The Current Money Crisis - Taking the Conversation Deeper

Nearly all of the discussions I hear about the government's budget crisis and the country's growing wealth inequality omit what is probably the most fundamental consideration of all: What is money's ultimate origin? How does it get into the economy in the first place?

We are hard up for cash to fund critically important public needs like education, healthcare and economic infrastructure. Huge numbers of people with sharp minds, strong hands and good hearts are ready to do needful work -- but they can't get a job because cash is scarce. And yet nobody stops to consider where money actually comes from.

It's an important question, in part because core economic growth and job creation are funded with newly-created money, never with pre-existing dollars. In those strong economic periods that we've all experienced, money was being created in huge amounts to fund the growth and to keep things running at the expanded capacity. But where was all the new money coming from? The answer will surprise most people. What's more, even though the answer is in fact very simple, it goes so contrary to unquestioned assumptions that it takes most people some time to overcome the initial disbelief and to understand how it really works.

When I came to understand a few simple technical details about how money is created under today's monetary system, my entire framework for thinking about money was transformed. Slowly, the ramifications of this new understanding began to branch in many directions. Wonderful visions began to sprout in my mind -- I began to imagine new possibilities for unleashing all the good energy in this country, so much of it misdirected or underutilized, to serve the public good. I began to see the possibility of a world where there was no shortage of funding for the things that mattered most to the health of our society and environment.

HOW MONEY IS CREATED - A SIMPLE TECHNICAL FACT THAT WILL CHANGE YOUR THINKING

Here’s the technical fact about where actually money comes from, followed by a brief explanation of why it's so important to understand. What I am about to tell you is not a secret. It's publicly available knowledge, even described in some old, out-of-print pamphlets published by the U.S. Federal Reserve and the U.S. Congress (some cited in my list of references below). Yet even though this knowledge has technically speaking been available for decades, very few people have had the slightest inkling of why it had any importance. It's worth remembering that the modern banking system is something relatively new and, as with so many new technologies, it was "pushed upon us" before we understood the alternatives or the consequences, without the benefit of thorough-going public discussion, and before we had learned to use or regulate it wisely. Public thinking still hasn't caught up to the banking system yet. The "esoterics" of economic talk have obscured the simple underlying truths. But awareness and understanding is growing today, as the citations below attest.

So here comes the simple fact I've been talking about. If it doesn't make you perk up with interest, it should. Don't leave this page until the importance of what I'm saying starts to dawn on you:

Under our current “fractional reserve banking system”--created in 1913 with the establishment of the Federal Reserve system--the United States money supply today is entirely created by private banks when they make loans. (The actual printing of physically-circulated paper money on government printing presses is irrelevant; it’s entirely secondary to this process of money-creation by banks.)

That's it. All money in circulation today is created by private bank loans.

Now you are probably either curious, startled, confused, skeptical or ready to go to sleep. Assumuing you're at least still awake, you might be asking, "How can this be?" or "What difference does that make?" or "What exactly are you saying?" What I'm saying, in short, is this:

When you “borrow” money--to buy a house, for example--the bank does NOT go to some reserve stash of dollars and lend you pre-existing money they have in their vault. No. The money that is “lent” to you in truth gets created by the bank out of thin air.

Confused? If so, part of your confusion probably stems from the fact that the term “loan” is a total misnomer. Money isn't really "loaned" when you take a loan. It's created. It's created simply through an accounting mechanism: the amount “loaned” is entered into your deposit account, and an equal amount is entered into the bank’s corresponding account as a new “asset,” i.e. what you owe the bank (plus accruing interest).

That’s the technical mechanism I'm talking about. All the money in circulation, with the exception of the metal coins minted by the government, comes into existence through this mechanism of bank loans.

Of course, there is more to the story. For instance, there are restraints on just how much money the banks can create--this is where the "fractional reserve" rules come into play. But none of the pieces that I am leaving out affect this one fundamental fact: the fact that all the money that exists today is created through the loans that banks make. (Many more details, and reliable sources verifying what I have said so far, can be found in the books, pamphlets and videos I list at the end of this blog.)

Assuming you can absorb this crucial fact, which may or may not seem a little mind-bending, you are ready to understand why this money-creation mechanism is much more than a mere technical detail, and is of such enormous consequence for the public well-being.

ALTERNATIVES HAVE EXISTED IN MODERN INDUSTRIAL NATIONS

First, it’s useful to understand that it doesn’t have to be the way it is today. Although today’s “debt-based” system is the way money-creation now works all around the world, robust, alternative methods of money creation have in the past existed in the United States, Canada and elsewhere, funding energetic economies that gave people meaningful work and built schools, hospitals, roads, etc., without creating inflation or painful boom/bust cycles. Under the alternative system I am here referring to, money was created not by banks, but by the government itself, and it was created, not as loans tied to debts, but as money existing independently of debt that was spent into existence to fund public projects.

Such a system of government-issued money operated, for example, in Canada from the Great Depression until 1972, and in the United States, to take the most recent example, during the decades after Lincoln created the government-issued “Greenbacks” to fund the Civil War without going into debt to banks. Indeed, the alternative of government-issued paper currency is as American as apple pie: government-issued paper currency was an American invention. It paid for the American Revolution. Before the Revolution, the American Colonies had invented such money as a way of dealing with the extreme monetary scarcity imposed by England. It was on the basis of this American-government issued cash, the Colonies built prosperous economies and the foundation of American independence. Ironically, the current monetary system, based on private bank debt, was a later importation from England -- an importation, some argue, that made its way to our shores through rather nefarious means. The story of how the banks acquired the money power in the United States, even though the U.S. Constitution specifically reserves the nation's money-power to Congress, is a story worth reading.(For the Canadian system, see the Bill Abram's videos on You Tube; for dicussion of the Greenback currency and American monetary history generally, see Zarlenga and Brown. For the story on how bankers achieved the passing of the Federal Reserve Act that established the current system, see Rothbard.)

WHY IT MATTERS -- SOME DISASTROUS CONSEQUENCES OF THE CURRENT MONETARY SYSTEM

Why should we be interested in alternatives? Because the architecture of our monetary system has as profound consequences for the moral fabric and well-being of our society as does our culture or our politics. And because the present monetary system gives rise to many of the worst features of our current political-economic system, for example:

1) Under the current system private banks, by deciding where to make loans, decide the direction of the country’s primary energy and activity — Will they fund war industries? Housing bubbles? Environment-exploiting companies? The top 1% of earners? Or education, hospitals, roads and bridges, green technologies, and healthy democracy? To whom will the money be made available? Of course, banks choose to lend the money in whatever way will make them the highest return. Whatever the banks decide, that’s where the money will be, and the energy and action of the people will follow, because people need jobs. Will our national energy be dedicated primarily to achieving what the world most needs? Or instead to achieving the private-enrichment schemes of a very few? This decision is in the hands of those who have the money power. Today, that would be the world's private banks. Ever notice how much the financial sector has grown in comparison to all other sectors of industry over the past 100 years?

From the perspective of job-seekers, one result is that we are all generally constrained to line up for a job at the door of those whom the banks deem worthy. There are few jobs, and to take a high-paying one too often means working to achieve goals that are not necessarily in the best interest of all. A just monetary system, in contrast, would put all of the people into action in building the common well-being. Full employment should signify nothing more than mobilizing the available energy of every person in constructing the wonderful world that we all want. Our present monetary system instead funds the most powerful private interests, those who are best at exploiting others, and these folks, in the short term, benefit from high levels of unemployment that keep wages low.

2) Under the current system, if we the people (the public sector or government) need money, we must borrow it from the banks and pay the banks back with interest. This makes no sense. As Thomas A. Edison and others have realized, if the government can issue an IOU to the banks in return for money, it can just as well issue the money directly, without having to pay interest. (That's why Lincoln created the U.S. Greenback currency 150 years ago, to pay for the Civil War without having to put the government in debt to banks. It worked.) The current system presents an absurd situation where we have delegated the money-power to private interests, who then charge us a whopping price for the extraordinary privilege we (for the most part unknowingly) have granted to them. One disastrous consequence is that public projects cost us taxpayers a multiple of 3 to 5 times more than they need to, due to interest charges. Money needed for education, roads, hospitals could be many, many times more abundant, helping to secure our future prosperity for generations. Instead the money is in short supply.

3) Because under our system all money is created through "loans," more money is always owed than is actually created. Whether you look at an individual loan or the aggregate of all loans, the bank creates (i.e. "loans") x amount of dollars, and always demands back “x + interest.” In other words, as a structural necessity of the system, more money is always owed to banks than exists. This creates a situation of inherent scarcity and competition, with terrible moral and environmental effects, harming the social fabric and the ecosystem.

The only way for any person or business to pay its debts is to get money from others, which increases the general monetary scarcity and competition, and also means that some must by necessity go bankrupt. The current system places us all in competition with one another to get scarce money, supporting rapacious practices and fueling exploitation of the environment and of people.

Since the only way to expand the money supply is to borrow more money, this system locks our society onto a path of exponentially increasing growth-and-debt. It’s not an accident that people and governments have been accruing exponentially-growing debts over the past century.

This monetary system has its deep and pervasive psychological effect: at some level we are all vaguely aware, even if we don't understand the reasons why, that there is not enough money to go around. This breeds fear and cynicism in the culture generally and in our individual psyches: the fear that any one of us could fall victim and discover ourselves in abject poverty (the system as structured requires that some must go penniless), and the cynicism that the law of the world is tooth and claw, with individuals ultimately out for themselves alone. It doesn't have to be this way at all. The goodness still left in our hearts, and the hope we hold out for a different future, derives from a past when things were different.

MONETARY REFORM & INNOVATION -- FINDING SOLUTIONS TO SUPPORT HUMAN WELL-BEING GLOBALLY

Our world can’t shift its current unsustainable course without radically reforming the monetary system. It's an essential piece of the puzzle.

I am aware of one movement for radical reform at the national level, and thousands of movements at the local level. At the local level, new community currencies are helping to relieve communities from their dependency on conventional, bank-controlled money, and to provide new ways of unleashing local, self-directed energies and capabilities. There are many varieties and experiments with local currencies going on today — some are only extensions of the current system; others hold the promise of creating something truly new and exciting. There are even glimmers of possible new exchange mediums that, some think, could even eventually replace money as I have spoken of it altogether.

At the national level, the reform effort of most interest to me is the one being pushed by the American Monetary Institute and Stephen Zarlenga, in alliance with Dennis Kucinich.

REFERENCES

I hope you're interest is piqued and that you'll enjoy learning more. Here are a number of books, videos and authors who treat some or all of the things I’ve been discussing. Stop by again and tell me about what you're learning.

1. Stephen Zarlenga, The Lost Science of Money. See Zarlenga's American Monetary Institute for additional publications and links. (See: www.monetary.org)
2. Ellen Brown, The Web of Debt (See: http://www.webofdebt.com/)
3. Bill Abram on Canada’s Banking System, parts 1-4 on YouTube
- Part 1: http://www.youtube.com/watch?v=jghiU55O5eY
- Part 2: http://www.youtube.com/watch?v=FyHpaHo71mQ
- Part 3: http://www.youtube.com/watch?v=1ixeDP5LEEQ
- Part 4: http://www.youtube.com/watch?v=hLtretltL3I
4. Robert de Fremery, Rights vs. Priveleges.
5. Bernard Lietauer, The Future of Money.
6. Paul Grignon, Videos (available on YouTube):
- “Money as Debt,” parts 1 & 2;
- Website: www.moneyasdebt.net
7. Murray N. Rothbard, The Case Against the Fed.
8. Thomas Greco, The End of Money.
9. Peter North, Local Money.
10. "A Primer on Money: Subcommittee on Domestic Finance, Committee on Banking and Currency", [Wright Patman (Texas), Chair], House of Representatives, 88th Congress, 2d Session, August 5, 1964. U.S. Government Printing Office, Washington, 1964.
11. Modern Money Mechanics: A Workbook on Bank Reserves and Deposit Expansion, Federal Reserve Bank of Chicago. (Online at: http://en.wikisource.org/wiki/Modern_Money_Mechanics)

______________________________

Marc Tognotti, Ph.D.,
Co-Director, Institute of the Commons
http://www.iotc-hub.org
E: marc@iotc-hub.org

H.R. 6550: National Emergency Employment Defense Act of 2010

Kucinich has introduced a bill to fundamentally reform the American monetary system. If passed, I think it could be the most significant act of Congress ever.

Because almost nothing affects so many things as does money, monetary reform has potentially huge consequences. Due to the current fiscal crisis, certain long-unquestioned, very basic assumptions about money -- what is it? who really creates it? how is it introduced into the economy? what are the consequences? what alternatives are there? -- are receiving new attention, making real reforms at least thinkable.

The Kucinich measure holds within it the possibility of funding full employment, universal healthcare and public education, and of repairing the national infrastructure, while eliminating the Federal debt and boom and bust cycles of inflation and deflation. It promises to reduce the exploitation of people and the environment. As I said, it can affect so much, because this is about reforming the monetary system, and nothing affects so many things as does the monetary system.

Yet I am curious whether what the bill proposes -- the assumptions it questions, the simple but at first difficult-to-fathom concepts it introduces -- has any real chance of making its way into public discourse. I wonder whether it will be able, even, to get any real hearing in Congress.

There are a lot of passionate, smart and dedicated people who have shepherded this bill, and the thinking and historical awareness behind it, this far. But I don’t imagine it’s that difficult for those interests who will feel threatened to make any serious, thoughtful consideration of what it says impossible. Sometimes I wonder if a chief function of our government, media and educational systems hasn’t been to keep people distracted from every fundamental question and insight.

The full text of the bill -- it’s being called the National Emergency Employment Defense Act of 2010 (H.R. 6550) -- is available at:

http://www.govtrack.us/congress/billtext.xpd?bill=h111-6550

A good background piece can be downloaded at:
http://www.monetary.org/32pageexplanation.pdf

Prosperity & Community - And Canada's Great Monetary Experiment

In this engaging set of video clips (see below), Bill Abrams, a retired, 85-year old Canadian high school teacher nicely tells the story of modern money and banking that, I hope, is gradually working its way into the public awareness.

The story he tells, which parallels what has happened in the United States and elsewhere, is about Canada’s growing national debt and the gradual bankrupting of its community life, individual freedoms, and public goods and services consequent to the adoption and spread of the “fractional reserve banking system.”

This is the system the United States, without public debate, adopted in 1913 with the creation of the Federal Reserve. Ever since, our country’s direction has been largely determined by private banks, our national debt has grown exponentially, and we have been subject to unnecessary cycles of economic boom and collapse.

Abrams talks about how Canada for many decades operated on a different monetary system — a healthier system that pulled it out of the depression and enabled Canada to build a national infrastructure, full employment, and safe, happy communities from 1935 to 1972, without incurring any significant public debt.

But as Abrams relates, in 1972, under pressure from the international banking system, Canada too adopted the debt-based, fractional reserve currency-issuance system. Since then, its public debt has been skyrocketing year after year, and interest payments to banks on that debt have been taking an ever-larger piece of the public budget. In other words, Canada joined the club.

Perhaps surprising to many, the United States, too, has at times enjoyed monetary systems that were in fundamental ways like what Canada had in place from 1935 to 1972. In fact, the American Colonies invented similar systems when they devised paper money to fund local prosperity. It was British opposition to Colonial-issued paper money that helped to ignite the American Revolution. Abraham Lincoln resurrected such a system when he started issuing the famed “Greenbacks” in the mid-19th century, to fund the Civil War without going into debt to banks. But, like the Bank of Canada, Lincoln's Greenback system was gradually displaced by modern banking, and with similar results.

Similar stories have occurred elsewhere. For instance, there is the dramatic example of the Island of Guernsey, which I wrote of elsewhere (Guernsey).

All of these stories renew hope for a world where every community can rediscover its way to creating a world of safety and prosperity, where we lead more fulfilling and meaningful lives, in more caring and neighborly communities.

The stories also suggest that local communities – towns, neighborhoods, counties — have it within their power to create complementary currencies that can help them regain the sovereignty and self-sufficiency they have lost to the “system,” i.e. to large private and public institutions and the marketplace that they control. The phenomenon of local currency creation is one of the remarkable stories going on around the world right now, with many thousands of examples springing up around the world.

Money in its essence is a human creation, an artifact of the law — or, more fundamentally, of human agreement. Money, in its essence, is simply a powerful enabler of human cooperation. It can be understood as an acknowledgment of service rendered, and the promise of the same in return. Money is therefore simply a sign of trust. Even in our corrupt, privatized system, and despite money’s alternating “golden” and “filthy” emotional associations, this mutual trust is still the underlying core from which money derives and that makes money work. Our current monetary system, which uses privately-issued bank debt as a substitute for money, falls sadly short of fulfilling money's social promise. A good money system builds community trust and capacity, and engages everyone in building a world that benefits all. How we create money is a great piece of the puzzle for setting the world on a better and different course. History shows that there is a better way.

Here are the Bill Abram video clips:

THE CRIME OF THE CANADIAN BANKING SYSTEM: Bill Abram

Part 1 (http://www.youtube.com/watch?v=jghiU55O5eY)
Part 2 (http://www.youtube.com/watch?v=FyHpaHo71mQ)
Part 3 (http://www.youtube.com/watch?v=1ixeDP5LEEQ)
Part 4 (http://www.youtube.com/watch?v=hLtretltL3I)

Other people who are telling the story, each from a different angle, include:

- Stephen Zarlenga, The Lost Science of Money
- American Monetary Institutute - www.monetary.org
- Bernard Lietaer, The Future of Money
- Robert De Fremery, Rights and Privileges
- Ellen H. Brown, The Web of Debt
- Thomas H. Greco, Jr., Money: Understanding and
Creating Alternatives to Legal Tender
- Paul Grignon, Videos (available on YouTube): “Money as Debt,”
parts 1 & 2; Web: www.moneyasdebt.net

“All of the perplexities, confusion and distress in America arises, not from the defects of the Constitution or Confederation, not from want of honor or virtue, so much as from downright ignorance of the nature of coin, credit, and circulation” -- John Adams

The American Monetary Act

The American Monetary Act, a legislative proposal intended for U.S. Congress, recognizes that through the creation of the Federal Reserve in 1913, private banks effectively took over from Congress the sovereign power to create money, and that this has resulted in “a multitude of monetary and financial afflictions, including:

• an uncontrollable national debt
• excessive taxation of citizens
• inflation of the currency
• drastic increases in the cost of public infrastructure investments[*]
• excessive un- and under-employment and
• erosion of the ability of Congress to exercise its Constitutional responsibilities to provide for the common defense and general welfare”

[Notes: Bullets added.]

The proposed legislation, created chiefly through the initiative of Stephen Zarlenga and his American Monetary Institute, is breathtaking. It is brief, simple, commensensical, practical, revolutionary. The Act isn't entirely new: it's an update of legislation first proposed by respected American economists in the 1930's. Zarlenga lays out the rationale for it at the end of his magnificent (if inexpertly edited) 700-page globally comprehensive history of money, which he personally gave me a copy of back in 2002 or so, The Lost Science of Money.

The language of the Act is relatively simple, but it may still be too laden with technical terms to be easily comprehensible to the newcomer. A supporting, 32-page explanatory pamphlet available at Zarlenga's web site can be downloaded here. This document itself is one of the best primers on the current monetary situation that I have seen. It gives a good synopsis of Zarlenga's book as well as of the proposed Monetary Act. I recommend that newcomers to monetary policy read this pamphlet before diving into The Lost Science of Money. It will make the larger book more easily comprehensible by providing a clear overarching framework.

Among other things, the proposed American Monetary Act is intended to:

• Convert our money system from one running on debt-based money (today’s money that is created primarilty through private banks "lending" at interest) to one running on real money issued directly by the government.
• End “fractional-reserve” banking (where 95% of money in circulation is created through bank loans), making banks into what almost everyone today already believes that they now are, banks of deposit that manage real money.
• Over time, eliminate the national debt and burdensome interest payments on that debt, which eats up a large and growing portion of our tax dollars.
• Catalyze spending on public needs at a fraction of prior cost and in the service of full employment and enhanced productive capacity by bringing additional money into circulation, not through lending, but through debt- and interest-free spending on public works. (Under the current system, the costs to government for infrastructure construction are increased 100%-200% by unnecessary interest payments to banks.)
• Keep inflation at bay by matching new disbursement with expanding productive capacity.
• Reduce or replace taxation with government issuance of money through spending on public priorities. 
• Bring the Federal Reserve, now a consortium of private banks only nominally overseen by government, within the U.S. Treasury.
• Help to eliminate the terribly destructive boom/bust cycles that further enrich the elite at the expense of the rest, in part by replacing the "house of cards" of "credit money," which is like an unstable Ponzi scheme, with real money.
• Reduce influence of private interests on government.
• Provide a new, ethical princple for government monetary policy: that of “furnishing sufficient liquidity to support the reasoned sustainable expansion of the physical economy, providing for the common defense and general welfare of the United States, and full employment of the nation’s working population.”
• Set out country on a new healthy course more supportive of the common good.

Reading the Act, I find it quite beautiful to imagine all of us exchanging the filthy luchre of “Federal Reserve Notes” for cleaner, greener “U.S. Money,” and throwing the old notes in the trash. This is in the section stipulating that, in timely fashion: “the Secretary [of the Treasury] shall establish the capability of converting outstanding Federal Reserve Notes to United States Money of equal face value upon presentation to any domestic ... financial institution by the bearer;" “all fund accounts within United States financial institutions shall be denominated only in United States Money; and “The Secretary shall promptly dispose of all Federal Reserve Notes upon receipt.”

The fact that this Act can be proposed in such straightforward simplicity seems to me a good sign. If Obama and his ilk were ever publicly to take notice of it, I would know they were for real. Bernanke the current Fed Chair seemed a pile of nerves in one interview where I saw him responding to unprecedented focus on the Federal Reserve, as Ralph Nader and others began asking for a first-ever comprehensive audit of that institution. But it seems to me that the Fed has, for now, successfully deflected the recent scrutiny.

As Thomas Alva Edison once remarked, if the U.S. Government can issue IOUs to private banks (as it now does to the Federal Reserve at interest, with the banks subsequently creating the money supply through subsequent loans based on this initial fractional reserve), the government can just as well issue U.S. currency directly.

Here, again, is a link to Zarlenga’s proposed American Monetary Act (http://www.monetary.org/American_Monetary_Act_version_10_feb_06.htm).

Toward A More Just Money System (Money as Debt II - Video by Paul Grignon)

A set of short, animated videos by Paul Grignon -- available on YouTube and entitled "Money as Debt II" -- provides a pretty good overview of money and its history as I’ve been learning about it over the past several years, and points to the historical opportunity we have today of transforming money to the world's benefit.

The videos tell the story, in brief, of the rise of our current private-bank-controlled, debt-based monetary system, and point out some of its consequences in, for example, unsustainable environmental exploitation, gross economic injustice, overwhelming imbalance and concentration of power, war, and a whole host of familiar ills.

A valid point is that the current money-system, while it gives rise to many evils, has also unleashed extraordinary human productivity by introducing extraordinary liquidity into the world of human relations and human exchange. Defenders of the current system have a legitimate perspective: If a population is thirsty, then even filthy, muddy water is a godsend. Dirty oil is preferable to no oil to keep an engine running. Maybe this is why our emotional response to money has always been so ambivalent.

But now with historical hindsight growing rapidly in the wake of modern progress, we are gaining the clarity necessary to separate the baby from the bathwater; i.e. we are opening a new prospect of having abundant money, but clean stuff, rather than filthy. Imagine clean money that helps repair the world, that builds human relations of cooperation and mutual benefit rather than extends systems of domination and exploitation, that supports rather than destroys a healthy environment. Can we exchange our filthy luchre for pretty?

The history of money is a story whose basic arc, I hope, will gradually come to the public’s attention over the next several years. ("The cat is out of the bag," I say to myself. "Too many people are starting to write about this and spread awareness. How many years will it take before these new realizations about our money system reach the general public? Five? Ten? Fifteen?" Or am I overly optimistic and is the capacity of mainstream propaganda simply too much to overcome?)

Grignon's video series points, in its final segments, to the existence and need of such alternatives to the current system. (I noticed, for instance, passing references to the Guernsey dollars I blogged about some months ago, as well as to colonial scrips, the old U.S. Greenbacks, and to the currently burgeoning community currencies, all of which I’ve also commented upon.)

The videos even make brief reference to Stephen Zarlenga’s work at the American Monetary Institute and his American Monetary Act, legislation [discussed in my following blog] that Zarlenga hopes to bring before Congress and in which Dennis Kucinich has shown an interest. (Look for the unidentified cartoon images of Kucinich and Ron Paul that briefly pop up in the Grignon videos; alert me if you see others that I missed!) I believe Zarlenga’s thinking is a bit stronger and clearer in some respects than Grignon’s, but these videos are very good nonetheless; then again, Grignon no doubt has valuable insights of his own to bring to Zarlenga's thinking.

To see the videos, click here (series 2) or here (series 1) and/or search YouTube for:

money as debt ii promises unleashed (1 of 8) through (8 of 8)
money as debt (1 of 5) through (5 of 5)

See also:

Stephen Zarlenga: His book, The Lost Science of Money and his non-profit organization, The American Monetary Institute (http://www.monetary.org/)

The American Monetary Act (at http://www.monetary.org/)

Paul Grignon's Web site (http://www.moneyasdebt.net/)

Ellen Hodgson Brown: Her book: The Web of Debt (http://www.webofdebt.com/) -- Brown’s book is a good overview and compendium of many of the things Zarlenga addresses, and it’s more accessible and more focused on modern U.S. Monetary history (but much less historically comprehensive).

The Money Masters: How International Bankers Gained Control of America (http://www.themoneymasters.com/) -- This 3.5 hour video can also be found in free segments on YouTube; it’s a great and revealing piece, although the unfortunate and strong “conspiracy theory” tone and slant might drive some people away.

Henry George Institute (http://www.henrygeorge.org/) -- The above thinkers are concerned with the privatization and monopolization of the inherently public money power by the private banking system. The economist Henry George instead focuses on another critical and related concern: the privatization of the earth, or land.

The 50-Year War and The Greatest Power in America

I just finished reading an article by Jonathan Schell, The Fifty-Year War: We Learned So Much, At Such Cost, In Vietnam. Why Must We Learn It All Again In Afghanistan?

Schell ends with a question concerning the greatest power in America. He asks: “What is the source of this raw power [over] presidents, Congresses and public opinion? The person who can answer these questions will have discovered one of the keys to a half-century of American history--and the forces that, even now, bear down on Obama as he considers what to do in Afghanistan.”

What power is Schell talking about? He's talking about the power that causes American democratic presidents to get involved in and maintain wars that they know cannot be won.

Schell begins by invoking what has now become a cliché, a purported lesson of Vietnam, that “you can't win a guerrilla war without winning the "hearts and minds" of the people.” Even General Petraeus says about Afghanistan, “the decisive battle is for the people's minds.”

But Schell argues, the Democratic presidents and advisers who led us into Vietnam and who are now keeping us in Afghanistan have known in advance that this is an impossible objective, an unwinnable battle. Occupying a country to fight a war on its behalf itself undermines the possibility of winning the hearts and minds of the people. Schell: “The art of victory has to be to try to set up a government that can both survive US withdrawal and serve US interests. The circle to be squared is getting the people of a whole country to want what Washington wants. The trouble is that, left to their own devices, other peoples are likely to want what they want, not what we want.”

The remarkable fact, Schell says, is that Vietnam wasn’t simply a mistake in hindsight. It was already known to be a mistake in foresight – but our Democratic presidents did it anyway.

So the question is, why? Why do we go into and maintain wars that we already know are unwinnable, given the self-defeating aim of creating stable self-government for others through violence?

The reason and motivation of the democratic presidents, Schell says, has little to do with either the logic of foreign affairs (e.g. the domino theory or what have you) or an unfailing optimism concerning fighting strategies (if we could just fight it better, we might win) -- but lies instead within domestic politics itself.

Lyndon Johnson "didn't want to listen" to doubts about the war because he “was afraid that if he did anything to ... appear to appease the North Vietnamese, he would be severely criticized by the right wing of American politics."

Similarly, the resounding defeat of McGovern “seemed to confirm [the Democrat] fears that had haunted Johnson: those who oppose or lose wars lose elections.”

Our foreign wars are “really a matter of domestic politics” -- the Democratic leaders’ fear of the right.

Democratic presidents go to war, and presumably do many things that are counter to their beliefs, because they are afraid of the right wing, and the power the right wing has to sway the mind of the electorate.

Interestingly, this takes us back to the opening focus of Schell’s essay. In other words, foreign wars are indeed about “a battle for the mind and hearts of the people” -- but “the people” is us.

The "great power" that Schell is seeking to understand -- whose "source" Schell calls a "key" to American history -- is this presumed power that the right has over the left and over the American people itself.

I’m led to reflect on a politics structured as a competition among representative “leaders” to achieve (by any devices available) popular support (however blind and superficial). We have a politics based on manipulations of appearances, of representatives making representations -- a politics of illusion.

I also notice that, while Schell points to a weakness in Democratic leaders, which is above all the fear of appearing weak (leading ironically to an assertion of "strength" in war), Schell doesn’t seem to account for right-wing hawkishness itself, which would seem to be the “origin,” in his framing, of this entire dynamic.

I find myself wondering if Schell is invoking two interdependent halves of the American psyche, linked by something in common that runs very, very deep: On one side are the right-wing accusers; on the other, the tail-between-the-legs, appeasing left-wing wimperers — who choose, ironically, to cover up their own weakness by going to war. I wonder if this might point to the underlying psychology of the right as well: posturing hawks who posture to cover up their own weakness.

If so, maybe this melds with the thought that we have a politics of illusion: we are all citizens of a country based on creating the illusion of its own power, a country whose trajectory is the trajectory of an assertion of power and control based on an underlying experience — that must be hidden at all costs — of weakness and vulnerability.

The main players in this whole scenario are neither the leaders of the left nor those of the right, but "the people" whose "hearts and minds" each side is engaged in trying to win over. Apparently, both sides come together in one belief: of all the things that the people at large cannot accept, it is this thing called "weakness." We are a nation unified, it would seem, in our readiness to point our collective finger at "weakness." We will not be taken advantage of, we will not be threatened, we will not be dominated.

I wonder if politics and the media in which it subsists has become above all a playground for the personal fantasies of a dominated, powerless public.

Perhaps we are profoundly afraid of weakness because weakness means relaxing the pressure of domination that is constantly being felt and replicated by the great majority of individual psyches.

Schell's question of this "power" might hide a more fundamental question: when, in our collective history, in our individual and aggregated personal histories, were we subjected to a fear that became so fundamental that we daily carry it in our being and in our orientation to the world and one another?

If the "source" of the power Schell is after is neither in the leaders of the right nor of the left, but in the American people itself, in our deep fear of weakness, or in our collective attempt to cover up the sense of our own powerlessness, then what is the appropriate action for us to take? If America was in Vietnam, and is now in Iraq and in Afghanistan for reasons having more to do with the domestic political psyche than in circumstances external to us, then what is the appropriate action for us to take as a people?**

One thing I know is that fear rigidifies the heart and the mind, obstructing the flow that is necessary to experience love, healthy thinking and authentic power.

**People who know me will know the remedy I advise, taking my cue from Thomas Jefferson: create a national system of elementary republics capable of reuniting the people, at the grassroots level outside of partisan politics, in the discovery and cultivation of common vision, agreement and coordinated action. This is my vision for a national system of neighborhood assemblies. Find out more at:
http://sfnan.org/iotc/navlist/gen_page_main.php?id=65&navlist=left

Reinventing “Money” to Serve the Public Good – How Small Communities Can Lead the Way

The remarkable story of a small independent state in the Channel Islands, Guernsey Island, demonstrates a topic I’ve been revisiting lately(1): how what we call “money” could actually be reinvented to serve the common good — that is, how our present-day money system could be transformed so that, instead of lining the pockets of a few fat cats, it might foster a more just and widely-distributed prosperity for all.

The Guernsey story is in addition a case study in how small, local, face-to-face communities — where innovative thinking, tight coordination, trust and commitment are uniquely possible — may be essential to the kind of social and economic innovation that the world is so much in need of. Guernsey is one more exemplar of why, as E.F. Schumacher stated in his famous book, “small is beautiful.”

A SMALL COMMUNITY REBUILDS ITS OWN ECONOMY WITHOUT OUTSIDE HELP

The story begins in the early 1800’s, when Guernsey, a community of 16,000 (2), was economically on the ropes -- as was much of Europe during the hard times caused by the Napoleonic Wars of 1803 to 1825.

The conventional wisdom presumed that every community had to suffer with the downturn in the wider financial system. With the larger economy in bad shape, what could little Guernsey do? It seemed a victim of circumstances beyond its control.

But, thrown to its own devices, this island community came together to defy the conventional wisdom. In a surprising tale of success, Guernsey invented a different kind of money that enabled the community to pull itself out of a woeful period of depression and unemployment, rebuild its severely deteriorated infrastructure, cancel its public debts, and become an exceptionally prosperous, fully employed and happy place.

This all started in the second decade of the 19th century, when Guernsey found itself in terrible shape. “[The] trade of Guernsey was practically extinguished and the people were in despair. Unemployment was rife, ... there were practically no roads.”(3) What roads they did have “were muddy and only 4 1/2 feet wide.”(4) The island’s “sea walls were crumbling,” “public buildings were in disrepair and, above all, a new market house, where the islanders could exchange their produce, was urgently needed.” Not surprisingly, people were leaving Guernsey and there was little employment.(5)

There seemed nothing the community could do. They were stuck between a rock and a hard place. Higher taxes were out of the question. “It was impossible for the Government to finance these necessary improvements out of revenue, as this only amounted to £3,000 yearly, and of this amount £2,400 had to be used to pay interest on its public debt of £19,000. Nor could the necessary finance be obtained by borrowing; the Government sought indeed to raise a loan, but such was the poor state of the island's assets that the only would-be lenders demanded the prohibitive rate of 17 per cent per annum.”

In short, “Orthodox finance could do nothing to get the people out of the depression caused by the Napoleonic wars.” (6)

In the middle of these financial straits, some people began to see an unnerving irony. Large numbers of unemployed people ready and able to work were everywhere on hand, as were the material resources needed to get the public work done. Activity was at a standstill only because there was no money available, except at prohibitive cost. Under this nonsensical situation, someone had an epiphany: “there was nothing to prevent the Government issuing its own money.” (7)

[T]he idea put forward that the State should issue its own money daily gained ground. It was argued that, as labour and materials were both available, it was absurd for improvements to be held up simply through lack of money, and as conditions became even worse, this plan served to provide the only solution. Finally, after various setbacks and considerable opposition, the adherents of State money carried the day and, in 1816, 4,000 notes of £1 each were printed by the Government and paid out for the most urgent repairs. (8)

The notes were issued to pay for the reconstruction of Guernsey’s sea walls, and once paid out, they began to circulate in the local economy, enabling people to begin freely exchanging goods and services once again. The locally-printed money worked like a magic dust to awaken the productive activity of the islanders.

By the success of this issue the principle was established, and during the next 20 years the Government authorised notes to the extent of £80,000, which were utilised in building the new Market House, schools in every parish, roads all over the island, St. Elizabeth's Cottage, etc. (9)

[T]he appearance of the island changed out of all recognition. From its backward and depressed state it became, within 20 years, renowned for its well-being. Moreover, by issuing State money, this transformation was carried out without increasing the island's national debt and without incurring interest charges. In fact if interest had been payable on the capital sums for these improvements, they could not possibly have been carried [out]. (10)

Since the astonishing success of its initial experiment, Guernsey continued a string of public issues of money well into the 20th century:

[In 1816, the initial] 4,000 pounds were used to start the repairs of the sea walls. In 1820, another 4,500 pounds was issued, again interest-free. In 1821, another 10,000; 1824, 5,000; 1826, 20,000. By 1837, 50,000 pounds had been issued interest free for the primary use of projects like sea walls, roads, the marketplace, churches and colleges. This sum more than doubled the island’s money supply during this thirteen year period, but there was no inflation. In the year 1914, as the British restricted the expansion of their money supply due to World War I, the people of Guernsey commenced to issue another 142,000 pounds over the next four years and never looked back. By 1958, over 542,000 pounds had been issued, all without inflation. (11)

Ellen Hodgson Brown summarizes: “When it wants to create some public work or service, [Guernsey] just issues the money it needs to pay for the work. The Guernsey government has been issuing its own money for nearly two centuries.” Brown adds that Guernsey has a simple, low and loophole-free 20% flat income tax. And no government debt. (12) Inflation has been kept at bay because increases in the amount of money in circulation were matched by the growing number of goods and services available for people to exchange with one another.

Unfortunately, according to historians, Guernsey’s exercise of self-reliant power today isn’t quite what it used to be, due to the intervention of private banks. Starting as early as 1827, banks began focused efforts to halt Guernsey’s control of its own local money supply; the banks questioned the legality of the issues, set up competitive and linked systems, and found various means to influence Guernsey public discourse and legislation. Through such means, the banks succeeded in severely blunting Guernsey’s independence. “Although since 1914 the Guernsey Government has again issued its own notes, these are now always covered by the Government deposits with the banks, and as today Guernsey currency is linked with Sterling, these notes are issued or withdrawn in conformity with orthodox principles.” (13)

The Guernsey story is by no means unique. Many other governments — including, famously, the American colonies (14) — have generated local prosperity through issuing their own money. But “Guernsey is one of the few to have stayed under the radar long enough to escape the covert attacks of an international banking cartel bent on monopolizing the money-making market.” (15)

DEVELOPING LOCAL SELF-EMPOWERMENT FOR GLOBAL BENEFIT

Guernsey’s success was in part due to its luck in staying “under the radar long enough” for local innovations to gather steam without outside interference. Such possibility of flying “under the radar” of larger governmental and private institutions – or, more to the point, of communities acting on their own initiative and sense of entitlement – is part of what gives us hope today. Guernsey tells us that there is room, here at the grassroots level, underneath the big institutional superstructures, for reinventing the world where we live, with our friends and neighbors, in our local communities.

We are not limited to fighting the existing behemoth institutions that dominate the system – big government and big business. Instead, local innovation in small communities can lead the way. The lesson we take from Guernsey is that small communities can begin to act on their own for change, in ways that can have consequences around the world. When communities lead, government and even business will often follow. We do not need to fight the problems when we can take initiative to create the solutions. (16)

If local communities can begin to realize and exert their own power, and eventually create a new layer of thoughtful cooperation and action at the grassroots level, our hope is that local communities can eventually coordinate on a wide scale to bring the world back into balance, locally and globally, infusing the ethics and qualities of healthy face-to-face, human-scale communities back into the larger system.

Today, there is more room than ever at the grassroots, because government and big business are more remote than ever. Even while we are more dependent on the control of distant forces than ever before, the conditions for self-organizing local action have also become more propitious.

Perhaps that’s why, today, little Guernseys are springing up everywhere, and in a variety of areas including economics, food production, land ownership, health, direct democracy, etc.

Our work at Institute of the Commons (http://www.iotc-hub.org) is dedicated to creating the small-community skills and infrastructure that can support such innovation and networked collaboration among small communities and neighborhoods.

ADDENDUM: THE GLOBAL LEARNING CURVE -- MONEY AND DEMOCRACY

The Guernsey story shows that, underlying the phenomenon of money even as it functions in the present system, are the keys to a broad public power with enormous potential that has not yet been fully realized. We have learned that money as a tool can unleash extraordinary productive activity in large populations.(17) What we haven’t fully learned is how this money power can be wrested from private control in order to serve the common good.

This is not the place to go into detail about the current money system of the United States, established with the institution of the Federal Reserve in 1913, and modeled on the British banking system. But a few outlines can be drawn to indicate the deeper relevance and import of what we are discussing.

Under the Federal Reserve system, the U.S. Government does not issue its own currency, but instead leaves the issuance of currency in control of the private banks that form the Federal Reserve System. The money supply is increased in the U.S. only when private U.S. banks make loans. Our Government, unlike that of Guernsey in the story, must borrow all the money that it spends by selling bonds that pay interest. Over time we have built up an enormous national debt that consumes an ever-larger percentage of annual revenues.

Moreover, because all money in the United States is created only through bank loans that require the payment of principal plus interest (with the interest owed typically much more than the principal), money is always artificially in short supply. By definition, more is always owed than has been borrowed, forcing competition among debtors such that bankruptcy for some is foreordained, and such that, regarding the system as a whole, the only way to pay off current debt is through additional borrowing, which only creates more debt, and so on ad infinitum.

The current money system thereby fuels ever-expanding, increasingly frantic production and consumption, while growing an increasingly burdensome debt closer and closer to a point of collapse. In a way of which few social and environmental activists are aware, the money system itself thus is a major contributor to the country's most pervasive social, political and environmental concerns. Not only does it favor the concentration of wealth that skews our political process, it also demands a hyper-production and consumption that extracts an unsustainable toll on people and the environment.

Yet our current banking system is only a recent historical development, resulting partly from accident and partly from the actions of the interested parties who developed modern banking and who were able to take private advantage of their insights into its internal mechanisms. Presently, individuals across our society are only beginning to discover and raise broader awareness of the alternative choices that lie before us concerning how money as a social tool is created, used and implemented. (For some emerging voices and insights, see some of the suggested resources listed below.)

Historical examples show that alternative money systems are not just theoretical. They have worked exceptionally well over long periods of time, with highly desirable results.

The choice is ultimately ours, whether the issuance of money will direct human activity towards the benefit of a few, or to the broader common good. We have the choice of producing a democratic currency, based on trust and collaboration, or a currency based on private control, doubt and competition for domination. But how to find our way, burrowing beneath present assumptions and daily practical realities, to discovering and implementing the choices that are actually there for us to take up, albeit only through concerted focus and collaboration? (18)

We believe that the place where full awareness of such choices can be best developed, along with the skills of implementing them, is in the laboratory of smaller communities.

We find hope, excitement and meaningful purpose in the recognition that western civilization hasn’t figured out everything yet, and that some of our most basic and unquestioned concepts and institutions — like money, community and democracy — are only in their infancy. The world is young on a steep learning curve, which means that the opportunity for individuals and small communities, including you and me and our neighbors, to advance the world’s learning is huge.

If people were to become more cognizant of the opportunities for learning and invention that lie near at hand for all of us, we might organize the world in a way that enabled us all to be a part of acting on those opportunities -- of learning and collaborating in the interest of all. That is only another way of defining meaningful, active, thrilling citizenship.

With such a way of thinking, we might begin to transfer our primary forums for learning from our present-day universities to the streets of our communities; we might start to join learning and thinking more directly to real innovation, action and citizenship. Only the domination and routine keep us somnambulating on the prescribed pathways of orthodoxy.

We’ve only barely started as a culture to understand the nature and potential of money. We’ve only barely started to understand the nature and potential of democracy. Small communities like Guernsey, and innovative neighborhoods anywhere can start to lead the way to new discoveries, new institutions, building on the ancient and recent past.

Once we have had the liberating realization that all of our existing institutions are only recently-fashioned stepping stones along a larger human path, roughly-designed and changeable artifices invented out of initial learnings; once we have the realization that each of these stepping stones has been created on the basis of human energies and conditions that we share with our ancient ancestors – joy, fear, desire and love; body, earth, and sky; life and death -- then we together, as individuals and as communities, can begin to feel rejoined to one another and to our ancestors in a great quest that unites us all: the quest to discover and shape the deeper essence and future of humanity itself.

What is it to be human? Who shall we be and what shall be the consequence of our having lived? Shall humans build a legacy of love and cooperation among people living in harmony with the earth? All of us are a part of fashioning the answer, whether we know it or not. To take up the answer consciously is to have a life of meaning.

We are all entitled to weigh the essence, history and future of humankind in our thoughts. We are all entitled to presume, on the basis of care for the common quest, that we have something to say in response to all those who have gone before and all those who are with us now. We would like to create communities designed to support every individual in assuming such eminence.



SUGGESTED RESOURCES

Ellen Hodgson Brown. The Web of Debt. 2007.
Henry George. Social Problems. 1883.
Thomas Greco, Jr. Money. 2001.
Paul Grignon. Money as Debt. (Video. 2008.)
Bernard Lietaer. The Future of Money. 2001.
---------. "Money, Community and Social Change" (Interview transcript. 2003.)
Stephen Zarlenga. The Lost Science of Money. 2002.


ENDNOTES

1. Cf. my earlier blogs: http://tognotti.blogspot.com/2009/06/how-understanding-what-is-money-could.html, and http://tognotti.blogspot.com/2009/04/policy-follows-practice-mammon-or-maman.html
2. For citation of 1816 population, see http://www.islandlife.org/history_gsy.htm. Guernsey’s present-day population (2008) is 68,000; see http://en.wikipedia.org/wiki/Guernsey
3. “History of Guernsey,” at http://www.islandlife.org/history_gsy.htm
4. Bob Blain, “The Other Way to Deal with the National Debt,” Progressive Review (June 1994). Blain is Professor of Sociology at Southern Illinois University. Quoted in Ellen Hodgson Brown, The Web of Debt, 2007, pp. 100-101.
5. D.M. Sherwood, “The Guernsey Market House Scheme,” The Fig Tree Quarterly (No. 10, September, 1938, pp. 190-3. Full article at http://www.alor.org/Library/The%20Guernsey%20Market%20House%20Scheme%20.htm
6. Sherwood, ibid.
7. Ibid.
8. Ibid.
9. Ibid.
10. Ibid.
11. Blain, ibid.
12. Ellen Hodgson Brown, The Web of Debt, 2007, pp. 100-101.
13. Sherwood, ibid.
14. The American Colonies started issuing paper currencies in the 17th century. In 1690, Massachusetts printed the first colonial paper money not backed by any physical thing (backed only by the State’s agreement to receive them in taxes), and spent it into circulation on public projects. Seeing the paper scrip's power to develop local economic activity, other colonies soon followed. Pennsylvania developed another model, creating a State loan office and loaning money into circulation at low interest. According to Benjamin Franklin, it was above all the British Crown's clampdown on the colonial currencies that incited the Revolutionary War. The Revolution was itself funded through the printing of the Continentals, which, even though their value suffered greatly due to the huge British counterfeiting efforts, managed to pay for the war effort – a huge feat. The next great instance, it seems, was Lincoln’s issuance of Greenbacks to fund the Civil War, in defiance of bankers who sought to profit enormously off both sides. Some conjecture that Lincoln's assassination, like the assassinations of McKinley and other Greenback supporters who followed, was due to this threat posed to the financial industry control. The Greenbacks remained in circulation for decades, although banks sought to remove them from circulation in various ways (and ultimately succeeded). The great populist movements of the late 19th century, in which small farmers and urban labor joined forces together against the great industrial and financial monopolies, took the name of the Greenbacks for their party name. For a more detailed account, see Stephen Zarlenga, The Lost Science of Money, 2002, pp. 361ff.
15. Brown, ibid.
16. An aside on the possibility of dual money systems, local and translocal: One insight the Guernsey story teaches is how the money system, when organized and controlled by private entities, can keep communities oppressed (by direct means as well as on the basis of a community’s own ignorance concerning the mechanisms of money creation and control). This insight was understood by the ancient Romans, during the glory years of the Roman Republic before the rise of the Roman Dictators. Hence they created a dual monetary system on the basis of the distinction between local public control of the money supply, and control by private and/or foreign interests. In order to avert outside or private manipulation, Rome used one kind of money, based on gold and silver, for foreign trade, and another currency for domestic trade, based on publicly-issued currency -- fiat currency like the currency created by Guernsey. The dual system combined local control with the capacity to take advantage of international trade, without risking dependency on outside exploiters. In his book The Future of Money (2002) Robert Lieatauer advocates for such a system under his notion of “complementary currencies.”
17. As we have seen, the issuance of money gave rise to amazing productive activity in Guernsey. The same phenomenon on a larger scale can be seen when, with the discovery of the New World, a sudden infusion of gold and silver into Europe led to an astounding new levels of European economic activity. See my blog: http://tognotti.blogspot.com/2009/06/how-understanding-what-is-money-could.html
18. Is money inherently “filthy”? We speculate that what makes money “filthy lucre” isn’t inherent in the concept of money itself. Our belief instead is that our sense of money as a “tainted” object reflects the fact that currency as we know it is under private control, ultimately an instrument of domination, competition and climbing. The public essence of money, the value it gains from the aspirations, needs and desires of all human beings to engage in activity, has been usurped. It’s the manipulation by the usurping parties that causes the stink, not money itself. If the sources of air had been taken over by a very few, and all of us were forced to elbow each other aside in order to get the best air for ourselves, we might begin to look upon the very desire for air, and even air itself, with suspicion and revulsion, not to mention greedy air-grasping humanity itself. With Woody Guthrie, we might say, “Look what your greed for money has done." Yet perhaps the artificially scarce money supply, manipulated under private hands, fosters greed and not money itself.

Through the Mushroom Portal

Looking for mushrooms is a tradition in my italian family. My grandmother would talk about her long walks, with groups of her friends, into the hills of the Garfagnana to look for Porcini mushrooms in the fall of every year. The thought takes me back to Lammari, to the wonderful feeling of people living together, simply, with one another and with the land. The smell of the woods and grass infuses the misty air that we breathe as if it were an extension of the body and flesh, connecting us with the land. Not like here in the city, where we find ourselves in an outdoor artificial container breathing pulverized rubber and road soot, such that we must take refuge in hygienic insulated indoor artificial containers called homes and apartments, sheltered from the loud traffic.

Back in 1999 I decided I’d learn how to hunt mushrooms. I looked on the web and found a listing that said a group of shroomers was meeting in a parking lot near the Pulgas Water temple just south of Crystal Springs reservoir. I went. Three of the five or six people there were italian guys over 70 years old. Che meraviglia.

Looking for mushrooms is meaningful on many levels. Mushroom hunting takes you through a portal into another time, primordial, off the artificial grid. Every good mushrooming park worth its salt has the same sign on its bulletin board near the parking lot: a white skull and crossbones on black with the words “Warning!”, “Danger,” and “Death.” Mushrooms are dangerous. Picking them is verboten. Fines will be levied. The sign in Palo Alto’s Huddart Park says that simply touching a poisonous mushroom can be deadly (untrue). I suspect that the ubiquitous posting of these signs is a plot decreed at the highest levels by some secret Council of Mycological Illuminati as part of a brilliant campaign of deception. The danger of mushroom picking is one of those broadly-accepted cultural myths, repeated mouth to mouth, by which we hem ourselves into the neatly sequestered parking spaces of modern life, keeping between the white-painted lines. Yes, some mushrooms are deadly. The secret is that, with a little education, the danger is easily enough circumvented. The propogated fear protects the treasure from pilfering by the impure. Only those capable of transgression may pass through the portal towards real living.

Mushroom hunting takes a person off the beaten path. Literally. The first step of the mushroom hunter is sideways, off the trail. I follow not the worn way, but always only my own feel for beauty and adventure and instinct. I look all around me and listen. Which direction is calling me? The glade to the left, infused with light? The damp, dark, musty spot down the hill? Shall I climb on high? Whither am I called? There is no reason to go one direction or another but that I am more attracted this way than that. All life should be such a wandering towards beauty.

Mushrooming teaches us the magic of the second sight. How often I have had the experience of standing in a wooded grove, scouring the leafy ground with my eyes, and scouring again, and scouring yet again, seeing not one single mycological specimen, none, when, lo, suddenly, I spy a single specimen! I look close in and inspect. Then I widen my gaze when, magically, I see another mushroom just the same, and then another, and another — and I realize that I am surrounded by an army of mushrooms everywhere! Some say it is a matter of looking right. Your looking always looks from assumptions that you cannot see until some discordant surprise throws open the curtains to new contact with the outside. This may be the case. Or maybe the mushrooms themselves are sly creatures of intention who like to play peek-a-boo; they wait cunningly until you aren’t ready before they pop out into the open. I have in fact found it a helpful device to say aloud “There obviously aren’t any mushrooms around here!” The sentence works as a kind of mushroom call.

The variety and abundance of mushrooms is astounding. Everywhere the woods contain an abundance. And it is open to the taking. Mushrooms are one of the few wild foods left to us. They remain within a past time when nature was open, when nature was a part of us. You find a mushroom and you may take it home and eat it. You can go back for more. You do not have to pay cash money for them.

On the other side of the portal, the word "free" has no meaning, because the exaction of payment hasn't even been invented yet.

A Rant Against the "Theory of Everything"

I recently came upon a story in a mainstream newspaper entitled "Surfer dude stuns physicists with theory of everything." The story titillated readers with the thought that a former graduate student now living as an "impoverished surfer" may turn out to be the world's next Einstein. The young man "has drawn up a new theory of the universe, seen by some as the Holy Grail of physics, which has received rave reviews from scientists." Part of the excitement has to do with the simplicity of the new theory: "his proposal is remarkable because, by the arcane standards of particle physics, it does not require highly complex mathematics. "

"Even better, it does not require more than one dimension of time and three of space, when some rival theories need ten or even more spatial dimensions and other bizarre concepts. And it may even be possible to test his theory, which predicts a host of new particles, perhaps even using the new Large Hadron Collider atom smasher that will go into action near Geneva next year."

Intrigued by the story, I researched it a bit on the internet, and found more explanation, as well as a nifty spirograph-style image of "E8," what some call "the most elegant and intricate shape known to mathematics," which the new "theory of everything" proposes as the underlying pattern that might solve the biggest quandary in particle physics.

Here is where my gripe started to arise. The sad part for me is that this horribly-misnamed "theory of everything," if not viewed in a broader context, can support an extremely reductionist view of the universe that denudes it of all its experiential qualities and beauties and of all that we associate with living things and humanity.

They call it a theory of "everything" presumably because, assuming that "everything" in the universe is built upon a foundation of legos, this new theory potentially explains the composition of the lego in a more comprehensive and encompassing way than ever before.

But when we look at legos in isolation we by no means see "everything" that has or can be constructed on a foundation of legos: e.g. living creatures, human beings and all the achievements of human communities over the course of history are themselves invisible in the lego theory, even though lego theory says that looking into any of these things we will discover legos behind them. What I am suggesting is that something that inherently transcends legos in fact has more "being" than the legos viewed in themselves can ever have. Spoken from the point of view of lego theory, this "something" might be said to consist in different patterns of relations and processes between legos, and then between such stabilized patterns and processes themselves, which relational patterns themselves come to constitute levels of being that can never be reduced to or fully explained through the underlying legos themselves. The logic of life, for instance, is a logic over and above the logic of physics and not reducible to it, just as the logic of human conversation and friendship- and community-building cannot be reduced to or explained by biology.

Thus this so-called "theory of everything" might more appropriately be called a "theory of nothing," nothing being the defining complement to the concept of "everything." That's because, from an important perspective, this "going back" of mathematical physicists (going back conceptually and temporally) to the underlying primary foundations of everything is to go in the direction of nothing: it is to follow evolution backwards to its beginnings and to the discovery of the primordial constituent components of "everything."

(This process of lego-discovery requires going so far beyond the scope of ordinary experience that the findings must be called a "theory" only, must be described in terms that defy ordinary conceptualization, and can be "tested" only by constructing enormous technological experiments -- e.g. the so-called supercolliders -- in a quest to reproduce conditions never otherwise found or encountered within the scope of earthly nature.)

This tracing backwards accords with a dominant view that has been around for a few thousand years, what Nietzsche and subsequent existentialists called "metaphysics," which assumes that true Being and Power are at the Beginning, in the Past, in what "was," i.e. in what lies under or before (arrived at through conceptual and actual dissection and other means of decomposition, such as super-collision; as Bacon said, "science puts nature on the rack"), rather than, for example, in the Future or what "might be" (e.g. what might be built upon our endowments joined with our hopes and dreams). Hence, in our tradition God is conceived as a Past Creator "in the beginning," rather than as a Future Attractor.

Compare the artist who starts only with colored dirt and liquid (the artist's legos as it were), and over time and with ingenuity and vision creates a painting where before no painting was; compare the carpenter who with certain basic materials, e.g. stone and dead wood, mixed with desire and purpose, creates a house where before there was nothing; compare the process of evolution which, from out of the primary raw materials of matter and energy, led to the emergence of variegated life in systems interacting to produce the conditions for more and more vibrant life, eventually leading to the emergence of people like you and me and our gatherings of friends who are motivated by hopes and possibilities.

"Everything" is not to be found in the underlying subatomic legos, in the under-realms upon which our experienced world is built, but in the other direction, in the emergence of the world of our experience over eons of time and, finally, in the future where we might hope to build a more beautiful and harmonious world. The future is everything.

The primary components through which the future human world are to be built cannot be found by dissecting the things we experience into constituent components, but only by coordinating the elements of our experience to form new structures and relations that realize new harmonies and possibilities, i.e. through innovative new relatings and combinings that cannot be foreseen by recurring to the underlying atoms that are not even visible in ordinary experience. The birthplace of such innovation must be social and public conversation and mutual coordination. The everyday world and the everyday language in which we live the world is ultimately where science gets all of its direction and orientation, and is therefore the ultimate source of "everything," including "theories of everything." Scientists are kidding themselves if they think otherwise.

All this is important, I think, because as a culture we are given to this illusion that science sees "everything" when in fact science and its resultant technologies are based on a kind of tunnel vision that, without direction from loving human community, can lead down a dangerous road. We are given to overlooking the importance of relations -- ecological, systemic, communal -- and the importance of cultivating relations relative to a shared and commonly constructed vision of the human future -- because we are focused on objects that can be pointed to, dissected, and, theoretically, controlled. I bristle at the arrogance, naïvete, self-congratulation and thrill of power that I imagine to be present in the phrase "theory of everything."

The question might arise, but can't this knowledge of the underlying legos of creation be put to use in constructing that beautiful longed-for future?

Here I have my doubts. One reason is that I fear that the impetus to discover this kind of knowledge is often or even primarily rooted in a collective, fearful flight from the given finite conditions of humanity and a related desire to re-engineer nature because of a fear of accepting these limitations. What I am talking about is a reaction against all the "limitations" of our biology in every respect, including our natural consignment to a finite, localized world. Ultimately, this might be epitomized by the fear of accepting the human condition of mortality. Unable as communities to face up to nature and even death in a way that apprizes us of the beauty of what we have and who we are (on the ground of accepting what is given), we get caught up in a collective pursuit based on denial, as if we could change, or as if it would be desirable to change, the very grounds of our existence through technological and scientific intervention. Look at the world today. As evidenced by widespread psychological struggle, our very relationship to our "selves" is troubled by non-acceptance.

Individually and collectively, we instead turn to technology and consumerism that is aimed at overcoming nature. (Imagine, overcoming nature!) Technology, in general, has been all about transcending limits -- starting perhaps with the limits of time and space, and ending with the limits of the natural world to sustain technologically-enabled mass consumption.

Incapable of realizing the beauty and meaning available to us within the natural finite limits given to human beings, incapable of accepting (i.e. loving) our selves, and on that basis of acceptance, realizing everything that love makes possible, we are under the spell of a knowledge-model that believes it can get to the root of "everything," which belief has a lovely but illusive silver aura of total control. Human beings are attempting to live in the world as if they were not bound by earthly limitations, with the result that they fall out of balance with nature and themselves.

This "theory of everything" might look like a theory of everything from the point of view of the engineer/scientist who loves to satisfy curiosity and to contemplate the beauty of "objective knowledge," as in elegant diagrams, blueprints, descriptions and machines. This is an important knowledge and appreciation, but again I say that the danger is not to see it within a larger context that brings other perspectives into the mix. The engineer/scientist's knowledge is incomplete and in itself is never enough to lead to action, and is never enough to understand the motives behind the engineer/scientist's own action. Action requires motivation. Motivation comes from emotion: we move away from something due to fear, or towards something from love and attraction. The most powerful source of emotion is our relationship to other people, i.e. how we find ourselves nurtured and sustained in community.

It is in the interest of those who are in power and who act from fear to laud the engineer/scientist's way of knowing as the highest way of knowing as a cover for preserving their reign of fear. Fear can drive technological development under the cover of a drive towards objective knowledge.

Because objective knowledge itself is directionless, the choice of what to investigate and know is never itself rooted in objectivity. This is why the engineer's knowledge is always subservient to emotion. This is why a community must work to cultivate love and acceptance if it is to direct, not only the pursuit of knowledge but human action in general, in desirable and "sustainable" ways.

For people who want to learn how to recreate nature through artifice, this having a more advanced theory of the lego must be quite exciting. It might open a key to unlocking even more fundamental natural forces than humanity has hitherto been able to unlock. We might be able to tinker with nature and biology (e.g. in biotech and nanotech) in ways that have even more significant consequences than anything that has been done before. The trouble is, I am not confident that more significant means better. It is not my wish to provide more keys to power to those who are tempted to "improve upon" nature because they are turned against nature, or to those who confuse a theory of dark and distant underlying foundations with a theory of "everything." Unfortunately, every advance into the theory of the lego -- like the earlier advances in the theory of the atomic nucleus -- brings humanity that much closer to attaining the power to destroy everything in the universe. To toy with the forces that rule the underlying physical foundations on which all subsequent layers of life and world have been built, is to toy with the forces that can unravel them all.

Earlier steps into the atomic nucleus and its logic led humanity to discover how to unleash nuclear explosions that could destroy whole cities and cultures, undoing hundreds of thousands of years of evolutionary achievement with the flick of a switch. With this new knowledge a step nearer to the theory of "everything," who knows but we might discover how to create a bomb that could explode the planet in a flash, or the sun or solar system. From the perspective of the "theory of everything," even if you blow it all up, "everything" would still be there. Presumably, it's a theory about the stuff you can't destroy. It's what you end up with when you smash "everything" to bits. (That's why they use super-colliders to test it.) Now there's a more appropriate name: "A theory of what can't be destroyed."

As kids, my brother and I had an enormous set of wooden building blocks. I can still remember the piney scent of the wood. The blocks filled a tub-sized wicker basket. We used to build tall and elegant towers, architectural masterpieces. We'd put the biggest, heaviest, most simply-shaped blocks, the ones with wide, flat tops, at the bottom. They were the foundation. Then we'd carefully set various forms atop these, in successive layers, some jutting out in intriguing cantilevers with curvaceous profiles. We took our time. We enjoyed the evolution of the structure. At the top, we put our most colorful, most whimsically-shaped blocks -- as a fancy crowning glory. We admired what we had built. We were concerned that someone unaware of what work had gone into the masterpiece, someone perhaps ignorant of its fragility and its laws of balance -- someone like my two-year-old little sister -- might inadvertently knock it down. We were acutely aware that moving the pieces on the very bottom was particularly dangerous to the whole.

I hope our world gets busy building community. I hope we focus more attention soon on cultivating love and collaboration between neighbors and neighborhoods, between towns, between nations. Conversation is where the world is really made, and it's on the quality and depth and breadth of our conversations that "everything" really depends. We've taught science and industry in our schools for a long time now. I think our technological power has well gotten ahead of our ability to achieve harmony among peoples and within ourselves. We've taught our young around the planet how to look through microscopes and telescopes. We've whipped up a frenzy of excitement over powerful technologies that enable us to manufacture, produce and consume vast quantities of goods, and to transport people, goods and communications over vast distances far in excess of what we are naturally capable. What we have been paying less attention to is how our excited pursuit of such technological powers have been having unintended consequences on our communities and on the planet that sustains us. How much of our drive to push forward with technology is rooted in problems that we can only solve at the level of community and human relations? How much does our overweening focus on technical development exacerbate the problems that technical development can't solve?

Human Civilization May Be Coming to a New Understanding of Money - and This Could be a Key to World Renewal

[A Reflection on Money and the Mission of the Institute of the Commons (http://www.iotc-hub.org)]

One of the interesting things I’ve learned in my recent research into the emergence of "money" in western culture is how the discovery of the New World was a critical turning point. Starting in the 15th Century huge quantities of gold and silver were discovered in the Americas, especially in the Peruvian silver mines. With the funneling of these large quantities of precious metal back to Europe, there was a sudden explosion in the amount of money in the Old World. The sheer volume of coins in circulation increased many, many fold. And this had a huge consequence which may have been surprising on the face of it but in retrospect is less so: an enormous increase in productive activity in Europe, leading to the Renaissance and ultimately the development of today's market culture and the industrial revolution, and leading also to the development of modern banking and what has turned into the modern money-creation system. (Much of this story can be found in the relatively recent work of Fernand Braudel.)

[What if Money were in its Essence a Spiritual Thing?]

The reason I point to this historical development is that I believe we have hardly begun to learn, as a society, what recent history has to teach us about banking and about money itself. In the 1500s when these large quantities of precious metal started coming into Europe, money, gold and silver were more or less synonymous in the public mind. Today, however -- after having decades ago abandoned the gold standard and with it the (already by then hollow) notion that money gains its value from its relation to quantities of gold and silver or other commodities, and after having become familiar with "digital money" that exists only as bytes on our computer screens -- we are much closer to being able to understand the essence of money in a whole new way, and with this, we are closer to understanding the different ways in which money has been created in the past, how it is being created now, and how it could be created differently tomorrow. To put this in more exciting terms: we are also on the verge of understanding for the first time in history the huge stakes involved in deciding whether to continue with the current money-creation system or to begin using other systems; we are on the verge of understanding how the power of money-creation could be used by society as a very significant tool in creating a happier, healthier and more just world.

Because few people realize that money is a historical artifact, they don't realize that the present-day money-creation system is only one possible system among readily available and even already-tested alternatives. Today's money-production system is something that we ought to investigate and evaluate in terms of how good of a job it is doing at making our society prosperous, harmonious, happy and just. But today we don't even realize that there are critical decisions to be made about how we choose to create money. And we don't realize how enormous the stakes are for society, or that their lies sleeping before us an enormous opportunity. Instead, we go mindlessly on with the status quo. The public at large defers to the experts. And the experts are those who have a stake in preserving the status quo. Nothing today is more mysterious or more inducing of sleep than the language of the university-trained economists and bankers. Distracted by the sleep-inducing hocus-pocus of these academicians, the general public doesn't even realize how to begin the frank conversations it needs to have about the essential lubricant of productive human activity.

However there are signs now that thinking about money is starting to awaken far and wide. See, for example, the writings of Bernard Lietauer, Stephen Zarlenga, Thomas Greco, Paul Grignon, Ellen Brown and the renewed of interest in writers such as Henry George and Alexander Del Mar, and even in the monetary wisdom of the ancient Greeks and Romans. There are signs, also, that certain members of Congress are beginning to look again at how money is created today. Take, for instance, the recent bill put forth in Congress asking that the public have insight into the up-to-now secret doings of the Federal Reserve (that consortium of private bankers that considers to masquerade as a government agency).

Let me point to at least three lessons hidden in the story I have told about the 16th-century currency explosion.

The first lesson is that the sheer availability of money is directly related to the productivity realized by a society. The dark ages had lasted for centuries. The sudden presence of money unleashed astonishing human activity: industry, trade, exchange, art, science, learning. Within this story are hidden other stories and lessons. Yes, it was huge and unpredicted importations of gold and silver that showed what an abundance of money could mean for social productivity.

But what wasn't realized at the time - but is becoming clear today - was that in order to create an abundance of money, gold and silver weren't even necessary. Had the governments of the middle ages only understood money more thoroughly, they could have simply created it using tokens of almost any kind: for example, using cheap and abundant copper (the way the Romans had), or using paper, the way the Colonial Americans would do in later times. A lesson to be learned, then, is that the world in 15th century Europe had for ages lived under the conditions of a great and unnecessary scarcity of money. Once we realize this fact, we are also ready to realize that the western world today, also, lives under conditions of a great and unnecessary scarcity of money, and that the current money system needlessly allows money to be concentrated into private hands (so that most of humanity must line up beggarly at the doors of those who can offer salaries), which leaves the major portion of humanity's great potential for creative, productive activity unused and squandered, and leaves major portions of the world's population in unnecessary misery.

A second lesson, related to the first, has to do with the insights it can provide into the nature of today's money-production system, the banking system. With the great increases in the amount of currency in 16th-century, with the concomitant increase in trade and industry, modern banking and modern currency systems were developed. Banking grew largely out of accidental discoveries. Goldsmiths who regularly stored heavy gold coin for those who owned them developed into a new unexpected thing called bankers, and a number of accidental discoveries by these goldsmiths. [Among these accidental discoveries were the fact that the "receipts" they gave their customers for gold on deposit started being traded by their customers as if these receipts had value themselves; similarly, they discovered that when they made loans to trustworthy individuals, they could issue such "receipts" to the borrowers to use as money; additionally, they discovered that, since their customers only rarely came to the bank to exchange their receipts for actual gold held on deposit, the bankers could lend out much, much more in "receipts" than they actually needed to have on hand in gold. (They could make the illusory claim that all the receipts, i.e. money, that they issued was backed by gold, when in fact the amount of gold held in reserve was only a small fraction of the money that was said to be backed by it.)] In short, bankers discovered that they could create money out of thin air simply by issuing loans and writing a corresponding debt into their books for the dollars that they created and lent. Money issued by banks in the form of debt is still the chief form of money-creation that we have in the world today.

Understanding how this privately-controlled, debt-based system robs the public and creates unnecessary, devastating economic depressions is a knowledge that today lies just beyond the public grasp. A great hope for the world today is that, as the public at large begins to reflect upon how money and modern banking came into being over the past several hundred years, they will begin to perceive both the great injustices that have were inadvertently built into the current system and, more importantly, the tremendous hidden opportunities that the current system hides from view, that are coming ready for the world to benefit from. We have before us the potential for a new era of human learning about how to produce money and unleash the productivity and creativity of people everywhere in the service of a healthier and more harmonious world.

A third lesson could said to be hidden in the first two. This lesson lies behind my statements above, that we have discovered how money does not indeed depend for its value from any commodities or precious metals that might be said to "back it." With the almost accidental extraordinary surplus of coinage that came about due to the discovery of the Americas, Europe suddenly became the scene of an accidental discovery and experiment: the discovery that human promises (e.g. to return services or goods in exchange for services or goods, or better, to collaborate and coordinate activities in pursuit of individual and/or shared desires) could be “abstracted” and not only represented in oral language but be made durable on bits of metal that were neither consumed or used in themselves, but only traded for usufruct of the “promises” that they signified.

The discovery we are becoming more clear on today is that the content of the promise, the essence of the money itself, in fact has no relationship whatsoever to the commodity value of the material that might carry it — i.e. the value of money, as money, has nothing whatsoever to do with the value of the underlying gold or silver on which it is stamped, but is entirely a reflection of something else, something intangible, i.e. the degree to which a culture or society had developed its capacity for productive collaboration and exchange in answer to shared desires; this capacity for collaboration can be summed up in a few words, chief among which might be the word “trust” and “inter-reliance” (which I prefer to the word “inter-dependence” -- to “depend” is to “hang upon” another and has for me connotations of co-dependency; to feel trusting and capable of relying on another does not necessarily connote dependence).

This is related to another aspect of money, viz: The value of money reflects the quantity of goods and services that are available in a culture for exchange. An increase in the number of goods and services available in a culture reflects an increase in the collaborative capacity of a culture. (Note: How this relates to the QUALITY of the particular goods and services available is a very important question that I am not addressing right now.) Hence a shortage of money results in a stunting of potential growth in a culture, it inhibits the ability of people to actively fulfill their needs and pursue their desires – a shortage of money is what we call a “depression” or “recession.” An excess of money in a culture leads to inflation. The art of money-generation which civilization has yet to learn would include development of skill in the regulation of the quantity of money in a culture.

Now, returning briefly to the question of the “quality” of the particular goods and services available. This is equivalent to the QUALITY of the collaborative capacity of a culture, i.e. the quality of human relationships in a culture, which is to say the moral makeup of community, the degree to which it is a community where love is prevalent, and not domination. Under our present culture the money-making power is under the control of private interests; this inherently public power has been usurped.* This is equivalent to the people not recognizing or taking up their own self-empowerment. This failure of the people to take up the power that is within themselves and instead leave it to the control of others outside themselves, remaining dependent on “external” forces is ultimately a political failure. This is where the neighborhood assemblies idea comes in, and where the kind of environment for speech and mutual coordination that we bring into being through our processes comes in. Ultimately, it is all about the coordination (and not merely the “dialogue and deliberation”) of all the players within the system with one another in an environment of mutual respect, transparency, public love.

(*In part this usurpation came about through somewhat of an accident - simply because out of unplanned developments and unexpected discoveries in early modern Europe, the private banking system gradually emerged as goldsmiths stumbled upon the money-creation power in the form of the issuance of credit and the creation of debt — they stumbled upon the system of “fractional reserve banking”; subsequently those who stumbled upon it grew this power, pursuing their own interests of course, until it became what we know as the modern-day banking industry; it is largely only in retrospect, as more people begin to realize that, in effect, this inherently public power to issue money was discovered and appropriated by private hands, that it looks as if the public has been “robbed.” In fact, the public is being robbed every minute of every day, as public and private debts to banks grow by the minute, but it becomes a robbery only to the degree to which the perpetrators and victims are aware that it is such. (Because the essence of money is so elusive to current modes of understanding, this awareness is quite elusive and easily displaced by other ways of constructing the matter.) -- Otherwise, it looks simply like “the way money works”; and in many respects it’s true and evident that “better with than without money”; it’s only when the question can move out of the domain of this “either/or,” with or without money, that we become free to move in a new direction. The question then is no longer stuck in you have money or you don’t have money, but can become “what is money and how could it be otherwise?”, what kind of money do we want with what consequences? Until we realize that this is a question, the public power to release its own capacity for collaboration in just and democratic ways remains frozen. We have a hunch that small communities, e.g. those empowered through neighborhood assemblies (communities that can work as closed feedback loops for taking responsibility, experimenting with actions and consequences) might be necessary as innovative laboratories of thinking and experimentation that can move society as a whole forward on these issues. Still, important work can possible be done at higher levels of government — but I don’t know how possible this is under current political conditions.

(In respect to the importance of small, cohesive communities - empowered by institutions that enable them truly to THINK together as wholes, which Neighborhood Assemblies as we envision them are intended to do - to serve as laboratories for monetary innovation, we can look at the example of the Ancient Greeks and the polis. Some of Aristotle's insights about money, for instance, are being cited today as containing great insights that, if widely understood, could dramatically change how we think of money in the modern world (and how the institution of modern economics thinks of money). Aristotle understood what we do not, that the essence of money derives from the public, i.e. from the cohesiveness and collaborative capacity of a community, i.e. from the degree to which the public has trust in itself, its laws, its public agreements. If we understood this we could take back our public power into the hands of the people and realize a truer and more just democracy.

The question concerning the nature of money has direct parallels to, and is a form of, what Martin Heidegger early in the 20th century referred to as the question concerning the essence of Being. Heidegger recognized that western culture had since its beginnings understood the nature of Being on the model of present objects that can be pointed at. He recognized that one of the most common of all words in our language, the word "to be" and its forms (like "is," "are"), was also one of the words we least understood. How ironic that a concept we so relied on was also fundamentally so puzzling! So it is with money. We rely on it daily, people dedicate their lives to its pursuit, we talk about it all the time, and yet it is very little understood.

What Heidegger realized was that their was a form of Being that was quite obvious, but had never been noticed by western philsophy. He pointed out that there was a form of being that we recognized all the time in common language and usage which philosophy, however, had never accounted for. He at one time indicated what he meant through the example of a hammer. From the point of view of western philosophy, a hammer was only wood and metal. But the hammerness of the hammer, Heidegger realized, came into being only through the networks of relationships that came into play when the hammer was put into use: nowhere in the wood or metal that composed the hammer was the "hammer" to be found; the hammer became what it was only in relation to hammering, to building a house, to pounding a nail, etc. Hence the essence of the hammer was in a coordinated network of human relationships, invented through human activity and imagination and purpose. Similarly with money, an artificial invention like the hammer. We try to think of money in terms of its objectness - is it gold or silver? is it the dollar bills we hold in our hands? is it the digital representations in our online banking accounts? No. It is an invention that carries within itself the reflection of our relations to one another and to the earth; money is a reflection of the moral quality of our world. When we get money right, we will get human relations right - we will live in harmony with one another and with the creation, the natural living world bequeathed to us.