I present a section from Chapter 1 for further evaluation:

The money token system has beautifully evolved from the exchange of carrots, eggs and apples in a village. The inventive human soon developed methods to manipulate the token system for personal advantage:

• Humans hoarded the money, thus removing it from the Circulating Money component of the Money Supply.
• Humans learned to counterfeit the tokens.
• Humans learned to use tokens to make more tokens.
• They learned to commandeer the supply of tokens.
• They learned to monopolize the stock of existing tokens.
• They learned to create substitutes for tokens such as IOU’s. The IOU is then traded as if it were a genuine token.
• Humans learned to create virtual tokens which they traded in a parallel system to the original physical tokens, forming an alternative payment system by transferring virtual tokens.
• Humans learned the art of Usury whereby: ‘tokens are lent expecting a greater number of tokens in return’. Throughout history, this practice has consistently been called usury and the practice regularly denounced and often banned because it becomes impossible to pay more tokens than exist. Moses was strong on Usury. The Christian Church banned it for over a thousand years. The Muslims still ban Usury. Neither side is entirely right as a ban on usury inhibits business formation and growth. Rampant usury impoverishes the poor and creates a situation where more money is owed than exists. It creates an Impossible Contract where the debts become unpayable and uncollectible.

Such is the inventiveness of the human. In the modern world, there are whole segments of society dedicated to ‘making money from money’. All this effort is outside the egg-and-carrots real economy. The next messiah will declare all these ‘money-from-money’ practices to be evil. Perhaps I am beating him to the statement.

What is bizarre is that the money hoarded or money working in the financial sector has no value. The easiest demonstration is to consider what happens when all hibernating money in tax havens and the like re-enters the real economy. A hyperinflation event will occur.

Money was invented as a temporary store of value to carry the value from one transaction to the next transaction. This differs slightly from the standard definition of money. It also negates the ‘store of value’ component of the money definition. With decent management, money will retain value for a long period. Any activity that takes money away from its activities in the real economy is an abuse of the use of money. The first abuse it the hoarding of money. Other abuse mechanisms are dependent on the origin of money. Money is always a free resource of society and any item that is difficult to counterfeit will make money. Money should be freely supplied within a society, but this creates a dilemma, the very creation at no cost means that the issuer gains a seigniorage on first use as the money is spent into society. Through common sense, the released value on first spend should be on national assets such as bridges, parks, and ports. Even when this occurs, this still does not enhance business that needs money before it can create money. A credit system is needed to encourage private entrepreneurship. Public ‘National Development Banks’ do this extremely well. We might as well take my initial statement a bit further: Money was invented as a temporary store of value to carry the value from one transaction to the next transaction to enable citizen to citizen and business to business and business to citizen trade. Citizens need money to buy food from businesses. Citizens earn money and spend it in a simple cycle. Businesses need money before they can make money, which is significantly different to business needs. Governments and other money-issuing authorities rarely get this balance correct. The balance is rarely obtained and difficult to manage. The money maker is required to provide a Money Supply that produced business growth and activity and enough earnable money so that citizens can earn money. It needs to create regulations that also control the physical activity without destroying the business activity. So many of our laws make it onerous to employ persons. Putting all the laws in favour of the employee does not aid the employee. Where employees fail to get financially punished for bad work or financially incentivised to give good service, quality will suffer. In so many countries, an employee’s remuneration is not dependent on the quality of service in the ways that are important to business. I sometimes say to working people in Australia: “If you won Lotto, would you buy a factory and employ people.” The answer is always in the negative with a comment to the effect: “Who would want the hassle of employing people.” This is from the very people that rely on employment being available. The result is that only things that have to be done, get done in Australia. Minimum wages are a disaster on this front. If a driver puts holes in the roof of a truck three times in a week, he is being negligent, yet his pay cannot be reduced. An owner-driver, on the other hand, gets penalised for the same sloppiness.

The dilemma of the money issuer is still not well understood. To operate a money system various goals would be applicable:

• Money should not be hoarded.
• Money should not be replicated as in counterfeiting.
• Should not be replicated in accounting systems. Only money originating from the government agency should be lent.
• Money should not be used to ‘make money from money’.
• Money should not be replicated in another form physical or virtual.
• Only existing money should be lent.
• Money should not be lent for the purpose of ‘making money from money’. This includes speculation in its many forms.
• Money should not be used to gain political control.
• Borrowed money should not be allowed to purchase housing.
• Housing should only be available for purchase by nationals and bonafide residents.
• Political bribery should be considered treason.
• Financial influence by foreign entities should be considered an act of war.
• Foreign and national individuals speculating against a nation’s exchange rate should be considered to be financial terrorists.
• The Circulating Money component of the Money Supply should:
  • Remain fairly static.
  • Should tend towards a mild increase.
  • Should increase in line with increased production.
  • Should increase in line with increased demand.
  • Should be available to bonafide start-up business.
  • Should be available to first time home owners at a moderate rate.
• The government owned and operated money creation agency should ensure that adequate low-cost money is available to private banks to on-lend so that private banks are only lending depositors genuine money or government issued genuine money.

In January, on a flight from Stockholm to New York, I sat next to Jerome, a Wall Street trader. He was in cattle class with me because he was getting his feet back on the ground after losing his job. During the long and interesting flight, he never mentioned a figure below one billion, except for his wage, which was two-thirds of a million. He was a trader. I shared my sandwiches in the middle of the night for which he was very thankful. I will never forget a couple his statements. One was: “Andy. We don’t know how to stop this. It is not going to end well.” He was effectively referring to the practice of ‘making money from money’, which of course produces no useful function in society except to move money from those with little money to those with more money in a manner that causes them to hoard their wealth. In a debt money system, this is particularly bad as all new money is created at the time of making equal quantities of debt. The problem builds up to a crescendo when there is no-one left to take on more debt. Any recession aggravates the situation. Desperate measures are taken to encourage the government to take on more debt just to maintain a Money Supply, but the vultures are remarkably skilled at obtaining this money and adding it to their hoards. Their total activity is completely useless because the very value of their hoards relies on an efficient functioning real economy. The financial sector effectively throttles the nation to death by bleeding off the Circulating Money into their hoards. These vultures are lauded as being part of the American Dream and get their place on the front page of magazines for doing great injustice to the people of the nation. Jerome was a very nice person. He did not take the job as a stock trader as a young man for selfish reasons. It was just a job and by society’s standards, a very good one. He was very good at his job and I don not bear him any grudge. He was a family man and was working for the betterment of his family in a very competitive area. His other memorable statement was that: “When this ends, people will be fighting over a sandwich in the street with machine guns.” He was referring to an impending monetary breakdown when the system of money from money reaches a point when the real economy collapses. The making of ‘making of money from money needs to be curtailed.’ The various tax advantages need to be removed and new taxes added to stop hoarding and tax financial transactions.