Thomas Greco's Alternatives to Our Broken Economic System
An alternative economy. Why not?
Our current credit-based currency—which is to say, a system of creating money out of thin air and lending it out at compound interest—assumes unlimited growth. This is the very definition of unsustainable. The assumption that there will always be more not only insures a greater pillaging of resources, but attempts to violate an immutable law of physics: the Second Law of Thermodynamics. Entropy. Energy and resources can only move from a usable to an unusable state, and never the other way around. Hence, the financial bubble.
Can the global superpowers learn from the economic mistakes of the past? They’ll have to if they want to stave off total collapse.
In this interview with Joanne Zuhl of Streetroots, author Thomas Greco (a href=”https://www.chelseagreen.com/bookstore/item/the_end_of_money_and_the_future_of_civilization:paperback”>The End of Money and the Future of Civilization) offers alternatives to our broken economic system.
Joanne Zuhl: At what point in your life did you realize that the current monetary system had to be replaced?
Thomas Greco: That goes back 30 years. I was teaching in the college of business in upstate New York, and essentially money and banking was being taught pretty much to accept the system as it is, with the Federal Reserve and the International Monetary Fund and the money creation process, but I really didn’t understand any of that.
It wasn’t until I had left my academic career behind and got involved in the peace and justice movement that I began to see information that was calling into question the dominant paradigm and the structures of banking and money that we had inherited in the past.
I was trying to get to the basic causes of the world’s problems, like starving amidst plenty, the gaps in income and wealth around the world, why some countries were very affluent while other were economic basket cases, and why we had recurrent wars. And in the process of doing my research, I quickly realized that there were a number of causes at different levels. We have the personal values added to beliefs, cultural factors that dispose us in certain direction, but those all result in some fundamental structures: political, economic and social structures, and institutions that channel those ideas and channel human energy.
J.Z.: With the recent economic crisis, is the time ripe for a new understanding of alternative monetary systems?
T.G.: It is a ripe time because we’re starting to feel the pain right here at home. Before, we were able to export the problem to other countries, Third World countries, I called them economic colonies of the Western economies — Europe, the U.S. and Japan. By dominating markets, both the market and the politics, the Banana Republics have been under the thumbs of the United States for well over a century. The U.S. military has been the enforcement arm of the imperial ambitions of American companies, not just American, these are multinational companies with no allegiance to any one country.
J.Z.: It reminds me of “Confessions of an Economic Hit Man.” The author’s name escapes me, but it was very simply laid out how the banks and the military operated in vulnerable countries.
T.G.: John Perkins … he makes it very clear how that works. But before the United States, the empire was headed by Great Britain, and other European powers. Throughout the 18th and 19th centuries, you had many countries dominating other countries as political colonies and later as economic colonies.
We’ve seen a shift from political colonialism to economic colonialism, just as on the micro level we’ve seen a shift from overt slavery to wage slavery, but it sill reflects a shift in balances of power.
J.Z.: You say that your search for social justice led you to conclude that the economic model was the root of the problem. How, then, will a different system correct environmental and social injustice?
T.G.: I quickly came to realize that the fundamental linchpin, the keystone of this structure of power is the money and banking system. Money is the medium of exchange, and whoever controls the allocation of the medium of exchange controls the economy, and whoever controls the economy controls the politics.
The key to understanding all of this is to realize what the substance of money is. It’s just credit. It’s no longer gold or silver. It’s not even any longer bank notes redeemable for gold or silver. What’s behind the money today is a debt obligation. When a bank makes a loan, they create the money in the process of making the loan.
But banks, when they make a loan, they only create the principal and not the interest, the system has a debt imperative, which is a growth imperative. That’s why economists constantly talk about growth. Because we have ever-increasing debt. And this compound-interest formula, it forces growth to accelerate over time.
We’re seeing basically an explosion of the financial system with an explosion of debt. And as debtors try to service what they owe, they have to continually expand their profits, and so we continue to tear up more of our planet, to make more stuff, and we continue to consume more stuff and that’s what’s driving the consumer economy.
Once we realize that money is only credit, then we can take control and allocate it to whomever we want.
Most people don’t start farming to crunch numbers and expenses. Like any business, even small-scale farmers need to consider their income and expenses. In his chapter on economics, Mike Madison breaks down everything he reported on his Form 1040, Schedule F: Profit or Loss from Farming to give readers a good idea of what kind of accounting…Read More
William Wordsworth was right when he said, “Nature never did betray the heart that loved her.” Nevertheless, the cold, dark days of winter can still get the best of even Nature’s most tenderhearted admirer. What’s one to do? We here at Chelsea Green have concocted the perfect cabin fever remedy with our suggested winter reading…Read More
Q: First things first: Why did you want to write this book? A: I studied economics at university 25 years ago because I wanted to make a difference in the world and believed that economics – the mother tongue of public policy – would best equip me to do that. Instead, its theories left me…Read More
A resilient future (or a resilient present, for that matter) needs to be slack, not taut. What do we mean? Core to the concept of a Lean Economy is understanding the need to move toward a “slack” market rather than one that is “taut.” When British economist David Fleming died unexpectedly in 2010, he left…Read More