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hitsnarfle posted this a while back and I just now got a chance to watch it.

Where does our money come from? Check it out, it's truly fascinating and a bit unnerving.

Comments

( 6 comments — Leave a comment )
kimboosan
Sep. 22nd, 2007 01:18 am (UTC)
I've heard about this, it is making the rounds with the young turks at work. I have not watched the whole thing but now that you posted it I think I will.

But really, not like this knowledge will change anything. It's like finding proof that aliens *do* exist; won't really affect my work schedule or doing the laundry.

::::KBS
democritus
Sep. 22nd, 2007 03:20 am (UTC)
Yeah, I was thinking the same thing as I was watching it. Whadya gonna do?
srb
Sep. 22nd, 2007 02:26 am (UTC)
Wow.
democritus
Sep. 22nd, 2007 03:22 am (UTC)
So, do you think that this is mainly true? I honestly don't know anything how that system works, but this seems pretty believable. I don't want to be a conspiracy theorist or anything though. ;)
srb
Sep. 22nd, 2007 03:53 am (UTC)
With a grain of salt, yes. For the global economy to expand new money has to come from somewhere, and the two obvious sources are either governments or banks. Since the governments are all in debt to each other and each other's banks, it makes some sense.

I don't think that debt and credit are inherently bad, the problem for society is when they get out of control, which they clearly are.



jamespolk
Sep. 22nd, 2007 04:08 am (UTC)
It's mostly true to my understanding but I think it drastically underplays the inherent brakes on the system as well. The inflationary power of fractional reserve is mentioned but only in passing.

And I like in that by President Garfield about money that he is identified as assassinated President Garfield. Like that quote had something to do with it.

It is very much a boom and bust cycle system, but not acknowledged is that so far no bust has taken the system below the previous bust. Will we eventually have a major failure? Probably. Will the world as we know it end? Probably not.

And it suggests that all we have to do is decide to switch to a non-expansionist real value currency and the world will be wonderful. But there's a reason the fractional reserve system wins out pretty much anywhere it runs into another system, and I don't see how, short of global fascism, you'd prevent it from returning even if we actually decided to switch to another system.

As mentioned fractional reserve was illegal in many times and places and that didn't stop it from taking root. Though that is why we are supposed to hate Jews and really rich sheiks have to mask their interest earning businesses.

So, despite the hints of the Trilateral Commission at the end, I'd say this thing is "right" but Malthus was also right on the fundamental principals. Malthus was wrong on the ability of food supply to continue increasing with population. And so far all the doomsayers (and notice that the quotes against this system are frequently more than a century old) have been wrong about the pace at which the world can continue creating real value resources to underwrite the debt. And, to make it all even more meta, the modern internet economy is creating a world where "virtual" money is really debt based on the "virtual" resource that is information. If Google simply disappeared tomorrow, hardly a single physical resource would be lost to our economy but it would still be a huge blow to the amount of "resources" underwriting the debt load.

So, to mangle a quote, it may be that the fractional reserve system is the worst of all possible monetary systems...except for all of the others. Other systems do provide stability, but historically that isn't just financial stability but technological stability and cultural stability. And another word for that type of stability is, by one way of looking at it, stagnation.

Finally, and I'm really rambling, the show mentions a new currency based on the value of government funded infrastructure (roads and bridges). I'd need to think more about that but my first reaction is to wonder about the effects of basing the "universal" value on depreciating assets. If you base it on gold and say 1 ounce of gold = 1 dollar and that never changes, then in 100 years you'll still have 1 ounce of gold and 1 dollar.

If you say 1 mile of freeway = $1 million, then if you don't do anything at all, in 100 years you'll have $1 million and no road (because it will have depreciated through decay). Instead you keep creating "new" money by paying for maintenance on that road and in 100 years you still have 1 mile of freeway but $1.5 million. And then the next year someone invents flying cars and you have $1.5 million backs by a mile of freeway that has no commercial or infrastructural value.

Ok, rambling off. (Just in case I missed the last 3 minutes of it since I accidentally clicked a link on the page and I don't feel like going back to it.)
( 6 comments — Leave a comment )