As mentioned before, modern society, both in developed and developing nations, creates money out of thin air at its own discretion. But how does it do that? Who has these exclusive rights?
These questions are of utmost importance.
In today’s developed economies, the significance of the financial system has become enormous. Modern economic efficiency is very high. Using up-to-date equipment and technology, a small portion of the population is able to provide the rest of the nation with all necessary goods. Humanity is not as scared of famine-threatening rainfalls or droughts as before, and it does not lack manufactured products.
Humanity is facing different threats, primarily two problems:
1. On one hand, there is a surplus of goods and services resulting from developed technology and increased labor efficiency, which leads to a situation in which the workers who used to produce them are not wanted by manufacturers or employers.
2. On the other hand, a large portion of the population continues to need these goods and services but cannot afford to buy them because it has neither money nor a way to earn it under such conditions.
Today, it is not limited resources or inefficient technology that prevents people from obtaining the goods to live a quality life. It is poor social organization—and only that!
Under these circumstances, the role of people entitled to issue money—that is, bankers and government officials —has become unprecedentedly important. The Age of Alchemists has emerged, even to a larger extent than could have been dreamed of during the Middle Ages. If alchemists in the Middle Ages had created gold from some other metal, their ability would have only devalued the metal they sought to create. The new alchemists are not facing that challenge since they can create new money—and the economy, filled with goods, seeks this money in exchange for real commodities. Currency wars so much talked about these days are nothing but different states’ competition for the opportunity to give away their goods and services to foreigners in exchange for reserve currencies that actively fill the world financial market. No matter how ironic, this is the reality. The inclination towards economic power incarnated in money has become stronger than the inclination towards ownership of real property.
The key questions of the modern economy are the following: what would the financial system be like if it were ruled by talents and skill rather than by the alchemist’s craft? How should the banking and taxation systems be organized for economic power to be distributed in favor of those who deserve it by providing their entrepreneur initiative, labor and talents which benefits people? In order to answer these questions, we need to take a thorough look at how money is created today.