In the millennia prior to the creation of modern finance, everybody knew that money was the root of all evil. Most religions bracketed the sin of usury – charging interest on money loans – alongside murder. Usury was so ruinous of individuals and civilisations as a whole, that periodic “debt jubilees” were required to reset the system in the face of economic and political ruin.
With the rise of finance capitalism (not really capitalism at all, but in reality neo-feudalism) in the twentieth century, and aided by the liberal class, the warning was toned down. “It wasn’t money itself that was the root of all evil,” said the Masters of the Universe in the world’s central banks. Rather, “it was the love of money” that was evil.
This was the big lie on which all of the horrors of the twentieth century were based and all of the existential crises of the twenty first century have their foundation. For what was implied was that greed – an individual failing – lay at the heart of our problems, when in fact every one of our problems is systemic.
It is hardly surprising that they – the people who benefit most from the debt-based money system – should seek to divert our attention from the nature of the system itself. However, at its heart, as we shall see in this book lies the contradiction of attempting to produce infinite growth on a finite planet. At the very heart of the contradiction is the fact that capitalism itself began with debt. Workers provided labour in advance. Capitalists provided factories, machines, tools and raw materials in advance. Both classes had to wait until wealth had been produced before their investment would be repaid.
Finance was different because it provided nothing in advance. Its sole input was fraud. Through the various slights of hand that bankers down the ages have used to adulterate (i.e. counterfeit) the currency of the day, they are the class that has always sought to get something for nothing. And the device that they have used to commit the crime is debt-based money – currency that is spirited into existence without real wealth to back it up. Currency that requires capitalist and worker alike to generate ever more real wealth from the finite planet just to pay back the interest on the counterfeit currency that we are forced to use in the course of our business.
All of the horrors of climate change and environmental destruction, resource and energy depletion, economic and political collapse, war and terrorism can be laid at the door of debt-based currency. And yet we are still encouraged by craven politicians and servile mass media to believe that the problem is just one of “a few bad apples” – a few greedy bankers in the middle ranks (for those at the top are never held accountable) of the finance industry who we are meant to believe have brought the entire global economy to its knees.
Until we understand what our forefathers knew – that debt-based money is the root of all evil – we will continue to destroy the life support systems that we depend upon. Until we change the way money works, we will change nothing!
Just before Easter 1984, a friend (who for obvious reasons shall remain nameless) invited me to participate in a criminal activity that by the following Tuesday was to be headline news across the UK. All I had to do was to go to London with a wad of cash that would be exchanged for incredibly good forgeries of the £50.00 notes that were then beginning to be introduced into circulation. Each note could be bought for just £5.00, and participants in the scam were instructed not to spend the forged notes in the London area.
The people behind the scam had chosen the Easter holiday because the banks would be closed for four days – allowing more time for the forged notes to be spent before anyone realised that this was a large scale and well organised operation. People buying the forged notes were told that they would probably get away with spending them on Good Friday and Easter Saturday, but that by Easter Sunday people would be on the alert. Only an idiot would try to spend them once the banks reopened on the Tuesday… and it turned out that there were quite a few idiots around.
When the story broke, the Sun newspaper helpfully imagined that the scam involved a lorry equipped with its own printing press, driving around London handing out funny money to crowds of followers. The operation was feared to be so large that the Treasury convened emergency meetings to try to gauge the impact of this multi-million pound influx of new currency into the UK economy.
In fact, the scam was more mundane. A set of plates for the £50.00 note had been stolen several years before. These had been spirited out of the UK to a printing press in Europe. Over the next couple of years, bails of the special blank paper used to print the notes also went missing – although since this was blank, its theft was of less concern to the authorities. As the years went by, apparently without either the plates or the paper being used for forgery, the authorities went back to their day-to-day business. However, over several years, bundles of counterfeit £50.00 notes were being printed in Europe and smuggled back into the UK for storage. Eventually, when the people behind the operation judged that the time was right, a cascading pyramid sales operation was mobilised to rapidly distribute the counterfeit currency.
Had I chosen to take part, I would have been at the very base of the pyramid. I knew the friend who had access to the counterfeit notes. However, I had no idea who he would get them from. It was the same all along the chain… and the higher up you got, the more dangerous and ruthless the people you were dealing with. If caught, you might have been persuaded to inform on the person who sold you the forgeries. On the other hand, as my friend put it, “the police can only fine or jail you; the people behind the scheme will put you in a wheelchair or worse.”
As is often the way with organised crime, the people behind the 1984 forged £50.00 note scam were never caught. Plenty of idiots were – like the kid from my home town who tried to buy a lawnmower with two forged £50.00 notes on the Wednesday!
For all of the furore, it turned out that the influx of counterfeit currency had relatively little impact on the UK economy. Once traders and bank tellers knew that there was a problem, it became impossible to pass off the forged notes. Indeed, for a while it was nigh on impossible to spend genuine £50.00 notes. Many of the forged notes never got spent – the friend that introduced me to the scheme had one framed as a souvenir; most were simply trashed. Those that did enter circulation were quickly removed by the banks.
If anything, the scam gave a slight boost to the UK economy – although by then it was emerging from the recession of the early 1980s. In any case, within a few years the UK monetary system would change so fundamentally that the impact of even this – at that time – large scale counterfeiting would be so trivial as to be almost irrelevant.
My reason for relating this story is to pose some important questions that take us to the heart of the problem of money:
- What, exactly, is the crime?
- Who are the victims?
- Why do states around the world make it illegal?
For most of us, the answers to these questions appear obvious. When we have to deal with the kind of forged currency that some local kids have printed on their colour photocopier, then the crime is quite obviously theft. Those of us who are given counterfeit currency in our change or businesses that are paid using forged currency are the obvious victims. States make counterfeiting illegal so that we can go about our business honestly. If counterfeiting of this kind were allowed to occur, our trust in money itself would collapse and we would be reduced to bartering.
Let us consider for a moment however, the counterfeit currency that the Mafia prints. That is, counterfeit notes that are printed using the same plates, on exactly the same paper, with the same ink and all of the correct security measures. Why is that a crime? After all, since this forged money is indistinguishable from the real thing, even if you receive it in your change you will never know and nothing can prevent you from spending it. Similarly, if a trader is paid with this counterfeit currency, there is not a bank in the land that will refuse it because, so far as anyone can tell, it is genuine.
What is the crime in the case of this Mafia money which is indistinguishable from government money? Who are its victims? Why does every state on the planet make this illegal?
The answer to these questions is actually the key to understanding every social, economic, environmental and political problem facing modern humans. They are the way into a web of deceit so simple – yet so poisonous – that most people recoil in horror when faced with them.
Let us begin with the crime of counterfeiting. It is a very old – indeed ancient – crime. It might even be the second oldest profession. It is a practice that has toppled kings, ruined empires and collapsed civilisations. It is just another word for the adulteration of money that has plagued humans from the day after money was invented.
We all know the fairy story about how money liberated peasants from our dependence upon barter. This “money as a benign invention” myth is so persuasive that it is probably the one element of modern economics that just about everyone can recite. Stop anyone in the street and ask them why money was invented, and they will relate some tale about the problems of barter and of working out the relative value of the goods people wanted to exchange.
It sounds very plausible. But it is a myth. There was never anything about money that was intrinsically benign. Sure, once it was invented, it could be put to benign purposes in the same way that a spear designed to kill people from a neighbouring tribe may be used to drill seeds or hunt game. But the original purpose of money was malign.
Anthropologists and archaeologists have scoured the planet searching for evidence that pre-money humans engaged in barter. Their search has been in vain – although along the way they have discovered a range of trading practices that demonstrate the inventiveness of humans. Since for most of our history, most of us lived barely above subsistence, exchange tended to take place among small groups that used obligation and social stigmatisation to enforce “contracts”. It was in everyone’s interest to garner obligations. That is, it was in your interest for your peers to be indebted to you – once someone owes you a favour, they are obliged to return it.
The means by which these various obligations were recorded ranged from tally sticks to knotted strings and collections of stones. The point is that people needed neither money nor barter so long as they lived in localised subsistence economies. Indeed, even as monetary economies grew, village residents continued to trade locally using pre-money methods. In England, it took the massive demand for labour brought about by industrialisation to move the mass of the population firmly into the money economy.
Money originated not as a means of trade, but as a means of violence – to enforce the despotic rule of a tyrant over an ancient civilisation’s surplus wealth. It emerged at the point in human history when we had generated sufficient surplus food to create a division of labour over and above the various roles required for producing our basic needs. Look at any primitive, hunter-gatherer society anywhere on earth and you find that all of the residential buildings are the same size. Look at any “civilised” society and you discover that while the majority of residential buildings are the same, some are much bigger. In the earliest civilisations, the biggest residential dwelling of all was always the one next door to the granary!
A key difference between hunter-gather societies and the first civilisations was the creation of specialist soldiers. Whereas everyone was responsible for defence (and aggression) in hunter-gatherer bands, civilisations began to create a monopoly of force in which surplus wealth was used to employ bodies of armed men under the command of an emperor, king or warlord. These armies – and navies – had to defend the established order, police the empire and on occasion invade, plunder or conquer neighbouring peoples. To be able do this, they had to be paid. But it would be impractical to pay them in the food, drink, clothing and shelter that they would need to fulfil their duties – to do so would so encumber them that they would be unable to move. Some means of exchange was needed to allow them to buy food, drink, clothing and shelter from any town or village in the kingdom.
Two factors made it almost impossible for soldiers and sailors to engage in the kind of obligation-trading that took place in the villages. First, since soldiers and sailors were transient, the social stigma used to enforce obligation would not work. There was no guarantee that a soldier or sailor would ever return a favour. Second, even if some bond of obligation could be arrived at, this would break the bond of loyalty to the emperor, king or warlord who required that a soldier or sailor’s obligation must always be to the crown. So some alternative means of doing business was required. Independently across all empires, precious metals – particularly gold – were arrived at as a means of exchange; in part because they are inert (unlike iron they do not rust) and in part because they are rare and hard to extract.
This scarcity and effort gives precious metals a value – or more correctly a measure of value. Gold or silver are not particularly valuable in and of themselves (In modern economies, both are used in manufacturing. But in early societies, beyond various forms of decoration they had no value other than as a means of exchange); it is only the goods and services that they are exchanged for that have a genuine use. But this raises a core problem at the heart of all money – since it is intrinsically useless, why should anyone trade in it?
A soldier might arrive at a village for the night, and attempt to pay for his board and lodging in gold. But since the landlord can neither eat nor clothe himself in gold, why should he accept the soldier’s currency?
The answer, in a word, is taxes.
Money and taxes are inseparable. The one cannot exist without the other; because without tax, money’s worthlessness is laid bare. The reason a landlord would provide a bed and a meal to a passing soldier in exchange for gold was that sometime later another soldier would arrive to collect the gold on behalf of the king…
These are the opening paragraphs from The Root of All Evil: The problem of debt-based money by Tim Watkins. The book is a concise, plain language explanation of how the debt-based fiat currency system works, and why it underpins the – now life threatening – environmental, resource, energy and economic crises that we will have to come to terms with in the twenty-first century. The core message of the book is that while we all have our preferred causes – saving the environment, green energy, animal rights, building a fairer society, etc – we will be thwarted at every turn until and unless we change the way money works. The Root of All Evil is available in paperback and kindle versions and can be bought online or ordered from book shops In the UK, USA and EU.