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27 November 2016
Book Report: Debt the First 5000 Years.
For this report I will start by summarizing the book in its entirety, then move on to referencing in
class discussions and readings for this semester. I will end this report with my own opinions and a few
selected quotes as I find necessary.
The author starts this book by explaining that nobody really seems to understands what debt
really is. The concept is very flexible and it therefore gives debt its power. There has been arguments
throughout the human history about debt the middle ages, ancient times and modern. He also explains
that there are three functions of debt according to Economists. The first being medium of exchange.
Second being the unit of account. Finally the third is the store of value. This is mentioned in our
curriculum this semester through the basic introductory portion. I recall this being one of the chapter
questions in our textbook (must be important). Further explaining states that the first trades were done
with what now we call virtual money. Actual coins came much later in the process. Barter seems to be
an accidental byproduct from using coins and paper money. Michell Iinneg was exponent of what came
to be known as Credit Theory of Money. Credit theorists say that money is not a commodity, But simply
just a tool used for accounting. This theory makes money only a measure of debt, not an account of
wealth. What matters most is that there is a uniform way to measure both credits and debts. This short
summary of the first three chapters of this book are paralleled very closely by the modern money theory
as presented in class. The book then continues on through the theoretical history of barter and exchange
continuing in chapter four with specific references to religion. Citing Judaism and Christianity
specifically as religions that have among them some form of debt as a principle within them. The Jews
have a festival of jubilee as a part of their tradition, wherein all debts older than 7 years are forgiven.

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Christianity has the concept of an unrepayable debt that burdens us all and that only our creditor can
forgive our unrepayable debt.
We then continue on about the morality of economic exchanges. Specifically the nature of
exchanges, how we should repay debts and why we repay our debts. Communism is the base nature of
all exchanges between people that see each other as equals. And civil exchanges are based on equivalent
reciprocity. Further exchanges and rates thereof are explained based on the relation of perceived equality
of each member. Further reading reinforces this relationship with specific mention of the exploitation of
both death and sex. Either to avoid the first or to get as much of the second as possible, and how
somebody who has the ability to acquire greater amounts of either gets much in the ways of trade to
those who have not as much.
The book further explains other such forms of debt especially honor as an asset and the
degradation of honor as a debt. With particular note I mention the payment for injury as implemented in
Ireland the length of a cut was measured with different sizes of grains, the higher the status of the person
the smaller the grain, and as many grains that make the length of the cut would be paid in the same
number of cows.
It has now been established many reasons as to why we pay for things and why we owe anybody
for anything. Now it is explained that money is introduced as credit and bullion as a necessary
requirement for war to be successful. Coins were created with the intention that if the issuing party won
the war, the coin will be worth quite a bit. The result of issuing bullion coins also meant that the warriors
could sell the now defunct governments coins to the winning party and they would still be worth
something. The theory that Religion, philosophy, war, and governments had fights and mergings over
time and after many many years had formed into what will be recognized as capital.
A short history of capital is revealed, including china, India, and Islamic states. coinage becomes
virtual, and debt is used as a form of trade. As debt was introduced as a form of payment, so to was

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interest introduced as a way to make more money specifically stated is usury. Usury was historically
defined as gains on interest for any reason and was illegal in Hebrew law, however with these new
advents, they were finding ways to skirt the law and get money if they were paid late or had a contract
broken.
Following chapters describe some fluctuations of real and virtual currency as the primary source
of a monetary unit, and then some horrible things happen, namely the plague and some major
exploration. Gold gets moved around to all sorts of places, foreign investments and trying to standardize
tax laws and laws of interest. The story of Hernan Cortez is told in great detail especially how he
mismanaged his funds, and that of his entire crew on the expeditionary force to the 'new world'. Of how
he charges them for every medical bill and weapon broken on the expedition in hopes to make back
some of the money that they find and were going to split with each other. And by the end, cortez returns
to Spain no richer for his entire expedition and all of the lies and promises he has made. Fredrick of
Brandenburg's story is also mentioned and how he is so bad at managing his funds that he is locked in his
own house with nothing to do and of all things asks for gambling money to pass the time. Frederick's
son gives political power to his fathers creditors in order to get some money back, things go south and
they make an army who then proceeds to kill anybody that thought that his debt solvency plan was not
quite right.
Feudalistic society for the commoners is presented and the debt fair is made mention of. That is,
everybody gathers around after the last approximately 6 months of debt is accumulated and everybody
resolves all of their debts. Anything that is not resolved with favors or extended debt is then resolved
with trade, particularly animals. This continued for a while, and snowballed to the point that everybody
had to have legal documents for all credit they extended. This made for some rather messy and costly
debt repayment. Interest was a part of these inter villager interactions, and the paperwork was required
so that nobody felt cheated out of any part of what they thought they were owed.

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The final chapter starts with president Nixon taking America off of the gold standard. And the
reason is to fund the war. Further explanations are given for how the gold reserves of the world are
handled and perceived to be handled, in addition to a basic idea of the federal reserve. The author
discusses at length the reasons behind the massive quantities of debt that the US government has
incurred and contributes it to a military debt. He also explains a double theology for money, one for
debtors and one for creditors. He ties this back to the fact that money never has really been a thing, just
the way that we facilitate trade. In his conclusion he states and justifies that the idle rich have most of
the money and it just sits around doing nothing for lack of imagination or initiative of the rich. While the
industrious poor would have many more ideas and ways to spend and use the money to keep new
business going. With his final lines, the author expresses that a biblical style jubilee would do us all some
good, as it would remind us not only that nobody can tell us what we are worth (as a human), but also,
nobody can tell us what we truly owe (being of any class or society).
This book was quite a good read, much too long as a general statement to my preferences, but
enlightening. My wife had read some parts of it as well and was deeply moved by the thoughts on
universal economics presented within. Some of my favorite parts were the specific histories mentioned
within. Namely the biblical references as well as some of the medieval ones.
All throughout this book I was making references to myself thinking hey I remember reading
about this for class or I remember professor urban mentioning just this very thing. a few points that I
remember word for word were from chapter 38, (thanks moodle) the three functions of debt (or money).
It seems that all sources point to it being quite a big part of what I was supposed to learn this semester.
This book, the text book, the professor, the lecture, the slides even. Everything made at least one
mention of it.
I can also recall from a lecture nearer the beginning of the semester about how trading with
people was a way to make social contacts. This was done by gift giving. If I said I liked something that

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you had, lets say your cow (because its always a cow). And I want to trade you for your cow, I know
that a cow is worth about 10 chickens. I trade you 11 chickens so that now you owe me something, and
while you owe me something you will come back to visit me to pay me back, sometime in the future.
This guarantees that we will be able to be social again in the future. This very concept was stated in class
and has also been explained, albeit, in less depth, in this book.
The barter system as we know it is very much gone over about how little we really know about
it. For instance, most text books will say that barter came first, then money, however this is not true,
first came the social trading as mentioned in the previous paragraph, then came money, in the form of
dowrys. Then came bartering to make up for the loss of money. If money was taken away from a people
that once had it, they will resort to using another item to take place of the money so that trade can
continue to be facilitated. This is stated in chapter six of debt, and was mentioned by professor urban.
On another note, dowry's as mentioned in chapter six were a part of trade and perhaps the
transition between social trade and monetary units. A suitors family would gather whatever they could
and present it to the bride's family, this as theorized by Graeber would solidify the promise that the debt
to purchase a spouse could never be repaid and would only signify that the suitor would forever be in
debt to the bride and her family for having the wonderful opportunity to marry the girl of his dreams.
It would seem as though this book follows very heavily upon the coattails of the modern money
theory of the textbook we have been reading this semester. The textbook states that money or coinage
isn't actually an asset, while the book for this report states that all money is debt. They seem to be quite
the same thing to me. The textbook also states that money has come from a need to justify and divide
debts to all parties, where the book states that this has been happening all along. The Romans did it
when they were expanding all over Europe and north Africa. They would use coins to pay their soldiers
who could in turn use those coins all across the empire in order to purchase any goods or services they
required. This was a debt to the soldier for his days of pay to the empire. Wherever the empire went, he

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would go also, using the empires money, and therefore all provinces needed to accept it. The textbook
also states that amounts had to be specified for payment to certain parties after people no longer wanted
to have to deal with each other, or in the event that somebody wanted to cheat somebody else our of
some sort of gains. This sort of behavior lead to the rise of bankers as a whole, and was one of the
reasons that usury was such a bad thing.

Once again I think this book is a great book, there are just a few qualms I have with it. While it
does a great job presenting information in a new and exciting way, it is quite long. Other than it being so
long, I feel like it could do the job of replacing the entire chapters on some of the history of money, as
well as most if not all of the modern money theory chapters as presented in our textbook. It really has
done a great job.
All in all, great book, long book. Never want to have to read it again.

Works Cited

Graeber, David. Debt: The First 5,000 Years. Brooklyn, NY: Melville House, 2011. Print.

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Sherman, Howard J., and E. K. Hunt. Economics: An Introduction to Traditional and Progressive
Views. Armonk, NY: M.E. Sharpe, 2008. Print.

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