The (almost) global revolution is now in what I optimistically think of as its advanced early stages. What is happening on the streets across the planet is only the visible surface of a deep and mighty desire for something honest and authentic. We are starving for a system that serves the people transparently, justly, and sustainably. We know the current sham cannot deliver what we want.
The revolution is no longer merely imminent, it is visibly underway. But, in conversation with fellow writer Frank Powers yesterday over a few beers in a semi-pretty part of Berlin, we agreed that the various groups neither know what to do with power should they get their hands on it, nor do they appear to be making sufficiently informed demands of the money system. As you know, I believe money as we have it must be destroyed, before any hope of progress to a different socioeconomics can follow. Before I came across Franz Hoermann I felt The Venus Project, for all its flaws and despite the paucity of details on transition, were the organization with the best chances of establishing a truly new system. I now believe Franz Hoermann has the best analysis of today's system, as well as sound ideas for monetary alternatives. There can be no quantum leap from debt-money to post-scarcity. That is not going to happen. Indeed, even embracing Franz Hoermann's suggestions will take a miracle, but, because they are strong, they should be heard. And from here on in only miracle's can save us, so, reach for the moon I say.
I am a nobody. If any one is reading this and my previous translations of Hoermann's work, and is impressed, please, join me in spreading his ideas. A new civilizational phase can only be reached with all of us doing what we can to further democracy and justice. No one is the leader. The ideas lead us as we alter them. We can no longer live for the machine, we must make the machine live for us.
What follows today is the last I will translate from “Das Ende des Geldes”, (some of which has appeared in these blog pages before). Next week I will begin presenting Franz Hoermann's proposals. They are 'out there' on YouTube in various, disconnected interviews, so I will have to 'staple' them together in some presentable form. Don't expect a polished product. In fact, never expect a polished product from any one, ever. It's up to us after all.
Now over to the Professor:
“In shallow political discussion, as also, sadly, in academic economics departments, the answer given when one asks after the function of money is most often threefold: Money is: (1.) a measure of value, (2.) a universal medium of exchange and (3.) a store of value.
It only takes a grade school education to demonstrate that money cannot fulfill even one of these functions. People who believe in the above definitions of money are continually led by this nonsensical belief to confused and confusing positions. First we'll refute the assertion that money is a measure of value. A measure is, at least in the natural sciences—which have always been the great role model for economics—a smallest unit, initially defined arbitrarily, but which thereafter may not be changed. Furthermore, assigned to each measure is a fixed method of measurement. Measuring length requires a different methodology than measuring weight or speed.
Today's money-values arise in the Market according to, allegedly, the Law of Supply and Demand. Even money itself is traded, allegedly, in a market. But trading money means the measure of value itself possesses a variable eigenvalue [“a value of a variable in an equation” according to the English dictionary, though the text's “Eigenwert” might also translate to “intrinsic value” in this context – Toby]. A meter, on the other hand, is the length itself, so possesses no length. Were the meter as measure of length to behave exactly as the Dollar and Euro as measures of value, then, when it came to measuring longer planks of wood, the meter itself would lengthen—because of the higher demand—whereas with short planks it would shrink, due to the lower demand.
Thus it must be clear even to schoolchildren, that is, to people without an economics qualification, that using such a yardstick you could not even construct a humble garden shed. A measure (of value) is an arbitrarily set, though thereafter unchangeable base size for comparison and measurement to be performed in a standardized manner. Commodity money with an eigenvalue does not meet this requirement and is therefore, provably, not a valid measure of value. So how then are financial values measured in today's society? There are three core methods: (1.) deriving the value from an actual purchase price, (2.) generation of an accountancy opinion and (3.) a subjective guess, as, for example, from a collector.
A purchase price represents an agreement to hand over an object for a particular amount of money. This price is therefore always subjective and never generally applicable for other similar items. Obviously a jeweler will hand over a wedding ring to his son at a lower price than to just any old customer. The illusion of similar prices for similar goods arises, e.g. in shops, mainly for reasons of expedience: Instead of bargaining with each and every customer over the price of each and every shirt or pair of trousers, prices are simply, that is for reasons of simplicity, assigned – of, course, in certain circumstances a customer can still bargain. Price is therefore always the result of a personal relationship, or the salesmanship of the seller, or the actual power balance at play, and can therefore never be derived from primitive calculations, as claimed by generations of clueless economists, forced by their training to parrot such nonsense. And here we confront the astounding fact that nothing is so easily manipulated as the market price in the everyday economy, for example with given, excuse me, I mean of course loaned money.
If you give your neighbour an amount of 'money' with which he is then to buy your house from you, no doubt he will find no reason not to take you up on your offer. Should you then amend your accounts to show a profit, because of which the bank then credits your account with real money you can use anywhere, then there can be no reason your neighbour should not return the favour. Why not just reuse that original 'money' you gave, excuse me, I mean of course loaned him, this time to buy your house from you? Then he can demonstrate a profit to his bank, which then immediately gives, apologies, likewise credits his account. Only much later will it emerge that the exchanged monies were worthless, but by then they will have been transferred to some other bank.
Should comparable prices not be available, accountancy opinions as assessments of value by specially qualified people will be produced. The exact methods these “Wise Ones” deploy are rarely made public, but when this does occur, the reaction is always astonishment and loud criticism. The wishes of their clients are invariably concealed behind arbitrary pseudo-mathematics. These “Wise Ones” try to secure their lifestyles with airy formulas and weak explanations, a.k.a. financial alchemy, designed to lend their endeavours an aura of higher knowledge. But when no genuine prices are available, what use can some value, arbitrarily derived by an accountant, actually have? None whatsoever, obviously, since the assessor tries to arrive at a definite price in the best interests of his client, e.g. for some negotiated sale, before a judge, etc. For the members of this profession [Hoermann is one, I believe] any analysis of their strange practices is of course taboo – their financial existence depends on this incomprehensible theology of formulas. Because their calculations are never testable and therefore not falsifiable, these professions should be disqualified from the scientific community. No assessor, claiming to be able to determine approximate values for prices on the basis of guessed mathematical formulas, ought to be taken seriously by a buyer, a seller, or a judge. These methods are exclusively about the misuse of mathematics, and never about their serious usage. Proofs for the claims made here have been published in scientific journals for years.
[ … snip … ]
The fairy tale of supply and demand is supposed to inform our politicians about how it is that scarce goods and services are the most valuable. And yet there is deliberate silence on the fact that the supposedly scarce products are, typically, very much there in plentiful quantities. It's just that they belong to other people, people who spread purposeful rumours, for example with the help of media outlets they also own, that these things are scarce at the moment. They need only lock up some store room, or pump less oil, or sell less on the stock exchange – presto, the market reacts, and the price rises.
Free market economics is optimally suited to such market manipulation, assuming one possesses sufficient power or information. In truth the so-called Law of Supply and Demand is nothing more than a systematic and comprehensive method of extortion. By means of the elegant and multi-generational repetition of “The Law of Supply and Demand” – as an allusion to universal natural laws – the public has become used to this robber-Barron method, and no longer sees this form of extortion as a crime. We've come to see it as a law of nature. For rearing the public in this way many economists have been awarded, deservedly, the [so-called] Nobel Prize.
But scarcity can never serve as a basis for scientific theory, since it lies, just like beauty, in the eye of the beholder. If which a person allergic to bee stings urgently needs, e.g. a life saving medicine, be scarce, such can have terrible consequences. For this reason he will be prepared to pay enormous amounts of money for this medicine, should someone seek thus to extort him.
For the authors of this book on the other hand, who are luckily not allergic to bee stings, a scarcity of such a medicine is unimaginable; one single ampule would be an over supply. Scarcity as a basis of a science is therefore exactly as effective as beauty. Purely subjective perspectives, which can be shaped and tuned by the richest and most powerful as they so desire, have been transformed to objective units of measure. Every owner of some product can raise its price at any time just by making it scarce. Pseudo-sciences, the so-called economic sciences, were established to deceive and manipulate the public. The scarcity of some good or raw material is in and of itself an absurd concept. Should, for example, too little crude oil exist, then we can build cars to run on electricity or hydrogen. The solution to problems of scarcity is not therefore the extortion of raising prices or even resource wars, it is innovation and substitution, that is, replacing scarce with other more abundant substances. And yet precisely to prevent this from happening the multi-branched practice of patents and copyright law was developed over recent decades. The great monopolies of humanity's product streams seek to prevent, for as long as possible, that their freedom to extort via cyclical consumption be taken from them. The fairy tale that scarce things are worth more has led the public to accept this type of extortion.
[ … snip … ]
Even here the standard definition of money fails: money is not in any way a universal exchange medium. What could such a thing be, anyway? When an exchange is executed, one swaps one piece of good A with one piece of good B. However, should we exchange two pieces of B with one A, it's not a swap (exchange) any more, since we now have a price in the sense of a value-relationship: one A costs two Bs.
For centuries the public has been told that a sale takes place only when money is used [my emphasis]. But this is not true, since prices are nothing more than a value-relationships. In the above case, one piece of A has the price of 2 pieces of B. Here we're using B as a currency to buy A. If one A cost 4 C, then in the C currency the price of A would be 4 C. Thus money can never be used for an exchange, but only for a sale. Because with money it is only prices that are being paid, the deployment of money as an exchange medium is impossible for reasons of simple logic. Through this semantic trick the public has been distracted from the ubiquitousness of price, which is always used exclusively in conjunction with money, since every sale requires a price and money can only buy, it can't do exchange [$5 for $5 would be an exchange!]. The price can always be manipulated on the free market by the more powerful party to the sale – free mostly in the sense of punishment free for the extorter. On the other hand the fact that any 'exchange' of unequal quantities is always a sale has been ingeniously concealed. When such happens it is always an instance of value-relationship, therefore a price of some kind is in action. And the fact that any good can at any time take on the function of money, by which means the money-monopoly of the banks would be threatened, has been successfully hidden from the public. This they accomplish in schools by rote teaching expressions into the unconscious, anchoring them there with magical formulas of money as a universal medium of exchange.
[ … snip … ]
Finally we come to the beloved function of money as store of value. How do you personally store the things you value? Do you sell them, then squirrel the money away in a safe somewhere? If you answered in the negative, perhaps you will also have recognized that even this famous function of money doesn't have a good leg to stand on. Mere repetition of nonsense does not make it true. Money is not value and cannot therefore function as a store of value. Money hasn't even got it in itself to store its own purchasing power, otherwise the institutes charged by government (and dependent on government largess) with tracking prices, would not have to manipulate, constantly, the basket of commodities used to assess the retail price index, in the hope of reporting – actually, producing – as low an inflation figure, as politically desired a figure, as possible.”
And there you have it purples, the last from Das Ende des Geldes. Next week, should I have the time (very busy week coming up) I'll post something on solutions. We need to be armed not only with the most accurate and incisive critiques of the status quo, but, more importantly, the most cogent and pragmatic suggestions for alternatives we can muster. That's where the real work is, and we all have to put our shoulders to the grind stone. Time is of the essence!
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