Tag Archives: Money of the future

THE BEADY EYE LOOKS AT HOW MONEY SHAPES THE WORLD.

18 Monday Jul 2022

Posted by in Uncategorized

≈ Leave a comment

Tags

, , , ,

(Eighteen-minute read)

How does money shape the world?

A daunting question.  Where does one start?

Perhaps it is possible to understand the significance of a medium of exchange like money by considering its absence.

If we want to create and live in a more fair, just, democratic, and morally advanced society with the least amount of poverty, crime, pollution, disease, and so on, we must learn the importance and value of voting with our money.

Before Money, we had Barter the exchange of goods, exchanged directly for other goods.14 Myths About Money: Are You Being Fooled?

 

What is money?

There are many myths surrounding money like Money doesn’t matter or it’s the root of all evil. People tend to make money mean what they believe it to be, not what it actually is. Time is not money. Tasks are money.

Money has little value to its possessor unless it also has value to others.

Teeth currency used to be common in the South Pacific and among native Americans.

To qualify as “money,” something must be widely accepted as a medium of exchange that is not backed by anything physical.  It relies on trust, it serves as a unit of account, which is a consistent means of measuring the value of things. However, it does not holds value over time and it is not the only thing that stores value.

Money is not a risk-free store of value, however. In periods of rapid inflation, people may not want to rely on money as a store of value, and they may turn to commodities such as land or gold instead. Because money acts as a store of value, it can be used as a standard for future payments.

But something need not have intrinsic value to serve as money.

Gold and silver are the most widely used forms of commodity money. One disadvantage of commodity money is that its quantity can fluctuate erratically.

The currency —paper money and coins—used in the world today is fiat money; it has no value other than its use as money.

What makes something money is really found in its acceptability, not in whether or not it has intrinsic value or whether or not a government has declared it as such.

Credit cards are not money. Gold is not money because it is not used as a medium of exchange. In addition, it does not serve as a unit of account. A Van Gogh painting is not money. It serves as a store of value. It is highly illiquid but could eventually be converted to money. It is neither a medium of exchange nor a unit of account.

Money is the medium of exchange for goods and services. It doesn’t literally make the world go around, but the economies of countries rely on the exchange of money for products and services.

Money, ultimately, is defined by people and what they do.

                                        ——————————–

There are really only two types of money: money that has intrinsic value and money that does not have intrinsic value.

To days society rewards you by giving you fiat money the most highly addictive substance on the planet: What’s most frightening about it is that you can’t ever physically overdose. Make no mistake about this. Like all addiction stories, wealth addiction is tragic with no boundaries. Like any addict in the throes of their addiction, there’s no limit to how far this can go.

The addicts will hijack human spirituality, exploit hatred, brainwash the masses, derail democratic politics, and tinker with fascism in their desire to have more.

Well, as strange as this is going to sound, there might be a pill for all this.

Imagine a world where every consumer, you and I, and everyone we know only supported transparent and ethical companies, and only bought products that were made by companies that stood by the same ethical standards we believed in, a world where businesses made sure they were “doing the right thing in the eyes of the majority”

But, if enough people were to unionize and demand ethical jobs paired with enough customers organized and demanding ethical products and services it could ignite a domino effect as companies struggle to supply what’s being demanded.

Trying to make it in this dog-eat-dog world we live in now needs more than just money.

Without money how can one afford to live?

Which measure of money is most closely related to real GDP and the price level?

As that changes, so must the definition of money.

                                   —————————

It would take a huge sacrifice on everyone’s part. 

Capitalism is an economic system in which trade, industry, and the means of production are controlled by private owners with the primary goal of making profits.

Just because the ideology of capitalism is only concerned with profits this does not mean it does not shape the world we live in.

In a globalized and dynamic economic system, there is a powerful and controversial organization that has the economic firepower to bail out entire countries:

The International Monetary Fund and the World Bank.

During the 1980s, the IMF took on an expanded role of lending money to “bailout” countries during a financial crisis. This gave the IMF leverage to begin designing economic policies for over 60 countries. Countries have to follow these policies to get the IMF’s “seal of approval” to get loans, international assistance, and even debt relief.

Thus, the IMF has enormous influence not only in structuring the global economy but also on real-life issues such as poverty, environmental sustainability, and development.

The IMF has created a system of modern-day colonialism that SAPs the poor to fatten the rich. (SAPs were developed in the early 1980s as a means of gaining stronger influence over the economies of debt-strapped governments in the South. To ensure a continued inflow of funds, countries already devastated by debt obligations have little choice but to adhere to conditions mandated by the IMF and World Bank.)

(SAPs) ensure debt repayment by requiring countries to cut spending on education and health; eliminate basic foods and transportation subsidies; devalue national currencies to make exports cheaper; privatize national assets, and freeze wages.

Why because they represent a rich country’s dominance in decision-making.

Nearly 80% of all malnourished children in the developing world live in countries where farmers have been forced to shift from food production for local consumption to the production of crops for export to industrialized countries.

The IMF also requires countries to eliminate tariffs and provide incentives for multinational corporations – such as reduced labor and environmental protections. Small businesses and farmers can’t compete with large multinational corporations, resulting in sweatshop conditions where workers are paid starvation wages, live in inhumane conditions, and are unable to provide for their families. The cycle of poverty is perpetuated, not eliminated.

The IMF is funded with taxpayer money, yet it operates behind a veil of secrecy.

The IMF works with a select group of central bankers and finance ministry staff to decide policies without input from other government agencies such as health, education, and environment departments.

Furthermore, the IMF has resisted attempts to open up to public scrutiny and independent evaluation.

The IMF has made elites from the Global South more accountable to First World elites than their own people. Assets such as forestland and government utilities (phone, water, and electricity companies) are sold off to foreign investors at rock bottom prices.

IMF loans and bailout packages are paving the way for natural resource exploitation on a staggering scale.

The IMF, along with the WTO and the World Bank, is directing the global economy on a path of greater inequality and environmental destruction.

So this justifies that IMF is bad for the world. Whoever started these institutions had a vision of a Devil. It is no coincidence that the official ideology of the sponsors of the IMF and the World bank is called “Capitalism*

These two institutions can’t do anything without Washington’s ok, as the US is by far the largest contributor to their budgets.

The problem is, that a lack of IMF could be even more harmful. When a country calls the IMF, it means it can no longer pay its economic commitments. That is, it is about to go bankrupt, and fall into social chaos.

So, as bad as the IMF recipe is, it beats the alternative, of financial default.

The intention of capitalism and the free market is to reduce any normally operating, anarchic society full of diversity and opportunity to a power pyramid where everyone is able to find their place according to how much money they have and entrepreneurship is the only goal.

Banks create money by issuing loans to borrowers.  

           ————————————–

There are other factors to consider beyond just profits, individual wealth, and cheap products?

What about protecting the land, air, and water,

The steady growth of the cryptocurrency industry over the years has drawn more attention to its carbon footprint. Bitcoin mining is currently estimated to account for about 0.5% of global electricity consumption, using up more power than Sweden does in a year,.

Have you ever considered what went into creating the product you are purchasing?

Imagine how much is thrown away because it’s cheap and easily replaceable. But why is it so cheap, how often do we ask ourselves these questions?

Imagine not just jobs that provide a paycheck but jobs that are benefiting society in positive ways it will motivate us to realize how dependent we have become on unethical and unfair practices and businesses in the name of profit. I hope we will begin to educate ourselves and make more ethical decisions as they relate to all aspects of business and not wait for our government to do it for us.

We can talk about changing the system in many ways through government change and through legislation change, but until then what can we do as individuals?

Well, I have some bad news because things are about to go pear-shaped. 

Money is disappearing being replaced by Data and digital payment platforms.

because of this current economic models will come off the rails at some point. 

Before this point, I think that we have to see that the corporations of the world have abandoned people long ago. That we will have to build our own economies and democracy as a living democracy in a world driven by technology. Corporations belong to no land no country no people. They have no loyalty to anything apart from profit and if we don’t start regulating profit algorithms and make them transparent profits will become on an unimaginable scale, becoming illegitimate, criminal at the cost of life as climate change takes a whole.

Changing the world for the better is not just a one-time grand heroic act, maybe it’s best described as the small but consistent decisions we all make every single day.

As the old saying goes…

“We blame society, but we are society”

Becoming financially fit has a cost and there aren’t any shortcuts from becoming a slave to it a master of if. 

All human moments are appreciated. All like clicks and abuse chucked in the bin.

THE BEADY EYE ASKS. WHAT IS BORROWING? WHAT IS MONEY?

22 Friday Jan 2021

Posted by in 2021. The year for change., COVID-19, Human values., Inequality., POST COVID-19., WHAT IS BORROWING?, WHAT IS MONEY?, What Needs to change in the World

≈ Leave a comment

Tags

, , , , , , ,

 

(Fifteen-minute read)

 

As you know the workings of the world of finance are screaming compilated.

All money is created as debt and destroyed when repaid.

Money originated as commodity money, but nearly all contemporary money systems are based on fiat money. ( Fiat money does not have intrinsic value and does not have use-value.) 

It has value only because a government maintains its value, or because parties engaging in exchange agree on its value.

There are three major theories regarding the origin of money:-

1 Money was created for trading purposes;

2 Money was created for social purposes;

3 Money was created for religious purposes.

Money is an unconditional means of payment, a token for wealth, worthless of itself, but symbolizing wealth because it is enshrined in law. It is then administered by Governments as a public resource, for and on behalf of the People.

Money today has no connection with earthly resources, and actually many earthly resources are diminishing while money (or at least the number on the pieces of paper) gets bigger and bigger.

I think we’d soon find out how money has stopped us from appreciating the true value of the earth we live on.

In the coming years, we need to get this reality of money out to everyone.

I imagine the scenario whereby ‘money’ in its present form disappeared in a flash, there would be no physical change in anything, just a lot of renegotiation.

With Facebook’s Libra looming on the horizon and the Covid-19 pandemic further depressing the use of physical cash perhaps it’s time for Central Bank digital currency (CBDC) to be introduced.

To give policymakers more effective tools to support the economy, particularly during times of crisis, while maintaining financial stability. Allowing central banks to distribute newly created public money directly to citizens rather than going through financial markets. 

What happens if the world does not return to normalcy within, say, a few years?

If so, governments will find themselves writing enormous cheques every month to sustain comatose economies. If that happens, all bets are off.

The bottom line is, we are not at the mercy of just a virus but a world economic depression with governments issuing epic amounts of debt. For now, confronted by an overwhelming emergency, governments have little choice but to engage in deficit spending on a giant scale, embarking on one of the greatest peacetime borrowing binges in history.

This is and should be raising many questions when it comes to borrowing, severely tests the question of how much the governments can borrow.

Apart from the tragic human consequences of the COVID-19 coronavirus epidemic, the economic uncertainty will likely cost the global economy trillions. 

In fact, the urgent question isn’t whether countries can afford to take on more debt. It’s whether they’re taking on enough debt to fund the stimulus programs necessary to avert an even deeper downturn.

There’s a degree of anxiety now that’s well beyond the health scares which are very serious and concerning. No matter how expensive an outpouring of government aid may seem right now, it is cheaper than dealing with a depression down the road.

After all, it consists of one arm of government creating money in order to buy debt issued by another arm of government,  which looks perilously close to a shell game in which central banks monetize government debt and distort markets. 

The amount a government can borrow depends on many factors, such as

  • Does it print its own currency?
  • Do markets trust the government to maintain low inflation and not default?
  • What is the interest rate on government bonds?
  • What is the state of the economy?
  • What is the purpose of government borrowing?
  • To what extent is the government borrowing from domestic or foreign investors?

Should we worry about the long-term effects of this new borrowing?

Without question, the new debt will leave taxpayers with a significantly larger burden to carry in years to come.

Some commentators believe debt-challenged governments may eventually be forced to go even further and turn to “helicopter money,” a maneuver in which central banks would simply create money, without issuing any corresponding debt, and the government would funnel the new cash to people and businesses.

The lender of last resort.

If there is no lender of last resort. 

The nightmare scenario where the virus continues to suffocate the global economy for a year or more would lead to the unpardonable sin of blurring the distinction between fiscal and monetary policy.

Disaster Capitalism.  

But until we win the battle against COVID-19, and revive our battered economies, we are in uncharted territory. Best to not rule anything out.

The economic impact of the COVID-19 coronavirus will be different than anything we have seen before. 

This is the calm before the storm.

How far can a currency fall before the government has to protect its citizens from the effects of a worthless currency? 

STIMULUS DOES NOT NECESSITATE EXTRA DEBT.

Money should become Man’s servant rather than his master.

In fact, central banks act as a broker between the governments and private bankers who lend the nation its own national currency at interest.

It does this by issuing gilt-edged bonds.

Markets are allowing all the major countries to borrow plenty at ultra-low rates of interest, underpinned by Central Banks buying up a lot of the debt.

This only has to change where inflation picks up, which so far it has not.

Inflation reduces the real value of the government debt, but, that means people will be less willing to hold government bonds.  

Inflation will require higher interest rates to attract people to keep bonds. In theory, the government can print money to reduce the real value of debt; but existing savers will lose out.

If the government creates inflation, it will be more difficult to attract savings in the future.

But in an economic depression, inflationary pressures vanish so it is much easier to finance a deficit by borrowing.

So do government debt and deficits don’t matter.

2021 will be the first year where the three main economies or trading blocs of the world – the US, the European Union (EU), and China – will refocus their efforts on fighting climate change.

Can the world afford this avalanche of new borrowing?

With the coming economic depression and the need to redefine our association with nature, while addressing climate change, and getting control of the pandemics there is no choice. 

It sticks out like a sore thumb if we are to win the war against this virus inequality has to be addressed by paying for the protection of our ecosystems.

In other words, to make it less profitable to destroy rather than to create. 

This can be achieved without the need to borrow with the technology we have at our disposal by placing a 0.05% World Aid Commission on all activities that generate profit for profit’s sake. ( See previous posts) 

All human comments appreciated. All like clicks and abuse chucked in the bin.)

 

 

 

 

 

 

 

 

 

 

 

 

Once society gains control of the issue of money, it cannot let the bankers issue money ever again. 

 

 

providing a safe public form of money and breaking the oligopoly that banks currently have on the digital money and payments system.

 

It does need standards and global agreements but the potential advantages clearly outwiegh the disadvantages.

endorsed digital currency is the way forward> this potentially is a great (and cheaper) way to distribute money to where its needed and this is more importnat than ever right know for obvious reasons.

Created money is already inflationary,

 


BORROWING COMES IN FORTY SHADES OF GRAY

a surge in misleading and unsubstantiated medical advice since the Covid-19 outbreak.

The first is that borrowing has been historically high in recent years following the financial crisis in the late noughties,

the deficit

GDP reflecting the need to spend and borrow to win the war.

Bank of England is buying in substantial quantities of the debt.

There is no need to count the interest paid on the debt owned by the Bank of England, as taxpayers and government get that receipt.

The debt taken on by the UK now has to be serviced by the following generations. And what are they getting in return for that debt? Just about nothing.

Quantative easing, which is bond buying by central banks

as it’s known in the jargon –

 

Covid is going to be around in the world for decadesa

possible total deficit of £7 trn by 2050.

By hoovering up domestic bonds, these central banks are creating artificial demand for bonds and thereby driving down interest rates (which move in the opposite direction to bond prices).

Central banks’ balance sheets are expanding furiously as they gobble up government bonds and other forms of debt.

 

 

What will money look like in the future.

06 Saturday Dec 2014

Posted by in Uncategorized

≈ Leave a comment

Tags

, , , , , , , , , , ,

                        

At the moment there is a lot of hysterical futuristic crap been written, about the money of the future.

” We will be making payment with the blink of an eye”  and the like.

” The cash register is coming to an end?” Not so far-fetched.

When it comes to money, there’s a lot of change going on.

Over 5000 complementary monetary experiments are already under way around the world…

Everybody knows that electronic currencies is changing the form of our conventional national currencies. (smart cards, e purses,etc.)

It seems more than likely that our current model will be replaced by electronic payments.

However the question remain whether today’s governments will allow money to disappear or we have to wait for them to fade out – or be thrown out – of existence. One way or the other there is no doubt that in a few years or several decades the hardened walls of the banking and government institutions running our economies are in for a shock when a new monetary system arises that is entirely private and not run by states.

Its shape and features will ultimately be decided by the market.  Free market monetary systems, in which the supply of money is outside political control, are likely to be systems in which money proper is a commodity of limited and fairly inelastic supply.

But it also seems improbable that a completely free market would grant any private entity the right to produce (paper or electronic) money at will and without limit. The present system is unusual in this respect and it is evidently not a free market solution. Neither is it sustainable.

Future economic historians will pity us for having worked under a strange and inefficient global patchwork of local paper currencies – and for having naively believed that this represented the pinnacle of modern capitalism.

Today, every government wants to have its own local paper money and its own local central bank, and run its own monetary policy (of course, on the basis of perfectly elastic local fiat money). This is naturally a great impediment to international trade and the free flow of capital. They are parastatal dinosaurs, joined at the hip with the bureaucracy and politics, bloated and dependent on cheap money and state subsidy for survival. They are ripe for the taking.

The world is ready for an alternative monetary system, and when the present system collapses under the weight of its own inconsistencies, there will be something there to take its place.

Money however is one of society’s most embedded, ancient institutions anchored in trust and the race to win that trust is on.

So there are many questions to be answered.

How will own the money?  How much freedom will they allow, when freedom is so attainable? How will they treat banks when, with merely a download, anyone can be their own bank?  What will they have to say about currencies which compete with their own?

What exactly is money?

Economic Textbooks define money by what it does, not by what it is – e.g. Functions of Standard of Value, Medium of Exchange, Store of Value, etc…. Money is an Agreement, within a Community, to use something as a Medium of Exchange.

Take the dollar.

It has lost over 92% of its value since its initial issuance in 1913. After the revaluation in 1934, the dollar dropped another 41%. The very volume of dollars in the world has given many people a conviction that the currency is worthless and doomed to lose its status as a global reserve currency and turn into toilet paper money by letting the printing presses run wild.

“Short-termism” is programmed by the interest feature of our conventional money.

1.3 trillion of it is traded in foreign exchange markets every day. 100 times more than the trading volume of all the stock markets of the world combined.

Only 3% of these foreign exchange transactions relate to real goods and
services. 97% is purely speculative.

What happened is that ‘speculative’ trading (i.e. trading whose sole
purpose is to make a profit from the changes in the value of the
currencies themselves) has all but taken over the foreign exchange
markets. The currency market has become the biggest single market in the
world. Foreign exchange transactions purchases and sales of
currencies) today dwarf the trading volume of all other asset classes,
even of the entire global economy.  

2/3 of all human beings who ever reached the age of 65 are alive today are looking at unfunded pensions liabilities now $3.5 Trillion in the OECD countries alone. Three times the GDP of the USA.

Not to worry as long as all major corporate decisions are made with a short-term horizon => long-term sustainability is going to be an illusion.

85% of all insurance payments worldwide compensate natural disasters. For times more people die in natural disasters than in all war and civil disturbances combined.

69% of professional biologists say we’re in ‘sixth extinction’ – we are in the process of losing 30%- 70% of the planet’s biodiversity by 2030 due to the actions of humanity!

Back to Money:

The latest smart phone technology is revolutionizing the payment process with the death of the wallet not far off.

Remittances are a gateway drug to Twitter, Facebook, Google, to achieve financial inclusion in the future.

Facebook is readying itself to provide financial services in the form of remittances and electronic money. It wants to become a utility in the developing world.

If Ireland’s central bank becomes an “e-money” institution it will allow Facebook to issue units of stored monetary value that represent a claim against the company.

Obtaining an e-money authorization in Ireland would require Facebook to hold capital of €350,000 and segregate funds equivalent to the amount of money it has issued. Facebook is already authorized for some forms of money transfer in the United States, allowing it to process payments for developers who charge users for in-app purchases.

Facebook takes a fee of up to 30 percent for such payments, and these fees account for about 10 per cent of its revenues. It recently reiterated its commitment to expanding its mobile payments and wallet products, which have yet to be widely adopted by consumers.

In 2013, the company facilitated $2.1 billion worth of transactions, almost exclusively from games.

I personally am not surprise that it is viewed with skepticism as a payment vehicle, when you look at all the crap one sees on Face Book – Would you trust Facebook to handle your money.

Google is registered in the UK to issue electronic money, in a process similar to the authorization which Facebook is seeking in Ireland.

Google and its NFC-driven Wallet, and PayPal are well on the way to providing digital payment that can move between two people as they pass each other on the street, or between two people on opposite sides of the Earth – with no difference between the character of the two payments.

Vodafone has acquired an e-money licence for the phone company to operate financial services in Europe.

Twitter, Square, PayPal, Apple are also in the race to replace Money.

The question of ‘what’s next?’ Depending on how it’s answered by governments, it might be very exciting or very frightening.

The importance of digital – potential changes in payments, branch banking, financial advice and the use of social media will accelerate change in the industry, most likely to the benefit of fast-moving incumbents.

New technologies are threatening to disrupt existing models in retail financial services; the pressure of increased operating and capital costs reducing capacity in wholesale banking; and a struggle for growth and profitability in insurance waning customer loyalty as their biggest challenge.

The banking system fundamentally makes money by keeping customers confused, making the lion’s share of profits from fees and charges, not from banking. They will have to think no longer of themselves as mere providers of financial products and services and enablers of transactions. They will need to be solution providers that play a greater role not just at the moment of transactions, but before and afterward as well.

The global e-payments value reached $256 billion in 2012, and is expected to grow three-fold by 2014 to a total of $796 billion. An average person touches his / her smart phone 150 times in a day.

So it’s no wonder that the single biggest area of investment is mobile apps for tablets and smartphones, with the ultimate target to consolidate everything you carry on you till financial transaction that involve buying something is paid for by simply saying your name.

And before I sign off we have Cryptocurrencies,

Bitcoin is a peer-to-peer currency with no centralized authority

Bitcoin is regulated by code, which determines how quickly new Bitcoins are generated without the intervention of humans. Bitcoins are stored in a wallet that resides on your computer – or a hosted wallet service off in the cloud, if that’s your preference – and transactions are nearly instantaneous. It’s the prototype for whatever improved implementation overtakes traditional currency in the future.

In the meantime, the debasement of paper money continues.

In the end, It’s great news that non-banks are challenging the traditional banking monopoly.

I leave you with a few Quotes;

“Maybe money is unreal for most of us, easier to give away than things we want. ” Lillian Hellman.

“Money is the only substance which keep a cold world from nicknaming a citizen “Hey You”. Wilson Mizner.

“Money is the poor people’s credit card. Marshall McLuhan.

“Money is what you’d get on beautifully without if only other people weren’t so crazy about it” Margaret Case Harriman.

” Wealth is nothing in itself; it is not useful but when it departs from us; its value is found only in that which it can purchase. As to corporal enjoyment, money can neither open new avenues of pleasure, nor block up the passages of anguish. Disease and infirmity still continue to torture and enfeeble, perhaps exasperated by luxury, or promoted by softness,. With respect to the mind, it has rarely been observed that wealth contributes much to quicken the discernment or elevate the imagination, but may,by hiring flattery, or laying diligence asleep, confirm error and harden stupidity.” Samuel Johnston.

 

4791385567_4a146e78c7_o

“Remember money has no sign of human worth.” Robert de Mayo Dillon.