Friday, November 21, 2014

Money Creation and Society

Yesterday there was a general debate in the House of Commons on 'Money Creation and Society' - which was, as noted in the debate itself, the first time 'money creation' has been a subject of parliamentary debate since the Banking Act of 1844. (You may remember in the post I did on the Giro that there was no need for a new act of parliament to get it going, and so there was no debate)

By way of marking this momentous event then, I thought it'd be appropriate, at the very least, to post the video of the debate.

I'd guess that if you're reading my blog you'll already be familiar with the ideas discussed. This Quarterly Bulletin from the BoE is referenced as a good explanation of 'modern money creation'. The reform group Positive Money lobbied for the debate. I'm not sure how the process works but the debate was secured by a cross party group of money-reformers [Michael Meacher (Lab), Caroline Lucas (Green), Douglas Carswell (UKIP) and David Davis (Con)] but the leader of the pack seemed to be Steve Baker who is the conservative MP for High Wycombe. Steve comes across as a fairly hardcore libertarian, quoting Mises, referencing Hayek, extolling the virtue of crypto-currencies and name-checking bitcoin.

As for the debate itself, all participants seem to share a dissatisfaction with the current situation where private banks have an effective monopoly on money creation. This they claim - and I think they're right - is the cause of many social and economic ills. Broadly, their suggested remedies divide along political lines. The Left suggests that money creation should fall under the remit of parliamentary committees, the Right thinks the market should decide.

No surprises there, then.

It was a special moment for me to hear the question 'What is Money?' being asked in the House of Commons. It was in Steve Baker's opening speech at around 18.40 in the video. He asks "What is Money? and then answers with 'Money is the basis of our moral existence'. That perked me up. I thought for a moment that he might talk about Value monism and money in the moral universe and all the weird stuff I love. But no. It was wishful thinking on my part. He was meaning it in a Hayekean free-market sense. And as I've explained elsewhere there is a fundamental ontological problem with Hayek's idea of Money (For Hayek money comes through price from markets; but actually money precedes markets and prices - chronologically, logically, and ontologically)

This links into a troubling theme for me. It seems to be received wisdom - accepted and unquestioned by all those in the debate - that money is a social institution subject to political will. This will expresses a desire for freedom and equality, and depending on the balance of those desires, finds its form in actions that seek either to bureaucratize or to democratize currency. The problem occurs when those alternate actions inevitably fail. The response that follows is a greater expression of political will and a subsequent energizing of the particular action. This too inevitably fails. And so, when a critical point is reached the action is switched, from bureaucratization to democratization or vice versa, and the process begins a new. The eternal reoccurrance of the eversame.

There are two basic problems.

Firstly, the assumption of causality - of money creation as subject to, or a function of, political will - is wrong. (Money cannot be wholly defined as a social institution either, but we'll deal with that another time).

And secondly, Money has the capacity to reflect back any duality - the political duality, of left and right; the economic duality of supply and demand; the moral duality of right and wrong. And the louder we shout at money, the more deafening its echo.

And there is one much more fundamental problem for the political will in regard to money.

(For me) Understanding money requires a total prestation of being. Of our being, to money's being. By their very nature political prestations are partial and so will always be in a confused conflict with money, as money reflects back the schizophrenic essence of the political. As such, there is no political vision that can achieve a new and meaningful understanding of money. As far as money and politics goes there can be no new heaven, and therefore no new earth.

It is in the realm of the sacred where we present ourselves (to God) as whole; as a complete being. All our thoughts, deeds, feelings, emotions, and actions are known to God. And, so the story goes, we can only know God if we stand before him naked, with our soul exposed.

What I'm arguing for in respect of money, is that we must expose ourselves to it in this way. I'm saying that intellectual understanding is good. That emotional, visceral, aesthetic, and even a sexual understanding of money, are all good. But our understanding of money will forever fall short until we can experience its sacred nature in a spiritual way.

I know that might sound totally alien. Even sacrilegious. But monetary reform - and by that I mean real monetary reform not just tinkering with currency - is about our relationship, both mundane and profound, with money. A change in ourselves will reflect in money, and we will see that change reflect back to us.

Burn it !

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