Fiat or Not

Single acts of tyranny may be ascribed to the opinion of a day, but a series of oppressions, begun at a distinguished period, unalterable through every change of ministers, too plainly prove a deliberate, systematical plan of reducing us to slavery. – Thomas Jefferson

In the discussion of usury when one mentions that interest-free money can be issued, made of paper without any backing in gold, silver or whatever else, a common reaction is: "That's fiat money: worthless." What people who hold this view lose sight of is the fact that the dollars, pounds, lakshmis, yuan in their pocket are likewise fiat money. But instead of being issued rent free by their national treasury at the cost of production, they are issued by private banks at interest.

Why do I mention rent and interest in connection with money in the same breath as if they were synonymous? Because according to the most common definition: "interest is seen as rent paid for the use of money." Money, fiat money at that, is shown for what it is: a tool of exchange. It makes the exchange of goods possible. Rather like a road it facilitates the movement of goods from A to B. Interest is then equivalent to road pricing, a charge for the use of a length of asphalt or dirt. If a government builds the road its use is paid for once through taxes. If a private company does you pay rent never ending. This is interest.

To illustrate the problem with interest we have to take a look at private monopoly of utilities. Aristotle wrote about this in his Economics.

There is the anecdote of Thales the Milesian and his financial device, which involves a principle of universal application, but is attributed to him on account of his reputation for wisdom. He was reproached for his poverty, which was supposed to show that philosophy was of no use. According to the story, he knew by his skill in the stars while it was yet winter that there would be a great harvest of olives in the coming year; so, having a little money, he gave deposits for the use of all the olive-presses in Chios and Miletus, which he hired at a low price because no one bid against him. When the harvest-time came, and many were wanted all at once and of a sudden, he let them out at any rate which he pleased, and made a quantity of money. Thus he showed the world that philosophers can easily be rich if they like, but that their ambition is of another sort. He is supposed to have given a striking proof of his wisdom, but, as I was saying, his device for getting wealth is of universal application, and is nothing but the creation of a monopoly.

Now, imagine (or even better, realize) that a private company not subject to audits with shareholders whose names are secret have a monopoly on the only form of money in circulation. This private company (The Federal Reserve, The Bank of England, The European Bank, etc.) charges you for the creation of that money by purchasing bonds at interest. So the amount issued or created, the principle, is a debt owed to the bank by the government: that's you. This debt generates interest. Now that debt based money is then put into circulation, and when you borrow that money from the bank they also charge interest.

Now if a private bank can issue fiat money and charge you for its use, why can't your government do the same free of charge? Why have we given private corporations this much power over our lives?

[image: David Hockney]