Money:%20Capital%20or%20anti-capital? - PowerPoint PPT Presentation

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Money:%20Capital%20or%20anti-capital?

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Money: Capital or anti-capital? From speculation whirlpools to Burlington Bread, the impact of money on sustainable community development – PowerPoint PPT presentation

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Title: Money:%20Capital%20or%20anti-capital?


1
Money Capital or anti-capital?
  • From speculation whirlpools to Burlington Bread,
    the impact of money on sustainable community
    development

2
Outline
  • What is money?
  • Is the existing system for money creation just?
  • How can speculative investment (in contrast to
    productive investment) undermine community
    development?
  • What is an alternative?

3
I. What is Money?
  • Medium of exchange
  • Store of value
  • Unit of account
  • What backs up the dollar?

4
A Short History of Money
  • C commodity M money
  • C-C
  • Barter
  • Coincidence of wants
  • C-M-C
  • Money as a medium of exchange
  • Use value
  • What happens when you amass more commodities than
    you can consume?

5
A Short History of Money (cont.)
  • M-C-M
  • MgtM
  • Exchange value
  • What happens when you amass more money than you
    can consume?
  • Money fetish
  • Money as a store of value
  • M-M
  • Speculation
  • Overwhelms the buying of real goods and services
  • What is produced?
  • Redistribution

6
How is new money created?
  • When the economy grows, more money is needed to
    chase more good and services
  • Seigniorage
  • Difference between value of money and cost of
    printing it
  • What percent of your purchases are with cash?

7
How is new money created?
  • Credit and reserve requirements
  • Reserve requirements bank must have cash to
    cover about 5 of deposits
  • 100 dollar deposit allows bank to make 2000 in
    interest bearing loans

8
Money creation by banks
Money is destroyed When bank is repaid
interest
Do Banks Create the Value that Requires New Money?
9
Interest payments and distribution
10
Speculation
  • Stock markets, real estate
  • Speculative exchange in the global economy
  • Buying and selling of goods and services is about
    30 trillion per year globally
  • Buying and selling of paper is about 1.5-2
    trillion per day, or 500-700 trillion per year.
  • Trading 1000/second, how long would it take to
    trade 2 trillion dollars?
  • How long has this been going on?

11
Speculation and instability
  • Financial bubbles Loans to purchase stocks, real
    estate
  • Positive feedback loops
  • International speculative flows
  • Rate of change and our understanding of the
    economy
  • Herd behavior
  • Tequila crisis, Asian flu, etc.

12
Speculators may do no harm as bubbles on a
steady stream of enterprise. But the position is
serious when enterprise becomes the bubble on a
whirlpool of speculation. When the capital
development of a country becomes a by-product of
the activities of a casino, the job is likely to
be ill-done. -John Maynard Keynes
13
Financial capital and natural capital
  • What grows faster, trees in the forest, cod in
    the ocean, or money in the stock market?
  • How do you maximize profits?

14
Financial capital and human capital
  • What happens to jobs when the stock market
    crashes?
  • Great depression, tequila crisis, Asian flu

15
Financial capital and social capital
  • Social capital the norms and networks that
    enable collective action. Trust. Social cohesion
  • Any links between speculation, income
    distribution and cohesion?
  • Do you trust the speculators?

16
Financial capital and built capital
  • Investment in productive capacity might bring
    returns of 7/yr. when the economy is doing well,
    while the stock market might earn 16.
  • Boom 90s and stock buy backs
  • Financial contagions and the impact on built
    capital

17
Community Currency
  • Regaining community control over the power of
    money

18
Why community currency?
  • Cyclical nature of money creation
  • The Great Depression
  • Business cycles
  • Example The Worgl
  • Who creates the value in money?
  • So who is entitled to seigniorage?

19
How do they work?
IOU is destroyedor used again
20
Seigniorage and Burlington Bread
  • Seigniorage and complementary currencies
  • Seignorage and public goods

21
Goals of community currency
  • Value goes to those who create it
  • Community has control over money supply
  • Interest free
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