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THE VANISHING ACT: EUROBOND BILLIONS

 

eurobond

Image: The Treasury, Nairobi, Kenya

140 billion shillings have been deftly spirited away from government accounts in the days (weeks?) prior to 3rd December 2015, when the news blew up all over the newspapers.

Hands are being wringed, fingers pointed, the perpetrators have duly disappeared, taxpayers will work more to pay for the loss, rivers of ink will flow, and lack of money will continue to be the root of all evils as the wise Nairobi cyclist had painted on the flap of his Black Mamba bicycle way back in 1985.

In 1918 Gesell predicted that if the monetary system was not reformed, another war would break out before another 25 years passed, and so it happened. Today it can easily be predicted that a perpetrator smarter than the one behind the 2015 heist will sooner rather than later appear if the Kenya monetary system stays as it is.

Journalists, with their proverbial clichés that they pass off as thought, speak of “cash” having been taken here, there and everywhere and disappeared elsewhere, without an inkling as to the root cause, and therefore to the solution, of the problem.

No cash has disappeared. 140 billion cash amounts to 140 million 1000/- notes, which at one gram each weigh 140 tonnes, enough to fill 23-24 six-ton lorries. No one has seen, let alone organized, driven and spirited away a transport column that size. Cash is today where it was yesterday: 180 billion outside banks in the pockets of people, and 200 million in bank vaults and tills.

What has disappeared, or is where it should not be, is 140 billion shilling worth of credit, in the easy moved form of electronic impulses that today fill an account, tomorrow another. This will forever be possible for as long as money is endowed with the parasitic function of store of value, and bank-controlled credit creates money instead of government.

Let us go back to basics. Few understand that the function of medium of exchange and that of store of value are contradictory, i.e. if one is acting the other is not, and vice versa.

The contradiction, incorporated in the same piece of whatever is used as money, immediately raises the issue of ownership. Who should own money? Government, the banks, the people? The conflicts that have kept the world in the grips of usury for the past 2500 years, causing not just rivers but oceans of blood, have all been caused by different answers to this question.

But if the contradiction was eliminated by getting rid of the function of store of value, the question of ownership would not even arise. Money would belong to all and to no one at once, circulating like blood within the body without “belonging” to a particular group of cells, tissues or organs.

I am aware that what I am saying is sheer economic heresy, offensive to the pious ears of those under the spell of Croesus’ superstition, which for the past 2500 years goes on maintaining that money must have “intrinsic value” therefore must necessarily be “backed” by something other than human creation of wealth, hence liable to being “saved” for “the future”. This economic “orthodoxy” is duly entertained by most people, instructed, trained or brainwashed into thinking in the box.

But it is by thinking outside the box that most problems are solved, which is what this article is trying to do.

Let us return to the blood metaphor. Five litres of blood, circulating 1000 times in 24 hours, become 5000 litres from the heart and back to it after having irrigated the smallest cell of the body. Blood cannot stop, under pain of septicaemia and death.

What prevents money from acting as blood does? Chrematistics, i.e. the superstition that being rich means having a lot of money, regardless of there being things to buy or not, in which latter case money becomes scrap: metal or paper but scrap all the same.

But money, unlike blood, can, and does, stop. Instead of causing septicaemia and death it causes usury, and with it poverty, the increasing gap between the rich and the poor, injustice, war both domestic and foreign, and most of the ills lamented by all and sundry in the mainstream media, on line and in public and private discussions.

Let us therefore ask whether the misdemeanour (for some) or brilliant heist (for others) could have happened within the framework of a natural money reform.

Essentially, the reform calls for blood-like cash moving goods and service up to any number of times its nominal value by changing hands as many times a day as desired by the users. The flow would be unimpeded, thus serving every nook and cranny of the economy.

M-PESA has made possible the moving of wealth in excess of 5 billion/day despite the restriction of 140 000/- a day. Were the needs of the economy ten times that, and the restrictions removed, forced circulation currency could possibly move wealth for 50 billion daily. How much cash would be in a position to do that?

The answer is about 17 billion, changing hands three times a day. It would therefore be impossible, in any circumstances, to have even a fraction of this sum all in one place at the same time. Counterfeiters, thieves, scammers, fraudsters of all hues, would find that they could make more money by working than by buccaneering

Is this a technical solution to solve a moral problem? It is, much as locking the doors at night discourages burglars from attempting to break in.

Giving priority to velocity of circulation of liquid cash at the expense of sluggish-moving credit would put the leash on sundry money manipulators, from banks to KRA officials to stock brokers to insurers to auditors to financial analysts and to the plethora of professionals that distribute wealth without producing any.

Monetary reform would not be a win-win solution, but winners and losers would be the ones that deserve to be, not the ones condemned to be by bad laws, rampant injustice and perpetrators of assorted heists.

 

AUTHOR: Den Anoisíes (Email: [email protected] ; Follow on Twitter: @Den_Anoisies)

 

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