What is Money??????

Money is debt. 

The general public (myself included) is led to believe that money is controlled by the government and is in direct relation to how much gold the country possesses.  Images of money being printed off at the mint spring to mind when trying to determine its origins, but the truth is our money only exists in theory and is not controlled by the government, as we may like to think.

Polanyi once described the characteristics of money goods as "homogeneity, durability, portability and economic divisibility" and while these qualities are important in an economy's form of money, it seems as though this definition is still lacking a key defining feature: that money must actually be backed up by something of value.  Prevalent forms of money today are worthless except for use in payments or exchange.  Historically paper money used to represent a reciept for a specific amount of gold that was being kept at the bank.  Money is no longer a receipt for an amount of gold, but rather it only represents itself. 

Money is created when someone receives a loan or mortgage, meaning money is created out of debt.  Money is private banks lending non existent money in the form of credit.  When a customer walks into the bank and requests a loan the bank does not have that money stored in the back in a safe, but instead simply types the amount into the customer's bank account.  This means money is no more than made up numbers on a computer screen.  The bank can make numerous amounts of loans despite actually only having a small percentage of that money.

Banks do have to be monitored in regards to how much money they can lend out, but the limits have changed and grown over the years.  The limits presented in the form of a ratio.  For example if the banks limit is a ratio of 10:1, it means that for every one dollar the bank actually has it can lend out ten dollars.  With the constant creation of money from nothing it means the amount of money in circulation is continually growing.  If there is more and more money being put out into the economy the actual value of money will decrease.  Without money being tied to a physical property it becomes unlimited and easily created, meaning our natural resources are being used up at an alarming rate and will not be able to be easily replenished.  The movie, History of Money, discusses how this leads to an unsustainable system that will ultimately lead to a collapse if it remains unchanged.

The monetary evolution of the west has not been guided by an invisible hand of progress, but largely imposed by conspicious actions of government.  The fact that the government chooses to borrow huge amounts of money from the banks, which they will have to pay back with interest is hard to conceive considering they could create and monitor money themselves.  Why borrow from the banks when the interest adds up so quickly?  The people that ultimately suffer are the taxpayers as it is their money being used to pay the huge sums of mounting interest.  The application of interest allows banks to profit off of money that doesn't even actually exist.  And if the money never existed in the first place, where are the borrowers expected to find it to pay back the loan?

History of Money, explains that this system is taking the wealth of many and placing it in the pockets of a select few.  If the public suddenly stopped borrowing money the entire system would crash.  It is reliant on debt annd the continuation of that debt.  Money cannot actually exist unless people believe it so.  If people were educated in regards to the production of money it would seem ridiculous and highly doubtful that the system could stay in place.

The major barrier to plying monetary analysis or any modern theoretical tools of economics in treating primitive money is the idea that modern money is intrinsically economically superior to the primitive variety.  Primitive money had a real physical value and was limited in how much you could own or find.  Modern money created from nothing and essentially limitless (as long as debt continues to rise) is a flawed system and makes little to no sense when compared to the historical forms of money. 

The modern system cannot be viewed as evolved or sophisticated as it is a system that fails to make sense.  It is ultimately hurting the economy and creating huge amounts of debt among the populations and government.  How this system manages to continue without public outcry is disheartening and is inevitably heading towards disaster.