The Moneyless Man (2 page)

That evening, the entire community came, jostling with excitement and intrigued to know what this charismatic stranger in the top hat and beautiful suit was going to say. Mr Banks showed them ten thousand cowry shells, each stamped with his own signature, and gave one hundred shells to each of the one hundred townspeople. He told them that, instead of carrying around awkward beer barrels, loaves, pots and stools, the people could use these shells to trade for their goods. All everyone would have to do was decide how many shells their wares and produce were worth and use the little tokens to do the exchanging. ‘This makes a lot of sense’, said the people, ‘our problems have been solved!’

Mr Banks said he would return in a year and that when he did, he wanted the people to bring him one hundred and ten shells each. The ten extra shells, he said, would be a token of their appreciation for how much time he had saved them and how much easier he had made their lives. ‘That sounds fair enough but where will the ten extra shells come from?’ said the very smart Mrs Cook, as he climbed off the stage. She knew that the villagers couldn’t possibly
all
give back ten extra shells. ‘Don’t worry, you’ll figure it out eventually’, said Mr Banks as he walked off to the next town.

And that, by way of simple allegory, was how money came into being. What it has evolved into is far removed from such humble beginnings. The financial system has become so complicated that it almost defies explanation. Money isn’t just the notes and coins we carry in our pockets; the numbers in our bank accounts are only the start. There are futures and derivatives, government, corporate and municipal bonds, central bank reserves and the mortgage-backed securities that so famously caused the world-wide collapse of financial institutions in the 2008 credit crunch. There are so many instruments, indices and markets that even the world’s experts can’t fully understand how they interact.

Money no longer works for us. We work for it. Money has taken over the world. As a society, we worship and venerate a commodity that has no intrinsic value, to the expense of all else. What’s more, our entire notion of money is built on a system that promotes inequality, environmental destruction and disrespect for humanity.

By 2007, I had been involved in business in some way for nearly ten years. I had studied business and economics in Ireland for four
years, followed by six years managing organic food companies in the UK. I had got into organic food after reading a book about Mahatma Gandhi during the final semester of my degree. The way this man lived his life convinced me that I wanted to attempt to put whatever knowledge and skills I had to some positive social use, instead of going into the corporate world to make as much money as I could as quickly as possible, which was my original plan. One of Gandhi’s sayings, which struck a chord with me, was ‘be the change you want to see in the world’, whether you are a ‘minority of one or a majority of millions’. The trouble was, I had absolutely no idea what that change was. Organic food seemed (and in many respects still does) to be an ethical industry, so that looked a good place to start.

After six years deeply involved in the organic food industry, I began to see it as an excellent stepping-stone to more ecologically-sound living, rather than the Holy Grail of sustainability I had once believed it. It had many of the problems rife in the conventional food industry: food flown across the world, convenience goods packed in too many layers of plastic and large corporations buying up small independent businesses. I became disillusioned and began exploring other ways to join the growing movement of people worldwide who were concerned about issues such as climate change and resource depletion and wanted to do something about them.

One evening, chatting with my good friend Dawn, we discussed some of the major issues in the world: sweatshops, environmental destruction, factory farms, resource wars, and the like. We wondered which we should dedicate our lives to tackling. Not that either of us felt we could make much difference; we were just two small fish in a hugely polluted ocean. That evening, I realized that these symptoms of global malaise were not as unrelated as I had previously thought and that the common thread of a major cause ran through them: our
disconnection from what we consume. If we all had to grow our own food, we wouldn’t waste 40% of it (as is done now in the US). If we had to make our own tables and chairs, we wouldn’t throw them out the moment we changed the interior décor. If we could see the look on the face of the child who, under the eyes of an armed soldier, cuts the cloth for the garment we contemplate buying at the mall, we’d probably give it a miss. If we could see the conditions in which a pig is slaughtered, it would put most of us off our BLT. If we had to clean our own drinking water, we sure as hell wouldn’t shit in it.

Humans are not fundamentally destructive; I know of very few people who want to cause suffering. But most of us don’t have the faintest idea that our daily shopping habits are so destructive. Trouble is, most of us will never see these horrific processes or know the people who produce our goods, let alone have to produce them ourselves. We see some evidence through news media or on the internet but these have little effect; their impact is seriously reduced by the emotional filters of a fiber optic cable.

Coming to this conclusion, I wanted to find out what enabled this extreme disconnection from what we consume. The answer was, in the end, quite simple. The moment the tool called ‘money’ came into existence, everything changed. It seemed like a great idea at its conception, and 99.9% of the world’s population still believe it is. The problem is what money has become and what it has enabled us to do. It enables us to be completely disconnected from what we consume and from the people who make the products we use. The degrees of separation between the consumer and the consumed have increased massively since the rise of money and, through the complexity of today’s financial systems, are greater than ever. Marketing campaigns are specifically designed to hide this reality from us; and with billions of dollars behind them, they’re very successful at it.

In our modern financial system, most money is created as debt by private banks. Imagine there is only one bank. Mr Smith, who up to now has kept his money under the bed, decides to deposit his life savings, 100 shells, in this bank. Naturally, the bank wants to make a profit, so decides to lend out a proportion of Mr Smith’s shells, let’s say 90 of them, keeping ten in their coffers in case Mr Smith wants to make a small withdrawal. Another gentleman, Mr Jones, needs a loan. He goes to the bank and is delighted to be given Mr Smith’s 90 shells, which he’ll eventually have to pay back with interest. Mr Jones takes the shells and elects to spend them on bread, bought from Mrs Baker. At the close of the day, Mrs Baker takes her newly-acquired 90 shells to the bank. Do you see what’s happened? Originally, Mr Smith deposited 100 shells in the bank. Now, in addition to Mr Smith’s 100 shells, the bank has Mrs Baker’s 90 shells. One hundred shells has become 190. Money has been created. What’s more, the bank can now lend out a proportion of Mrs Baker’s deposit! The process can start again.

Of course, the physical number of shells hasn’t changed. If both Mr Smith and Mrs Brown wanted their shells back at the same time, the bank would have a problem. However, this rarely happens and if it did, the bank would have shells from other depositors to use. The problems start when the bank lends out 90% of all their depositors’ shells. The result is that of all the shells in all the bank accounts of this fictional world, only 10% exist! If all the depositors wanted more than 10% of the total amount of shells at the same time, the bank would collapse (a bank run) and people would realize that the bank was
creating
imaginary money.

This system may seem ridiculous but it is what happens today, every day, in every country of the world. Instead of one bank,
there are thousands. Instead of shells, we have the world’s myriad currencies. But the principle is the same: most money is created by private banks’ lending. Our most precious commodity doesn’t represent anything of value and the figures in your bank account are mostly someone else’s debt, which itself is funded indirectly by another person’s debt, and so on. Neither are bank runs fictional. Recent bank crises, from Northern Rock in the UK to Fannie Mae in the US, show the inherent instability that comes from basing our financial system on an imaginary resource. The edifice is built on pretence and, as shown by 2009’s bank bail-outs across the world, tax payers inevitably have to subsidize with billions to keep the pretence alive when the system implodes.

In the current financial system, if deposits stay in banks, the banks make no interest and therefore no money. Therefore, banks have a huge incentive to find borrowers by whatever means possible. Whether by advertising, offering artificially low interest rates, or encouraging rampant consumerism, banks share an interest in lending out almost all of their deposits. The credit this creates is, in my opinion, responsible for much of the environmental destruction of the planet, as it allows us to live well beyond our means. Every time a bank issues a human with a credit note, the Earth and its future generations receive a corresponding debit note.

It seems we can’t get enough of it. According to the US Census Bureau, there are now almost 1.5 billion credit cards in the US; the US has more than four times as many ‘flexible friends’ as people. The average household debt (excluding mortgages) is $17,510 and to compound the situation, at the time of writing
the US’s national debt is growing by an astonishing $4.5 billion every second. Payback time, in both economic and ecological terms, will inevitably come. While all this money creation is great for the economy, it is not so good for the people that the economy was originally intended to serve. An estimated 77 million Americans struggle to pay for their medical bills, with credit card debts averaging $5,000 per household. Every year, almost 1.5 million people are declared bankrupt or insolvent, and approximately one million houses are repossessed.

In the end, the process of money creation inevitably means the rich get richer and the poor get poorer. Banks lend out money that, by any objective measure, they didn’t have in the first place and at every stage, accrue interest and keep the right to repossess real assets if loans are not repaid. Is there any wonder that huge inequality exists in the world?

Let’s return to our little town. In the past, at times such as harvest, it was common practice for the people to often help each other out on an informal, non-exchange basis and the people there co-operated a lot more than they do today. This co-operation provided them with their primary sense of security; indeed, a culture of collaboration still exists in parts of the world where money is deemed less important. However, the pursuit of money and humans’ insatiable desire for it has encouraged us to compete against each other in a bid to get ever more. In our little town, competition replaced the co-operation that once prevailed. Nobody helped their neighbors bring in the harvest for free any more. This new competitive spirit was partly responsible for many of the town’s problems, from feelings of isolation to a rise in suicide, mental illness, and anti-social behavior. It has also contributed to environmental problems, such as the depletion of resources and the climate chaos that currently go hand-in-hand with relentless economic growth.

For most of us, money represents security. As long as we have money in the bank, we’ll be safe. This is a precarious position to adopt, as countries such as Argentina and Indonesia, which have recently suffered hyper-inflation, will attest. The boom period the world experienced at the start of the twenty-first century – a bubble inflated by highly-pressurized bank executives – has ended. Many politicians, economists and analysts are still not sure if there was only one reason.

While I’ve no doubt that we’ll make it through this downturn and maybe even a few more, future economic crises will not be so easy to manipulate and stimulating recovery will be harder, as these challenges will be affected by real-world problems. The banking industry is inherently unstable and two of the pillars of our economy, the insurance and oil industries, will eventually take a huge hit from two massive and evolving problems: climate change and ‘peak oil’.

Whatever your beliefs about why the climate is changing, it’s undeniable that it is. It’s also certain that the damage it will cause is going to cost someone an incredible amount of money. In 2006, Rolf Tolle, a senior executive of Lloyd’s of London, warned that insurance companies could become extinct unless they seriously addressed the threats climate change poses to their business. Ultimately, there are two scenarios: either the insurance companies continue to cover ‘acts of God’ (or, more accurately, ‘acts of humanity’) and drastically increase our premiums to protect themselves – yet still risk extinction; or they stop covering them and the people whose homes and possessions are wiped out pick up the tab, ruining local economies and creating one humanitarian crisis after another.

‘Peak oil’ – a huge subject – boils down to one simple fact: our entire civilization is based on oil. If you don’t believe me, take a look around wherever you are now and try to find one thing that either isn’t made from oil (remember plastics are oil based) or wasn’t transported using it. Oil is a finite resource: when it will run out is up for discussion, but the fact that it will run out is not. What’s more, even before the wells run dry, speculation will push up prices, so that oil will increasingly become unaffordable for more and more people. According to Rob Hopkins, founder of the Transition Network, we are using four barrels of oil for every one we discover, meaning that we are already moving rapidly towards this scenario. To highlight how critical oil is in our lives, Hopkins adds that the oil we use today is the equivalent of having 22 billion slaves hard at work – or each person on the planet having just over three. Oil is the sole reason that we in the West can live the lives we do; lives which are unsustainable in every sense of the word.