The Ideology of Money Scarcity

By J.D. ALT

I’ve been continuing to work on the book I first proposed here at NEP last spring—The Millennials’ Money—and am getting close now to having it ready for publication. The aspect of it that was least successful (and there were several NEP comments to that effect) was the framing of the “ideology of money scarcity” as having evolved from the particularities of the baby-boomer’s generational experience. That was always a shaky and not-very-insightful argument—and I recently came to realize it had to be replaced with a “framing” that focused the “target” of the book in a more useful way. This “target” became clear to me while reading a series of collected essays by Wendell Berry (The Art of the Commonplace) in which he very forcefully explains how and why local, self-sufficient economies are being exploited and destroyed by the multi-national corporate economy—and why it is essential for those local economies to somehow be re-established and regain some useful portion of their self-sufficiency. I realized this was, in fact, precisely what my book was suggesting ought to be the ultimate purpose of the “millennials’ money”—and that modern fiat currency, itself, makes achieving that goal uniquely possible. What follows here is part of my revised introduction, which is titled: “The Ideology of Money Scarcity—A Brief History”.

…. Most important, however, all the monetary procedures that had been put in place to protect against the government issuing more dollars than it had in gold—even though they were no longer necessary—were left untouched. These protective “money procedures” (which we’ll outline in Chapter 2) kept everyone thinking and behaving exactly as they had before 1971. That is to say, they behaved as if the quantity of dollars available in the world was a finite and limited “resource” (like gold) for which everyone—including the sovereign government itself—had to compete to have a share of.

We could call this perception and belief the “ideology of money scarcity”—and we could speculate about who, or what interests, have most benefited from maintaining (and even reinforcing) its imposition on our common view of the world.

We might imagine, for example, one group of beneficiaries to be those who, for one reason or another, believe the federal government should be small and unobtrusive in the daily affairs of its citizens. Members of this group might believe as well that local governments should have more power and more to say about things than a big, central bureaucracy that’s out of touch with people’s needs. To keep the sovereign government small and its activism in check, this group only needs to argue that whatever it is the sovereign government wants to do, there isn’t enough money available to do it. The current presidential campaign of Bernie Sanders is a case in point: Mr. Sanders forcefully ticks off his list of collective goods the federal government ought to create, only to be confronted with media pundits who calculate that his federal programs will cost $18 trillion dollars—a number that is approximately $18 trillion dollars more than anyone believes the federal government has to spend, or could reasonably collect in taxes. “Tax and spend”—it’s an argument that shuts down any enthusiasm for national collective accomplishments every time.

I would argue that the primary beneficiary of the ideology of money scarcity, however, is the modern corporation—especially the multi-national corporation which has as its business model the transformation of self-sufficient local economies into the unwitting and dependent consumers of global supply chains from which the corporations greatly profit. The ideology of money scarcity assists this business model in numerous ways. The most powerful assist derives from the perception that the corporate economy itself is the “broker” of the money that’s available to be used in the world. This perception is projected and reinforced by the global stock and financial markets which seem to be the exclusive decision-makers about who gets to spend money, and for what purpose—even to the point of establishing and reinforcing the belief that sovereign governments themselves must borrow their money from the corporate economy’s “financial industry.” Thus the multi-national corporations are positioned perfectly to manipulate and guide the political decisions that support their business model, and their bottom line.    

In his book Shattered Consensus, James Piereson argues that America today is thinking and acting with two diametrically opposed belief systems. On one side, those who call themselves “conservatives” believe that an intrusive sovereign government has not been constrained enough, and that what is needed is a radical new shrinkage of federal spending. To this I would add that the “conservatives” are strongly encouraged, supported and manipulated in this belief by the interests of the corporate economy which specifically want to shrink any efforts by the federal government to restrict or regulate their profit-making enterprise. (As an illustration, I give you the Coca-Cola Company which, it was recently revealed, paid millions of dollars for “scientific research” to debunk the connection between sugary drinks and childhood obesity, thereby discouraging any “health-based” regulation that might impact its profits.)

On the other side, according to Mr. Piereson, those who call themselves “liberals” believe the unfairness, inequities and environmental destructiveness of the corporate economic system—coupled with its inability or refusal to address major societal needs—demands a radical expansion of the government’s role and activism. This stand-off seems a fairly accurate description of our present political landscape, but it fails to observe the singularly important detail which we are now trying to see: Each of these opposing views is firmly grounded in the fundamental ideology of money scarcity. The conservatives wield every opportunity to invoke the mantra that the government is broke and its spending must be reined in, while the liberals (like senator Sanders) find themselves helpless to refute the “logic” that the many things they want the government to spend money on are severely limited by the fact that everyone (including the U.S. government itself) is competing for what appears to be a finite and limited pot of dollars.

           The Millennials’ Money

As I’m about to demonstrate, this view of money is illogical at its core—and profoundly counter-productive for our society as a whole, not to mention millions of specific individuals and families who comprise the vast majority of that “whole.” Furthermore, the only true beneficiaries of maintaining the ideology of money scarcity are the multi-national corporations which are now, as I write, dramatically accelerating their global control of local resources. Local economies are cudgeled and manipulated into first becoming the providers of export commodities—which the corporations buy as cheap as possible—and then beguiled into becoming the eager consumers of imported commodities which the corporations sell as profitably as they can. It’s a “beautiful” business model if your goals are to maximize shareholder profits and executive bonuses. As a business model for humanity—and for humanity as a dependent member of the earth’s community of integrated ecosystems—it is fast becoming, quite simply, an unmitigated disaster.

What I believe (and hope) is that today’s Millennials, being the first cooperatively oriented (civic) generation to come to power in the first true era of modern “fiat money”, will also be the first to grasp the astonishing possibilities this “modern money” perspective makes available to a collective democratic society. Equally important, it’s my hope that those BGXers who legitimately (I believe) bemoan, mistrust, and abhor the bureaucratic behemoth that is our sovereign federal government, will come to see that modern fiat money is not a license to fatten the beast further, but rather a true opportunity to trim it into something lean and effective in assisting the affairs of both collective and individual aspirations.

This is why I believe that modern fiat money truly is, or will become, the “Millennial’s Money”—and, I might add, just in time. What they, as a generation, are inheriting is a growing cloud of collective problems that actually must be solved—and solved by whatever method gets the job done. Most challenging, perhaps, is the fact that these problems are not going to be solved by a corporate economy operating with a business model that, in fact, creates and exacerbates the problems themselves. Rather than obsessing about ideological norms and dogmas (like their parental generations), the Millennials have already begun searching for real, pragmatic, concrete solutions to the unfolding difficulties that they, and the rest of life on planet earth, are facing. Fortunately, as it turns out—and as I now hope to demonstrate—this kind of effort is exactly what modern fiat money is ideally suited to accommodate.

10 responses to “The Ideology of Money Scarcity

  1. Bayard Waterbury

    Thank you so much Mr. Alt for your insightful article which so clearly outlines a pending catastrophe which will make global warming look like small potatoes by comparison. As I have said the globalists, Those members of the super wealthy and the major global corporations seem completely aware of what they are doing. Their goal is to starve as many millions on this planet as possible, and subjugate the rest to their purposes. It is through this doctrine of money scarcity that they can accomplish this goal if they continue to be unchallenged buy those of us who so clearly understand their purposes. This is a truly great tragedy that, if left unchecked, will result in a world dominated by a tiny portion of the global population and subjugated for their purposes. This is a tragedy of truly immense proportions. I can’t wait to read your book and share it with as many of my fellow citizens as possible. Thank you again for your continued work on our behalf.

  2. Frank Wolstencroft

    The elephant in the room being studiously ignored in the US monetary system, whereby all US dollars are created as interest bearing debt is that no debts = no money.

  3. James D'Albora

    Nice analysis, looking forward to the book! Question for you; I’m starting to think that a universal basic income UBI for all Americans would be a good start towards relieving the gross inequity we see. But what is your take on the possibility of rising prices or inflation if something like this were to take place? Like rent for example. If more people had more secure income, would they not be motivated to move out of crummy buildings and into better ones? Once all the “nice” apartments were taken, the prices might start to rise, thus relegating the poor back into less desirable housing. Can we ever escape classism and inequality if we rely on this money system even if we were able to print more of it?

    Thanks for any info on this matter!

    • James, my perspective on MMT isn’t that it makes it possible to “print money”, but that it makes it possible to pay citizens to do useful things—things that improve our collective prosperity, well-being, and the sustainability of our private enterprise at the level of local communities. If you just give people money for doing or creating nothing at all, that clearly creates inflationary pressures. My perception is that the problem with the inequitable distribution of money isn’t simply that the rich have too much and the poor too little—the problem is the rich can’t think of anything useful to do with the vast percentage of money they control (except to gamble with it in the financial markets) whereas the poor can think of all kinds of useful things to do if only they had a little bit of it. So it’s a huge waste of the power of money to cause useful things to happen. MMT (again, from my perspective) makes it possible to simply ignore the 1%—let them play in their gambling casino—and go straight to local communities who are interested in building things and creating services that matter.

      • Howard Switzer

        Yes, the creation of US money and spending it to pay people to do things people want and need, healthcare, education, better more efficient infrastructure, is not inflationary. Even a citizens dividend to get things started after a transition to a public money system would not be inflationary as it would cover the gap. If we are concerned about inflationary spending lets stop spending on corporate welfare subsidies and wars. The oil industry is subsidized at about 10 million per minute so they can destroy local economies and war is a conveyor belt of resources dumped into an abyss.

  4. Howard Switzer

    J.D.

    What you’ve shared here so far has been an inspiration to me and this is precisely the argument I’ve been making within the Green Party in support of pushing monetary reform up front in our campaign and which is already in our platform and which I include in my presentations.
    “…very forcefully explains how and why local, self-sufficient economies are being exploited and destroyed by the multi-national corporate economy—and why it is essential for those local economies to somehow be re-established and regain some useful portion of their self-sufficiency. I realized this was, in fact, precisely what my book was suggesting ought to be the ultimate purpose of the “millennials’ money”—and that modern fiat currency, itself, makes achieving that goal uniquely possible.”

    Also a talk from Helena Norberg-Hodge also helped. I am looking forward to your book!!

  5. An excellent and important discussion, John. Here are two points.
    First, you might use the “State and Local Fiscal Assistance Act of 1972”, otherwise called the General Revenue Sharing Program, as a precedent for keeping spending decisions close to the people. Richard Nixon started the program because of what he saw as a serious mismatch between the federal ability to raise money with taxes and the needs of state and local governments. The program used formulas to determine how much would go to each unit of government, with one third to a state and the remainder to lower levels within the state. There was a wide range of allowable uses for the funds. The program was extremely popular with local governments, some of which received up to half of their revenues through it until Ronald Reagan terminated it.
    Second, I wonder whether the real culprits and beneficiaries in the private sector are corporations or one per centers who use corporations as their tools, agents, and shields.

    • Thanks Tip. That little tidbit about what Reagan did away with might ought to go in the book. Reagan really was, it seems to me, the beginning of the true enforcement of money scarcity.

  6. John Hemington

    J.D.,

    In order to really comprehend the confusion over money and the “national debt” you should seriously consider reviewing Marriner Eccles testimony before the House Committee on Banking and Currency held March 3-5 1947 and the exchanges between Wright Patman and Marriner Eccles. This explains just why it is that so few people in this nation understand how money works in the nation’s economy; and why, in some detail, the U.S. ends up paying interest on the money it should be able to create and spend into the economy at no cost. It is a startling acknowledgement of just how badly the people are being raped repeatedly by Wall Street bankers and their lackeys in government. Patman and Eccles were to of the last good guys in this system.

    If you can’t find the testimony provide me with an e-mail address and I will forward it to you. Patman and Eccles

    HEARING BEFORE THE COMMITTEE ON BANKING AND CURRENCY HOUSE OF REPRESENTATIVES EIGHTIETH CONGRESS FIRST SESSION ON H. R. 2233, Superseded by H. R. 2413
    AN ACT TO AMEND THE FEDERAL RESERVE ACT, AND FOR OTHER PURPOSES MARCH 3, 4, AND 5, 1947, COMMITTEE ON BANKING AND CURRENCY

  7. This is a step in the right direction. Given that the value of a dollar is dependent on supply and demand, escaping from monetary scarcity releases us from a fundamentally deflationary process. Wall Street, the City of London and other financial centers are driving towards taking a monopoly/oligopoly position on the supply of money away from gold miners and government mints. And we know what happens when a monopoly is achieved — it’s not good. Among other things, the electronic whirlwind of derivatives and high frequency trading creates pseudo-value at the speed of light while doing nothing for the material world, where it still takes stuff and energy to do worthwhile things. Is there anything that can stop that whirlwind? The best idea I’ve seen so far is to recognize that there’s only so much experience that any person can capture, no matter how wealthy they are. This leads to measures like Gross National Happiness that promise a way out from the paradox of “how much is enough?” “More than my neighbors!” Build a system that recognizes this paradox and doesn’t blow up, and you’ve solved money.