"Mr. Gill owes about $45,000 in federal student loans, plus another $40,000 to his parents. That investment in his future has led to a secure job with decent pay and good benefits. But it has left him with tremendous financial constraints, as he faces chipping away at the debt for years on end.
The Federal Reserve Bank of New York, in a new study, found that 30-year-olds with student loans were now less likely to have debts like home mortgages than 30-year-olds without student loans — even though most of those with student loans are better educated and can expect to earn more money over their lifetimes. The same pattern holds true for 25-year-olds and car loans.
This is surely a different start than any modern generation has had before? Can you buy a car? Can you own a home? Can you afford to have children? What does it mean for how you live your life?
Is this why so many young don't and have to find another way?
Is this why car sharing has to be a new reality? Is this why renting will become so important? Is this why owning stuff will have to be less important? Is this why in the UK so many 30 plus year olds still live with their parents?
Isn't our economy and our culture is centred on owning stuff. It has been since the dawn of agriculture. But the Millennials cannot own stuff. A whole generation will grow into middle age with few assets that they "Own".
A marker of this is car sales. Cars sales have dropped in Europe for 18 months in a row. Car sales are down 10% in Europe and 17% in Germany! Demand also sank in other major continental markets, falling 14.5% in France, 13.9% in Spain and 4.9% in Italy. The UK was the only major bright spot for car makers, with sales up 5.9%.
What does this mean to an economy that is based on selling more and more stuff?
What will this mean to marriage and family? At the moment single people and single parents are at an all time high. Can a person survive as a single in this kind of world where sharing may be the only way to have what we need?
We cannot know how this will be in any detail. But this is will be very different from any generation for 10,000 years.
It could mean the re-emergence of a society that is based on sharing and on the tribe. We used to live like this. Huans lived like this for all time - Except the last 10,000 years after the dawn of agriculture.
I worry about money today? I never used to but I do now. I am not alone. More and more people look into the future and worry that money might not buy anything or that they might now have any or both. There are all sorts of signs.
A stockmarket that is not based on the real economy. The 1% who have most of the wealth? Workers who are not rewarded for their work? Cyprus and "austerity"? Bank Bailouts that supersede everyone and everything? The rape of our environment in the search for "growth"? Bitcoin? There is lots of evidence that something wrong with money today.
Money seems to have become an end in itself and it has become too distanced from the needs of people and the planet. What is wrong and what will come? I have a few ideas that I would like to test with you.
I think that institutions have captured humanity. We think they serve us but they don't and money is central to this capture.
We go to school to learn. But in reality 60% leave school knowing almost nothing and the rest know a lot of abstract things that give them a credential. Schools teach to the test and the credential. In reality most of us leave school knowing little about what is really important. We have few practical skills. Our education system is an end in itself.
In theory our health system should keep us well. If we have a car accident it does a very good job of fixing us. But for our general health, look at the outcomes. We are all getting more and more sick and this is all costing us more and more money. Health care has become an end in itself.
What has banking become? It used to help people and business finance real things, like build a factory, a canal, a house. It used to help people trade with each other. But now most of the money in banking is made by financial manipulation. Banking has become divorced from the real economy. It is an end in itself.
And the job? If we are honest, most jobs today are also abstractions from the core of making and serving in a real way. You are a part of a machine. You are not the personification of the thing or the service. Your pay in a job is not based on the value that you create, look at how wages have lagged productivity, they are based on leverage. How low can you be paid and still turn up for work is the equation. The job is an end in itself.
But there was another way that did root everything in the real.
This picture is of a ledger that was used by merchants in the Hanseatic League from the 14 - 17 century to conduct their business.
They also had a problem with money at the time. Then money was made from gold or silver and was made only by kings. There was not enough money around to conduct trade. So the merchants of the Hanse came up with a system that solved their problem and that kept their trade OUTSIDE THE CONTROL OF GOVERNMENT.
Groups of merchants would do business with each other and use a ledger instead. I buy fish from you, we record the sale in the ledger. You buy iron from me, we enter the sale in the ledger. We supply wood and building materials to another partner, it goes into the ledger. Periodically we net the whole thing out. Very little real cash was needed. But the transactions were real. This was not barter. There was a cash value attached. So we all knew where we stood. And best of all, when we sell to outsiders, like the English, they pay cash which flushes the whole system.
This is the scale of the Hanse:
Each city had its own ledger. And then the cities had larger ledgers that made up the Baltic region.
This system can and did scale. It made the Hanse the wealthiest region in the world for several hundred years.
The ledger was a public document shared within the group. It was the partnership platform. Big deals could be done like this too such as building a fleet or improving the harbor. Bigger deals could be done when Lubeck and Danzig and other cities funded anti pirate patrols.
The entire Hanseatic League used this approach of public business to give them the edge over all who had to finance themselves using cash alone or who had to borrow conventionally. The ledger was in effect their credit system: for it enabled them to escape the bonds of a monetary system that, then, was based on physical gold and silver.
Are you starting to see how we might do this today?
The General Store and Barn Building
This is a tested idea. This is how credit also worked in rural Canada and America for hundreds of years. In rural communities there was no cash for most of the year. So how did business get done? With a ledger!
In that case the ledger was held by the General Store. Again in rural America, cash was rare and only was abundant after harvest. You bought from the store using the ledger and the store ledger was used to record you buying and selling other things with your neighbours. Harvest would flush the system when we sold to outsiders.
Without the social trust platform of the General Store, economic life in rural areas would not be possible. But here, the the power of Trust and Community built on the ledger added another layer of value. This I call Barn Building.
In rural America and Canada, social trust extended beyond good to include services.
In these kinds of communities there was also a social labour exchange. If you needed a new barn for your son, the community would give its labour in return for an expectation that you would do the same to others. Here the ledger was kept in the minds of the community. The more you were seen as being generous, you lent me your cart, you gave me a cow when my milker died, the more the entire community would be ready to aid you. In this kind of system, the more you give, the more social credit you have.
Today, this is how Open Source software works. The core deal being that I can use the elements in the system but I have to give back my improvements. The reality being that the more you give to the system, the more you can expect to get back. At first in status, or trust, and then in material help. The Open Source community lives their lives in public. Inside their world, all the key players are well known. Newbies have to prove their worth. This is normal and human.
The real world
In a value system based on real good and services, money and credit can be attached to reality. There will be enough money al the time because it is based on real trade in real things. So such a system avoids two big problems of all other money systems.
If money is rooted in a scarce commodity, like Gold or Cowrie shells, there is never enough. Kings debase the currency or others do. If the money is based on paper and the trust in a government, in the end governments debase the trust. This is what we see today. Money is worth a fraction of what it was 100 years ago. It has been no store of value.
The future of money
In parts of Europe, such as on Greek Islands, where no on has any cash, markets are emerging where all involved trade with each other based on selling real goods and real services for a money amount, like the Hanse, but based on the ledger.
My bet is that online markets will arise that are much bigger than a town on a Greek Island. Those of us who have little access to cash will be able to use the online ledger to buy and sell real goods and services.
I already consult locally for food. It's a good deal for both sides. We work out my hourly rate. This gives me a credit in the store and I buy food at her market rates. We both win.
We are learning how to insert trust into this. Look at eBay, at Airbnb. Look at sharing sites. We are so close.
For personal trust and reputation are central. This is less about contract than shame and reputation. The letter of the law will not save you if you behave badly in such a system.
At the same time, new clearing systems are emerging outside the banking system I am looking at Ripple.com.
I see a system emerging that will be outside the control of the current system. That like MOOCS and Universities will make the current offer look like a bad deal. Like Craigslist, make the classified in newspapers look like a bad deal. Like downloads and sharing make albums look like a bad deal.
THEY will fight this. But will lose. They will lose because this kind of money works for 99% of us.
If we go down this route we will humanize money. Money will represent real value that each of us create. Money will be limited to the real value that the planet offers too. Money will be balanced with reality. Money will be a store of real value. Each of us will be able to get what we earn.
More later on this but you can see more right away in my book You Don't Need a Banker to get Credit. You can get this here
In this interview, Jordan MacLeod talks about the Zombie Monetary Apocalypse. A Zombie can move but has no life. It feeds on the living. Jordan tells us why our monetary system has become this and what we have to do. We have to reinvent money again - we have done this many times before - so that it reflects what we need our economy to be.
A Zombie Bank is a bank that has to be propped up by government. It does not support a real economy but plays with money. The price of supporting Zombie Banks is to suck the life out of people and the world.
The core of the problem is the current design of money itself. It cannot die. It is eternal. When 75% of the economy was social, this was not a major problem. But now we all pay cash for every service. Not a single thing is free or can be found in the social economy. You don't have an extended family, so you pay for daycare. You don't know how to build anything so you buy everything. You don't grow food, you buy it all. 100 years ago, we did not need a lot of money. But today, money drives you and all that we do.
So, money is no longer only a means for exchange for a few services. It has become an end in itself. Because it has no expiry date or life cycle, it violates the principles of life. It is a zombie!
This is why we are destroying our society and our world. It is a design problem.
But Jordan is not a pessimist. Because money is now digitized, the pioneers of the digital world have the knowledge and the power to design a new system. People are working on this now. Soon money will be created by an open and wide system rather than by a few banks. Soon money will reflect who we are and what we really need. We think it is only a matter of time. More on this here
This week Jordan MacLeod (author of Natural Money) and I discuss how community financing might replace a lot of direct government finance. Small governments are over borrowed anyway. And who needs a bureaucrat to decide what we all want?
We talk about Justus Coffee that used a new type of community fund in Nova Scotia to raise $500,000 from residents. PEI has passed legislation to allow this approach too. (link here)
The opportunity is for residents to set up important projects that benefit all as a business with strong support in tax incentives that go to the resident investors. It is 35% from the province and 35% from the feds. I can see local energy and food projects fitting in well here.
In this context we close by talking about the new kind of banker that will be needed. For these are still complex projects that need local expertise. Here we can see the capital markets return to home.
Next podcast we will talk about micro finance - how to pull off a successful Indiegogo or Kickstarter project.
This podcast is all about why we think that the major banks will fade away in the next 15 years. It will not be a nice time. But a better system will replace it. Jordan and I are struggling to understand this ourselves and want to offer you our conversation so that we can all get a better sense of what is to come and so what can we each do to get ready.
The Banks seem essential and inviolate. But then, 30 years ago, so did "Big Steel". But a new small company came in to the bottom of the steel market and began to take away business that Big Steel did not want. Big Steel gave up the Rebar market without a fight because they could not make money there. So Nucor grew, as did other mini mills, and took on Big Steel step by step until there was nothing left.
In this post today, I interview Jordan MacLeod, author of Natural Money . Jordan is one of the leading thinks about the future of money today. We see signs that this process of disruption is well under way. We think that the big banks will be challenged as Big Steel was and that this will take place in the next 5 years.
In this segment, the first of 3, we identify the pressures that the banks have put themselves under that are exposing them to new disruptive entrants. Mainly driven by the fact that the banks treat the small person and the small business very badly.
The Federal Deposit Insurance Corporation estimates that roughly 10 million households in the United States do not use a bank, up from nine million three years ago. And the agency says 24 million more households have a bank account but still use nonbank financial services, like prepaid cards.(link)
Now that Visa is a for profit organization, it is aggressively raising fees for small business - maybe thinking that they cannot do anything about it.
Millions of people now wire money internationally. This has been a gold mine for banks who charge a fortune for this.
The large banks have proved that they cannot be trusted.
All this combines to empower new small competitors that are eating in to the bottom of the market that the banks don't like anyway - their Rebar market.
All this is happening very quickly and is being aided by banks that are small and who also resent being used by the majors.
What this implies is, that at some point, Money itself will be questioned. For today money is created by bank lending. With a Fractional reserve system, each dollar that a bank lends to you only requires a reserve of 10 cents. The other 90 cents is magic.
In parts 2 and 3 of this series we will talk about what may happen as the major banks are eaten up from the base and a confidence in them continues to fall. Where will we put our money then? What will money be then? These are huge issues. We take money for granted now. But history reminds us to be cautious when a large system is under threat.
Not an easy topic.
In the meantime, I have a lot more about the new system that is to come in my second book You Don't Need a Banker
Not long ago, you had to have a bank account but no longer.
A reason for this is that banks treat people so badly and that there are alternatives now to a bank account. This is a classic Innovators Solution to an underserved population where new alternatives are emerging. We are in the chaotic phase of what will be a revolution in banking. The banks are no longer the only game in time. Soon better alternative will appear for more and more of us.
"Part of the lure is the so-called underbanked population — people who use few, if any, bank services. The Federal Deposit Insurance Corporation estimates that roughly 10 million households in the United States do not use a bank, up from nine million three years ago. And the agency says 24 million more households have a bank account but still use nonbank financial services, like prepaid cards.
Mr. Holley said that 20 to 25 percent of Walmart customers were unbanked.
“The more kinds of services we can offer our core customer like that, the better for them,” he said.
Last month, Walmart unveiled a prepaid card with American Express. The card operates much like a debit card except that it is not attached to a bank account. It comes with free customer-service telephone support, and fees are relatively low, but the account is not backed by the F.D.I.C."
The foundations of banking are being chipped away. You can find out more about this and what you can do in my new book - You Don't Need a Banker - To get Credit
Obama was not able to confront the banks in his first term. They were too powerful. Now he can. There is no third term. What can he do? What Roosevelt did was to sever the connection between investment banking and deposit banking. This is the key step in the regulation that will help.
But we all know that one man cannot do it all. We too have our part to play. We too can act and help create a better banking system. A system that serves us and not "them". A system that gets behind the betterment of our communities and our ability to make a living.
For - just as the web's social power is eating away at the machine media - did you enjoy Twitter last night! - Just as it is now eating away at Universities - So new tools and new ways of getting credit are emerging that give us back the power over our own destiny. If we use this new system, as millions did when Craigslist appeared, we will accelerate the shift that we all need. This is not a liberal idea. This is a liberty idea. This is about freedom and it is about the core of how business has always been run, until the last 50 years.
We have all had glimpses of Crowd Funding. But this movement is bigger than that. Just as Craigslist was only one of the vectors that weakened media or the Khan Academ is only a vector for schools. The new banking system is based on rules that are very different from the ones we think are normal. It is based on a much older culture of community.
The more we understand this new banking system - which is based on the very ancient rules of reputation and covenant rather than the new rules of alogrithm and contract (McBanking) - the more quickly we can get out from under the power of the banks as they are today.
This is why I have written a guide to help us understand what went wrong and what is happening to make credit very different and more human again.
You can Buy You Don't Need a Banker - To get Credit - here on Kindle. It is only $2.99 and is less than 75 pages.
I have an admission to make. For 25 years I was a banker - and was a big advocate of the gross error that we made which was to re-connect investment banking to deposit banking. Worse in those days I applied my skills as a strategic planner to this shift. So I am sorry for that BUT my past also means that I know a lot about the topic and I hope that part of my redemption can be that I helped take what I was part of building down.
This is the 2nd book in the series Trusted Space Books that are guides to the shift in society from a machine culture to a network culture. The first book - You Don't Need a Job - is the broad guide to the shift. The book that will follow Banker is You Don't Need Medicine - To be Healthy. The one that folows that will be You Don't Need a School - To get an Education.
I hope that this small book will help you find more freedom.
Here is Raymond's latest update on Chicken, Pork and Beef boxes
Hello all
I am filling pork boxes now and will have boxes for the next three weeks at the farmers market in charlottetowen or they can be picked up at thefarm in Springfield;
I will be filling beef boxes starting in mid November as well and will be able to fill about 15 per week so it will take about three weeks to fill them as well. I have filled almost all chicken boxes now and would like to know if anyone has been missed.
I have filled about 25 pork boxes already and hope everyone who has had some pork is enjoying it.
Please send me an email with your current phone number as their have been several changed phone numbers and email addresses since spring. thanks Raymond
Just as many of us have found that we Don't Need a Job to earn a decent living and to have a good life, many of us are also learning that just because the banks won't or cannot lend to you does not mean that you cannot get credit.
The barrier to accessing this new world of community based credit is Mindset. Just as it is Mindset that makes us so fearful of not having a Job. Many try and use the new tools in the old way - just like this with the same results:
It's 1940 - what do you see here and what did the French General Staff see?
A Tank right? This is a Char B. It was much better than nearly all the German tanks of the time.
But in reality this is what the French General Staff saw. They saw this as a mobile pill box that could be deployed as moving strong points with the infantry.
Now let's look at the Germans at the same time.
Here they are about to launch the first Blitzkrieg in Poland. These are Mk II's a vastly inferior tank to the Char B.
This is how the German General Staff really saw them and how they were used.
A raging but narrowly confined Torrent that would destroy and disrupt all in its path - it is an idea all about controlled chaos. Only the German Army with their highly devolved culture that pushed command down could cope with such an idea.
This idea was truly "disruptive". The actual tools were inferior to the opposition. Their context was superior.
THIS is what my new book is all about.
It is a contextual guide that will, I hope, help you see the context and so the mindset issues that can either trap you or empower you.
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