We’ve given the banks a real-life licence to print money. And they’ve used this to blow up the economy and pass the costs back onto ordinary people.
We all know it’s illegal to print your own fivers or tenners at home. But when a bank creates money, they don’t print it on paper bank notes – they just type numbers into your bank account (which is just a record in a computer database). This type of money is just digital, just numbers in an account. And because the laws that govern money haven’t been updated since 1844, there’s no law against the banks creating this type of digital money.
If you or I wanted to make a loan to a friend, then we’d need to have the money before we could lend it to them. But banks take your money, then use that as the basis for typing new numbers into somebody else’s account – without removing the money from your account first – which means that they’re effectively creating brand new money.
This might be hard to believe, but you don’t have to take our word for it. Listen to Martin Wolf, the Chief Economics Editor at the Financial Times, and a member of the government’s Independent Banking Commission, who said:
“The essence of the contemporary monetary system is the creation of money, out of nothing, by private banks’ often foolish lending” Financial Times 9th November 20101
Today, 97% of all the money flowing around the UK was created by banks in this way. All this money exists in the form of numbers on a bank balance in a computer. By allowing the banks to create so much money, practically every single penny in existence today is on loan from the banks somewhere down the line, meaning that we all collectively pay around 5% of our money every year straight to the banks in interest. All of this money was created by somebody typing more numbers into an account when a bank made a loan to a customer. Make no mistake about it, although it still has the Queens Head on it, the pound itself has been privatized by stealth.
What Does this Mean for Us?
If almost all money in the economy is created by commercial banks and then lent by them to the public, then it’s not surprising that everyone seems to be in debt. In real terms we’re richer than ever – we have more science, technology, medicine and knowledge than ever before – but we’ve been forced into debt because the banks have a monopoly on putting money into the economy.
But it’s even worse. Under this current system, the only way that we can get out of debt is if someone else goes deeper into debt. To pay off your own debts, you need to give some of the electronic bank-created money in your account to your bank, but the money in your account had to be created by a bank when somebody else went into debt. So it’s mathematically impossible under this system for us all to get out of debt.