Cryptocurrency: Fixes The Waterworks Of Money
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Thu Jun 22 00:40:31 PDT 2023
The Waterworks Of Money
The money system visualized as an irrigation system
Authors: Carlijn Kingma (cartographer), Thomas Bollen (investigative
journalist) and Martijn van der Linden (professor New Finance at The
Hague University of Applied Sciences).
Most countries are dealing with a ‘cost of living crisis’. High
inflation is eating into the budgets of ordinary people, which were
already tight. Over the past decade wages have fallen sharply behind
compared to corporate profits and shareholder remuneration. Meanwhile
the collapse of US banks and the bailout of Swiss banking giant Credit
Suisse show that financial instability remains an ongoing threat.
And there may be more skeletons in the closet. Not only within the
tightly regulated banking sector, but also at ‘non-banks’. In April
2023 Klaas Knot, chair of the Financial Stability Board, warned for
the known unknowns at other financial institutions: ‘If they are
hidden for a very long period of time, sometimes the problem then
grows so big, that it only becomes unhidden or visible when it's too
big to deal with.’
The problems of cost of living and financial instability cannot be
seen in isolation from the design of our money system.
Floods and droughts
The money system is to the economy what an irrigation system is for
farming lands. Just as irrigation helps crops grow, money allows the
economy to flourish. But if the architecture is fragile, or the
sluices and floodgates are mismanaged, severe droughts will cause
hardship and suffering.
During the past decade the super-rich and large corporations could
borrow at record low interest rates. In 2019 hedge fund billionaire
Ray Dalio warned of the consequences of what he considered a ‘broken
system’. He pointed out that while ‘money is essentially free for
those who already have money and creditworthiness’, it’s ‘essentially
unavailable’ to those who don’t. This, he explained, contributes to
the widening wealth gap, opportunity gap, and political divides we see
today. The financial sector flooded certain parts of the economy while
other parts remained parched.
During the pandemic the floodgates were opened even further. Although
some free paychecks were sent to the people at the bottom of society –
in the US for example several programmes were rolled out to support
the unemployed – the chasm between the poor and rich grew further. The
easy money boosted the markets for yacht-backed-loans and securities,
dividends, share buy-backs, and M&A deals to new highs in 2021 and
2022. This came at the price of higher inflation. Ordinary citizens in
many countries now struggle to make ends meet. Even despite pay
raises, their real wages (accounting for the net effects of inflation)
have further declined.
‘The Waterworks of Money’, an architectural map of the money system
drawn by cartographer Carlijn Kingma
The two-tiered state
Fixing the design flaws within society’s irrigation system is not a
commercial or technocratic task, but a democratic one – or as the
American economist John H. Cochrane succinctly put it: ‘We voters need
to tell our politicians which kind of central bank we want.’
The same applies for other parts of our money system; the payment
infrastructure, the tax regime and the investment of our pension
savings. Who gets the power to create and allocate new money––and for
what purposes? How can we make large corporations pay their fair share
of taxes instead of shifting the burden to family businesses? And what
needs to be done if we want the rules of a market economy to apply for
the banking sector as well? Answering the big questions that shape our
economy, requires continuous political engagement.
In a democracy, the power to design the money system––and the laws and
institutions that govern it––is ultimately in the hands of the people.
However, in practice there is a big obstacle impeding the democratic
process. ‘In the age of the CDS and CDO, most of us are financial
illiterates,’ wrote US financial journalist Matt Taibbi in 2009.
Taibbi tried to raise awareness of the dangers of ‘financial
illiteracy’. He argued that by making finance needlessly complex, the
bankers transformed our democracy into a ‘two-tiered state, one with
plugged-in financial bureaucrats above and clueless customers below.’
Anyone unfamiliar with the jargon of economists, bankers and tax
experts is excluded from the public debate on how our monetary system
Why reform is necessary
After every crisis, the consequences of this exclusion become visible.
In the aftermath of 2009, ordinary citizens footed the bill for the
bank bailouts––the US Treasury spent 420 billion dollars and European
countries roughly 1.6 trillion euros (Estimated costs of bailouts by
EU member state governments €1.6tn, US $426.4bn. Howarth, D., and S.
James (2022). Banking Politics: Structural Reform in Comparative
Perspective. Oxford: Oxford University Press). Meanwhile, the bankers
were negotiating the conditions of their own rescue packages and
drafted future regulations.
The actual power over our monetary architecture is in the hands of a
small and exclusive group – often employed by, or with close ties to
the financial sector. In essence, they propped up the existing banking
architecture, without addressing the fundamental design flaws that
make it so fragile. When former American president Barack Obama signed
the new banking regulations in 2010 he said: ‘There will be no more
tax-funded bailouts. Period.’ However, in 2023 the US government had
to dip into the public purse again to save four large banks from
bankruptcy, and prevent ‘contagion’ to the rest of the financial
system. Privatizing profits while socializing risks and losses has
become standard practice.
The Waterworks of Money
In his 2009 polemic Taibbi concluded: ‘There is a reason it used to be
a crime in the Confederate states to teach a slave to read: Literacy
is power.’ To put the power back into the hands of the people, we need
to demystify the world of finance.
With this mission in mind, we (cartographer Carlijn Kingma,
investigative financial journalist Thomas Bollen, and professor New
Finance Martijn van der Linden) worked for two and half years to map
‘The Waterworks of Money’, an architectural visualization of our money
system that bypasses the economic jargon. Kingma spent 2300 hours
drawing this map by hand, based on in-depth research and interviews
with more than 100 experts––from central bank governors and board
members of pension funds and banks to politicians and monetary
In an animated video, we walk you through a metaphorical
representation of our money system, its hidden power made manifest.
Only if ordinary citizens develop their own vocabulary to participate
in the debate about our money system, can they tell their politicians
which kind of ‘financial irrigation system’ they want.
The Waterworks of Money is at the moment exhibited in Kunstmuseum Den
Haag, and reproductions can be seen at the Dutch pavilion at the
Venice Biennale. For more info, see waterworksofmoney.com
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