Please see this excellent article by Charles Hugh Smith

Hi Charles,

I recently had an insight about what appears to me as the fundamental driving force beneath the corruption that you wrote about in your article today. It’s not a new insight in any way — there have been many people who have said this in one way or another, and it is the essential basis for the whole concept of “sound money” but it hit me in a decisive way recently.

If you consider that the primary “fabric” of society, the sum total of our relationships with everyone, is a web of energetic exchange that we all participate in by working, employing, bartering, buying, selling, etc. … And if you accept that money is a representation of energy whose utility is in making the exchanges of energy that underpin society more convenient by both storing energy as well as providing a standardized unit of account and value for all work and property in energetic terms…

Then if you simply run a thought experiment about what would happen to the nature of exchange — again, the “fabric” of society, and most significantly, our RELATIONAL landscape — if you allowed the supply of money to be massively manipulated such that it no longer represented the sum total of real energy (whether stored in the form of “real capital” or potential in the form of “work”) available to be exchanged.

I believe that fractional reserve banking, in and of itself, inevitably leads to the forms of corruption that you write about and that we can observe in the US and the world in general. By systematically misrepresenting the energetic “content” of money, by turning the basis of our relational exchange into fraud, you create an uncertainty and sense of wealth scarcity while simultaneously creating a playing field that incentivizes people to game and exploit each other in order to horde a larger and larger share of an uncertain pie for their own security.

Where the very nature of relational exchange has itself been made fraudulent, how can a society built on that foundation be anything other than fraudulent?