Money and its role in building a country

In a book written by Jason Goodwin entitled "The Greenback: The Almighty Dollar and the Invention of America", we are told of the story and history of the American dollar. Goodwin’s research tells us of how the early settlers, pilgrims and immigrants who came from Europe sojourned into America with literally only their clothes on their body, with practically nothing but a hope and determination to find a better place to live in. Now, in the shores of America, inhabited by native Indians and Incas, the early immigrants had only themselves to depend on in creating wealth and value to the vast wilderness that was then America.

To give themselves a fighting chance at survival, the immigrants forged amongst themselves a solid contract to honor and accept paper money as a medium of exchange as well as a measure and storage of value. This way, they were able to produce the things and goods they needed and in the process create economic value out of the resources that they found on the land.

This invention of the paper money by the early settlers proved to be the greatest invention of America as, from acceptance of the US dollar amongst the early immigrants thereon, the Greenback has through time, now gain recognition as the international currency by almost all countries in the world.

Indeed, of all the nations that was born to this world, only America from the very beginning had this obsession over money. In the words of Goodwin, "America’s theology was a secular one. It revolved around money and liberty, promise and return, profit and loss. It revolved, in fact, around the miracle of money." Goodwin, then, concludes," Only America was born in the love of money."

But the lesson of the book is that in the attempt of the author to trace the origin of the Greenback, it explained likewise how the wilderness that was America was transformed into the great country that it is today. The reason for the phenomenal growth and development of the United States from its early immigrant days is that the very simple system of using paper money made for its ready and easy access to everybody, even the poor settlers, giving them the chance and opportunity to make the land they occupied valuable and productive and, therefore, contributing to wealth generation.

It is to the genius of the American people that its original 13 States that comprised the Union which declared its independence from its British colonizer – then the greatest colonizer in the world with territories all over that were in sunrise and sunset at the same time – has surpassed its erstwhile conqueror and has become the only superpower, economically and militarily, of the world today. This could not have been possible, Jason Goodwin’s book says, without America inventing paper money, the Greenback.

The very essence of paper money as against metal money is that the former is practically initially without value as it is not supported by any metal to back it up, such as in gold or silver. But while paper money is without value at its initial printed stage, it gains value when eventually used as a medium of exchange. As printed money is continually exchanged for various goods and services, business is generated on an uninterrupted basis, creating economic value for the producers as well as taxes for the government. Thus, the printed paper money, valueless in the first instance, acquires a life of its own when used and thence becomes more valuable as economic values are created through its use.

By making the poor have access to paper money through long-term, low-interest loans, they could invest in productive activities that will enable them to earn and meet their needs, thereby extricating themselves from what Jason Goodwin calls "the bitterness of persistent poverty." Indeed, Goodwin’s book has been a source of inspiration as well as a bible of information for many countries on how money should be created and managed. I, myself, have had the occasion to give copies of the book to Secretary and NEDA Chief Romulo Neri for them to appreciate the valuable lessons thereon and to adopt the same formula of success in the Philippine setting.

As an independent and sovereign country, we have all the rights, nay duty, to manage our own local currency and determine for ourselves, base on our needs for development, our own level of money supply without being restricted thereon by foreign agencies that are not expected, in the first place, to look after our welfare and interest. Indeed, the foremost lesson of Goodwin’s book is that each country must be truly independent from foreign control, such as from the IMF, in charting their own local monetary destiny. Should the Philippines be able to pursue its own monetary goals, independent of foreign dictation or restriction and guided solely by our needs, we are certain that we can have a Philippine peso that will fare much better than our paper money today and able to develop the country fast enough to catch-up with our neighbors, and, most importantly, be able to liberate at least three-fourths of our people from the bondage of poverty.

As it is, statistics reveal that the Philippines has one of the lowest money supply in the region. As of the end of year 2000, the country only had a money supply equivalent to $7.69 billion. Considering our much bigger population, this level of money supply sharply pales in comparison to Thailand’s $16.47 billion, Malaysia’s $21.2 billion and South Korea’s $39.38 billion. Singapore itself, a small city-state, had a money level of $18.81 billion, more than twice that of our own. Japan, the economic giant of Asia, had a whopping $2.06 trillion equivalent in money supply as of the end of the year 2000.

It is obvious that our local money in circulation is way below our requirements for development as our present anemic money supply could hardly satisfy even our countrymen’s basic needs for food, clothing, shelter, medical care and education. If we are to have a chinaman’s chance at developing our country on a sustainable basis, we must be freed from IMF conditionalities on our money supply and, at the same time, we must amend the restrictive provisions of our own Central Bank Act that prohibits the Bangko Sentral from lending money to the government through the issuance of new money.

The United States of America, out of necessity, invented the Greenback paper money and doggedly pursued an independent monetary policy that is directed only in serving its own interest. Because of that, we have an America that is the only economic and military superpower in the world today with the Almighty Dollar as the accepted international currency, that is second to none.

The Philippines need not invent what has already long been invented but we must, like the successful nations, be able to direct our own monetary policies that is consistent and appropriate for our growth and development as a country and people. Doing this, we shall have a respectable peso in no time at all but, better yet, we shall have a respectable people, living a decent quality of life, with their dignity and self-worth held high.

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(Note: We beg the indulgence of our leaders who are at times tasked to read a lengthy piece. The purpose of our writings, however, being advocacy and not merely commentary in nature, compels us to dissect a given problem, analyze its causes and effects, and offer studied solutions. The length of the article should be irrelevant to such an approach.)