In Part 1 http://tinyurl.com/z3x2yzb I tried to give an overview of what I mean by ‘toxic’ banking. It represents ALL of the reasons we try to legislate against the human fallibility for monopoly situations. Bitter experience has taught us that price fixing and other abuses occur because monopoly is seen as the ultimate means by which to maximise a return on capital.
Bankers are to be commended for the manner in which they have stealthily created a monopoly of the global production of money over the last century or so. 97% of all countries produce their own currency through private banks. The banks argument is that money is their business, not that of governments. To the general public however, it appears that their money comes from government.
The ‘Federal’ Reserve and the Bank of ‘England’ appear to be government institutions but are, in fact, private companies operating for profit. Money gets into our pockets when our governments borrow from the banks and put it there.
They do this by Issuing letters of intent (Government Bonds) which promise to pay the purchaser interest on the money. Banks respond by taking on the loan/Bond and lending them money, by printing pieces of paper which are put out into Society as money.
(At this point there is no difference whatsoever between the pieces of paper the banks print and the pieces of paper printed for the world famous board game Monopoly – coincidence in the name – You decide!! What makes the difference in value between the two pieces of paper is, that the government legislates that one is an ‘official currency’ and the other is not . . . That’s all there is to the validity of our money, both here and abroad.)
I have explained in this manner to emphasise that every coin and bank note in our pockets and purses, together with every other piece of money you can think of, our governments pay interest on to the private banks from whom they originally borrowed it. If they paid it all back, there would be no money in circulation and Society would come to a grinding halt!
The grip any monopoly exercises over Society becomes expensive to the user. For all money in circulation, the interest private banks demand our governments pay is compound interest, which means we are not only paying for the cost of the outstanding loan but also for the interest on that loan.
So if you borrow £10 at 10% p.a simple interest, you pay interest of £1! But with compound interest you pay the interest on £11 (the loan plus the interest). As you can see from this oversimplified example (done for my sake!) adding interest to the interest pushes up indebtedness to the banks.
Since the 2008 financial collapse this indebtedness to private banks has grown exponentially, along with the power they are able to exert over Society, as the people of Greece found out rather dramatically in 2015!
This whole monopoly becomes more bizarre when you come to realise, as I did, that no longer do banks hold vast stacks of cash in tower block size vaults. Their money is only ever released as loans and only in circulation as long as the loan lasts.
When you want to buy a car you take out a loan. It registers on the banks accounts as a debt, against which they have made a credit to you of the money. That is how money comes into being (out of thin air) and when you pay back that loan the money disappears back into the ether again. When governments need money the same thing happens, only on a much larger scale of course.
So in essence it costs the banks ‘3/5ths of 5/8ths of bugger all’ to supply us with money, for which they charge and make inordinate amounts of profit, plus the power they accumulate by our indebtedness. It is the ultimate monopoly, in my opinion and its growing power is now enslaving us and our governments in debt.
Because of this monopoly, private banks are also able to leverage more than just interest for the use of their money. We are now seeing them demand our public resources, including our most fundamental water supplies at rock bottom prices.
This incredible position of unelected power has been achieved, in large part, by our own ignorance of how money is produced. This deliberate policy of secrecy has kept us in ignorance of their growing monopoly position. As Henry Ford is quoted as saying
“It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning”.
There is no starker evidence of the power of this monopoly and our ignorance, than the ‘bail out’ of the banks in 2008. Not only a dishonest use of public funds for commercial purposes by our governments, it also established a frightening precedent. That taxpayers will underwrite the losses of commercial companies at the cost of our public services, where the money was originally intended.
Our ignorance is being further tested with talk of ‘bail ins’. Here, the money we hold in our banks, be it in our current account or other investments can be taken in similar fashion to our taxpayer money, should banks again need financial support. This is a forgone conclusion as monopoly demands little regulation, which caused the collapse in 2008.
This global monopoly has created an environment where our money is not owned by us and therefore we have helpless over its control or management. If it is governments who determine which pieces of paper are legal tender, then it is down to us to find people who will legalise public printing presses to produce our own money.
This will see either our money produced free of charge OR any interest charged returned to the people by way of first class public services and the abolition of personal taxation. All of which public banking is quite capable of doing.
It happens in Switzerland . . . but developments there are for Part 3.
Awareness breeds understanding and understanding breeds change
Until the next time
Thinking from his Book: Global Magna Carta. Returning Power to the 99% . . . If They Want It! By J T Coombes