For many years now all commercial banks have churned out credit at a rate of between three and four times the real rate of economic growth. They do this without any consideration as to the natural needs of the economy or the limitations of the real world. This recent, rapid, inflation of the money supply came at the same time that Chancellor Gordon Brown relaxed regulations on the banking industry. This has been the main driver of inflation and is a completely unsustainable state of affairs. A situation that Chancellor Brown, despite his claim to have ‘abolished boom and bust’, couldn’t fail to have noticed. As the economist Kenneth Boulding stated: “Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist.” Perhaps he should have added Chancellor of the Exchequer as well.
When more and more money is 'loaned' and the money supply constantly expanded, there’s a resulting boom in economic activity, which eventually and inevitably turns to bust. The bust, when it comes, is as a result of a decrease, for whatever reason, in the money supply. Perhaps the best example of a boom turning to bust is the Great Depression in America in the 1930's. As Nobel-Prize winning economist, Milton Freidman said in a radio interview, “The Federal Reserve (America’s privately owned central bank) definitely caused the Great Depression by contracting the amount of currency in circulation by one-third from 1929 to 1933.”
But what advantage is there to bankers in such an unstable system of boom and bust? The charge, by some, is that during the ‘boom’ years they’ve earned a great deal in interest payments on the 'loans' that were made with the money they created out of thin air. Then, after the inevitable collapse, as the economy contracts, they’re in a position to go bargain hunting for new assets; buying up all those struggling businesses, armed with the knowledge that the whole credit creation cycle will soon begin again. And let’s not forget all those homes repossessed during the bust because the 'money', or rather the digits on a computer screen, wasn’t paid back. Homes that are guaranteed to increase in value when the money tap is turned back on again.
Would anyone in their right mind want to give private, commercial, bankers acting in their own or their shareholders interests this kind of control over their nation’s money supply? It doesn’t make any sense to give them that kind of power but that is exactly what our government has done. A situation summed up in an apocryphal statement by former American President, Thomas Jefferson: "If the American people ever allow private banks to control the issue of currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their fathers conquered." Whether he genuinely said those words or not, one look at the current situation in America and you can see how prophetic they might prove to be.
Just as Britain’s economy is under constant pressure with massive private and national debt and budgetary difficulties, so are the economies of the other nations of the developed world. This begs the question, how can these wealthy nations, from a position of constant monetary shortage and near insolvency, lend money to the developing world? The answer is they don't. The ‘loans’ consist almost entirely of money that has been created via the same debt-based banking process that is used to supply money to the national economies of the so called 'wealthy' nations.
Of the many billions currently 'owed' by third world or developing countries the vast majority represents money created out of thin air by commercial banks through the purchase of debt bonds. These loans may be denominated in pounds, dollars or euros, but they have no connection with their respective national economies and in no sense whatsoever do they constitute money owed to the creditor nations of the World Bank and IMF.
Contributions from the ‘wealthy’ nations are largely raised through the sale of debt bonds, adding to their own national debt. The only part that isn’t is the 25% contributed to the IMF in the form of gold. The result is that both the contributing ‘wealthy’ nations and the borrowing third world nations carry a burden of debt. A debt that is owed, ultimately, to privately owned, commercial banks who have created the money from nothing. So what happens when a country that has borrowed money can't or won't pay it back? It's not the commercial banks, the World Bank, the IMF or the government's who have to pay. As ever it's the people of the developed world; directly through their taxes and indirectly through inflation.
The other consequence of these massive burdens of debt being accumulated by very poor countries is that quite often they result in their poorest citizens being deprived of basic essentials as well as such things as health care and education. There's plenty of evidence to suggest that it's the politicians in these countries that benefit the most. Endemic corruption often ensures very little of the money that’s loaned filters down to the most needy in society. Invariably it’s used as a method of power and control by political elites.
Some observers have argued that the World Bank and IMF "have done more harm to more people than any other non-military institution in history.” As an example, between 1982 and 1990, debtor countries paid back more than $1,300 billion but began the nineties over 60 percent more in debt than they were in 1982. Sub-Saharan African debt alone increased by 113 percent. Nigerian writer and environmentalist, Ken Saro-Wiwa, criticised the World Bank's position: “[It] has to accept that its real instrument of torture is its insistence on growth, its economic theorising at the expense of human welfare... The sooner debtor nations realise the political nature of the World Bank, the sooner they will be able to face the bogus economic theories of the Bank with an equivalent weapon - people's power.” Despite worldwide pleas for clemency he was was executed by the Nigerian government on November 10th 1995.
In 1988, after 12 years as a senior IMF economist, Davison Budhoo, resigned in disgust saying he wanted to "wash my hands of the blood of millions of poor and starving people."
Former corporate economist John Perkins wrote about his work in the book 'Confessions of an Economic Hit Man'. It was his job to entice leaders of under-developed nations into accepting loans from the IMF and World Bank. In his book he states:
"There were two primary objectives of my work. First, I was to justify huge international loans that would funnel money back to (the company he worked for) MAIN and other U.S. companies (such as Bechtel and Halliburton) through massive engineering and construction projects. Second, I would work to bankrupt the countries that received those loans (after they paid MAIN and the other U.S. contractors, of course) so that they would be forever beholden to their creditors, and so they would present easy targets when we needed favours, including military bases, UN votes, or access to oil and other natural resources".
Is it possible that in the modern world, conquest by the sword may have given way to conquest by the loan? Professor Carroll Quigley, mentor of former American President, Bill Clinton, wrote in his book, ‘Tragedy and Hope’, about his personal knowledge of an elite clique of international bankers who were determined to control the world. They “had a far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole." It seems quite clear that the current methods appear to be keeping the Third World in poverty rather than helping them to escape it.
Harvard graduate and former department chair at UCLA, Professor Henry C. K. Liu became an investment adviser for developing countries. He calls the current monetary scheme a "cruel hoax [and] when we wake up to that fact, our entire economic world view will need to be reordered.” The hoax is that there is virtually no ‘real’ money in the system, only debts in the form of numbers on a computer screen. The notes and coins, which are issued by the government, make up only a tiny fraction of the money supply. The rest consists of debt to private banks, for money they created from nothing with accounting entries on their books. It is all done by sleight of hand; and like a magician's trick, we have to see it many times before we realize what is going on. But when we do, it changes everything and all of history has to be rewritten.
Money and banking have been made to appear as mysterious, arcane and complex processes that can only be operated by a technocratic elite. Despite this attempt by banking interests to conceal what is really going on it seems clear the banking and finance systems of both the wealthy and poor nations are not functioning in the interests of the vast majority of their peoples. We appear to have become the economic slaves of bankers, chained by their debt. But it doesn’t have to be like this. If nations issued their own currency, debt free, by whatever mechanism, they could expand and prosper up to the limit of their physical potential.
If the necessary debt and interest free money was spent into the economy there’s no good reason for the existing restraints on public expenditure on the likes of education, health care or law and order. The only question we should ask is, are the required human and material resources available? It is the availability of resources and the public need that matters, not the number of digits on a cheque or a computer screen. That money is a scarce and finite resource is a myth that needs exposing.
When the power to create money was granted to the Bank of England in 1694 it automatically guaranteed that more and more wealth would be concentrated in fewer and fewer hands. A process that still continues. Not only wealth but immense power and control which benefits only a very few people to the detriment of the rest of society.
This central banking system, which some convincingly argue is little more than a legalised cartel, has spread around the world. Perhaps the most famous example being the U.S. Federal Reserve which, despite it's official sounding name, is neither federal nor a genuine reserve. It is a privately owned corporation. There are many who say that America's history is best expressed as it's struggle to evade the clutches of the European banking cartels. A struggle it finally lost when the Federal Reserve was founded in 1913. The President at the time, Woodrow Wilson, soon came to regret his role in the affair. He said: "I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world -- no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men." He was bemoaning a fate that had already stricken Great Britain many years before.
It's tempting to heap the blame for all this on the bankers. But we shouldn’t forget that this present situation operates with the full knowledge and collusion of those in government. Government's who are happy to borrow more and more money, year on year, plunging us ever deeper into debt and in the process increasing the money supply that inevitably results in a rise in inflation. The UK money supply rose from around £250 billion in 1986 to nearly £1,500 billion in 2006. Figures for January 2009 showed it was growing by 16.3% pa. A staggering increase resulting in the pound in your pocket and savings account constantly losing value. And who profits the most from this state of affairs? The banking oligarchy.
How much of the wages of a person working in Britain today goes straight into the pockets of a wealthy elite via the taxes paid to fund an unnecessary national debt? How much lower could taxes be if we didn't have to service an ever increasing level of interest on the national debt? A debt that helps to keep the City of London in the manner to which it is accustomed. How much could these taxes be reduced and, if necessary, spending on essential infrastructure increased if governments created money themselves, by whatever mechanism, instead of borrowing it at interest from privately owned, commercial banks given a license to create it from nothing? This issue shouldn’t be viewed through the false lens of left/right politics. It is much more fundamental than that.
In February 1983, in an article in the London Illustrated News, Sir Arthur Bryant wrote: "What seems required is a public body removed and divorced from political pressure, staffed by Treasury officials, invested by Parliament with the duty of creating, free of interest, as much money for necessary government purposes as the country at any given time should, in their considered judgment, need to ensure the maximum possible employment of its productive resources".
He went on to say: "The exercise of the right inherent in every sovereign state of creating and issuing a sufficiency of money to make financially possible what is physically possible and morally desirable, would enable as much real wealth to be brought into existence as, with its immense inventive and scientific potential, it is capable of making".
The government could directly invest in public infrastructure, services and institutions, such as roads, bridges, libraries, scientific research, water and power infrastructure, the maintenance of public parks and wildlife reserves and public transport to name a few. This money would then trickle down into other aspects of the economy such as car manufacture, electronics, telecoms, other unessential services and much more. The success of the lower tiers of the economy would be in part dependant upon the state of essential services, which is as it should be. Of course, the key to this suggestion is that we have a genuinely accountable government. Something that it's quite clear we don't have at the moment.
As a safeguard against unaccountable government’s misusing their powers there are some reformers who suggest a return to the Gold Standard, where the value of the pound is backed by something of value such as a precious metal; in this case gold. Precious metals have always been thought of as being valuable. A value, it’s claimed, that neither politicians or bankers can easily manipulate, in contrast to fiat money, which can and is, easily manipulated. There are also other suggestions, such as more localized currencies, which warrant further investigation. The important thing is to generate a debate as to the best alternative to the current deeply unfair and dysfunctional system.
Amid the economic turmoil, the rising unemployment, the pound dropping in value against other currencies, particularly the euro, and the national debt climbing alarmingly we are told this is all down to a handful of greedy bankers and a lack of regulation. A few chairmen and other high officials are sacked and used as scapegoats while the shadowy elites of the banking world, the real controllers and decision makers, escape attention and continue in their manipulation of the financial markets. Of course the same Labour politicians that helped to get us into this mess, by de-regulating the market and then turning a blind eye to the enormous explosion in credit and the resulting escalation in private debt, tell us they’re working towards making sure it won’t happen again. At the same time we have the scandalous situation where the tax paying people of Britain will be made to pay for the inevitable failure of the fractional reserve, central banking system by bailing out banks to the tune of multiple billions. That will, of course, mean yet more debt creation; very good news for the banks lending the billons required for the bailouts and even better for those receiving them, but not so good for the people of Britain who will be paying for it all for generations to come. There will be the usual suggestions of more reforms, more rules and more regulations but nobody will be looking at the underlying cause of the present problems. It’s the fractional reserve system that allows the creation of fiat money, in the control of private banks, which is overwhelmingly to blame. It has led us into a totally unnecessary recession and needs abandoning altogether.
There are many observers who suggest that this ‘credit crunch’, which is yet another contraction of the money supply but this time with it’s own handy little marketing tagline, is a completely manufactured event. Even if you’re not of that opinion, you can’t fail to have noticed how world leaders have seized upon the situation to propose a new global financial system. The Prime Minister Gordon Brown never fails to mention the ‘global’ nature of this problem. There’s no doubt that there are many politicians, bankers and corporate leaders who are eager to create a global currency and the present economic turmoil and recession is being used to further those ends.
Further investigation soon reveals that these moves towards a global financial system are just part of a much larger agenda. That being a one world government with the private bankers and those who control them completely in charge. This is merely an extension of their existing dominance and would result in the further enslavement of the whole planet. The wealth and power resulting from their control of the banking and monetary system, and subsequently the corporations and government at all levels, is the most powerful weapon in their armoury. The New World Order they envisage would be solely for their benefit. A world wide system of feudal control that would see the majority of mankind serving the wants and needs of a small cabal who think they have been born to rule over us all.
At a meeting of the G20 in London, in April 2009, there was an agreement to expand an existing IMF system called ‘special drawing rights’. This was seen by many as the first steps towards a global currency. Not long after the IMF announced that “the current global recession is likely to be ‘unusually long and severe, and the recovery sluggish.’ In reality, as the IMF knows, it would be possible to put every nation in the world on the road to recovery by allowing them to prime their economic pump through sovereign control of their own monetary systems, with freedom to utilize their own natural resources.
It’s quite likely that before we see the creation of a world currency we’ll see attempts to manoeuvre us into the European Single Currency as a step along the way. This is all to the advantage of the bankers and the politicians and not to ours. It should be resisted along with another of their aims, the cashless society; a world where everything is paid for digitally by credit card, or even, as many predict, a microchip implant in each member of society. Both of which are easily controlled and manipulated and which would increase our financial slavery to the banking elites as part of the ‘Big Brother’ style government that appears to be growing daily. The selling points of such a system will be things such as the ability to stop drug traffickers and tax cheats. This is an attempt to make the proposals seem benevolent but they will be anything but. The same people who have accumulated immense levels of wealth, at the expense of the people in countries like Britain, and the politicians who have succumbed to their powerful and controlling influence are now claiming they are going to make improvements to the system which will be to our benefit. Don’t believe it for a second.
Robert H. Hamphill of the Atlanta Federal Reserve Bank said: "We are completely dependant on the commercial banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the banks create ample synthetic money we are prosperous; if not, we starve. We are absolutely without a permanent money system.... It is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defects remedied very soon."
Perhaps the collapse he feared is what we are witnessing now. But what will be re-built in its place and by whom? The same people who profited so enormously from the previous system and who seek to enslave us further?
Who can disagree that our present financial system is in desperate need of investigation by all? Can anyone doubt we need to find a better way? The banking and monetary system that has caused so much damage and exerts such a malign influence around the world started here in Britain and it should finish here. We need to find an alternative to the model of a central bank operating a fractional reserve banking in a fiat currency, owned by private interests. One that would solve many of the iniquities of life in Britain today and, in the words of Sir Josiah Stamp, make this "a happier and better world to live in".
Many thanks to all the following:
The contributors to the articles at Prosperity UK:
Sabine McNeil and her blog ‘In the Spirit of the Forum for Stable Currencies’:
Joe Plummer for some great articles on his site: http://joeplummer.com
G. Edward Griffin, author of the excellent book about the creation of the ‘Federal Reserve’; ‘The Creature From Jekyll Island.’