Reverse Shock Doctrine

Money is primarily a medium of exchange and only as a function of that is it a store of value, as it must be invested in order to be stored. Think through what would happen if people put their money under the mattress and not in the bank; The whole process of credit creation would collapse and the economy would grind to a halt.

What this means is that money is a form of public utility, similar to a road system. Currently it is treated as a form of private property, but this assumes it is primarily a store of value and the problem with that is that there is insufficient opportunities for investment to satisfy everyones desire for personal wealth. That is the central cause of the current credit crisis. On one side it motivates everyone to squeeze as much money out of the system as possible, thus starving those who don't fight for every dollar of sufficient income and requiring them to go into debt in order to survive, not just to get ahead. The problem here is that they are not generating the additional wealth to pay this debt back and will eventually renege on it. On the other side, it tends to generate amounts of money beyond what can be effectively invested and increasingly risky forms of credit must be extended in order to invest it. The over all result are reoccurring credit bubbles and collapses. If we treated roads like we treat money, everything would be paved over, but fewer and fewer people would be able to travel, as most roads would belong to a small proportion of the population.
On the other hand, if we were to understand that money is primarily a medium of exchange and thus a form of public utility, then the social motivation for accumulating huge amounts is reduced and the capacity for investment is distributed more widely. Money is not private property in the first place. You cannot print what you want, because the government retains copyrights. Its value is based entirely on the general faith in the institution issuing it. The taxpayer is ultimately responsible for guaranteeing its value. The primary institution responsible for issuing the currency is the Federal Reserve Bank and any profits from its operation are turned over to the Treasury. What if we were to extend this model to the entire banking system? Make local banks a function of local government and use their profits as community income? The main argument used against this is that it would give government too much power and government is inefficient. For one thing, it would likely be ecologically and sociologically healthy to reduce the level of dependence on a primary monetary system and allow other forms of local currencies and barter systems to develop. I think we all realize the frenetic level of economic activity is unsustainable for much longer. If it was socially repellent to hoard currency, just as it isn't acceptable to be a total road hog, then people would have to put their efforts to build and invest in their situations by strengthening their social and environmental health and not just suck out wealth to put in a bank. The current banking system has proven greed cannot function without being regulated, as if that needs to be learned. Yes, it would take time to iron out the details, but by the time the current mess is over, the government is going to effectively own large sectors of the banking community and returning it to a system of private profit would require investing in a large regulatory system, etc. If the public is responsible for the risks, it should retain the profits as well.

Views expressed on this page are those of the authors and not necessarily those of Campaign for America's Future or Institute for America's Future