Democracy In The 21st Century 2: Radical Optimism

The internet has transformed the way we talk, the way we message, the way we learn, the way we shop, and the way we do business, and it will change many more things in our lifetime.

The internet provides an abundance of choice and complete freedom of communication –
the ability to contact anyone in the world at any time at no cost.

Anyone with a computer can talk, buy, sell, and bank online with whomever they please. Everyone has access and instant choice between different vendors and different currencies at the click of a button. Anyone can create an online business and do business with people on the other side of the globe. Anyone can create online friendships and meet like-minded people, formulate groups and networks and consolidate public opinion. Anyone can create a web page and get their message heard; anyone with a camera phone can be a journalist; anyone can create a cause, a forum, a network, a movement, and make real changes. In other words, the internet enables real democracy.

Many say the West is in decline, but be best not to let these people scare you. Our belief in freedom, self determination and capitalism has given us a culture of creativity and innovation. This entrepreneurial nature, combined with the digital technology boom, will ensure that it is the west that pioneers the continued development of the free peoples of this planet; but we must be daring, and we must think positively.

There are ways of achieving more development AND more equality in our society, and they involve democratising certain public institutions in order to give equal rights to all who hold a stake in them. All of the issues that have led to the stagnation of the western economies can be solved with more democracy, and the internet makes this possible.

Monopoly Money 3: Fear Of The Unknown

If you or I were to print money, we would be thrown in jail. Why? - Because it is against the law! But the reason it is against the law is presumably because it is unjust for people to increase their personal wealth in relation to other people, without earning it. Yet the government and the banks do it all the time. It goes without saying that this is not fair. So why do people not complain?

A state controlled currency is widely accepted simply because people don’t know any different. It is deemed to be the norm. Every country has a government with a central bank that is in charge of the money. There is an unspoken trust for the government to act in the best interests of the people, and to act competently. But unfortunately for the majority of us, this centralised control of our money provides the means and the incentive to abuse the currency in order to indulge in human desire and create short term unsustainable economic growth at the expense of increased inequality in society and an inevitable future economic downturn, that is, when the boom eventually becomes a bust. So what can we do about this?

This post is the last in a three part series about money. In the first part we spoke of the rapid expansion of the amount of money in the economy. The money supply is going up, and the value of our money is falling. This has been happening on a huge scale in the last 40 years since the fall of the Bretton-Woods agreement when the last link to gold through the US dollar was severed. At this time an ounce of gold was agreed at $35, but since 1971 the price of an ounce of gold has soared, and peaked at $1900 in August of this year. The money that we use, however, buys nothing like what it did back in the day. The devaluation of our currency makes prices rise, and ordinary people bear the brunt. In the second part, we established that the root cause of economic discontent lies with the central bank, and hence with the government. We talked specifically about the system of fractional reserve banking and how it relies on confidence. If confidence was to be lost, everyone would attempt to withdraw their money from the bank and not everyone would get it back. We spoke of how the government and the banking sector are jointly involved in creating money. The Bank of England buys government bonds and other financial assets, using money created out of thin air, which in turn increases the money in the banks. The Bank of England also supports the creation of money and credit by the banks themselves in its role as the ‘lender of last resort’, which guarantees the credit worthiness of the banks so they can all compete by lowering rates in order to create and lend more money.

The sad truth is that so long as the management of our currency is left to government, it will continue to be debased at our expense. Depreciation of the value of our currency will continue indefinitely until one of two things happen - The government voluntarily changes its policy and embraces the subsequent recession, or continues in its money creating activities, artificially spurring growth until the economy becomes so reliant on monetary expansion to survive that the only possible outcome is total collapse of the financial system. Or is there a third option? Can we find a way to release our currency from its strict bounds and permit a free flowing stable monetary system, immune to the human forces that seek to manipulate it? In this post, I talk about the management of our national currency and some of the proposed solutions to break up this vast concentration of power.

Monopoly Money 2: Don’t Blame The Capitalists

This is the second post in a three part series on money. The first part can be read here. 

The recent Occupy protests have mainly targeted the banking sector. Demonstrators have held signs saying everything from: “Capitalism in cancer,” to “You got bailed out, we got sold out,” to “No bears, no bulls, just pigs,” get it?

Protesters have camped outside Wall St. and the London Stock Exchange etc, where many of the wrongdoers can be found. However, this isn’t where the root of the problem is. The protesters should really be outside the Federal Reserve or the Houses of Parliament and the Bank of England.

The blame for the economic instability and unfairness that people resent is being laid on capitalism, and when people think capitalism, they think banks. Although capitalism does of course create inequalities and embraces greed as a positive driver of prosperity, it is not the enemy. Capitalism creates the wealth and jobs that we all want to see. It is the government’s involvement in the banking system that has entwined banking and politics and sown the seeds for yet another credit driven recession. 

In the first post we talked about how the central bank creates money through ‘quantitative easing’ and the reasons it gives for doing so. We asserted that inflation = people getting poorer, and I stand by this generalisation as being true for the vast majority. 


However, there are some groups of people who stand to benefit from the government’s money creation activity. In this post I talk about who these people are, how the government’s policies are designed to benefit them and hence why we are the 99%. 

Monopoly Money 1: The Predicament

This is the first in a short series of posts about money. Each will contain a little bit of economic theory, but I hope for it all to be comprehendible for those that have not studied economics.

Despite thinking often about our finances, the system of money in our country is not something that most people really stop to think about. You get your wages, spend what you want to spend and save what you want to save. But how exactly did our current system of money come to be? Our entire way of life relies so heavily on its availability and its value, yet the people that control its production, issue and usage are a small number of powerful individuals. In this series I attempt to explain the dire need for our country to democratise the management of our currency and how, when it comes to the future management of our monetary system, the whole world could benefit from a little bit more open-mindedness.