Young Americans Dislike Capitalism

Here’s an interesting statistic via Zero Hedge.  47% of Americans age 18-29 view “capitalism” as having negative connotations (see image below).  I know the average reader here is over the age of 40, but maybe we need to start infusing the young population with a bit of Pragmatic Capitalism.  After all, it’s not that capitalism is inherently evil.  It’s only evil when it’s allowed to be corrupted.



Got a comment or question about this post? Feel free to use the Ask Cullen section, leave a comment in the forum or send me a message on Twitter.

Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

More Posts - Website

Follow Me:


  1. The other chart with, (Socialism: 49% Positive / 43% Negative) is interesting as well. The times they are a-changin.

  2. The 30-49 year olds also need to get with the program. 40% don’t trust capitalism and another 10% are undecided; and by the way, no wonder! A meager 46% of the younger folks like the results of our capitalist system these days, and the 30-49 year old folks are hardly more positive at 50%.

    I think this survey says more about a lack of faith in the people that run the world’s economy these days, not the “capitalist” system itself and it’s fiat currency, which BTW pretty much nobody understands how it works. I have looked left and right and nobody likes capitalism these days.

    The federal government has $16 trillion of debt, $11 trillion of which is owned by the public (the rest is held by government entities like Social Security). Last year we paid $230 billion in interest on that debt, so the average interest rate is a little over 2%. We can pay the usury at that rate easy. So socialism actually works! Let’s fix all the broken stuff in the USA!

  3. CR: After all, it’s not that capitalism is inherently evil. It’s only evil when it’s allowed to be corrupted.

    That has been my position all the time.

  4. I assume the young people are not talking about the capitalism as it used to be as I was young (I’m 51). When usiness owners behaved mostly fair, where failed banks were allowed to die, where there was a broad upward mobility. When there was a good chance they’d later be better of than their parents, thanks to hard work and effort.

    What the young people experienced instead during their lives so far is a completely freaked out system where top managers claim the right to be ‘compensated’ a thousand times higher than the employees of the company, where banks are said to be ‘to big to fail’ so they can take whole nations as hostages, where the middle class shrinks, where those on the top take ever bigger parts of the wealth generated by those a bit further down the social ladder, where households are so deep in debt they can never pay it off. To name just a few things hard to appreciate with today’s perverted anglo-american form of capitalism.

    So, I can understand the young people perfectly well, I believe they are right in their assessments.

  5. “After all, it’s not that capitalism is inherently evil. It’s only evil when it’s allowed to be corrupted.”

    I guess you could make the same ‘argument’ about communism, too.

    Any system that doesn’t handle bad human behavior is destined to fail.

  6. There is very little capitalism happening in the U.S. outside of a few sectors like restaurants. 10% of all retail sales flow through Walmart. Our telecom is dominated by a few oligarchs. Healthcare is a broken system where the govt is not allowed (via lobbyist) to negotiate lower prices for bulk purchases of drugs as Econ 101 teaches. Industrial defense complex – no need to comment. I could go on and on in almost every major industry.

    We are to the point that the major players in every industry are so entrenched in D.C. that they have built up walls (moats) around their businesses so new comers are handicapped dramatically. And if any dare make progress they can buy them up before they become a threat.

  7. i dislike those subject since people voting are thinking about reality (communism = staline, capitalism = goldman sachs) whereas all politicians put theory behind those words…alas selling dreams is probably the most rewarding business on this planet…

  8. Given the tendency to become more conservative as one ages, this chart is not surprising.

  9. Pure capitalism, qua libertarianism, cannot work in an industrial society. Never has, never will. Mixed economies are clearly the best. In other words a mix of socialism and capitalism. Take Germany for a prime example of what works. Business, labor and the state all play significant roles in how the economy works there. Unions are very strong there too. The USA would do well to emulate it.

  10. To my mind the words “pragmatic capitalism” are euphemistically meaning a mixed economy, incorporating the best parts of both socialism and capitalism.

  11. Without context, this chart is not very meaningful. Are these results different from, say, 20 years ago? 50 years ago? Are they different than attitudes in other countries? Do these results show a change in a long term trend among generational groups, or is it just a continuation of people generally owning more assets and relying less on wages as they grow older, and thus becoming more conservative (again, very broadly speaking) and so more supportive of a capitalist system?

    All unanswered questions that would make this much more interesting.

  12. It is good to see that the younger people can see that so many are getting a raw deal. Sooner or later the question Whats in it for me? Has to be answered. Don’t throw the baby out with the bathwater, kids, capitalism is a good system but we need to take it back from what I would call the neocapitalists.

  13. Capitalism has far too many meanings. It reminds me of the various sects that call themselves Christians, even though they differ significantly in how the interpret what they are as Christians. In other words it’s too loose a term. At least Cullen goes to the trouble of hyphenating the term. I don’t know this for sure but I think his view of capitalism comes close to the German model.

  14. Haight-Ashbury AND The Summer Of LOVE should be a lesson to all young folks who think Social Utopia is with in thir reach.
    It’s been said that the Summer of love turned into the Autumn of despair and then the Winter of disrespect and destitute.

  15. $11T owned by the public? I’m thinking at least $3T is at the Fed (any interest on that goes right back to the treasury) and the social security trust fund is somewhere around $4T I believe.

  16. Ironically some of this may have to do with Republicans branding anyone with a different opinion as socialist.

  17. You can probably overlay that chart with how much wealth each generation has amassed. Young people are getting screwed not only by capitalism but also by socialism, because that socialism is entirely aimed at older generations (Social Security, Medicare).

  18. As more and more Treasuries are taken out of the system, the so-called “most liquid market in the world” is becoming much less so.

  19. It might have something to do with younger people ahving difficulty in the job market. It is hard to appreciate capitalism when youa re unemployed.

  20. To my age group’s credit, the previous generation(s) of business/political leaders have been, at least to my mind, very poor.

  21. I have spoken here before of the ‘worms’ eye view’ I gained going to school during the height of the Vietnam War with the sons and grandsons of men running it (Wikipedia McGeorge Bundy; preceding him, Acheson: the architect of embargo policies that some think brought the militarists to power and forced Japan into war, and later of ‘containment’ of the USSR – and Harriman: richest man of his day – finance & RR’s – both: key participants in the postwar arrangements – Yalta/Potsdam, Bretton Woods, the founding of NATO; before them and responsible for this axis, the anomalous figure of FDR).

    Groton was the product of a marriage between the erstwhile hostile parties of Boston pedigree and New York money, much of the latter coming from one JP Morgan, which is what made possible the school’s explicit ideals of ‘public service’. MR has led me to think more about those earlier connections.

    Power does corrupt, but often more subtly than is commonly understood (what is the dividing line between loyalty to one’s own kind/in-group, and naked self interest?). In his novels, Louis Auchinchloss documented the NYC banking class, initially defending it, but eventually becoming profoundly disillusioned with it.

    In a recent ‘New Yorker’ piece, Evan Osner observes that systemic corruption is incompatible with economic vitality with one significant exception: during periods of rapid growth, such as in the US before 1929; later in Japan and Korea, and now in China. Flaws may become manifest only after the broadly rising tide diminishes.

    I have begun to wonder if the fundamental flaw in the Federal Reserve System, and more broadly, in the Anglo-American version of ‘capitalism’ may not be the co-optation by the private banking sector of the sovereign ‘currency issuing’ power of the state.

  22. In the honest form, capitalism is way superior to centrally planned. Galbraith wrote in the 1950s that communism would fail.

  23. Perhaps calling it social democracy instead of socialism would take emotion out of the picture and allow us to proceed intelligently. I doubt many in this country want the central planning lifestyle.

  24. I’ve noticed recently that a billionaire by the name of Thomas Peterffy has been running a LOT of ads that show a picture of him and say something like “I came from a socialist country [somewhere in Eastern Europe] where there was no hope. No initiative. I came here for the American dream. Click below to learn more.”

    I’ve never “clicked below.” What is this? Is this a “ad” for “Capitalism” in general or is it a political message of some kind. Somewhere I read where he things that the US is slipping into socialism. I have NO idea where these billionaires are coming from with these “socialism” complaints! Obviously we don’t have pure capitalism… but in no circumstances do I consider the current situation to be more “socialistic” that it was anytime since the 1930s.

  25. You’re obscuring the issue. This is not good-versus-evil.

    Capitalism is inherent unstable and unsustainable. And it is no longer benefitting a majority of US citizens. Rejecting this is a sign of intelligence, not moralizing.

  26. “Capitalism is inherent unstable and unsustainable. And it is no longer benefitting a majority of US citizens.”

    Your kidding right? I hope so because one glaring Capitalistic Concoction would beg to differ:
    “Since its release in June 2007, people in the U.S. have bought 85 million iPhones — almost one iPhone for every third person in the country, according to the most recent census data. Those sales have generated a total $50 billion in revenue for Apple.”

    Now throw in Samsung and all the other gadgets that are making a difference in peoples lives. Perhaps not all good, but the number in the masses don’t lie.

  27. He’s trying to convince people to vote Republican because he sees that the path the Democratic party is on is the same path that takes away peoples motivation for self reliance.
    He was from a socialist nation and has some good incite.

    “Mr. Peterffy, who pioneered electronic trading practices in U.S. markets and now leads discount-brokerage giant Interactive Brokers, embodies the rags-to-riches American dream. Born during World War II in Hungary, he spent his childhood behind the Iron Curtain, where he says the country’s national spirit was eroded by a system that took away the drive of its people to work hard, build businesses and create jobs. He left for the U.S. as a young man and today his net worth has been estimated at more than $4 billion.”

  28. I think young people actually look up the definition of socialism, they understand what it means and also study what it does in other countries without a bias filter in place. If socialism gets a good rapport and they understand what it means then it makes sense that capitalism will get knocked backed.

  29. For the future of the world, capitalism is a stupid system……………….

  30. Socialist and communistic systems are also corrupt. Corruption is a human condition not the method of production.

  31. Buts that just like any other system. To say this is not capitalism is absurd. Every system of production ends up this way. Every system involves people and people behave like this. To expect anything else to happen is not realistic.

  32. I would put this differently. Germans are a people who understand how things work best. They are almost unique in this quality. Americans are people that must prove to the world that capitalism is the only way and everybody must follow this way of doing things, other they won’t talk to you and will call you socialist or a communist. Again, they will not understand what these terms means but they like using them to make themselves feel superior.

  33. Just wanted to say i’m 27, and have followed this blog for 2 years,

  34. No surprise here, considering the demonization of such things in our schools and universities. This is nothing more than a crisis of national conscience – an indication of collective guilt. It has nothing to do with whether one system (socialism) actually functions better than another (capitalism, but rather which one is perceived as more moral. The trouble with this view is that the younger generation has not lived in a truly socialistic society to know if it is actually more moral (it is not).

  35. Now I will make sure that I will never do business with Interactive Brokers. Peterffy is a windbag and his commercial uses absurd hyperboles.

  36. It dawns on me that once the robots and automated factories produce most goods and algorithms most services this whole capitalism vs. socialism argument will be moot. People say, “Well new jobs will be created.” I say baloney. The whole point of all this technology is to reduce human labor. Those with the capital will do great. Those with just their labor to sell are, unless they write code or are engineers, pretty much screwed. So how will these goods and services be distributed if hardly anyone has a job? I think capitalism is sewing the seeds of its own demise. It has to be socialism in the end. Then the more interesting question becomes, what will our purpose be if it’s not work (as we know it) and GDP growth? Art? Science? Philosophy? Inter-planetary exploration? I concede that this sounds a little crazy, but man, I see it all around me from self-checkout at the grocery store, Turbo-tax, 3D printers, self driving cars…it goes on and on.

  37. I just remembered the robots are already doing the inter-planetary exploration…all right, cross that one of the list.

  38. Good comment. As a younger person I think we saw a very pro-capitalism period in the late 90’s and mid 2000’s, but the recent decline has exposed some of the flaws of capitalism if it’s not managed. There are some justifiable concerns about reduced job security and career training, skewed reward systems, rising inequality, reduced social mobility, skyrocketing tuition, and lack of accounting for externalities like pollution. On top of that we see the toll that some of this cutthroat environment takes in the form of stress, obesity, anti-depressants, and anti-anxiety meds. I think there is a desire to find more of a happy medium that promotes better social health and happiness, maybe along the lines of Germany or the Scandanavian countries.

  39. Malmo, I don’t think capitalism is all that complicated. In the USA and most everywhere on earth the private sector is run in the capitalist style (e.g. everyone for themselves, freedom to figure out how to make it, follow the law or get a new one written). The public sectors being federal, state, county, town, homeowner’s associations, etc. are purely socialist organizations, run by the loudest mouth in the room. What we have is a balance that goes too far one way, then too far another. We layer over that 10% of the population being absolute total crooks, and we have what we have.

  40. During the summer of love I was taking quantum mechanics at UC Berkeley, and had a total of one date. I became a scientist and made some important advances and I’m now 66 retired in Maui living in our own mini-resort that we designed and built during 1991-2. No Autumn of dispair for my family nor most of my Berkeley friends and classmates. I think you have read too many stories from the folks that were not there.

  41. Malmo, capitalism in its root is basically the freedom for individuals to conclude a contracts on a voluntary base… There is no King, no Aristocrat, no Guild, no Dictator, no Govt etc. that constrains for its own advantage this voluntarily concluded contract between the free individuals.

    Of course the debate today is how far should, could the govt go and restrict this freedom in todays environment.

  42. Both Very Serious Sam and Ted – excellent comments. You summed it up; there are a lot of costs of the winner take all society we live in that are never spoken of. And how U.S. CEOs are valued at multiples 100s x greater than European and Japanese ones (who also run multinationals) is a testiment to the bastardization of the systems. In the 1970s U.S CEOs at least lived in a distant orbit of their workers – no longer. This goes to the broken public co system with crony board of directors full of C-level execs from other companies. I always ask anyone who thinks this system makes sense – how do you think pay would work for any occupation if peers at other companies set your pay? It would be an ever upward spiral – which is what has happened at the CEO level. But that is only one of many issues we have.

    The German model in my book is appearing to be the best of the bunch. And yes I know they are benefiting from a currency that is far too low for their economic strength. But they have unions so the worker class has some say, but the worker class sits on the boards of their public companies so that the fox doesnt sit in the henhouse without oversight as in the U.S. and there is some balance – much like Congress, Prez, and Supreme Court can balance each other. (granted 2 of those 3 are dysfunctional in the U.S.) Germans work hard, but actually are allowed vacations and can balance work and life while still prospering versus the system here. Yes higher taxes but top notch education and healthcare at “reasonable” costs. And the work sharing programs and such during the depths of the recession rather than just handing out checks shows some creativity and leadership.

  43. This should come as no surprise. Acedemia is predominately socialist and anti capitalism. Also movies and TV constantly depict business people as evil and greedy. This constant emphasis on the bad side of capitalism is bound to foster a negative feeling toward capitalism in young people and other segments of the population.

    Capitalism has its good and bad sides, but it’s hard to get an objective presentation from teachers, who don’t even understand their pension fund assumptions, and from the media who want to see at least a western European style economy even though we can watch its gradual decline due to the can kicking process going on daily in Europe.

  44. This. A hundred times this.

    We have been “good” at inventing new jobs so far, but I see the declining curve. In the 60s, 3% unemployment was horrible news.

  45. Reality calling: The decline is in 4 countries. All of it caused by the Euro experiment.

    Up here in the north (I’m Swedish) we are doing just fine, thank you very much.

  46. For now. The Cdn federal govt is attempting to balance its budget, and fast. We’ll see how that turns out.

  47. Same as UK. In their drive to not become the next Greece, they become the next Greece.

  48. This is so true. With all the automatization and robotics, there may come a time where 5% -10 of the population works to conceive and maintain machines that create incredible theoretic prosperity, owned by 0.1% of the population. The other 95% would be consumers far all these products… if only they had a salary and a job !
    Mass appropriation of the “means of production”, as Marx prophesized would then be an inevitable consequence…

  49. I just helped my brother move house. He happens
    to be retired on a $4,000 / month inflation adjusted
    pension. I’m not exactly picking beans either, but no
    free cherries in my bowl.

    He was a member of a UNION…. the Union stood up
    for the employees, supported their rights, and told
    management to ..get&^%%’d…if that is what it took.

    Is there some validity in bringing back the big union
    bosses to fight for the “man on the street”…???

  50. Unions are only needed when labor does not get a fair share. With CEO’s stealing millions from the system, lesser executives and BOD’s being awarded millions and stock options, what do you think?

  51. Capitilism is not the culprit. It’s the lack of a level playing field for all:
    1) To many have learned to game the system
    2) There is no distinct leadership in the political arena
    3) No one wants to hear what they have to give-up to correct the system

  52. Reminds me of when we played marbles as kids: This will be a fair game but we will play by my rules!

  53. In our present society, CEO’s are rewarded very well if they eliminate jobs. Managing a company is not altruistic. Perhaps we need better incentives to reward production. (notice the term “managing”; CEO’s do not have a stake in the final outcome of a company…if the company falters, the CEO will move to greener grass with all his assets in tact).

  54. Yes, Marx envisaged exactly this – socialism is inevitable, AFTER a huge technological advance like this. Lenin and the other communists did not follow Marx and decided to carry out their revolutions too early.

    Lenin was financed by German / British bankers, probalby in the hope that they would control Russia through him.

  55. Money stands in as a good, and can circulate forever, unless drained with taxes. Credit stands in for money, and disappears into the ledger upon payback. Credit has future tense, money has past tense. If money circulates quickly, it behaves an a marker to settle transactions and contracts. If money circualtes slowly i.e. hoarded, the user is asking it to stay stable as a capital asset. Hoarding causes deflation, making money appear to be more valuable relative to goods and services.

    Usury applied to money tends to vector toward savers. Usury applied to Credit vectors toward those who create credit-money, e.g. banks.

    This usury flow concentrates to the top of the financial pyramid, forming financial capital hoards. Financial capital is not the same as wealth generation. Financial capital formation is a systemic function of usury as applied to credit and money.

    Credit is generated by hypothecation, borrowing the debtors credit, is a form of fraud. Liabilities on credit ledger are marked with usury, as if credit is money. There is no lost future opportunity with credit, especially when it is created on a keyboard. Credit formation should be only fees that represent actual costs, and any usury should be simple (not compounding), and not exceed principle. (The doubling of principle rule allows money to follow natural population limits, so it doesn’t compound to infinity.) Money is sterile, it cannot reproduce itself magically, and hence it should not grow exponentially (compounding usury), nor should it vector to those who don’t produce wealth by using keystrokes.

    Capitalism can start to work again, when the money system itself is fixed. We don’t need labor unions to redress financial capitalism if the root problems are corrected.

  56. I’m sorry but.. “unless drained with taxes”. Just.. no. Money doesn’t disappear through taxation and spending, it’s just another form of circulation. (One that CAN grow too large if it crowds out things that are needed more.)

    The only draining that is going on is into the financial sector and offshore accounts. But THAT on the other hand, is huge.

    On a semi-related note, I put this FRED graph together today:

    Notice how total income tracks so-so with ALLMON.
    Notice how Joe Worker’s income does NOT track with either of them.
    House price line added for illustrative purposes. Someone has to pay for the increased amount of money. Joe Worker is.

  57. Right Mikael. The idea that taxes destroy money is an MMT idea. And it’s wrong. The way our system is designed is that the govt is a user of its own money. That is, it must procure funds from the private sector before it can use that money. Yes, it’s true that the govt could theoretically just print up its own money and issue it without taxing or borrowing. But the system is not designed that way. The govt is designed as a user of its own money. Therefore, taxing is the taking of private sector “inside money” and redistributing it to other people. Taxes do not drain money. They redistribute money.

  58. Ack, sorry, I temporarily forgot the MMT-ism of govt creation+destruction of money.

    Hey, I stumbled over an awesome quote I had totally missed:

    “The privilege of creating and issuing money is not only the supreme prerogative of Government, but it is the Government’s greatest creative opportunity. By the adoption of these principles, the long-felt want for a uniform medium will be satisfied. The taxpayers will be saved immense sums of interest, discounts and exchanges. The financing of all public enterprises, the maintenance of stable government and ordered progress, and the conduct of the Treasury will become matters of practical administration. The people can and will be furnished with a currency as safe as their own government. Money will cease to be the master and become the servant of humanity. Democracy will rise superior to the money power.”
    – Abraham Lincoln

  59. On a related note, I try to say “tax and spend” rather than “redistribute” these days. The latter seems to trigger “ARGH COMMUNISTS” reflexes… :S

  60. Then again “spend” isn’t optimal either; some read “use up” or “waste” into that word. Is there a better one?

    “The govt taxes and buys from the private sector”? Kinda long.

  61. Completely aware of today’s reality. It’s just a good quote to throw in someone’s face when they’re being Extremely Difficult :)

  62. Redistribution is only pejorative if it’s used in reference to inefficient spending. I think people should just get over the fact that govt takes from us all to give to others. That’s just how it works. The govt redistributes. If we want more efficient redistribution then vote for change.

  63. No. Money, defined properly, stays in the supply and circulates. It can best be discerned by its drain rate. Government can pull it from supply and respend (tax and spend), or they can destroy…which they never do.

    Please don’t confuse credit and money, a typical mistake of MMT adherents. Credit comes off of a double entry ledger, and returns to said ledger.

    Because we use credit as money doesn’t make them the same things.

    Any credit draining overseas returns to its source, the double entry ledger eventually.

    If the credit/debt contract is canceled witout money (by grabbing), then former credit money may stay in the supply and circulate. This is why bankers like depressions, so former credit money circulates.

  64. That is false. Credit absolutely, positively is money. The definition of money is simple. Its primary function is a medium of exchange. Yes, it has other purposes, but that is its primary and most important function. Credit is designed specifically to facilitate exchange. So, to say that it is not money is wrong.

    You and MMT make the same mistake. You claim bank money is not real money, but only a claim on govt money. That cash, reserves and coins are the only true form of money. That is 100% wrong. You all make the same neoclassical mistake of claiming the govt is the centerpiece of the monetary system. That’s is categorically false. Banks and bank money are the center of the monetary universe. The govt money like notes, reserves and coins simply facilitate the use of credit as money. In fact, if there was no bank credit there would be no need for a reserve system. And if you don’t first have credit you can’t draw down your bank account using notes. Go to an ATM or a bank and try to take out cash without first having deposits. It doesn’t work. These forms of govt (outside money) facilitate the use of inside bank money.

    You, MMT, and all the neoclassicals have it totally backwards!

  65. I suspect the fallacy is rooted in the idea that credit is repaid. That may be true for an individual loan. But in aggregate, it is most empathetically NOT.

    Granted what we are seeing now is credit-created money shrinking a bit, and it hurts. Seen that way, credit-created money isn’t quite as good as debt-free money because a sane govt would never shrink the money supply in a recession.

  66. Yes. Private debt doesn’t get repaid in the aggregate even though it gets repaid in micro circumstances. But people extrapolate this micro idea out to the macro. A fiat monetary system designed with private banking must always expand credit growth since it is credit that is the primary medium of exchange.

  67. No. History shows otherwise. When DeBeers put a head tax on the Africans, it forced them to work for their money. In other words, a money economy was started by using taxes. There was plenty of gold and diamonds, but the African’s worked to death in the mines to pay the head tax.

    When Mass Bills circulated, they were issued as a promise to receive, not a promis to pay. They circulated as money, and the motive force for currency was to receive as taxes.

    The motive force for credit is a debt agreement to pay back the banks “credit.” Credit then stands in as money because our law recognizes it to also be received as taxes. Credit is a doppleganger standing in for money. Credit pops into being on a ledger and disappears into the ledger. Money has a different genesis and behavior as it flows in the system.

    The three percent of coins and bills are spent as seigniorage against the existing money supply. They do not have motive force to drain into a leder. They are simply money that circulates in the money supply.

    Because we are in our current banker credit paradigm doesn’t change the facts, there is a fundamental difference between credit and money.

    If money is misdefined, then we cannot fix capitalism.

    Credit can become money with banker tricks, like rolling over a loan, or collapsing a debt contract (grabbing assets). Leaving bank credit in the money supply with no motive force to drain turns it to money. Rolling over debts causes usury compounding errors. Upon closer view at this point, it becmes apparent how capitalism starts to fail.

  68. You’re making the exact same argument that MMT makes. That taxes drive money. This is only true in a very narrow sense. Laws establish the national medium of account. Taxes are the way a govt moves resources from private to public domain. But taxes do not drive money. They are merely the way the govt leverages private sector wealth to recirculate for public purpose.

    Your example falls apart just as easily as it’s constructed. When a nation suffers hyperinflation it does not run out of taxing authority. Mugabe did not run out of power in Zimbabwe. He ran out of private sector output to tax. It is output that drives money. Not taxes. As such, anything that serves as a medium of exchange can be defined as money. Credit is just one form of money issued by banks. And it is the dominant form of money in our economy.

    Further, notes and coins are fast becoming extinct. Almost all of the transactions that occur in the modern monetary system are done via transfer of bank deposits. Soon, there will be no need for notes and coins. Your purest form of money is fast becoming irrelevant. You are making the mistake of assuming that money is a physical thing when the reality is that money is primarily a medium of exchange that need not exist in any physical form.

  69. Money first came into being in the temples, most probably in Babylon. They were used as an accounting method for settling accounts. The workers in the Temple Guilds were paid in barley weights of money. The Temple would be “Force and Law” and the workers agreed to receive money for their labor. There was little differnce between Temple and Government in this case. Government’s can be force and law behind money. The first corporations in England and Holland had their own mercenary force in case contracts fell apart. Later when the Bank of England became private (1694), government was hosted to the bank’s ends, and the population was soon made into debt peons.

    Taxes are only an extension of legality, which in turn is an extension of force. This is why private banking money (credit) is always used to host government; this must be done in order to add law and force to bank money created during credit/debt contracts. Today’s banks don’t need their own army because government accepts their credit to pay in taxes, and laws are place to codify the private banking system.

    See, by misdefining and conflating credit with money, the question “Why do we charge so much usury for Credit?” can never be asked. And then, we never get to the root problems of capitalism.

  70. There you go again attaching money to govt. Money pre-dates govt. In fact, money is found in many primitive animals in the form of promises or social debts. Your attempts to discover the origin of money are attempts to attach it to a political belief via govt or via something physical. Money has no roots in govt or physical things. Its roots lie in our heads in the form of non-physical social constructs.

  71. Money does not need to be in physical form. It is an accounting method that matches the amount of goods and services produced.

    Credit has a hard time matching the amount of goods and services as it is once removed from reality of labor’s needs, meaning credit comes into being with debt contracts. Worse, credit charges usury as if it was money. A banker does not issue his own money, he borrows the debtors credit through hypothecation. Simply for the act of selecting buttons on a keyboard, as if he was trading stored up wealth, he gets to acquire usury rights?

    In 2012, accounting rules in the U.S. redefined money to be a “divsion of the commonwealth.” (Yes I also think it is nebulous, but its a step in the right direction.) Credit money as issued by banks, would then define to be a “division of debt contracts.”

  72. Credit and Debt contracts lie in our heads, not money. I can borrow a Chicken from you and I immediately become a debtor. I can pay you back with a chicken, and our credit/debt contract is settled. If I keep your Chicken for a long time, I may have to pay you back two Chicken’s and maybe some eggs. That would be interest on the good, due to loss of use over time. Or, I can use money to pay back the “good”. Money stands in for the Chicken as a good at the moment of transaction. Again, credit/debt transactions can be settled without money.

    Credit/Debt contracts are so deeply wired in our primitive brains, it is hard to dislodge the idea that it is not money. We feel it, but that doesn’t make it so.

    If I have to pay you back your goods with extra “money” that creates the usury error. Money is sterile, and does not reproduce. The whole world is held hostage to the usury error and misdefintion of money.

    In populations of less than 70, people in tribes simply remembered who owed what to whom. Talleys then evolved to keep track of credit/debt contracts. Talleys are high information, low velocity, and are used to settle contracts at fairs.

    Money is not credit. Confusing it as such is an error.

  73. You think money is a physical thing. That argument is running out of time as physical notes and coins go extinct. In 50 years your argument will be entirely proven false as we have nothing but a credit based system where bank deposits and numbers in computer systems dominate every single exchange. This is already evolving even though you fail to admit it. The MMT and neoclassical arguments designed around govt money or physical things is going entirely extinct and will be proven wrong in my lifetime as we see economies emerging entirely around bank credit.

    You will then argue that money is extinct. But you will be wrong.

  74. Money is a slippery SOB. I can’t think of anything that is more difficult to define, at least to most people’s satisfaction. The lack of agreement on what money is exactly, after all this time, is astounding.

  75. Money is an accounting identity that should match volume goods and services. It is an abstract concept, which is why it takes advanced law and societal constructs to come into being.

    Credit money as issued by banks is also abstract, but it is a division of debt contracts, and stands in for money.

    The law and force element applied to both bank money (credit money) and real money is easy to see. If I didn’t pay you back your chicken to settle our contract, then you would want to bash my head (force) or go to the law (if developed).

    Money can be defined as something that wants to stay in the supply, and not drain away. It simply is there, matching goods and services, and is usable as an accounting identity to settle contracts. If it is drained away, it can be done so by taxes, and not respent. In that way, money is available at low cost to settle debt/credit contracts.

    Bank money on the other hand, is a poor substitute since it wants to drain into the ledger, causing deflation, and comes into being with usury always attached. Bank money (credit)would be a lot more useful if we didn’t charge so much for it, but we will never get to that point of discussion it seems. BM should only come with fees, and we should eliminate compounding.

  76. I still think you are explaining things in a confusing and roundabout way but I agree that the direction we are headed seems doomed.

    Interest rates have been dropping decade over decade and I have to wonder how long we can keep up slashing interest rates to enable credit expansion. Houses are passing the point where it is possible to pay them in a life time of work.

  77. I see the point you are making. State-issued debt-free money = very good. Credit has problems attached to it. I think everyone is in agreement about that.

    For everyday purposes, Credit = Money like CR is trying hard to hammer in.
    And I think you agree here too except you are being quite difficult about it :)

    In long term macro, it is NOT the same.