We seem to have allowed free markets, the efficient flow of value, to become confused with capitalism, the extraction of value as the end goal.
Money is a contract, with one side an asset and the other a debt. Which enables markets to function. Yet we treat it as a commodity, to mine from the economy, both necessitating ever more be added, to sustain markets, while finding ways to store this surplus capital.
It is said of Roosevelt that he saved capitalism from itself, presumably by preventing a socialist revolt, but the fact is the New Deal was the beginning of the federal deficit. So not only was he putting unemployed labor back to work, but unemployed capital as well.
Paul Volcker couldn’t have cured stagflation with higher interest rates, as that reduced the flow of capital to those willing to borrow and grow the economy, increasing the need for money.
It was the ballooning of the deficit under Reaganomics which drew out the surplus money already in the system and spent it in ways which didn’t compete with the private sector for limited investment opportunities, such as military spending.
The magic of capitalism is that public debt backs private wealth. So we can have endless, strategically inept wars and no one is held to account, because their real function is to spend money, that more can be borrowed.
Econ 101 tells us money is both medium of exchange and store of value, but a medium is dynamic, while a store is static. Blood is a medium, fat is a store. Roads are a medium, parking lots are a store.
We want to save money for the future, but money is simply a contract, in which the asset side has to be backed by a debt.
What if the government threatened to tax out what it currently borrows?
People would have to find other ways to store for the future. Given we all save for the many of the same reasons, from raising children to retirement, if these could be invested in directly, as community functions, than everyone trying to save for them individually, through their bank accounts, we would have a healthier society and environment, as a store of value, not as resources to be mined of value.
The irony of our individualistic ethos is the resulting atomized society is more easily controlled by institutional authority and mediated by a parasitic financial system. Networks matter as much as nodes.
