Nature of Money

fullcircle principles

In 2003 i met Bernard Lietaer - he blew my mind. It is embarrassing to confess, but until then i had never engaged in the inquiry of the nature of money. It was such an integral part of reality that it felt natural, like nature - seducing us to forget that it isn't - we invented it.

What i learned from Bernard and then deepened when reading people like Charles Eisenstein or Tim Jackson and Jeremy Lent and listening to people like Jim Rutt, Jordan Hall, Daniel Schmachtenberger just to name a few of the brilliant minds out there) was what the conditions and emergent properties of the design of our money are.:

We create money through debt - invent it out of thin air - when it is needed and whoever needs it can show a sufficiently high probability of not defaulting on the loan. Once in circulation the money starts creating itself by means of interest rates. This way the global money supply doubles roughly every twenty years.

To ensure that the purchase power of one unit of money stays roughly the same over time and everyone can agree on the value, we need something that represents the value of money in circulation. This used to be gold until we ran out of it because the amount of money was growing too quickly.

So we did something ingenious but fatal. We replaced gold with GDP - thereby making the growing supply of money dependent on ... ITSELF. This is why we are obsessed with GDP growth - 3% per year is healthy growth your news-anchor tells you. 3% is a doubling every twentysomething years. Sounds familiar.

That in itself would not be problematic. It would be an extremely elegant solution if it were not for a tiny but crucial detail: since we don't qualify the actions of people as they are growing the GDP (aka profit), the more ruthless ones will be more successful by definition. This results in a race to the bottom in which people are left with the choice of also becoming a little bit more ruthless or going bust.

We could easily turn this vicious cycle into a virtuous one if it weren't for the other element of our bi-polar trap - the nature of politics.

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