The creation and annihilation of money and its economic effects are reviewed. Economic values appear "in the mind" of the market participants; e. g., by pretending, maintaining and achieving a particular price for a certain asset. Upon its creation by banks, this kind of " value phantasy " is converted into " real money " often in terms of buyer's debtaccompanied by a simultaneous payment of fiat money to the seller. This money is then multiplied on the money market and is competing against other money supplies for the traded assets, goods and services, where it may cause dilution, inflation and reallocation of resources .
General options for monetary systems, in particular the creation of fiat money, as well as its appropriation in various setups is discussed. We identify private banks as the main source of money through monetization. The asset value is inevitably determined by subjective beliefs and fantasies loosely bound by market constraints. One may imagine such a monetary system as being " suspended in belief. " Inevitably, the interest levied by banks in return for money created via monetizing debt systematically reallocates resources towards the financial institutions, and away from industrial and manual production, farming and labor. Unfortunately, the alternatives appear to be even more troublesome than the present state of affairs. Any system based on interest-free fiat money creation, in order to avoid hyperinflation through excessive borrowing of " free" debt, has either to rely on unjustifiable privileges or chance. And any system based on commodity money such as the gold or silver standard instead of fiat money creation is heavily depending on the quantity of commodities, and also incapable of waging or defending against war through the effective monetization of future loot or loss .
R
The creation and annihilation of money and its economic effects are reviewed. Economic values appear "in the mind" of the market participants; e. g., by pretending, maintaining and achieving a particular price for a certain asset. Upon its creation by banks, this kind of
General options for monetary systems, in particular the creation of fiat money, as well as its appropriation in various setups is discussed. We identify private banks as the main source of money through monetization. The asset value is inevitably determined by subjective beliefs and fantasies loosely bound by market constraints. One may imagine such a monetary system as being
R
value phantasy
suspended in belief.
R
is converted into
Inevitably, the interest levied by banks in return for money created via monetizing debt systematically reallocates resources towards the financial institutions, and away from industrial and manual production, farming and labor. Unfortunately, the alternatives appear to be even more troublesome than the present state of affairs. Any system based on interest-free fiat money creation, in order to avoid hyperinflation through excessive borrowing of
R
real money " often in terms of buyer's debtaccompanied by a simultaneous payment of fiat money to the seller. This money is then multiplied on the money market and is competing against other money supplies for the traded assets, goods and services, where it may cause dilution, inflation and reallocation of resources
free" debt, has either to rely on unjustifiable privileges or chance. And any system based on commodity money such as the gold or silver standard instead of fiat money creation is heavily depending on the quantity of commodities, and also incapable of waging or defending against war through the effective monetization of future loot or loss