The popular misunderstanding of money
John D Alt
A general observation that’s easy to make is how our habitual misunderstanding of Modern Fiat Money divides us against each other. A particular example is playing out, as I write, in my home state of New Mexico. The community is acrimoniously divided over proposed legislation requiring business owners to offer PAID LEAVE to employees needing time off for personal or family emergencies. What is interesting to observe, in this instance, is that the two sides in the debate — small business owners and social-minded progressives — are not divided by disagreement over whether the community would be better off if emergency-stricken employees could maintain their income while temporarily away from work — meaning they could pay their rent and utilities, buy food and gas, and continue to patronize various local businesses. No — if you step back, it’s clear the underlying division of the debate lies in our popular misunderstanding of money itself.
Here is the letter I wrote to a local newspaper, trying to point this out:
PAID LEAVE requires Understanding Fiat Money
The paid-leave debate (Santa Fe New Mexican, Feb 20) is a good example of how confusion about our sovereign fiat money system divides us – unnecessarily – against each other. In this case, the division occurs because our habitual (and unquestioned) “money logic” tells us that paid leave, if it is to happen, must be paid for by employers. This proposition creates real challenges for small businesses operating on slim profit margins with small workforces. As a result, these business owners are divided against those who see, foremost, the social and family health benefits of a paid leave program.
The crucial point to see is that we can imagine the argument ending — these small business owners and the social progressives becoming united in pursuing something demonstrably in the interest of our common welfare — if only there were someone else to write the “leave paychecks”.
But who else could write those interim pay cheques? Certainly, raising state taxes to foot the bill is a non-starter. And asking the federal government to increase taxes or borrow more dollars to underwrite a universal paid leave program seems, well, inconceivable — especially in today’s political-economic chaos. But the truth is, if the Sovereign Fiat Money System we’ve been using now for over half a century is properly understood, our national government could write all of those paid leave pay cheques – and could do so without either raising taxes or borrowing dollars that must be repaid with future taxes – and arguably ought to do so as a matter of “fiscal responsibility” in pursuit of our collective well-being.
Paid Leave is just one example of how our misunderstanding of Modern Fiat Money divides us into competing factions. Politicians sense this and relentlessly take advantage of it by reinforcing the money-misunderstanding at every opportunity – playing us against each other to garner votes and power. This is one of the ironies of our political-social chaos today: If we truly understood that taxes do not pay for federal spending – and Treasury bond operations do not “borrow” dollars that must be repaid with future taxes – we could be having an entirely different conversation. We could be asking ourselves, for example, who would be harmed by a universal PAID LEAVE program? And if nobody is harmed — while the general well-being of our local communities and economies is helped — then what exactly is there to argue about?
Further comments by John Alt:
Will the Santa Fe New Mexican publish this short opinion piece? The odds are likely against it – which leads me to consider another layer of difficulty we confront: Is it possible that our Popular Misunderstanding of Money is so difficult to dispel – or even openly talk about—precisely because it divides us? Is there something built into the structure of our social relationships that makes us want to be a part of one or another opposing faction? Is the other option – participating in a united effort to undertake and accomplish something that undergirds our collective well-being – is that option so antithetical to our nature that we’re not even interested in discussing how, in fact, we can pay ourselves to accomplish it? And, if that is the case, can we then turn it around? Can we imagine that understanding our misunderstanding could, possibly, ever so-slightly, begin restructuring this dysfunctional part of our nature?
Source: https://johnalt.substack.com/p/the-popular-misunderstanding-of-money
Reproduced with the author’s permission.
About the author:
My journey as an architect and writer has come to focus entirely on two goals:- First, to lay out an understanding of the operations of modern fiat money and the astonishing implications this understanding has for what we can undertake and accomplish as a collective society. Second, to share specific concepts for Affordable Housing and Urban Architecture that are made possible by the operations of modern fiat money. These two topics intersect – with different emphasis and viewpoints.
