of this control. Some people gain lots of status and influence by becoming gatekeepers of these systems (CEOs, bankers, managers etc), but only as long as they serve the system’s interests. Ultimately, neither money nor power care who’s in control or who holds the reigns, as long as the system itself grows and evolves. This whole process is obvious enough from the statesmen and women who’s head adorn our bills and coins, who prints our money and who ends up with most of it at the end of the day. Money is not and has never been neutral – the evolution of currency came via the most despotic and imperialistic regimes in history, from Babylon, through Rome, and all around the globe shortly after the development of organized credit, banking and corporations in Europe starting around 1500. Today, a quick at many of these same regions (Greece, Rome, Spain etc), shows how totally questions of currency and credit can decide the fate of nations and continents.

Ultimately, money has value because somewhere out there, there’s a man with a gun who says so.

A good interview popped up on infoshop news the other day, with David Graeber, a popular anarchist scholar, about his most recent book, “Debt: The First 5000 Years”. In light of the American debt crisis, he’s been getting a lot of attention lately. Intrigued, I tracked down a few more interviews, as well as an article he wrote, and now I think I’m going to have to track down a copy of the book.

Graeber’s perspective is interesting for a lot of reasons. First, because it’s based in history and anthropology, and demolishes a lot of the popular myths on the subject. For instance, the idea that money grew out of barter economies and later evolved into complex systems of credit. These ideas were popular with thinkers like Adam Smith, but after two centuries of archaeology in the “cradles of civilization”, it just doesn’t hold up. All of the first forms of money were based on credit, with coinage arising hundreds or thousands years later. Second, he draws a lot of important links between the evolution of this system and the military and political systems of the time. Coins tended to arise as a way to pay soldiers and finance wars of conquest. Debt, in general, became a basis for the legitimacy of taxes and slavery. And since ancient times, from the Jubilees (debt forgiveness) of the ancient Middle East to the texts of the great religions, there’s been a lot of resistance to these systems.

The analysis of the relationship between “virtual money” (credit) and coinage/metals addresses a question which has come to the forefront in recent years, particularly with some free market-ers and the anti-Federal Reserve crowd. Graeber’s work shatters the notion that money must be based on gold or silver reserves, but not without investigating the question deeply. Virtual money tends to arise in eras of peace (where central authorities can enforce it), and coinage in wars (plunder). “Epochs” using one or the other often last centuries, and as Graeber notes, one just ended in the 1970s when Nixon took America (and by extension, the world) off the gold standard.In many ways, it’s too early to tell what this will mean in the long run.

The problems we’re witnessing today are not new. Debt-based economics are as old as money itself, as are the problems associated with them. There’s nothing inherently “free” about these kinds of systems, and they almost always come associated with slavery, conquest or other forms of exploitation. This was well-enough recognized in the times of Buddha, Jesus or Mohammed. In ancient Sumerian, the word for “freedom” (the first we know of) literally translates to “return to mother”. As the kings of Babylon periodically wiped out everyone’s debts to keep the system from spiralling completely out of control, family members sold into debt-slavery would be freed and households could re-unite. Strange, isn’t it, that in the world’s first market economy, “freedom” wasn’t a term used to describe trade, but an escape from it?

An Interview With David Graeber: Debt’s History, Implications, and Critical Perspective Infoshop News
Debt: The First Five Thousand Years Excerpt, by David Graeber (Mute Magazine)
Another Interview via New Significance (allegedly from CNN originally)
9 Things You Didn’t Know About The History Of Debt Slideshow from Huffington Post
Debt: The First 5000 Years @ Amazon.com

To follow up my posts the other day about the massive inherent failings in our system of money, I thought I’d give a brighter picture as well.

Local currencies and barter networks achieve many of the goals we hope for with dollars or Euros, but at the community level. They can give people an incentive to produce, but without the strings attached we see in traditional forms of debt-based money. Here are two views, one from the Peak Oil community, and one from the Wall Street Journal, of all sources.

Peak Moment, an ongoing series about community responses to Peak Oil, published this excellent interview with Francis Ayley who has worked on a number of British And American LETS (Local Exchange Trading System) networks.
Local Currencies – Replacing Scarcity with Trust (Google Video, 28 min)

The Wall Street Journal, or at least their bloggers, have also caught onto the trend. And with the help of a fast-failing global economy and a bunch of internet-age buzzwords (“peer-to-peer” etc), they actually come out in favour. Not all of the systems they mention are ones I’d want to be involved with, but the historical analysis near the end is very interesting. They openly talk about the way state currencies were created by kings in the 12th and 13th century in order to bring economies under their control.
The Currency Revolution (21 minutes)

Money as Debt(google Video, 47 minutes) is an interesting documentary about the source of money in our modern financial system. While I don’t agree with everything it says, I think it’s really important to listen to and learn about the wide range of populist economic critiques which are coming out today.

I’ve been following a lot of this for the last decade, and it ranges from very insightful to a little wacky. Zietgeist would be a good example of the latter. While I agree wholeheartedly that we need to critically evaluate things like our money system, religions and the official story of 9/11, there are a lot of risks of being labelled as a part of the lunatic fringe. And as someone who’s worked with a lot of conspiracy theorists before, I can tell you there’s some good reasons people shy away from them. Worse yet, I’m troubled by the underlying message of many of these groups that we just need to get “back to America, how it was supposed to be”. There are very basic problems with both the basic legal framework of Canada and the US and our constitutions. Getting rid of the Federal Reserve won’t change that, and neither will granting government more powers to police banks (which they keep giving up). We need a much more fundamental, radical change.

That being said, our current systems of banking, money and credit are incredibly flawed. Between the radicals and the conspiracy folks, the warnings about an apocalyptic failure of the mortgage-backed security markets and imminent peak in oil supplies were coming out within days of the towers falling. As the film demonstrates, and as most people have no trouble believing, banks are just creating the money they lend us on paper and inside computers. There is no real-world basis to over 90% of it, other than the banks themselves. To put people through this meat-grinder in order to own a home (or by proxy, renting one) is a complete and total scam. If the banks are simply creating the money we use to own our homes, then why must we pay it back two, three or more times over in typical mortgages? Worse yet, why does it usually cost more to rent a home or appartment than its mortgage would cost (paying back double money which was invented out of thin air), when renters usually have less money than owners, and don’t get any equity out of it?

The problem with too much money is that it generates inflation – the more money is around, the less it’s worth. And that’s why new money must be carefully monitored – unless it comes with real-world value (such as financing homebuilding), it only increases the money supply. This puzzled me for a very long time – how could so much money be created, but not simply tank in value like the Zimbabwe currency crisis? Then it hit me – every time we borrow money – cars, credit cards, mortgages, student loans etc – we’re working to pay them off. And as we work, we create fantastic amounts of value (much more than we’re paid for) that helps the other side of the equation stay balanced – at least to a degree.

This also brings into serious question the “ownership” of enormous majorities of our homes, busiensses and public spaces. If the money which bought them is not legitimate, then why are we still paying for them? Doesn’t living or working someone for years on end give us rights that trump arbitrary access to made up money?

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