Download
1 / 30
300 likes | 376 Views
Explore the complex relationship between money systems, commons, and growth in this in-depth VT Law School class. Learn about the decline of the commons due to market fundamentalism and the value of common assets with the Alaska Model. Delve into the history of exchange, the role of speculation in the global economy, and the harmful effects of money creation by banks through fractional reserve. Discover the impact of misallocation and debt growth on society and the importance of exploring alternatives to traditional banking systems. Uncover the potential of public goods and complementary currencies in shaping a more equitable economic landscape.
E N D
Money, the Commons, and GrowthVT Law SchoolClass 2 Gary Flomenhoft Gund Institute
“MONEY SYSTEM AS A PURE PUBLIC GOOD” Excludable Non-Excludable Open Access Regime: Oceanic fisheries, timberetc. from unprotected forests, waste absorption capacity, roads(congestible) Market Good: land, timber, fish once captured, farmed fish, waste absorption capacity? Rival} Potential market goodbut inefficient: patented information, pond Pure Public Good:climate stability, ozone layer, clean air/water/land, Biodiversity, information, habitat, life support functions, etc. Non-rival}
Alaska Model: Alaska Permanent Fund (Share of the commonwealth)
A Brief History of Exchange C= commodity M= money C-C’ = barter C-M-C’ = money as a medium of exchange M-C-M’ = mercantilism, money as a store of value and end in itself M-M’ = speculation, money as a way to redistribute real wealth
A Brief History of Exchange M-M’ = speculation, money as a way to redistribute real wealth • Speculative exchange in the global economy • Buying and selling of goods and services is about $30 trillion per year globally • Buying and selling of paper is about 1.5-2 trillion per day, or 500-700 trillion per year. • 95% speculation in paper! M-M’
A Brief History of Exchange “Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.” -John Maynard Keynes
WHO CREATES MONEY? (SEIGNORAGE) GOVT: $600 BILLION TOTAL: $8.6 TRILLION 600/8600 = 7% BY GOVT 100-7 = 93% BY BANKS!
HOW DO BANKS CREATE MONEY? INTEREST!
Magic of money creation FRACTIONAL RESERVE ~3-5% How the Federal reserve system creates a private banking monopoly cartel! PRIVATE LOCAL BANK FED RESERVE BANK LOANS $20,000 $20,000 ASSETS $1000 (5% OF $20,000 “on reserve”) PLUS INTEREST! INTEREST $1000 DEPOSIT Best scam going: privatization of huge public asset
3 PROBLEMS WITH BANK CREATION OF MONEY (GRECO) Artificial scarcity- debt grows with passage of time. Not all debtors can pay. Never enough of it to serve the purposes for which it is created Misallocated at the source- goes not to those who are most in need or who will use it most effectively, but to political power centers, well-connected insiders, and those already wealthy Systematically pumps wealth from poor and middle class to the wealthy.
MONEY AND GROWTH What grows faster, trees in the forest, cod in the ocean, or money in the stock market, or compound interest? Consider opportunity costs. How do you maximize profits?
Alternatives to bank money-govt. Money as a public good 100% reserve requirements and money creation through seignorage Government spends money on public goods Government issues money as basic income $90,000 interest free government loan to 18 year olds? Would it need to be a loan?
