Morality and monetary policy

By Edward Hadas
March 6, 2013

Monetary policy these days is complicated, ineffective, and quite possibly immoral. The complexity is inevitable; there is no simple way to ensure that the supply of money and credit is appropriate in a large modern economy. The ineffectiveness is evident: central bankers let that supply grow too fast before the 2008 financial crisis, and have unable to return monetary conditions to normal since then.

The moral lapses may be subtle, but I believe the lack of attention to the common good in the management of interest rates and the monetary system causes three serious problems.

 1) Dangerous freedom

Imagine a world in which anyone can use anything as a currency. This perfect monetary freedom would be a disaster. With strangers, I would only be willing to deal in gold, or some other scarce substance that could be carefully measured, because I would have no way of evaluating verbal or written promises to deal fairly. I might be able to trust members of my social group in economic transactions, but only because our monetary freedom was balanced by strong social constraints; they would be punished if they tried to cheat me.

The example is extreme, but it brings out the dangers that come with all monetary freedom. Money is always a token of value, but the value of the token is hard to determine. Invincible ignorance is one issue. No individual can hope to know how much a dollar, or an ounce of gold, should be able to buy at any time, and even monetary authorities struggle to keep track of the supply of both money and the things that money can buy.

But greed is even more dangerous than ignorance, and the freedom to create money – as banks do by lending out deposits, or as anyone can do by issuing promissory notes – is an invitation to greed. The borrower or the issuer is constantly tempted to acquire more spending power than justice would allow.

The current monetary system is far from totally free; central banks such as the U.S. Federal Reserve exercise some control, and they try to use their power judiciously. However, these monetary authorities delegate most of the actual money creation and destruction to relatively unconstrained banks. These institutions have steadily misused their freedom. Greed leads to credit booms, unnecessary bad loans and sudden moves from expansion to contraction. And greed comforts banks and bankers as they extract unconscionably large payments for their services.

 2) Money distorted

Central bankers are supposed to keep prices stable. Right now, the monetary system is conspicuously failing to do so. True, fluctuations in the U.S. Consumer Price Index have been fairly modest since 1991; the annual rate of change has varied from a 2 percent decline to a 5 percent increase. However, the prices of houses, oil and most other commodities have moved far more in both directions, often at a dangerously rapid pace. To call that price stability is like a fire department boasting that its record was good because few houses burned down, arbitrarily ignoring numerous factory blazes.

Behind this failure lies a poor moral judgment. The authorities insist that bank balance sheets must be treated as nearly sacrosanct. They refuse to impose losses on lenders, leaving banks to carry on and the economy smothered under a heavy blanket of debt. For the sake of the false good of bank stability, central banks have “abnormalised” the financial system with absurdly low policy interest rates.

 3) Bankers in control

The monetary authorities have not only failed both to limit banks’ monetary freedom and to make the financial system sound; they have largely allowed the banks themselves to determine how they should operate. Central banks and financial regulators have neither used their regulatory power to restrict pointless trading and exploitative lending nor taken advantage of their substantial political authority to spread the bad news about the industry’s anti-social behaviour in lending and remuneration.

Bankers have proved very bad judges of how their institutions can best serve the common good. They need lessons in right behaviour, but the Fed’s Ben Bernanke and his peers around the world have been reluctant teachers. Why? The problem is certainly not ignorance; they know, or could know, what should be done. Rather, monetary and financial authorities suffer from a basic misunderstanding of their role.

They want to be nothing more than effective financial technocrats. But that is not enough. They should recognise that their institutions have a serious ethical responsibility.

Central banking can never be made simple. However, the authorities would do a better job if they took morality seriously, by focusing on the helpful limits to freedom and the proper role of the monetary system. Indeed, I believe that monetary policy can only be consistently effective if it is ethical.

27 comments

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Great article.

The Fed’s QE is the biggest boon to the wealthy ever witnessed by modern markets.

The Fed has been buying up, from the wealthy, every worthless note the wealthy had been stuck with. The Fed has been buying everything, you name it. Worthless junk that nobody else would buy, the Fed has been buying it for top dollar, taking it off the hands of the wealthy.

The wealthy can barely contain themselves at their good fortune. Who would have thought they could get rid of those worthless pieces of paper? Yet, the Fed has now paid them roughly $1.5 trillion in cold, hard cash.

The wealthy, who had expected to lose everything, are now made richer than ever.

The Fed board members are very happy to accomodate them using the government’s money.

Once again in life, the wealthy criminal class wins, effortlessly. And the common man is ground into the floor under their heal.

QE is a far greater crime than TARP, and far more subtle for the average citizen to grasp.

Posted by AdamSmith | Report as abusive

Another great article. Buy life insurance thoughy, just in case.

Posted by tmc | Report as abusive

“No individual can hope to know how much a dollar, or an ounce of gold, should be able to buy at any time”

Well, this is absolutely false. A dollar, or an ounce of gold, will buy exactly what the buyer and the seller agree to for the exchange. No more, and no less.

Good article, though. I find it funny that the Fed is creating money through buying bad mortgages at a rate at could give every worker in the US a $2/hr raise (about 118bn an hour, every hour of the day). I don’t agree with central bank control, but it would be a far more effect way of stimulating the economy. Trickle up economics.

Posted by Jameson4Lunch | Report as abusive

118 million hour, not billion, I should say. Over 2.8 billion a day.

Posted by Jameson4Lunch | Report as abusive

Nicely stated Mr. Hadas. I wonder how many folks are out there who refuse to invest in the equity markets today on moral grounds? We’ve made that decision. Although we’re disappointed in the low returns earned on cash we’re content to keep most of our assets working locally by selecting credit unions and smaller banks.

We were equity investors for many decades but that ended in 2011 when it became clear that central bank interference in markets was going to be an ongoing, significant occurrence. An awful lot of people are suffering in this environment while another group enriches and congratulates itself. Not very ethical in our view.

We’re not money “on the sidelines” waiting to “get in”. We’re money that refuses to participate on ethical grounds. I for one am starting to wonder weather capitalism is even sustainable in the long run.

Posted by Missinginaction | Report as abusive

Mr. Hadas: Well done.

Posted by COindependent | Report as abusive

Ed, did you not get push back from your editors for implying greed on the part of bankers? I mean yes, it’s obvious, but news organizations are more interested in advertisers and as such need to not say anything too “socialist” or “commie like”. I know your comments have nothing to do with those, just that those are the typical knee jerk reactions from the CEO class. You know the puppeteers to our pinochio government. And, I am sure your editors are quite fluent in the language of former drunken frat boy CEOs and quite aware of what level of sycophancy must be maintained to make the masters less cruel.

Posted by brotherkenny4 | Report as abusive

You simply cannot legislate morality into monetary policy. The fault in this article is in the statement “Imagine a world in which anyone can use anything as a currency. This perfect monetary freedom would be a disaster.” The problem is that you can’t. If the federal government can monopolize a currency that we all MUST use, therein is the so called disaster. If they can monetize our labor output, without our permission or approval, and back that currency with nothing other than our (and our childrens) sweat, then we should be able to establish competing State or city currencies that are better managed. Why can’t the landholders of a given area monetize their property (if it is really theirs) and circulate it?

Why is that you say? How would we buy foreign products in such a case? Then I reply and ask what the harm would be in locally produced products?

If I go to a foreign country and hand them US dollars, they click a button at the register and the conversion is done automatically. Same with credit cards. Even companies should be able to pay employees with a foreign currency if it deems it to hold a better value with less inflation.

If I could force 350 million people to use my monopoly currency while barring all other competition to it, then what would I care if it is managed well? Where’s my competition? There is the real problem underneath all that longing for morality. Competition is good for the goose, not the gander.

Posted by LysanderTucker | Report as abusive

I gave up believing in the truth of “money” (the national currency and all it’s forms years ago. I know it is a form of language and a legitimate government backed currency lot easier to use than barter and a lot more versatile than gold. A landlord can’t force his tenants to pay the rent in gold. Gold doesn’t have the backing of the government, as legal tender and the government can’t control its value. Even gold must be assigned a spot value in the national currency or the buyers and sellers, both, can run afoul of income tax regulations.

But now I don’t know that there is any integrity to the financial regulators and the laws that govern transactions either.

But regardless of what money may be worth at any moment, matching it to assets and goods is even trickier. Artists (Rembrandt for example) can be notorious spend thrifts and that may not be due to their “ditziness” or “artistic” temperament but because they can be profound thinkers and may realize that it is only a useful tool and can’t bear up to too much examination. They might only believe in their own works or tangible assets. Money tends to dissolve in the bright light of critical thinking. Economists must appreciate that to their bones? Money is almost a mirage and Wall Street types got too sophisticated with theories, and knew they could profit on them while everyone with less than a PHD in economic theory was blindsided by it. I think bankers and investors, too, had a hard time keeping up with the innovations, not only in derivatives, but also in the ways of keeping the books. Enron was an example of that.

It’s conflict of interest that is the big problem. And now that concept is harder to define. It’s easier to replace it with: what conflict? Now big money can make the laws that govern big money or any money.

The country has a big conflict of interest in that for ten years it was willing to bribe other countries with it’s own peculiar economic prowess and spread the money around, all the while knowing that if it is defeated or looses the game of bluff and swagger, it’s dependents and creditors around the world will pick it’s bones clean for what its money took from them or promised them, when it was still believable.

The value of one’s currency seems to depend on the integrity of the countries institutions. And if the institutions are no longer respected, the money is just toilet paper. The last ten years have been a vivid lesson in how governments – paranoid and desperate governments – can act worse than organized crimes, and they are “too big too fail” if they are super powers.

Buckminster Fuller had it dead on center when he called the history of the planet a contest of the “In pirates versus the out pirates”. But pirates of any status don’t tend to make stable governments.

Posted by paintcan | Report as abusive

I think you’re right. The whole business world, including banking, has way too much entitlement; very dangerous with people driven by greed. It’s become a culture of non-accountability in a world of naive people who have held on to the beautiful idea that the business world is driven by honor. Well, I guess we’re all waking up. At some point things will shift; they always do.

Posted by JenniferStewart | Report as abusive

Wonderful article, Mr.. Hadas (as usual, I might add)

My “take” would only involve a few word substitutions: “But greed is even more dangerous than ignorance…The borrower or the issuer is constantly tempted to acquire more…power than justice would allow.”

Quite true. Thus we complete the circle of logic to the truism that absolute (and unaccountable) power corrupts absolutely with rather awesome predictability.

Posted by OneOfTheSheep | Report as abusive

@AdamSmith,

Ahhh, again the tirade against the “…wealthy criminal class…” for the actions of an unaccountable and totally clueless GOVERNMENT INCOMPETENT CLASS”. You really need some new glasses.

@missinginaction,

Original points worthy of consideration well put.

@LysanderTucker,

There is no “fault” when a writer asks the reader to “imagine” something for the purpose of discussion. He is not, thereby, advocating same. It is implicit for capitalism to function efficiently there must be “competition” that is “managed well”. When GOVERNMENT is “the competition”, competent management is always suspect. Trust, but verify.

@paintcan,

Was there some reasonably coherent logical point in all that?

Posted by OneOfTheSheep | Report as abusive

@OOTS – The world’s economies and governments do not work on your charming truisms and it most certainly does not work according to logic! Theories about the benefits of free markets and laissez fairs capitalism are only that – theories! The purity of the logic, or the theory, or the correctness of any attempts to describe what is going in a nation’s life don’t matter nearly as much as what people are actually doing and what they have a stake in and how well they puff their point of view. And they can do all the “wrong” things and actually win the battle of survival.

To make it all the more murky and unpredictable: nature doesn’t have a coherent thought in it’s head. It is not at all disciplined according to any rules that would satisfy you. But it is held to a gruesome life or death critique.

The comfortable are never comfortable forever. And “logic” never has a thing to do with it, except maybe at the molecular level of their being.

Why don’t you just admit it – you’re feeling a little defensive? Make up a new life history and you’ll forget all about it.

Posted by paintcan | Report as abusive

@paintcan,

No good deed goes unpunished. I gave you the benefit of obvious doubt that you were trying to convey serious thought. My bad.

To you thought, ideas, facts, and history are a constant flow of things indistinguishable in importance or priority. To you, that which you profess to not understand does not exist. The quintessential “head in sand” syndrome.

Philosophically you appear as the passive clam lying on the bottom of the ocean taking in whatever the currents bring you, keeping that which you like, ignoring the rest ultimately excreting almost everything to be carried forever away “downstream” leaving your mind both pure and empty. Whatever works for you.

It’s pretty much impossible to have meaningful exchanges of information with those that so isolate themselves in their own alternate universe. You might want to have your doctor verify you are not currently victim to undesirable drug interactions.

Posted by OneOfTheSheep | Report as abusive

Morality is all fine and well. But it’s of no use to plead for morality when so much money is at stake. I can put a finger on the four words which have gotten us into this mess: “To Big To Fail”. It’s a license to print money. The government bails you out when you are in trouble, they keep your borrowing costs near zero, they protect your depositors no matter what you do, and they help out with your troubled mortgages. Given those criteria, why would any banker give any consideration to anything as subjective as morality?

Bankers are human. They are tempted by huge buckets of cash just like the rest of us. Instead of trying to hold them to a higher standard, why don’t we just let their banks fail once in awhile? Why not let them pay the ultimate price for their recklessness with their shareholder’s money?

“Too big to fail” is, by definition, untenable.

Posted by BobinEurope | Report as abusive

The author has a spine yet does not go far enough. This process of stealing money from those who have earned it and giving it at a severe discount to those that would borrow it is sick. This done in the name of financial stability is a lackadaisical view of social interaction and productive investment. Politically it is the easy way out when what is needed is real leadership for the long term good, not childlike reactions from weak hands.

Posted by keebo | Report as abusive

Hey OOTS, take a page from Hadas’ book already, if you are so impressed by him, vis a vis you don’t need to insult people to make your point. Then again, if it makes you feel good, who am I to judge?

Posted by UnderRated | Report as abusive

I was watching a program on Hulu a few nights ago that looked at the diet of the wealthy during various periods of British history.

The program filled out a little of the social context of each period and also talked about the economic conditions that got the upper class into it’s position.

For one thing – it started with theft. Aristocratic landowners had been systematically confiscating formerly monastic and public lands (the commons) and claiming them as private property and reducing the rest of the population to beggary and disenfranchisement. The gentry controlled the lives of their tenants more so, it seems, than the old feudal economy could imagine. It reduced everyone, not a landlord, to the renter status. It reduced may of them to beggary even by the reign of Elizabeth I and to starvation by the time of industrial revolution. The social revolution privatized all resources and served the central government with the taxation it needed to expand its imperial reach. The less monetized system of the late middle ages was not yielding the predictable cash flows needed by the crown to pay for arms and the navy. There was no great return of resources to the local level either. That really didn’t start to occur until the 20th century and the post WWI era.

The privatization of Britain’s resources also produced a culture of wasteful conspicuous consumption that reached its peak in the industrial age. Queen Victoria’s cook evidently said that the amount of food discarded after the feasts, was enough to feed thousands. And the palace was only one of thousands of affluent squanderers throughout Britain and Europe. And while the wealthy were eating extremely unhealthy diets that shortened their lives, the industrial poor were living on bread and tea as the staple diet.

Without a doubt – imperial conquest needs masses of people the state can afford to “spend”. It fact it has to be prepared to waste them for larger gains. It will praise their loss as the “sacrifice of heroes” if it is useful and a loss they care to admit and if the loss of thousands of men or citizens is something that yields long term profit and it will try to ignore or bury its defeats or stupidity, incompetence and corruption under corrective propaganda, otherwise. To be sure – the British crown was developing the economy of Britain but there is no reason to ignore the costs of that development either. An imperial capitalist ystem makes it too easy to do that anyway.

I’m not arguing a communist manifesto here. Only looking at history for the underlying structure. One can never read enough history but there never is enough time to do that either. But there is no reason at all why anyone should light a candle to it and praise “the progress of history” as culminating in “the best of all possible worlds”. Chamber of commerce platitudes can ring tinny and false.

Social control, monetary policy and morality are not the same thing. Social control, especially when heavily skewed to the top earners will define the morality that suits itself. OOTs always argues that “the trouble with this society, and the undeveloped world in general, is the poor have to it too good and they should really have more respect for people like Me”. And allot of them shouldn’t be having children at all and maybe the parents should do “us” all a favor and drop dead. Always he assumes the developed capital intensive economies can do so much better with their resources tan they ever could.

My argument is – people like OOTS aren’t really worth too much respect, especially if it means their needs trump all other needs. OOTs is not the kind of guy that believes in self sacrifice. He thinks he’s disciplined but that isn’t the same as self-sacrifice. He always writes as though he is the embodiment of wisdom and good sense, and all the rest, the less affluent, or less educated are wrong to be that way: why can’t they be like him? He never allows for the fact that billions are living with less waste than the highly developed economies and the kiss of capital seems to up both consumption and waste and doesn’t stop at the goods but rapidly causes them to waste themselves and their old ways of life. He never admits that the wealthy can be ignoble, greedy, selfish, spoiled rotten, lying bastards and stupid too and one thing everyone seems to ignore: they can be so fickle. Those gargantuan meals, and even the entire way of life of the upper classes, worldwide (except China to some extent) were dominated by the dictates of “fashion”. Less developed economies usually aren’t controlled by fashion’s whims.

Another word for fashion is “artificial obsolescence”. The wealthy were the principal beneficiaries of the wealth of the state, and they made sure, even ruthlessly, they had an iron grip of control over it and then pissed it away in celebration of their status.

Maybe it won’t change, but it can’t be ignored either. But the more the rest are made too dependent on the top, the more intense the criticism will become. I can’t imagine there are more intense critics of the lifestyles and pretensions of the affluent than their “help”.

Posted by paintcan | Report as abusive

@paintcan,

Everyone make observations. For some the accumulation of selective life experiences over time has an effect fully as miraculous on the brain as the transition of grape juice into a fine wine. The word most appropriate to describe this “magic” is wisdom. For all too many, the same process merely produces vinegar. Life isn’t fair.

Wisdom in an individual is much more than mere knowledge; even though knowledge itself has been the exception for the great majority throughout recorded history. Those who can perceive wisdom revere it no less than those who can and do appreciate a fine wine.

We do not respect people so much for who they are as what they are. We judge their credibility by the standards they live and the consistency of such standards, or “values”. This is their “true” measure.

People whose brains can not or do not sort out and organize facts and experiences are incapable of the selective thought processes necessary to distill and extract the important essence from these things that simplifies the decision-making process. Day-to-day life requires many, many decisions that would consume all available time if we had to consciously think about each and then act.

Those of us that do not, over time, develop the “automatic appropriate response” are thus condemned to jumbled thoughts and jumbled lives without apparent direction. Can you not see that discipline and self-sacrifice are two sides of the same coin, each appropriate to certain circumstances?

A “complete” individual cares not what other people think about him/her. They strive instead to achieve clear communication and lasting contentment. To neither is “wealth” necessary. Each of us decides every day how we will live from that moment forward.

I have yet to see a person who is petty, jealous or constantly envious of others achieve any form of contentment lasting beyond a full belly. On the other hand, true simpletons, such as those whose minds are laid waste by Alzheimers, can be quite happy. The great majority of people I have experienced fall somewhere in between.

We all have choices. Choices have consequences, even when our “choice” is to do nothing. Choose wisely.

Posted by OneOfTheSheep | Report as abusive

OOTS – Mr Hadas’ articles are open to all comers. He takes the classical long view – the grand architecture of events – and I love to add my bits to it.

To neither is “wealth” necessary. Damn you for the liar you are. I live with less concern for wealth than you ever could.

I write both sweet and sour. I wish I had had more piss and vinegar when I was younger.

It would be nice if – instead of trying to demolish me you actually cited some history, sociology, or economics. That would be more to the point.

The only time choices are really valid is if you deal with honest people who actually believe in honesty and who present honest choices. Otherwise, why call the results any more flattering name than “garbage in, garbage out”?

If the future is going to be one where billions are trapped in economic and social systems that are actually designed to control, and even blight them, by people or a class that thinks that somehow they are not made of the same stuff as the rest of humanity, it won’t be worth living in it and I’m glad I’m too old to have to for too long.

If the future will be one of predators and prey, than the people with Alzheimers are the fortunate ones. They are past knowing what’s eating them. And your children would be better with the minds of cats and dogs.

I’m sure the future could arrange a human society like that too.

Posted by paintcan | Report as abusive

OOTS – You forgot to mention “self-interest” in your pretty comments about being wise and simplifying decisions.

It is always obvious that you place yourself and your needs as paramount when confronting decisions regarding others. If you looked at life with more empathy and more self examination, and a good deal less cast iron egotism, your decision making wouldn’t have been nearly as easy as you claim it was.

My self-interest is approaching zero and that seems like the “wise” thing to do as I get older and approach my own death. I don’t believe I take “me” with me.

Tell me, oh wise one. Do you believe there is a life after death? Two women came to my door yesterday afternoon and left me some Jehovah’s witness literature. One of the booklets talked about that issue. What does “wisdom” have to say about the idea? It’s a very popular idea.

BTW -have you ever met anyone with Alzheimers”. My mother died of Alzheimers and Parkinson’s disease and I would rather have been shot than live even a few months like that. You are a fool if you think she was happy. She turned to stone and bed sores after about three years of wasting pain.

OOTS you’re too damned smug and self satisfied.

Posted by paintcan | Report as abusive

@paintcan,

Self-interest is present in every human interaction, whether conscious or subconscious. At it’s most basic, self-interest is the survival instinct in every living thing. It is present, if not necessarily dominant, in every decision. It’s effect(s) may be harnessed and put to good effect or it may run wild like undisciplined children to the detriment of one and all others. Is this, to you, an “honest choice”?

I see genius and beauty in the concept of capitalism to harness this universal force to society’s benefit by inducing individuals to put forth more effort than they do otherwise. Such a society, in whole or in part, thus can be more efficient and productive.

Such “surplus” may improve the quality of one’s life forward, or not. The efficiency of calitalism to such end is utterly dependent on the design and fit of the harness, and the wisdom of those who would apportion it’s “surplus”. If people do not harness capitalism properly, it is no more responsible for failure or disappointment than the plow horse for sterile seed, loss of topsoil or lack of rain following a good harvest; or the chisle for ruining a carving. “Honest choices”?

Just as one can perceive and discuss beauty without being beautiful, so I can discuss wisdom without having to be wise. Otherwise there would be no instruction in logic or philosophy. Wisdom is perhaps as elusive as happiness…a butterfly some chase all their lives that, when they rest, may come and alight on their nose; or not.

Life after death has ever been a “very popular idea”. Peter Ustinoff as a “rich man” had a wonderful line in one movie. When asked this question (because he gave freely to all representing the various religions of ancient Rome), he responded: Publicly I believe in them all. Privately I believe in none of them.”

On occasion the JWs have come to my door over the years. I treat the people and their faith with appropriate respect. I do not envy nor do I accept their beliefs, and so it is a waste of their time and resources. Who am I to judge them or deny them the courtesy of being heard?

Personally, I think the clock is wound but once. At this point in my life I value time more than money. There is much I don’t understand or cannot explain, and that will always be so. The same is true of the Pope. He may be bothered by this. I am not. Recognition and acceptance of reality are cornerstones of contentment. Change what you can, accept what you can’t. Recognize the difference.

That said, there have been times when my back has been to the wall it would have been of comfort to have an unshakable belief in a benevolent and omnipotent force that would back me up if all else failed. Logic and personal experience suggest that the threat of a predator remains though the ostrich puts it’s head in the sand.

Reality is what it is, from the blissful warmth and beauty of a puppy to the pain of an unexpected bite from a black widow spider under your bed. Life comes with no warranties. My mother, too, had Alzheimer’s and bedsores before she died of a stroke, but she was more mentally content and at peace in her last nine months than in most of her preceding 96 years. We all must play the cards life deals, for better or for worse.

Posted by OneOfTheSheep | Report as abusive

“Imagine a world in which anyone can use anything as a currency.”

It’s easy to imagine. Sometimes it’s a little inefficient, sometimes it’s great. It’s been around for a long time. It’s called barter.

Posted by Bob9999 | Report as abusive

OOTs you just engaging in verbal masturbation now.

You are too selfish to have anyone believe in your Franciscan philosophy. If you’re St Francis, I’m a saint too. You always complain about how many of the wrong kind of people are alive but you aren’t doing much, from the sounds of it, for anyone else but yourself. Hallmark writes more sincere sentiments.

@Bob9999 – Barter would be nonsense. If two people bartered and gave each other itemized invoices before they physically exchanged the goods, and they in turn went off and exchanged it with other people for other things they wanted, and a third, fourth and fifth tier swapped and continued to modify the list and extend it: at the end, all the parties could settle up at an exchange where they would deliver their physical goods. Or all those transactions could happen in a market place every business day? As cumbersome as that process sounds, it’s so much better than random bartering, wouldn’t you think? Why not just assign monetary amounts to those transactions and issue tokens? That’s all money is? It is just another relative value in a wide range of relative values in life.

Without money one can’t invest. Wouldn’t barter reduce every business activity to having to rely on it’s own physical resources and be restricted to a very limited range of abilities and goods? How do steel mills or mines barter for materials and labor?

However, if you are very sharp with money, you can do very rapacious things with it and swindle people out of tangible goods with fraudulent money or money that can become debased. And even minted gold can loose value due to abundance. Without a doubt money is “rationed” in this country. The supply is always controlled or it looses it’s value. But the reputation of the controllers and the believability of their bookkeeping depends on the acceptance of those they control.

You can’t make a profit in barter so why bother to make more than you need? The state would enslave you quickly. It needs taxes to keep itself alive. You would be too independent and kill organized society.

The root of all evil may be money but barter is no blessing either. That leaves doing it yourself and waiting to starve to death, sooner or later. But you would be enslaved before that could happen and your slavers would be those with minted currency. By definition, they would be more sophisticated and could think more abstractly.

We’re stuck with money. Floods, famine, plagues, earthquakes and other disasters happen and money is more adaptable and transportable and a more developed language than having to exchange in kind. And we have states because most of us wouldn’t be here without them. The state would take your labor in exchange for your life.

To return to the article, if the currency and monetary policy is being distorted in favor of a class of wealthy people without adequate protection for the rest of society that is dependent on it, that is criminal.

It isn’t crazy to suggest that a small part of a population can try to exterminate a whole lot of those they think are expendable. They might even operate hardly noticeably and do nothing the unfortunate can really take up arms against. Maybe they do it by neglect or distraction? A few years ago people here were using the metaphor of the frog in the slowly heating pot. I don’t think we are there yet. I just think it could happen, or be allowed to happen, if future global weather isn’t good for the planet, or the Age of Aquarius just made everything waterlogged.

Stalin used politics and enormous control to starve Russian provinces into submission. The future may see some really rotten leaders. If enormous greed is required to get to the top, the future could be led by ruthless tyrants, or gangs of them, and the world would devolve into governments run like organized crime. I think we got very close to that for the past ten years and it isn’t quite over yet.

The only thing the wealthy may value are others with money. OOTs always thinks that way. But they may also be the dessicated and over stuffed aristocracy of 17th century Britain. Elite classes tend to see the rest of the country as mouths to feed and men to send to battle.
They feel very secure with large herds of well tamed human beings.

If you couple Buckminster Fuller’s “battle of the “in-pirates versus the out-pirates” and, Mumford’s,”tyranopolis dies and becomes necropolis”: that won’t be much of a future for long. But I’ll probably be dead before I ever see what actually happened. History always sees able to invent horrors.

Posted by paintcan | Report as abusive

@OOTS – You must be thinking of Charles Laughton. He was the world weary Senator who aided Spartacus wife in escape. Ustinov was the slave trader who originally bought Spartacus until Crassus was seduced by two “daughters of Venus” to stage a spectacle for their amusement. That fight was what caused the Spartacan revolt, according to the movie anyway. I forgot to mention that last night.

I also don’t understand what your last paragraphs have to do with “honest choices”.

It shouldn’t be that hard to understand that in negotiations for a contract or a major purchase, it is mandatory and a matter of law that the information presented by both sides be factual and presented in good faith.

Spartacus never saw an honest choice in his life and the Roman world didn’t believe in that, as far as outside dealings were concerned. The Roman Empire was based on the command and desire of a core aristocratic constituency that believed it was entitled to steal anything it needed and it lived on propaganda. They also were desperate to hide the fact that although they had “eaten the world” the world also ate them. Their artistic heritage was designed to deny the fact that the social facts of life of the Roman Empire were “Roman” in name only.

You put too much faith in Capitalism as a force for truth. It knows no morality and the law lives in a natural world that knows none either. But it is the law’s task to define some degree of morality, in spite of the fact that there are few generally agreed upon definitions, in all the details, about what that morality should be.

he Book of genesis opens with that story about the forbidden fruit and it’s a pity people are so literal in their interpretation. They lack subtlety and insight into their own natures. Is is a charming fable (or not) that tends to be reduced to a simple “do what you are told” lesson in obedience. But it can easily be seen as an illustration of the problem human beings have in knowing what to do. That is something natural creatures don’t have to contend with.

We are also a society that has bred generations of passive consumers. The ME still has age-old Souks where it is expected that the customer will dicker over prices.
Most people in this society are not capitalists, they are consumers and the ultimate insult to the consumer’s missionary position, are Facebook type data gatherers who can watch their ant farms and can sell that information to modern day “sons and daughters of Venus”. The consumer doesn’t necessarily benefit from all that attention and, in fact, may be pestered by a swarm of sales promotions. Most of us can delete the spam. It is not like face-to-face discussions of price where you would know if a swarm of peddlers was gathering around you while you were making a purchase.

A lot of investors aren’t capitalists either. They are gamblers and speculators and are the sheep to be sheered by the full time seat holding traders on the exchanges. Most consumers have their own lives and must devote their time to their employment or the tasks at hand. It puts the professional “capitalist’ at an enormous advantage. The consumer’s ignorance is their fortunes.

Since it is their full time job and pays them well for understanding the intricacies of the law, they are almost the only people capable of effectively influencing the law. And if rational arguments don’t work, bribery and influence peddling can do what is required.

And that is the developed world’s problem. Roman style empire building is still very attractive to many and the modern way may be able to achieve “conquest” through leverage, debt and economic blandishments that don’t necessarily fulfill the promises they make, not even to those who accepted the bribes.

What scares me about you OOTS: you sound like the type of “good Roman citizen” who could have seen Spartacus and his army crucified – 5000 of them lining the Appian Way – and praised Crassus the billionaire savior of the Roman Empire and not demand one change to he social system or the laws that caused his appearance to begin with.

And it was all because two air-headed bimbos wanted a little sexy entertainment: according to the movie anyway!

Posted by paintcan | Report as abusive

I have to say I’ve enjoyed reading this thread. A lot of very interesting thoughts. There are some very well-read, capable people coming here to Reuters. It’s a good crowd here.

Posted by AdamSmith | Report as abusive

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