Also Known As
"The Miracle Of Worgl"
(section to be completed)
Rev. August 23, 2013
In 1932, in the midst of the worlwide Great Depression, in the town of Worgl, Austria, there was a mayor, Michael Unterguggenberger, who was not a formally educated man but a clear thinker. He looked around at his townspeople, who were suffering an unemployment rate of 34 percent amongst 5000, and astutely surmised that their actual problem was that they did not have enough correctly colored pieces of paper to have a vibrant local economy. Commonly known as money. Being a reader of the sensible economist Silvio Gesell, the proponent of free money, he solved this problem by instituting a local currency which operated on a negative monetary interest model. [ Allow me here to expound a bit on the idea of free money (or negative interest currency) - it is quite literally the correct solution to mankind's seemingly intractable economic problems. Currently, money is not only a means of exchange for goods and services but also a store of value. The second function often subsumes the first, more native, and useful one. In other words, there is a tension between getting and spending in America. Because the dollar is often scarce to people, it has a value in and of itself. This is not useful to the People as it leads to a hoarding of an essentially useless item which only has its value because society has consensually determined it has value. One cannot eat it, wear it, breathe it, etc. It has no value in and of itself natively and should be systemically treated in this way. In other words, even though one cannot live without it within a modern society, it is useful only in a societal context and in exchange for more useful tangible goods. However, one must have enough of it so that one can live and have enough resources to live. So, why make it scarce as Capitalism does? Is there a good reason? Why make it available only through the mechanism of issuance of debt? And positive financial interest? This only makes the artificial substance scarce and needlessly hard to get, which ensures poverty, a scarcity mindset, competition, and war. All the scourges of man. They can be significantly traced back to the backwards economic system which makes an essential but unreal concept difficult to obtain. Such a system is guaranteed to be unhealthy for the People and the world as we are seeing in the current state of the world. Make an essential-to-survival resource systemically hard to get and the people will be forced to fight amongst themselves to survive. However, make that resource artificial in nature, as money is, and the situation goes from the realm of mere tragedy and becomes farce. Possession of an artificial concept becomes more important than living real life. An "Alice in Wonderland" situation if there ever was one. Completely upside down and backwards. Down the Rabbit Hole with no end to the madness in sight. As long as the Bankers are in charge of the World and its various economies. ]
The proper simplicity of the Worgl system lay in its use of the idea of negative interest (or demurrage) currency.) Negative interest currency is simply currency which systemically reduces in value by a set amount over a given period of time. In other words, it is whole in and of itself, but the value of the whole diminishes by a tax on the held money at the end of the month, per se. This differs from positive interest in that in this setup additional money is always needed to be injected into the system to keep the system afloat (i.e., the current economic system). One cannot pay off a loan with only the principal, additional money has to be systemically generated to keep it going. Thus, infinite growth. Negative interest currency can be said to be self-contained. No additional monies need to be created for the system to continue functioning. Therefore, it does not lead to infinite growth but is balanced and stable. It is not even certain that a devaluation of the money would occur.
The specifics of the system are as following - the currency (called a labor certificate) was based on the national Austrian schilling, and was assessed a one percent tax on the held money at the end of the month. Therefore, the motivation to hold onto the money disappeared. Rather, to avoid the monthly tax, the motivation became to spend the currency in as useful and rapid a manner as possible. This is in contrast to the dynamic in Capitalism, where there is a tension between getting and spending, which slows down the circulation of money in the local economy. In Worgl, the systemic brake on the currency flow did not exist. Therefore, the currency created a much more beneficial system, which
made true that "a rising tide lifts all boats." Since there was no systemic scarcity of currency, no one felt a lack of the essential resource. Taxes were paid before they were due, "there was enough work and bread for everyone", Civic projects were built, and the people planted trees spontaneously in groups. There was no division between the people, and the earth they lived upon for sustenance. A truly balanced system which provided the proper fulcrum between man, himself, each other, and Mother Earth. A simple change in the nature of currency from a positive interest note to a negative interest note provided the crucial change to turn the money from a dubious life-supporting construct to a fully life-supporting construct. It was the solution that the People were looking for, but not the Bankers apparently, as they tried to shut it down. Perhaps, once it became clear that over 200 towns were also interested enough to send representatives to Worgl to find out how the "Miracle of Worgl" was being done. The People fought all the way to the Supreme Court, but lost their fight for a truly fair and democratic economic system when the Court, lacking wisdom, sided with the Bankers. The legal justification for the highly significant decision was "It is illegal to issue your own local emergency currency." The town, after glimpsing the closest we are likely to get to economic Utopia, rejoined the rest of the world in the economic misery of the Great Depression. That court decision and the shutdown of the experiment was a truly momentous and tragic day for all of mankind. We are still dealing with the aftereffects of it. Needless to say, within a few years, Hitler gained power just across the border in Germany due to his promise of economic deliverance. If Worgl had been allowed to propagate naturally, we would be living in a completely different and much more peaceful world at this time, rather than teetering on the edge of destruction.
**As an aside, the information on this topic has been personally handed to Nobel Prize winners on the University of Chicago campus. It has elicited nary a response, negative or positive. At the time, it was incomprehensible to the author. After some years, it was clear that that tone taken in the essay was a little insulting perhaps, but the logic is sound. These economists are not really scientists and their "science" is not really such. Carlyle was only partially correct in his assessment of the field when he said "Economics is a dismal science." Nay, it is not even a science. It is merely a set of manmade assumptions, the most basic of which is false, that scarcity is inescapable - a fundamental law of the Universe. This is wrong, as will become overwhelmingly obvious in the near future. There is enough to go around as any child can see. When the fundamental assumption of a field is incorrect, the rest is probably gobbledy-gook. That is the case here, unfortunately. All the Economics Nobel Prizes from the Swedish Sveriges Riksbank will not make up for this flaw and all the needless tragedy it has imposed on the world and its population.