Is it possible to create a new currency (such as 'citizen coupons') independent from extractive and predatory economy?

I've given myself many headaches trying to understand money - it seems such an ordinary everyday thing, but it has evolved to be complex and hard to understand.

Positive Money have a short video that attempts to enlighten, but I'm still not sure it's the full picture or even right??? https://youtu.be/01IusDeSPE4

I've listened to The New Chartists talk about The Bradbury Pound in the UK which was used in war time to create interest free money. Bring back the Bradbury Pound they argue. They talk as if the "magic" of printing money is the answer to everything. Free money, free houses, nobody need work again ... ???

But ... isn't that what's happening now, in the current coronavirus crisis? Even if not paper money, even if we're not getting free houses, governments around the world are loosening the purse strings and creating electronic money without borrowing - for free, no strings attached? We (all) get something for nothing.

Here's how I think of it: Money is a promise. Nothing more, nothing less. When I went to the bank to borrow money to buy a house, I signed a mortgage - a promise to pay back over a number of years. The mortgage is my promise (that the bank validates) and the paper that I signed becomes worth something - that mortgage is effectively money

But if you make too many promises to pay back in the future, you may end up in the situation where you can't pay it back, and that mortgage paper with your name, your promise, becomes worthless. Whoever is holding it, thinking it has value, loses.

That's what happened in the housing crisis. Money was lent to "subprime" borrowers. Mortgages were created, packaged up by the banks and sold on to others believing that the bank had done their job in validating the ability of the borrower to honour their promise to repay.

And that's where it all went wrong. Promises couldn't be honoured and we had a crash.

There's no telling at this stage many years after this crisis is over what will happen to the economy, or the next generation who will somehow have to honour the promises being made by governments on behalf of us all.

So when I read in that Medium article that

"We can agree that we can distribute currency independent of the interest-debt-tax-investment-speculation economy — the type of economy that is extractive and predatory.

We can easily imagine currency to function in this way. Governments print currency for every person according to some valuation of essential goods and services"

That just sounds like too much witchcraft to me.

That sounds like making promises now that will cause pain down the line, either for us, or for our children.

How many countries round the world in history have, found out that the short term illusion of free money, by simply starting the printing presses rolling, soon reveals itself to be a fraudulent scheme.

Thanks for this Alex, money is a promise is a very helpful metaphor to understand this dilemma. I like it. And I guess when someone accepts a promise it becomes an agreement. And here it becomes more complicated for me. Probably an underlying assumption for agreeing is trust. But who should trust whom? When parties involved in agreements (using money) are individuals, small compies, big corporations, states...operating at a global scale and with hugely different powers, can we still build agreements based on trust? ps. I guess the video you link demonstrates that banks benefit most from "printing money" economy, while they manage (and charge for) its distribution :)

Yes, absolutely, trust is key - whether it be a verbal promise, a written IOU, a mortgage deed, a government bond, or the bank notes in our purses and wallets. We have an expectation that they are all going to be worth something in the future. As simple words of intent or pieces of paper they are worth nothing unless the person or institution behind the promise is able to fulfil their commitment.

For your amusement maybe(??) here's some woolly thinking from The New Chartist movement :

We support the full restoration of Sovereign National Credit – that is our nation’s absolute right and proven ability to create, issue and control, through HM Treasury (not the Bank of England), all of the money needed to successfully run our country. It will be money that is debt-free and interest-free as it is based entirely on the wealth and creativity of our nation. This will be done by re-introducing the extremely successful 1914 Treasury-issued Bradbury Pound that will ensure the long-term security, prosperity and happiness of everyone in the country. This also means that the need for Direct Taxation - for having an invasive and complex personal taxation system which allows agenda-driven politicians to micro-manage and control our lives - will almost cease to exist. Our country will effectively become a tax-free haven and ‘austerity measures’, so beloved of the Tories, will be a thing of the past!  

Yes.. there is a worry that printing money leads to massive devaluation. However, there are other ways of evolving the way we trade. Check Open Credit Network where Oli-Sylvester Bradley is challenging the notion that we need to rely on money to the extent we currently do. I've invited him into this group.

Hi @The Alternative UK - (It feels really odd replying to an "organisation" when the posts must have been written by a person - is there any chance you could add yourselves as Pat and Indra etc and write from your personal accounts, so we know who is speaking and it's a little more personal?)

YES - thanks for the shout out - Mutual credit is indeed a way to solve many of the the current economic problems. It answers the core question in this thread directly. Read this to get started if you don't know anything about mutual credit: https://opencredit.network/mutual-credit-explained/ and this might help too https://opencredit.network/2020/02/11/how-mutual-credit-works-an-example/

It's an age old idea, which has basically just never been implemented properly at scale. At The Open Credit Network we are building a business to business network (to start with... because the Consumer Credit Act prohibits people making 'loans' to individuals without jumping through loots of expensive hoops) using open source software and cooperative governance, so that everyone that joins can have say in how the network is run. We think this combination may be the magic sauce... We have big plans to work towards a federated network of mutual credit networks.

We're really keen to develop our software more, to be able to provide an open source mutual credit system for individuals too, and to grow our crew and to spread the idea that MONEY HAS TO CHANGE... or nothing will change.

If you can help in any way, we would love to here from you - or if you can just share the word, that would be really useful too.

Oli
(sorry if that's too many links - I tried to keep them all in context!)

Ha! Sorry about the AUK ID.. Indra here. But it's a problem we're trying to sort out with Loomio. Have to switch browsers in order to reply as myself

Thanks for the heads up on your work on Mutual Credit @Oli SB - that's a massive amount of work I'm sure and I wish you all the best on making a success of that. Without having delved into the details too deeply, I guess this would work much the same as Credit Unions for individuals - which were introduced to me when I lived in Sheffield as an ethical and much cheaper alternative to Pay Day Loans.

"Money is simply an agreement" (or promise) is how I've come to understand money and that's a good enough explanation for individuals and short term transactions. It may even work for government borrowing where the agreement is for amounts much larger and much longer term. If the government needs more money, it simply enters into new agreements with the market and issues bonds, ie promises to pay in the future. We have an easier life now, the consequences are sufficiently far in the future for us to not have to worry about them (that is, if we don't care about the next generation).

I'm claiming no expertise on the subject, other than having followed Positive Money for a while and not really getting the big picture of fiat money, reserve currencies, fractional reserve banking, high frequency trading, mortgage backed securities, CDOs etc, etc - it's a bit of a head spin if you're not an economist. But i still think there are a lot of bankers who should be in jail after the crash and not rewarded for their massive failures. Did they really understand the system, in which case they're crooks, and if not they were just massively incompetent.

Any initiative that helps to side-step that world of unregulated parasitic behaviour that sucks wealth out of the "real" economy and into the hands of crooks who need bailouts when their fraudulent schemes go bust, deserves success.

There, I feel better for that.

Keep going, Good Luck.

👍

Thanks @Alex Cooper I appreciate that - and agree about the bankers ... but we're going to need more than "good luck" if another economy is going to be possible... we're going to need your (and everybody else's!) direct involvement and support... because "If you are not part of the solution you are part of the problem…"

I've just been in a fascinating Alternative UK co-creators Zoom meeting in which the Open Credit Network was discussed, and what I think emerged from the conversation was an awareness that promoting the OCN in our local areas (as I try to do in my area) very much depends on working within, or creating, networks of trust within which ideas like OCN can be heard and seen as credible because of the trusting relationships already built up. And crucial to that building of trust is working from within the heart, the emotional intelligence, the love, that is at the heart of caring for each other. I'm beginning to understand that cultivating local social networks that are based on helping others to be centred around their heart-wisdom could perhaps help make new economic systems like mutual credit take off.

I like the "heart-wisdom" it is interesting how an image of a heart-chakra Anahata keeps on coming back to me every time when we try to solve problems only with intellectual wisdom using the rational mind. The pain in the chest I get at those moments is like a reminder to stay open to other ways of knowing.

PS. and then a spoiler...Saturday evening I was watching this documentary with my family on Imelda Marcos (I highly recommend it for everyone!!!) She, Imelda, is repeating several times in the film how she is "a loving mother of the nation". What is chilling in her statement is that I do not have any doubt she really believes it. So "love" is only a word, and we all define what it means for us individually. If "love" becomes a guideline the "love" might have many meanings.