Zarlenga lost science of money
The Lost Science of Money: The Mythology of Money, the Story of Power by Stephen A. ZarlengaThis is a huge and curious book, according to the author originally published in Switzerland in German. The English version came out 13 years ago.
The point it tries to make is that money is a legal concept and should by law be issued by government as needed, not by banks in a fractional reserve system like we have in the United States.
In our system, the government must go into debt through the issue of bonds by way of the banking system in order to pay for services to the people, needlessly borrowing money in order to then turn around and spend it when it could directly issue the money to the service providers, contractors building roads, for example.
The author correctly points out that money is treated like a commodity, traded in a market that pretends money is no different from soybeans or copper, an investment that yields interest. This has traditionally been called usury, condemned by all the major religions. Money should be only for transactions, a method of easing trade between parties that avoids the impractical bartering that was used before money came into use. Only productive activities should make money, not the holding of money itself.
Unlike gold or soybeans that are produced in certain quantities that cannot be easily increased or decreased, money as we know it is rapidly increased or decreased through the issuance of credit by the banks. In a fractional reserve system like we have, only about 10% of the amount of credit issued by banks is backed with actual money deposited in the banks. The other 90% is only a notation in a bank that gives the debtor the ability to spend with nothing to back it should depositors wish to draw out their deposits. This is an invitation to booms and busts and is the reason for the storied run on the bank. Credit can be created or destroyed instantly because it is 90% thin air.
For this reason, our system invites and produces repeated investment bubbles that make it appear the economy is booming, only to be followed by collapse into recessions or depressions. The answer is to limit the issuance of money so that there can be no sudden increases or decreases and only the amount needed to keep the economy running steadily with a gradual increase should be issued. Ideally, the government could do this and the author gives examples in history of this, such as money issued during the American Revolutionary War and again during the Civil War.
The book is lengthy because the author wants to follow money through history in order to make his case that it can be issued successfully by government. Unless this power is reserved to the government, it will be subverted by private parties that see the opportunity to profit greatly if they can take over the handling of money themselves in order to get a credit system going they can exploit through making the government a debtor.
Another important point is that there is no use basing money on any commodity such as gold or silver. This pretends that there is some fixed amount of material that will keep money stable. The problem is the amount of money needed by an economy is not fixed and to pretend that gold (or any other material) should determine the quantity of currency is to invite deflation (increasing value of money over time) as an economy attempts to expand while the amount of gold is fixed. The effect is to greatly increase the value of gold beyond that based on its practical use, resulting in a destabilizing international trade in gold the causes gyrations in currency value. The fact that the United States had to go off the gold standard leaving huge quantities of gold sitting in vaults far beyond any practical need makes the point that gold in itself is not of great value. It was valuable because we made believe it was so.
The presentation is clunky with a variety of typefaces and too many ALL CAPITAL HEADINGS. Though organized by time, the author digresses frequently and doesnt smoothly return to topic. My impression is that the author alone was the proofreader. Most books of this nature have several people who are familiar with the topic read over the manuscript to get it into the most presentable form. It this sense it is not a professionally done book, which is not to say that the points it makes are not valid and important, but I think the average person would be put off by the length and manner of presentation. This is a shame because the main points are important to get to the public, and could be in a concise book a fifth the length.
I believe the case is made that highly regulated issue of currency by the government directly would be preferable to the system controlled by the banks that we have now, one that has proven itself destructive repeatedly. It is sobering that the author predicts another economic collapse as he writes in 2002 and the very thing happened in 2007. He sees collapse as the best opportunity for change, yet in this latest episode, I did not hear one word about the system he proposes though I avidly followed the economic news throughout the housing bust. I only happened across this book in a link encountered on a blog a few months ago.
Its clear from the bailout through the Federal Reserve (not a government agency) that the banks have an iron grip on our economy. Lobbies run our government and the banks have the Fed, their own private creation, to work for their benefit. Until the lobbies are defeated by publicly financed political campaigns, this book is purely a theoretical treatise. Prisoners in a jail can be well informed about where to go and what to do upon escaping, but without the tools to cut iron bars, they remain in jail.
Book of the Day: The Lost Science of Money
Stephen A. Zarlenga — 25 April was a researcher and author in the field of monetary theory , trader in stock and financial markets , and advocate of monetary reform. He received a BA in psychology at the University of Chicago in He worked in the fields of mutual fund investing, commodity trading , real estate , and insurance. In , he founded the American Monetary Institute , established as a a 1 trust, dedicated to the "independent study of monetary history , theory and reform. Zarlenga argued that, in a world where "the nature of money is a fiat of the law , an invention or creation of mankind,"  even in times of the gold standard , [note 1] the authority to " create money " should be the sole prerogative of a sovereign government.
From: School of Cooperative Individualism Library. At some point in my own internet-based research on the subject I came across the website for his American Monetary Institute. Zarlenga and I differ significantly in our views of what constitutes a just — and sound — monetary system. Or a combination? He argues:. Paper money in hand is more secure. In a crisis this leads to cash runs on banks.
American Monetary Institute, This massive treatise more than pages recounts the history of money from early times, providing an interesting historical overview based on a wide variety of sources. It is a scholarly, well researched, and insightful account of the evolution of money, banking, and finance, in which the author argues that a main arena of human struggle is over the monetary control of societies.. All that is well and good; the story of money IS the story of power, and the author tells it well. It is, indeed unfortunate that few people today realize the important political implications that are inherent in the control over money and banking, or that such control has typically been in the hands of elite private interests. This well researched history goes a long way toward clearing away the fog that has enshrouded that bastion of privilege. The book attempts to do two things, first, to describe the dimensions of the money problem by tracing its roots, not only in economics and finance, but also in ethics, religion, and politics; and second, to prescribe, in broad outline at least, a solution.
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worlds together worlds apart 4th edition citation
by Stephen Zarlenga
While developing these arguments, the author takes us on a whistlestop tour of monetary and banking history with chapters on the decline of Rome, financing the Crusades, usury and the Scholastics, the rise of mercantile power in Europe, the birth of the Bank of England, the story of Colonial money in early America, the birth of the Federal Reserve and much more. Leander Bindewald.
Published by American Monetary Institute Seller Rating:. About this Item: American Monetary Institute, Condition: Very Good. Dust Jacket Condition: Very Good. In Very Good Condition. We can ship from the USA and Canada ontario.