This will address some common criticisms of what was discussed in Part 1 which is assumed that one has read.
2.1 Argument: A little interest is morally acceptable. It is not “usury” which means “excessive interest”.
Reply A: As demonstrated in the thought exercise in 1.2, any interest attached to money creation does not represent human effort. It is fraudulent, it perpetuates debt and therefore not morally acceptable.
Reply B: The meaning of “usury” was originally “interest”, which is now considered obsolete. The history of how that meaning conveniently became “excessive interest” is admittedly difficult to trace but one has to wonder whether that was deliberate as a means of conditioning (brainwashing) the population.
Furthermore: Despite Reply A and Reply B, the following distinction is important. If, for example, you borrowed money from a friend, then a small amount of interest as a token of gratitude to your friend who helped you in time of need can be justified. The argument is not merely sentimental. The money your friend had was already circulating in the population. By borrowing it, you have temporarily denied your friend access to it. Your friend could have instead used it, did some work and then earned more in return. Therefore, a small amount of interest to compensate that possibility can be justified. However, money creation is new money; that is, not money that is already in the population pool. No one is denied access to money because of this newly created money. Therefore, interest shall not apply to money creation.
2.2 Argument: We can’t just create or print money as it is based on nothing.
Reply A: This argument is over-simplistic, possibly a kneejerk reaction to the current system that creates or prints money with interest. As already illustrated (1.2), it is the interest that perpetuates debt. As long as the amount of money created corresponds to the human effort with no interest applied, then any problems will be relatively minor due to unintentional inaccuracies that cannot be avoided.
Reply B: As money (in any form) cannot simply appear in the correct amount and in the correct hands at the moment(s) work is being carried out, money must be created in anticipation. This practical issue cannot be avoided. And since it is created in anticipation, this newly created money is, strictly speaking, not based on anything at the moment of creation. As such, money creation can be justified but interest can never be justified in this context.
2.3 Argument: Using a tradable proxy such as paper and coins is just like fiat currency. It is based on nothing when it should be backed by precious metals.
Reply: This argument is over-simplistic, possibly a kneejerk reaction to the current system that creates (prints) money with interest. To repeat: money is supposed to represent human effort (work). That is what money is supposed to be backed by. There is nothing wrong with precious metals in itself as a tradable proxy, a form of representation. It is not the form that is important, it is that the form needs to be secure from counterfeiting and that the amount created and circulated in the population consistently represent the work done. There is the tradition of using gold and silver. Aside from security against counterfeiting, the other reasons are aesthetics which is more of an emotional argument. This is fine in itself but it is not absolutely necessary. Therefore, the form can be precious metals or gold-pressed latinum or even “paper” which is easier to carry. The form should be physical (tangible) and not digital in order to avoid any semblance of the fractional reserve, and no interest is to be applied at the point of creation. (If a secure form can be created using quantum computing as opposed to the current binary digital systems, then it may work, but that is another topic.) Paper notes can be very secure. The current US notes are pathetic examples. Even a stupid country like Australia has been using for decades physically durable notes with numerous security features that make them practically impossible to counterfeit.
2.4 Argument: Such an economic system will still require an authority to create the money and monitor its circulation.
Reply A: Yeah, and?
Reply B: One cannot avoid the necessity of authority and hierarchy. Someone has to be in charge. There has to be centralization when it comes to authority (determining procedures) even if there is delegated authority (de-centralization) when it comes to day-to-day operation (executing procedures) for the sake of transparency, security against infiltration and redundancy. Only an anarchist moron would promote otherwise. This argument does highlight the necessity of good people who are capable of constant vigilance. A seemingly good system cannot compensate for evil people in charge, and good people can still act with decency and produce decent results within a bad system. Ideally, both good people and a good system are required, but it is people who get things done. Therefore, part of the solution is to remove evil bankers rather than remove the idea of authority and hierarchy.
2.5 Argument: What about all the banks out there?
Reply: Commercial banks are ultimately controlled by central or reserve banks which are labeled as “quasi-governmental”. This is basically an obfuscated admission that they are a private rather than a governmental entity. The excuse is that such an entity should be “quasi-independent” as if that is a good thing. Clearly, the government—which is supposed to govern for the benefit of society—is not truly in charge. The central or reserve bank is a private entity as the board or those who control the board are in effect working on behalf of bigger private banks that are run by a handful of families.
Furthermore: If the government is truly in charge and creating money without interest, then there would be no need for taxation as we know it. Taxation is proof that the debt is perpetuated by private entities utilizing interest. All the different banks out there are perpetuating debt by utilizing interest and fractional reserve. They are fundamentally doing the same thing; the difference is in which layer of control and geographical region they are operating. There are, of course, other implications; for example, the economic policies of one region are used to exert control over another region.
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Even without the application of interest and fractional reserve, there are aspects necessary for a just economic system that are not discussed. For example, how much money is to be retained in society due to the value added (work) when a loan is paid, and how are prices to be calculated and monitored.
If time permits, these aspects will be discussed in the future, but the point of these two articles is that the fundamental problems are interest applied to money creation and the fractional reserve. Most if not all other problems stem from these two fraudulent practices.
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