Accounting Money, Piracy and Credit
The theme of piracy and privateering describes our current economic system, both as a humorous metaphor and verifiable fact. I've been referring to the GOP as the Grifters, Oligarchs and Pirates party for a reason. And that reason is that they've become, over time an ideology of legalized piracy.
Historical Perspective on Piracy
From a historical point of view, one can trace the privateering back to Elizabethan England, or all the way back to the Bronze Age. It's not like Europeans invented piracy or privateering. But they did they invent the use of corporations to give systematic privateering a patina of respectability. Although, if I keep digging into the literature I'm likely to find antecedents even further Back. The Ancient Greeks of Homer, were pirates. The fleet that attacked Troy was a filibustering fleet. Whatever, the "casus belli', they didn't sail to the Bosporus just to rescue a pretty abductee named Helen. They were there for loot. That set a pattern that endured to this day. Alexander the Great to Napoleon on one track. But Athens to Venice and Genoa, to Britain, on another track. That Track of Venice and Genoa to Britain is a track of organized privateering associated with commerce and banking.
Venice: Banking and Privateering
The website Encyclopedia of Banking, article on Venice claims that:
"in 1171 the government of the Republic of Venice extracted forced loans of specie from wealthy citizens." [Venice]
Initially these "forced loans" were simply entries on an accounting sheet, which the Government paid back at 4% interest. But over time this seizure of Gold in return for promises to pay evolved into a form of banking in which people deposited money in return for promises to pay and a form of credit based accounting money evolved, with the State of Venice serving as a bank for the citizens of Venice, and others. Venice operating as a bank made it a strong power in the entire European and Mediterranean region.
Genoa
The invention of accounting money led other Italian Cities to create banks in an effort to compete with Venice.
Genoa formed its bank in 1408, in response to a depression that followed their defeat in 1381 at the battle of Chiogga at the hands of Venice after years of war. They created a bank to improve the economic fortunes of their city.
"The Banco di San Giorgio ... would become the world’s first modern, public bank, not just a forerunner of the Bank of England but its prototype." Genoa
Genoas' bank would become so powerful, it overshadowed the city of Genoa. Other cities, Florence one of the more notable, would follow suit. The Bank of England would be modeled on these. The practice of lending against revenues gradually became widespread because it was pragmatic and effective. Eventually;
"In 1587 the Venetian government established the Bank of Venice as the Banco del Piazza del Rialto." [Venice]
Banks were an irresistible invention for the wealthy and connection. A bank puts debt to work, and manages to multiply it. Which may be a disaster for ordinary citizens but is a bonanza for the bankers and investors. The Bank of Genoa, Venice and others, innovated:
- the issuing and management of government debt,
- double-entry book-keeping,
- sinking funds – funds into which payments are made so that a particular debt can be repaid
- the role in financial transactions of the clearing house,
- the organisation and conduct of lotteries.
Since then money as gold or silver, has increasingly been an artifact of treasure. Something that people set aside in case commerce fails or they no longer can lend or borrow. But the bank, as a casino, could make sure that everything that was done by the government, businesses or even ordinary people, gave them a cut. Banks not only extract loot, but they make the economic activity, production, exchange, transport and consumption, possible that generates that loot. They give with one hand, and take away with the other. The wealthy still prefer money as treasure. But there is a reason that "good money", or good treasure, exits circulation, while better money, notes, circulates. People exchange promises. The goods that count are food, water, things that make us more comfortable, productive, or give us pleasure. Money is effective that measures those things. Nobody can eat Gold. Gresham's law is a chimera.
More later (and some edits)
Further Reading and Related Posts
- Irving Fisher
- Economist: http://www.economist.com/node/13104022
- Irving Fisher and his outlines of a solution
- First Post on Stamp Scripts & Irving Fisherhttp://holtesthoughts.blogspot.com/2015/02/postal-banking-stamp-scripts-and-fixing.html
- Second Post on Stamp Scripts: [http://holtesthoughts.blogspot.com/2015/02/irving-fisher-and-stamp-script.html]
- http://realmoneyecon.org/lev2/images/pdfs/100percent_money.pdf
- http://realmoneyecon.org/lev2/images/pdfs/monetary_reform.pdf
- Readings on Money
- Actual Book; "Money, Whence It Came, Where It Went, c1975"
- Gresham's Law as a Tool of Regulation
- Gresham's law versus Sovereign Money
- General Grant and Mark Twain, Greenbacks versus "Solid Money"
- Hamilton On Money
- http://holtesthoughts.blogspot.com/2015/07/hamilton-on-money.html
- Franklin on Money
- This guy Gary North, claims that the famous franklin quote is bogus [http://www.garynorth.com/public/6882.cfm]
- But Franklin's speech to Parliament refutes any idea that Franklin accepted Parliament's authority to prohibit paper money:
- http://www.bartleby.com/268/8/10.html
- Attributes of a Virtuous Commonwealth
- http://holtesthoughts.blogspot.com/2012/08/attributes-of-virtuous-commonwealth.html
- Commonwealth According to Locke"
- http://holtesthoughts.blogspot.com/2014/09/commonwealth-according-to-locke.html
- The Concept of Commonwealth as antidote to Tyranny
- http://holtesthoughts.blogspot.com/2012/08/the-concept-of-commonwealth-as-antidote.html
- Why Social Programs are an Investment
- http://holtesthoughts.blogspot.com/2015/09/why-social-programs-are-investment-and.html
- The Bogus Wall Street Article "Price Tag of Bernie Sanders’s Proposals: $18 Trillion":
- http://www.wsj.com/articles/price-tag-of-bernie-sanders-proposals-18-trillion-1442271511
- Derivative Business Insider Article:
- http://www.businessinsider.com/bernie-sanders-isnt-as-progressive-as-you-think-2015-9
- Robert Reich's Article:
- http://robertreich.org/post/129306966350
- Forbes: Can America Afford Sanders' Agenda? by John T. Harvey:
- http://www.forbes.com/sites/johntharvey/2015/09/21/can-america-afford-sanders/
- Quantum of Power by Arslan Ibrahim
- https://www.linkedin.com/pulse/quantum-power-arslan-ibrahim
- https://www.ft.com/content/6851f286-288d-11de-8dbf-00144feabdc0
- https://www.dpisd.org/cms/lib/TX01001079/Centricity/Domain/993/chap14.pdf
- I started this post back in September 28, 2015 as part of a review of the book "Innocent Fraud" and some reading I'd done on James Galbraith and Irving Fisher. I was intending to finish it as a pseudo academic work pointing to the evils of aristocracy and what to do about them. But then we elected Donald Trump.
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