Changing the System … One Bit at a Time


Whoever makes a society’s money occupies the central power position in that society.  At one time kings and rulers made money.  In medieval times there was a term used to describe the benefits that accrue to whoever creates societies money.   It’s called seigniorage.  Not only does seigniorage include the establishment of legitimacy and power, but it also provides significant financial benefits.  Kings would routinely debase their currencies reaping financial rewards … because the difference between the cost of minting coins and their value in the marketplace was significant.

Today commercial banks have a monopoly over the creation of our government sanctioned money.  It was a power given to them … free and clear by the Federal Reserve Act of 1913.   Their power position our society conferred on them  seigniorage benefits – as they occupied the pole position in the race for political and economic influence.  Today the benefits of money creation … known as seigniorage accrue exclusively to commercial banks.  Those benefits are powerful … they include:

•  branding,
•  creating a sense of legitimacy,
•  capitalizing on the spread between zero interest deposits and the interest that extends to loaned funds.

The benefits seigniorage can be can be extended to non bank entities … in effect democratizing our money and banking system.

The foremost technological visionary of our time, Steve Jobs challenged us to think different. … How might we think differently about the design of a new money and banking system?


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