MONEY: HOW HAS IT DESTROYED YOU?

Prakash Khanal, PhD

Thousands of years ago, mankind invented money. Initially money was made in coins made out of ‘mud’ and ‘leathers.’ Then man moved onto introducing money made out of ‘metal coins.’ Then mankind introduced monetary notes made out of paper. Nowadays money has been transgressing into digital forms.

The air, land- rocks, water-oceans, sky or trees- plants to all things that are crucial to ‘life’ and our ‘existence’ itself are available almost as if naturally and freely that no-one can contemplate surviving a few minutes if these things have to be paid for.  The ‘super thing’ that humankind has created so far may well be ‘MONEY’. It seems that it’s one that has created all kinds of problems for humanity en masse today! From corruptions to bribery, class-struggle to colonialism, war to famines, unfair trades to drug trades, ammunition sales to terrorism, individual/inter personal to family feuds to mass poverty across the world, all seems to have appeared as a result of money pinching the soul of humanity very badly. Money today no longer seems to be the solution to man’s problems, but the reason for all the problems. Prakash Khanal, PhD, has some findings that show how money has affected our lives badly in our modern time.

Money is like the “Ring” of Dark Lord Sauron in Lord of the Rings

Money is like the “Ring” of Dark Lord Sauron in Lord of the Rings. It is useless and powerless when it is on the ground or not worn by anyone. But as soon as someone wears it, that person’s personality changes and they want to keep it. The wearer of the “Ring” is possessed by an insane obsession to keep it and that the wearer is go to any extent to keep it. Exactly like that ring, money has no value of its own. Money is worthless. Yet, the world’s richest and brightest individuals compete with each other to make more of it. What is it about money that keeps these mega billionaires energised and pushes them insanely to inhumane levels to amass it?

The global wealth inequality, however, is gradually moving towards its tipping point when the income shares of the richest one percent in Western Europe and the US have increased from around eight percent in the 1970s and 1980s to 11 and 20 percent respectively today. The income shares of the bottom 50 percent in Western Europe and the US stood at 20 percent in 1980. Whereas, in the last three and a half decades this figure has dropped to 12.5 percent in the US and 18 percent in Europe, according to French economist Lucas Chancel, a professor at the Paris School of Economics (PSE). Chancel is also the codirector of Paris based World Inequality Lab as well as a senior research fellow at the Institute for Sustainable Development and International Relations since 2011. Chancel presented a paper entitled Ten facts about inequality in advanced economies in October 2019 in a conference on “Combating Inequality: Rethinking Policies to Reduce Inequality in Advanced Economies.” The conference was organised in the US by Peterson Institute for International Economics (PIIE).

The onset of COVID – 19 in December 2019 infected at least 170 million people across the planet and killed 3.5 million. Many families have been distraught and destroyed when lives were cut short by the invisible enemy. Thousands of businesses have closed, millions of people have lost their livelihoods and their homes have been repossessed by their lenders. There is no end to the grief of millions of people. The world and its inhabitants face extinction.

Among this doom and gloom, some individuals such as Jeff Bezos, Elon Musk, Mark Zuckerberg, Mukesh Ambani, Bill Gates, Larry Ellison, Warren Buffet, Zhong Shanshan, Larry Page – the megabillionaires, richest among the few countable rich individuals and others who are super rich have profited enormously from the bleakness and impossibility that most of us experienced during 2020 and continue to experience during 2021.

The ferocity of the pull of money in some individuals is just unimaginable and beyond the comprehension of ordinary people. A report entitled “The Secret IRS Files: Trove of Never-Before-Seen Records Reveal How the Wealthiest Avoid Income Tax” in the United States (US) published by ProPublica in the US, discloses how some of these mega billionaires use legal loopholes to avoid paying legitimate taxes. The ProPublica report was based on the vast trove of Internal Revenue Services (IRS) confidential data that ProPublica obtained about tax returns of thousands of the US’s wealthiest people covering 15 years. The report even states that one of the wealthiest persons on the planet Jeff Bezos took US$ 4000 tax credit for his children in 2011, “the second year in which Bezos avoided a federal income tax despite his estimated wealth of $18 billion at the time, records show he not only offset his income with losses from side investments and various deductions, but also took a US$ 4000 tax credit for his children.” The ProPublica full report about how some of the richest people in the United States avoid paying tax can be read at the following link here.

The wealth gap between the rich and the poor has never been so wide and continues to widen becausethe bad economic policies adopted by the richer nations help the rich to become richer. What is it about money that makes slaves out of fine individuals?

The onset of COVID – 19 in December 2019 infected at least 170 million people across the planet and killed 3.5 million. Many families have been distraught and destroyed when lives were cut short by the invisible enemy. Thousands of businesses have closed, millions of people have lost their livelihoods and their homes have been repossessed by their lenders. There is no end to the grief of millions of people. The world and its inhabitants face extinction.

Among this doom and gloom, some individuals such as Jeff Bezos, Elon Musk, Mark Zuckerberg, Mukesh Ambani, Bill Gates, Larry Ellison, Warren Buffet, Zhong Shanshan, Larry Page – the megabillionaires, richest among the few countable rich individuals and others who are super rich have profited enormously from the bleakness and impossibility that most of us experienced during 2020 and continue to experience during 2021.

The ferocity of the pull of money in some individuals is just unimaginable and beyond the comprehension of ordinary people. A report entitled “The Secret IRS Files: Trove of Never-Before-Seen Records Reveal How the Wealthiest Avoid Income Tax” in the United States (US) published by ProPublica in the US, discloses how some of these mega billionaires use legal loopholes to avoid paying legitimate taxes. The ProPublica report was based on the vast trove of Internal Revenue Services (IRS) confidential data that ProPublica obtained about tax returns of thousands of the US’s wealthiest people covering 15 years. The report even states that one of the wealthiest persons on the planet Jeff Bezos took US$ 4000 tax credit for his children in 2011, “the second year in which Bezos avoided a federal income tax despite his estimated wealth of $18 billion at the time, records show he not only offset his income with losses from side investments and various deductions, but also took a US$4000 tax credit for his children.” The ProPublica full report about how some of the richest people in the United States avoid paying tax can be read at the following link here.

The World Bank

How many of us even know that the World Bank, one of the largest institutions on Planet Earth is created by humans. It is dedicated to international development and poverty alleviation. It was known as the International Bank for Reconstruction and Development when it was established in July 1944. Together with several other United Nations institutions, it was an outcome of an international conference that was participated in by 730 delegates from 44 nations in Bretton Woods, New Hampshire, United States.

This conference was organised prior to the end of World War II (WWII) to agree upon a series of new rules for the post-WWII international monetary system and to make available funds that would be required for the reconstruction and development of the war torn economies in the western hemisphere. In our memory the financial depression of 1997 and 2007-2008 is still fresh, but it was the great financial depression of the 1930s that led the world leaders to agree to the creation of International Bank for Reconstruction and Development and International Monetary Fund (IMF) that are known as Bretton Woods institutions.

The World Bank came into official operation only on 27 December 1945. Once in operation the World Bank first financed the reconstruction of war torn Europe. Afterwards, the World Bank started providing low interest loans for development and for the alleviation of poverty from the emerging economies. Gradually, other auxiliary agencies linked to development financing to a range of government, intergovernmental stakeholder and private sectors such as the International Development Association (IDA), the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA), and the International Centre for the Settlement of Investment Disputes (ICSID) and together it is known today as the World Bank Group (WBG). The World Bank Group is one of the largest sources of funding and knowledge for developing countries; a unique global partnership of five institutions dedicated to ending extreme poverty, increasing shared prosperity, and promoting sustainable development. With 190 member countries and more than 120 offices worldwide, the World Bank works with public and private sector partners to develop solutions to the most urgent global challenges.

The past 70 years have seen major changes in the world economy.  Over that time, the World Bank Group—the world’s largest development institution—has worked to help more than 100 developing countries and countries in transition adjust to these changes by offering loans and tailored knowledge and advice.

Through its various arms the World Bank Group works with governments, the private sector, civil society organizations, regional development banks, think tanks, and other international  institutions on issues ranging from climate change, conflict, and food security to education, agriculture, finance, and trade. For perspective, the World Bank made four loans totalling $497 million in 1947, as compared to 302 commitments totalling $60 billion in 2015. 

The wealth gap between the rich and the poor has never been so wide and continues to widen because the bad economic policies adopted by the richer nations help the rich to become richer. What is it about money that makes slaves out of fine individuals?

How has Money Treated You? Was it Fair?

There are rare, good examples of rich individuals and their corporations becoming richer in fairer, ethical ways but still we cannot blame them because they operate within legal limits by exploiting and bending the laws created by individuals and businesses in the developed nations. But how about those who flaunt the laws and operate illegally, unethically, and invisibly such as the blackmailing of the US fuel distributor, the Colonial Pipeline, who were forced to fork out US$4.4 million worth of bitcoins to their blackmailers the DarkSide, – a group of computer/electronic hackers believed to be hiding somewhere in Russia, – to restore and resume their services. Or, how about the torture British Post Office bosses subjected to their over 700 employees, the sub-postmasters, who operate small branches of the Post Office in the British rural heartlands, for over two decades, accusing them of embezzlement, caused actually by an expensive software glitch? These are a few of the worst examples of crime, greed, institutional failings, government failings, legal failings, and human failings that the world has seen and experienced in the new millennium. And, what role, if any, should institutions like the Financial Conduct Authority (FCA) in the UK and similar regulatory legal and criminal investigation entities elsewhere in the world play?

Let us explore some of these failings in a little more detail and begin with the hacking of Colonial Pipeline’s central control system by DarkSide and their affiliates in the United States on 7 May 2021. Despite the official policy not to concede to the conspirators and the criminals, Joseph Blount, Chief Executive Officer (CEO)of the Colonial Pipeline, reached a difficult decision the same night to submit to the demands of the criminals without wasting any more time. He knew exactly what would be the consequences of a network that meets nearly 45 percent of the US East Coast fuel supply if there was a delay in restoring its services.

The European Central Bank

The European Central Bank (ECB) came into existence on 1 June 1998 after several years of exercise of monetary union among the member states carried out by the leaders of the European Community (EC) that was divided in several stages, a process started in the beginning of 1991 thus went on for several years. Thus, the establishment of ECB should be viewed as the culmination of several years’ effort relating to European monetary union that abolished national currencies of 11 member states namely Belgium, Germany, Spain, France, Ireland, Italy, Luxembourg, the Netherlands, Austria, Portugal and Finland – the countries which joined the Euro Zone and adopted the Euro as their currency. The first step towards creating the ECB, however, was taken by the EC in 1988 with the sole objective of economic and monetary union: free capital movement within Europe, a common monetary regulatory  authority and a single monetary policy across the Euro area countries.

Later on, during his first ever public remarks, Blount has been quoted by The Wall Street Journal as having accepted that he had difficulty reaching the decision to pay the ransom to the criminals and it was a controversial one, nevertheless he thought it was a right one for the country (Eaton and Volz 2021).

As a result of the malware attack by the hackers and even quickly agreeing to their demands the supply chain that transports petrol, diesel, jet fuel and other refined products from the Gulf Coast in Texas to Linden in New Jersey through a network of a over 5,500-mile pipeline system remained closed for six days as they restored the system to its fullest capacity. The closure hit the supply of fuel prompting panic buying from the people which left thousands of fuel stations without fuel and pushed the price of fuel to its highest seen in six and half years.

The criminals made money but remain anonymous, holed up somewhere in Russia and we only know them as DarkSide. Alas, unlike Jeff Bezos of Amazon, Elon Musk of Tesla, and Mark Zuckerberg of Facebook the criminals hidden behind DarkSide could boldly claim that they brought Colonial Pipeline to its knees! Unlike Bezos, Musk or Zuckerberg the criminals behind DarkSide will always live in fear and will always be on the run.

The other sad account related to money and gross injustice and failing of government and of a social institution known to us in the United Kingdom is about the abhorrent treatment meted out to the sub-postmasters by the post office bosses and how that affected lives and livelihoods of over 700 sub-postmasters who are known for their efficiency and integrity that continue to foster social fabric in far flung remote areas when their agents bring us valuable letters from our loved ones every morning.

Even today despite the phenomenal development of digital communication and its wider reach over the nooks and corners of the British island over 17 million people continue to use one of the several services offered by the post office in the UK. The unlucky men and women sub postmasters in England, Northern Ireland, Scotland, and Wales – who for nearly 20 years, since 1999, experienced immense grief, shame and lost everything they possessed including one suicide because their bosses put their faith in machines and Horizon computer software rather than those men and women for whom their work provided them everything from respect and trust in the community where these post office branches are located to the only source of their livelihoods.

It is a classic case of injustice handed over to the postal employees that operate over 11,500 branches of the post office in the United Kingdom without even trying. The systemic failings within the post office bureaucracy and lack of support from the government made innocent sub postmasters bankrupt, ruined their honour, and jailed them as criminals and ruined their lives when they were forced to pay money that they did not embezzle. Known as the most widespread miscarriage of justice in the UK, it was not only those sub-postmasters, but the treatment meted out to them and the scandal that erupted with it that shook a deep-rooted trust that the British postal system and its agents that crisscross our footpaths everyday had established through their unfailing service since the establishment of postal services three and a half centuries ago in 1657.

FIAT Money of Paper, is This Only What Makes Life Easy?

It is very strange that the Post Office bosses at that time did not seem to have made any effort to find out why all of a sudden money started to disappear in some post offices from the computers after the installation of the Horizon computer system.

The refusal of the post office bosses even to consider that the fault could be with Horizon computer software instead of the sub postmasters is nothing new in the UK. Needless to say, there are several such cases when computer programmes such as £12 billion “London Configuration 1” software paid for with public funds in the UK to improve the performance of the National Health Service (NHS) miserably crashed at its feet, yet nothing happened to the incompetent software developers and their contractors. Furthermore, whether the money spent on phoney factories and businesses belonging to relatives and friends of Conservative party leaders or former prime minister David Cameron’s effort to influence the Conservative leaders to obtain government backed loans for Greensill Capital, a collapsed finance firm, during the COVID-19 pandemic, or prime minister Boris Johnson providing peerage to Peter Cruddas, a billionaire Conservative party supporter, overruling for the first time the advice of the official Appointment Commission, as a favour of their paltry donations – all account to breaching of the public trust by people in  high places. They are fuelled by deceit, superficial smartness and trickery in its core. However, the unapologetic behaviour of the people, the perpetrator of these monetary scandals only shows that the public as well as the institutions created to challenge their hegemonistic indulgence are actually powerless in restoring public faith.

This brings us to explore the role of Financial Conduct Authority (FCA) or the failures of the Financial Services Authority (FSA) in fulfilling the obligations and responsibilities entrusted to it. The FCA was created in 2013 by the government by dissolving an earlier version of financial regulator the Financial Services Authority (FSA) in the wake of the financial crisis of 2007-8 that crippled the economies of the majority of the developed nations including that of the United Kingdom probably because of its failure in visualising the symptoms of financial crisis gradually being built by bad financial practices regularly practised by the financial and credit institutions. FSA was supposed to regularly monitor and regulate. Together with the FCA, another financial regulator the Prudential Regulation Authority (PRA) was also created at the same time to set standards and to supervise financial institutions. The  FCA regulates around 66,000 institutions in the UK that are related to financial conduct such as credit and insurances.

The PRA promotes the safety and soundness of financial institutions, makes sure that policyholders, the insurers, are appropriately protected and facilitates effective competition between 1500 financial institutions that it regulates. The PRA works in three areas, banking, insurance and policy. The PRA regularly supervises domestic and international banks  investment banks and overseas banks operating out of the UK market. Similarly, it also makes sure that policyholders having general and life insurances receive due degree of protection. The PRA is responsible for the implementation of the prudential regime for liquidity, capital, accounting, operational risk and governance and negotiates policy input in specific international agreements which is ensured by development of policy and consequent Handbook rules that indicate prudential standards that the firms need to maintain in their businesses.

The four nations of the United Kingdom all have created strong institutional regimes that regularly monitor, supervise and regulate businesses such as banks and insurances that transact money through various guidelines, policies and Handbooks that are aimed at safeguarding the public: the policy holders as well as the employees. They have undergone institutional and statutory changes because of their failure in timely detecting the malpractices continuously exercised by the same financial institutions that they were supposed to monitor and regulate. Their failures led to a financial meltdown that resulted in the closure of businesses, redundancy of employees and loss of property that further exacerbated the wealth gap between rich and poor.

The Asian Development Bank

Many people in the world, especially in the developed western hemisphere, may not have heard about the Asian Development Bank (ADB), a regional development bank that was created on 19 December 1966 as an offshoot of the first Ministerial Conference on Asian Economic Cooperation organised by the United Nations Economic Commission for Asia and the Far East in 1963, in more or less similar way the World Bank was created in Bretton Woods in 1944. The ADB was conceived as a financial institution that would be Asian in character and foster economic cooperation and economic growth in Asia. During its inception period the ADB mostly focussed its attention on food production and rural development. The ADB has its headquarters in Manila, capital of the Philippines and is owned by 68 shareholder members of which 49 are from the Asian region. Japan and the United States hold the largest share of 15.571 percent each and China, India and Australia hold 6.429 percent, 6.317 percent and 5,773 percent respectively. The ADB provides loans, technical assistance, grants, and equity investments to its members and partners. The ADB has 31 field offices around the world.

The number of households falling in this economic trap, the children falling into poverty continues to grow. People in full time employment have to rely on foodbanks for their subsistence, this should not go on for ever. The government must bring in policies, whereby decent and innocent but ethically hard/smart working human beings could continue to maintain  their livelihoods without the trepidation of poverty, injustice, scarcity and security that not only allows the rich, powerful and influential to benefit from it but also should address the wealth gap that continues to widen in our society.

According to Chancel, the wealth differences between the rich and the poor in Europe and in the US suggests that these countries have dealt differently with the effects of the global economic and technological forces on the wealth and income distribution. He suggests, the income and wealth gaps widen less in countries with more progressive tax regimes, strong labour market institutions such as trade unions and minimum wage laws, broad based access to education and health services, and generous social transfers. The wealth and income inequality continues to grow in the developed countries in the Western Hemisphere because the governments in these nations seem incapable, lack interest, or seem too weak to rein in the uncontrollable growth of some of the transnational companies whose bosses display hegemonistic character at its best as they continue to indulge in just the opposite of what they preach.

The People’s Bank of China

The People’s Bank of China (PBC) is the central bank of China which was established on 1 December 1948 by consolidating three other banks Huabei Bank, the Beihai Bank and Xibei Farmer Bank. Since July 2017 the PBC is the only central bank in the world with its holdings valued at US$ 3.21 trillion. In 1978 as part of the Chinese economic reform the commercial banking function of PBC was split into four state-owned banks the Industrial and Commercial Bank of China (ICBC), the China Construction Bank, the Bank of China and Agricultural Bank of China, but before that PBC dominated all business transactions and credit in China. The Industrial and Commercial Bank of China (ICBC) is the largest bank in China and also globally by assets, deposits and loans. There are over 4500 banks in China. The Chinese banking system is the largest in the world in terms of number and total of assets at US$ 40 trillion (approximately £ 29 trillion). The other three largest banks in China are China Construction Bank, Bank of China and Agricultural Bank of China.

Thus, to say the least, money today is not what it used to be when its value was worth its weight in silver or gold. Today’s money is Fiat money, just takes a few pence for the national banks such as the Bank of England to print it. The national banks print the fiat money whenever its demand soars among consumers. Research has shown that due to restrictions imposed on using hard cash because of Covid -19 the use of hard currency or bank notes has fallen by over 60 percent. Today, hard currency is used by households to save for rainy days or holidays. Besides, economic growth has halted in most of the countries, people have lost jobs, businesses have closed so people have less cash at hand to dispense on stores so their shopping has moved online which is why companies like Amazon have earned record profit at the height of the Covid-19 pandemic. Multinational companies have poured their resources into the use of all available technologies such as algorithms and artificial intelligence, the manipulating technologies that help them to prey on vulnerable people’s weaknesses. Amidst the race to make more money and survive simple human decency has become a thing of the past. There is urgency that governments devise and implement policies backed by tougher legislations and punitive measures to combat inequality of wealth distribution and to address the legal loopholes exploited by the bigger multinational companies to avoid taxes and amass wealth amidst widespread human suffering.

Money has undergone several transformations over the thousands of years since it was created with a purpose to ease and facilitate business transactions moving onto the use of real currency for buying and selling from barter trade. However, it seems that money has outlived its purpose. Money is gradually piling up among some super rich individuals. It is not only being used for businesses but also to finance every sort of criminal activity known to humans. If acts of terrorism and other forms of violence perpetrated on innocent civilians across the globe had not been financed then every corner of the world would have been a much better and safer place to live. People would not be displaced from their homes to become identity- less or anonymous refugees. Today money has become a tool in itself that is used by greedy powermongers as well as criminals to finance crimes and to ignite violence globally.

The Faces of Money; in The World Today, Money has Many Vissages

Institutions such as the World Bank and International Monetary Fund (IMF) continue to push the agenda of developed countries to the emerging nations in the name of development aid whereas these countries receive hundreds of times more money than the development aid promised by any global aid agencies including the World Bank in the form of remittances. There is need to watch how the money is made and how it flows to finance undesirable events in the world. There is need to create a separate powerful global entity that works with every national level financial regulatory body, traces money movement and how criminals are being financed and alerts national institutions and also takes actions. If not, the gap between the rich and the poor will further increase, rich will continue to exercise their monopoly on the poor, unemployment as well as redundancy will rise and so will poverty as we already know that full time employed are relying on food banks and over four million children in the UK are living on the breadline.

References:

(Eaton, C. and D. Volz (2021). Colonial Pipeline CEO Tells Why He Paid Hackers a $4.4 Million Ransom. The Wall Street Journal. The United States, Dow Jones and  Company.)

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