Franz Hörmann on a World Without Money

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"First of all, what's wrong with our money?

Most people seem to believe, okay, we have a financial crunchdown, just let's cut on public spending, pay back some debts and return to business as usual. This is not possible. Why? Because money is not a positive value. Money is invented by the banks. If you go to a bank, and you get a loan, they don't give you money that lays around in the vaults of the bank! The bank that gives the loan, doesn't have the money! Loans from banks, this is money that doesn't exist, it is created. It is created by lending it out, bearing interest.

And this is one of our major problems today, because, when banks grant a loan, the money doesn't exist before-hand. It's not existing. It's invented out of thin air, but then, in fact, the banks want it back, with interest, and this is the problem. Because they never invent the money for interest.

In the beginning, in olden times, some thousands years ago, people used cattle or sheep as money, and then, if they lent a herd, they returned it with the newly born calves, and this is what we call natural interest. Natural interest grows on itself and then we can return it, no problem with that! But if we use gold coins or paper money, hmm, they don't get children.

So banks only create the money of the loan, and never the money to pay interest and this is where the problem starts, because the money for the interest doesn't exist in our money volume. So this is the root of the so-called "competition" in our economy. We have to fight against each other to take away money from each other to give it back, back, to give it to banks as interest. Back is the wrong word.

So you know and you understand that our money that we use today doesn't have any value on itself, it is completely worthless. This funny paper, numbers, bits and bytes in the computers, but still we treat it, we treat it as if it were gold coins! And this is the next problem that we face. Because banks demand a collateral from the customers. They on themselves, they have nothing of value. They offer you bits and bytes and the paper sheets. But then they take away your house, your car, your property, if you don't give them back the money with interest, but the money for the interest has never been invented.

Now if we can't repay the capital, we lose the collateral and this is what we call expropriation. You know it from the foreclosure problem in the United States today.

Our worthless money is, in fact, a circular argument. Let's have a look at a pound bill, it's very very funny what you can read there. The Bank of England writes, (on a ten-Pound note) "I promise to pay the bearer on demand the sum of ten pounds."

Okay! You give ten pounds, and you receive ten pounds. It's a circular argument. Now if three people in our current system want good life and they lack money, they can do it! It's even legal! How to do it.

They must be customers for different banks. And then one of them starts the game. Presenting a bill of 100, Mr B to Mr A. Mr A doesn't have the money. He gets a loan from the bank. Why should the bank grant the loan? Oh. He has a collateral! He has claimed the bill to Mr C. Mr C doesn't have the money either. He gets the next loan from a different bank but again he has a collateral to claim, of 300, it's a bill to Mr B. Mr B again doesn't have the money. He gets it from the bank as a loan. And now the game goes into the next round with a bill of 400.

This is our growth, our economic growth. And the root of this circle we have permanently to repay the banks, money that is created as a credit, with interest, and then again, some money more that we can live from. And this money that we can live from, has to grow exponentially because the interest beneath it grows exponentially. And this is, in fact, the root of our problem in the current system. How can we fix it now? It has to do with mental models. Money isn't something that comes from natural science. It is a social invention. It's a social contract, a construction. And if we all people, around the globe, agree, then we can change it. But we must be a really large number. It's very hard to change the money system if you are a group of 3 or 4 persons.

What's very important now is we have to say democracy starts with a democratic money system because what is happening just now is that most of our most important laws are already broken by politicians just because they are afraid, scared to death. Only a very very minority of politicians understand those problems. And they don't dare to speak about it. They are shocked. And now they are breaking all laws and all rules just to keep the illusion of a functioning money system alive.

But now democracy is in danger, as we see in Greece, and within a few weeks in different other countries, and therefore we must change it. We must take away the power to create money from the private banks and we must do it to the population. Democracy must create money.

Now what is a sound new definition for money. Money is a rule, a rule to distribute goods and services among people. Now each economy has two different problems - production and distribution. Now our problem is that we have linked those two different problems with the money system.

If I work in the production process, I earn money and this is the only money that I can spend in the distribution process. But if my enterprise breaks down, I lose my job, and then I can't buy things from other companies, and they get into problems too, and this is what we call a production cycle, a vicious cycle that endangers our economy.

We must not mix those two different problems. Production is something we can do in a co-operative way, in a sustainable way, in a ecological way; and, the distributions of goods and services is a totally different problem. This is something that democracy has to decide. It's a political problem. The minds of people can grow different kinds of giving, of presenting things, of giving and taking, of giving alone, that is something we have to experience with our feelings and not always with our mathematics.

Now, usually we are caught in dual transactions, in binary transactions. If I want something from another person, this person can insist that I deliver immediately something of equal value. Today, in most cases it is money. If I lack the money in this moment, then most probably the transaction cannot be done. Ah? But what do we have today? We have social networks. This is our cloud of possibilities, of combinatory possibilities, our social networks, and now if we connect into the cloud, then we can break free of our binary transactions. So now if I am in need of something that another person has, that person can give it to me, gets in the cloud a positive value on his account. I myself go into that and later on, I repay with my own goods and services.

And this is something that can very easily be done today on the internet with our databases that are already available. And then there's the next new definition for money. A very important one. If you consider it, you will know what I mean what is money today. If i want something from society I have to spend money and if I do something for society I receive money. So we can say that money is nothing else than an user interface. Money is an interface! It's the interface between the individual and society. But an interface is software, it's not hardware. It's software! It's not hard physical coins of gold. It's software, and software is flexible, and software can grow, software can have different behaviour.

Today we write software using objects, object-oriented technology, and those objects have behaviour, those objects can learn, they can change their behaviour. We can create different monetary systems for each single person, that fits into the personal life and into the phase of development. So what will we do in the next step. User interfaces today on your laptops, on your computers, you can adjust them! You can chose on linux if you use KDE or Gnome, and you can change the colour of your windows, if you use windows, and this is how we will treat money in the future. Everything that is really from real economy, hard facts, resources, knowledge, skills, services, goods; stay on the back-end, in the database, where they are really handled, there they are indexed, and then, then comes the money system. And the money system is only the front-end.

It's only the front-end, they can adjust it, so that it fits into the personal life of every individual. So, money is the front-end and not the back-end. This is something that we have mixed and this is an error, a mistake, that very very often happens in software development. We implement something on the back-end side, that in fact is better placed on the front-end. With money it's the same. Money is only the bridge to come to goods and services, on the back-end. And money must fit to our personal life and phase of development. And now we have, the first time in human history, the choice to implement individual systems that adapt to personal lives, and not the other way around. Not changing people to fit, to make them fit to systems, but make systems that fit to people. And this is what we will try in the future. Money is the user-interface between an individual and the society." (