Leadership of Money
Yesterday I wrote an essay called "Leadership of Knowledge" that I just revised extensively. The latest version is on the blog at:
In it I contended that we have blown the need for individual leaders out of proportion. It is puerile to wait around for some great man of the hour to save us all. Look at the record of kings and queens of England or of American presidents. Though there were a few brilliant exceptions, on average they were barely competent. Instead I proposed that we look to entire professions for our leaders. We could empower these experts for innovation and influence by encouraging them to make their own money.
I promised this time to answer the question: what would happen if economists made up their own spending money? Here is what I think they might come up with.
Consider the events of the past couple of months.
According to one financial expert in an article written on December 2nd, the American bailout of private banks and other lending institutions has already cost more than the New Deal, the Marshall Plan, the Louisiana Purchase, the moon shot, the savings and loan bailout, the Korean War, the Iraq war, the Vietnam war, and NASAs lifetime budget combined. (Barry Ritholtz, "Bailout Costs More than Marshall Plan, Louisiana Purchase, Moonshot, S & L Bailout, Korean War, New Deal, Iraq War, Vietnam War", Global Research, December 2, 2008). This prodigious outlay of funds went to institutions whose very existence -- in the eyes of most religions -- is morally questionable at best. Usury, making one's living solely on interest from lending money, is in God's eyes (and the eyes of anybody who looks over the details of this bailout) an excess. At the same time, there is scriptural support for amateur borrowing and lending, for example in the Psalm,
"A good man sheweth favour, and lendeth: he will guide his affairs with discretion." (Ps 112:5, KJV)
As we have discussed here before, right now banks and unregulated quasi-banks make new money -- not the government, as some think. Money is created by loans among private lending institutions many of which a few years ago were liberated from the regulations designed to keep them in check. Mix in human greed and you get the present crash and burn. Even the richest national governments are heavily in hock to these money changers. It is so bad that some commentators believe that the mega-bailout is proof that the U.S. government itself has been privatized by the moneyed elites in a sort of business coup d'état. Be that as it may, banks -- or more precisely the banking industry as a whole -- create money out of thin air by lending money at interest to one another.
Why not turn over the task of making and printing new money to experts and tradespersons? This job of high finance -- using knowledge and infrastructure as collateral -- could be taken over by the trades and professions. After all, it is their expertise that is largely responsible for the advance of science and the spectacular growth of wealth over the past century. And, since the members of the trades and professions already have an independent income from their own careers, they would be inclined to be moderate. They are in an excellent position to lend money on a strictly amateur basis, charging either no interest or very modest rates on their loans.
As described yesterday, trades and professions could already be actively making their own virtual funds in ongoing simulations similar to Second Life; call the currencies "farmbucks," "teachbucks," "docbucks," "lawbucks," and so forth, they would already be as adroit at handling money as any banker. Using their own virtual funds on the Net, the trades and professions would be experienced in giving points and coupons rewarding behaviour that they consider desirable. It is a small step to go on to creating "real" money in the same way that banks already do, by lending and borrowing money from one another.
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