For the 1% – A Terrain for Compromise
Is there a terrain of compromise that might also be acceptable to the protagonists of the financial system? Anyone enjoying the privilege of a monopoly will tend to fight to retain it. Legitimising non-financial incentive systems will therefore not be an easy path for the financial system, and even harder to accept for some central banks. However, in contrast to the Chicago Plan, what is proposed here keeps the core of the banking system’s business model intact. Interest in a Chicago Plan reincarnated under the name of ‘Modern Money Theory’ (MMT) is now spreading, even at the grassroots level. Just one example: a public conference entitled ‘the MMT Summit’ was held in Rimini, Italy, on 24-26 February 2012. It attracted several thousand participants!
When assessed in terms of its societal consequences, maintaining the monetary status quo and the Official Paradigm seems increasingly irresponsible, perhaps untenably so. European countries have been financially cornered into dismantling social safety nets that took generations to build, and into retracting the promises made to people who contributed throughout their entire working lives to a pension and health care system. Governments will also be obliged to privatise cultural heirlooms that have, in many cases, been public property for centuries or even millennia. Most regrettably, universal austerity will render them totally unable to exert the leadership required for the kinds of investment needed to avoid runaway climate change.
The Fiat Currency Paradigm makes it clear that our money system is an 18th century legacy information system, rendered quite convoluted and sclerotic by 300 hundred years of use and abuse. How will we explain to our children and grandchildren that thanks to the technological means available in a new Information Age, we were able to update all our information systems except our monetary system? Who will take responsibility for telling them that we sacrificed the planetary biosphere in order to keep our monetary system operational for one more decade?
Thomas Friedman’s op-ed piece from the New York Times, previously mentioned in Chapter VI, concludes: “Capitalism and free markets are the best engines for generating growth and relieving poverty – provided they are balanced with meaningful transparency, regulation and oversight. We lost that balance in the last decade. If we don’t get it back – and there is now a tidal wave of money resisting that – we will have another crisis. And, if that happens, the cry for justice could turn ugly. Free advice to the financial services industry: Stick to being bulls. Stop being pigs.”