I hate to give banks TOO much credit, but understanding how the world we live in works isn’t possible without understanding banking.
To understand banking, of course, you must understand money. And, further, to understand money you must especially wrestle with the concepts of fiat money and fractional reserve banking.
And, finally, to wrestle with those slippery concepts YOU SHOULD DEFINITELY read Capital as Money.
After you get the concepts of fiat money and fractional reserve credit creation pinned down, you’ll begin to understand more about why there is so much volatility and excess in our financial system. Then you’ll want to look for alternatives to the present system we all rely on, which is exactly what the authors of Capital as Money have done.
The idea of our money being connected to something other than `thin air’ has an instinctive appeal to people. The problem is that most times people latch on to the idea of gold as the substitute for thin air. My conviction is that `out of the ground’ is no better, really, then `out of thin air’ as a source of money.
Gold has the appeal of seeming to be “God’s Currency”. Problem is, though, that gold is not currency, God’s or ours, and using it as currency (or to back currency) is also problematic.
What you have in Capital as Money is a genuine alternative to `thin air’ or `God’s currency’. Rather than basing our money on `air’ or `gold’ let’s base it on the fruits of our labor, our productive capacity, our hard earned and long term capital, and our ability to create more of the same.
That’s the genius of capital as money. The securitized ownership of our biggest corporations (the public ownership of the stocks issued by our largest corporations) is extremely deep and liquid, and yet it rests on something real (not thin air) and growing (not hidden under the ground). The idea presented by McGrath and Dwayne of using this very real corporate capital as the primary method of backing our money system deserves very serious consideration.
Capital as Money makes a very significant contribution to a very important conversation about what our money system is going to be based on; not air, not gold, but something much better suited to the creation of money.
Read the book and join the conversation.