Money as a CommonsProfessor Mary MellorNorthumbria University UKHelsinki University 16.05.13
Modern Money is not a Commons• Modern money has been privatised• The main source of money issue is throughthe banking syst...
Money Creation: Currency - BankQQQE
Privatised Money Supply• Most money is now issued as debt (97% in UK)• States have lost control of money supply• Enhanced ...
BANK LENDINGINCREASESMONEY SUPPLY
Expansion of UK Money Supply0500100015002000250019701973197619791982198519881991199419972000GDP indexBroad money (M4)
CREDIT CRUNCHDECREASESMONEY SUPPLY
Bank money creation• ‘the process by which banks create money isso simple that the mind is repelled’ (JohnKenneth Galbrait...
Privatised Money• Economic policy controlled by profit-drivenprivate interests• Financial sector controls money supply• In...
Marshall PlanLouisiana PurchaseMoon raceS&L crisisKorean WarNew DealIraq WarVietnam WarNASAWorld War IIBanking bailout• Ji...
Neoliberal Ideology – HandbagEconomics• All money and wealth is created in the privatesector• States must limit expenditur...
MONEY SYSTEM€€€€€€
What is Money?• Where does it come from?• Who owns and controls it?• How is it issued and circulated?• It doesn’t just app...
Economic Myths• Money emerged through trade• Money is only a medium of exchange• Money originally had intrinsic value(gold...
THE ECONOMIST’S STORYBARTER
1750 BCECode ofHummurabi600BCE1300 ADModernbanking
MONEY CAN LOOK LIKE THISWith permission: tab2space on flickr
MONEY CAN LOOK LIKE THISWith permission joep de graaff flickr
Varieties of Money• Money can take many forms: clay tablets,written records, sticks, stones, coins, paper• Social : used f...
PUBLIC MONEY IS DEBT FREEEXPENDITURE - TAX
BANK MONEY IS DEBTLOAN - REPAYMENT + INTEREST
The Problem with Debt Money• More money is reclaimed than is issued• Ponzi system – old debt is paid by new debt• Drives c...
The Necessity of Deficit• Deficit: The allocation, spending or lending ofmore money than is reclaimed (taxation ratesnever...
Money systems need deficits not debts• ‘I cannot find an example of a country that hascome through a banking crisis and re...
The Money DivideEconomic ‘Man’Market valuePersonal wealthAble-bodied workersLabour, intellectExploitable resourcesKnowledg...
What to Do?• Get rid of money – not very practical inurbanised societies, also money in variousforms has a long history• S...
Money as a Commons• Money should be seen as a ‘commons’ socialresource like air or water is a natural resource• Its issue ...
Money as a Commons• Money access as democratic right (citizenincome, right to meaningful work)• Use of socially issued mon...
Debtfree Money for the People
Democratising Money• Control of money supply needs to be takenback from the banks• All new money should be issued free of ...
People’s Money for Sufficiency• Democratic priorities• Needs-led expenditure• Public infrastructure• Community/Specialist ...
Publications• Mary Mellor (2010) The Future of Money:From financial crisis to public resource (Pluto)• Mary Mellor (2010) ...
Web Lectures• Bringing Economic Down To Earthhttp://www.youtube.com/watch?v=9F-DuD6T_i0• Just Bankinghttp://www.youtube.co...
Understanding Money: four lectures• http://www.youtube.com/watch?v=5IZRWQn5jgk• http://www.youtube.com/watch?v=8wpbnYZZaG4...
Mary Mellor: Money as a Commons
Mary Mellor: Money as a Commons
Mary Mellor: Money as a Commons
Mary Mellor: Money as a Commons
Mary Mellor: Money as a Commons
Mary Mellor: Money as a Commons
Mary Mellor: Money as a Commons
Mary Mellor: Money as a Commons
Mary Mellor: Money as a Commons
Mary Mellor: Money as a Commons
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Mary Mellor: Money as a Commons

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Mary Mellor's presentation on money as a commons held in the University of Helsinki 16.4.2013.

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Mary Mellor: Money as a Commons

  1. 1. Money as a CommonsProfessor Mary MellorNorthumbria University UKHelsinki University 16.05.13
  2. 2. Modern Money is not a Commons• Modern money has been privatised• The main source of money issue is throughthe banking system• This money is only issued as debt throughbank accounts• However people think of this as ‘real’ i.e.public money (national currency)
  3. 3. Money Creation: Currency - BankQQQE
  4. 4. Privatised Money Supply• Most money is now issued as debt (97% in UK)• States have lost control of money supply• Enhanced by use of electronic money• Enabled the growth of a ‘money market’where both money (currencies) and debt(securitisation) are traded as commoditiesusing debt funding (leverage)
  5. 5. BANK LENDINGINCREASESMONEY SUPPLY
  6. 6. Expansion of UK Money Supply0500100015002000250019701973197619791982198519881991199419972000GDP indexBroad money (M4)
  7. 7. CREDIT CRUNCHDECREASESMONEY SUPPLY
  8. 8. Bank money creation• ‘the process by which banks create money isso simple that the mind is repelled’ (JohnKenneth Galbraith, 1975 Money: Whence it came and Whereit went Penguin, London p. 29)• ‘The essence of the contemporary monetarysystem is the creation of money, out ofnothing, by private banks’ often foolishlending’ (Martin Wolf Financial Times 9.11.10)
  9. 9. Privatised Money• Economic policy controlled by profit-drivenprivate interests• Financial sector controls money supply• Instability of money supply (boom and crunch)• State reliant on taxing private sector• State has to rescue financial sector using‘borrowed’ money• State is then ‘punished’ through austerity
  10. 10. Marshall PlanLouisiana PurchaseMoon raceS&L crisisKorean WarNew DealIraq WarVietnam WarNASAWorld War IIBanking bailout• Jim Bianco, of Bianco Research:http://www.ritholtz.com/blog/2008/11/big-bailouts-bigger-bucks/
  11. 11. Neoliberal Ideology – HandbagEconomics• All money and wealth is created in the privatesector• States must limit expenditure to avoidovertaxing the private sector• States must not create their own money• State as household dependent on borrowingfrom the ‘money market’ (Maastricht Rules3% deficit 60% National Debt)
  12. 12. MONEY SYSTEM€€€€€€
  13. 13. What is Money?• Where does it come from?• Who owns and controls it?• How is it issued and circulated?• It doesn’t just appear in society –floating fromthe trees……
  14. 14. Economic Myths• Money emerged through trade• Money is only a medium of exchange• Money originally had intrinsic value(gold/silver)• Banks loans link savers to borrowers• States cannot create money or wealth
  15. 15. THE ECONOMIST’S STORYBARTER
  16. 16. 1750 BCECode ofHummurabi600BCE1300 ADModernbanking
  17. 17. MONEY CAN LOOK LIKE THISWith permission: tab2space on flickr
  18. 18. MONEY CAN LOOK LIKE THISWith permission joep de graaff flickr
  19. 19. Varieties of Money• Money can take many forms: clay tablets,written records, sticks, stones, coins, paper• Social : used for injury payments, tithes,dowries, local exchange• Public: issued and used by rulers, states ormonetary authorities• Commercial: issued as debt by banksdesignated in national currency
  20. 20. PUBLIC MONEY IS DEBT FREEEXPENDITURE - TAX
  21. 21. BANK MONEY IS DEBTLOAN - REPAYMENT + INTEREST
  22. 22. The Problem with Debt Money• More money is reclaimed than is issued• Ponzi system – old debt is paid by new debt• Drives constant growth and profit-seeking• Crisis if unregulated (2007-8, Finland 1990’s)• Private benefit - public responsibility• Ignores the need for deficit/debt free moneyin money systems
  23. 23. The Necessity of Deficit• Deficit: The allocation, spending or lending ofmore money than is reclaimed (taxation ratesnever 100% - banks demand 100%+)• Handbag economics’ deficit hysteria is totallymistaken. More money must always be issuedthan is reclaimed – otherwise there will be nodebt free money to circulate• Bank deficit occurs as default on loans
  24. 24. Money systems need deficits not debts• ‘I cannot find an example of a country that hascome through a banking crisis and returned toeconomic growth without the creation of astate development bank… the whole point ofa state development bank is that it losesmoney’ (a senior investment banker quoted inSunday Times 05.08.12)
  25. 25. The Money DivideEconomic ‘Man’Market valuePersonal wealthAble-bodied workersLabour, intellectExploitable resourcesKnowledge (IPR)Women’s workSubsistenceSocial reciprocitySick, needy, old, youngBodyEcosystems, wild natureFeelings, emotions,wisdom
  26. 26. What to Do?• Get rid of money – not very practical inurbanised societies, also money in variousforms has a long history• Spread current money access (debt) –problems of micro-finance/sub-prime• Create Local Money – useful - but does notusually cover wider economic needs
  27. 27. Money as a Commons• Money should be seen as a ‘commons’ socialresource like air or water is a natural resource• Its issue should not be privatised or itsaccumulation be a primary aim• Currently no basis for ‘enough’ : bread/moneyprice• Money as a public resource would create thepossibility of a sufficiency economy withenough for all not cornucopia for some
  28. 28. Money as a Commons• Money access as democratic right (citizenincome, right to meaningful work)• Use of socially issued money to prioritiseeconomic activities (social need, publicservices)• Any residual market system would beregulated and serve the demands of asufficiency and socially just economy
  29. 29. Debtfree Money for the People
  30. 30. Democratising Money• Control of money supply needs to be takenback from the banks• All new money should be issued free of debton the basis of democratic priorities• Monetary management through issue andtaxation (linking fiscal and monetary strategy)• Private investment should be based on a realtransfer of money (as the text books say)
  31. 31. People’s Money for Sufficiency• Democratic priorities• Needs-led expenditure• Public infrastructure• Community/Specialist banks• Not for profit services/production• Basic income• Income for ‘commons’ resources – land, water
  32. 32. Publications• Mary Mellor (2010) The Future of Money:From financial crisis to public resource (Pluto)• Mary Mellor (2010) Could the money systembe the basis of a sufficiency economy? real-world economic review 54 www.paecon-net/PAEReview/issue54/Mellor54.pdf• Frances Hutchinson, Mary Mellor, WendyOlsen (2002) The Politics of Money (Pluto)
  33. 33. Web Lectures• Bringing Economic Down To Earthhttp://www.youtube.com/watch?v=9F-DuD6T_i0• Just Bankinghttp://www.youtube.com/watch?v=uAhxDsm0eZE
  34. 34. Understanding Money: four lectures• http://www.youtube.com/watch?v=5IZRWQn5jgk• http://www.youtube.com/watch?v=8wpbnYZZaG4• http://www.youtube.com/watch?v=PoIRCHq7Cr4• http://www.youtube.com/watch?v=argEb1tWtt0

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