The Coming Monetary Transformation: Revolution or Evolution?

By Joe Bongiovanni.

Surely the answer to that question must depend on your personal views, like beauty – lying in the eye of the beholder. But your particular answer matters not. A complete money-change is coming. If you’re paying attention, you can feel it in the air. So, call it what you want.

Many involved today in central banking, monetary policy, politics and, yes, business-economic journalism in all media, are gathering their understandings of this ‘something very new’ happening about our money. What formation this new money system construct ultimately takes remains to be determined. It’s completely up to us. Indeed, a new National Monetary Commission might again be in order – to help us sort things out.

There are wide variations in the new ideas on the money-change theme out there, some with true revolutionary merit, most without. But the outcome will be a completely different way of doing our ‘money’ things.

Full disclosure. I had a member-profile on Huffington Post since 2006, and my bio-identity has been that of a monetary-revolutionist. My Dad was a monetary reformer.

The bankers need not fear the results of a Bernie Sanders or Jeremy Corbyn, or even the HowieHawkns’ of the world catching on to this political potential of public money.

It’s not that they won’t eventually catch on. Indeed, they must. It’s that it’s nothing for bankers to fear, especially central bankers grasping at straws to save their failed monetary designs.

We will still need money, and the bankers, no matter what. And the bankers can fully manage the nation’s credit, based on their community creditworthiness guidelines.

What we don’t need is those same private bankers making the loans that control the public’s money. Rather, the government’s role will become to ensure adequate and non-inflationary circulating media’ is available to the banks for lending.

The positive change that is finally coming will undoubtedly, to me, be a true socio-economic revolution. But I’m also hopeful that the central bankers and the their academic supporters will see the change more as a needed institutional and systemic evolution, perhaps a giant, orderly public policy advancement from the present foggy, pseudo-science around our national systems of money.

As Lord Adair Turner, former top banking regulator in the UK, explained at his first, notable keynotes for the annual Institute for New Economic Thinking (INET) gatherings, the essence of truly new economic thinking today comes from finally better understanding and accepting what has been a great body of historic taboos about our money, and their suggested solutions from the 1930s.

Turner’s speeches intelligently and poignantly observe how using debt-contracts as a basis for a money system cannot work today; either mathematically or politically. He boldly opines that public money solutions, as advanced by Fisher, Friedman and others, are eminently doable, technically, if backed by the political will to move them forward.

Dr. Turner slowly, but openly, advances his own Overt Money Finance (OMF) version of Fisher‘s One Hundred Percent Money, a proposal Fisher built upon the earlier Chicago Plan for Monetary Reform, itself built ultimately upon the one true giant of money-science teachings, natural-science Nobel laureate Dr. Frederick Soddy. I am not sure I have heard Dr. Turner mention Soddy. But Soddy’s are the foundations of not only Turner’s new modern money understandings, but of the ecology of money and economics that must be applied if we are to achieve the sustainability of our global economies on this Planet Earth.

It was on that ‘road-not-taken’, that of public-money taboos, where Dr. Turner discovered the ‘policy’ means for overcoming what are clearly the major flaws in the central bank models of today, especially their money-driven booms, busts and secular stagnations of these unprecedented times. Negative money-cost (Negative Interest Rate Policy(NIRP) is not a cure. 

So, what is driving these pressures for systemic reforms to our money systems?

Answering that question has a pre-requisite of an historic understanding of our present money system, how it works, and from where it came. This present system of money, that which all the bankers learned in the business and finance schools–same curriculum, no matter the continent–has a historic identity as the ‘bankers school of money’. What I call “capital-markets money”.

It is important to understand the earlier debates between the bankers (debt-based) money school and the lesser-known public policy choice of that time, the currency school; which was that of the government directly issuing the nation’s currency. Public money, indeed.

The best presentation of the modern New Currency Theory (NCT) teachings of these relationships takes place at the website of Dr. Joseph Huber, Prof. Of Environmental and Economic Sociology in Germany. Huber’s possibly most relevant paper isCurrency and Banking Teachings: A frame of reference of lasting relevance to modern money systems“.

So, it is indeed that old debate, that old public-money ‘taboo’, that is re-emerging, being engaged, and today, evolving.

This new debate will be won on the side of ‘public money’ for many reasons, not the least of which is that today we have these broadly-available educational tools, such as this and other web-blogs and forums, that weren’t available when the bankers school system won out – perhaps winning only because the bankers had the money (and gold) that the realm’s power-brokers needed.

Corruption is older than them thar hills, the Kochs and the Petersons.

But, there being “an alternative” is not the only force at play so as to advance a revolutionary money change. Hardly. The public money option has been available all along.

The reason the “new” currency theory teachings, and those of other sovereign, fiat money adherents, are advancing broadly under the banner of ‘public money’ – what I like to term The Money System Commons – is because the bankers school (debt) system has failed, saturating the various nations of the world, their citizens (students) and their businesses, in excessive, un-payable debt. It just doesn’t work. Period.

Look around.

It doesn’t work for many reasons, but one is that every banker-money loan also creates more debt than money, making portions of the debt un-payable. As the British economic reformer C.H. Douglas said, equationally, P+I > P, i.e. the principal plus interest (the debt that that is owed by the borrower) is always equationally greater-than, the principal of the loan (the money created and circulated in the economy).

Every loan. All new money.

Accumulating, compounding interest.

To the One Percent.

Forever.

Our social inequality, and our concentrations of wealth and incomes, are debt-money’s outcomes.

The debt-based money system is broke, broken and insolvent; being kept alive through the intravenous feedings of global central bank reserves, and the banker’s fear of doing nothing (debt-deflations), and, perhaps also, simply our collective money ignorance.

It is that ignorance that is rapidly evaporating, as readers of Martin Wolf’s book The Shifts and the Shocks: What We’ve Learned – and Have Still to Learn – from the Financial Crisis might personally experience.

Adair Turner’s speeches, the writings of prominent business-economic journalists at places like the WSJ and the various Times’ of the world, show us anew every day. Check them out.

There’s a revolution coming in money.

Let’s do it right.

Joe Bongiovanni,
Director 
The Kettle Pond Institute
[email protected]

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YOUNG SIK KIMHoward Switzer Recent comment authors
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YOUNG SIK KIM
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I’ve been searching and waiting long for anyone who comes up with the ideas I just found at these pages. Thank you!

Howard Switzer
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Howard Switzer

Excellent comments about our broken money system and the change a coming.