Money: Between Violence and Peace

What is the real power of money? Money is at the heart of our exchanges. Commercial exchanges, naturally, but also social and cultural ones. By linking individuals, it helps to pacify relationships, and thus plays an almost religious role. At the same time, through its creative power, it generates violence, which is reflected in space and time. In this way, it constantly oscillates between the creation of violence and peace, until it becomes a mirror of the equilibrium of each era.

Thomas Cole: The Course of Empire: Destruction, 1836

The pacification of human relations is notably enabled by the issue of money. In a primitive society, or one without monetary intermediaries, every exchange is fraught with the potential for conflict. There is no unit to satisfy the double convergence of desires. 

Money, on the other hand, enables and facilitates exchange between two individuals. Not only does it act as a mediator, but it also emancipates us from a violence that is supposed to be natural. It creates a social bond of trust between individuals, during the exchange that unites them. In the early days of the Roman Empire, the use of the aureus - a gold coin - not only facilitated trade across an immensely vast territory, but also reinforced social stability for a time. By circulating a common currency, Rome was able to extend its authority and establish an economic link between culturally diverse populations. This monetary integration was a factor of stability for centuries, before currency devaluation and fiscal crises weakened the Empire.

Monetary history reveals a fundamental paradox: the more a state resorts to issuing money to reinforce its authority, the more it progressively weakens confidence in the currency itself. This phenomenon has been observed over the centuries, as under the Spanish Empire in the 16th century, for example: after the discovery of gold and silver mines in Latin America, the massive influx of precious metals led to excessive inflation, which gradually put an end to Spanish economic and political power.

All things being equal, what applies on an individual scale also applies on a national and international scale. Issuing money is a major economic lever for containing social tensions and guiding political choices. It contains as much violence on an individual scale as it does on a national scale, potentially marked by revolts and demonstrations of all kinds. For example, the Yellow Vests crisis in France was interrupted by a targeted increase in public spending (exceptional bonuses, tax cuts, etc.). The government's financial support for the people concerned helps to ease ongoing tensions: peace, moreover, is bought by money (in the same way that, during Antiquity, rulers distributed bread and games to maintain social order).

But peace is priceless. While money has the power to ease short-term conflicts, it generally transfers these tensions into the future and onto the external environment, in time and space. Money is neither neutral nor passive. It structures social, economic and political relationships. In our modern economies, where money creation is essentially credit-based, debt becomes a central tool for temporarily maintaining this stability. This is particularly true today, when money is created solely by credit: debt is used by the powerful to procrastinate and postpone fundamental problems to the future. This makes the future all the more violent for future generations. 

Violence and peace: repeating cycles

Throughout history, we have seen that cycles are created in this sense: periods of monetary stability often coincide with phases of prosperity, while periods of hyperinflation or high monetary issuance often equate with tension and conflict. When social equilibrium is preserved, with moderate inequalities and little tension between nations, monetary emission remains contained. Budgets are in surplus, spending under control and interest rates high. Conversely, the more a period is conducive to tensions (of whatever kind), the more credit is used. This leads to ever-increasing deficits, growing indebtedness and lower interest rates to support this financing. Over time, money issuance continues to increase, until one or more crises erupt.

In fact, periods of war are always marked by massive recourse to monetary issuance. During the First World War, for example, European nations ran up massive debts. In the 1920s, this led to episodes of hyperinflation, particularly in Germany, where the Deutschmark collapsed. Today, the same phenomenon can be observed in the United States, the world's most indebted country, with debts of $36 trillion, which has also been constantly involved in wars of all kinds for over half a century. At the same time, the dollar has been steadily depreciating in real terms over the same period.

Successive political upheavals

Monetary creation, which depends on political circumstances, also makes it possible to predict regime changes. Periods of monetary crisis often coincide with profound political and social transformations. The French Revolution, for example, was precipitated by a major fiscal and monetary crisis during a period of hyperinflation. This event precipitated the fall of the Ancien Régime and, a few years later, the creation of the First Republic in 1792. Money is as much political as it is economic. During tense political periods, it is often used to serve private interests. Whether to calm social tensions - as we have seen - or to serve the powers that be. This is why, a few months before the presidential election, we see a sharp increase in money creation via public spending... The health crisis was thus used as an excuse by Emmanuel Macron to considerably increase French public debt before the 2022 election. 

With this in mind, we can see that the current era is more dangerous than ever. History teaches us that monetary excesses always lead to regime changes, but also to violent ruptures. Today, global debt is at an all-time high, and public deficits are spiraling out of control, inflation has been running at very high levels, interest rates have long been reduced to negative levels, and money creation has never been so high. At the same time, geopolitical conflicts are multiplying and the bellicosity of nations is manifesting itself dangerously with the return of nationalism. Clearly, we are approaching the end of a cycle. The long term tells us that this type of period leads to the collapse of political regimes and great upheavals, as foretold by transhumanism, artificial intelligence, robotics,etc. Also, monetary instability and hyperinflation have often been the breeding ground for revolutions or the emergence of new religions and ideologies. Christianity took hold after the fall of the Roman Empire, Islam after the disintegration of the Byzantine Empire, and communism after the economic crises of the early 20th century. Faced with the risk of great financial penitence today, a new ideology could emerge. In the light of today's global challenges, it would be profoundly revolutionary...