Project Manager – Mark Notturno
We all know that money makes the world go round. But what is money and what real value does it have now that it is no longer backed by silver or gold? How is money related to credit on the one hand and debt on the other? Why do some people seem to have so much of it and other people so little? How can something be worth a fortune one day and nothing the next? Is there anything aside from the electrons and the numbers in your checkbook that is actually moving when you pay a bill online, or when someone makes an electronic transfer into your account? Do you worry that Americans may never be able to pay off their personal and national debt—and do you wonder what, if anything, might happen if they don’t? Do you know how the Federal Reserve creates money by buying US Treasury Bonds—or how ordinary banks create it through the ‘miracle’ of fractional reserve banking? Do you have a clear idea of what a trillion dollars is, where it could all come from, and what an economic collapse involving trillions of dollars might look like? And do you sometimes think that money, credit, and debt—and perhaps our entire financial system—might ultimately be one big Ponzi-scheme created by some evil demon with far more intelligence than you?
Today, many Americans live in fear of both personal and national economic collapse. The American dream has become a nightmare for them. They worry about whether they will ever be able to pay off their credit card and mortgage debt, which now totals $18 trillion—let alone the national debt, which totals an additional $14 trillion—and whether their social security and retirement accounts will be worth anything when they retire. Today, many Americans, and indeed Washington itself, live from month to month paying only the interest on their debt, which in the case of our national debt now totals $395 billion and is the third largest expenditure in our budget. But instead of being encouraged to save money and live within their means, they have been encouraged to ignore what is in their own financial interest and to try to ‘spend themselves to prosperity’ by assuming increasingly larger debts, with exponentially increasing interest, to ‘help the economy’. Today, changes in our money and monetary system have left us in uncharted territory. Today, Americans have been told by their leaders to ask not what their economy can do for them, but to ask instead what they can do for their economy. And today, many Americans are resigning themselves to a future in which they will most likely leave their wealth not to their children, relatives, and friends—but to the banks and other creditors that have lent them money.
This project will begin with a brief exploration of the evolution of our concept of money—what is was in the past, what it is now, and what it might be in the future—and its changing relationships with credit and debt. It will then move to an exploration of the governance concerns and questions that Americans might have about money, credit, and debt—and then to the development and description of contrasting conceptual policy possibilities for addressing them.
Money, Credit, and Debt
Project Manager – Mark Notturno
We all know that money makes the world go round. But what is money and what real value does it have now that it is no longer backed by silver or gold? How is money related to credit on the one hand and debt on the other? Why do some people seem to have so much of it and other people so little? How can something be worth a fortune one day and nothing the next? Is there anything aside from the electrons and the numbers in your checkbook that is actually moving when you pay a bill online, or when someone makes an electronic transfer into your account? Do you worry that Americans may never be able to pay off their personal and national debt—and do you wonder what, if anything, might happen if they don’t? Do you know how the Federal Reserve creates money by buying US Treasury Bonds—or how ordinary banks create it through the ‘miracle’ of fractional reserve banking? Do you have a clear idea of what a trillion dollars is, where it could all come from, and what an economic collapse involving trillions of dollars might look like? And do you sometimes think that money, credit, and debt—and perhaps our entire financial system—might ultimately be one big Ponzi-scheme created by some evil demon with far more intelligence than you?
Today, many Americans live in fear of both personal and national economic collapse. The American dream has become a nightmare for them. They worry about whether they will ever be able to pay off their credit card and mortgage debt, which now totals $18 trillion—let alone the national debt, which totals an additional $14 trillion—and whether their social security and retirement accounts will be worth anything when they retire. Today, many Americans, and indeed Washington itself, live from month to month paying only the interest on their debt, which in the case of our national debt now totals $395 billion and is the third largest expenditure in our budget. But instead of being encouraged to save money and live within their means, they have been encouraged to ignore what is in their own financial interest and to try to ‘spend themselves to prosperity’ by assuming increasingly larger debts, with exponentially increasing interest, to ‘help the economy’. Today, changes in our money and monetary system have left us in uncharted territory. Today, Americans have been told by their leaders to ask not what their economy can do for them, but to ask instead what they can do for their economy. And today, many Americans are resigning themselves to a future in which they will most likely leave their wealth not to their children, relatives, and friends—but to the banks and other creditors that have lent them money.
This project will begin with a brief exploration of the evolution of our concept of money—what is was in the past, what it is now, and what it might be in the future—and its changing relationships with credit and debt. It will then move to an exploration of the governance concerns and questions that Americans might have about money, credit, and debt—and then to the development and description of contrasting conceptual policy possibilities for addressing them.