What seems to be overlooked in the whole process is that for markets, money circulates as a medium of exchange, yet Capitalism assumes it to be the signal to extract from the noise of the economy and society. Necessitating that ever more be added and ways found to store what has been extracted.
Econ 101 says money is a medium of exchange, store of value and price setting mechanism, though the last is a function of being a medium.
Yet medium and store are distinctly different, as one is dynamic, while the other is static. Blood is a medium, while fat is a store. Roads are a medium, while parking lots are a store.
As most money, as well as notational wealth, functions as a contract, in which the asset is ultimately backed by a debt, then relatively similar amounts of debt have to exist, to back the assets.
For one thing, this creates a centripetal effect, as positive feedback is drawn to, in fact defines/creates, the center of the community, while negative feedback pushes the debts and those incurring it to the edges of the community.
Given the financial system functions as the value distribution mechanism of the community, like the circulation system distributes energy around the body, this is analogous to the heart telling the hands and feet they don’t need so much blood and should work harder for what they do get.
The Ancients used debt jubilees to reset this dynamic, but we don’t have sufficient perspective to realize the feedback loops, over our goal oriented paradigm.
Another consequence is that government has been manipulated into being debtor of last resort. Where would those trillions the Treasury siphons out of the capital markets go otherwise? Apple stock? Derivatives? Wall St couldn’t function, without enormous government debt. The magic of capitalism is the degree to which public debt backs private wealth.
The functionality of money is in its fungibility. We own it like we own the section of road we are using, or the fluids passing through our bodies. It really does function as a public ulitity and should be treated as such. Taking the punch bowl away, when the party gets going, not just pouring more vodka in, when it runs low.
What if the government were to threaten to tax out what it currently borrows? After the freaking out subsides, people will have to start finding other ways to store value, than in banks, if infinite debt cannot be generated.
We all save for many of the same reasons, from housing to healthcare, retirement and raising children. So if these could be invested in and developed as community resources, than everyone trying to save for them individually, we might have the stronger communities and healthier environments necessary for a viable future, than using them as resources to mine value out of and feed the financial system, rather than deal with the complexities of community. The consequence of our individualistic culture is atomized societies, that are more easily controlled by insitutional authority and mediated by a parasitic financial system. Networks matter as much as nodes.
Government, as the executive and regulatory function of society, amounts to its central nervous system. It was private once. It was called monarchy and when monarchs lost sight of the fact they served a function to society, in order to be served by it, they were usurped. Finance appears to be having its, “Let them eat cake.” moment.
Not that banking could be a direct function of government. Like the head and the heart, they are different organs, serving different functions. As politicians live and die on the hope they inspire and we experience money as quantified hope, it is an irresistible impulse to print more money, when other goals prove difficult. Money should be understood as a tool, thus with practical limits, not a God, without them.
