Today we can hear more and more critical voices on the world economy. Critical voices around the world ask whether it is the only possible way for humanity to exist. “We have seen nothing better so far” one can say…But are we doomed to remain within these artificial money borders? Could we invent something new?
Recently I was lucky to meet a great thinker, an Austrian professor Franz Hörmann who is not only a brilliant and knowledgable critic of the capitalistic financial system but also an innovator in this complicated field.
I would love to share some quotes from his interview.
What is wrong with the current economical system?
“It is now becoming apparent to the broader pubic that something is fundamentally wrong with our system, that the problems confronting us cannot be explained away with reference to ‘business cycles’ or to the ‘incompetent economic policy of particular countries’. Standard explanations are no longer sufficient in view of the comprehensive nature of societal indebtedness (companies, states, banks and individuals); the simple logic of double entry bookkeeping requires that each liability is balanced by an opposing claim of an equal amount.”
“The true root of our problem is neither Europe nor the euro (as a currency), but can be traced directly the booking method used by banks to extend credit: claim (of the bank on the borrower) on liability (of the bank on the same borrower). This is how a double entry debt is created, in which the bank’s debt corresponds exactly to the borrower’s credit in his/her bank account. We use this bank money to ‘pay off’ bank debts which – assuming we don’t withdraw the money as cash – are never actually paid off, but are used over and over again, indefinitely, as a means of payment. That bank balance sheets do not survive this process over the long term is a matter of simple logic.”
How a fundamental system change could look like?
“Far more helpful would be a fundamental system change, as proposed for example by “positive money”, that is, the creation of money as purely electronic equity and not as borrowed capital (e.g. booked as ‘cash on equity’) under transparent, democratic control, i.e., not in the hands of private, profit-seeking companies (see e.g. http://www.positivemoney.org/).”
“Society will split into two groups in the foreseeable future. One will consist of those who have understood the principles of bank debt and thus refuse to accept accounting entries as legal tender or as legal ‘debt’. The other will consist of those who have not understood the bank debt system and thus persist in seeing money as a thing of value, as a tool well suited to effecting transference of private property. At some point, the former group will, in large numbers, begin to inform the rest of the population about the existing system, after which reform will be possible.”
It is not only about the money, the whole attitude to work itself will change! (more…)