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Banksters vs Humanity: Round 14

By       Message Derryl Hermanutz     Permalink
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Banksters vs Humanity: Round 14

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"Much discussion of money involves a heavy overlay of priestly incantation. ...The study of money, above all other fields in economics, is the one in which complexity is used to disguise truth or to evade truth, not to reveal it. ...The process by which banks create money is so simple that the mind is repelled. Where something so important is involved, a deeper mystery seems only decent." {John K Galbraith, Money: Whence it Came, Where it Went, 1975}

"Q. But there is no question about it that banks create the medium of exchange?

Mr. Towers: That is right. That is what they are for... That is the Banking business, just in the same way that a steel plant makes steel. The manufacturing process consists of making a pen-and-ink or typewriter entry on a card in a book. That is all. Each and every time a bank makes a loan (or purchases securities), 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." {Graham F. Towers, Governor of the Central Bank of Canada (from 1934 to 1955), testifying before the Canadian Government's Committee on Banking and Commerce, in 1939. (longer quote at end of this article)}

Progressives, socialists, radicals, revolutionaries, typically rail against the excesses of corporate industry; and against co-opted governments that serve corporate commercial and financial interests over human social and economic interests. Even classical free enterprise liberals, and free market libertarians, oppose corporate monopolists who enjoy state-supported market power, in violation of the ideal of independent businesses competing on a level playing field.

All of these well-intentioned critics, idealists and reformers are -- if not exactly tilting at windmills -- at least attacking symptoms rather than attacking the root cause that drives them. You could cure all of the symptoms, but they will reappear as long as the root cause remains in place.

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The root cause is the world's privately owned money issuance and allocation system, otherwise known as "banking". Private commercial banks enjoy a near absolute monopoly on the initial creation and the primary allocation of the world's supply of "money". Very large scale transnational banks exercise this "money power", and have been doing so for centuries.

The Money Power is the "invisible hand" that builds and manipulates all of the other structures of power in capitalist civilization. In the capitalist world, everything is bought and sold for money. The issuance and allocation of money assigns the power to "buy and own" everything.

As Polanyi explained in, The Great Transformation, it is by their financial control of the international bond market that bankers rule over national governments: by manipulating bond interest rates and exchange values of currencies, and by flooding or starving nations of international payments money.

Governments do not issue their own money: that is the ruse that obfuscates the truth. Governments collect taxes and issue bonds (debt) to get money. Bankers issue money to purchase the debt. Banksters have for centuries exercised monetary sovereignty -- the power to create, originate, issue The Money of Nations. The money purchases the Wealth of Nations. But Adam Smith believed gold is the only "real" money, which blinded him to the power of the bankers' credit/debt money. The economics-industrial complex has maintained this willful blindness ever since.

Money is not "produced" by economic effort: another obfuscating ruse. Money is simply "created" out of nothing by banks. Money is not "backed" by something else. Money is simply numbers or tokens that people accept as "payment" for real stuff. Much ink has been spilled arguing over the definition of "money". But like the proverbial duck, the definition is functional: If it spends like money, if it buys like money, it is money.

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The offer to pay money commands people to do whatever you want them to do; commands the economy to produce and build whatever you want. With money you can buy everything that humanity can convert to "property" and sell. Capitalism converts the world to property and sells it for money that is simply created out of nothing by bankers. The buyers of the world then "own it" as their private property.

Money and debt are positive and negative numbers that work by accounting arithmetic. Money numbers have no logically necessary or causal relationship with the "value" of real things in the real economy. Humans "wanting" stuff gives the stuff its "economic value". In our capitalist system, the only people who get the stuff they want are people who have money to "buy" the stuff.

There is nothing inherently wrong with money as an institution. Complex economies need money to function. The problem is that self-serving private interests -- "banksters" -- have captured ownership and ruling power over the institution of "money". And they are using that power to re-create a plutocratic ownership structure governed by a neo-feudal ruling class of owners.

Human ingenuity and effort in the real economy produces all of the real economic value that is bought and sold for money. But the economy produces exactly zero "money". Banks "create" all of the money. How banker money gets into the real economy is one of the "mysteries of the faith" in mainstream economics -- which models a fairytale barter economy in which we exchange the economic "values" of goods with each other.

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I spent my working life as an independent small business owner/operator. My academic background is in philosophy and political economy. I began studying monetary systems and monetary history after the 1982 banking crash that was precipitated by (more...)
 

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