Welcome to moneytruth.org, a website where you can discover a little something about money. And if you like it, maybe you can help others discover that little something too.
Money is fascinating and, clearly, very important stuff, but did you know... money has a secret. Despite the significance of money in all our lives, very few of us are taught the most important things about it, like what money really is and where it really comes from. And the right to know these things is not properly recognized in human rights law.
The result has been a worldwide failure to understand and to use money properly. Instead of being a tool for justice, inclusion and human rights/betterment, money is more likely to be a source of injustice, exclusion and conflict.
So this is a campaign to fix that. We believe that basic monetary literacy is enough to change the economic world for the benefit of all.
So, what is money? And where does it come from?
To answer this, let's start by saying what money is not.
Although people often think of money the way they think of gold or silver, it's easy to see that money is really not made from any precious materials. Yes, coins are often made to look like gold and silver, but that's really only for effect. In reality, not only is money not made of precious materials, most money isn't made of any materials; most money doesn't exist in physical form at all.
Most money exists as nothing more than numbers in people's bank accounts. And they are just numbers; there are no corresponding piles of notes or coins (or gold or silver) being kept in vaults. So, if money is really just numbers, then what are those numbers? What are they measuring and where do they come from?
The numbers of money are measuring a legal 'title' or 'claim'. Someone who has money has a measured claim within society and society itself, or some part therein, has a corresponding debt to that person. It may be hard to grasp at first, but money is relational, there are two sides to money: on one side claims, on the other side debts.
Another way to say that is money is debt. Like any debt, it has two sides: someone who owes and someone who is owed. Money really exists as just a record of a debt; it comes into being when someone goes into debt and remains in existence only for as long as the debt remains outstanding.
Some of you may know that money is 'creditary', or 'promissory' or like an IOU. And that's exactly right: these are legal relationships with a debt on one side and a claim on the other. They all come into being when somebody goes into debt and they last only for as long as the debt remains outstanding.
These are the simple, two-sided relations that are expressed through money. This is a reciprocal system in which money exists only to occupy the space between giving and receiving. Money comes into being when somebody (including a government) goes into debt and will cease to exist again when the debt is repaid.
I'll explain these things in more detail, but the point I'm making is that banks are really not 'lending' and we and our governments are really not 'borrowing' other people's money when we go into debt. It should be clear that money, debt and banking are very different to their common portrayal. And that gives us an opportunity to think again about how the economic world around us should work.
Let's say you're selling your house and I want to buy. In our world today, almost nobody could have a home if it weren't for the facility of debt, so debt is very important to us and many, many people every day use debt to buy a home; they take out a mortgage. So where does that money come from? Where would the money come from if I needed a mortgage to buy your house?
The money would come into being, simply as transferrable numbers in my bank account, when I need it, when I sign a mortgage agreement and go into debt.
And when that new money is transferred to you, you will be the holder of x dollars of new claims within society (which you can redeem at your convenience). I will be the holder of the exact same amount of new debt. (But I will also now have the house.)
These numbers (→) come into being during the process and they are money. The idea that money should somehow be different to that, that someone should have to root around to find some already-existing money to 'lend' to me is, by comparison, highly impractical. And it has far graver consequences too. Not only would it be restrictive and expensive, resulting in far fewer people getting access to money and at very high prices, it would set up the some of the most unjust and corrosive hierarchical relations that can exist within society.
In practice, major financial operations like banking could never operate on the basis of actual lending and borrowing. Money will inevitably resolve to its most efficient form, which is simply numbers and bookkeeping i.e. nothing more than recording who owes and who is owed.
For that reason, what we call 'credit' (debt) currencies are just a simple practical reality for every society. But they are also very much more than that. Through credit currencies, through the 'creditary', debt nature of money, we all share a common platform upon which our debts and our exchanges are facilitated, not by 'borrowing', but by simply recording numbers on paper or on a computer screen.
And that means most of our debts should be interest free.
Money really is a far more democratic technology than we're conventionally led to believe. Money really should be at the foundation of all people's real economic rights. Every person, as well as every government, should have a democratic relationship to money and access to money on democratic terms, free of unnecessary lender-borrower relations and free of interest. Human rights demands it!
Covered in these slides are what I would call basic monetary literacy. I hope you now have a better idea of 1. What money really is. 2. Where it really comes from. And 3. How money can work differently in the future. There's more to read which explores this theme in greater detail and you can get in touch with us on our Facebook page if you have any questions.
Our goal is to get this basic economic literacy into schools and into human rights law where it rightly belongs. So if you think you can help, please do get in touch.
The very nature of money and banking, as it extends throughout the world, is that of a giant credit system.
Money is not stuff, money is relational. Rather than being hewn from guts of the Earth, money is socially constructed and is given its life in society and law.
Money is debt, it is a commonly tradeable, anonymous record of outstanding debt. We can also call it 'creditary' (the word 'credit' means debt here) or 'promissory', as in 'promise to pay', or even think of it as an IOU. All these words reference the same thing: the debt-based (and therefore temporary) nature of money.
Being debt, money comes into being when we need it, when we go into debt - most commonly as a simple numerical record of that debt. Conversely, when we recover money and repay our debts, the process is reversed and money ceases to be again.
What we have, then, is a common credit platform upon which money exists only to occupy the space between giving and receiving. Banks are not 'lending' and neither you nor I are actually 'borrowing' anyone else's money when we go into debt. Our debts should therefore be largely interest free.
Governments' debts work very much the same way. In the process of deficit (debt) spending, the government's bank (a central bank) creates and destroys money in just the same way our highstreet banks do for us. Domestically, it should be clear that government created money is not only not 'borrowed' money, it is a 'debt we owe ourselves' and therefore hard to regard as a debt at all. Internationally, the creditary nature of money and banking means that, just like us, nations also share a platform upon which debt is facilitated by record keeping, not by 'lending' or 'borrowing' anyone else's money.
Rather than standing on the upper side of a hierarchical lender-borrower relationship, banks are really credit agents; their role is to record into being and then facilitate the circulation and eventual settlement of our debts. Banks really stand shoulder to shoulder with debtors, next in line in the responsibility to honor those debts - that is, to pay money out of existence again. In other words, banking should be a largely horizontal, not hierarchical, affair.
Money, debt and banking are very different from their common portrayal. Seen in a clear light, they lose their imposing character and can be identified as remarkable tools for universal economic participation and for universal economic rights.
We'll go into more detail and find many more fascinating things to say about money. You can read about mortgage debt and sovereign debt in the Understanding Money section and you can read Bite-Size pieces on important bits of money theory - including this little take on the basics of capitalist economics.
Over to us
The economic world is a brutally harsh master for so many people. It's a perpetual mess in which most of us have very few rights and very little opportunity to serve the few the economy really does seem to work for. It could be argued that our economies are just as much systems of exclusion and abuse as they ever were. And we know that money is at the core of that problem.
Economies can work very differently. Money can work for everyone and provide us all with a foundation in real rights. Our economies can work much more from the bottom up, rather than the top down and they should be, to a very large extent, intereset free.
All that's required to achieve it is to fight for basic monetary literacy. So please help us do that. Please share our website and support our campaign for:
The teaching of basic monetary literacy in schools.
The recognition and protection of the right to basic monetary literacy in human rights law.
The request to reassess household and public debts the world over.
You may also be interested in our sister campaign Action on Education; a fight for children's wider educational rights in schools.