There's an old saying out there, "he who has the gold makes the rules". At first glance, it appears to make sense. Money is power, right? Those who have more of the former, tend to have more of the latter too, right? And if you believe in good ol' fashioned American capitalism - i.e. the idea that people who work hard should earn more, thereby gaining the capital needed to invest and innovate in improving their own lives, and the lives of their fellow citizens, thereby gaining power & influence, through genuine economic growth - then you're generally pretty OK with the whole "money is power" thing, because at least everyone has an equal opportunity to earn it on their own merits, right? If you have lots of money, you probably earned it, right? Or at least, inherited it? Or at least, won it in a lottery, or something?
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What people tend to think less about is where the money actually comes from - not how it's earned or inherited or won or otherwise transferred or transacted - but how it comes into existence in the first place. Where does money itself come from? Who puts the money out there in the first place, before anyone even has a chance to earn it? (because, as another saying goes, we know money doesn't actually grow on trees…)
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When you start to think a little more about it - the original quote "he who has the gold makes the rules" starts to have a little more meaning. There was, in fact, a time in America when money itself was backed by gold - an actual, physical, naturally-occuring, scarce commodity that holds value across generations, and ensures that any "paper currencies" (like dollars) traded in relation to it could also be relied upon to hold their value, regardless of the whims of politicians, because the value was backed by something real. What do you work hard for? Would you exchange your life's labors for the promises of a politician? Or do you feel your life's work is worth its weight in gold?
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It all changed in 1971, when the American gold standard ended and dollars were no longer convertible to gold. What happened after that? Well, that's where the "magic money machine" comes into play. And its ramifications for American society & culture (and for Doowopolis) have been profound - especially ever since the 20th century turned into the 21st.
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The excerpts below from Christopher Leonard's recent book, "The Lords of Money", give you a glimpse into how we may have gotten to where we are today - which just might start to give you some ideas on where we could be going tomorrow if we don't start to think a little more deeply about where "money" comes from, how "value" gets created, and just who's going to build that better, brighter future we all dream of. After all, if a better, brighter tomorrow isn't on your own terms, is it really better and brighter? Whose American Dream is it anyway?
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"In recent decades, the Fed has come to assume an ever more important place in public life. This is uncanny. There is no provision for a central bank in America’s Constitution. It has no role in the classic three-way separation of powers. Yet the question of who manages money and regulates credit is foundational for any modern society."
Christopher Leonard, author, "The Lords of Money"
"For nearly 60 years, the Fed upheld the American currency as part of a global, gold-backed system. With Richard Nixon’s decision in August 1971 to end gold convertibility of the dollar, the Fed in its current form truly came into its own. Money and credit are now the creations of policy and profit-driven business that have made the independent central bank into a pivotal institution."
Christopher Leonard, author, "The Lords of Money"
"In America, the half-century since the 1970s has also been one of profound social and political change. Society has become more polarized on lines of inequality, identity and cultural politics, so much so that many feel the “American dream” to be in question."
Christopher Leonard, author, "The Lords of Money"
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Read full article in the NY Times:
How Much Power Does the Federal Reserve Have?
https://www.nytimes.com/2022/02/22/books/review/the-lords-of-easy-money-federal-reserve-christopher-leonard.html