The
youtube video of 12 year old Victoria
Grant speaking at the Public Banking in America conference last
month has gone viral, topping a million views on various websites.
Monetary
reform--the contention that governments, not banks, should create and lend a
nation's money--has rarely even made the news, so this is a first. Either the times they are a'changin', or Victoria
managed to frame the message in a way that was so simple and clear that even a
child could understand it.
Basically,
her message was that banks create money "out of thin air" and lend it to people
and governments at interest. If
governments borrowed from their own banks, they could keep the interest and
save a lot of money for the taxpayers.
She said
her own country of Canada actually did this, from 1939 to 1974. During that time, the government's debt was low
and sustainable, and it funded all sorts of remarkable things. Only when the government switched to
borrowing privately did it acquire a crippling national debt.
Borrowing
privately means selling bonds at market rates of interest (which in Canada
quickly shot up to 22%), and the money for these bonds is ultimately created by
private banks. For the latter point, Victoria quoted Graham Towers, head
of the Bank of Canada for the first twenty years of its history. He
said:
Each and every time a bank makes a loan, new bank credit is created -- new deposits -- brand new money. Broadly speaking, all new money comes out of a Bank in the form of loans. As loans are debts, then under the present system all money is debt.
Towers
was asked, "Will you tell me why a government with power to create money,
should give that power away to a private monopoly, and then borrow that which
parliament can create itself, back at interest, to the point of national
bankruptcy?" He replied, "If Parliament
wants to change the form of operating the banking system, then certainly that
is within the power of Parliament."
In
other words, said Victoria, "If the Canadian government needs money, they can
borrow it directly from the Bank of Canada. The people would then pay fair
taxes to repay the Bank of Canada. This tax money would in turn get injected
back into the economic infrastructure and the debt would be wiped out. Canadians would again prosper with real money
as the foundation of our economic structure and not debt money. Regarding the
debt money owed to the private banks such as the Royal Bank, we would simply
have the Bank of Canada print the money owing, hand it over to the private banks,
and then clear the debt to the Bank of Canada."
Problem
solved; case closed.
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