> [!summary] Progressive Summary > Tries to establish different first principles on which to build finance. Distinguishes capitalism and markets as two different things. Markets are where goods and services are traded. Capitalism is where money is turned into a commodity, rather than simply a medium of exchange. When money becomes a commodity, finance is endless, because we are incentivised to accumulate money. The true end (purpose) of money, and therefore finance, is to keep track of debts in trading so they can be resolved. Money, in this sense, should operate like a subatomic particle, appearing for short periods of time to manifest a transaction, and then disappear. It shouldn't be fetishized into an object of accumulation. The solution is to reform our current financial system and move to a system of clearing houses. > > We made the mistake of prioritising the principle of liquidity over the principle of clearing. # Structured Notes ## Definitions principle of clearing - a form of finance based on money that is not a commodity and an unpayable debt, but a measure for the exchange of goods and for the payment of debts ## Chapter Summaries ### Part I, Chapter 2 - At the root of the possibility of crisis: Liquidity and risk > Liquidity is the other face of trust, or rather of the peculiar type of trust that must reign in the financial markets. We refer to the trust that lenders - meaning people who buy shares, in the case of financial markets - must feel in their ability to sell what they buy, at any time and with no uncertainty. ### Part III, Chapter 2 - The way out of liquidity: The Gordian knot and utopia > Capitalism is a market system with one market too many, namely the money market, and hence structurally exposed to the risk that none of its markets may be a market in the true sense. > Taking money out of the market means adopting clearing as the architectural principle of a possible reformed financial system. The riddle at the heart of the Gordian knot of finance: > The basic essence of all the reforms that it will make sense to implement in every specific field, in an effort to get out of this crisis in a way that does not prepare the terrain for another, possibly even more serious one, can be summed up as an action designed first and foremost to *strip money of its character as liquidity* wherever this is possible. > Slavery arose historically as 'debt bondage', in particular bondage for debts that the victims were unable to pay. What form of slavery, even more subtle, is engendered when debts are incurred so as not to be paid? # Quotes