Thursday, August 15, 2013

The Problem with Money

I've been thinking on a problem and it's got my head in a knot.  Read on and you can join me.

A long time ago, people worked to get stuff for themselves.  They worked to gather fruits and nuts or to hunt or to prepare a field and plant some crops--to get food for themselves.  They cared for animals--to get milk or meat or leather or wool, for themselves.   They built a hut, tepee or house--for shelter for themselves. They cut wood or gathered it--to get heat for themselves.  They carried buckets or skins to fill with water, to have water for themselves.  They spun flax or cotton or wool, and wove it, to have clothing for themselves.    But whatever they did, mostly their work resulted in something that they got to use or keep.  And since everybody had the same number of hours, most people got about the same amount of somethings. 

Then people started to live in communities where they might help each other.  One helped to build a barn for the other, and then the other helped to build a shed for the one.  One worked to raise chickens for eggs and traded the eggs to another for some cabbages that the other had worked to grow and harvest.  There might have been a change of benefits, but still work equalled things, for the most part.

Later still, most people began to work for money.  And at one time,  money still represented trade of one type of work for another, most of which involved some kind of a thing.  Back when money represented or included precious metals, someone worked (a lot of work, because they're rare) to get the gold or silver out of the earth, and someone worked to mint it into coins.  Even paper money, back then, represented gold or silver--it was a certificate that said that you owned some tiny bit of gold or silver or copper, stored in a vault somewhere.  It was just easier to carry around than all that metal.  It wasn't a direct exchange of benefit of work (the folks who created the money-the bankers--took a cut, and got richer and richer doing it), but it was still work for stuff, mostly.   And, importantly, there was, in a vault somewhere, a pile of assets (gold and silver) that backed the money issued.  No more assets, no more money.  This remained the case throughout history, until just the past few decades. 

But since a few decades ago, money is not made of precious metal.  Coins are made of junk metal--plentiful metals that require little work to get and have little monetary value.  And paper money requires even less work to make.  You can make thousands of dollar-papers from cutting down one tree and adding a little cotton and ink and stuff.  In fact, you don't even need the paper dollars to make "money."  You can just put some numbers in a computer and presto(!), somebody's bank account has a million "dollars" in it.  Of course it's illegal for anyone except the Federal Reserve to do that, but they do it quite enough for everyone.

The point is that much of our money doesn't represent ANY gold or silver, or any corn, or any tables and chairs, or any tangible goods at all, held anywhere.  The money isn't backed by gold or silver deposits:  It's backed only by the "full faith and credit" of the "United States." 

Now the United States isn't actually a thing.  It's merely an idea--an idea that represents a conglomeration of people who agree to operate as a group.  Us.   The "United States" can't do anything, produce anything, have an army, or even tax anything, without us.   So the "full faith and credit" of the United States is merely a way of saying--"don't worry, our PEOPLE will give you a certain amount of work for this piece of paper."  Full faith and credit is just the promise that the people of the United States will work to pay the "work-debt" represented by that dollar. 

Ok, now--some of us, when we work,  make something.  Some people work as farmers and make food or fiber or another product when they work.  Some make machines, like cars or computers, or parts of them.  Some make furniture, or cloth, or paper, or lumber out of the raw materials that someone else's work made.  Some create art, or music, or poetry, or books.  Some, like engineers and designers and architects, make a plan for a thing that someone else adds their work to, and together they make a building or a power plant or a car.   Whatever people make, the work that is "stored" in that thing that was made is represented by the dollar bill that paid for it--a tangible asset. 

But a lot of us-- me included for much of my life, don't make anything.  I was a lawyer.  I made nothing that myself or anyone else could use.  All anyone ever got out of my work was a piece of paper that said someone owed someone else some money for something they did or even didn't do.  What I "made" was just imaginary.  Just ask anyone who's ever gotten a judgment against someone who didn't have any money to pay the judgment with.

Other people make nothing too--insurance people sell an idea, not a thing, and it will never become a thing.  Just a promise that if X happens, we'll pay you some money.  Health workers treat people's diseases, but they don't make anything.   Bankers and people who work in banks--all they do is move around the money that represents the stuff that someone else made.  They don't make anything new.  Finance people like stockbrokers and traders and so on--they make nothing.  Their "work" is only in trading back and forth pieces of paper (or computer data) that represent someone else's work that made something (like the profit of a Walmart store, or the corn some farmer grew).   And yet, those of us who didn't make any thing with our work still get paid.  In money that represents nothing except people's promise to work a certain amount for that dollar.  And of course, the more "advanced" our society gets, the fewer people work in things that actually make anything.  For example, we all heard recently and ad nauseum how we're approaching the point where 20 percent of our economy goes to healthcare, one of those huge industries that produce almost nothing.  And even counting the supposed "value" (in GDP) of all the industries like healthcare and finance and law that don't make any things, we're still going in the hole--with a national debt of over $16.7 trillion and climbing. 

So here's the rub.  First, the government and the bankers make up the money.  The treasury department and the "member banks" who own the Federal Reserve decide how much to make--based on some idea that none of us is privy to.  They can decide to "expand" or "contract" the money supply.  They can eliminate money, or they can issue trillions of dollars' worth more by simple keystrokes on a computer, like they have with the recent "quantitative easing."  But as we've seen, the money doesn't mean anything except a promise by the PEOPLE of the United States to work a certain amount in return for it.   Now, I for one don't much like the idea of Ben Bernanke and a bunch of bankers at the Fed deciding how much work I and everyone else needs to do to pay for all those dollars, but that's only the start of the problem.

The next part of the problem is those many people who don't make any thing when they work.    This is an increasing percentage of the American people.  At one time, there were many more American farmers and factory workers and machinists and other folks whose jobs it was to make stuff.  That number has been dwindling since the 1960s.    You might notice that many of the jobs that don't make anything (doctors and lawyers and bankers and insurance people and stockbrokers and financial traders and so on) tend to be the same jobs that "earn" a lot more money than the people who do make something, like farmers and factory workers and builders.  And, since no tangible assets are created by those many of us whose occupations don't make things, the pile of tangible stuff that's represented by the money we issue keeps getting smaller and smaller. 

So we have a lot more "dollars" representing a shrinking pile of tangible assets owned by the people who make up the "United States."  As a result, more and more of those dollars are bare naked dollars--nothing to show for them except the future work of the people who "promised" (through their good friends the bankers and Treasury Department )to pay for them.  They are pure debt--a mere promise that someone will work to make good on them.

But most of the "money" and most of the tangible assets that exist in the United States are in the hands of a few people.  Estimates are that the wealthiest 1% of people own 40%  of the "wealth" (that is, the assets and the money/debt) in the United States.  The next 19 % own another 45% of the wealth.   That's 20% of people owning 85% of the assets and money/debt. The next 20%--the second wealthiest fifth--own another 11%, approximately.  So the rest--6 out of every 10--own only about 4% all together.  A substantial majority of Americans own almost no wealth. 

That's bad enough when you think about "wealth" as just that nebulous "money" word.  But when you think about it as I have been, and now you are--well, that means that 1 person out of a hundred "owns" the past and future work of 40% of Americans--about 124 MILLION people.  Four people in every ten own the work of 96% of their countrymen. 

We used to have a legal system in this country where people owned the work of other people.  They supposedly outlawed it in 1864.  But here we are. 

So, now you see why I'm having a problem with this.  To be frank, I'm certainly one of those top twenty percent.  I'm not even near the bottom of that quintile--so perpetuating this system of slavery is in my own self-interest, at least as compared to a system that's actually fair.  And yet, I don't like the idea of owning another person's labor any more than I like the idea of owning the person outright.   Seems like it might be time to fix some stuff in this country--dontcha think?

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