Hey Michael,
here comes another way too long response (the topic is just to complex for short answers).
Your points (1) and (2) are contradicted by the monetary systems within the USA from 1790-1913. There was a lot of non-debt money and there was no income tax. There were of course a lot of problems that the Federal Reserve Act was supposed to prevent, but it hasn't done so.
How did this non-debt money come into existence? What made people accept it and trust its value? Why could the US trade with other countries?
The US did not develop in a vacuum, but was a split off of an existing society and took part in international trade, which means it was linked to other states and monetary systems and could basically “piggyback” and “jumpstart” on the technological advances developed through debt pressure and competition.
The US settlers and pioneers could only defeat and conquer the indigenous population because of superior technology and population numbers, both in existence because of the debt based societal pressure in Europe to constantly advance and grow or get overrun or collapse.
A quick search for US government revenue in 1790 shows it generated its revenue through trade with other countries (tariffs), which means it was reliant on other countries/civilizations to finance itself:
Germany is in a similar position in Europe today, as it is generating a surplus through exports, but the ability to export relies on the other European countries to go into debt to be able to buy them (which means they run a deficit).
Just like I personally have no debt and can still enjoy the fruits of civilization, but that just means someone else is in debt and carries the burden for me. There are always points in the monetary system where it appears that someone is debt free, but it is always reliant on other people’s debts and the system as a whole (true for both individuals and countries).
Point (3) is a faulty deconstruction of an irrelevant use of the word labor. You made a series of incorrect comparisons based on an incorrect interpreation of labor as some commodity with relative value. I am using the word labor in its most simple and obvious form and acknowledging that it is the basis for creating value. I don't know how to make it more simple: nothing happens without labor, without productive human effort. It is real. Value is an abstraction upon labor and money is an abstraction upon value. Whether money is based on a physical item like gold or just a symbol backed by credit and faith doesn't really change anything, although I would argue the limitation on money creation by the gold standard in the USA from 1944-1971 coincided with the greatest period of economic and industrial growth in the history of mankind, and that real wages and purchasing power have remained stagnant or decreased since then.
I totally agree that labor creates value. Where I disagree is that you can base a monetary system on it or use it as a unit to measure the value of something (outside of low tech communities cut off from the rest of the world). If you are more skilled than me in producing something (or have more advanced technology), you create more or better products while exerting the same amount of labor as me, which makes it unusable as a unit to compare values/prices etc.
Point (4) There are three things you said that are relevant. If you understand the current monetary system it has two features at the inception of money: (a) intangibility: money created from nothing, it is an idea; and (b) it is created as debt.
Money is almost never created from nothing, except in extreme circumstances (e.g. Quantitative Easing = real money printing to try prevent a total collapse, as is happening right now all over the world). In all other cases it is backed by something, even in Fractional Reserve Banking. Just the amount or kind of asset that has to be given as a security varies (land, gold, future income etc).
If you take out a mortgage, the house and land is the collateral (=the value), in case of a consumer loan it is your expected future income (otherwise the bank denies the loan).
The newly created money is just the “pricing” of you debt/asset, which means the debt/asset is the value and the money is just the “certificate”. Once the debt is paid back, the money ceases to exist, as there is no more debt to back it. So it is always based on an asset or the promise of future value created (income).
Why does it have to be created as debt? This was not the case for almost all the money created in the USA from 1790-1913, so that proves it is optional.
See the answer above, the US did not exist in a vacuum and was connected to and reliant on other countries, as well as on the already invented technology and an international monetary system created by already existing civilizations (all reliant on debt to function).
If money is not based on debt, the people are under no pressure to innovate and overproduce. Without this pressure, a civilization never forms or an existing one can´t maintain and improve its existing technology and declines and gets taken over or eventually collapses. This has happened countless times throughout the course of history.
I don't agree that civilization depends on a debt cycle because money does not have to be created as debt. However, I'm not totally questioning that. What I'm saying is that if you understand the monetary system in the USA today, there is a multiplicity of debt. Money is created when private individuals borrow it and money is created when the US govt. borrows it. For a fact, based on the history I've mentioned a few times, there is not any requirement for the US govt. to borrow money from a private banking cartel in order to create it. They could create the money without the debt part and spend it or distribute it into society and prevent citizens from also obtaining most of their own money from debt.
I agree that banks are not necessary and the government can issue the money directly, which will probably happen soon, as the world wide banking system is on the brink of collapse since 2008 and is only kept running by tricks like Quantitative Easing and similar financial acrobatics that break all rules that the governments themselves had set before.
But the government can never just spend the money into existence (or only in small quantities). If it does, it just creates massive inflation (see Zimbabwe, or Germany close before the end of WW II). It has to give it out as loans with interest; otherwise there is no pressure to produce more than is needed to survive.
Which is why, for example, home owners in Germany after WW II got a state mandated mortgage on their homes, which kickstarted the new currency and economy, as everybody had to pay back the newly created debt. And as the system was reset to zero and everything had to be rebuild (as it was destroyed by the war), the German “Economic Miracle” happened. But as the system ran its course, as it always does, the country once again is at the limit of possible expansion and the economy is about to decline.
Point (5) It's a little off-topic, but China developed rapidly because Western govts. and Western multi-national corporations gave them cash, built them factories, trained their engineers and technicians, gave them intellectual property and technology, and allowed them to steal other intellectual property and technology. The US still gives foreign aid $cash$ to China today.
Private property and debt expansion is the Chinese mechanism for growth, but it is predicated on international support. Without it, China would have collapsed in the early 80's or before. China spends money into the economy as infrastructure through its state-owned enterprises, which do incur debt, as do private citizens who purchase the products, mainly real-estate, but the central government controls the debt and the books, and their currency is not fully convertible. They manipulate it a lot.
All true, just as was the case with US at its foundation. China needed the technology of an already existing debt based society to enter the game, as it had no internal pressure to develop it itself before adopting capitalism.
But without private property and the ability to use it as collateral to take out loans (=increase the money supply & pressure= grows), China would still have no functioning economy and no pressure to produce and innovate, even if you gave it every technological secret of the West.
And the same thing happens in reverse: If you take away the debt pressure, an already developed debt based society declines (see all communist countries) or gets taken over.
Point (6) I agree that the banking system allows for war to be one of the chief mechanisms to create debt. This is another reason why it's immoral.
Which means there is no moral way to run a society or economy...
I simply don't accept your premise. Money is a tool, so we and our govts should strive to use it morally for everyone's benefit, and perhaps save the souls of a few Shylock bankers along the way.
That is the trap I fell into before as well:
The believe that there is a way out, that it’s just immoral practices and corrupt/greedy bankers and governments that are the problem and without them, the system would be cured. But they are just symptoms, not the cause.
The whole concept of civilization is based on an “immoral” motor and without it, it can´t exist. No debt = no pressure = no civilization.
Nobody develops nuclear reactors or combustion engines or mechanical looms or whatever else you need to run a civilization without the initial and never ending pressure of debt to overproduce and the looming punishment in case you can´t repay it.
People would just hunt/gather or farm to provide for themselves and their small community.