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| limo:money [2025/12/05 19:24] – [What are the benefits of low-impact money?] asimong | limo:money [2025/12/17 04:30] (current) – external edit 127.0.0.1 |
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| Probably what most people think of when they hear the word ‘money’. | _Probably what most people think of when they hear the word ‘money’._ |
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| Money appeared in many forms at various times in different parts of the world; but here are three important ways that money originated. | Money appeared in many forms at various times in different parts of the world; but here are three important ways that money originated. |
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| **Tax tokens:** this was a way of building empires stretching back to ancient times. A king stamps his head on coins, pays soldiers with them and demands them as taxes, so that all subjects have to provide goods and services to the soldiers and to the king, to obtain the coins. [More...](/limo/money) | **Tax tokens:** this was a way of building empires stretching back to ancient times. A king stamps his head on coins, pays soldiers with them and demands them as taxes, so that all subjects have to provide goods and services to the soldiers and to the king, to obtain the coins. [More...](https://www.lowimpact.org/categories/money/further-info/brief-history-of-money/#tax-tokens) |
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| **Goldsmith’s** **receipts****:** goldsmiths kept valuables in their store-rooms and provided receipts that could then be passed around as, in effect, money – because everyone knew the receipts were good for real gold or jewels. Goldsmiths saw that people didn't often come to collect their valuables, so started lending money backed by gold in their vaults. They eventually realised that they could lend out more than they actually had, and became fabulously wealthy. This is the basis of ‘fractional reserve’ banking – i.e. they only had a fraction of what they lent in reserve in their vaults. [More..](/limo/money). | **Goldsmith’s** **receipts****:** goldsmiths kept valuables in their store-rooms and provided receipts that could then be passed around as, in effect, money – because everyone knew the receipts were good for real gold or jewels. Goldsmiths saw that people didn't often come to collect their valuables, so started lending money backed by gold in their vaults. They eventually realised that they could lend out more than they actually had, and became fabulously wealthy. This is the basis of ‘fractional reserve’ banking – i.e. they only had a fraction of what they lent in reserve in their vaults. [More..](https://www.lowimpact.org/categories/money/further-info/brief-history-of-money/#goldsmiths) |
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| **'Common tender':** this can include traders' market money, or informal mutual credit. Imagine a medieval village in which everyone is a producer and a consumer, and knows everyone else, but no-one has any money. Everyone manages to obtain the services of thatchers, carpenters, farmers, fishermen, blacksmiths, bakers, brewers, cheesemakers, weavers, leatherworkers, basketmakers etc. because everyone keeps a tally in their head (or maybe in a more formal way), of what’s been provided to the community (including by you). If anyone is lazy or unreliable, people won’t want to provide things for them, and so everyone plays the game, and they all get what they need. [More...](/limo/money) | **'Common tender':** this can include traders' market money, or informal mutual credit. Imagine a medieval village in which everyone is a producer and a consumer, and knows everyone else, but no-one has any money. Everyone manages to obtain the services of thatchers, carpenters, farmers, fishermen, blacksmiths, bakers, brewers, cheesemakers, weavers, leatherworkers, basketmakers etc. because everyone keeps a tally in their head (or maybe in a more formal way), of what’s been provided to the community (including by you). If anyone is lazy or unreliable, people won’t want to provide things for them, and so everyone plays the game, and they all get what they need. [More...](https://www.lowimpact.org/categories/money/further-info/brief-history-of-money/#common-tender) |
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| During Alexander the Great’s conquest of Persia, he looted silver and used [half a ton of it per day](http://projects.exeter.ac.uk/RDavies/arian/war.html) to pay his army. Subjects of his empire then had to obtain silver coins from the soldiers to pay their taxes. | _During Alexander the Great’s conquest of Persia, he looted silver and used [half a ton of it per day](http://projects.exeter.ac.uk/RDavies/arian/war.html) to pay his army. Subjects of his empire then had to obtain silver coins from the soldiers to pay their taxes._ |
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| Here's our '[brief history of money](http://lowimpactorg.onyx-sites.io/infoarticle/brief-history-of-money/)'. | Here's our '[brief history of money](http://lowimpactorg.onyx-sites.io/infoarticle/brief-history-of-money/)'. |
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| ### Where does money come from now? | ### Where does money come from now? |
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| 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...](/limo/money) | 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...](https://www.lowimpact.org/categories/money/further-info/brief-history-of-money#__RefHeading___Toc41879_2618143146) |
| 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). |
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| The [Cayman Islands](https://www.theguardian.com/us-news/2016/jan/18/the-cayman-islands-home-to-100000-companies-and-the-850-packet-of-fish-fingers). Population, c. 65,000. Registered companies, c. 100,000. Tax havens have allowed corporations and wealthy individuals to stash away [somewhere between $8 trillion and $36 trillion](https://www.imf.org/external/pubs/ft/fandd/2019/09/tackling-global-tax-havens-shaxon.htm) that they’ve extracted from business activities all over the world. Small businesses have to pay tax. Large ones can avoid it. We need to level the playing field. | _The [Cayman Islands](https://www.theguardian.com/us-news/2016/jan/18/the-cayman-islands-home-to-100000-companies-and-the-850-packet-of-fish-fingers). Population, c. 65,000. Registered companies, c. 100,000. Tax havens have allowed corporations and wealthy individuals to stash away [somewhere between $8 trillion and $36 trillion](https://www.imf.org/external/pubs/ft/fandd/2019/09/tackling-global-tax-havens-shaxon.htm) that they’ve extracted from business activities all over the world. Small businesses have to pay tax. Large ones can avoid it. We need to level the playing field._ |
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| - it doesn’t require perpetual GDP growth ([which damages ecology](/stea/steady-state_economics)) | - it doesn’t require perpetual GDP growth ([which damages ecology](/stea/steady-state_economics)) |
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| - it doesn’t concentrate wealth in very few hands ([which prevents democracy](/thde/the_democracy_problem)) | - it doesn’t concentrate wealth in very few hands ([which prevents democracy](/demo/democracy)) |
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| - it prevents the means of exchange from being sucked out of communities and stored (which reduces [community resilience and well-being](/comy/community)) | - it prevents the means of exchange from being sucked out of communities and stored (which reduces [community resilience and well-being](/comy/community)) |
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| Gold mining destroys landscapes and involves the leaching of toxic waste including cyanide, mercury and sulphuric acid. [One gold mine in Papua New Guinea](https://actnowpng.org/sites/default/files/The%20environmental%20effects%20of%20mining%20waste%20disposal%20at%20Lihir%20Gold%20Mine,%20Papua%20New%20Guinea.pdf) alone is pumping millions of tonnes of tailings containing toxic waste into the Pacific Ocean each year, contaminating the food chain and wiping out life on the sea bed. | _Gold mining destroys landscapes and involves the leaching of toxic waste including cyanide, mercury and sulphuric acid. [One gold mine in Papua New Guinea](https://actnowpng.org/sites/default/files/The%20environmental%20effects%20of%20mining%20waste%20disposal%20at%20Lihir%20Gold%20Mine,%20Papua%20New%20Guinea.pdf) alone is pumping millions of tonnes of tailings containing toxic waste into the Pacific Ocean each year, contaminating the food chain and wiping out life on the sea bed._ |
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| [Rai stone](https://en.wikipedia.org/wiki/Rai_stones) on the island of Yap in the south Pacific. Believe it or not, these were used as money for hundreds of years. They came in different sizes, but some weren’t very portable at all. Legend has it that one large stone fell from a boat and lay at the bottom of the ocean – but was still used for monetary transatctions (ownership of the stone changed, even though it didn’t move). | _[Rai stone](https://en.wikipedia.org/wiki/Rai_stones) on the island of Yap in the south Pacific. Believe it or not, these were used as money for hundreds of years. They came in different sizes, but some weren’t very portable at all. Legend has it that one large stone fell from a boat and lay at the bottom of the ocean – but was still used for monetary transatctions (ownership of the stone changed, even though it didn’t move)._ |
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| Virtually all new money is created by banks, as debt, with interest attached. The money system is not designed to promote circulation, but [accumulation and concentration](http://lowimpactorg.onyx-sites.io/why-the-banks-have-so-much-power-and-how-we-can-take-it-away-from-them/). But we really don’t need this kind of money system, when we can issue credit to each other in communities, and those communities can trade with each other. The technology exists to supersede the existing money system in ways that promote trade and work, rather than extraction and speculation. | _Virtually all new money is created by banks, as debt, with interest attached. The money system is not designed to promote circulation, but [accumulation and concentration](http://lowimpactorg.onyx-sites.io/why-the-banks-have-so-much-power-and-how-we-can-take-it-away-from-them/). But we really don’t need this kind of money system, when we can issue credit to each other in communities, and those communities can trade with each other. The technology exists to supersede the existing money system in ways that promote trade and work, rather than extraction and speculation._ |
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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. |
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| ## Further resources | ## Further resources |
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| - Matthew Slater and Jem Bendell’s _[Money and Society MOOC](https://matslats.net/money-society-mooc)_ | - Glyn Davies’ (2002) _[History of Money](https://lowimpactorg.onyx-sites.io/wp-content/uploads/HistoryOfMoney.pdf)_ (pdf) |
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| - 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/)_ | - David Graeber’s (2011) _[Debt: the first 5000 years](https://lowimpactorg.onyx-sites.io/wp-content/uploads/Debt-first-5000-years.pdf)_ (pdf) |
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| - Brett Scott’s _[Altered States of Monetary Consciousness](https://brettscott.substack.com/)_ | - Matthew Slater and Jem Bendell’s (2015–16) _[Money and Society MOOC](https://matslats.net/money-society-mooc)_ |
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| - Glyn Davies’ _[History of Money](https://lowimpactorg.onyx-sites.io/wp-content/uploads/HistoryOfMoney.pdf)_ (pdf) | - Tom Greco’s (2024) _[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/)_ |
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| - David Graeber’s _[Debt: the first 5000 years](https://lowimpactorg.onyx-sites.io/wp-content/uploads/Debt-first-5000-years.pdf)_ (pdf) | - Brett Scott’s _[Altered States of Monetary Consciousness](https://brettscott.substack.com/)_ |
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| - Positive Money’s [video series](https://positivemoney.org/videos/) | - Positive Money’s [video series](https://positivemoney.org/videos/) |
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| ## Specialists | ## Specialist curators of this topic |
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