The Waterworks Of Money

system is poorly managed, it can collapse. The money system is vital for the economy, but it can collapse if it is not managed well.

Authors: Carlijn K. Kingma, Thomas Bollen, Martijn Van der Linden.

The irrigation system as a money system

The majority of countries are experiencing a "cost-of-living crisis". The high inflation rate is affecting the already tight budgets of many people. In the last decade, inflation has been high.

Earnings

The United States has fallen behind in comparison to

Corporate profits

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Shareholder remuneration

The collapse of US banks, and the bailout by Credit Suisse, the Swiss banking giant, show that the threat of financial instability is not going away.

There may also be more skeletons hidden in the closet. There are skeletons in the closet not only at banks, but also other financial institutions. Klaas Knot warned in April 2023 that if the problems at other financial institutions were not addressed, they could grow so large.

Our money system is a major factor in the cost of living, financial instability and other problems.

Floods and droughts

Money is the system that controls the economy, just as irrigation is a system for agricultural land. Money allows the economy flourish, just as irrigation aids in crop growth. If the architecture is weak, or if sluices, floodgates, and other infrastructure are not properly managed, droughts can be severe.

In the last decade, the super-rich as well as large corporations were able to borrow at historically low rates. Ray Dalio, a hedge fund billionaire in 2019, was the first to announce that he would be retiring from his position.

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He was concerned about the consequences of a system he deemed to be 'broken'. He said that, while money is "basically free" for those with creditworthiness and money, it is "basically unavailable" to those without. He explained that this contributes to today's widening of the wealth gap, the opportunity gap and political divides. Certain parts of the economic system were flooded by financial capital, while others remained dry.

The floodgates opened further during the pandemic. The gap between the rich and the poor grew even wider, despite some people receiving free paychecks - for example in the US there were several programs to help the unemployed. Easy money helped boost the market for

Yacht-backed loans and securities

,

dividends

,

Share buybacks

.

M&A deals

New highs are expected in 2021-2022. The price was higher inflation. In many countries, the average citizen is struggling to survive. Even though they have received pay increases, their real wages are still declining (after accounting for inflation).

Carlijn Kingma's architectural map of money, 'The Waterworks of Money", is a beautiful illustration of the system.

The two-tiered State

The American economist John H. Cochrane put it this way: "Fixing the design defects within society's water irrigation system is not just a technocratic or commercial task. It is a democratic and social one."

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It: "We voters need tell our politicians what kind of central bank we desire."

It is the same for the other components of our money system, such as the payment infrastructure and tax regime. Who has the authority to create new money and for what purpose? How can we ensure that large corporations pay their fair tax share instead of shifting it to family businesses? What must be done to ensure that the rules of the market economy also apply to the banking sector? To answer the big questions which shape our economy requires a continuous engagement in politics.

In a democratic system, it is ultimately the people who have the power to create the money system and the laws and institutions which govern it. In practice, there is one major obstacle to the democratic process. In the age of CDS and CDOs, the majority of us are financially illiterate.

Writer

Matt Taibbi, a US financial journalist in 2009. Taibbi wanted to make people aware of the dangers associated with 'financial literacy'. He claimed that bankers turned our democracy into a "two-tiered" state by adding unnecessary complexity to finance. The public debate about the future of our monetary system is dominated by economists, tax experts and bankers who speak in jargon.

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Reform is needed

The consequences of exclusion are visible after every crisis. After 2009, the US Treasury spent over 420 billion dollars on bailouts for banks and European countries about

1,6 trillion

euros (

Estimated cost of bailouts for EU member states governments EUR1.6tn / US $426.4bn Howarth, D. and S. James (2020).

Oxford: Oxford University Press. Oxford University Press

In the meantime, bankers were negotiating conditions for their own rescue packages. They also drafted future regulations.

A small, exclusive group of people - many with close links to the financial industry - hold the real power in our monetary system. They essentially propped up existing banking structures without addressing their fundamental design flaws, which make them so fragile. In 2023, the US government was forced to dip back into the public purse to save four major banks from bankruptcy and to prevent "contagion" to the rest the financial system. It has become a standard practice to privatize profits and socialize risks and losses.

Money Waterworks

Taibbi's 2009 polemic concluded that 'literacy is power'. In order to put power back in the hands of people, it is important that we demystify finance.

We (cartographer Carlijn K├Ânigma, investigative journalist Thomas Bollen and Professor New Finance Martijn Van der Linden) have worked for over two years and a half to map the '

Money Waterworks

This is a visual representation of our money system without the economic jargon. Kingma spent more than 2300 hours by hand drawing this map, which was based on extensive research and interviews conducted with over 100 experts -- from central bank governors to board members of banks and pension funds as well as politicians.

We show you in an animated video how our money system is metaphorically represented, and its hidden power becomes manifest. The only way ordinary citizens can tell politicians what kind of "financial irrigation" system they want is if they develop their own vocabulary in order to take part in the debate on our money system.

Waterworks of Money on display in

Kunstmuseum Den Haag

You can see reproductions of the originals at

The Dutch Pavilion at the Venice Biennale

See for more information

waterworksofmoney.com