I’ve previously identified some of the errors that Monetary Reformers and Alternative Currency advocates make. First, money is NOT and can never be a commodity. It is at its core simply a record of debt. Secondly pegging an alternative currency to a mainstream, manipulated, inflating currency dooms it to the same destruction as the one it’s pegged to. Thirdly, it is only traders themselves who can and will ever value a currency, and they do this at the point of each trade.
I continue with another subject that is well understood by some (but not all) in this sector. Those who DO get it though, don’t usually go far enough and miss the full story. I then talk about Interest and touch on egos and the WIIFM factor.
4. Disrespecting the Power of Interest
The charging of interest (actually first called Usury) is the METHOD by which wealth (and thus power) is consolidated. It is the TOOL of enslavement.
Many in the Alternative Currency movement (specifically proponents of Mutual Credit) recognise full-well that it is the charging of interest (which of course compounds) that is one of the main reasons why the current economic system is ‘broken’ and ‘going down’.
They are right of course but the fourth problem is that the Monetary Reformers don’t respect or recognise the virtually immeasurable power that this practice has given TPTB over hundreds of years. Thus they err gravely with their projections, solutions and strategic approaches to dealing with it.
Some refer to the ‘instability’ of interest bearing monetary systems and discuss economics in a mathematical or scientific manner* and they are right – anything compounding is contrary to the laws of nature, nor is it sustainable etc. Some calculate** the impact of compounding interest on the price of goods and thus derive inflationary impacts of compounding Interest, an incredibly complex task, BTW. As a result they can and do quantify the costs to society and the rate of this increasing enslavement.
Others reference the immorality of charging interest (referring to the perceived injustices of how the rich get richer and the poor get poorer) or apply some value judgement into the currency/economic equation. Great, so do I, and I cover these philosophical issues too in an upcoming post.
Much has been written and is available on the impact of interest-bearing currencies. In a nutshell though, except for the Islamic community (who have their own practices that are fundamentally different in structure but differ very little that I can see in the real-world matters of social justice) the charging of interest on money is standard practice in the Western world.
The big-picture is this: All the Central Banks of the world ‘issue money’ and regulate supply and usage of that currency through various means. Controlling the supply and adjusting interest rates are two of the main forms of control. The Central Banks however are all essentially privately owned (or at least controlled) institutions and profit from the charging of interest to the governments of the world. They are in essence a global cartel that works hand-in glove with big business (the vast majority of banks and big business are all owned by the same people).
They do this with the implicit and explicit co-operation of the world’s politicians. The primary role of the politicians has been and remains to enforce Legal Tender laws that require the payment of taxes in what is determined as the “Sovereign currency” i.e. the USD in the US through the Federal Reserve; the WST in Samoa through the Central Bank of Samoa and so on. This is a legally enforced monopoly****.
Many are coming to understand that the Central Banks settle through the Bank of International Settlements in Switzerland and that all interest payable from the entire global monetary supply is ending up in private hands. The consolidation of power and wealth results in debt enslavement by way of interest payable to the [private] owners of the Bank of International Settlements. The enslavement of entire countries concerns increasing numbers of people.
Now, proponents of Mutual Credit systems (where there is NO interest payable on the extension of credit amongst traders) in the main, understand the negative impact of compounding interest very well. On the surface, their problem with their alternatives is one of scalability, for they have been able to get Mutual Credit based regional currencies to work for short terms (with a lot of effort) but their entire successes have not even made a dent in the humongous, brutally efficient, interest-charging global monetary system. To give a comparison, I estimate that excluding the Islamic Banking system, the entire turnover of every non-interest bearing currency system that has existed on the planet in the last 100 years, doesn’t come anywhere near the losses of even just one company, on one day alone, in 2008.***
Current Mutual Credit (zero-cost credit) monetary systems can not and will never address the global problem of interest-bearing money issued by TPTB. The reasons are multifaceted (and I’ll be sharing more about this shortly) but the first one relating to Interest is this . . . Interest is and has been being generated on increasing amounts of debt for MANY years, which has resulted in extreme consolidation of power and wealth and of course debt enslavement.
Detractors consider that the charging of interest is the problem; and claim that the system is unfair, broken and that things will crash and that we will all suffer. What is rarely talked about is that the answer to all these charges is actually . . . .”Yes! True, but there is the fact remaining – it works! (for them)”
And what happens, continues to happen, and WILL continue to happen is that this unfair, immoral, unstable, unsustainable monetary system that we have now was conceptualised and first used millenia ago, was implemented successfully in Britain a few centuries ago, standardised and propagated into key global economies around a century ago, and has morphed into a global phenomenon since. The system is no accident; it has and will likely continue to be powerful, and (this is key) it is working very well thank you very much – just as it was designed to do.
Some people see the problem as Interest. Others though view Interest to be GOOD, of course as the means by which they are able to gain, retain and consolidate the power that they have. Providing an interest free solution is noble – it is of course just as worthy as picking up one starfish and throwing it back into the sea – but talking about alternatives to something that is powerful, empowering and working as planned, is the error that Interest-free money advocates fall into when considering Monetary Reform. In a nutshell, if they want to change the system . . . they’re dreaming.
To those people though, I don’t recommend give up thinking and working the issues out though because the principles of Mutual Credit are sound; it’s just that an effective strategy to affect global change is missing. I’ll be covering this with more advice in coming posts but let’s dive into the strategy relating to affecting change.
5. The WIIFM Factor, What’s In It For Me?
Self-interest is one of the strongest motivators there is. Put aside the necessities of life such as food, shelter, reproductive activities and so on, self-interest is THE big motivator of all time.
Now without getting bogged down with philosophical arguments, basically the entire Monetary Reform movement errs in the same way as amateur businesses do – they try to sell the ‘steak’ and omit the ‘sizzle’.
The problem is not one of attitude. It is not lack of brainpower, or passion or technological wizardry, it is a systemic one put like this . . . the current system makes a lot of people a lot of money. In this regard it is working – very well too! There is no widespread motivation to change because, let’s face it, it is better for today for most people TO go into debt. It is better today for most people TO turn a blind eye to the ills of the world. It is not advantageous in the slightest for 99.999% of the world to suddenly stop trampling over others in order to better themselves with another (better) system!
The Monetary Reformers will ALWAYS be on the losing end of any battle with people who have the choice whether or not to make a buck and benefit with self-interest TODAY and something that might be better structurally, fiscally more prudent, essentially sustainable, ethically or morally “right or good” however you want to define that.
So, until the Monetary Reformers can grapple with this issue, which is a conceptual issue as much as it is a currency design or policy issue, takeup of their alternative systems will remain with those very few who are less self-serving than the mainstream population. This is the painful experience of the Monetary Reformers and is the status quo.
Now this is a two edged sword, it’s not necessarily a case of the fatalistic, well we should all give up and go home, I’m simply identifying the error that most advocates do not acknowledge the WIIFM factor; their sales spiel is selling the concept, not the direct benefit. In marketing we recommend to sell the ‘sizzle’ and not the ‘steak’. To invert the problem is to have the solution – simply design an alternative that addresses the WIIFM factor and do it better than the people that have your target market at present.
Easy? Maybe not!
The currency world works exactly the same as is in any business. If VISA gives me better rates, service, fees, credit terms, credit availability than Diners, then guess what? I’ll use them in preference. Again there’s heaps to this subject and I’ll be covering it in future posts but I’ve identified the error, that all Monetary Reformers I am aware of simply do not address the WIIFM factor with anything remotely like the benefits that the current currency providers offer.
There’s a paradox however because this same issue (self-interest) is another big problem for the Monetary Reformers . . .
6. Ego Kills Goodwill
Our ego [self-interest] pushes others away and destroys the potential to work together.
This is a tricky one to explain because there is ‘ego of self’, and ‘ego in objectives/business’. They are different and best explained by personal example . . .
I have an ego. It is this ego that drives me to think, write and DO things as a thought leader in any given space. People have a love-hate approach to that. Some love the confidence I exude and are drawn to it simply because they like a straight shooter and a leader. Others however write me off and don’t want to have a bar of me, or what I say because they ‘don’t like me’ or whatever. In this regards I am polarising.
Whatever the case though it’s my personal ego that affects others negatively. This ego exists in ample measure in the Monetary Reform sector of course! This creates division and therefore there is a lack of unity. That’s an important subject but not the most important one.
The other form of ego though is the real killer, and it is ALWAYS where the rubber hits the road – power and money. This form of ego is represented in a business sense by branding, marketing, reputation management, business relationships, commercial risk and of course REWARD. It’s a structural thing, not a personal thing.
If I then, develop a very thin currency and give it away, helping others to achieve their goal, letting them use it and name it and profit from it then my business ego is low, and resistance is therefore very low too.
Most Monetary Reformers have their own patch and followers. If they were honest it would be a scalp for any of them to develop a great currency system that worked and took the industry by storm, and had the legs to springboard Bitcoin’s success, to leap-frog over all the crypto-currencies out there; to [finally] develop a community currency that was ubiquitous and with penetration rates that showed WIR the ‘proper’ way to do things; that tackled VISA, PayPal and the Central Banks head-on and had the potential in due course to win.
This though is the very problem in a business sense that we identified with the nature of money, by considering it a commodity. We are viewing a measurement as a product. We naturally want a successful product. Our ego prevents us seeing that it doesn’t matter WHAT we do, the answer is conceptual and systemic not a product per se.
The solution is the application of sound principles – not the marketing of a brand, business or product. Yes, VISA has the brand and markets it but is is what they DO that people want. Yes, Bartercard (or any other commercial/non-commercial exchange) has a brand and its own currency that it markets but it’s how they help people that matters and enables them to achieve their takeup and goals.
Likewise with the Monetary Reformers they need to address the principles and open the doors to application rather than focus on how to build something that actually represents ego in the form of a business, even if it is disguised as a currency.
The Positive Money people have identified themselves, and their message well. The brand is PM. The Public Banking people have done the same with their ‘leader/spoksperson’ and she too does a great job. Likewise with the commercial organisations and community currency advocates – they all have their own brands and push them.
All fair enough . . . but how do you make money, make a difference, achieve traction if all you are doing is just sharing wisdom or knowledge or talking about principles or giving things away?
You may ask, “How do you do it differently?”
Think about this . . . Google’s ego is in the stratosphere in the former category. “Do no evil!” they used to say. That’s what God says isn’t it? Talk about arrogance and personal/corporate ego! “We will manage the world’s information with the best technology available.” That’s REAL EGO+++!
But in the second category of ego (commercial ego) it is the leanest, cleanest, fastest, most efficient piece of anything on the planet. Their system is the best; it meets peoples’ needs the best and it HAS DONE for more than the last decade.
In terms of it’s commercial ego it is the lowest of the low – developing the best search engine on the market and giving it all away when others sold it; buying the best analytics tools in the world and giving them away THEN on top of that, making those tools even better; giving away APIs, developing great affiliate sales opportunities and . . . and . . . and . . .
Protecting this ‘commercial ego’ (be it a product or a personal brand) is the mistake that I see pretty much all Monetary Reformers making.
Most (but not all) Monetary Reformers know and understand the evils of charging Interest however they all seriously underestimate the immense global power that more than a continuous century of this practice has brought the elite. They fail to adequately address the reasons WHY people use a failing system and want to protect their patch, rather than working at conceptual and systems levels.
In my next post I continue detailing more specific errors that the sector makes. I touch on conceptual issues relating to the backing of a currency, issues of scalability & gaining critical mass (another common deception) and more.
It’s great to have your company in this series highlighting the Mistakes of the Monetary Reformers.
* I’ve found Marc Gauvin’s application of BIBO (Bounded In Bounded Out) stability theory into the currency sector to be very helpful in this regard. I differ from him in his concepts for implementation but his core teaching on stability is very solid.
** The [late] German, Margrit Kennedy did solid work in this area and was a well-recognised leader in this discipline.
*** This is not a David & Goliath issue. It’s not even anything NEAR like an ant trying to take on the Sears Tower. The differences are more like one tiny little atom trying to take on the entire sprawling city of Los Angeles, which in a few years will be the size of the entire state of California and in a decade will be more like an atom vs the entire US continent.
**** Because it’s also one of the critical building blocks for the New World Order this will never change unless or until the globalisation process is either reversed or more likely from my take, passed through. Other than the incumbents, one simply cannot create ANY privately owned, managed or issued currencies in any jurisdiction on the planet for the purposes of Legal Tender (i.e. payment of taxes to the government). This is BY LAW in every jurisdiction.
The Mistakes in a Nutshell:
- Money is NOT and can never be a commodity. It is simply a record of debt.
- Pegging to a mainstream, manipulated, inflating currency dooms any alternative currency to the same destruction as the one its pegged to.
- It is traders alone who value a currency, at the point of each trade.
- Interest may compound, de-stabilise, be immoral etc but it works, consolidating wealth and power.
- Failing to adequately address the "WIIFM factor" cripples a currency from the outset.
- Ego [self-interest] kills goodwill.
- The backing of a currency is always TRUST, not a commodity itself.
- It is impossible to manage a pure currency.
- Usage doesn't determine the function of a true currency.
- Creating networks solves a non-existent problem.
- Networking currencies introduces more problems than it solves.
- Open Source thinking will only replace current systems when they implode.
- Everyone thinks they're right.
- The seller should be the one determining credit terms.
- Credit management from the top will always fail.
- Confidentiality is conditional - it's not a binary issue.
- Zero-cost money is a pipedream.
- Shallow and partial thinking limits our vision.
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