We’ve lived so long under the spell of hierarchy—from god-kings to feudal lords to party bosses—that only recently have we awakened to see not only that “regular” citizens have the capacity for self-governance, but that without their engagement our huge global crises cannot be addressed. The changes needed for human society simply to survive, let alone thrive, are so profound that the only way we will move toward them is if we ourselves, regular citizens, feel meaningful ownership of solutions through direct engagement. Our problems are too big, interrelated, and pervasive to yield to directives from on high.
—Frances Moore Lappé, excerpt from Time for Progressives to Grow Up

Monday, October 18, 2010

The Parasitic Nature of the current Monetary System

by Amanda Morales from Global Research

This piece is, IMO, quite helpful at contributing to the understanding of money which is vital for understanding many of the economic problems that capitalism creates. However, I think that the article needs more clarification and elaboration. Such a source as the book by Ellen Brown entitled, The Web of Debt provides this. 

I think the issue of gold as money or wealth is mishandled in the article. In her introductory remarks she accurately states:
Other inaccurate triggering factors often blamed are inherent human greed, overpopulation, baby boomers, abandonment of the gold standard [my emphasis], fractional reserve banking, fiat currencies, over-consumption and even technology.
However, two paragraphs later she writes:
The amounts deposited at the bank and lent are mere bookkeeping entries, not backed by any real assets (like gold, for instance). 
Gold is mostly an asset because it has become a wealth fetish for many people on the earth. How this has developed, I do not yet understand. It has some limited uses--like, for example, I have some gold crowns in my mouth. Gold (mixed with other metals) is a very hard and durable material. But you can't eat it, you can't put it in your car's gas tank, etc. If you took it to your local grocery store and attempted to buy food with it, I don't think they would know what to do with it.

Mainly what she is arguing against is the privatization of money issuance, and money issued as debt by private banks such as the Federal Reserve (of course, the name itself is a piece of disinformation--there is almost nothing "Federal" about the Federal Reserve--read this). Governments should be issuing money as the productivity of the economy requires it as a medium of exchange in the form of paper. 

Paper is easy and cheap to produce. You don't need to dig up the earth, pollute the environment, use energy to refine it, and then store it in vaults to have a monetary system. And we in the US do use paper money (fiat money, money backed by laws). The problem is that it is issued as debt by private banks. The Federal Reserve (The Fed) creates this electronically, lends it to our government and charges interest, all of which puts us in debt to the Fed. It is my understanding that all central banks in various countries work essentially the same way.

What I don't understand about Global Research website is that they produce a lot of good articles like this, but occasionally they carry articles that are pure crap. For example, this article by Bob Chapman who is a gold fetishist, or articles that undermine the truth about global warming like this.