As a child you may remember playing the game Musical Chairs, where a circle of seats are made, the children told to dance around them while a song is played and then dash in for their own when the music abruptly stops only to find there are not enough to go around and those hapless who are unable to find a seat ejected from the game.
Well it may come as a surprise to know that we in our daily lives are essentially playing this same game, but instead of dancing to a song we do so for money and when the music stops (i.e. when our debts come due) we either have enough to pay them or face bankruptcy, homelessness, hunger and even death.
Money – as it predominantly exists today – is very much like the dwindling supply of musical chairs in the respect that all major currencies are created out of debt, i.e. are issued by banks to governments, businesses and individuals, but only on the promise that those funds (the principal) will in the future be paid back in their entirety plus interest. This means for every dollar, euro, yen, etc. we may currently have in our possession somewhere else in the world another/others owe this amount – or once did if they fell into bankruptcy. A game of "musical money chairs" is thus set into motion, since all the money in circulation represents only the principal portion of these loans, while the interest payments remain hanging over society as a whole – incapable of being paid off in the aggregate since the total money supply in circulation is always less than the total collective debt.
The ramifications of this arrangement are multifarious, but two major & inescapable consequences are (1) bankruptcy is literally baked into the system and (2) in the aggregate the only effective way to stave off the former is by expanding the size of the monetary economy by borrowing ever greater sums in order to keep pace with the interest payments as they come due (and why not coincidentally you will hear mainstream economists & politicians trumpeting the need for more growth as the panacea to our woes.) Of course, since each new loan fuels more of the same, an exponential trap is set loose and like all such run-away processes cannot indefinitely persist on a finite world.
As many are now articulating – several of whom powerfully in the following documentary – the perpetual growth logic inherent to our "modern" monetary system now looks to be driving humanity dangerously beyond the limits that our biosphere can sustainably support and therefore if we are going to avoid catastrophic collapse will require of us a fundamental reformation in our thinking, social organization as well as in the very makeup of our economic assumptions. To that end, our money will also need to undergo a transformation if it will come to serve – versus hinder – our future wellbeing.
Money & Life
If you enjoyed this documentary and would like to dig deeper I highly recommend picking up a copy of Brian Czech's book, "Supply Shock: Economic Growth at the Crossroads and the Steady State Solution."