Here’s a good written summary of the “money as debt” issue:
“Without beating around the bush, here is the hot potato: Money is being created not by our governments, but by a private monopoly run by the (private) banking corporations.”
And money is basically created out of thin air!
“[Auriti, a professor of law] explains that our monetary system is the biggest fraud in history. The people are being defrauded, says Auriti, by twice the total amount of currency in circulation, because not only have they been denied their rightful share in economic development, but when issuing currency, the money was issued as a debt, adding damage to insult, as it were, and inflicting a double loss on the populace.”
Here’s another interesting source:
A man in New Jersey once tried to corner the soybean oil market using a practice not dissimilar to that employed in the normal course of banking. He bought and paid for a storage tank of soybean oil. He then asked his bankers to test it for quantity and quality. He borrowed against it and bought a futures contract for the delivery of an equal amount of oil to him at some future date. He then shifted the oil to another tank and filled the first tank with water so that it would continue to appear full. He was not concerned about his borrowings, they had been covered by the futures contract.
He then had his bankers test the new tank for quality and quantity and borrowed against the new tank. He bought a further futures contract. He kept repeating the process in the hope of gaining control of the market and driving up its price to his advantage.
In each case, he had removed the real oil, and had effectively replaced it with a legal promise to deliver an equal amount of oil at some stage in the future. This is what the banking system does with our deposits. They are removed. Loan agreements are held in their stead. Loan agreements are agreements to deliver a specific amount of money to the lender at some future date.
The soybean oil man was eventually exposed. He was tried and convicted. He went to jail for fraud. Yet bankers, who in essence do the same thing with money, continue to function as legitimate businessmen – and, in fact, they are. Their misrepresentation has been legitimised. The legitimisation occurred so long ago that most, if not all, current bankers and customers have no knowledge of it. Today, bankers are seen as the pillars of the community. No reputable economist or financial expert of whom I am aware has questioned the validity of the money-lending mechanism of the banking system. To each it is a “given”.
The author goes on to say:
As we saw with the gold coin in the previous chapter, the system produced by superimposing the mechanism of money-lending onto the system for storing and distributing money is dishonest. It ought not to have the support of the legal system. Giving legal respectability to misrepresentation turns logic on its head. The widespread use and acceptance of institutionalised money-lending leads us to believe it is a sound practice. But it is based upon misrepresentation. It is dishonest. It certainly ought not to have the support of the legal system.
Nevertheless, it does have the support of the legal system, and the amount of the misrepresentation continues to grow. The amount can be measured. In a given banking system, it will equal the amount of loans outstanding on the books of all branches of all the banks in that particular system, less the paid-up capital of those banks. Each time the banking system as a whole produces a net increase in loans, the amount of misrepresentation will increase, and the real exchange value of each previously existing unit of money will decrease proportionately.
This decrease should become immediately apparent in the market-place – but it doesn’t. Under the gold standard, for instance, prices remained stable during periods when misrepresentation was continually occurring. Hidden from public view, a gap was opening between the amount of gold available to honour claims and the amount of those claims. With each new misrepresentation the gap widened. Holders of claims were unaware of it. They believed that the claims which they held could be exchanged at any time for the amount of gold stated. So long as this view held, each claim was treated as if it were the amount of gold stated.
Confidence then became the key to successful banking. It was irrelevant that a bank could not meet all its issued claims if presented for payment at the same time. What mattered was that individual claims could be met when presented. Systems were put in place to assure depositors that their deposits were safe. The presence of these systems allowed lenders to increase their misrepresentation with impunity. Nevertheless, with the increased misrepresentation, prices remained stable.
(This opinion belongs solely to the author and does not necessarily reflect the views of The Good Sex Network.)