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Gunther Sonnenfeld, November 8 2021

The Economic Reshuffle

Imagine that you have broccoli and I have apples.

I need the vegetables and you need the fruit. We make a trade. We can make the trade without money if we agree that our needs are of equal value.

The financial system to date has determined that the trade is not of equal value, and therefore there must be an arbiter of that value (a bank, an institution or a government), as well as instrumentation (money, credit) to make that transaction of value.

In this system, the value you and I agree upon is extracted from the transaction from the onset. In other words, the system does not want you and I to determine the value we exchange, nor does it want us to make exchanges autonomously.

In financial terms, the value that is imposed upon us comes in two forms: Interest and collateralization.

In economic terms, the only thing that really matters is the activity of the trade or exchange that you and I make.

In other words, the economy doesn't care so much how we make our trade, only that we make the trade in the hope that no one else gets negatively affected, or that the environment suffers on account of it.

Unfortunately, that's not how finance has worked to date.

When you and I trade broccoli for apples, the transaction is collateralized with money we don't own, interest we don't incur ourselves, nor collateral we need to have.

As this happens, the interest that is accrued compounds as inflation. Inflation gets redistributed as we make more transactions, until it has nowhere else to hide - not in more interest, more debt, or more taxes.

Taxes are a way of hiding, or attempting to hide, the interest we take on for things we should already own. The less we actually own, the more debt we take on. The more debt we take on provides more profit to those issuing it - banks, institutions, and by proxy, governments.

You see how this works.

Our co-dependency on interest and collateralization keeps us enslaved to debt. No matter how much money we make (or don't make), if we don't own the medium of exchange, we don't own the products and services for which we trade. The only thing that we end up doing is servicing more and more debt.

It's no wonder, then, that we are experiencing hyperinflation on goods and services the likes we've never seen.

So how do we counteract this, or bypass this altogether?

By enabling the capability to produce independently, trade independently and self-capitalize our own economic activities.

Is this possible?

Sure it is. We already live in a mixed economy, and we have been decentralizing these capabilities as the weight of the financial system collapses on itself, moving further and further away from the real economy.

All you need to really understand is that by producing goods and services, you provide value that you can determine with other producers and other buyers. While value may be unclear at times, you nonetheless have plenty of tools to produce, trade and redistribute.

In other words, your capabilities to produce and to trade, with real resources servicing real needs, are the greatest hedge against inflation, and a replacement for interest and collateralization.

Exciting, isn't it?

Written by

Gunther Sonnenfeld

Older Gall's Law
Newer Breaking Free of the Mental Model that Stifles Real Progress