The death of money and the alternative economy

2024 Author: Seth Attwood | [email protected]. Last modified: 2023-12-16 15:55

Why are the Central Banks of the West flooding the world economy with money? Why are the products of printing presses losing signs of money more and more? What is the alternative to the modern parasitic economy? Answers of Professor Valentin Katasonov.

The central banks of the leading Western countries are flooding the world economy with money. This is manifested primarily in the fact that the US Federal Reserve, the Bank of England, the European Central Bank (ECB) and other central banks after the financial crisis of 2007-2009. launched the implementation of the so-called quantitative easing (QE) programs. They began to buy up debt securities (including those of low quality), injecting hundreds of billions of dollars, euros, pounds sterling and other currencies into circulation channels every year. At the same time, central banks began to pursue a policy of consistently lowering interest rates on passive and active operations. As a result, the rates on deposits of the central banks of Sweden, Denmark, Switzerland, Japan, as well as the ECB went into negative territory. Not only has there been a lot of money, it has become almost free.

The paradox is that such a monetary expansion of the leading central banks of the West did not lead to the development of the real economy, but began to drive it into a dead end. There are several reasons for this. Firstly, an increasing part of the output of monetary printing presses goes to financial markets, where the excitement of speculative games flares up. Money does not enter the real sector, they do not expect high and quick profits. Secondly, the production of printing presses is losing more and more features of money. Today, with the help of money, it is no longer possible to measure either the value or the price of goods and services. A striking example is oil prices, which can change several times during the year. The point is that oil prices began to be measured using such an instrument that we call money only by inertia. In fact, it is a banal tool for speculation, manipulation and redistribution of wealth in favor of the owners of money - those who control printing presses. It is no exaggeration to say that today we are witnessing the death of money.

Those who are engaged in production in the real sector of the economy feel it all on their own skin. Companies in the field of industrial production, agriculture, construction, transport cannot make long-term investments, conclude long-term contracts, or engage in promising research and development. They can't even trade normally. There is not enough circulating capital (all the money went to financial platforms where speculators frolic), and even if there are any, there are various risks associated with sharp fluctuations in exchange rates, inflationary depreciation of money, ups and downs in commodity markets. Modern commodity producers find themselves in the position in which our ancestors were many thousands of years ago, when there was still no such universal medium of exchange as money.

Naturally, commodity producers are trying to adapt to the era of the death of money. New economic relations are being built. These new relations are called differently: alternative, non-traditional, money-free, commodity exchange, barter … The whole set of alternative economic relations can be summarized in three main groups:

- purely commodity exchange, which does not provide for the use of money in any form;

- partially commodity exchange, which are designed to minimize the use of official money;

- commodity exchange, based on the use of alternative money, that is, money that does not have an official status).

Alternative forms of economic relations can have several levels:

- local (exchanges within one city, region, settlement);

- national (exchanges within one country);

- international (exchanges between entities belonging to different national jurisdictions).

The development of alternative economic relations meets with quite active resistance from the owners of money. This is not surprising, since any alternative economic relations undermine the monopoly of central banks on the issue of cash and the monopoly of private banks on the issue of non-cash (deposit) money. Under various pretexts, central banks and governments of different countries are waging an irreconcilable struggle against this kind of "creativity" of economic entities. This, incidentally, explains the fact that a considerable part of alternative economic relations are in the “shadow” sector of the economy.

1. Purely commodity exchange operations. The classic form of such transactions is barter. In addition to classical barter, “multi-commodity” barter is becoming increasingly popular - schemes in which tens, hundreds and thousands of economic entities can participate.

2. Partially barter operations. They are designed to minimize the use of official money. As a rule, elements of currency use are present in a wide class of international transactions (“countertrade”). Countertrade involves cash payment for the supply of goods and services from two countries, but the principle of cost balance of supplies is applied. The technique of operations can be very different. For example, the export earnings of suppliers from country A can be accumulated in their bank accounts and then spent on the import of goods from country B. In this case, you can move away from using hard currencies (US dollar, euro, British pound sterling), relying on the national currencies of the participants in the counter trade.

Even if countertrade does not provide for such obligations as the use of export proceeds in a bank account to pay for imports, the principle of balance is still important for the participating countries, since allows them to control the stability of their trade and payment balances, which is important for maintaining the stability of the exchange rate of the national currency.

Some of the more well-known forms of countertrade are: Commercially-based offset transactions; counter-purchases; compensation transactions based on industrial cooperation agreements; redemption of used products; operations with tolling raw materials (tolling), etc. The most complex of the listed forms is compensation transactions based on industrial cooperation agreements. In fact, this is no longer just a commodity exchange operation, but a transaction to exchange investments for goods. As a rule, in this scheme there is also a lender providing loan capital to the investor.

Here it is necessary to say about various clearing - mechanisms allowing to take into account mutual monetary claims and obligations of participants in economic relations. Most often, the functions of the clearing center are performed by the bank. The clearing scheme provides for the periodic fixing of the balance of monetary claims and obligations. The balance can be covered (repaid) in a predetermined currency (clearing currency). It is possible to lend to a clearing member who has a negative balance. It is also possible to repay the negative balance with the help of commodity deliveries. After World War II, when there was a foreign exchange famine in the world, bilateral and multilateral currency clearing played an important role in the development of international trade. In the 70s of the last century, when the Bretton Woods monetary system was dismantled, the "golden brake" was removed from the printing press of the US Federal Reserve (the gold reserve covering the emission of US dollars was canceled). Since that time, the targeted destruction of currency clearing agreements began, since they reduced the demand for the products of the US Federal Reserve at times. Today, interest in currency clearing as an alternative to Washington's dollar diktat is on the rise again.

3. Commodity exchange operations based on alternative money. One of the ways to survive in the modern world, where all participants in economic relations are actively imposed on the US dollar, which is misunderstood as money, is to create alternative money. That is, such money that could actually perform its economic functions (first of all, measures of value and means of exchange). In different countries of the world, at the level of individual cities and regions, a large amount of local money appears. Of course, such local money does not completely crowd out official money, but in some cases the local population's need for official money can be reduced by two or more times. Local money, in the form of paper signs or records in a computer, intensifies the exchange of products of labor produced within the region. Among the wide variety of alternative money, barter money is especially worth highlighting.

Many experts admit that in the context of growing instability in the world, the topic of alternative (non-traditional) methods of trade and settlements is becoming more and more relevant.