Sunday, June 19, 2011

Hoermann's Ideas for a Possible Way Forward II

As the WienTV interview is edited to begin with Hoermann answering an unheard question, I will too, although I've started a little way in, cut out his opening comments on “Zeitgeist, Moving Forward”. English speakers can watch the interview if they want though, because there are subtitles. But the subtitles are not good, miss and misrepresent plenty. As with my most recent translation, I've translated WienTVs questions loosely, only attempting to catch the spirit of the question, rather than stay true to every colloquial detail.

Without further ado:

Franz Hoermann: What we today think of as money, a thing we still associate with solidity and material, [or as] a value we pass around among ourselves in exchange, does not actually exist. It is pure information, a number, and needs therefore no medium, not even paper. It could exist, for example, solely on computer disks, which it does, of course, already, and is created there too. This is – if you've been reading between the lines – the problem behind the current financial crisis.

Money is created by a booking entry in private banks. Private banks have a monopoly of money creation. Not central banks, not democracy. And the way in which they extend their balance sheets, always and only with further debt issuance – debt bearing compound interest! – is the root of today's problems. That is, everyone has debt, debt is exploding, exponentially, and [this debt] cannot be paid back.

WienTV: Yours is a very provocative thesis, namely that 2011 will be the end of money. Why?

FH: Well, “the end of money” has multiple meanings. On the one hand, today's money is nothing more than a rule of the game. This rule says that individuals, groups, institutions and states must repay their debts with interest on top. If you take a careful look at this, you'll see that for most industrial nations, this year, the numbers don't add up. What is actually happening with all the Euro Bailouts is nothing more than paying old debts with new debts. These news debts bear, of course, interest. That means we can predict that these debts will explode, that they will be, because of the rules of the game, unpayable. That is the end of money from one perspective.

The second perspective is that the public will finally understand, that what we see as money never actually existed. Money created by book entry can have no substance, and cannot therefore have any intrinsic value. After we've finally come to terms with this, we'll be able to establish something similar to money, namely numbers, with which we can organize human action anew, namely democratically, legally insured, transparently, in a way understood by all, and helpful for human development.

WTV: What will money look like in 2012?

FH: If we're successful, if the international network of scientists I belong to succeeds with the ideas we are putting forward, then [money] would be an electronic accounting unit which has purchasing power. It would only be created as 'payment' for human contribution and skill. People will have individual accounts 'equipped' with a certain 'overdraft facility' which we see as a guaranteed income. [Not sure how this word work – refreshed every month? – Toby] With this people can shop. They'd have purchasing power. Then, for every contribution they bring to the community – networked electronically, organized for production – they'll be rewarded with [further] purchasing power, according to clear and transparent rules, rules which will be changeable at any time.

Our goal is to divide these contributions into two categories, namely pleasant (fun, good for personal development), and unpleasant (chores, boring work that simply must be done). Both categories will be paid, but the unpleasant jobs will be better paid. But, if anyone is especially creative, in that they come up with some solution that leads to their redundancy, and therefore frees up many others from having to perform that unpleasant work, they will receive a 'super premium,' so that they can further develop themselves in other areas.

WTV: Who will be the winners and who the losers in this new system?

FH: Interestingly, since the new form of social organization we propose would not be a zero-sum game – though most people understand this, seeing money as a pot of a finite amount gold coins – we would be able to declare all social classes simultaneous winners, because the system would encourage cooperation. There would be no more competition.

WTV: Are the Internet and Open Source a virtual model for what you propose?

FH: Yes, we see the Internet as the system's infrastructure, and Open Source is a good analogy for it. We can found society as an Open Source Society. A quick example: it won't be necessary for each car manufacturer to produce an entire car (Mercedes, Audi, BMW, Toyota), since this automatically brings them into competition with each other, and they try to do each other down. These manufacturers will [instead] specialize in component manufacture, which, in a 'Lego module concept' will then be assembled into a whole car. This should ensure that cars last for, say, thirty years, since it will be easy to swap out only those 'Lego components' that are actually broken. In this way car companies would work together rather than compete with one another, cooperation instead of competition. This would of course mean redundancies across the board, but this wouldn't be a problem , since they would receive ongoing purchasing power and could develop their personal skills as they so wished, and that at a higher level which would be more useful to society generally.

WTV: Re cooperation instead of competition. I've heard that before –

FH: Yes, the welfare state [laughs]!

WTV: but would this also mean a more environmentally friendly set up?

FH: Yes. Our new money system, as I've already pointed out, consists of electronic numbers which are generated solely by human behaviour [societal contribution]. For inorganic matter, e.g. raw materials or half-finished products, we would set up a separate accounting circuit. These things will not be valued. Inorganic matter, objects, will have no value. Manufacturers will no longer ask for a component to be made of, say, aluminium, they define which criteria the material must have, e.g. rigidity, melting point, etc., and materials specialize will work to meet these demands. So it won't be competition over scarce raw materials, we will focus on functionality instead. People who need it will be provided then with some 'pure material.' Should this fail, new materials will be synthesized, which is the responsibility of the specialists, who would receive bonuses for their work and creativity.

When we pay people only with electronic numbers for their skills and contributions, the advantage is that we automatically have a fair system, since everyone can develop their skills, but not everyone can [work on/benefit from] the legacy of/inheritance from a company.

WTV: Isn't the end of poverty also the end of wealth and therefore communism and bland uniformity?

FH: No. We'll just think in other categories, that's the trick. There won't be rich and poor as we currently have them, there'll just be people in different stages of development. The very young just beginning to develop their skills, people who've been at it a while, people who have taken time out to reconsider their career and look at alternatives. And for all these stage the new bank employees will be there – we call them “Life Guides” – who, almost as psychological coaches, will accompany their charges for life.

WTV: Well, that sounds very utopian –

FH: Indeed! [“Tja!” says Hoermann, which is very hard to translate, kind of like “What can I say, you've got me!”, but I chose “Indeed.” – Toby]

WTV: [Laughs.] It seems to me that the guaranteed income is absolutely essential.

FH: Correct. We can organize this by giving everybody an account via, for example, their social security number. We will all begin with an 'overdraft' range, which has purchasing power, and this represents the guaranteed income. In this system then, those who deliver a product/service see their account increase, those who receive see theirs decrease. This exchange is recorded neutrally as [simple] numbers [without what Hoermann calls “dimension”], so there's no need for suffixes like Dollars or Euros [I believe he thinks of currency as a dimension of the number].

In reality price is nothing more than a value-relationship. The dimension [i.e. currency?] cancels itself out in the relationship. 3 meters to 2 meters [3:2] is 1.5 without need for a further [explanatory dimension]. Historically, Marks and Krone etc. are nothing more than seals of dominance which assigned to the sphere of the sovereign control of economic activity generally. After the French Revolution and the usurpation of the nobility, upon which money creation was taken from the royalty and handed over to the banks, the banks maintained the seals as a way of empowering their money, or affecting consensus to use it as money, and then called their money a thing with intrinsic value. Materialism arises out of this construct, that is, the currency misrepresented as commodity money, with which currency speculators can excite [make volatile] exchange differences, and from this generate unearned income. Firms in the real economy on the other hand suffer from this volatility, are forced therefore to hedge against it, an insurance which the banks again benefit from. That is, in brief, the context for all this.

So while we understand the numerical [accounting] unit as a thing with intrinsic value, we are all confronted with these paradoxes, such as particularly successful nations suffering as their currency gains in value, and vice versa, from which, actually, only counterproductive effects emerge which can only benefit speculators.

WTV: How should we proceed as collapse unfolds? What should people do?

FH: Firstly we need to disconnect our sense of happiness, which is just a feeling, from property ownership and bind it to self-determining the shape and pattern of our lives, so that we have more control over the development of our skills and activities, and this will be the new definition of happiness. The money we have today should be spent as quickly as possible into the real economy, which people are in fact doing anyway – which has been misunderstood by conventional economics and interpreted as a recovery! Should currencies really break – which is probably something we cannot avoid – it would be enough if we reassigned money creation, that is one account for everyone, to, for example, a social ministry. We all have social security numbers. For the new electronic banking system we need nothing more than a new bank sort code and can use existing infrastructure. Every citizen receives, via his or her social security number, an account in the new system, money creation then becomes the responsibility of the social ministry, and with that we can dispose of the finance ministry [Treasury I guess – Toby].

So, the rest of the interview, which is just one question and answer, you can check out for yourselves. It's about how to treat the criminal (elites), which Hoermann answers along the lines of, we seek no enemies, we're trying to establish a solution everyone can be more or less happy with.

And that's it from me for a while. I'm off for six weeks ten days from now, and need next weekend to prepare for the holiday, attend to domestic stuff. I hope the repetition here of some ideas is not too bothersome. Hoermann speaks fast and says plenty, and one thought leads quickly to another and each depends on former and future expressions. In that sense the more the better (and editing it is a bloody nightmare). Also worthy of note, again, is that these ideas are suggestions for us to take and run with, to make our own. They are not instructions. There's no leader to follow but you. We must make the system our own if it is to be an improvement on today's. And we have to want to do so, and understand fully why we want it. No pulling the wool over anyone's eyes. Intelligent consensus always, no 51% telling 49% what to do. That this is hard, untried, seems impossible, should deter us, not because the task is not enormously daunting, but because any other way will not work. At least, that's my reading of our predicament. Only if we grow up culturally and take charge of our communities via direct democracy, which must include a democratic money as well as other social infrastructure (such as Lego cars!) can encourage cooperation and the maturity of all citizens. Growing up out of the dumbed-down emotional immaturity we are now bogged down in is the task before us. Hoermann's ideas, and not all of them are here, seem very well tuned to the demands of that task.

One last thing, Hoermann & Co will be releasing a 30 page booklet at the end of the summer which will list practical advice for how to survive currency collapse. I'll get it, and translate as much of it as I can. (And I haven't had a chance to do any quality control, nor for last week's post. Sorry. Must do better!)

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