Yesterday evening Thomas Greco was in Vienna. We were a mixed audience coming from different fields all interested in the money problem.
Thomas started by introducing himself and his history. He has an engineering background and worked as a college professor. Got “yanked out of the matrix in 1974″, seeing that not everything we see is as it appears. Started asking questions about problems like war, poverty, exploitation and how to solve these problems.
One day he had a book in the mail “In the Wake of Inflation Can the Church Remain Silent?”, he checked the few references and found (some of) them sound. The question why they allow the money-system to exist kept gnawing at him and he got in touch with the author, they eventually became good friends. He helped put out a second edition of the book. His questions were why the church doesn’t mention usury and why social justice if not part of their program.
He participated in several land-trust, school of living and other projects and his focus narrowed down to money and banking. Over the time he helped starting several local currency projects and wrote several books which document what was learned (a joke was that much was learned from failed projects). The first two books can be downloaded from reinventingmoney.com, the third is available as an EBook-Excerpt, for the fourth there is an excerpt at google books. I’ve read the fourth and can recommend it as one of the most systematic treatments of our current money system problem I know. Books are:
Tom then proceed to outline the history of money: It started out with barter exchange, the first form of money was commodity-money, various commodities like tobacco (cigarettes), flour or grain, nails and precious metals like silver and gold (highly valued in small amounts, portable, durable) served as money. What follows is symbolic money: the first bankers were goldsmiths depositing gold for their customers, the receipt from the bank about the deposit of gold served as a place-holder for the gold. When goldsmiths discovered that they could give receipts not only to people depositing gold, but also to people who came to borrow it, credit money (the 3rd form) was born. The last form is credit clearing where we keep only an account for each member and incoming money is added while outgoing money is subtracted. The main problem of credit is interest which exploits people.
Then a discussion where Franz Nahrada claimed that money is always an alienation ensued. Thomas explained that the farther the relationships among people are, the higher the need for money: In the family we don’t need (and don’t want) money. With a close neighbor we expect some reciprocity (we keep in mind if the other person is always taking). For dealing with people you don’t know we need some kind of formalized structure. But he agreed that a closer community relationship is a good goal. It was mentioned that experiences without money (where you lose your wallet and have to find your way without money for some time) can be a lasting positive experience, on the other hand money may cut through relationships…
In the discussion I asked about Toms view about demurrage, a negative interest rate on money. He answered that demurrage is an unnecessary “stamp scrip” (so called because some demurrage currencies use stamps that have to be bought and affixed to the banknotes) first introduced by Silvio Gesell and that it’s unfortunate that demurrage is the only one of his proposals that is generally remembered. Demurrage currencies where successful in a time where any kind of exchange medium would have been successful. The problem demurrage tries to solve, the prevention of hording (mainly of paper currencies) could be solved by reallocating excess money to (new) businesses. I noted that Gesell also had this in mind when he argues that when depositing excess money in a bank for re-lending, he proposes that there should be no demurrage. (I’m still not fully convinced that demurrage might not be a good tool at times) We agreed that a shortcoming of Gesell is that he can only envision a central banking system while Thomas recommends the separation of money and state (I also think this currently is our best option). There is also a blog post on demurrage by Tom.
During the discussion Tom remarked that due to the “Bubble and Bust Cycle” of our current money system, banks always have to find new ways to indept the people. When he studied, there were no student loans. This is a new idea that came up in the 60s. In the 90s we had the dot com bubble and the recent crisis in 2008 added a lot more dept to the private sector. He thinks we reached the end of the line, the dollar will probably be inflated out of existence. One of the outcomes of a hyper-inflation like Weimar in the 1920s is that the middle class gets wiped out. They still have savings but these won’t buy anything. Maybe the plan for after the inflation is a global currency. A question about the timeframe for these predicted events was answered that it’s hard to say, but China already has satisfied its appetite on US government bonds now buying gold. Maybe an America-wide new currency (Amero) or a global currency will be the plan. This would wipe out everyones savings and re-start the game, hopefully not everybody will go along with this.
In the later discussion I asked — when Tom had talked about the Government and the central banks cooperating — that up until now I had seen the private banking as the problem and the state more in the role of a victim. Tom replied that they are cooperating and that this cooperation was introduced in the early days of the Bank of England (when the king needed money for war). In a blog post When will the dollar die? Greco also outlines a facet of that cooperation: “National governments are unique in being able to play this role [of borrower of last resort] because of their collusive arrangement with the banking cartel.”
We also had some discussions on emerging trends, barter exchanges (which aren’t really barter in the original sense of the word). Tom said that if businesses are not involved early on in an alternative currency project, it is bound to fail. Barter exchanges that only involve retailers can work to a certain degree of circulation. But for a robust system, manufacturers, employess are needed to close the circle. Not all suppliers are within a region, so we have to get regions to cooperate. Mistakes that have been made by some local exchanges (which is detrimental to their own business and the whole “industry”) are:
Tom also mentioned Argentina during the discussion which had a strong social currency movement in the early 2000s with dozens of trade exchanges. The system (nearly) collapsed due to mis-managed, my question if this was induced by outsiders was answered that there were accusations of counterfeiting by the central government or other authorities but it is unclear if this is true. When he visited Argentina, there already was counterfeiting in some of the largest exchanges and they didn’t do anything about it. Now they have better safeguards.
The following links are taken from the discussions (no particular order, Tom is not affiliated with any of them as far a I know but knows some of the creators as “cooperatively minded entrepreneurs”), during the discussion I noted that we would need a common protocol among different barter and community currency enterprises, so that not everybody builds his own “walled garden” which was agreed… I’ve written about that problem before when writing about cloud computing.
At the end we watched the short film The Essence of Money (4:13) that outlines how money works. In my opinion it’s also a good illustration how a distributed money system — where every player in the game can issue his/her own money — could work. With todays electronic systems we maybe can come up with a solution that is distributed: compare this to file-sharing systems that started out as centralized systems like Napster and evolved into distributed systems like Gnutella today. The film Money as Dept was recommended, there seems to be a sequel, the original seems to be available in several places on the net.