THE WORLD OF UPENDED VALUES
The imperfection of the modern system is in the vicious principle of money distribution. Only financial institutions use the unique quality of investment money and only because they have the right to print money. Even if we put aside the ethic aspect of the problem and focus on technical issues, we’ll see that the system fails at the consumer level.
Credit money inevitably leads to lower effective demand from households in the long run, and the mechanism of ‘an economic cycle” (crisis) is triggered. But if consumers are not provided with money in the volumes corresponding to the nominal (price) volume of produced real values, there is an overproduction crisis, and the business switches to the creation of artificial monopolies, speculation games and making financial bubbles.
But the producing sector of the economy cannot solve the problem of the creation of the necessary aggregated wages, which would correspond to the aggregated price of the goods the labour creates because it contradicts the main goal of modern business - getting the maximum profit. On top of that, modern production processes are so much automated that ‘labour productivity’ does not much depend on the number of workers. It primarily depends on the level of automation and qualification of servicing personnel.
There are no mechanisms now that are capable of providing a sustainable synchronization of the system and balance the level of nominal supply and nominal demand without triggering inflationary processes. All known mechanisms lead to crises and stagnation (sluggishness) in the development of the economy and the society.
The current economic situation is unique because all previous methods of fighting the crisis cannot produce a lengthy positive effect. The return to ‘the gold standard’ is no longer an issue in the modern society, this is a way to the past. The introduction of ‘currency management’ through a full reservation of national money with the currency of a country with a more developed economy is not realistic because leading economic states have the same financial problems as other countries.
Also, ‘the anchor currency’ ends in the same way as ‘the gold standard’. Cumulative real values of other countries for which the U.S. dollar is the reserve currency, exceed GDP of the U.S.A. as their production facilities develop. In this situation, trust in the U.S. dollar on the international market inevitably shrinks, no matter how strong the U.S. economy is.
This story shows us that neither banking institutions, nor government structures can duly regulate economic processes and cannot oppose the development of the crisis. Only those for whom the economy exists, the population, can be the sole regulator, but the population lacks the necessary and working economic tools to perform this task. If interests of the people, not business, are made a priority, everything clicks into place.
We see the only solution in the introduction of a new system of money creation and distribution, as well as in dividing cash flows into investment and consumer ones. Money, from the point of view of its backing with resources, can be split into two totally different categories. GDP reflects consumer characteristics of money in a material way, while investment characteristics are manifested in potential production facilities, which could be created, if there are natural resources and creative human potential. The economy will get the necessary incentive for progressive development, if the population is regularly supplied with growing money volumes split into investment and consumer flows.
This statement may seem incredible for business representatives and government bureaucrats because they will have to reject the core goal of the whole business community - getting the maximum profit. But if the financial system does not supply households with the purchasing ability, which will not only depend on the wage, but real possibilities of the producing sector of the economy corresponding with achievements of technological progress, the economy will be unable to develop further.
We have to reject outdated and false stereotypes of thinking to realize that such a transformation of the financial system is the necessary condition for a further development of the social and economic formation. One should not forget that the creation of new laws of existence and new rules for progressive development is constantly happening. Now is the time we accept the obvious fact that the financial system modernization based on vital interests of the population will help make qualitative changes in the economy with the aim of a more effective and harmonious development of the state and the society.
Everybody knows that the baby sees the world upside down. And before its brain learns to put the picture right, the baby cannot know its way around. If we look attentively at what is happening around us, it will turn out that we live in an upended world, namely, in the world of upended values. Such purely material things as money, gold, stones, land, houses, cars and others are held for key valuables. For instance, the price of one and the same house can differ greatly depending on the solvency of possible buyers and the absence or presence of buyers as such.
The modern economy is in an absurd situation. The state cannot satisfy all needs of the society despite having all intellectual, technological, production and natural resources because the tactical task to develop business and technologies with the accompanying effect of profit-making turned into a strategic task on the government level. At the same time, the true strategic goal of economic development, namely, material wellbeing, harmonious spiritual, ethical and intellectual development of the civil society, turned into empty rhetoric on the government level. Universal values were replaced by the state with values of purely material character which ended up with one goal - getting the maximum profit.
In a correctly developing system business must be an instrument to attaining tactic goals, this is a technology of the development of the society, not vice versa. Thanks to the universally impressed false values, business representatives have turned the situation upside down. The top brass of the society aims primarily at business development (at interests of the business), while interests of the society are pushed aside. The false idea that the society will develop automatically, if business and business technologies are developed, leads to a consumerist attitude to the society. Such a stand takes households as means or environment, in which the business could develop at a necessary rate to make profit. The man becomes an appendix to goods, people have to conform with the economy instead of fixing the economy for its own needs.
The state system is tuned so that the society must service the economy as the end in itself. In this way, the economy closes on itself. The current financial system has replaced the goal with the means, meaning the world order is broken, and the economy has lost the true goal for its development. Using the principle of consumerist attitude to the society, business-oriented state provokes a reciprocal consumerist attitude to the state, to nature, to life, to the family, to each other, etc. Sergei Valtsev in his book “The Decline of the Mankind” describes in detail how business-oriented government systems and the power of money over people lead to a decline of civilization (http://www.rusmissia.ru/indexeng.html).
A vicious circle has appeared in the modern social and economic formation. People work the whole day, they utterly lack the time for themselves and their kin, but nevertheless, people feel poor. They work even more to get rid of this heavy feeling, but it is impossible to feel free in the environment of constant aggressive advertising of new needs.
Money does not make the man free, on the contrary, it enslaves him. No matter how paradoxically it sounds, the presence of money goes hand in hand with the feeling of poverty, the man is in constant fear of losing the source of income and, accordingly, being deprived of money. The essence of poverty is not in the absence of money but in the fear that with the loss of money stability, health, wellbeing, etc. will be lost.
Despite all advantages of the technological progress, the modern man feels a permanent lack of money as well as a permanent lack of time and strength to earn it. Lewis Carroll described this absurd situation very well in Through the Looking Glass: “It takes all the running you can do, to stay in the same place. If you want to get somewhere else, you must run at least twice as fast as that!”
Specialists say that the bulk of people does not get enough sleep all the time, suffers from stresses and illnesses caused by the stresses. There is no time and/or money for the family, kids are born mainly after 30, when pathologies are accumulated in the body and the very possibility to reproduce becomes problematic.
The modern Russian society is fully disoriented and lives in an absurd situation. Ads recommend the consumption of foreign products, mass media calls on people to become businessmen, but the real economic and financial conditions do not allow doing either.
Imagine the psychological state of a person who hears from everywhere: “come on, do it, take it,” but when he tries to do something or to take something, he gets a rap on the knuckles. Disappointment and despair are inevitable, which leads to stress. It is only natural that in such conditions people shrink into themselves and try to escape life. This is why drunkenness, drugs, suicides or escaping into virtual computer worlds or television addiction are so popular with the youth.
Russia’s existing financial and economic conditions are not good for living and active work. People do not have the possibility to use the existing riches and create new ones only because the financial and economic system is artificially tuned to the interests of a limited number of financial system heads and raw materials oligarchs.
Many political and public figures say rightly that what is happening now in the world is not only the crisis of the financial and economic system, but also a crisis, or to put it more precisely, a collapse of the existing system of values. This means a system, where each man is not the end but means to produce material values. People cannot help feeling it, and they do not want to live in such a value system. Everyone at the bottom of the social ladder wants to get higher thinking naively that as his social status changes, the world order will change. But he will be inside the existing value system with any social status. If he treats other people as means to solve his material goals, other people will treat him the same. The more power is concentrated in the hands of one man, the more he becomes a means for the more number of people.
The sad example of the great Roman empire shows that key factors pointing to the decline of civilization are: a fall in birth rates, the collapse of the family institution and the spread of social pathologies (ref. The Childless World). Since the 80s of the last century, a landslide decline in the birth rate started, it was then when the economic situation deteriorated sharply not only in Russia, but in the western world. There are an average of 1.3-1.4 births per woman now. Demographists say all economically developed states are in for a full-scale collapse in birth rates by 2025, and the process is picking up steam now. In the Unites States now every sixth family does not have children, in Canada each fifth family, in Europe every third family will be childless within the next 10 years.
Russia’s demographic situation is the worst compared with the whole western world. In 2009, the native population shrank by 700,000 people (this is equal to a complete extinction of the Novgorod region or Karelia). U.N. forecasts say that if current demographic trends persist, the population of the Russian Federation will amount to about 50 million by 2075 (it equals to five cities like Moscow). But in large metropolises the process of extinction is not so obvious thanks to permanent migration from other cities. But even multimillion cities can become fully deserted as early as in 100 years, because there will be no one to arrive there from other regions.
Educational establishments are closed by the thousand across the whole country, settlements and even towns become empty. Most villages are populated with elderly people and as early as in 10-15 years no one will live there, the youth will not replace the gone generation. By 2005, the share of elderly population exceeded the share of children for the first time, there will be twice as many old people than children in 30 years. In such conditions degeneration happens not only on the physical, but also on the intellectual, creative level (statistics say most innovation inventions are done at an age under 30).
Unlike animals, the man is a social creature, and a human child is not a natural result of live-sustaining activities, very many favourable social conditions for his birth and upbringing are needed. People can change their instincts depending on the social situation. Besides the widespread cases of conscious decisions due to economic, social and psychological reasons, there is a mass growth of infertility, both with men and women. Doctors say that the main reason for infertility is stress. When stress is frequent, nature blocks the reproducing ability on a physical level, through hormonal mechanisms. This is as if nature orders: now is not the time to reproduce, it is the time to save myself!
In state systems, where urgent business interests go prior to long-term human goals, processes of society degradation and a gradual extinction of population are launched inevitably. The Russian economy has for several decades been mainly tuned to getting profits from the sale of the country’s raw material resources on foreign markets. The bulk of the population is a burden for such an economic system because it does not produce an immediate profit. It was in Russia where the notion of ‘needless people’ and even ‘a needless generation’ appeared on the brink of the XX-XXI centuries. The extinction of the population in conditions of vast territories, rich natural resources and hi-tech production facilities is the most absurd situation in the world.
It is only possible to restore order by changing development priorities - the economy must service the society, not vice versa. The situation can be changed, if the civil society’s opinion has more weight in the political system. This is the change of the political system that the government should expect, if it wants to escape the deadlock. (ref. The Imbalance of the Political Forces).
The civil society brainwashed by mass media is in an anabiosis. People still have the naïve idea of leadership as ‘a kind uncle’, who is smart and noble enough to help them solve their problems. But people with power in their hands do not differ from others in any way. Everyone is prone to external manipulation, meaning he can be deceived (misled), frightened or tempted (bought). The temptation of quick personal enrichment is often the main factor for taking decisions by the people in power.
The global economic crisis which happened because of speculations organized by the current financial system is a direct proof of this statement. The only way to change this situation which is dangerous for the society and the state is the distribution of power, its delegation to the civil society. Decisions taken by people in power must be a direct result of public expression of will. The main thing is that there is a realistic possibility to organize such a mechanism of interaction between the government, business and society.
Everyone knows that financial possibilities are a real tool for the power. In other words, power belongs to those who have the right to issue and distribute cash flows. The founder of the international banking dynasty Mayer Amschel Rothschild said so openly: "Give me the right to issue and control a nation's money and I care not who governs the country.”
The idea of giving each citizen an investment possibility seems incredible at first (superficial) glance. But when considered in more detail, this factor seems vitally important for a further progressive development of the economy and the society. Milton Friedman, who has put forward a negative taxation system, which (if implemented) could become the first stage of introducing a mechanism, which would provide the society (the population) with investment means, realized it perfectly well.
Moreover, such system already exists and functions but in a limited (monopolistic) version. The modern credit banking system is the monopoly functioning in interests of representatives the financial sector of the economy. Investment offered in the form of banking credits is not backed with material values of the banking system itself. The main backing is state debt (not real material values but ‘securities’).
But, as we’ve already seen, material backing of investment money is not required for a profitable operation of the banking system. Money investment in its essence corresponds to an unimplemented human creative potential (at a relatively advancing degree), undeveloped natural resources (at a relatively decreasing degree). In other words, investment is always an advance payment. This is the way the financing principle works.
Since the human creative potential has gained more value compared to natural resources in the modern hi-tech world, it would be logical to adjust the financial and economic system to stimulate people’s creative processes (self-fulfillment). In accordance with Maslow’s hierarchy of human needs, the highest need of self-fulfillment can be developed on a mass scale only when all other basic needs are satisfied.
From the economic point of view, the lameness of the modern banking system of investment distribution is in the fact that as the market satiates with credit money, households’ purchasing ability declines with the accompanying effect of falling production and employment. Which leads to stagnation in the economy and in the end to a global systemic crisis.
From an ethic point of view, the viciousness of the modern banking system is in the fact that bankers receive an unreasonably high profit using their monopolistic right to produce and distribute money. Financiers’ costs consist of the creation of figures on the computer (cashless money) and in the production of paper with water marks (cash money). But costs of the producing sector of the economy consist in the creation of real production means and in the producing real goods. This means that the incommensurability of profit and cost is obvious.
Thus, the current financial system has turned money into a means of exploitation of the society. It is the bankers who decide who can use the human creative potential and natural resources (which banks do not own). The financial system also levies a tribute (chief-rent) of all participants of real production and consumers basing on the vicious system of money distribution and using old (false) stereotypes of thinking.
Getting credit money from usurers, people keep thinking naively that the money is backed with real material values kept in banks’ bunkers. In reality, they get money backed with their own property and own profits from operating activities.
Of course, formally, banking investment money is backed with state guarantees (state debt to financiers). But state debt is distributed on all the society in the form of growing taxes and shrinking social guarantees (in accordance with IMF recommendations) as well as through the inflationary burden, or money depreciation (meaning a decline in households’ income). Thus, credits offered to the society by the financial system is backed by the society itself in any case.
A huge part of taxes collected by the government from households and companies goes to service state debt to the financial system. Since budget deficit under the current money distribution system, cannot shrink by definition, the state is forced to issue new debt in growing volumes (including to cover outstanding debt), gaining irredeemable debt to financiers. At the same time a vicious financial pyramid (fraught with an inevitable collapse) is being built globally, more and more financial bubbles are being created at the expense of real investors, citizens.
Credit money inevitably leads to lower effective demand from households in the long run, and the mechanism of ‘an economic cycle” (crisis) is triggered. But if consumers are not provided with money in the volumes corresponding to the nominal (price) volume of produced real values, there is an overproduction crisis, and the business switches to the creation of artificial monopolies, speculation games and making financial bubbles.
But the producing sector of the economy cannot solve the problem of the creation of the necessary aggregated wages, which would correspond to the aggregated price of the goods the labour creates because it contradicts the main goal of modern business - getting the maximum profit. On top of that, modern production processes are so much automated that ‘labour productivity’ does not much depend on the number of workers. It primarily depends on the level of automation and qualification of servicing personnel.
There are no mechanisms now that are capable of providing a sustainable synchronization of the system and balance the level of nominal supply and nominal demand without triggering inflationary processes. All known mechanisms lead to crises and stagnation (sluggishness) in the development of the economy and the society.
The current economic situation is unique because all previous methods of fighting the crisis cannot produce a lengthy positive effect. The return to ‘the gold standard’ is no longer an issue in the modern society, this is a way to the past. The introduction of ‘currency management’ through a full reservation of national money with the currency of a country with a more developed economy is not realistic because leading economic states have the same financial problems as other countries.
Also, ‘the anchor currency’ ends in the same way as ‘the gold standard’. Cumulative real values of other countries for which the U.S. dollar is the reserve currency, exceed GDP of the U.S.A. as their production facilities develop. In this situation, trust in the U.S. dollar on the international market inevitably shrinks, no matter how strong the U.S. economy is.
This story shows us that neither banking institutions, nor government structures can duly regulate economic processes and cannot oppose the development of the crisis. Only those for whom the economy exists, the population, can be the sole regulator, but the population lacks the necessary and working economic tools to perform this task. If interests of the people, not business, are made a priority, everything clicks into place.
We see the only solution in the introduction of a new system of money creation and distribution, as well as in dividing cash flows into investment and consumer ones. Money, from the point of view of its backing with resources, can be split into two totally different categories. GDP reflects consumer characteristics of money in a material way, while investment characteristics are manifested in potential production facilities, which could be created, if there are natural resources and creative human potential. The economy will get the necessary incentive for progressive development, if the population is regularly supplied with growing money volumes split into investment and consumer flows.
This statement may seem incredible for business representatives and government bureaucrats because they will have to reject the core goal of the whole business community - getting the maximum profit. But if the financial system does not supply households with the purchasing ability, which will not only depend on the wage, but real possibilities of the producing sector of the economy corresponding with achievements of technological progress, the economy will be unable to develop further.
We have to reject outdated and false stereotypes of thinking to realize that such a transformation of the financial system is the necessary condition for a further development of the social and economic formation. One should not forget that the creation of new laws of existence and new rules for progressive development is constantly happening. Now is the time we accept the obvious fact that the financial system modernization based on vital interests of the population will help make qualitative changes in the economy with the aim of a more effective and harmonious development of the state and the society.
Everybody knows that the baby sees the world upside down. And before its brain learns to put the picture right, the baby cannot know its way around. If we look attentively at what is happening around us, it will turn out that we live in an upended world, namely, in the world of upended values. Such purely material things as money, gold, stones, land, houses, cars and others are held for key valuables. For instance, the price of one and the same house can differ greatly depending on the solvency of possible buyers and the absence or presence of buyers as such.
The modern economy is in an absurd situation. The state cannot satisfy all needs of the society despite having all intellectual, technological, production and natural resources because the tactical task to develop business and technologies with the accompanying effect of profit-making turned into a strategic task on the government level. At the same time, the true strategic goal of economic development, namely, material wellbeing, harmonious spiritual, ethical and intellectual development of the civil society, turned into empty rhetoric on the government level. Universal values were replaced by the state with values of purely material character which ended up with one goal - getting the maximum profit.
In a correctly developing system business must be an instrument to attaining tactic goals, this is a technology of the development of the society, not vice versa. Thanks to the universally impressed false values, business representatives have turned the situation upside down. The top brass of the society aims primarily at business development (at interests of the business), while interests of the society are pushed aside. The false idea that the society will develop automatically, if business and business technologies are developed, leads to a consumerist attitude to the society. Such a stand takes households as means or environment, in which the business could develop at a necessary rate to make profit. The man becomes an appendix to goods, people have to conform with the economy instead of fixing the economy for its own needs.
The state system is tuned so that the society must service the economy as the end in itself. In this way, the economy closes on itself. The current financial system has replaced the goal with the means, meaning the world order is broken, and the economy has lost the true goal for its development. Using the principle of consumerist attitude to the society, business-oriented state provokes a reciprocal consumerist attitude to the state, to nature, to life, to the family, to each other, etc. Sergei Valtsev in his book “The Decline of the Mankind” describes in detail how business-oriented government systems and the power of money over people lead to a decline of civilization (http://www.rusmissia.ru/indexeng.html).
A vicious circle has appeared in the modern social and economic formation. People work the whole day, they utterly lack the time for themselves and their kin, but nevertheless, people feel poor. They work even more to get rid of this heavy feeling, but it is impossible to feel free in the environment of constant aggressive advertising of new needs.
Money does not make the man free, on the contrary, it enslaves him. No matter how paradoxically it sounds, the presence of money goes hand in hand with the feeling of poverty, the man is in constant fear of losing the source of income and, accordingly, being deprived of money. The essence of poverty is not in the absence of money but in the fear that with the loss of money stability, health, wellbeing, etc. will be lost.
Despite all advantages of the technological progress, the modern man feels a permanent lack of money as well as a permanent lack of time and strength to earn it. Lewis Carroll described this absurd situation very well in Through the Looking Glass: “It takes all the running you can do, to stay in the same place. If you want to get somewhere else, you must run at least twice as fast as that!”
Specialists say that the bulk of people does not get enough sleep all the time, suffers from stresses and illnesses caused by the stresses. There is no time and/or money for the family, kids are born mainly after 30, when pathologies are accumulated in the body and the very possibility to reproduce becomes problematic.
The modern Russian society is fully disoriented and lives in an absurd situation. Ads recommend the consumption of foreign products, mass media calls on people to become businessmen, but the real economic and financial conditions do not allow doing either.
Imagine the psychological state of a person who hears from everywhere: “come on, do it, take it,” but when he tries to do something or to take something, he gets a rap on the knuckles. Disappointment and despair are inevitable, which leads to stress. It is only natural that in such conditions people shrink into themselves and try to escape life. This is why drunkenness, drugs, suicides or escaping into virtual computer worlds or television addiction are so popular with the youth.
Russia’s existing financial and economic conditions are not good for living and active work. People do not have the possibility to use the existing riches and create new ones only because the financial and economic system is artificially tuned to the interests of a limited number of financial system heads and raw materials oligarchs.
Many political and public figures say rightly that what is happening now in the world is not only the crisis of the financial and economic system, but also a crisis, or to put it more precisely, a collapse of the existing system of values. This means a system, where each man is not the end but means to produce material values. People cannot help feeling it, and they do not want to live in such a value system. Everyone at the bottom of the social ladder wants to get higher thinking naively that as his social status changes, the world order will change. But he will be inside the existing value system with any social status. If he treats other people as means to solve his material goals, other people will treat him the same. The more power is concentrated in the hands of one man, the more he becomes a means for the more number of people.
The sad example of the great Roman empire shows that key factors pointing to the decline of civilization are: a fall in birth rates, the collapse of the family institution and the spread of social pathologies (ref. The Childless World). Since the 80s of the last century, a landslide decline in the birth rate started, it was then when the economic situation deteriorated sharply not only in Russia, but in the western world. There are an average of 1.3-1.4 births per woman now. Demographists say all economically developed states are in for a full-scale collapse in birth rates by 2025, and the process is picking up steam now. In the Unites States now every sixth family does not have children, in Canada each fifth family, in Europe every third family will be childless within the next 10 years.
Russia’s demographic situation is the worst compared with the whole western world. In 2009, the native population shrank by 700,000 people (this is equal to a complete extinction of the Novgorod region or Karelia). U.N. forecasts say that if current demographic trends persist, the population of the Russian Federation will amount to about 50 million by 2075 (it equals to five cities like Moscow). But in large metropolises the process of extinction is not so obvious thanks to permanent migration from other cities. But even multimillion cities can become fully deserted as early as in 100 years, because there will be no one to arrive there from other regions.
Educational establishments are closed by the thousand across the whole country, settlements and even towns become empty. Most villages are populated with elderly people and as early as in 10-15 years no one will live there, the youth will not replace the gone generation. By 2005, the share of elderly population exceeded the share of children for the first time, there will be twice as many old people than children in 30 years. In such conditions degeneration happens not only on the physical, but also on the intellectual, creative level (statistics say most innovation inventions are done at an age under 30).
Unlike animals, the man is a social creature, and a human child is not a natural result of live-sustaining activities, very many favourable social conditions for his birth and upbringing are needed. People can change their instincts depending on the social situation. Besides the widespread cases of conscious decisions due to economic, social and psychological reasons, there is a mass growth of infertility, both with men and women. Doctors say that the main reason for infertility is stress. When stress is frequent, nature blocks the reproducing ability on a physical level, through hormonal mechanisms. This is as if nature orders: now is not the time to reproduce, it is the time to save myself!
In state systems, where urgent business interests go prior to long-term human goals, processes of society degradation and a gradual extinction of population are launched inevitably. The Russian economy has for several decades been mainly tuned to getting profits from the sale of the country’s raw material resources on foreign markets. The bulk of the population is a burden for such an economic system because it does not produce an immediate profit. It was in Russia where the notion of ‘needless people’ and even ‘a needless generation’ appeared on the brink of the XX-XXI centuries. The extinction of the population in conditions of vast territories, rich natural resources and hi-tech production facilities is the most absurd situation in the world.
It is only possible to restore order by changing development priorities - the economy must service the society, not vice versa. The situation can be changed, if the civil society’s opinion has more weight in the political system. This is the change of the political system that the government should expect, if it wants to escape the deadlock. (ref. The Imbalance of the Political Forces).
The civil society brainwashed by mass media is in an anabiosis. People still have the naïve idea of leadership as ‘a kind uncle’, who is smart and noble enough to help them solve their problems. But people with power in their hands do not differ from others in any way. Everyone is prone to external manipulation, meaning he can be deceived (misled), frightened or tempted (bought). The temptation of quick personal enrichment is often the main factor for taking decisions by the people in power.
The global economic crisis which happened because of speculations organized by the current financial system is a direct proof of this statement. The only way to change this situation which is dangerous for the society and the state is the distribution of power, its delegation to the civil society. Decisions taken by people in power must be a direct result of public expression of will. The main thing is that there is a realistic possibility to organize such a mechanism of interaction between the government, business and society.
Everyone knows that financial possibilities are a real tool for the power. In other words, power belongs to those who have the right to issue and distribute cash flows. The founder of the international banking dynasty Mayer Amschel Rothschild said so openly: "Give me the right to issue and control a nation's money and I care not who governs the country.”
The idea of giving each citizen an investment possibility seems incredible at first (superficial) glance. But when considered in more detail, this factor seems vitally important for a further progressive development of the economy and the society. Milton Friedman, who has put forward a negative taxation system, which (if implemented) could become the first stage of introducing a mechanism, which would provide the society (the population) with investment means, realized it perfectly well.
Moreover, such system already exists and functions but in a limited (monopolistic) version. The modern credit banking system is the monopoly functioning in interests of representatives the financial sector of the economy. Investment offered in the form of banking credits is not backed with material values of the banking system itself. The main backing is state debt (not real material values but ‘securities’).
But, as we’ve already seen, material backing of investment money is not required for a profitable operation of the banking system. Money investment in its essence corresponds to an unimplemented human creative potential (at a relatively advancing degree), undeveloped natural resources (at a relatively decreasing degree). In other words, investment is always an advance payment. This is the way the financing principle works.
Since the human creative potential has gained more value compared to natural resources in the modern hi-tech world, it would be logical to adjust the financial and economic system to stimulate people’s creative processes (self-fulfillment). In accordance with Maslow’s hierarchy of human needs, the highest need of self-fulfillment can be developed on a mass scale only when all other basic needs are satisfied.
From the economic point of view, the lameness of the modern banking system of investment distribution is in the fact that as the market satiates with credit money, households’ purchasing ability declines with the accompanying effect of falling production and employment. Which leads to stagnation in the economy and in the end to a global systemic crisis.
From an ethic point of view, the viciousness of the modern banking system is in the fact that bankers receive an unreasonably high profit using their monopolistic right to produce and distribute money. Financiers’ costs consist of the creation of figures on the computer (cashless money) and in the production of paper with water marks (cash money). But costs of the producing sector of the economy consist in the creation of real production means and in the producing real goods. This means that the incommensurability of profit and cost is obvious.
Thus, the current financial system has turned money into a means of exploitation of the society. It is the bankers who decide who can use the human creative potential and natural resources (which banks do not own). The financial system also levies a tribute (chief-rent) of all participants of real production and consumers basing on the vicious system of money distribution and using old (false) stereotypes of thinking.
Getting credit money from usurers, people keep thinking naively that the money is backed with real material values kept in banks’ bunkers. In reality, they get money backed with their own property and own profits from operating activities.
Of course, formally, banking investment money is backed with state guarantees (state debt to financiers). But state debt is distributed on all the society in the form of growing taxes and shrinking social guarantees (in accordance with IMF recommendations) as well as through the inflationary burden, or money depreciation (meaning a decline in households’ income). Thus, credits offered to the society by the financial system is backed by the society itself in any case.
A huge part of taxes collected by the government from households and companies goes to service state debt to the financial system. Since budget deficit under the current money distribution system, cannot shrink by definition, the state is forced to issue new debt in growing volumes (including to cover outstanding debt), gaining irredeemable debt to financiers. At the same time a vicious financial pyramid (fraught with an inevitable collapse) is being built globally, more and more financial bubbles are being created at the expense of real investors, citizens.