A Healthy International Monetary System

When I lived in Italy, my colleague used to point out a town to me that didn’t use money. Unfortunately, I don’t remember the name of the town, but it was on the way to Castiglione della Pescaia from our home in Badia a Passignano. It was quaint, small, and circular, on a hilltop surrounded by a wall. He was always talking about empowerment and building up a parallel system. He called himself a communist, a Cathar, a Gnostic, and an Alchemist, but looking back, I’m not really sure I understood what he was and what he represented. He admired Mussolini and Barak Obama. I didn’t care about or understand politics back then…I was living in a bubble.

Italy has had a long history with money and banking. In fact, modern banking can be traced to the medieval and early Italian Renaissance, to wealthy cities like Florence, Lucca, and Siena, where I spent a lot of time. In 2011, during Europe’s sovereign debt crisis, a little Italian town by the name of Filettino made international news when the mayor decided he’d had enough of the Italian government and started issuing currency with his face on it. The fiorito, as it was called, was actually being used by the townspeople for awhile. I’m pretty sure it didn’t work out, once he met with his lawyers, but it was a nice try to declare independence.

An international monetary system should be simple, right? On a fundamental level, it’s only necessary for trading and traveling between nations. Countries with different national currencies need to be able to trade together and people from one country should be able to trade their currency for the currency of another country where they want or need to travel. Since trade is never an even exchange, one country would also need to have a deficit and the other a surplus in money that doesn’t lose value in purchasing power, over time. There should be no such thing as inflation and deflation. There should be no changes in the purchasing power of international “trade” money, over time.

The reason why our current monetary system is failing is because it was never designed to work in the first place. It was designed by oligarchs. These are individuals who derive their political power from extreme wealth or certain international business interests that generate extreme wealth. According to World Population Review, Wikipedia, and several others sites I found, the U.S. is an oligarchy. There are only a small number of oligarchies in the world: the Philippines, the Russian Federation, Iran, Ukraine, the United States, and China. Interesting mix, huh? Somehow I don’t think American oligarchs are borrowing trillions of dollars to fight for democracy. They are fighting for control of the international monetary system.

In this war, it’s the debtor nations versus the saver nations. The dollar no longer works for many countries because they lose purchasing power over time, and ordinary people experience hardship from inflation and can’t survive. If their governments borrow in dollars, and the dollar goes up, their currencies also get weaker. Argentina is a perfect example. The dollar, backed by almost $35 Trillion in debt, isn’t making sense anymore. With 8.1 billion people in the world, up from 770,000,000 at the start of the industrial revolution, the global economy is turning around from resource abundance to scarcity. Things that make our system work, like never-ending debt and cheap abundant oil, are coming to their end. This changes everything as we know it.

The characteristics of money are durability, portability, divisibility, uniformity, limited supply, and acceptability…but what are the characteristics of a healthy international monetary system? It depends on the future of global trade, and one thing we know for sure is that energy will become a precious commodity. Will we be transporting fish from China to the USA for Americans to eat? How about the million other Chinese things that Americans use daily? Since globalism is running on a system of fossil fuels with a shrinking Energy Return on Investment (EROI), we can expect that international trade is going to get a lot smaller and tighter, while local trade bigger and broader. This is really great news if you understand how the current system is destroying our planet.

When the world moves from globalism to localism, power will shift away from oligarchs to everyday people. G. Edward Griffin, in his book The Creature from Jekyll Island, talks about how the economy was running away from the oligarchs in the early 1900s. Growth in banks outside the Federal Reserve System (West and South) was booming. Businesses were self-financing and they didn’t need credit from central bankers. According to memoirs that Griffin read, the oligarchs could only get control of credit creation by destroying the U.S. and global economies. In doing so, they had to get all the gold, so people couldn’t build up a parallel system. I talked about this in my last post; how FDR secured most of the world’s gold in the span of a decade.

It’s frightening to open your eyes and look at all the ways in which oligarchs are controlling us today. They envision a techno-human future where we become “super” on the backs of technology, which they see as omnipotent, fueled by an endless supply of cheap energy. They are above God, above nature, and energy-blind. But on nature’s turn from abundance to scarcity, on the world’s turn from debt-backed money to asset-backed money, on the people’s turn from globalism to localism, we should think carefully about monies and the monetary systems that emerge before and after the rubble. What foundation do they rest upon? The next, hopefully healthy international monetary system should have the following characteristics:

  1. Money that doesn’t lose value, purchasing power, between nations.
  2. Money that can be marked as a surplus or deficit, since all trade isn’t even. It should probably be a neutral centralized agency that does this, with some kind of cap and repercussion for each nation on the deficit side.
  3. Money that exists and can be traded without electricity or the Internet. Remember energy will be very expensive and will be reserved for only what is deemed essential. It should not be wasted on exchanging currency when it needs to be used for food and shelter. The grid could go down too, and we won’t know for how long. Weeks? Months?
  4. Money that has been and is created by human labor, not machine labor. Machines require expensive material and energy resources that rest on the foundation of mining, manufacturing, global transportation, and strong international relations. Any of these things can be scaled back or disrupted for a long period during scarcity and/or war.
  5. Money that is traded through human beings, without the use of automobiles, planes, computers, phones, etc. Just in case! You don’t want money that stands on the back of technology, which stands on the back of cheap energy, which stands on the back of a dying debt-backed system. Do you know what I mean? Your wealth and money shouldn’t be stored in someone else’s liability during a sovereign debt crisis, especially when the whole system could default.

Do we need banks? Probably not. Do we need credit? Not in a world where local communities are self sufficient. Do we need oligarchs? No! But they always seems to weasel their way into societies, so beware! “It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”—Henry Ford

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