limo:low-impact-money

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limo:low-impact-money [2025/11/07 02:39] – katjalimo:low-impact-money [2025/11/12 17:02] (current) – katja
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---- 
-title: "Low-impact money" 
-date: 2014-05-12 
-categories:  
-  - "money" 
-tags:  
-  - "blockchain" 
-  - "building-societies" 
-  - "commons-economy" 
-  - "credit-clearing" 
-  - "credit-commons" 
-  - "credit-unions" 
-  - "cryptocurrencies" 
-  - "fair-trade" 
-  - "free-open-source" 
-  - "local-currencies" 
-  - "low-impact-shopping" 
-  - "mutual-credit" 
-  - "philosophy" 
-  - "rotating-savings-credit-associations-roscas" 
-  - "small" 
-  - "steady-state-economics" 
-  - "use-credit-obligations" 
-coverImage: "Money-main3.jpg" 
---- 
 # Low-impact money # Low-impact money
  
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 > “The study of money, above all other fields in economics, is the one in which complexity is used to disguise truth or to evade truth, not to reveal it.” - J K Galbraith > “The study of money, above all other fields in economics, is the one in which complexity is used to disguise truth or to evade truth, not to reveal it.” - J K Galbraith
  
-### What is low-impact money?+ 
 +## What is low-impact money?
  
 This is a complicated topic, so to understand the answer to that question, first we have to define money. What you’ll often read is that money functions as: This is a complicated topic, so to understand the answer to that question, first we have to define money. What you’ll often read is that money functions as:
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-#### History of money+### History of money
  
 Many economics textbooks still claim that money evolved from barter – but it’s not true. There’s [never been a society in which barter was the means of exchange](https://www.theatlantic.com/business/archive/2016/02/barter-society-myth/471051/) (it’s too difficult to find someone who wants what you have and has what you want). Many economics textbooks still claim that money evolved from barter – but it’s not true. There’s [never been a society in which barter was the means of exchange](https://www.theatlantic.com/business/archive/2016/02/barter-society-myth/471051/) (it’s too difficult to find someone who wants what you have and has what you want).
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 Here's our '[brief history of money](http://lowimpact.local/infoarticle/brief-history-of-money/)'. Here's our '[brief history of money](http://lowimpact.local/infoarticle/brief-history-of-money/)'.
  
-#### Where does money come from now?+### Where does money come from now?
  
 Most people probably believe that the state creates money. That’s true for about 3% of money – coins, notes and central bank reserves. The other 97% is created by banks when they make loans. If you borrow £10k from a bank, they haven’t taken that money from anywhere else. They’ve just created it from nothing and deposited it in your account. [More...](http://lowimpact.local/categories/money/further-info/brief-history-of-money#__RefHeading___Toc41879_2618143146) Most people probably believe that the state creates money. That’s true for about 3% of money – coins, notes and central bank reserves. The other 97% is created by banks when they make loans. If you borrow £10k from a bank, they haven’t taken that money from anywhere else. They’ve just created it from nothing and deposited it in your account. [More...](http://lowimpact.local/categories/money/further-info/brief-history-of-money#__RefHeading___Toc41879_2618143146)
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 It’s not even a ‘fractional reserve’ system any more, in that that no portion of the money banks lend out needs to be held in reserve anywhere. Their decisions are solely based on confidence that the loans will be repaid (with interest). This is proven by [Richard Werner](https://www.sciencedirect.com/science/article/pii/S1057521914001070) and confirmed by the [Bank of England](https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/quarterly-bulletin-2014-q1). It’s not even a ‘fractional reserve’ system any more, in that that no portion of the money banks lend out needs to be held in reserve anywhere. Their decisions are solely based on confidence that the loans will be repaid (with interest). This is proven by [Richard Werner](https://www.sciencedirect.com/science/article/pii/S1057521914001070) and confirmed by the [Bank of England](https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/quarterly-bulletin-2014-q1).
  
-{{url>https://player.vimeo.com/video/71074210 640,360 frameborder,0}}+{{url>https://player.vimeo.com/video/71074210 640,360}}
  
 _A flaw in the monetary system? Excellent video that explains how the money system, and compound interest, funnel money from the majority to a super-wealthy elite._ _A flaw in the monetary system? Excellent video that explains how the money system, and compound interest, funnel money from the majority to a super-wealthy elite._
  
-#### Low-impact money...+### Low-impact money...
  
 … is money that’s created and controlled by us, not by banks. Originator of LETSystems, [Michael Linton](http://lowimpact.local/lets-origins-michael-linton-letsystems/) said: ‘we all use their money, and it always goes away’. Where does it go away to? To tax havens and the accounts of the majority shareholders of giant corporations. We can only prevent this if the money we use is not the kind of money that can be sucked out of communities and delivered to tax havens. For that to be the case, it’s important that our means of exchange is not also a store of value. Truly low-impact money would be used to trade within communities, but it wouldn’t be possible to extract it and store it away. … is money that’s created and controlled by us, not by banks. Originator of LETSystems, [Michael Linton](http://lowimpact.local/lets-origins-michael-linton-letsystems/) said: ‘we all use their money, and it always goes away’. Where does it go away to? To tax havens and the accounts of the majority shareholders of giant corporations. We can only prevent this if the money we use is not the kind of money that can be sucked out of communities and delivered to tax havens. For that to be the case, it’s important that our means of exchange is not also a store of value. Truly low-impact money would be used to trade within communities, but it wouldn’t be possible to extract it and store it away.
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-### What are the benefits of low-impact money?+## What are the benefits of low-impact money?
  
 Well, nothing we do to try to move to a sustainable, healthy and democratic society will work as long as we have the current money system, because money has those two conflicting functions – i.e. it can be used to buy and sell things, and it can be used to store, hoard, accumulate and become wealthy with. As long as that’s the case, money will gravitate towards stored wealth, because money attracts money and gives access to the political system. This continues until so much money is concentrated, and so little is circulating that the economy crashes - as it has many times - and will continue to do so until those two functions are separated. During crashes, communities are devastated and ordinary people suffer. During booms, nature is destroyed. So there’s never a ‘good’ part of the ‘boom-and-bust’ business cycle. Well, nothing we do to try to move to a sustainable, healthy and democratic society will work as long as we have the current money system, because money has those two conflicting functions – i.e. it can be used to buy and sell things, and it can be used to store, hoard, accumulate and become wealthy with. As long as that’s the case, money will gravitate towards stored wealth, because money attracts money and gives access to the political system. This continues until so much money is concentrated, and so little is circulating that the economy crashes - as it has many times - and will continue to do so until those two functions are separated. During crashes, communities are devastated and ordinary people suffer. During booms, nature is destroyed. So there’s never a ‘good’ part of the ‘boom-and-bust’ business cycle.
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 It’s important to understand the difference between a [commodity-based economy and a money-based economy](http://lowimpact.local/capitalism-free-market/). In a commodity-based economy, people do useful work, for which they receive some means of exchange, which they use to purchase the results of other people doing useful work. In a money-based economy, people with money invest in the production of commodities, which they sell in order to make more money. They don’t produce anything, and they have no interest in the commodities produced – they’re only interested in the money they can accumulate. It’s important to understand the difference between a [commodity-based economy and a money-based economy](http://lowimpact.local/capitalism-free-market/). In a commodity-based economy, people do useful work, for which they receive some means of exchange, which they use to purchase the results of other people doing useful work. In a money-based economy, people with money invest in the production of commodities, which they sell in order to make more money. They don’t produce anything, and they have no interest in the commodities produced – they’re only interested in the money they can accumulate.
  
-{{url>https://www.youtube.com/embed/bmR4qtEdu0I 560,315 frameborder,0}}+{{url>https://www.youtube.com/embed/bmR4qtEdu0I 560,315}}
  
 _10-year-old girl explains to her teddy where money comes from. I’m not sure he believes her – but she’s right. More introductory videos from Positive Money [here](https://positivemoney.org/videos/introduction/)._ _10-year-old girl explains to her teddy where money comes from. I’m not sure he believes her – but she’s right. More introductory videos from Positive Money [here](https://positivemoney.org/videos/introduction/)._
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-### What can I do?+## What can I do?
  
 It’s a complicated subject, so there’s a lot to learn. See further resources, below, for a few free resources we recommend. It’s a complicated subject, so there’s a lot to learn. See further resources, below, for a few free resources we recommend.
  
-{{url>https://www.youtube.com/embed/3HdmA3vPbSU 560,315 frameborder,0}}+{{url>https://www.youtube.com/embed/3HdmA3vPbSU 560,315}}
  
 _The goldsmith’s tale – an ‘origin of money’ story._ _The goldsmith’s tale – an ‘origin of money’ story._
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 As Henry Kissinger said: ‘Who controls money controls the world’. So unless we’re happy with a financial elite controlling the world, we have to control it ourselves. As Henry Kissinger said: ‘Who controls money controls the world’. So unless we’re happy with a financial elite controlling the world, we have to control it ourselves.
 +## Further resources
  
-### Further resources +- Matthew Slater and Jem Bendell’s [Money and Society MOOC](https://matslats.net/money-society-mooc)
- +
-- Matthew Slater and Jem Bendell’s [_Money and Society MOOC_](https://matslats.net/money-society-mooc)+
  
-- Tom Greco’s updated, 2024 version of [_The End of Money and the Future of Civilisation_](https://beyondmoney.net/welcome-to-the-new-2024-edition-of-the-end-of-money-and-the-future-of-civilization/)+- Tom Greco’s updated, 2024 version of [The End of Money and the Future of Civilisation](https://beyondmoney.net/welcome-to-the-new-2024-edition-of-the-end-of-money-and-the-future-of-civilization/)
  
 - Brett Scott’s [Altered States of Monetary Consciousness](https://brettscott.substack.com/) - Brett Scott’s [Altered States of Monetary Consciousness](https://brettscott.substack.com/)
  
-- Glyn Davies’ [_History of Money (pdf)_](https://lowimpactorg.onyx-sites.io/wp-content/uploads/HistoryOfMoney.pdf)+- Glyn Davies’ [History of Money (pdf)](https://lowimpactorg.onyx-sites.io/wp-content/uploads/HistoryOfMoney.pdf)
  
-- David Graeber’s [_Debt: the first 5000 yea_](http://lowimpact.local/categories/money/books)_[rs](https://lowimpactorg.onyx-sites.io/wp-content/uploads/Debt-first-5000-years.pdf) (pdf)_+- David Graeber’s [Debt: the first 5000 years](https://lowimpactorg.onyx-sites.io/wp-content/uploads/Debt-first-5000-years.pdf) (pdf)
  
 - Positive Money’s [video series](https://positivemoney.org/videos/) - Positive Money’s [video series](https://positivemoney.org/videos/)
  
-### Specialist(s) 
  
-**The specialist(s) below will respond to queries on this topic. Please comment in the box at the bottom of the page.**+## Specialist(s)
  
 ![](https://lowimpactorg.onyx-sites.io/wp-content/uploads/Brett-Scott-2.jpg) ![](https://lowimpactorg.onyx-sites.io/wp-content/uploads/Brett-Scott-2.jpg)
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  • Last modified: 2025/11/07 02:39
  • by katja