To understand them and what they’re fighting for, it’s important to understand the system they’re challenging.

Our money system is underpinned by national central banks and treasuries that issue foundational “base” money. This includes the physical cash in our wallets and also reserves, the special forms of digital money that commercial banks hold in their central bank accounts, which are inaccessible to us.

These commercial banks then boost the money supply by issuing a second layer of money on top of the central bank money layer, through a process called credit creation of money (sometimes called “fractional reserve banking”) to create commercial bank money, which we see as bank deposits in our bank accounts.

The details are subtle and complex ― especially at the international level ― but the interaction of these players issuing money and taking it out of circulation makes the money supply expand and contract as if it were breathing. Monetary reform groups target different elements of this. Here are five of them.

1. Government Money Warriors

Stephanie Kelton, professor of public policy and economics at Stony Brook University, is one of the leading lights of modern monetary theory.

We say that the sun rises, but in reality the sun stays fixed and the illusion of sunrise is created by the Earth turning. Modern monetary theory argues that a similar delusion occurs in our thinking about government money ― we often claim that a federal government “raises money” through taxation and then spends it, but actually it is government institutions that originally issue money by spending it into existence and then withdrawing it from circulation by demanding it back in taxation. If the government issues money, then why would it have to raise money by asking for it back?

The idea that a federal government can run out of money like an ordinary household or business is an illusion, argue advocates of modern monetary theory. A government can only run out of money if it either does not issue its own sovereign currency (like the European nations, which have opted for the euro) or if an artificial political limit has been placed on how much money it can issue. In the latter situation, governments must first recall money via tax (and other means) before reissuing it elsewhere.

This is why modern monetary theory advocates are incredulous about conservatives who want to block spending on education and health care by saying we don’t have the money to pay for it. “Governments with monopoly control over their currency can always pay for their policy priorities,” says Pavlina Tcherneva, an economics professor at the Levy Economics Institute at New York’s Bard College.

Under modern monetary theory, if there are unemployed people who want to work and material resources for them to work with, a federal government can issue new money without causing inflation because the increase in money supply will be met with an increase in production. “The goal is to use the public purse to serve the broad public interest without accelerating inflation,” said Stephanie Kelton, professor of public policy and economics at Stony Brook University and former senior adviser to Sen. Bernie Sanders (I-Vt.).

2. Bank Money Reformers

Bank money reformers want to target the powers of commercial banks to create money.

Other reformers target the commercial bank money system. They argue it creates economic instability, over-indebtedness and concentration of power in the hands of banks ― the very banks that led us into the 2008 financial crisis.

Bank money reform groups include the American Monetary Institute, Positive Money, and the International Movement for Monetary Reform.

Commercial banks create new money when they issue loans. The moderate wing of the bank reform movement argues that, because the government grants them this privilege, banks should be subject to greater democratic scrutiny over their lending. The hard-line wing believes bank creation of money should be banned altogether.

The movement to curtail bank money is politically more diverse than modern monetary theory; it’s been supported by certain libertarians, including the late economist Murray Rothbard, neoclassical economists such as Irving Fisher, as well as left-wing proponents, such as the U.K.’s Green Party, which believes bank money-creation leads to environmental crises and corporate domination.

Their prescriptions are not uniform: Positive Money, a research and campaigning organization in Britain, calls for the power to create money to be granted exclusively to a democratic, accountable and transparent public body, creating a “sovereign money” system in which we might all have our own accounts at the central bank. This is distinguished from full-reserve banking, which would require your bank to have the reserves to fully back your account.

3. Cryptocurrency Crusaders

The Bitcoin logo on display at the Consensus 2018 blockchain technology conference in New York City on May 16.

Cryptocurrency crusaders not only reject both national and bank money systems, but also reject the entire concept of credit money (money that is “created from nothing” through law or social agreement), calling for it to be replaced with “commodity money” (money that is “created from something” through production). They have inherited the baton from “goldbugs,” who called for gold to be money.

The movement, which began with Bitcoin, argues that the best money system is one that’s outside of human politics. This comes from a philosophical tradition that says systems should be governed by the boundaries of God, physics or math, rather than laws set by politicians. With gold, for example, these natural boundaries would be geology: how much gold can be found and extracted. In Bitcoin’s case, the boundary comes from the fact that the digital system sets a hard limit on how much digital money can be issued and then forces participants to “mine” it as if it were a commodity.

Because Bitcoin hard-liners believe true money is a limited-supply good that must be extracted through production, they claim that fiat money ― created by banks or countries ― is artificial or deceitful money under the control of corrupt powers. There’s a puritanical edge to these cryptocurrency crusaders, who mistrust human institutions and trust in an abstract ‘godlike’ order of mathematics and markets.

While theories like MMT hinge on collective human political institutions, crypto crusaders see politics as foolish. This distrustful attitude shows: The movement sometimes seems as much at war with itself as with the fiat money system, with bitter in-fights between supporters of different crypto-tokens.

They are, however, the richest of all monetary reformers, with many crypto users having ironically become millionaires in the fiat currency they claim to dislike so much.

4. The Localists

A note worth 10 Brixton pounds, an alternative currency in London, is illustrated with an image of David Bowie.

There’s a whole history of alternative non-government money prior to cryptocurrency. These original alternative currency variants include mutual credit systems, timebanks (where time is used to measure how many credits you earn), local community currencies, such as the U.K.-based Brixton pound, and systems like the Swiss Wir, a currency used between businesses.

The tradition is also skeptical of large-scale government-bank money systems, but rather than calling for them to be replaced by a robotic algorithm, they believe small-scale communities should take control to issue money locally.

Unlike cryptocurrency advocates, they have no problem with money being “created out of nothing.” Rather they have a problem with who gets to do that and at what scale. They believe large-scale systems alienate people and dissolve close-knit communities.

A mutual credit system like Sardex in Sardinia, for example, does not reject the idea of money expanding and contracting, but it brings together an island community to decide on what terms that occurs.

While the other movements are outspoken, local complementary currency enthusiasts are often humble and below-the-radar, working for low pay to build resilient community structures.

“Local currencies change how money is issued,” says Duncan McCann of the New Economics Foundation, “how it circulates and what it can be spent on in order to re-localize economies, encourage environmental behaviour, and promote small businesses.”

The crypto-credit alliance looks to merge older, alternative currency systems with blockchain technology.

5. The Crypto-Credit Alliance: Mutual credit meets blockchain technology

This is the least-known or developed of the movements, but is perhaps the most exciting. Nascent initiatives, such as Trustlines, Holochain, Sikoba, Waba and Defterhane, seek to hybridize older alternative currency systems like mutual credit with the blockchain architectures that underpin cryptocurrencies. They share common ground with both modern monetary theorists, who also see commodity money as regressive, and cryptocurrency advocates, who wish to bypass the government.

Cryptocurrency unleashed a lot of creativity, but much has been wasted on toxic speculation. On the other hand, localist mutual credit movements have powerful ideas but often struggle to get heard or to spread. Crypto-credit innovators are exploring the creative possibilities of merging these two to solve flaws in both.

Originally published in the Huffington Post

The post These 5 Rebel Movements Want To Change How Money Works appeared first on P2P Foundation.

So a traveller is passing through the sleepy US Midwest town. Looking for somewhere to stay in the area he rings the bell at the Hotel A reception and asks to see the rooms. The owner (A) scowls and tells him to have a look around the rooms if he must, it’s all the same to him, and the traveller puts a $20 note on the reception desk as a token of good faith while he views the rooms.

A promptly crosses the road to hairdresser B and settles his $20 account, and B goes next door to Bar C to bring his own account up to date. C in turn slips $20 due to Ms D the local lady of easy virtue, as she leaves for an assignation at Hotel A; she in turn puts the $20 note back on the reception desk to bring her account up to date. At this moment, the traveller returns to the reception not impressed by the rooms, observes Ms D’s transaction which confirms his view of Hotel A, grabs his $20 and leaves for the next town. What lessons can be learned from this little fable?

Promises, Promises

A credit instrument is a promise issued by a promissor in exchange for value received from an acceptor, and it is returnable in exchange for value to be provided by the promissor in the future. If the credit also carried a legal obligation to provide currency/money then it would be a debt instrument; if it carried an obligation to deliver money’s worth of value then it would be a derivative (forward) instrument; and if it carried absolute rights of ownership over future streams of value from the promissor, then it would be an equity instrument.

Credit instruments – which are based purely upon trust between promissor and acceptor – pre-date modern finance capital by millennia –  and remain as the unseen Dark Energy in the global financial market universe, particularly in the developing world.

Credit instruments are visible to this day in the language of finance: the Tax Return was the accounting event at which acceptors of discounted sovereign credits would return these sovereign promises to the Exchequer for cancellation. The phrase Rate of Return describes the rate over time at which credits may be returned to the promissor in exchange for value, thereby enabling a profit from an initial discount to be realised. Perhaps most strikingly, these credits became known as Stock after the half of a split wooden tally stick which was given to the acceptor by the promissor as a transaction record

This simple early undated form of Stock forked into equity instruments (shares of Joint or Common Stock with variable rates of return) and debt instruments (Loan Stock – with fixed rates of return) which constitute conflicting modern absolute/digital  finance capital claims over productive assets in our analogue world..

Credit Clearing

Acceptance of credits requires trust in the promissor, and A, B, C and D knew and trusted each other well enough on an individual basis to accept each other’s promises bilaterally (or Peer to Peer)  to the value of $20. However, the traveller was neither known nor trusted, and so placed a generally acceptable credit instrument (‘currency’) – a $20 note – on the reception desk.

Secondly, A provided not Dollars, but 20 Dollar’s worth of value to D, B to A, C to B and D to C, and the Dollar was used to keep score of exchange/credit transactions.  The $ therefore served in those initial transactions only as a generally understood standard unit of measure for value in the same way that a metre is a standard unit of measure for length and a kilogramme is a standard unit of measure for weight. This is what is meant by the ‘unit of account’ monetary function, and it will be seen that it is independent of any credits or value which may be exchanged by reference to it.

So when the traveller arrived in Alphaville there were open, undated $20 promises or credits as follows: A to B; B to C; C to D and D to A. These promises could have been fulfilled in Dollars or in kind (Dollar’s Worth), so that C could have had his hair cut by B, or A could have had a sexy time with D, but in the example, the circulation of the $20 note enabled a chain of open credits to be settled.

Had  A, B, C and D each been aware of the existence of each other’s credits then a chain settlement A>B>C>D>A could have been generated. In other words a Shared Transaction Repository (STR) could have enabled chain settlement of these credits without the need for currency at all.

Triple Entry Accounting

Conventional double entry accounting enables enterprises individually to keep track of solvency, liquidity and development through recording asset ownership and obligations to and from counter-parties. An STR represents a third – triple – shared entry which removes the need for audit and reconciliation between individual records. It potentially revolutionises commerce through opening up collaboration in cost saving and resource sharing

My own insight into the potential of an STR resulted from a Dot Com and an application – OilClear – I invented in 1998 which addressed the need to automate paper-based oil market transaction confirmations which at that time still used faxes and even telexes. It became rapidly clear that this function of transaction registration – and contractual certainty – is a generic market utility function.

Around this time I met a Seattle accountant, Todd Boyle, who had been working on internet accounting. Todd had identified and documented the phenomenal system-wide economic potential for cost savings available from integrating and sharing transaction and title data through Triple Entry accounting and what he termed Webledgers.

However, the business model problem faced by OilClear was what I came to call the Internet Paradox: if an application is neutral, it’s not liquid, and if it’s liquid, then it’s not neutral.  Despite years of effort I could find no acceptable route to market. The trade capture concept was introduced by exchanges, and survives to this day in the competing forms of ICE’s eConfirm and the CME’s TradeHub where it forms the basis of significant profits from market data income at the expense of the market participants who originate it..

In the years since OilClear I have been researching, prototyping and developing legal protocols and instruments which will enable the utility Internet Paradox to be resolved.

Consensus

I identified two types of consensual trust agreements supporting generation and acceptance of two types of credit instruments: people-based and asset-based. The first type supports promises/credits issued individually or collectively and based upon capacity to provide goods and services, so that a promise issued by one person may be accepted by another. Historically trust for ‘people-based’ credit came to be provided by risk intermediaries/middlemen as a banking function and survives to this day in the form of letters of credit and in credit card systems.

However, the future is visible in the past, in the mutual risk sharing agreements which are still routinely in use in the form of Protection & Indemnity (P & I) Clubs in the shipping world and also in certain types of Islamic risk sharing eg Takaful. The attraction of credit service provision for banks is that administration, risk management service provision for a credit P & I Club (Clearing Union) would require only working capital, since performance risk is mutualised..

In relation to productive assets, production or revenue sharing agreements enable the sharing of value generated from the use over time (utility) of productive assets, particularly land/location; resources (particularly energy); and increasingly, intellectual value (IP). I term the consensual production sharing protocols  for flows of value from productive assets ‘Capital Partnerships’. Such swaps of asset-based value flows have been around a long time, and survive to this day in forms of Islamic finance.

Bearing in mind the universal needs for shelter and for warmth, transport and other forms of energy, credits returnable in payment for the use of land/location use (rental) credits will be locally acceptable in exchange, while energy use credits will be acceptable independently of location. In other words, the funding of land and energy assets using such prepaid land and energy credits give rise to locally and generally acceptable forms of asset-based credits currency which may be used as currency to settle outstanding/open P2P promises.

Fintech

Fintech tokens/objects such as Bitcoin and Ether have a historic parallel in the Memorandum Tally – the second type of split wooden tally stick record which recorded receipt or proof of past value and which supported bearer documents of title such as Title Deeds. In my analysis, Fintech 2.0 requires issuance of promises/credits returnable in payment for future utility, rather than tokens representing past ‘proof of work’. To use the humble Snickers bar as an analogy, a Snickers bar receipt has subjective value in exchange only to those who collect Snickers bars or who believe others will in turn accept the receipt from them in payment. A Snickers bar credit/voucher issued by Snickers, on the other hand, is as subjectively valuable in exchange to the acceptor as the physical Snickers bar for which it may be presented in payment.

It seems to me that to create for every transaction at vast expense of energy a consensus of machines across an entire database/STR is in fact unnecessary and represents wasted resources. An STR requires consensus between people, not machines, using enterprise-specific and market-specific protocols/user agreements. Such agreements govern the issuance, exchange (by reference to a mutually acceptable unit of account), clearing and settlement which may take place either via Ripple-style chains generated A>B>C>D>A of people-based credits; via currency settlement using asset-based credits, or both.

The Promise is the Key

Since my knowledge of Fintech systems and cryptography is limited the following suggested system description for a complementary FinTech 2.0 architecture is necessarily high level and speculative.

Transactions will be agreed using mobile devices either directly (physical presence) or remotely (network presence). Authentication will combine geo-location of the mobile payment device with simple bio-metric data such as voice and/or image recognition.

The Promissor’s device generates a promissory message identifying both promissor and acceptor and transmits it to the acceptor who then responds with an acceptance message. Both devices then transmit the accepted promise securely to an STR to which both subscribe thereby creating a combined timed shared transaction record. This creates a unique multi digit code number analogous to the grain of the wood (nature’s hash)  in split tally stick records.

The outcome is an STR of promises which is fine for a world of people who know and trust each other, and  who do not require privacy, but is inadequate beyond such a utopia. In order to create an acceptable combination of access and privacy, consensual user agreement protocols are necessary between people, rather than between machines, to provide privacy to an agreed standard.

The Community is the Currency

There are essentially three types of Community: those connected by place/location; those connected by a common interest; and those connected by both. Since over two thirds of bank credit money in existence today is based largely upon the capitalised use value of location (through mortgage loans) local rental credits may logically be the basis of FinTech 2.0.

Mutual ‘Clearing Union’ (Credit P & I Club) agreements for P2P credit issuance and clearing may then be integrated with these local credits as user agreements for local STRs. So local credit creation and clearing systems may combine automated ‘chain settlements’ A>B>C>D>A  of open P2P credits, using settlement bots, with settlement using bank and asset-based credits.

Such local STRs enable the aggregate issuance of credits/promises by individuals to be visible to system users and/or managers without compromising privacy in respect of individual relationships and transactions. Individuals would be members of multiple Communities, with Community ID’s linked to a Basic ID.

Fintech 2.0

In my analysis, the conflicts – which arise from absolute property rights – between instruments which are either of absolute infinite duration or absolute finite duration are intractable. Digital Fintech instruments are created as objects which do not connect to an analogue world.

Here in Scotland there are three verdicts in a criminal trial: conventional absolutes of Guilty, Not Guilty but also an indefinite verdict – Not Proven. The indefinite duration of the credit instrument, and its returnability in payment for people-based and asset-based value enables the connection with the real world to be made.

So Fintech 2.0 may comprise two elements: Protocols and Promises, enabling a resilient political economy to be built bottom-up through a form of ‘Open’ Capital complementary to modern proprietary finance capital.

Transition via Fintech 2.0  from commodity transactions to smart service provision on shared platforms/ STRs is being driven by powerful economic rationale:

• Efficiency – colossal savings in service delivery are realised at the retail price.
• Capital Intensity – finance capital used by intermediaries is replaced by intellectual capital deployed in service provision.

A collaborative service economy built around Fintech 2.0 potentially asks a new question of the rational Homo Economicus: “Would you rather have a smaller percentage of something or 100% of nothing?”

Photo by tashalutek

The post Fintech 2.0 appeared first on P2P Foundation.

The first trend is basically ‘Bitcoin and related currencies are going to free us from the stranglehold of the existing financial infrastructure and open the doors to a truly P2P way of doing business with each other’. A good example of this type of article would be ‘Blockchain revolution: open source democracy for the 99%‘ by Nozomi Hayase of opendemocracy.net.

Some excerpts:

“The revolution in this era may not need pitchforks, as the ‘peasants’ can just stop paying for the plutocracy.”

The Bitcoin network empowers those so called the other six billion, the unbanked, underbanked and exploited. In the West, Bitcoin is often seen as an instrument for speculation, yet it can actually be a tool for liberation in the Global South.

Transition into blockchain currencies has the effect of freeing people from monetary control and centralized economic hegemony. The blockchain-based borderless currency is such a game changer that it could foster a free flow of movement away from fiat debt, creating a kind of global jubilee, making personal and national debt embedded in the old fiat system increasingly irrelevant. It also could stop printing of money that is often used simply for building weapons and maintaining constant war. A shift into asset-based currency could help balance the red ink of the growing empathy deficit, transforming society into a global network of abundance.

In contrast, we have the second trend in reporting on cryptocurrencies, which we could call ‘Hang on a moment, Bitcoin is great and all, BUT…’.

A good example of this is the article ‘What happens after the crypto-revolution?‘ by Matthew Slater of cointelegraph.com.

Some quotes:

Bitcoin may disintermediate banks, but that will not change the economy, save the environment or make society fairer. One peaceful way to prevent our governments driving us to collective suicide is to get behind a new generation of P2P credit projects.

Many entrepreneurs and activists are eager for Bitcoin to ‘disrupt’ the banking system, but adoption is sure to be slow while the price is so unstable. There’s no solution to the volatility problem, and lets face it, most of the money which goes into Bitcoin is from people looking to make a profit from volatility – speculators. They do not care how well Bitcoin might function as money.

Bitcoin’s innate purpose is to disintermediate the banks as a global payment system and bring the cost of global payments to near zero. However, adopting Bitcoin as a national or even global legal tender currency would do little to change the balance of power and build a more equitable society.

At this point, the nascent state of cryptocurrencies is really reminding me of the early ‘Wild West’ period of the internet around 1995 – 2000: anything seems possible, and freedom seems just within reach. However I think we need to learn the lessons from that time: elites will remain elites and will use their power to warp reality to their way of thinking. We saw it especially with ‘Don’t Be Evil’ Google spying on us and passing our data to any interested party after we naively entrusted them with all our emails (and much more). By the way if you didn’t, if you were one of the few naysayers who warned against it, then I take my (tinfoil) hat off to you. We have now been warned, and to me, while applauding a great deal of the sentiments expressed in the first article, I tend to favour the more cautionary perspective of the second, and especially its upbeat conclusion:

If money was backed by your reputation, and issued interest free in the quantity that reflected our trust and interdependency, we could expect the economy to display entirely different characteristics:

• 30 year mortgages would become 10 year mortgages
• prices would plummet as interest was subtracted right through the supply chain
• zero unemployment
• two or three days working week
• No inherent ‘need’ for growth
• governments wouldn’t be slaves to banks!

The author goes on to recommend several promising truly P2P credit alternatives (including that favoured by the Cooperative Integral Catalana, with whom the P2P Foundation has recently entered into partnership.

In conclusion, I think we need to embrace the liberating potential of cryptocurrencies and other new P2P monetary systems, meanwhile keeping our eyes open for attempts by the status quo to subvert them to their own ends.

Won’t get fooled again!

The post Cryptocurrencies: Poison or Panacea? appeared first on P2P Foundation.

7. Freedom Isn’t Free

PN: Let’s talk about technology. In terms of administering a shared goods-and-services system, the internet might be a good match. But it also seems that the internet, and machines and technology in general, can stand in place of actual relationships, and can be a stumbling block. How do you negotiate between those ideas?

DR: The word that describes digital for me is discrete. For example, take sounds. With an actual sound, no matter how hard we zoom in, it’s still a real thing. There’s still more fidelity, more information to be found. If I scan or sample it, I’ve now translated that sound in the real world into a number. Something that was an event, in nature, in the world, is now a number. It’s a derivative of reality. That number encapsulates as many metrics and as much information about the sound as I’m capable of including, and I can then make copies of the number and manipulate them. So there’s greater choice in that way. But the only things the number can reproduce about that sound are the things I’ve told it to reproduce.

PN: It only knows what it’s supposed to measure.

DR: The reproduction process also involves a sampling rate, which necessarily leaves stuff out. Even if the sampling rate is so good, so super-mp3, that it’s beyond my conscious hearing, there is still space between the samples. Just like a fluorescent light; there’s space between the flashes.

Now the question is, for all intents and purposes, is it the same, or not? I would argue that formany intents and purposes, it is the same, but for all intents and purposes, it is not. It is a re-creation of a thing, and an approximation, and without even getting spiritual and talking about prana and chi and everything else, there is a difference.

In high school when I needed to do a research project, I would go to the library to find a book. I couldn’t help but see the 20 other books on the shelf nearby, I had to read 20 spines before I found mine. And in reading those 20 spines I would see stuff I wouldn’t have found otherwise, and I might get ideas for my paper randomly — not by predetermined choice. I would see them by virtue of the fact that some librarian who was alive before me made a decision, by virtue of legacies and input and real life messiness. Whereas when I’m in the digital realm and I know the book I want, I type it into Google, and it’s there. And nothing else.

PN: This discrete freedom of choice sounds like a very controlled environment.

DR: Right, what are my range of choices? And who’s giving me that range? People are utterly unaware of that. So when I look at technology I say well great, people have the ability to write online, but they don’t, most of them, have the ability to program. In other words we can enter our text into the little blog box, but we aren’t thinking about the biases built into a daily blog structure, which are towards short, daily thoughts, not introspective . . .

Or look at online communities. I’m going to become friends with another person who owns a 2004 red Mini with a sunroof, like mine, rather than with my neighbor who happens to have a different car; I’m going to look for that perfect affinity. But that’s not a real relationship, that’s my digital relationship, which is discrete! Discrete communities end up groping towards conformity of behavior really quickly.

That’s why it’s a consumer paradise, because it really does celebrate the idea of increasingly granular affinity groups, increasingly granular product choices.

8. The Derivative Life, An (Un)Reality Show

PN: An over-arching theme I found in the book is how the common-sense stuff of our reality, the economy and money and shopping and working, is really science fiction; we don’t live inside a “natural” economic structure — we made it up.

DR: It gets very much like Baudrillard in a way. We lived in a real world where we created value, and understood the value that we created as individuals and groups for one another. Then we systematically disconnected from the real world: from ourselves, from one another, and from the value we create, and reconnected to an artificial landscape of derivative value of working for corporations and false gods and all that. It is in some sense Baudrillard’s three steps of life in the simulacra.

So by now, as Borges would say, we’ve mistaken the map for the territory. We’ve mistaken our jobs for work. We’ve mistaken our bank accounts for savings. We’ve mistaken our 401k investments for our future. We’ve mistaken our property for assets, and our assets for the world. We have these places where we live, then they become property that we own, then they become mortgages that we owe, then they become mortgage-backed loans that our pensions finance, then they become packages of debt, and so on and so on.

We’ve been living in a world where the further up the chain of abstraction you operate, the wealthier you are.

9. The Way Out

PN: So since this is a system we created, can we create something else?

DR: Right, that’s what open-source was supposed to be about. I believe that every realm of human experience and design is ultimately open-source if we choose for it to be. That’s why I got interested in religion and money, because those seemed to be the two areas that people would not accept an open-source premise. Religion — of course it isn’t, those are sacred truths! But I would argue that Judaism was actually intended as an open-source religion. I’ve written a book about that, called Nothing Sacred, which was and still is controversial. Because if the Torah is open for interpretation, if it’s this beautiful, myriad, hypertextual, hyperdimensional document that it is, then the whole thing is up for grabs: what happens to the real estate, the Israeli state?

Money of course is the other big area, it’s still the one thing they won’t let you print.

PN: You’ve seen the dual currency idea from the Middle Ages coming back in certain places?

DR: We’ve seen it coming back for 10 or 20 years now in places like Ithaca, New York, and Portland, Oregon; little places with alternative communities and hippies and weirdos and Grateful Dead parking lots and things like that. They could try local currency because people were weird enough to go for it.

More recently, after the economic downturn in Japan, dual currencies started to take hold in the non-”alternative” community. Everyone had time, but no one had money. Everyone was willing to work, but there were no companies they could work for. And since the only way we know how to work is to outsource our employment to a company, things looked bad.

One of the main needs people had was getting health care to their grandparents and great-grandparents who lived in towns far away. No one could afford home health care for them — people to bathe them, walk them around, give them their shots, their IVs, their bedpans. So if you can’t afford the service what can you do? What they did was set up a non-local complementary currency system where you would volunteer a certain number of hours of work to take care of an old person where you lived. You would acquire credits, and then someone who lived near your grandparents would take care of them for the credits you paid. There was no money involved! The currency was literally worked into existence. Even after the economy improved and people got their health insurance back, old people preferred the health care workers who were coming from the real people rather than the ones that came from the companies.

Now it’s starting to hit places in the US where things are especially bad — Detroit, Lansing, Cleveland — these are towns that have resources in people, land, old factories. They have time, they have energy, but they don’t have money and they don’t have any corporate interest. So what can they do? Make a local currency, start doing things for each other. I’ll fix your car, and you do something for me.

Promoting bank-lent businesses is basically saying that you don’t believe in sustainable business models yet. Any business that started with the bank is not a sustainable business model, because it’s already in the debt/interest track. This is where Obama is still confused. He should say,“Look, I realize the economic crisis is real, there are mortgages and loans and we’re going to work on that. But the more important thing right now is, rather than spending $5 trillion of your great-grandchildren’s money on these bankers that screwed up, let’s see how can we spend a teeny bit of money and reeducate communities about real economic development and sustainability.”

And it’s easy! When I talk to economists, or when I talk to bankers, they all say, “well that doesn’t work, you need a bank to go in and invest in a community for it to happen.”

Actually — you don’t. You don’t need the bank.

Read more recent Douglas Rushkoff:
Think Occupy Wall St. is a phase? You don’t get it.
Occupy Wall Street beta tests a new way of living.
Are Jobs Obsolete?

Read related essays on HiLobrow:
Rushkoff on HiLobrow.
#longreads on HiLobrow.

Additional resources:
Niall Ferguson, The Ascent of Money
Adam Curtis, watch All Watched Over By Machines of Loving Grace on the Internet Archive

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