Towards Consciousness

By Vignesh Dhandapani

Part 2 – THE SOLUTION

Now let us see from where this concept of “Paper Money” started. Prior to the 1800s, money savers who were looking to keep their valuables for safekeeping, deposited gold and silver coins  with goldsmiths, receiving in turn a promissory note for their deposit. Once these notes became a trusted medium of exchange an early form of paper money was born, in the form of goldsmith’s notes.

As the notes were used directly in trade, the gold smiths observed that people would not usually redeem all their notes at the same time, and saw the opportunity to invest coin reserves in interest-bearing loans and bills. This left the goldsmiths with more notes on issue than the reserves to pay them with. This generated income –  a process that altered their role from passive guardians of bullion charging fees for safe storage, to interest-paying and earning banks. Thus ‘Fractional- reserve banking’ was born.

However if creditors (note holders of gold originally deposited) lost faith in the ability of a bank to redeem their notes, many would try to redeem their notes at the same time. If, in response, a bank could not raise enough funds by calling in loans or selling bills, it either went into insolvency or defaulted on its notes. Such a situation is called bank run and has caused demise of many banks. Likewise, when a currency loses the confidence of its people , its fall becomes exponential, as has happened to the Zimbabwean dollar. In 1982, one US Dollar equaled one Zimbabwe dollar. Today around Z$200,000 buys one US Dollar!  During World war 2, German Mark was used for making Cigars. Rampant inflation, Current account deficits, Lower interest rates, these all contributed to the currency collapse. Most of the currencies in the world, including the major ones, have no asset backing. Governments simply print money whenever they need it or when a crisis hits them. This leads to inflation and when a currency gets completely discredited, it collapses. Today the US Dollar, the world currency, is in real danger of collapsing.

Let us see what Srila Prabhupada has to say:

“If you write something which you do not believe in, are you not cheating? That means Cheating. You take word, you are giving a piece of paper, and it is written there, “One thousand dollars.” That means you are cheating in the name of God, he will accept you, that’s all. If you say, “No, I Don’t want paper. Give me gold dollar.” Then you are finished. Your currency will be finished. Immediately there will be revolution, that “The Government is cheating us.” Actually it is cheating. What is the proof, value, of this paper? Little paper? Simply “I Promise to pay, governor and this…” But it is on trust only : “Yes, government will pay me.” They’ll never pay, but so long the government goes on, it will go on, that’s all, cheating will go on. And as soon government fails, you throw in the street, no one will care for it.” [ Srila Prabhupada, Garden conversation- June 22, 1976, New Vrindavan]

“If one gets a diamond, he is possessing something valuable. But in this civilization you are simply making plastic plates and plastic cups. Indeed, in Japan I have seen pasteboard homes. And everyone is thinking that he is advanced. Formerly people used to have golden and silver utensils, but now they have plastic ones, and still they are proud to be so materially advanced. What is your position? You have a bunch of paper and think, “I am a millionaire”. What is the value of that paper? Is that not cheating? However, if we possess gold or diamonds worth a million dollars, that is actual wealth. But we are educated in such a way that we think we are millionaires by paper only. As soon as there is some catastrophe, millions of such dollars could not buy bread. This actually happened in Germany; millions of marks could not purchase one piece of bread. All this is going on in the name of advancement of civilization, and the real purpose of life, God consciousness, is missing.” [Srila Prabhupada Interview with the New York times- September 2, 1972, New Vrindavan

“So actual value, to keep cows, to have food grains or gold, jewelries, these are the signs of richness. But Kali-yuga is so cruel that if you have got gold, if you have got jewels, then government will take away. Formerly there were ordinary plunderers, thieves. Now, according to Srimad Bhagavatham, the government will be composed of organized thieves in every country. That will be the situation. So you cannot keep now. You have to be satisfied with these papers. That’s all.” [Srila Prabhupada in Srimad Bhagavatham 1.8.21 – Mayapura, October 1, 1974]

In a summary – Barter system/Coins made of Gold and silver which was active in Vedic age eliminates greed and mining of unwanted so-called wealth.  Vedic system of trade and economic growth brings value to the money which we deal with whereas ‘Paper money’ can bring only Recession, Bankruptcy etc. since this is the seed of greed.

Given this challenge of the current cruelly deficient, ‘cheater-cheated’ system that we are stuck with for a long time, the only way for us to get out of this whirlpool is to utilize as much of the resources as we can lay our hands on, for the service of Krishna and Srila Prabhupada.