This is no joke! by Stefan Weckbach

Stefan,

I am surprised more people don't recognize this enormous wealth vacuum as the overwhelming problem with the world today. Congratulations for being one to notice the elephant in the room!

While you do a very good job of laying out the dimensions of the problem, in my entry, I try to place it in a broad conceptual context.

My argument about the nature of money is that it is a contract, which we treat as a commodity. State/fiat currencies are in fact backed by something, the health, wealth and productivity of the community issuing that currency. The irony is that by treating them as commodities to be collected, rather than contracts to be honored, the health and wealth of the community is in fact being drained and eventually the currency becomes worthless, because it is no longer backed by a viable institution. A pathetic, sick joke, all the way around.

Regards,

John Merryman

Stefan,

I agree it isn't a difficult concept to understand for someone willing to make the effort, but I find most people really do not want to go outside the lines they have already accepted, especially since anyone who has any influence over other people, does so because they function well within the system. Catch 22 there.

The fact does remain that it is an enormous bubble and debt bubbles always pop, but we just happen to be in the most monumental one in history, thanks in large part to the technology that allows it to be global and sophisticated enough to seep into just about every pore of every society.

My thought though, is that this will create a correspondingly large opportunity for radical change.

So even if people don't seem to hear, or pay attention on a conscious level, that doesn't matter, because you are planting seeds in their minds, so that after the system freezes up again and their notational security blanket gets some serious holes in it, these ideas will start sprouting up like grass after the rain.

Good Luck!

Regards,

John M

I did appreciate your message Stefan..

I could hardly say I enjoyed your essay, but you tell it like it is. There is a lot of bad Math on Wall Street, which tends to compound the problem of which you speak. Derivatives are an abomination, which to my mind were a major cause of the 2008 market crash. And people are so easily deceived by the money makers. They are treated like authorities, because they have something other people want, but in many cases their greatest talent is misleading others about the relative risk of investments - so they can maximize their own take (both coming and going).

Despite your brevity and lack of detail, you go directly to the source of one of the greatest standing problems which could prevent mankind from steering its future if not dealt with. I wish you luck with this essay. If you have time, please check out mine too.

All the best,

Jonathan

Dear Stefan,

You make a strong case against fiat money, but you did not address the arguments in favor of it.

You say that banks "make money out of nothing". In a sense that is true, but look what it gets you: a more productive society that works harder because it has incentives. If the velocity of money is zero, then not much happens. For example, a pound of gold sitting in the ground is worthless. A pound of gold that is dug out of the ground by a miner will feed his family and pay for the services he requires (doctor, dentist, shoemaker, etc.). But if the bank wouldn't have given him a loan in the first place to let him buy his equipment, then how would he have gotten the gold in the first place? Substitute any manufacturing or service industry for the gold in the ground. Banks don't just create money out of nothing, they create tons of essential products and services out of nothing.

As an example, look at Medieval society. They did not have fiat money, and the economy was stagnant. People were motivated by other goals, and did science and technology for fun in addition to their day job of 12 hours of back-breaking labor of subsistence farming. The major innovators were monks who were relatively isolated from economic deprivation because they were organized (e.g. Eilmer of Malmesbury, an English Benedictine monk who flew a glider early in the 11th century). Islamic countries try to ban interest rates (and thereby try to prohibit fiat money), and look what it buys them: even with Middle Eastern oil, they have (on average) the lowest standard of living in the world.

This is not to say that our modern economic system can't be improved (in terms of justice, efficiency, or stability). But rejecting it completely (as you seem to do) is not a realistic, humane, or smart answer.

The grand purpose of Common Sense is to plan for the future. Training the mind to have marketable skills, to save money incrementally to invest in something to generate greater returns (investment), to become involved with organizations that together represents influence to change the future from what otherwise is predicted to be less desirable.

As simple as a softball league. If a person were to rely upon who they knew, they might get enough people together to play a game a few times a year, with limited resources for improving personal skills. There would be no marketing of skills to obtain financial support. Play would occur in empty fields.

A league administrative structure allows for advertising to acquire a critical mass of players for playing a couple of times a week. Recruiting trainers/coaches to teach varying levels of skill enhancements. Marketing teams as advertising for businesses and funding park maintenance fees, uniforms, equipment, and in some cases paid referees.

Planning for the future is necessary, if we as a people want to avert total extinction events.

I believe the contrary to what you believe, that we must help every person to develop skills to better predict the future, and manage developments to ensure our developments occur. Not much different than building a designing and building a fighter aircraft. Managing the development of systems of systems.

But maybe I missed a point you were trying to make. If I did, can you rephrase your insight from a different perspective?

Money that sits in a Reserve is of no value to an economy, it is not actively moving. So people that hord money are not creating an economic vacuum. The more they hold on to it, the more their assets lose value. So most wealthy people reinvest their wealth to create greater wealth (ROI).

This generally means greater numbers of economic transactions; economic cash flows.

What I don't like is where large companies buy out smaller companies to remove competition and/or remove competing technologies; to allow price fixing. A form of monopolizing markets regionally.

A battery company produced a car battery that could be completely discharged by putting a wrench across the terminals and it would not blow-up. After being completely discharged the wrench is kicked off (hot) and after 30 minutes the battery recharged itself enough to start the car.

Union Carbide used its influence to block the Battery Manufacturer (Staff of Life) from being able to purchase the materials to build their battery. Not being able to fill their contracts, they were forced out of business.

I believe it should be illegal for any corporation/business/person to block access to resources needed by other businesses to produce their products unless the same restriction applies to all businesses/persons without exception. Businesses should ONLY be allowed to enter into mutually beneficial agreements to benefit both businesses.

Drilling for Oil as another example:

http://ecowatch.com/2012/03/07/homeowners-and-gas-drilling-leases-boon-or-bust/

Oil companies can destroy aquifers supporting an entire region, with no "real" legal liability. The only time justice is served is when individuals attack soft targets at the highest levels to destroy corrupt administration of oil/gas processing; largest investors, stockholders, representatives and senators that vote in support of oil/gas negligent efforts ... (terrorism/vigilante/...). Unfortunately most terrorists I read about seem to be unknowing puppets of large corporations and they attack useless targets that just weaken their own intents. Eh, just venting.

Large systems of people are needed to prevent oil/gas companies from locking out the ethical influence of individuals. The trend seems to be to steal resources, sell related products, deplete resources, steal other resources, sell products ...

Corruption = Unethical Allocation of resources and/or opportunities

Legal System Corruption = Illegal Allocation of resources and/or opportunities

The vacuum you cite seems to be most strongly related to corruption.

I look forward to having your insights explained from a perspective that I can relate to. I think there is something here, I just can't get my head wrapped around it.

Dear James,

thanks for your comments, which i try to answer as good as i can.

You are totally right that the grand purpose of Common Sense is to plan the future. Besides other effects of Common Sense, like the feeling of togetherness and safety in an uncertain world, Common Sense is more or less a natural feeling, because the human brain (in my opinion) is a social and cooperative organ.

My point in the essay is, that more and more people on the planet can't anymore plan their personal lifes, because they either have one (or more) precarious jobs to do to earn the money to pay their bills and feed themselves. For them, there isn't enough money to save for their retirement pensions, so they can neither plan the near nor the far future.

Many other people are jobless, not due to their missing education, but due to several factors. Besides automation of technical processes the main agenda for the last 10 years - at least in Europe - was to economize.

Now the situation after Lehman Brothers and various quasi-bankrupt european countries is, that we have about 18 Million people than cannot survive financially without their nation's help in the EU. The nations debts worldwide add up to approximately 50 Trillion Dollars. Social equipment and infrastructure comes undone.

I think in the united states of america, the picture is much similar. The money to finance projects like the instauration of infrastructure in the electricity-sector is - potentially - existent in amounts of tons, but is mostly allocated in financial derivates instead of having been allocated into Common Sense projects.

There's no sense for me to enable tons of jobless (insolvent) people a huge loan to buy a home, instead of financing this money in the mentioned infrastructural projects. The result now is more national and public debts besides more private wealth that is allocated further in an anti-common sense.

As i described in my essay, most people in the civilized nations are further and further forced to work for lesser and lesser salaries. The agenda is "economizing" all affairs of the human life. Will this also affect the financiability of science? I think it will. Only projects that can generate a grater return will be financed. Independent of what those projects could do to the environment, animals, people and to nature as an ecological system.

One needs no huge fantasy to grasp in which direction the economization of all social and human affairs will bring us, namely to the direct opposite of what many essay-authors here consider to be necessary (to enable a better future for as much people on the planet as possible).

James,

"So most wealthy people reinvest their wealth to create greater wealth (ROI)."

If I may butt in here, I would point out that a lot of that investment capital goes into government debt, which is public. So then it gets spent on many things, such as war and militaries, that have no investment value, but which the public must still pay off the bonds funding them. Even the various spin off attributes of government spending which do have potential to return value, are often sold off to private business. Without all this government borrowing, that wealth would lose value much more quickly, if it only had private borrowers to absorb it. The government then becomes part of the process by which those with excess wealth manage to use it siphon more wealth out of the public.

Regards,

John Merryman

Neither you Stefan Weckmann nor you John Merryman did tell me something new. When I discussed with Edwin Klingman who measures energy in Dollars, I didn't try to mediate but to look for some truly basic questions behind your concerns.

To Edwin and many others, Alfred Nobel was in the first place a wealthy man, someone who felt great by installing some sort of competition. Read what I wrote in discussions in particular to my own essay as to see that my experience caused me to devote to the question of responsibility for be or not to be.

I consider Armin Shirazi horribly wrong when he ascribes any evil to political ponerology. I even don't fully agree with those like e.g. Jonathan Dickau and Teyinder Singh who hope for solving the basic problems just by means of appropriate education and tolerant belief.

When I was allowed to teach I was forced for decades to also deal with Marxist dogmas. I could not defend my dissertation with "summa cum laude" because I used an expression of the class-enemy: Bruttosozialproduct instead of national income. I asked: How can money create new money? If you are interested, I will tell you my result and how it relates to the essence of my essay.

Eckard

Dear Stefan,

Discoveries and inventions tend to be permanently useful for the whole world no matter how much effort was needed to get them. On the other hand, money is used in order to distribute goods more or less according to the amount of labor required for each single product to be consumed. For instance, we all including the developing countries are still benefiting from Guericke's experiments.

The possible profit is the larger the more people are users. Therefore money can grow without fraud just with the size of market. Interest rates largely correspond to economic growth. Almost nobody seems to be prudent enough as to by ready for steering towards a reasonable limitation of population. I envision resistance against necessary additions of the principles of humanity by those who strive for profit as well as by those who see the world from the perspective of aggressive nationalism or/and of religious dogmas that demand as many children as possible.

Discoveries, inventions, and all like that make the world richer and require more intelligent responsibility.

Best,

Eckard

Stefan,

The point I try making is that we lose sight of the basis of this money and just treat it as a commodity to be collected, which then requires more to be produced in order for commerce to function. Then those with the large collections have leverage over the economy.

The problem with 'fiat' money is not that it is based on public debt, but that we forget this foundation means its value is directly tied to the health, wealth and productivity of said community. If we recognize that it serves as a contract between the community and its members, then it is no longer simply a commodity to be collected at will, but a contract that has to be respected by both parties.

Money functions as an economic medium. Effectively it is like a road system. We own our cars, businesses, houses, etc, but not the roads connecting them and no one cries socialism over that. Like blood in the body, in order to function is has to be able to flow freely and any clots, unused collections, excess pressure, etc, are extremely unhealthy. Now if we were to view it primarily as a contract between the community and its members, for one thing, there would have to be sufficient leeway for emergencies, etc, because that would seriously reduce the need and function of trying to store excessive amounts. Conversely anyone trying to abuse the system, including storing excessive amounts, would have those stores penalized. This would create the tendency to treat other aspects of life, from social relations to a healthy environment, as stores of value and not just as sources to be mined to create notational wealth. If people really understood and respected the fact that those little numbers on the bank account are not just a pile of coins in a safe deposit box, but a contract with the vast web of society and that its value is dependent on the health of that society, they might be a little less selfish, with regards to the rest of society. They might also appreciate other, more organic forms of exchange and reciprocity. Especially since those currently controlling this system systematically use it to tax any and every possible form of exchange denominated in these notes. That even the ones where people seem to profit, are more come ons, to entice further and deeper participation. This is not to say there shouldn't be a vibrant and healthy economy, based on capital as a medium of exchange, just not one prone to the cancers, tumors and high blood pressures of this version.

So we can respect fiat currencies, but we need to first understand them.

Regards,

John

Dear both,

Currently, essays are on top which claim serving the world. I wonder if you don't agree with them and will vote accordingly ;). I was not heard when I objected that common sense tends to use the expression "save the world" with an ironic undertone. The question is: save from what?

Karl Marx observed cyclic economic crises and envisioned a general one because in capitalism goods are jointly produced but privately appropriated. The Latin word privare means to steal. Well, inequality might be unfair to some extent. However, is mankind and its basis the Earth really fundamentally endangered by economic bubbles and social inequality?

Or should we follow Shirazi and fight against political ponerology?

Or will loving-kindness save us from all evil?

Or should we accept our fate?

I think the name FQXi reminds us to strive for revealing more foundational questions. What might be wrong in our ideals of humanity and responsibility?

Some essays are dealing with growth of population as "alarming". Kadin's good essay didn't get much support because it collides with old doctrines. I agree with him: The logical contradiction between continuing forever growth and limited basics suggest a taboo question: how many people does humanity need?

My essay tries to reveal a related likewise unwelcome necessity: We all must outlaw nationalism and aggressive religions in order to save global peace.

Eckard Blumschein

Dear Eckard,

you raise many important questions. One of the less important ones is my voting. I am not fully through the essays and prefer to vote when i am done.

I am with John that money is treated as a commodity rather than a social contract. honestly i think that money rules almost all areas of human affairs today. Money talks and i consider this talk as the most aggressive religion on the planet. This does not mean that i want to abolish it, but to think about its destructive dynamics in worldwide society.

My essay's concern does not exclude other relevant suggestions to obvious problems, like Shirazi, Kadin or many others presented. I think one very important point here is to look at the interdependencies of the many problem-fields presented here on FQXI. This could complete the big picture.

I am with Sabine Hossenfelder that analyzing the problems isn't enough. The results need to be made public in a language most people can understand. The analyzing and publication is a task for the leaders of the scientific community. I really would wish that FQXI would carefully analyze the essay's results - via experts of the corresponding fields - and those who can subscribe it should do so. After this it could be published to the worldwide public.

Otherwise all our suggestions will be only of theoretical nature. Science has its responsibilities. It has high recommendation among most people. It should compile its knowledge concerning our present global problems and the validated solutions and take position. I know that most scientists fear the intervention with politics. But publishing a baseline study that has been subscribed by our most honored scientists should not be a crime or an intellectual betrayal. Shouldn't it?

Best wishes in the contest,

Stefan

Eckard,

Population certainly is a legitimate issue, but the question is how to deal with it. There are three examples. One is simply to kill off enormous numbers of people, as Hitler, Stalin, Mao, Pol Pot, etc. did. The problem is this really doesn't accomplish the overall purpose of saving the planet, given the levels of destruction, not only of the environment, but of any social cohesion which would be necessary to work together to solve these problems.

Another would be to do as the Chinese have done and limit the number of children as a government policy. It will be a while to really see the long term effect of this, but given the shape of the environment in China, it doesn't seem part of an adequate program.

The other is how western countries have managed to do it and make large families economically less viable and socially unfavored. Given this was not an intentional policy, it seems that the issue of population might be something approached indirectly, as a matter of incentives, rather than by force or direct prescription.

As for aggressive nationalism and religions, there is no way to not have people band together in like minded groupings and aggression is a simplistically effective policy. What people need to understand is that on broader scales and long term views, these tactics can backfire, but like many of the proposals here, that might be well in the future. People do naturally gravitate into groups and since the largest tend to form around the most basic common denominators and the oldest around concepts that were first relevant millennia ago, sometimes it's a matter of waiting for those systems to break down in the face of problems they are not able to deal with, before real change can be effected.

Stefan,

Politics permeates science as well. The best you can do is put the ideas out there and hope they take root. If it's going to happen, eventually it will happen, but sometimes it takes a lot of persistence to make it happen.

Regards,

John