

Money for Nothing

[1]2,918 words

Translations: Czech [2]French [3], Greek [4], Spanish [5]Swedish [6]

Audio version here [7]

Everybody knows you need to work for your money. And if somebody just gives you money, that can only be by the expropriation of somebody else’s labor. Money just doesn’t grow on trees, after all.

But is this really true? Just because you work for your money, did the guy who paid you also work for it? What about the guy who paid him? If you follow the money trail long enough, you are going to find someone who did not work for his money. He simply got it for nothing. He did not even have to go to the trouble of picking it off trees. He just created it out of thin air by bookkeeping. We call this man a banker.

Unlike people who have to produce things of real value before they count them up and enter the number in a book, the banker creates his product simply by bookkeeping operations. The whole panoply of bank services—checking accounts, savings accounts, free toasters, checks with baby ducklings or golden retrievers printed on them—are, arguably, props to disguise the fact that the core of banking is the sheer creation of money out of nothing.

When I was a boy, one of the banks in my hometown gave out free piggy banks to children. Today, that seems a master-stroke of propaganda, fostering the impression that real banks, just like piggy banks, can only give out money that they take in. But banks are not required to keep your deposits on hand. They loan them out. Every dollar in your checking or savings account is loaned out ten times over. This is how bankers simply create money through bookkeeping. And that is just the beginning of how bankers create money. And bankers can do it even if they do not operate in buildings with Grecian columns out front and teller windows inside, even if they do not have checking and savings accounts and all the other props we associate with banking.

But even though the money you borrow was created for nothing, you still have to pay it back, with interest. And when you pay it back, you can’t just create the money. You have to work for it. You have to provide real goods and services. Thus bankers, by loaning out the money they create for nothing, gain a mortgage on future production of real world goods and services.

What is money anyway? Money is a medium of exchange that allows one to covert the fruits of one’s labor into easily portable tokens that one can exchange for the fruits of other people’s labor. What one chooses for tokens does not really matter. Money can be bits of shiny metal, colorful slips of paper, electronic data in computers, or cowrie shells, just as long as they are accepted by the butcher, the baker, and the candlestick maker.

Money does not need to have any intrinsic value. In fact, it helps if its intrinsic value is next to nothing, otherwise people will hoard it rather than circulate it freely, which would cause an economic hardship known as deflation, in which money is a commodity whose value rises because its supply diminishes. (When money is a commodity whose supply rises and its value decreases, that is called inflation. It is worth asking: Can one avoid both evils if money has no value in itself, i.e., if it is not a commodity that can be bought and sold alongside bricks and butter?)

If the best money has no intrinsic value, then the worst sort of money would be precious metals. The best sort of money would be entirely intangible, just data in a computer. Even paper money can be hoarded, for instance, when the price of toilet paper gets too high. (Perhaps the best way to ensure that money is not hoarded is simply to print an expiration date on it.)

Ideally money should be a self-effacing servant of the real economy, which produces actual goods and services. But money has grown into a jealous tyrant that interferes with the real economy. The simplest example is your average economic crisis. In an economic depression, the land does not suddenly go sterile. The udders of cows do not go dry. Men do not suddenly become stupid and lazy. The sun keeps shining; the crops keep growing; the chickens keep laying; people keep working. Goods pile up in warehouses and stores. And on the demand side, people still need to eat. But silos are bursting and people are starving because, for some mysterious reason, there is suddenly “not enough money.”

People have no money to spend, or they are afraid to part with the money they do have, because of a climate of uncertainty. After all, half way around the world, a massive swindle has been discovered; a bank has collapsed; a speculative bubble has burst. So, naturally, back in Hooterville, stores are filled with sour milk and rotting vegetables and children are going to bed hungry.

If an able-bodied man were shipwrecked on a fertile island, he would not starve for lack of money. But on this vast and fertile island we call Earth, people starve amidst plenty because we have accepted the dominion of a monetary economy that disrupts the real economy. That is no way to run a planet.

The obvious solution is simply to increase the money supply. One must make consumer demand effective so the market clears and life can go on. And the simplest way to do that is for the government to print money and give it to people. Remember George W. Bush’s 2008 “stimulus checks”? That was money for nothing, handed to people to stimulate economic activity. The effect, of course, was negligible. But it was morally and economically far preferable to the massive “bailouts” and the Obama stimulus plan that followed.

Whereas the Bush stimulus checks went directly to millions of consumers, who injected the money directly into the economy when they purchased goods and services, the bailouts and stimulus spending went to a relative handful of politically connected insiders. It turns out, furthermore, that very little of the money went to stimulate the US economy. Instead, a lot of it was invested overseas. Other recipients of bailouts held onto their cash, hoping that they could buy up real assets for cheap if the economy continued to slide deeper into depression. Moreover, whatever money did go into the US economy came with strings attached: the necessity to repay principal and interest. At least with the Bush stimulus checks, the money went directly into the economy with no strings attached in straight up purchases of goods and services.

But, as we have seen, money for nothing is not merely part of an occasional emergency stimulus measure. It is business as usual for banks.

But if money is being created out of nothing all the time, then we have to ask: Should this be left to the banks, or is there a better way of doing it?

Why not simply have the government create money and send each individual a monthly check, to be spent as he sees fit? This money would stimulate the economy directly, through the purchases of goods and services, whereas money created by banks in the form of loans must be paid back, with interest, creating a parasitic class of people who get a share of real production by loaning at interest a commodity they get for nothing.

Again, every industry that produces real goods and services has accounting and inventory costs, but actual production has to come first. You have to make toys before you can count them. With banks, money is by created simply by bookkeeping operations, e.g., making loans. Bankers “produce” merely by juggling numbers.

But if money for nothing is simply a feature of the modern economy, why not cut out the parasitic “private sector” middlemen and simply have the government create money and distribute it directly to consumers?

Why is the government preferable to the private sector as the creator of money? Because, unlike private businesses, the government is accountable to the public. Its purpose is to secure the common good. Moreover, when the private financial sector is in crisis, the bankers look to the government to bail them out—at the expense of the taxpayers. Time for the government to bail the people out—at the expense of the banks. Let’s repudiate all our debts [8] and start fresh with a new financial system.

“But simply creating money and mailing out checks would be inflationary!” some would object. True. But it would be no more inflationary than allowing banks to create money.

Furthermore, there is a deeper issue here: Is inflation or deflation simply a product of the commodification of money? The commodification of money means that money is not merely a tool of exchange, but a commodity that is exchanged, a commodity with a cost of its own (interest). Would it be possible to decommodify money, i.e., to eliminate interest and a secondary market in money, either partially or altogether? Would the creation of money that expires after a while cut down on the commodification of money?

“But money for nothing would be socialism!” others would object. Yes, I am proposing socializing the creation and initial distribution of money. But what people do with the money at that point is their own business. The system I propose is completely consistent with private property and private enterprise. Indeed, it would strengthen and secure them, because it would eliminate a parasitic class of people who steadily mulct the real economy, and occasionally send it into crises, by creating and loaning out money that is free to them and should be free to all.

“But how would businesses capitalize themselves without bank loans?” That is a fair question. Perhaps the best answer is to say that that just as individual consumers could get money for nothing from the state, creditable producers could do so as well. But nothing about my proposal would prevent banks and credit unions from forming to capitalize businesses. But they would not be allowed to create money out of thin air. They would have to attract savings by paying interest, then loan out their deposits—and no more than their deposits—at interest to creditworthy businessmen. To do this, banks would have to offer serious interest for savings and charge serious interest on loans, but it could be done. It would definitely be “tight” money, though, which might be a good thing in the long run, since it would discourage speculative investments. Of course if money went bad after a while, it would make no sense to save it. But none of this might be necessary if interest-free state financing is a viable option. It is certainly a question worth exploring.

Nothing, moreover, would prevent businesses from capitalizing themselves by selling shares and paying dividends, either.

“But shouldn’t people work for their money?” Yes and no. Money needs to get into circulation. And the modern welfare state gives people money for nothing all the time in the form of unemployment insurance, old age pensions, welfare payments, food aid, healthcare, etc. Why not bundle all these benefits together into a single, flat monthly payment? These payments would be enough to ensure the basic social safety net we all have anyway. It would also be fairer than the present system, which expropriates the fruits of some people’s labor to redistribute them to others. It would, in effect, be welfare without redistribution.

But the basic payments I envision would not allow people to live opulently. Thus most people would choose to work. Some might choose to invest their monthly checks. Others might wish to defer them so they can enjoy better old age pensions. But the whole character of work would be changed, because people would not work because they have to. They would work because they want to. The socialist dream of the “de-commodification” of labor would be realized.

Sure, some people might choose to spend their time smoking dope and strumming guitars. But one of them might be the next Goethe or Wagner. And surely we would be better off extending the adolescences of a million bohemians than supporting a thousand scheming Wolfowitzes, Madoffs, and Shylocks along with all their warmonger and pornmonger cousins.

“But this system would create public debt!” some might object. But I am talking about creating money, not borrowing it. Why should the government allow banks to create money and then loan it, at interest, to the government, when the government can create money itself? The very existence of public debt goes back to the time when money was something of intrinsic value (like gold) that banks might possess and that the government could not just make up. A government that can simply create money has no need of public debt.

“But this system will create idleness!” is another objection. Yes, but there is nothing wrong with idleness. In fact, as I see it, the whole point of social and technological progress is to create a world in which machines put us all out of work. The goal of social policy should be to create conditions of ever-increasing productivity through scientific and technological progress.

But it would be ecologically irresponsible, indeed catastrophic, if people were to take the gains of increased productivity in the form of more consumer goods or burgeoning population growth. Thus the goal of social policy should be to keep consumption roughly stable and cash out productivity gains in terms of ever-shorter work weeks. As productivity increases, it might be possible to maintain a comfortable standard of living with 20 hours of work per week, then 10, then 5, then 1.

When the work week approaches zero hours, we would be living in a “Star Trek” economy in which scarcity of physical goods is abolished through the invention of unlimited cheap and clean energy sources and the “replicator” which can turn energy into any desired good, simply poofing it into existence. In such a world, the only scarcity would be ecological carrying capacity, which would have to be zealously guarded by keeping populations in check—or sending them out to colonize the stars, terraform dead planets, create galactic empires, etc.

But what to would people do with their leisure? Such a society would be the culmination (and, I would argue, following Hegel, the hidden inner purpose) of all human striving, from the moment man first differentiated himself from the animal and stepped into history. It would obviously be a farce if mankind struggled for millennia only to give birth to a world of indolent, empowered morons. Imagine Homer Simpson poofing donuts and Duff into existence while watching holoporn until he becomes one of the boneless blobs in hoverchairs depicted in Wall-E. Utopia would be wasted on such people. Thus along with scientific, technological, and social progress, we would also need to pursue cultural, spiritual, and genetic progress to create a race worthy of utopia.

A job is just something you do to make money so you can do the things you really enjoy. A job is just a means to doing things that are ends in themselves. Once machines put us out of work and the lollygaggers and lotus-eaters are bred out of the gene pool, people can busy themselves doing the things they find intrinsically rewarding: raising children, writing books, playing and composing music, writing software, inventing machines, playing sports, tending gardens, perfecting recipes, advancing science, fighting for justice, exploring the cosmos, etc.

It will be a realm of freedom in which the human potential to create beauty, do good, and experience joy will be unhampered by economic necessity.

This is the stuff of science fiction and other utopias, staples of the American imagination. Yet the dominant political paradigm in America and the rest of the white world is profoundly regressive and dysgenic. While whites dream of the Space Age, our system is headed toward to the Stone Age, worshiping Negroes as heroes and gods (Morgan Freeman has been typecast as God) and placing a product of dysgenic miscegenation in the highest office of the land.

If we are to resume the path to the stars, we will have to begin by addressing four principal evils: dysgenics, economic globalization [9], racial diversity (including non-white immigration), and finance capitalism.

What do we call this alternative economic paradigm? Ultimately, I would call it National Socialism. But the little florilegium of economic heresies I have assembled above is drawn primarily from the Social Credit ideas of Clifford Hugh Douglas (1859–1952) and Alfred Richard Orage (1873–1934), partly by way of Alan Watts, who was my first introduction to these ideas, and Ezra Pound, who is the most famous exponent of Social Credit.

It is my conviction that the North American New Right, if it is to provide a genuine alternative to the existing system, must break with all forms of “free market” economic orthodoxy and work to recover and develop the rich array of Third Way economic theories [10], including Social Credit, Distributism, Guild Socialism, Corporatism, and Populism. This essay and others [11], including ones to come, are my naïve attempts to start a conversation in the hope that it might draw in other writers who are more qualified to construct a critique of capitalist orthodoxy.

Creating an ideal world will cost us, and our enemies, a great deal in real terms. But the first step toward freedom, namely the act of imagining it, is free.