Bilgram and Levy asserts that: "We should define money as any medium of exchange adapted or designed to meet the inadequacy of the method of exchanging things by simple barter. Anything that accomplishes this object is 'Money.'" In other words, money is an agreement within a community to use something as a medium of exchange. What is the intended purpose of money? To simplify trading via a temporary placeholder of value until one exchanges it for something of utility that can satisfy ones needs. Money in of itself cannot satisfy human needs as it does not contain nutrients the body need to survive, it cannot be put into your car's gas thank to get it to run, etc. However, this temporary placeholder alleviates the barter "coincidence of want" issue (finding someone to trade what you have for what they have can be cumbersome).
Money has evolved from: simple barter, to commodity money, to symbolic money with backing or convertibility to gold and silver, to credit and now its ultimate form of credit clearing with no backing or convertibility. During the Bretton Woods agreement days, the USD was chosen to be the reserve currency among countries as long as one (1) USD could be converted to 35 ounces of gold on demand. Now why is this significant? Because it meant that America could not arbitrarily print any amount of dollars without backing it by the gold equivalent. So if America had the equivalent of 100 times 35 ounces or 3500 ounces of gold, they would be allowed to print dollars up to a maximum of $100. Look at it like measuring and converting lengths (e.g. twelve inches is equivalent to 1 foot). Today's money system has no such measure and a currency in of itself can and should never be a measure of value. This is why even more so today that money should be a public good and not treated like it is private. In other words private institutions should not have exclusivity to its creation because money is now credit (an I.O.U= I Owe You) and the only institution can back credit is the Government of a country. Credit is a community (= together among each other) agreement.
"It is within the realm of reciprocal exchange that money plays its fundamental role as a medium of exchange or means of payment. Any feature of a monetary system that subverts reciprocity is dishonest and destructive to the intended outcome of mutual benefit among those who use money." – Thomas H. Greco, Jr, The End of Money and the Future of Civilization, page 89 – What does Mr. Greco mean by this? Reciprocal exchange is being prevented in many ways. When a bank can boast about being over-liquid this is of grave hindrance to reciprocal exchange (in particular in a credit system) since man has agreed to use money/credit as a medium of exchange and not a store of value. If the money is parked then this hinders reciprocal exchange.
It is not that the evolution of real money into unreal credit money that is necessarily bad. On the contrary, credit money and credit clearing has allowed mankind to accomplished many great things. What is wrong with the current system is not that money is advanced as a credit against the borrower's promise to repay, but that interest on this advance accrues to private banks that gave up nothing of their own to earn it. Banks should be rewarded for (useful) services performed such as clearing services, assessment of asset values, risk assessment services, vault storage, intermediation between savers and investors, but not interest. In effect, banks are merely acting as middlemen, bringing savers and investors with funds together with borrowers who need funding. However, there is a specific type of banking for this which is called investment banking with profit-sharing arrangements as oppose to debt and interest arrangements.
In conclusion, money is credit. Banks create money by privatizing our own credit and lending it back to us – at interest. Credit is allocated on a biased basis to favored clients which distorts the system of economic rewards. The interest forces cancerous growth which is beyond our planet with finite resources. Because interest on a global scale can never be repaid due to the built in deficit inherent in the system, persons who primarily consume are at a disadvantage because they will be constantly trying to keep up, working more jobs if they have to, as their salaries stay below the inflation rate. This increased cost of living is costing people their lives as they virtually become economic slaves to the benefit of some but to the detriment of society as a whole.
"A great industrial nation is controlled by its system of credit. Our system of credit is privately concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men who, even if their action be honest and intended for the public interest, are necessarily concentrated upon the great undertakings in which their own money is involved and who necessarily, by very reason of their own limitations, chill and check and destroy genuine economic freedom." -Woodrow Wilson, excerpt from 1912 campaign speech -
"The pinnacle of power in today's world is the power to issue money. If that power can be democratized and focused in a direction which gives social and ecological concerns top priority, then there may yet be hope for saving the world." - Thomas H. Greco, Jr. –
Emilio Kalmera
