You can't ignore MONEY

If you had of asked me 7 years ago what I thought about the topics of "money", "investment", "economics" etc I probably would have said: "BORING!". I grew up in a middle-class household where money wasn't a big issue (or one that was even spoken about),... and I also found the subject slightly distasteful. I did poorly at Economics in Grade 10, I think because at the time I found it to be abstract and had no experience in its practical application.

Today I am hardly a bastion of knowledge when it comes to the subject of money/finance. Don't ask me any questions about Keynesian economics (ask Ai-Ling!). I have very little in savings, zero investments and no assets. But a few things have changed since then.

Probably the biggest thing that has changed is: I have recently noticed that, uh, the whole world is currently in a tremendously momentous period of change due to developments in global and regional management of MONEY. If you are interested in the past, present and particularly the future path of human-kind, therefore, there is absolutely no way you can ignore this subject.

A problem that I have with the subject of money, is how enormous, expansive and complex the world economy is. There is no way that I will ever understand either its entirety or all of the tiny cogs and micro-machinations that it is composed of. I am not an economist, I do not work in finance and I never plan to. So it can be hard to come to any sort of understanding, when you only dedicating perhaps 1% of your time towards it.

One video that I found really helpful was Money as Debt by Paul Grignon. The most useful part of this video, I thought, was a very simple and visual explanation of how finance came to exist. So at first people were trading gold. Carrying gold around all the time was not very practical, so people started storing their gold with other people who offered the service. These first "bankers" then issued pieces of paper stating the amount of gold that each person had deposited, which people then used as currency. Then the bankers realised that they could easily issue MORE PIECES OF PAPER than ingots of gold... because people hardly ever came and retrieved the physical gold. I learnt that in these early times, rules were developed about the ratio of "paper money" to physical gold that the bankers were allowed to "create" ie, the birth of fractional reserve banking. But of course lots of people didn't abide by these rules. I don't know the figures,... but say,... at first the ration was 4 paper units:1 gold ingot,... this later became 10000 paper units:gold ingot... something like that. Of course this is all simplified but it really helped me to understand how the world of finance was born.

I was also pretty interested to find out, that when you take out a loan, the bank
WRITES THAT MONEY INTO EXISTENCE. Ie, you ask for $400K for a home loan. The bank says: "sure thing!" and then writes $400,000 on its balance sheet. Even though the $400 is in the negative, that debt can then be "re-packaged" into some-one else's investment. So when you see those clips on the news of money being printed... and you think that's how most money comes into existence,.. it's not really true. Money is virtual!

One thing that I find really bizarre and a bit scary, is that the world of finance/the amount of "virtual" money that is created and traded in the stock-market etc is way bigger than the actual world economy. The amounts of debt just kept increasing, puffing up like a massive balloon... and now, in most places in the world this has popped/or is rapidly deflating,... taking down with it the ACTUAL economy. The balance sheets of ACTUAL companies involved in real physical products and services.

So everyone is panicking, selling their "virtual" monies and buying physical gold again,... but unfortunately that is removing a lot of the actual finance and liquidity that was required by actual businesses to go on operating.

It's a little surreal, living in Australia where large effects from the global financial crisis have yet to hit home. I look at the rest of the world and feel sad for the low-middle classes of very normal people around the world who have now had the brunt of the crash forced upon them as austerity measures such as reduction/elimination of social services, pensions, welfare, public health, education etc. I think only time will tell if Australia will suffer a similar fate...

Anyway, to sum this post up,... we are now living in a time where MONEY is the biggest player of our times. It will be extremely interesting to see how things go from here,.. we can only hope that more people will try to understand it and hopefully be able to curtail its worst abuses.

The Global Financial Crisis for Idiots - part 1

If you are anything like me, you probably don't have much background in economics and financial theories. I was never really interested in this topic at school and I basically failed economics in upper high-school. In this subject area, I am myself, an idiot. However, the topic is both just so crucial and also, surprisingly interesting once you can tease out information from the enormous intimidating mess of abstract concepts and corporate disinformation. As the world falls into the economic crisis, it's about time we all took a bit of control over our own knowledge of money and the economy.

I thought that this video, Money as Debt would be a good start! Here's the write-up from the producer of the video, Paul Grignon. This guy is immensely interesting.


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"Born in Toronto, Canada in 1948, I first became suspicious of our money system when I was in high school in Ottawa. We were studying logarithmic functions such as interest and it struck me that a money system in which money accrues interest at every turn could only function with exponential growth of the money supply. Something did not make sense to me. I wasn’t sure what it was but I had a strong feeling that banking was a scam designed to benefit bankers at the expense of everyone else. I vowed never to get into debt to bankers.

As fortune would have it I got to (mostly) fulfill that vow. As a hitchhiking, backpacking young adult I was led to Gabriola, a forested coastal island off British Columbia, Canada where the building code was not yet in effect. My partner and I were able to take up residence in a tent, then a shack and as the years went by, and our four children arrived, our primitive shelter without water or power gradually evolved into a modest but comfortable owner-built paid-for home. This was achieved on a sporadic income that would never have been sufficient to buy a home had we gone the conventional mortgage route.

For several years, I made my living in the logging industry as a seasonal tree planter until injury forced me off the slopes. Taking whatever jobs I could get at first, I eventually established myself in my longtime ambition to be a landscape painter and visual artist. (http://www.paulgrignon.com)

In 1997, as a result of an inheritance, I was able to realize another long-held ambition. I set myself up as a digital video maker and produced several professional video projects.

In 2002 I was commissioned to produce a video for United Financial Consumers (http://www.ufc.ca), a small organization dedicated to defending credit customers from the predatory practices of banks. I taped a 5-hour seminar explaining an innovative strategy for reclaiming the equity banks defraud us out of when we sign for a so-called “loan”. I prefaced this rather abstruse lecture material by telling “The Goldsmith’s Tale” in animation form. Entitled “Money as Debt”, it was my first full animation project.

Other monetary reformers saw this original “Money as Debt” cartoon and approached me about using my animation as part of an information package being sent to municipal politicians, urging municipalities to demand interest-free loans from our publicly owned Canadian central bank, the Bank of Canada.

The Canadian Action Party, a federal political party devoted to monetary reform posted it on their website.

Two gentlemen from the American Monetary Institute in the USA also saw the animation. One described my cartoon as “far and away the best explanation of fractional reserve banking” he had ever seen. They requested that they be able to use it for their educational purposes as well.

I informed them that I was in the process of writing a much-expanded script. I knew there was a lot more to explain and felt certain that an animated cartoon was the best way to overcome the eyes-glazed-over reaction one often encounters when trying to interest people in this subject. I asked them if they could wait a few months until I had finished the project to my satisfaction.

They agreed to wait and to assist me. Their avid interest in the project spurred me on. I worked day and night (12 -20 hours per day) for 6 months to complete the movie.

My new US contacts were able to provide me with very valuable information and feedback on my script. One of them, a senior member of the Institute, had learned this information directly from US Congressman Wright Patman, who was Chair of the House Banking and Currency Committee for 12 years.

With the help of my partner Tsiporah and my neighbour and voiceover man, Bob Bossin, the final script was edited and rewritten numerous times. Money as Debt is now a colourful, fast-moving 47- minute animated short feature that explores the basic concepts of money creation in words and pictures that are not only clear but also enjoyable. It is intended for all audiences, including elementary school children. My particular hope is that it will convince environmental, social justice and electoral reform advocates that monetary reform is essential to the goals they hope to accomplish.

Money created as interest-bearing bank credit is a magic trick, a fraud - now 3 centuries old; one that very few people have seen through despite, or rather because of, its utter simplicity.

It is my intention to make this mysterious debt-money system comprehensible to everyone. It is also my intention to foster sufficient understanding of the problems with this money system that citizens will be motivated to join the monetary reform movement and/or create local alternatives to the global monetary system - a system in which most of the productive people of the world are collectively chained to an ever-increasing and perpetually unpayable debt.

This is a system designed for elite control of the people by those who have given themselves the privilege of creating money. It is also, I believe, a system that is designed for catastrophe. As the movie explains, there can be no sustainable civilization without a sustainable money system." - Paul Grignon

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The video is about 45 minutes long, so make sure you have enough time and possibly a nice cup of tea.