Accounting and Money for Ministerial Leadership. Nimi Wariboko

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Accounting and Money for Ministerial Leadership - Nimi Wariboko


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restrictions on its use to mark social boundaries, create separate spheres of exchange and regulate allocations to create differentiation of homogenous money, affirm cultural distinctions, and elaborate the social meaningfulness of money. In this way, she mounted a vigorous assault against the widespread economistic view of money as absolutely fungible, qualitatively neutral, and devoid of any use value. Her research has shown that money is “neither culturally neutral nor socially anonymous. It may well ‘corrupt’ values and convert social ties into numbers, but values and social relations reciprocally transmute money by investing it with meaning and social patterns.”21 In directing attention to monetary exchanges as thickly social, cultural, and relational, Zelizer argues that social ties and economic (monetary) transactions repeatedly mingle. In this vein she rejects the idea of “hostile world”22 and that of “economics-or-nothing reductionism” in economic-sociological analyses.23

      For now, let us take a moment to examine what kind of relationship our monetary system has with the environment, which is an integral part of the web of relationships that make life and human flourishing possible.

      Theology in Motion 1: Money and Environmental Pollution

      The foundation of the monetary system in the United States is debt. In order to create money, “high-power money,” to put money into circulation the Federal Reserve Board has to buy government securities from the commercial banks, except it wants to literally print money. If the Federal Reserve Board wants to pump $20 billion into the United States economy, it has to buy that amount of government securities from the banks (creating new bank reserves for them) and pay appropriate interest to the commercial banks or their investors. The Fed cannot just create money as the Treasury Department does with its issuance of metal coins, which is debt-and-interest free. The reader who is not familiar with modern monetary economics may rightly ask: Where do the government securities come from in the first place? The Treasury Department of the United States government sells bonds to borrow from the public in order to supplement tax revenues. The banks buy the debt instruments for their use or for their clients and the government pays periodic interest to the investors. From this you can see that the foundation of the money supply in the United States is on debt, not commodity standard. Running an efficient system for generating market-clearing interest rates and payments of interest due on debts is key for the functioning of the whole monetary system.

      The interest-based monetary system is one of the contributing factors to ecological non-sustainability of economic growth. It is often rare to find theologians who recognize the crucial link between the damage to the environment and the interest rate. In the market economy, every producer who intends to stay in business has to cover, at the minimum, his or her cost of capital. Let us say that the risk-free, before-tax interest rate on bonds (only a part of the weighted average cost of capital as cost of equity is ignored in this example) is only 4 percent; it means the profit rate has to be higher than this level for private production to go on. This also means at the minimum the economy has to grow at 4 percent to yield this kind of profit irrespective of concern for the environment. Now this is where the argument hits home. If the economy of the United States is growing at 4 percent per year, it will double approximately every eighteen years. (This 4 percent rate does not include allowance for return on equity, a margin for national population growth rate, and the compounding of interest, which is boundless. And if it does, the years will be dramatically less.) Now imagine the huge impact on the environment if Europe and Japan are also growing at the same rate—yet we know the average cost of capital in these societies is more than 4 percent per annum. The monetary system and the whole mechanics of capitalist production system have this built-in power to grow and grow just to make zero return on invested capital.


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