Money, Usury, and the Economics of Peace
by Thomas H. Greco, Jr.
I recall involvement with the peace and justice movement more than 30 years ago. It was during that time and through that involvement that I was first alerted to serious flaws inherent in the global system of money, and the urgent necessity of transcending it.
That wake-up call came in the form of a book, In the Wake of Inflation Can the Church Remain Silent?, by Edward Veith. I thought I knew something about economics and money, but the material in that book, written by a humble, uneducated man of faith, astounded me and set me on a course to try to understand the mysteries of money and its destructive influences on society – and to find ways to transcend it.
I’ve found the answers I was looking for and continue to be led to resources, people, and opportunities for transformative action. The world is now in the midst of a multi-dimensional crisis that is challenging us to rethink, reorganize, and restructure. Mere changes of policy and political leadership will not suffice; the problems are systemic and structural and cry out for a deep examination of the basic principles, process, and practices that we have come to take for granted.
Foremost amongst these is the lending of money at interest. We have been warned repeatedly by the prophets and scribes of various religious traditions of the dangers and inequities inherent in the practice of usury, but we have not had an adequate explanation of why that is so. As a consequence, we have been persuaded that interest is not usury and that interest is a necessary feature of an economic system if it is to provide the goods and services needed for people to enjoy a high standard of living.
As the global system of money, banking, and finance teeters on the brink of collapse, as the distribution of income, wealth, and political power becomes ever more lopsided, and as human distress multiplies in the midst of material plenty, the falseness of those arguments can be readily seen. The fact is, our entire global system of money is built upon a foundation of usury that is unable to support the edifice of universal economic well-being. Rather, it produces a cancerous and wasteful growth of superfluous “stuff” while leaving basic needs unmet.
Money today consists merely of debt created when banks make loans. Because those loans carry interest, debt grows simply with the passage of time. To keep the system going, additional loans must be made, either to the private sector or to the public sector, hence the massive recent takeover of nonperforming mortgage and other debts by governments in the various bank bailout schemes, and the inflationary creation of “empty dollars” to finance government budget deficits.
It is imperative that the “train of civilization” be decoupled from the “engine of destruction” that is usury/interest. We need to learn to play a different game. We need to organize an entirely new structure of money, banking, and finance, one that is interest-free, decentralized, and controlled, not by banks or central governments, but by people associated to create healthy community economies.
In brief, any group of traders can organize to allocate their own collective credit amongst themselves, interest-free. This is merely an extension of the common business practice of selling on open account – “I’ll ship you the goods and you can pay me later,” except it is organized, not on a bilateral basis, but within a community of many buyers and sellers. Done on a large-enough scale that includes a sufficiently broad range of goods and services spanning all levels of the supply chain from retail, to wholesale, to manufacturing, to basic commodities, such systems can avoid the dysfunctions inherent in conventional money and banking and open the way to more harmonious and mutually beneficial trading relationships that enable the emergence of sustainable economies and promote the common good.
This approach is no pie-in-the-sky pipe dream, it is proven and well established. Known as mutual credit clearing, it is a process that is used by scores of commercial “barter” companies around the world to provide cashless trading for their business members. In this process, the things you sell pay for the things you buy without using money as an intermediate exchange medium. It’s as simple as that. According to the International Reciprocal Trade Association (IRTA), a major trade association for the industry, “IRTA Member companies using the ‘Modern Trade and Barter’ process, made it possible for over 400,000 companies World Wide to utilize their excess business capacities and underperforming assets, to earn an estimated $12 billion dollars in previously lost and wasted revenues.”
Perhaps the best example of a credit-clearing exchange that has been successful over a long period of time is the WIR Economic Circle Cooperative. Founded in Switzerland as a self-help organization in 1934 in the midst of the Great Depression, WIR provided a means for its business members to trade with one another despite the shortage of official money in circulation. Three-quarters of a century later, WIR continues to thrive with more than 60,000 members throughout Switzerland, trading about $2 billion annually.
Yes, it is possible to transcend the dysfunctional money and banking system and to take back our power from bankers and politicians who use it to abuse and exploit us. We do it, not by petitioning politicians who are already bought and paid for, but by using the power that is already ours – to use the resources we have to support each others’ productivity and to give credit where credit is due.
Thomas H. Greco, Jr. is a community and monetary economist, writer, networker, and consultant. This article was written in collaboration with Ray V. Foss. The author of four books, most recently The End of Money and the Future of Civilization (Chelsea Green, 2009), Greco also serves as director of the Community Information Resource Center. He blogs at http://beyondmoney.net.
