Challenging the system?
Is Texas unaware that Libya, the most advanced nation in Africa, was destroyed and Qaddafi murdered because he proposed a gold-backed money system for Africa? Challenges to the dominant monetary system are often met with overwhelming force. Fortunately the Constitution allows states to mint gold and silver coins, unclear is how a gold-backed digital currency will be regarded.
Gold was the money of the oligarchs for millennia. We have a 300+ year old monetary system established along with the Bank of England in 1694 by the power elite, the executive arm of the ruling class. That system is usury, creating all money as interest bearing debt for power and profit. That is capitalism. While it was claimed to be backed by gold there has never been enough gold to back a monetary system.
People often think the problem is creating money by fiat, but all money is created by fiat, including gold when designated as money. As Aristotle said, “Money exists not by nature but by law.” That should be obvious as Texas passes a law to use gold as money. Money is an ancient human innovation that has been captured and perverted by the powerful.
In answering the question, “What is money?” Stanford University’s Encyclopedia of Philosophy says there are two competing theories of money, The Commodity Theory, where a commodity is used for money, and the Credit Theory where credit is used for money. Why is there no theory for using money as money? That is the secret that must be kept from the people. Money is supposed to be a publicly issued debt free permanently circulating medium of exchange issued into the productive economy at the bottom, as opposed to the speculative economy at the top, for the general welfare. This was kept secret for the last 100 years by a public incredulity inculcated by a captured schooling and media system but with the internet the truth is gaining some ground.
To be useful as money gold must be valued greater than the commodity, when not it was melted down and sold on the commodity market. Also, because all commodities today are privately owned and controlled it doesn’t solve the problem of elite control. The current system uses bank credit for money which is also privately owned and controlled. People think the government issues the money which only makes sense because money is the governing factor, but government only prints and mints the physical currency which it sells to the banks for their customers cash needs. Only 3 to 5% of the money supply circulates in cash at any one time.
Aristotle also pointed out that money plays two roles, one as a medium of economic exchange and two, as an instrument of power. The power function stems of the “store of value” function that facilitates the accumulation of money which can then be used to dominate a market, control an industry, or dictate public policy, start wars etc. all of which has gone on for a long time. Of course, in this system people need to accumulate some money to qualify for a loan to buy a car or a house, banks only lend money to people who have money. Even if you do have some money the banks may not lend to you if your ‘debt to income ratio’ is too high, even if you have a high credit rating due to your frugality.
The problem was best analyzed, and the solution developed by the merchant economist Silvio Gesell in the 1920s. The prominent economists of the 1930s, Maynard Keynes and Irving Fisher, both praised his work and yet few have ever heard of him, and schools carefully ignore his book, The Natural Economic Order, which provided the foundation of ecological economics. His money system was demonstrated by small towns in Germany and Austria, creating local prosperity in the depths of the depression. Wörgl, Austria accomplished $2.5 million in public works in 15 months while only issuing $6000 in currency. This was due to a demurrage fee which greatly increased the circulation velocity of the money but also there was a positive psychological affect. Because of the dynamics of Net Present Value, people began thinking long term instead of short term and began building for the future before the central bank-controlled government shut them all down, even in the US where hundreds of towns began to issue currency. Irving Fisher even wrote a manual on how to do it which is online.
All that said, I appreciate Texas challenging the dominant system and hope it will help make people examine the privatized monetary system and the proposals to make it public and democratic.