coins money notes

Supporters of a resource-based economy (RBE) advocate a moneyless society, not because there is something inherently evil about money, but because we envision a future society where such a means of exchange is obsolete. If an RBE (or a similar “post-scarcity” system) can achieve a society of abundance for all, where basic needs, products and services are freely available, then there will be no need for price tags.

When monetary systems evolved to replace barter they filled a need in human societies and facilitated trade and development. These days money has come to rule the world, and become a necessity for providing our basic needs. The problem is that a currency only has value if it is scarce. Hence, there is an inherent inequality built into the monetary system (that which makes it profitable to throw away good food and produce products that fail just before the next model arrives on the market). These days the financial system has become so complicated and moved into the control of just a few banks. Very few people (even those working in finance and government) really understand where our money comes from and the implications of how money is created.

Up until the end of the First World War currency was backed by the gold standard, where banks had to hold an equivalent amount of gold for every note they issued. This system was replaced by the Breton-Woods agreement at the end of the Second World War where international currencies were pegged to the U.S. dollar and the U.S. dollar was pegged to the value of gold. This system broke down in 1971 with Nixon inflating the value of the U.S. dollar by printing more money than was held in gold. From then we have had a “fiat currency” (literally a currency based on faith), which allows money creators to print money with no physical backing. Money is literally just a piece of paper, the only reason it has any value is because we all agree to play the game and believe it is worth something.

As the governments have handed over the right to create money to private banks (essentially without regulation), the banks make more profits simply by printing more money. When we go to the bank to get a loan, we are not borrowing the life savings of retirees, the bank simply generates numbers out of thin air (pretending that this money has been deposited into the bank). When the debt is repaid, these numbers disappear and the bank keeps the interest as profit.

“…by far the largest role in creating broad money is played by the banking sector… When banks make loans they create additional deposits for those that have borrowed the money.  There is, therefore, a strong link between the growth of money and credit”

S. Berry, R. Harrison, R. Thomas, and I. de Weymarn, “Interpreting movements in broad money,” Bank of England Quarterly Bulletin, vol. 47, no. 3. Bank of England, pp. 376–386, 2007.

Despite our education as children that saving money for a rainy day is a good thing, if everyone kept saving (and not taking new debt) then the amount of money circulating in the economy would decrease, resulting in a recession. A strong economy is based on a high level of credit (which is why there is significantly more debt than money in the world today). Politicians that talk about austerity measures and reducing debt clearly do not understand how the financial system works.        

This debt-based system is highly problematic for society, for the individuals struggling to repay loans from the big banks, as well as for governments who are obliged to bail out the banks during economic crises. In addition, the banks are essentially in control of where the money they issue is spent. They can choose to lend money for housing (making the housing increasingly expensive and creating bubbles like that which caused the latest financial crisis), in preference to productive ventures (e.g. small businesses). By far the largest economic activity in the world today is making money from money (e.g. the stock market) which is completely unproductive for society. Such a system guarantees that we stay indebted to the banks (who make enormous profits) and guarantees the cycles of boom and bust.

There are many activist groups calling for the creation of money to be separated from the banks and for the decisions about how this money is spent to be a democratic process. This would of course be an improvement, but do we really need money at all?

More and more people are waking up to the absurdities of the monetary system, choosing to live with less debt and be more aware of their role as a responsible consumer. Instead of relying on their bank balance for independence, many are choosing to turn to their communities for security. The high level of worldwide connectivity we enjoy through the internet is allowing an explosion of sharing networks that help build trust, communities and make monetary exchange obsolete.    

Below are some videos and websites that explore these ideas further and provide resources for moneyless/low cost living.

·         John Bush and Douglas Mallette on Zeitgeist Live: free market vs. a resource-based economy (Youtube) 

·         97% owned, documentary about where money comes from (Youtube)

·         Moneyless Man

·         Moneyless accommodation

o    Couchsurfing

o    Hospitality Club

·         Work exchange

o    Workaway

o    HelpX

o    WWOOFing (willing workers on organic farms)

·         Freeconomy

·         Free things

o    Freecycle

o    Freegle

·         Free transport

o    Liftshare