Citizens, get your money back from the bank! Create your own "safe" money and get involved in your community! This is the call and proposal of a monetary politician to democratise the financial world. With the aim of a future worth living in.
“Money must be something divine. Or is it rather something demonic?” (Oberhuber 2018)
For the Romans it must have been something divine, otherwise they would not have minted their money in the temple, in the temple of Juno, also called Moneta. The newly emerging monotheistic religions at the time of the Romans were more reserved about money. Nevertheless, the trade with money in as well as with these religions has spread more and more and determines meanwhile all large national economy. The managers in the large and small companies strive for growth, the company has to come up each year with a higher profit than in the previous year, the balance sheets are to expand, the funds that flow reflect ever higher totals. Regarding growth, the question is not only what percentage of growth, expressed in monetary terms, we can expect, strive for or describe as real. We must also ask ourselves how growth is measured if we want to scale it quantitatively so that the results can be used for valid forecasts and planning. In my book “Sustained Growth,” I have already pointed out that the general indication as an increase in GDP expressed in percent is not sufficient and, moreover, can lead to false associations. Proposed for my part therefore in the alternative to it a reference to the work performance! Growth as productivity increase generated by money, work and knowledge can lead with a certain work performance to definable measurement numbers, which can also help to understand the problems arising again and again with the distribution of the economically brought in profits of an economy and to distribute the profit fairly. Those who continue to search for new measures can also refer, for example, to the work of Samans. Samans contrasts GDP with the alternative measure IDI. The IDI (Inclusive Development Index) does not only include pecuniary data in the index, which makes it a better representation of reality, but it is also not as easy to determine. Apart from the problem of how to measure growth, we must also keep in mind the problem of relative growth. When growth mania and even growth in principle are attacked by various authors, this usually refers to growth measured in GDP, not to growth through increased productivity. If productivity per person is increased, this may well lead to a sensitive loss in GDP if there is a simultaneous decline in population growth, even though everyone has to work less to fulfill their desires. In addition, growth is generally to be regarded as punctual, since growth and decay always take place next to each other punctually assigned in certain limitable areas. Money and financial capital, that can help to generate and secure economic growth. Money is for example in the field area of the finance capital as growth factor in the position to finance the energy necessary for a project and to build up with it ordered structures, order capital. One could also see in this the transformation of the factor of money into that of energy, and thus the possession of energy reserves obtained through money. How this happens, could happen, or should happen, is to be discussed here and in the planned subsequent volumes with the correspondingly assigned factors, in the present 1st volume with money and financial capital, in the 2nd volume with knowledge and educational capital, in the 3rd volume with labor and human capital, in the 4th volume with the always necessary resources and the corresponding physical capital, as well as in the 5th volume with energy and order capital, also representable as negative enthalpy. In the 6th volume then the growth is to be regarded in the interaction of the different factors as in the tension field of the relational cycles developing, reflecting itself in the economic cycles. Regarding the concept clarification still a few words to the growth! We know growth first of all also from the biology, even though growth phenomena can be observed in crystallography. For growth processes in biology, it is also typical that different substances can initiate and promote growth, the so-called growth hormones. Here, of course, the economic growth phenomena should be the topic. Nevertheless, the question should be allowed what growth is from the basic point of view in the different scientific disciplines and by what it is stimulated. Growth is not simply multiplication, which we indeed also observe in growth, it is always also information-controlled, moreover we need energy and resources, whereby this all takes place in a temporal development process, which builds up new order structures. The information control also requires the possibility that external factors can have an influence on it. This is only possible if sensors and mediators like receptors intervene in a mediating and interpreting way. In this context, money is something like a mediator that is almost indispensable in our economic systems today, even if it is not the sole factor for growth and prosperity in our society and even not a necessary factor. Even if money is neither necessary nor sufficient for lasting growth, it is extremely useful and helpful in maintaining our current economic systems and it is hard to imagine life without it. In contrast, knowledge and information are to be classified as essentially necessary, since without knowledge content and information no growth is possible. Growth in economy is generally determined by 5 factors, of which money is only one. Information, energy, resources and the input of a work performance must be necessarily present. If we consider for the explanation of economic growth first the factor money more near, then the other factors are to be assumed as in sufficient measure present. This volume is the first volume of a planned series, so one or two important pieces of background knowledge are touched on but not elaborated in detail. Much can only be adequately presented in subsequent volumes, the interrelationships only in the last volume, in which the emergence of cycles is also to be discussed. What part the 5 factors of growth have in the observable cycles, to know, becomes perhaps important to arrive at a new model for economic growth. Each factor forms a basic approach for causal and correlative considerations and, moreover, for the study of interconnected relations such as the feedback loop (also known as the control loop). In each case, new equilibrium platforms are to be considered in macroeconomic terms. The equilibria are stabilized by accumulated factorial forces. In the 1st volume now the factor money with the associated finance capital is to be taken into the focus, even if this is exactly the factor which is not essentially necessary and in certain respects even arbitrary! Money can compensate the absence of other factorial forces to a limited extent, nevertheless, it is to be assumed with the consideration of the individual factors that the remaining 4 factors can act in sufficient measure! The interfactorial interactions, always also considered, are to be worked off only later sufficiently justifiable. Thereby only the temporal course can be considered fully in its own dynamics, evident in the upswing and in the downswing, they are thereby the counterparts to the growth and the decay of a special form of construction and destruction of ordered structures. Due to which conditions the cycles in the temporal sequence and in the deflections change, must change, this cannot be discussed here. Just as the downturn with decay and destruction increases the entropy, so an upturn with growth and building of new orders decreases the entropy. In all of this, information is of central importance, as innovation, in the construction plan, in the business plan and, in the tendency, also in random patterns, which in ordered structures can be built in. In the last volume, there will also be space to examine growth as an all-encompassing phenomenon, starting from the growth phenomena in nature up to the economic growth phenomena, for comparability, perhaps also to take nature as a model in individual cases, as this is generally the goal of bionics, so far unfortunately only used as an application in technology. Money is the factor that plays only a marginal role in natural growth processes, if at all, because it itself owes its existence only to social agreement. In addition, the commercialization of the economy through the factor of money entails a shift from life-value to money-value interactions, and in this respect, it cannot be equated with the tendency towards higher qualities of life. Higher prosperity may be due to higher diversification and the support of this by the accelerator money in the exchange of goods or in the provision of services. In this respect, one can say that if money did not yet exist, it would have to be invented as soon as possible, would then also have the chance to exclude from the beginning all the mistakes in the construction of money which still burden it. Since money is versatile and variable, even if not by itself, but because of convention, it can easily be accumulated in hoarded form. Accumulated money is also known as capital, more specifically here as financial capital. Capital can take very different forms of existence as assets, which is why we don’t just talk about the capital, it can be transformed, comparable to the different forms of energy, which can, after all, be transformed into each other. Just as one can transform electrical energy into kinetic energy, one can also transform financial capital into real capital, educational capital, human capital or order capital, if suitable interactable structures and energies meet. Interactable structures like hormones in organic systems may not only exist in biology. In the economic contexts to be addressed here, the corresponding controllable development process is co-determined above all by labor and money. Whether in the economic contexts to be dealt with here interacting structures are to be found which are comparable with those in biology, this may be put here only as a question. The focus should first be on the interaction between the single factor in our economies, in this case money, and growth in a definable economic structure. First of all it is important to distinguish clearly between natural factors and arbitrary factors. Money, as said, is not a natural factor because, unlike other factors, it plays no role in growth phenomena in nature not controlled by humans, phenomena over which humans exert no influence. This is precisely why it is the first factor to be examined for its importance in economic growth phenomena!
“Permanently it is about money: in such trivial processes as paying at the supermarket checkout, looking at the bank account or planning.” (Kremer, 2018)
Money, as we know it today, has 3 fundamentally different functions according to M. Miller:
1. the value storage function 2. the value measurement function and 3. the means of payment function.
In the discussion, these functions are already in the focus of economists of the Austrian school. Miller now also points out that the store-of-value function is probably the most important function and is in acute danger. He is correct in also noting that it does not matter whether money is stored and held as cash or in bits. At the same time, capital created by the accumulation of money is nothing other than accumulated cash and digitally stored money, i.e. money collected and then stored. Therefore, credit cards and debit cards that draw on stored money can also be used like money. The storage of money in banks suffers, of course, when interest and expense accounts devalue the money and thus the money itself loses value faster than rust destroys iron. The storage function is now also a kind of exchange insofar as it is not the current exchange of value that plays a role, but the time-delayed exchange of values. The value measurement function, on the other hand, represents an exchange value in non-real space, which, however, can become a real exchange value in the exchange between real and unreal world. The unreal world is also, on closer examination, not quite as unreal as at first sight. As unreal we would like to list here all those phenomena which influence the physical time space but are superficially not real scalable in it. Now capital as a real usable medium of exchange seems to exert a special attraction not only for the actors at the market places especially the financial market places, but also for economists and social philosophers like Marx and Piketty. Without money, however, the financial capital addressed here would not exist at all, which is why money must be addressed first after all. Is it possible to explain capital and even to work out the laws of capitalism without knowing and understanding the origin and function of money? Probably not! Therefore, here the attempt to work up this as compactly as possible!
If the german economist Thomas Mayer in his book “The new order of the money” in the introduction assumes that in panel discussions, in which he participated, among so-called experts … “hopeless confusion about the simplest terms prevailed”, then it is truly necessary to consider these terms here more exactly, particularly since this book addresses itself not so much to the experts as rather to the normal citizen. The latter finally wants to know how money and capital can be used to stimulate growth processes in the economy in order to increase prosperity.
What is money? That would be the first question to be answered. According to Mayer, the two sources from which the answer can be derived are manifested in the following views: For some, money is a special commodity that has become a means of exchanging economic goods through social convention. For others, money is merely a measure of the debt we owe to fellow human beings who have left us an economic good. Perhaps, in sacred-legal terms, the compensation of a debt is even the origin of money in the first place. Money as a commodity or money as a debt, this puts two contrary views in mind to what money usually seems to be for people. I would like to counter this with a third, a mediating definition: Money has become an equivalent for work performed in the form of goods or services. This expresses the appreciation for these labor services, so that this money itself can pay off debts. This always creates a creditor-debtor relationship, even when goods and money are exchanged at the same time. If the seller gives a good, for example a box of chocolates, to the buyer, he expects money from the buyer in return. The seller is the creditor and the buyer the debtor. The settlement is achieved with money, in any case a kind of promissory bill, which is then passed on as money, for example to buy cocoa powder or even a newspaper. As a transferable promissory bill, this bill can in principle remain in circulation forever, unless it contains an imprinted mark for cancellation. This can be a fixed date or just the registration code, to which a corresponding date has been added, on which the bill becomes invalid as a promissory bill, perhaps because the loan then becomes due, or the debt that still exists has to be readjusted. With the nowadays very widespread creation of money by means of a loan, the date for invalidation is also fixed, whereby as a rule not exactly the bill is returned which was paid out when the loan was granted. Generalizing, therefore, only money not tied to a loan can remain in circulation forever, so to speak, without an official expiration date.
Subsequently, the question arises as to what capital is and, connected with this, what the interest is that one may expect for money and capital.
If we first assume that capital is created by the accumulation of money, the idea that saving is the basis for capital formation and lending is obvious. In many cases, the interest on capital made available has now been as a reward for the associated renunciation of consumption. But this interest can only be measured by the scarcity of the capital available, as Keynes already points out. “The owner of capital can receive interest because capital is scarce, just as the owner of land can receive rent because land is scarce” (Keynes, 1974).
Here, artificially created scarcity by producers and traders must be distinguished from the natural scarcity of resources and all other commodities, which derive their value not from the scarcity of a labor input but from a scarcity beyond labor inputs. Keynes does not address this essential distinction, which was not really an issue at the time of the 1st Industrial Revolution and before, and this was because natural scarcity was not general, but rather marginal in limited areas. This has already changed in the course of the 2nd Industrial Revolution and will only change fundamentally in the age of the Internet of Things. The more capital-intensive production becomes and the more this capital also yields corresponding returns, the more capital will accumulate, and the scarcity will dissolve. We can now also regard capital as an accumulation of promissory bills, promissory bills that have not yet been redeemed, or as a promissory bill that has been created by the owner of capital via a loan at his expense by receiving money from a loan contract. Accordingly, capital does not have to arise from a savings behaviour, with which an essential obstacle in the form of scarcity is not fundamentally eliminated but is nevertheless no longer present in the exclusivity assumed so far. The loss of the previous scarcity in the “safe money system”, which will be explained in more detail, means that capital can be made available more easily and growth can thus be triggered more readily by the factor money.
Both high savings and cheap loans can reduce the scarcity of capital. If capital is no longer scarce, the willingness to pay high interest rates for it decreases to the point where loans can only be accommodated with zero interest rates. However, the willingness to give away capital without interest income can only be encouraged with appropriate hedges. A lack of inflation, for example, is an indication of the secure return of funds provided over the long term. Likewise, deposit insurance can help create confidence, confidence that the money borrowed will be repaid. But trust and security are also created by private-law protection through contracts that secure a work performance, as in the case of “safe money,” which will be discussed in more detail later. As a rule, there should be no money stored and kept anywhere in a money system based on credit, since money in circulation always represents a debt relationship. Stored money that is in the piggy bank is comparable to the promissory bill in the chest of drawers that has not been redeemed. There is always, even if only virtually, a creditor and a debtor. If I receive 100 euros as payment for a good in a business transaction, I am the creditor of the good and my counterpart, who gave me money for it, acts as debtor until the exchange of the good for the money received dissolves this debt relationship. The money stands for a promissory bill that is triggered with labor services or goods. If money is withdrawn from circulation, the debt relationship nevertheless continues to exist unless the debt value shown on a banknote is declared void by declaration or by law. It is precisely this invalidation of money by declaration or law that should be ruled out in the case of secured money.