Then I guess you’ll just die. No? You don’t really need money if you can live off the land and that’s the assumption he’s making here. During the depression people survived off the land. That’s why we had the dust bowl. Farmers started planting fence post to fence post, along came a drought and there was nothing to stop the wind or hold the rain when it did fall. The economic conditions caused people to take extra risks. Which makes you more vulnerable to random events like a drought.

Yes, it seems to me this is a defining characteristic of fiat money. However, I am not sure it is any less faith-based than commodity money. Although, perhaps I am confusing faith and trust?

“Are we ready to look at the way a business landscape predicated on interest-based loans leads companies to make decisions based on debt structure rather than supply and demand?”

This seems like an axiomatically true, though misleading, statement. Debt structure strongly influences the cost of supplying a good and the demand for the good. So by considering supply and demand, a company is also, not rather, considering debt structure.

Supply: A machine will let me make a widget faster and therefore reduce my costs by $100 annually. If servicing the loan for the machine is going to cost $50 dollars annually, I will take out the loan, costs will drop and my supply curve will shift. If servicing the loan costs $150, I will not buy the machine, and my supply curve will not shift.

Demand: If I have $100, I can either buy the widget for $100 from which I can expect to derive $10 worth of utility/enjoyment annually, or I can buy a gadget for $100 from which I can expect to derive $20 worth of utility/enjoyment annually. I will buy the gadget, not the widget. But wait, if I can borrow $100 and service the debt at $5 annually, then I’ll also buy the widget, because I have a net gain of $5 dollars annually. My demand curve has shifted!

“And are we ready to consider – just consider, mind you – whether this bias is intrinsic to commerce or the legacy of reforms by people who have long since left the building?”

Yes, I am. But I don’t know that I understand (1) how you think it can be done and (2) why this would be advantageous. The only way I can see would be to eliminate interest. The problem is, even if you declare by law that no one may charge interest, you can’t declare that there is no time value of money any more than you can declare that that pi is equal to three – so, I guess you can declare it, it just won’t make it so. So if money becomes worth less in the future, people won’t lend it to each other unless they get more back in the future. Thus the only way we can get people to lend money is to allow interest, thus we get back to the statement above.

So are you saying you want to get rid of interest and therefore lending? I don’t see the advantages of either of those (in fact I see major disadvantages). Please explicate further?

You come off completely unbiased and give a detailed and very balanced look into modern economic problems. (Sarcasm)

But seriously, thank you most posters for not just going along with the crazy just cause he’s disappointingly BoingBoing approved.

Dictators inducing hyper-inflation is a familiar story.

But don’t forget Malthus.

Something I read a year or so ago. There were several researchers considering alternate pathogens.

This article isn’t the one that I read, but it gives an overview of the basic ideas in play.

That argument, as others have pointed out, is nonsense.

The Black Death — almost certainly caused by the bacterium Yersinia pestis — showed up in the Crimea in 1347, probably via caravan routes from Central Asia (and probably originating in a series of devastating outbreaks in 1330s China), and then spread from there via trade routes throughout the Mediterranean. Extreme mortality occured all over the place: death rates in places like Egypt and Syria were as high as those in Southern and Western Europe. So an argument based on Western European economics (“Philip centralized the coinage in France!”) simply doesn’t work.

(A similar devastating epidemic — also most likely caused by Y. pestis — struck the Mediterranean and Europe in the mid-500s, during the reign of Justinian. This was one of the high points of the Byzantine Empire, when it had the wealth to reconquer much of what had been lost in the West — hardly a case of “corporations and economic downturn lead to plague.”)

For the first, I can suggest Islamic banking, which features no interest – but still lends.

http://en.wikipedia.org/wiki/Islamic_banking

Ask yourself the next time you go to the doctor– does the guy really have a secret joy in poking fingers in orifices which makes him do that rather than farm, or is the main difference the amount of dough that gets slung his way? This applies to many other professions, for that matter– money serves to get people to do things they wouldn’t be intrinsically motivated to do. Who would be a garbageman?

I also like grand sweeping statements without any real analysis or facts to back them up.

Perhaps you should provide some.

I think the “it’s just fact” is a poor rhetorical device covering up a great deal of either dishonesty or sloppy thought.

It’s weak. When your assured it just a fact check that fact first.

It’s very scary and makes you wonder just what is going on behind the curtain that the corporatocracy uses to sheild things from the public

Killed around half of the population of Europe you say? Hmm. Sounds sort of like the Black Death, except that was due to by rat-born flees, not a weak economy.

Care to explain how an economic downturn caused the Black Death?

So you cast “chartered” monopoly as the villain but not natural monopoly or laissez-faire competition. Interesting choice. I wonder if you could mention one or two chartered monopolies in the last two centuries that have had any major impact at all. Also, how do you square this with item #3? Are you seriously saying that monopoly is still “embedded in our culture,” or that we have not or cannot question it, chartered or otherwise? What about Sherman, Teddy Roosevelt, Howard Taft etc.?

2. The invention (or, more exactly, re-introduction) of centralized currency (post-Floren) by France and other European nations, which impoverished the middle class.

As others have pointed out, anyone issuing a currency has the potential to debase it; centralized or not. Just because some king outlawed foreign currency 500 years ago doesn’t mean that’s the case today. The dollar is not a monopoly currency; it’s legal tender. In the US, if you and I agree we can transact business in Euros, gold, Ithaca Hours, coffee beans, gift cards, or any other form of barter. However, we cannot refuse to accept dollars as a legitimate offer of payment.

3. The way those institutions were so thoroughly embedded in our culture that to question them – even in conversations among ostensibly open-minded people – is to invite ridicule.

There is an interesting change of tense here. Did you use “were embedded” because “are embedded” is indefensible? I’ve tried to give your posts here a charitable reading, but you haven’t offered a shred of evidence of any causal link between your historical examples of monetary malfeasance and the modern era.

If you are certain that the world’s centralized currencies are being debased then short them and grow rich. Buy commodities. If there’s a currency you do trust, put your savings in that country. Hedge your currency risk by spreading your savings over multiple currencies if you wish. Doesn’t the fact that you’re free to do all of this undercut your position?

http://www.usatoday.com/money/economy/2009-04-05-scrip_N.htm

actually, it was rat-borne fleas, not “rat-born flees” that spread the Bubonic Plague.

In defence of Mr. Rushkoff, he is probably referring to the fact that undernourished people (read poor) are more susceptible to diseases than healthy folk.

You’re right that feudalism was a big deal, but it was actually beginning to break down by then. Peasants did subsistence farming, on land they did not own. (Which turned out to be a better deal than what came next.) But merchants and others began forming towns and cities whose commerce was largely beyond the control of feudal lords. So was trade *between* feudal territories, which was crucial. The aristocracy was landlocked in the feudal system. Merchants were not. Neither were the early family companies doing trips to new territories.

It takes longer than a blog post to say all this – and the best reference are the works of Braudel.

As for earlier examples of central currencies, yes yes. They’ve been used by dictatorships attempting to take control of new colonies. The best two examples are Egypt (the story is actually central the Joseph fable in the Bible, and why my first book on this subject, Exit Strategy, was a retelling of Joseph on Wall Street) and Rome.

Egypt had local grain-based currencies that were eventually replaced by centralized currency as the Empire expanded and needed a tool for extraction of resources. Same with the territories overtaken by Rome.

And we know how both of those empires ended up. There’s only so much you can extract before you either kill the society or it rises up against you.

But please, you have to understand, the things I’m writing here are not as supported as they’d be in a whole book – which I hope to wikify as soon as it’s out, as well, for people to contest and/or support with additional documentation.

Suppressing folk remedies makes a certain amount of sense today, but in medieval Europe it was a disaster. The folk remedies weren’t arrived at scientifically, but they were the result of a thousand years of trial and error, and MUCH better than the “medical doctors” of the time, who invented grotesque treatments based on weird theories about bodily humours.

Christianity is a religion that makes being poor seem acceptable, because “you’ll get your reward in heaven.” In other words, you’ll get pie in the sky when you die (that’s a lie).

Sigh.

Smell of a faith based economic system. It works if everyone believes. Oh no, it failed! Time to believe something new! Even the failure becomes dogma, very fast. Sitting in a cafe, listening to one economics student explain to another the correct interpretation of the “crisis”, complete with correct value judgements on all the players.

Any improvement should be tested in the small before scaling it up. That far I agree with. But what I’m hearing so far from Rushkoff is simply recreating in the small what caused a mess in the large. You think your banks made a hash of things? Just wait till amateurs start printing play money! On the positive side: relatively few people will be hurt, and it may even be possible to learn something.

There is some fundamental story about risk and capital that’s missing here. This shouldn’t be hard. There should be a set of principles or something that yield a safe strategy. It should be obvious and intuitive, both how to set up a little economy for your mates, and how to judge the health of larger economies.

So thanks to the banks being more stingy with their credit, I’m not able to purchase items I normally would. So thanks, banks, for propping up the market for generic toilet paper and bulk dried foods!

Even if you’re right, that line right there sets off my bullshit detector.

> Look at pretty much any local band you like. They make very little money from live performances at pubs and the likes. They probably earn most of what money they do make from selling cds.

You have a couple of good points but this is untrue. Studio cost, mixing, mastering, distribution, all that costs a lot of money. So much money that most bands just sign a deal – if they can get one – and let the record co. take care of it. They get an advance, then have to pay it off by selling CDs. So no, they don’t make a lot of money on the CDs at all, except if they would sell so many that they could repay the record company… But that won’t happen unless you’re Radiohead. Or Madonna.

Shows on the other hand, those cost practically nothing. The gas to drive up there. The band already has all the gear, so they just need to show up and do their thing. It gets costly when you get bigger, for example U2 would have to pay security, build a stage, etc. Local bands just play their songs and that’s it. Some venues even let them share in the booze income and they get a share of the door price. They also get income from merchandise.

If you want to support a band, go to their show and buy the t-shirt. Forget about the CD.

I am curious, however. Can I ask that before you conclude your guest post duties you make a post outlining the main culprit (or top three) of your thesis as you see it? Is it fractional reserve banking? Is it lending at interest? The concept of money itself? You’ve told us who started it, but what exactly is the “it” they started?

I was instead speaking about small bands that have not signed up with a major label. Quite a few local bands simply produce their own CDs, or go with one of the alternative labels that have much different business models from the big labels. The cost of semi-pro recording studios have come way down, to the point where an artist can build a serviceable studio for a couple grand. At that level of capitalization, CDs can be quite profitable.

“The economic downturn in Europe led to a plague.”

I have known dozens and dozens of musicians over a decade (and I myself am one) all the way from making homemade CDrs to being signed on a label and performing on Conan O’Brien and the only thing they all share is that no one no matter what level they are at makes any money from CDs. This is nothing new and has been going on for at least as long as the record industry has been selling LPs.

For the independent artists CDs are barely profitable at all and if you are lucky you will come out breaking even.

I don’t think we actually disagree. Yes, I pretty much agree with much of what you say but nothing you’ve said goes to explain your position. Initially you disagreed with Rushkoff’s:

“Labor might make money, but money doesn’t make labor.”

This seems patently obvious to me. Money is just stored wealth and only labor can create wealth. A piece of paper or hunk of metal has no intrinsic value. Capitalism creates surplus wealth (via mechanized efficiency) which can then be used to fund things like your doctor. Agrarian societies cannot afford their sons sitting in a room reading books until they are in their mid twenties. It takes them a long time to build up the surplus value they need to send a favored son off to college.

@ #22 posted by Daemon
“Care to explain how an economic downturn caused the Black Death?”

I don’t know about the Black Death so much but take a look at the Irish potato famine. Was that caused by the potato blight? It was the proximate cause yes but work your way back in the causal chain. The reason the the blight caught hold was because there was a vast monoculture of potato plants for the disease to spread through. The reason everyone was farming potatoes is because it was the only crop that allowed them to feed themselves off their tiny plots of land. The reason they were on those tiny plots was because their absentee landlords, who owned that land, forced them onto smaller and smaller plots in order to extract every last bit of money from them and so that the rest of the land could be used for English beef cattle.

So basically people were herded into a smaller and smaller area until an opportunistic disease like potato blight, or the plague virus, came along and killed millions.

“All of this has happened before and all of this will happen again.”