[R-G] [BillTottenWeblog] Money for the People and by the People

[Bill Totten]

by Alistair McConnachie

Prosperity (May 2002)


Just as we need government for the people, and by the people, so we need
money for the people, and by the people.

Money Reformers advocate essentially two things - firstly, that we
change from a debt-based to a debt-free economy. That is, to a society
where money, or a great deal of it, is supplied into the economy
debt-free, meaning it does not require to be paid back.

And secondly, Money Reformers advocate that the creation of money should
be a public service, under public control for the public good.


The Money Trick

The essence of a viable money system is confidence. Once confidence is
established, a trick can be played.

Historically, money lenders kept stocks of gold which they had acquired,
or were keeping safe for others.

However, they soon discovered that instead of actually lending out the
physical gold and precious metals in their safes, they could give out
promissory notes which "promised to pay" the equivalent amount in gold.

They soon found that if, say, only one tenth of their clients would at
any particular time insist on payment in actual coin or bullion, then
the money lenders could safely make "promises to pay" totaling ten times
the value of their actual reserves of coin and bullion.

All that was necessary was that people believed in the convertibility of
the promises to pay. Soon, people were trading the "promissory notes"
instead of the actual coin and bullion.

Thus was born the basic principles of the modern banking system.


So, What is Money?

Money is simply the medium we use to exchange goods and services.
Without it, buying and selling would be impossible except, of course, by
direct barter exchange.

Notes and coins are virtually worthless in their own right. They take on
value only because people accept them, in exchange for goods and
services. All the money in the world is useless in the middle of a
barren desert.

To keep trade and economic activity functioning, there has to be enough
of this medium of exchange called money in existence to allow economic
activity to take place.

Hence the importance of ensuring that there is sufficient money in the
economy to facilitate the exchange of goods and services, and hence the
crucial importance that the creators of this money are under the direct
control of the very people who need it to survive. That's you and me.


Where Does The Money Come From?

Someone has to be responsible for making sure that there is enough money
in existence. It's not you. It's not me. So who is it?

Each nation has a Central Bank to do this - in Britain, it's the Bank of
England.

Central Banks act as banker for the commercial High Street banks, and
the government - just as individuals and businesses keep accounts at
commercial banks, so commercial banks and government keep accounts at
the Central Bank - in our case, the Bank of England.

If the government wants to spend money on some public project such as a
school or hospital then it will collect the money from taxes, but every
year the government fails to collect enough money in taxes to pay for
all its spending requirements. There is always a shortfall. So what does
it do? Where does it go for money?

The government "borrows" the money this way: It prints and sells "gilt
edged securities". These are simply pieces of paper which promise an
additional return to the buyer, in the future. The securities are
auctioned several times a year to meet the shortage of government
revenue as it arises. They are bought by individuals, insurance
companies, pension funds, trust funds, and banks.

The government takes the money it has raised by these sales, and spends
it on its public projects. The sum owed by the government is called "the
National Debt". These securities are becoming due regularly. That is,
the government has to pay back the amount, with interest.

When the non-banking sector (individuals, insurance, pension and trust
funds) buy securities, then saved money is being recycled back into the
economy through government spending.

However, when banks buy government securities, then entirely new money -
which has been created out of nothing by the banks specifically for
these purchases - is spent into the economy by the government. The
government has to find the money to repay them in full, with interest,
which it does by selling even more securities and raising taxes even
further!

Now that's just government debt that we're saddled with, and have to pay
back in our taxes.


Almost All Money Enters Society as a Debt

Money enters in other ways. There is also the money which enters society
via our private debts as individuals, which we owe to commercial private
High Street banks.

It is a myth that these banks lend money they already have. When was the
last time you went to your bank and found there was money missing from
your account because it had been lent to someone else! Like the ancient
money lenders of old, banks can lend out more than they actually hold!

The fact is that banks create money out of nothing and lend it to you at
interest.

There is also commercial company debts owed to High Street banks, and
there is international, or what is called "Third World" debt.

The crucial point to realise is that all of these debts - government,
private, commercial and international - are debts owed to the banking
system in one way or another.

Almost the entire stock of money circulating in every country in the
world today represents a debt owed to the banking system. Only the note
and coin issue is debt-free.

The entire financial system of all nations today is what we call
debt-based; meaning that the process of going into debt is relied upon,
almost exclusively, by governments, to create and supply money to their
economies.

The world runs on debt. We live in a debt-based society. We cannot get
money into society without almost all of it entering, at source, as a debt.


The Positive Versus The Negative Economy

Money Reformers make two distinctions when we look at the economic world
around us. On one hand we recognise and support the positive economy,
which is characterised by mutual trade for mutual benefit, and
productive, just, sustainable enterprise.

On the other hand, we have the negative economy, characterised by
poverty, cut-throat competition, oppression, exploitation, war, waste,
inflation, and starvation.

When we look around ourselves we are often forced to acknowledge that
the economy we live in is often not a positive economy of mutual trade
for mutual benefit, but rather a dog-eat-dog economy, a cannibal
capitalism which has a tendency to eat itself and all those caught in it.

Money Reformers are alone today in recognising that many of the ills of
the world are due directly to the twin facts that the economy of the
world is based on debt - rather than on debt-free principles - and the
power to create the money in the first place, is vested in the hands of
a tiny minority.

We recognise that the debt-engine drives the world economy in many
negative directions. Richard Greaves has laid out the negative
consequences of the debt-based economy in his article which appeared in
the November 2001 issue of Prosperity.

Moreover, while some people highlight "the redistribution of wealth" as
a possible solution, Money Reformers, highlight the fundamental monopoly
power of money creation enjoyed by the few to the detriment of the many.

We are highlighting the fundamental question of who has the power to
create the money in the first place.

We point to the fact that many of the economic and social ills which
beset society and the world today are due to the power to create money
being concentrated in the hands of a tiny minority, rather than
democratically distributed in the hands of the People.

This democratic imperative can be summed up in the slogans: It's the
People's Money and Money for the People, and by the People.


What Does This Mean For Democracy?

What does this mean for government of the people, by the people?

Banks are businesses out to make profits. Since they alone decide to
whom they will lend, they effectively decide what is produced, where it
is produced and who produces it, and all on the basis of profitability
to the bank, rather than what is beneficial to the community.

Our money, instead of being supplied debt-free as a means of exchange,
now comes as a debt owed to bankers providing them with vast profits,
power and control, as the rest of us struggle with an increasing burden
of debt.

By supplying money to those of whom they approve and denying it to those
of whom they disapprove, financiers can create boom or bust, and support
or undermine individuals, organisations, economies and governments.

We, the people, don't have the power to create the money. The money we
require just to survive is only available from the banks. To a large
extent, we are at the mercy of the banking system and we are effectively
enslaved by them. We cry Freedom from Debt Slavery!

As Richard Greaves said in the November 2001 issue of Prosperity, until
the power to create money is taken out of the hands of the banks, and
the hands of the private interests who do it for profit and control,
then we can never say that we live in a democracy.

He continued: "The nation's economy is our economy. We create the real
wealth through our ingenuity, enterprise and hard work. The current
banking system operates as a massive drain on that public wealth as well
as concentrating power and control in the hands of a tiny, private
minority."

So what do we need to do? Essentially, we need to move towards an
economy based upon debt-free principles where much more money than at
present comes into society debt-free, and we need to move towards
democratic control over the money creation process.


Principles of Debt-Free Finance

And in this effort we can be guided by the principles on money creation
laid out in the Bromsgrove Statement.

We believe that money must be based on the real wealth of society - that
is, on people, skills and materials. If you have the people, skills and
materials, then that which is physically possible and socially desirable
can be made financially possible.

If the people have something they want to do in their community, and if
they have the skills and the materials, then they should not be
prevented for "lack of money".

The overall purpose of an economic system is simply to provide goods and
services - as, when and where required - in order to satisfy human needs.

Money is simply the means of exchange for the goods and services
produced by the people and their skills and resources. It is not a
commodity in itself.

In this regard, money should be our servant - not our master. And since
money, at source, is created out of nothing, there is no need for it to
be scarce.


So Here's The Least We Should Be Demanding

For a start, we can see that we're paying our taxes to enrich a banking
system which never had the money in the first place!

We can see that the government is raising money it doesn't have, by
borrowing from banks which don't have the money either, but only the
legal authority to create out of nothing.

The government then expects us, through our taxes, to pay back the banks
with the real money that we've worked for! The obvious question arises:
Why doesn't the government just create the money itself?

Instead of borrowing the money from the banking system, and forcing us
to pay it back in our taxes, the government could simply create the
money itself, spend it into society and not need to ask for it back.

And, yes, the government - or a state appointed authority - could do
exactly that. Instead it enslaves us all to the banking system … and
that's a scandal!

_____

Please print out, photocopy and distribute these articles. Also copy and
paste them to emails, and circulate widely, and please include all the
essential contact information below. Thank you.


Essential Further Reading:

Prosperity: Freedom from Debt Slavery - is a four-page quarterly journal
which campaigns for publicly-created debt-free money, edited and
published by Alistair McConnachie. A four-issue subscription is
available for GBP 10 payable to Prosperity at 268 Bath Street, Glasgow,
Scotland, UK, G2 4JR
Tel: 0141 332 2214; Fax: 0141 353 6900
admcc at admcc.freeserve.co.uk  http://www.ProsperityUK.com
Or you can follow this link to our subscribe page:
http://www.prosperityuk.com/get_involved/subscribe/index.php

The Grip of Death: A study of modern money, debt slavery and destructive
economics by Michael Rowbotham [Jon Carpenter Publishing, 1998] and
Goodbye America! Globalisation, debt and the dollar empire by Michael
Rowbotham [Jon Carpenter Publishing, 2000] both available from the
address above.

http://www.prosperityuk.com/articles_and_reviews/articles/monftp.php


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