FINANCIAL REFORM

If money is the root of all evil, then our financial system is a flourishing botanical garden. Money itself isn’t the problem. It’s just paper, metal, or pixels on a screen. The problem is the elaborate, smoke-and-mirrors machinery we’ve built around it—a system so complex that even the so-called experts admit they don’t fully understand it. (In the 2008 financial crisis, “Oops” was the global economic summary.)

Consider the history of money. In Debt: The First 5,000 Years, anthropologist David Graeber dismantles the myth that early economies were based on barter. Instead, he argues, debt has always been at the heart of financial systems, often entangled with power dynamics and social hierarchies. Money wasn’t invented to make trade easier; it was invented to keep track of who owes whom. Fast-forward to today, and that ledger has morphed into a labyrinth of derivatives, credit default swaps, and other financial instruments so abstract regulators cannot understand them.

The 2008 crisis wasn’t an anomaly—it was the logical outcome of a system designed to prioritize profit over prudence. Wall Street packaged risky mortgages into complex securities, slapped them with AAA ratings, and sold them to unsuspecting investors. When the house of cards collapsed, who paid the price? Not the banks. They got bailouts. Ordinary people lost their homes, jobs, and savings. As economist Joseph Stiglitz notes in The Price of Inequality, “The banks got bailed out, and the people got sold out.”

And what did we learn from that catastrophe? Not much. Global debt has continued to skyrocket, financial regulations have been watered down, and speculative bubbles keep inflating—whether it’s housing, cryptocurrencies, or the latest tech startup with a business model based on, well, nothing.

The World Inequality Report 2022 highlights that the richest 10% of the global population owns 76% of the wealth, while the bottom half owns just 2%. This isn’t just unfair; it’s economically destabilizing. As economist Thomas Piketty argues in Capital in the Twenty-First Century, extreme inequality stifles growth, fuels political instability, and undermines democracy. When wealth concentrates at the top, so does power—and that power is used to rig the rules in favor of the few.

But financial reform isn’t just about fairness; it’s about sanity. The current system is built on perpetual growth—a concept that sounds great until you remember that we live on a finite planet. As ecological economist Herman Daly points out in Steady-State Economics, infinite growth on a finite planet is not just unsustainable; it’s mathematically impossible. Yet, GDP remains the sacred metric of success, even when it measures things that are actively harmful, like oil spills, deforestation, and medical bills from preventable diseases.

Meanwhile, the financial sector—once a modest servant of the real economy—has become its master. In his book The Value of Everything, Mariana Mazzucato argues that modern finance often creates “value” through activities that extract wealth rather than generate it. High-frequency trading, hedge fund speculation, and complex derivatives may make billions for a few, but they contribute little to the common good. In fact, they often destabilize economies, as seen in the 1997 Asian financial crisis, the 2008 meltdown, and the recurring volatility of global markets.

When success is measured solely by financial metrics, we internalize scarcity, competition, and insecurity—even in times of abundance. The “fear of missing out” (FOMO) isn’t just a social media phenomenon; it’s the engine of speculative bubbles, consumer debt, and burnout culture. As sociologist Richard Sennett explores in The Culture of the New Capitalism, modern work environments driven by financialization erode trust, community, and personal fulfillment.

History offers alternatives. During the Great Depression, the U.S. implemented the Glass-Steagall Act, which separated commercial and investment banking to prevent conflicts of interest. It worked—until it was repealed in the 1990s, paving the way for the 2008 crisis. In Switzerland, proposals to ban fractional reserve banking have gained traction, challenging the very foundation of how money is created. Meanwhile, models like public banking, community currencies, and cooperative finance are thriving in pockets around the world.

The Grameen Bank in Bangladesh demonstrates how small, community-based lending can empower the poor without trapping them in cycles of debt. Unlike traditional banking, which prioritizes creditworthiness based on existing wealth, microfinance prioritizes trust, social capital, and economic participation at the grassroots level. Similarly, cooperative banking, mutual aid funds, and public banking initiatives redirect financial power away from speculative markets and toward productive, community-driven investments. Local currencies, such as the Bristol Pound in the UK or BerkShares in the U.S., encourage resilience by keeping wealth circulating within communities rather than corporate coffers.

The concept of money itself is evolving. Cryptocurrencies, while often speculative, fraud-ridden, and a playground for financial escapism, expose a fundamental truth: money is a social construct, its value resting entirely on collective belief. Yet, the promise of decentralized finance—when stripped of Ponzi schemes and techno-utopian delusions—offers glimpses of an alternative to centralized banking monopolies. Instead of reinforcing inequality through unregulated speculation, financial systems can be reimagined to leverage blockchain for transparency, community-controlled currencies for local resilience, and digital finance that serves ecological sustainability, social equity, and human well-being over profit margins and stock prices.

Therefore, under Folklaw:

Financial systems shall be restructured to prioritize transparency, equity, and sustainability. Banks will operate as public utilities, with strict regulations separating commercial and investment activities. Financial systems shall be decentralized, democratized, and accountable to the people they serve. Speculative trading, including derivatives and high-frequency transactions, will be banned.

Microfinance institutions, cooperative banking, and public banking initiatives will be expanded to provide fair, accessible credit without predatory interest rates. Local and community-based currencies will be encouraged to support regional economies, ensuring that wealth remains within communities rather than being extracted by multinational corporations.

Debt forgiveness programs will address predatory lending practices, particularly in education, healthcare, and housing. Public banking institutions will replace private monopolies, focusing on community investment and sustainable development.

Cryptocurrency markets, often rife with fraud and speculation, will be strictly regulated to prevent financial instability and exploitation. However, decentralized financial technologies that promote transparency, financial autonomy, and non-extractive economic models shall be encouraged. Public blockchain systems will be developed for fair, transparent economic transactions, ensuring that digital finance serves communities rather than enriching a select few.

Financial education will be integrated into public curricula, empowering citizens to understand and challenge the systems that shape their lives.