Tuesday, May 17, 2016

Economic Delusion: What is Money? (video)

Ven. Ajahn Punnadhammo (Buddhist Publication Society Newsletter No. 61, BPS.lk, 2009); edited by Ashley Wells, Sheldon S., Dhr. Seven (eds.), Wisdom Quarterly; Thoughty2: Paagle TV

Thai Theravada monks (HuwPenson/flickr)
The whole world is currently suffering a major economic crisis, which has a good chance of being as severe as the Great Depression of the 1930s.

Can Buddhist teachings help us understand what is happening?
It can. Capitalism is like that. The financial markets reflect the cumulative result of millions of individual decisions. Regarding decisions, the Buddha said that it is wise that they not be made on the basis of
  • greed (craving)
  • anger or fear (aversion)
  • delusion (ignorance).
It is obvious how greed and anger/fear (aversion) have poisoned the well. So I would like to focus on something a little deeper, namely, how delusion has worked to create the present financial collapse.
This paper bill used to be as valuable as gold.
Specifically, the whole scenario demonstrates the amazing power of mental formations (sankharas) in human history. Money is an abstraction.
At some point in the distant past people agreed to believe that one is shiny rock was worth those two cows, even though the real, utilitarian value of a cow is considerably more than the real value of a symbolic shiny rock.
Paper money is an even higher level of abstraction. This piece of paper with this number and the queen’s face, or a spooky eye-in-a-pyramid design or whatever it might be, is said to represent so many shiny rocks, which are worth so many cows.

Having gone off the gold standard, our currency is now “fiat money,” meaning that the value is established purely by government whim or fiat.
  • The gold standard is a system that depends on a fixed amount of gold. Each paper unit is redeemable for gold at any time. Fiat money means nothing is backing it except the promise of a government that it has value. This is a lot less stable but a lot cheaper, so now nearly all countries use the fiat or "because I say so" method of printing money. U.S. Pres. Nixon took the U.S. off the gold standard in 1971.
This is not fully accurate. A dollar bill doesn’t have value because the government or central bank says so; it has value because the people believe it does. Ours is a faith-based currency.
It is not surprising that paper money was first used in China, a civilization deeply affected by Buddhism and Taoism, and used to philosophical subtlety (sophistry).
Consider what is happening here: Material goods and hours of labor are freely traded for an agreed convention. Something on the material plane of reality is being surrendered for something on the purely abstract plane of mental formations, which is void and without substance.

Maybe that eye-in-the-pyramid on the dollar bill is telling us something.
Fast forward to the dawn of modern capitalism in post-reformation Europe. The “real” economy of goods and services was becoming complicated, involving more and more kinds of goods, some of which were being shipped all around the planet.

What is “money” really? It is debt, but few know that. This is essential viewing on money and our banking system, a fast-paced and highly entertaining animated feature by Paul Grignon. It explains the world's money system. How is money created? "When banks [private corporations] extend loans to their customers, they CREATE money by crediting their customers' accounts," explains Sir Mervyn King in a speech to the South Wales Chamber of Commerce at The Millennium Centre, Cardiff, October 23, 2012. Need more evidence? The Bank of England explains in a "Brief History of Banknotes." "Britain finally left the gold standard in 1931, and the note issue became entirely fiduciary, that is, wholly backed by securities instead of gold." Question is, WHAT securities?
To facilitate all these transactions on the plane of material reality, various new kinds of mental abstractions were invented, usually represented by fancy bits of paper.
Promissory notes, insurance plans, bonds, and company stocks all came into being, each representing a contract between parties to fulfill certain obligations.

How a non-profit in India is fighting corruption [bribes] with fake money (pri.org)
Stock certificates, bonds, notes, and bills were often printed with all kinds of elaborate borders, seals, watermarks, and decorations.

This served a utilitarian purpose, making forgery difficult, but it had a more important symbolic function: Much like ritual in religion, it worked to awe observers. Something special is happening here. It wasn’t long before these pieces of paper were trading for more than their book-value. More

    No comments: