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Being a part of this year’s summer school on Alternative Economic and Monetary Systems (AEMS) is a unique online experience that brought people together from all around the globe to acquire more cutting-edge knowledge and competencies from some of the world’s great thinkers and leaders from diverse fields of knowledge.
Worthy of note was an insightful session on Monetary System Basics that digs into the evolution of US monetary systems (debt and credit system) from the 1970s and the financial effect of the militarization of American capitalism. Two cycles of popular movement since World War II were discussed. The 1st movement demands rights of national citizenship from 1945 – 1978, while the 2nd movement from 1978 – 2008 demands access to capitalism. The history of how debt enforced capitalism and how governments borrowed to finance wars, linking the debt crises to the massive investment in military infrastructure, was unveiled. Even the creation of central banks was seen as an alliance between the interest of warriors and the financiers who were bailed out of the crises using taxpayer money. This alliance founded capitalism; a system of power and exclusion which till now largely remained in place.
I gained a new perspective on several aspects; First, the conspiracy theories surrounding the events of 9/11 and the fact that the Federal Reserve, other central banks, governments and organizations gold reserves are stored in vaults under the Federal Reserve building in Manhattan at roughly 5000 metric tons (266 million troy ounces). Second, how efforts are made to maintain the global status of the US dollar as the only currency used to buy and sell petroleum and how any attempt to deviate attracts consequences (the case of Saddam Hussein using Euro). Third, the announcement by the US president, Richard Nixon on August 15, 1971 that all foreign held US dollar would no longer be convertible to gold thus, initiating the regime of free floating currencies. This caused an increase in the value of US gold reserve resulting to a massive net transfer of wealth from poor countries which lacked gold reserves to rich countries like the US, yielding them an enormous economic advantage. Lastly, how the banking system claimed to be democratic, funneling resources from the idle rich to the industrious poor.
Of interest is the idea that poverty is caused by lack of credit as propounded by Ferguson, young graduates going on strike to secure start-up loans because of the belief by some people (Grameen Bank) that credit is a human right - a way for the banks to draw on the ‘social capital’- the knowledge, networks and ingenuity that poor people are using to get by in difficult circumstances and convert it into even more (expansive) capital.
The monetization of the US national debt as the ultimate pernicious alliance between the interest of the warriors and financiers indirectly promotes capitalism by controlling the source of the money supply through credits seems true. A typical example is the link between the US federal debt and the defense budget.
My take-home is that any system that reduces the world to numbers can only be held in place by weapons and can operate only by continually converting love into debt.
In conclusion, the learning experience from this session is the best so far. The different approach and insightful perspective of the speaker triggered my curiosity in wanting to update and deepen my knowledge on what led us to the concept of monetarism and more.
Written by: Esther Puldu
Based on the lecture "Monetary System Basics" by Kurt Bayer during the AEMS Summer School 2021