Money, Debt and the World We Want

Rebecca Dominguez, Contributing Writer

The money system, investing, and the idea of monetary reform in the United States can sound daunting, but an Italian scholar Marco Vangelisti explained in an Oct. 13 lecture at Santa Rosa Junior College how regular citizens can understand and possibly change the U.S. monetary system. Vangelisti recommended monetary reform and a change in investing norms.

In his lecture “Money, Debt and the World We Want,” Vangelisti, who holds both math and economics degrees and helped form the Slow Money Northern California chapter, explained how the way people invest is damaging our country. When looking at investing in a traditional sense all that is considered, Vangelisti said, is the risk, the liquidity, and the return.

But this does not take into consideration what the money is being invested in. “That is what I call the narrow lens of finance,” Vangelisti said.

Vangelisti provided the example of a tree to illustrate the current investment climate. In this world a tree is in a relationship to people who breathe the same air, it’s in a relationship with water and the soil and the tree provides a habitat for animals. In the narrow lens of traditional finance however, a tree is viewed only in terms of its commercial value as lumber.

“According to traditional finance, a tree is worth more dead than alive,” Vangelisti said. Viewing trees in this manner is what leads to deforestation and this logic is why people need to change their investments.

When investing people need to consider what those investments will be doing. Vangelisti said that before investing he asks himself, “Is this investment something that supports conditions conducive to life?”

There are four new major trends in what Vangelisti called regenerative investing.

The first trend is the Social Enterprise Movement, a way of investing in which the money is not being used for the sole purpose of maximizing profit and not investing in companies that are part of the current extractive economy.

Second is impact investing, where people invest after looking at the environmental and social impacts of an investment.

Third is a Jobs Act and crowdfunding that are trying to change securities laws so that it is easier to invest locally and direct invest through newer technologies.

Fourth is the Local First movement, which advocates for people to buy and invest locally.

Vangelisti also explained how money works. There are three different types of money, commodity money, which is stuff that has actual value, such as gold; representative money which is commodity receipts; and fiat money which is a agreement that something has the values placed in it. The U.S. currency is fiat money.

Vangelisti explained the current monetary system and its problems. He said banks or governments spend, lend, or borrow money into existence. The private banking sector has a monopoly on money creation because it can lend money into existence. All the money in the U.S. is created as debt and then there is no extra money put into the economy to repay the interests on those debts. That means there is more debt incurred than there is money in circulation to pay that debt. Vangelisti said this debt-based money system is not stable and could lead to a collapse.

The U.S. needs to consider monetary reform, Vangelisti said. Some recent ideas in monetary reform are that each state could create its own money free of debt and this would eliminate the problem of not enough money to pay off all the debts banks create. Also, government could spend money into the economy and this would not only add more money in circulation, but provide work for the goods and services being purchased.

As complicated as the theories behind currency and debt may seem, it is something that everyone deals with on a daily basis.