Money, the Commons, and Growth Oct. 24, 2003

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Money, the Commons, and GrowthOct. 24, 2003

• Gary Flomenhoft
• Gund Institute

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(No Transcript)
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INVISIBLE BOOT
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INVISIBLE BOOT
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system
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MONEY SYSTEM AS A PURE PUBLIC GOOD
Excludable
Non-Excludable
Open Access Regime Oceanic fisheries,
timberetc. from unprotected forests, waste
absorption capacity, roads(congestible)
Market Good land, timber, fish once captured,
farmed fish, waste absorption capacity?
Rival
Potential market goodbut inefficient patented
information, pond
Pure Public Goodclimate stability, ozone layer,
clean air/water/land, Biodiversity, information,
habitat, life support functions, etc.
Non-rival
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VALUE OF COMMON ASSETS
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Alaska Model Alaska Permanent Fund
(Share of the commonwealth)
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Alaska Model Alaska Permanent Fund
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DECLINE OF THE COMMONS due to market
fundamentalism
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A Brief History of Exchange
C commodity M money C-C
barter C-M-C money as a medium of
exchange M-C-M mercantilism, money as a store
of value and end in itself M-M speculation,
money as a way to redistribute real wealth
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A Brief History of Exchange
M-M speculation, money as a way to
redistribute real wealth
Speculative exchange in the global
economy Buying and selling of goods and services
is about 30 trillion per year globally Buying
and selling of paper is about 1.5-2 trillion per
day, or 500-700 trillion per year. 95
speculation in paper! M-M
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A Brief History of Exchange
Speculators may do no harm as bubbles on a
steady stream of enterprise. But the position is
serious when enterprise becomes the bubble on a
whirlpool of speculation. When the capital
development of a country becomes a by-product of
the activities of a casino, the job is likely to
be ill-done. -John Maynard Keynes
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WHAT IS MONEY? IOU to avoid barter
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WHO CREATES MONEY? (SEIGNORAGE)
GOVT 600 BILLION TOTAL 8.6 TRILLION 600/8600
7 BY GOVT 100-7 93 BY BANKS!
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HOW DO BANKS CREATE MONEY?
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HOW DO BANKS CREATE MONEY?
INTEREST!
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Magic of money creation
FRACTIONAL RESERVE 3-5
How the Federal reserve system creates a private
banking monopoly cartel!
FED RESERVE BANK
PRIVATE BANKING SYSTEM
LOANS 20,000
20,000 ASSETS
1000 (5 OF 20,000 on reserve)
PLUS INTEREST!
INTEREST
1000 DEPOSIT
Best scam going privatization of huge public
asset
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3 PROBLEMS WITH BANK CREATION OF MONEY (GRECO)

• Artificial scarcity- debt grows with passage of
  time. Not all debtors can pay. Never enough of
  it to serve the purposes for which it is created
• Misallocated at the source- goes not to those who
  are most in need or who will use it most
  effectively, but to political power centers,
  well-connected insiders, and those already
  wealthy
• Systematically pumps wealth from poor and middle
  class to the wealthy.

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1. Debt
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2. misallocation
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3. Interest payments
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MONEY AND GROWTH
What grows faster, trees in the forest, cod in
the ocean, or money in the stock market, or
compound interest? Consider opportunity
costs. How do you maximize profits?
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1. Debt
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Alternatives to bank money-govt.
Money as a public good 100 reserve requirements
and money creation through seignorage Government
spends money on public goods Government issues
money as basic income 90,000 interest free
government loan to 18 year olds? Would it need to
be a loan?
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Alternatives to bank money-Mutual Credit and LETS
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Alternatives to bank money-complementary currency
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Alternatives to bank money-complementary currency
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Alternatives to bank money-complementary currency
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Alternatives to bank money-complementary currency