This is a response I wrote to a friend's FB post lamenting the money-grubbing nature of the guy in the video below.  My friend accused this guy of being part of the problem, so I felt compelled to write this.  And then after doing so, I realized it kind of encapsulated what I'd like to say to the rightly outraged folk who are occupying Wall Street, and to everyone who is fed up with being stolen from but, I think, doesn't quite understand how it is they're being stolen from or who is doing the stealing:

Here is the video.

Sigh.  I wasn't going to post here because I don't want to get embroiled in a whole debate, but it just keeps gnawing at me and it is such a critical distinction to make so I'm going to try:  This guy is NOT the problem.  Money is NOT the problem.  He may be "money grubbing" and greedy and all kinds of things you don't like, but he did not start this mess and no, he is not fueling it.  What started it was the bastardization of money through government manipulation of it that allows the govt. to sap the wealth of everyone else for its own ends.

Money is a tool that was developed by human beings to make their lives easier.  Just like you’ve noticed that your landlord doesn’t want to take rent in bamboo or bananas, most people would prefer not to have to go around looking for other people who want precisely what they happen to have at the moment, in order to get what they want.  Money is the tool that allows people to exchange bamboo and bananas for a place to live, without having to carry around bamboo and bananas all the time.  THAT’S PRETTY MUCH IT.  To impute some kind of malice or evil to the institution of money is to completely misunderstand it.

This wouldn’t be such a bad thing if it weren’t for the fact that so many people aim their rage for the current economic mess we are in at the “greedy money grubbers” or “capitalism” or even money itself.  As long as we all keep misunderstanding what caused the problem, we’re going to keep experiencing the same problem over and over and over again.  

Here’s what actually happened - starting a long, long time ago:  Left to their own devices, people came up with things that could be used as media of exchange and as stores of value.  These things ranged from salt to seashells to big-ass rocks under the ocean that no-one could even move.  Historically, people have favored precious metals because they are easily transportable, limited in quantity and hard to fake, easily divisible, don’t spoil when you keep them for a long time, etc. etc.  

Governments, all over the world and at different times, have taken over the once voluntary and grass-roots institution of money.  They have declared themselves the arbiter of what is and is not to be used as money, how much it is worth, and more recently, they have removed money from any link to anything real (like salt or seashells, or gold or silver).  Fast-forward to today’s world and what we have is (in the country I live in) a government that monopolizes the issuance of money, and the money it issues is just paper.  That’s it.  They don’t even pretend that it’s tied to anything else.  It is “worth” what they say it’s worth.  

Through various means (fractional-reserve banking, central bank interference in the market for money and manipulation of interest rates, etc.) the government is able to inflate the money supply to its own benefit.  For a more rigorous and scholarly understanding of how this works, please refer to this Scrooge McDuck cartoon. 

Essentially, the folks (and the people they pay - think military contractors, etc.) who create the money are the ones who get to use it at full value.  By the time it gets down to the rest of us, it holds only a fraction of its value and we need a lot more of it to buy the things we want and need.  

Meanwhile, by pumping extra money into the system, the central banks create artificial booms which later turn into very real busts.  People think there is more (real) money than there actually is.  The price of money (the interest rate) is lower than it should be, so people believe that it is cheaper to invest than it actually is.  All kinds of people (not just “money-grubbing traders) invest in things, thinking the cost of doing so is cheaper than it is, and you’ve got a bubble.  This is what caused the dot com bubble and bust, and it’s what caused the housing bubble and bust.  And before you dismiss my analysis, please note that the only people who accurately predicted the housing-market bust (Peter Schiff, Ron Paul and a few others) were the people using this same analysis.  

You can argue that the banks and bankers are a big part of the problem, and you’d be right.  But not for the reasons you think you are.  They are not part of the problem because they are “greedy” or because they deal in “money”.  They are part of the problem because they are profiting from what is essentially counterfeiting.  They are destroying the money supply, and much of the wealth that ordinary people have built up for themselves.  They absolutely are profiting at our expense.  But unless you understand HOW they are doing that, you’re not going to even come close to addressing the real problem.  In fact, you will probably make it worse by calling for “more government regulation of the financial industry.”  This would be nonsense.  It is government’s involvement in the world of finance, and more centrally, in money itself, that is at the source of the problem.  

You are right to be outraged at those who have caused the financial mess the world is in right now.  But please please please take a few moments to understand precisely who those people are and how they did it before launching an all-out offensive on anyone who deals in the world of “money.”  If you do, you might actually help prevent it from happening again.