T1 Some of the biggest men in the United States, in the Field of commerce and manufacture, are afraid of something.

They know that there is a power somewhere so organized, so subtle, so watchful, so interlocked, so complete, so per asi e, that they better not speak abo e their breath when they speak in condemnation of it.! ~Woodrow Wilson, President of USA (1913) T" #$ach and e ery time a bank makes a loan %or purchases securities&, new bank credit is created ' new deposits ' brand new money.# ~Graham F. Towers, ire!tor, "an# of $anada T( #The process by which banks create money is so simple the mind is repelled.# )*ohn +enneth ,albraith, $conomist T#.ermit me to issue and control the money of a nation, and / care not who makes its laws.# )0ayer 1mschel 2othschild, 3anker 451.T$216/7T28 Voiceover: 1. Two great mysteries dominate our li es6 lo e and money. ". 9hat is lo e:! is a ;uestion that has been endlessly e<plored in stories, songs, books, mo ies, and tele ision. (. 3ut the same can 78T be said about the ;uestion 9hat is money:! -. /t=s not surprising that monetary theory hasn=t inspired any blockbuster mo ies. 3ut it was not e en mentioned at the schools most of us attended. >. For most of us, the ;uestion 9here does money come from:! brings to mind a picture of the mint printing bills and stamping coins. 0oney, most of us belie e, is created by the go ernment. ?. /t @s true %pause& but only to a point. Those metal and paper symbols of alue we usually think of as money are, indeed, produced by an agency of the federal go ernment called the 0int. A. 3ut the ast maBority of money is not created by the 0int. /t is created in huge amounts e ery day by pri ate corporations known as banks. %long pause& C. 0ost of us belie e that banks lend out money that has been entrusted to them by depositors. $asy to picture. 3ut not the truth.

D. /n fact, banks create the money they loan, not from the bank=s own earnings, not from money deposited, but directly from the borrower=s promise to repay. 1E. The borrower=s signature on the loan papers is an obligation to pay the bank the amount of the loan plus interest, or, lose the house, the car, whate er asset was pledged as collateral. That=s a big commitment from the borrower. 11. 9hat does that same signature re;uire of the bank: The bank gets to conBure into e<istence the amount of the loan and Bust write it into the borrower=s account. 1". Sound farFfetched: 1(. Surely that can=t be true. 3ut it is. 1-. To demonstrate how this miracle of modern banking came about consider this simple story6 451.T$2"6 ,8GHS0/T5S T1G$ The ,oldsmith=s Tale 1. 8nce upon arious times, pretty much anything was used as money. ". /t Bust had to be portable and enough people had to ha e faith that it could later be e<changed for things of real alue like food, clothing and shelter. Shells, cocoa beans, pretty stones, e en feathers ha e been used as money. (. ,old and sil er were attracti e, soft and easy to work with, so some cultures became e<pert with these metals. ,oldsmiths made trade much easier by casting coins, standardized units of these metals whose weight and purity was certified. -. To protect his gold the goldsmith needed a ault. >. Soon his fellow townsmen were knocking on his door wanting to rent space to safeguard their own coins and aluables. ?. 3efore long, the goldsmith was renting e ery shelf in his ault and earning a small income from his ault rental business. A. Iears went by and the goldsmith made an astute obser ation. Hepositors rarely came in to remo e their actual, physical gold, and they never all came in at once. C. That was because the claim checks the goldsmith had written as receipts for the gold deposited, were being traded in the marketplace as if they were the gold itself.

D. This paper money was far more con enient than hea y coins, and amounts could simply be written, instead of laboriously counted one by one for each transaction. 1E. 0eanwhile, the goldsmith had de eloped another business. 5e lent out his gold charging interest. 11. 9ell, as con enient claim check money came into acceptance, borrowers began asking for their loans in the form of these claim checks instead of the actual metal. 1s industry e<panded more and more people asked the goldsmith for loans. 1". This ga e the goldsmith an e en better idea. 1(. 5e knew that ery few of his depositors e er remo ed their actual gold. So, the goldsmith figured he could easily get away with lending out claim checks against his depositors= gold, in addition to his own. 1-. 1s long as the loans were repaid, his depositors would be none the wiser, and no worse off. 1nd the goldsmith, now more banker than artisan, would make a far greater profit than he could by lending only his own gold. 1>. For years the goldsmith secretly enBoyed a good income from the interest earned on e erybody else=s deposits. 1?. 7ow a prominent lender, he grew steadily richer than his fellow townsmen and flaunted it. Suspicions grew that he was spending his depositors= money. 5is depositors got together and threatened withdrawal of their gold if the goldsmith didn=t come clean about his newfound wealth. 1A. 4ontrary to what one might ha e e<pected, this did not turn out to be a disaster for the goldsmith. Hespite the de iousness inherent in his scheme, his idea did work. The depositors had not lost anything. Their gold was all still safe in the goldsmith=s ault. 1C. 2ather than taking back their gold, the depositors demanded that the goldsmith, now their banker, cut them in by paying them a share of the interest. 1D. 1nd that was the beginning of banking. The banker paid a low interest rate on deposits of other people=s money that he then loaned out at a higher interest. "E. The difference co ered the bank=s cost of operation and its profit. The logic of this system was simple. 1nd it seemed like a reasonable way to satisfy the demand for credit. "1. 5owe er this is 78T the way banking works today. "". 8ur goldsmithJbanker was not content with the income remaining after sharing the interest earnings with his depositors.

"(. 1nd the demand for credit was growing fast, as $uropeans spread out across the world. 3ut his loans were limited by the amount of gold his depositors had in his ault. "-. That=s when he got an e en bolder idea. Since no one but himself knew what was actually in his aults he could lend out claim checks on gold that wasnt even there! ">. 1s long as all the claim check holders didn=t come to the ault at the same time and demand real gold, how would anyone find out: "?. This new scheme worked ery well, and the banker became enormously wealthy on the interest paid on gold that did not existK "A. The idea that the banker would Bust create money out of nothing was too outrageous to belie e, so, for the longest time, the thought did not e en occur to people. "C. 3ut, the power to Bust in ent money went to the banker=s head as you can well imagine. /n time, the magnitude of the banker=s loans and his ostentatious wealth did trigger suspicions once again. "D. Some borrowers started to demand real gold instead of paper representations. This set off rumours. (E. Suddenly, se eral wealthy depositors showed up to remo e their gold. The game was upK (1. 1 sea of claim check holders flooded the street outside the closed doors of the bank. 1las, the banker did not ha e enough gold L sil er to redeem all the paper he had put into their hands. (". This is called a run on the bank! and is what e ery banker dreads. ((. This phenomenon of a run on the bank! ruined indi idual banks and, not surprisingly, damaged public confidence in all bankers. (-. /t would ha e been straightforward to outlaw the practice of creating money from nothing. (>. 3ut the large olumes of credit the bankers were offering had become essential to the success of $uropean commercial e<pansion. (?. So, instead, the practice was legalized and regulated. (A. 3ankers agreed to abide by limits on the amount of fictional loan money that could be lent out. The limit would still be a number much larger than the actual alue of gold L sil er in the ault. Muite often the ratio was D fictional dollars to 1 actual dollar in gold.

(C. These regulations were enforced by surprise inspections. (D. /t was also arranged that, in the e ent of a run, central banks would support local banks with emergency infusions of gold. -E. 8nly if there were runs on a lot of banks simultaneously would the bankers= credit bubble burst and the system come crashing down. NNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNN 451.T$2(6 T5$ 087$I SIST$0 T8H1I The 0oney System Today 1. 8 er the years, the fractional reser e system and its integrated network of banks backed by a central bank has become the dominant money system of the world. 1t the same time, the fraction of gold backing the debt money has steadily shrunk to nothing. ". The basic nature of money has changed. (. /n the past, a paper dollar was actually a receipt that could be redeemed for a fi<ed weight of gold or sil er. /n the present, a paper or digital dollar can only be redeemed for another paper or digital dollar. -./n the past, pri ately created bank credit e<isted only in the form of private banknotes, which people had the choice to refuse Bust as we ha e the choice to refuse someone=s pri ate che;ue today. >. /n the present, pri ately created bank credit is legally con ertible to go ernment issued fiat currency, the dollars, loonies and pounds we habitually think of as money. Fiat currency is money created by go ernment fiat, or decree, and legal tender laws declare that citizens must accept this fiat money as payment for debt or else the courts will not enforce the obligation. %.ause O music up and down& ?. So, now the ;uestion isP if go ernments and banks can both Bust create money, then how much money e<ists: A./n the past, the total amount of money in e<istence was limited to the actual physical ;uantities of whate er commodity was in use as money. For e<ample, in order for new gold or sil er money to be created, more gold or sil er had to be found and dug out of the ground. C. /n the present, money is literally created as debt. 7ew money is created whene er anyone takes a loan from a bank. 1s a result, the total amount of money that can be created has only one real limit F the total le el of debt. D. ,o ernments place an additional statutory limit on the creation of new money, by enforcing rules

known as fractional reserve requirements. 1E. $ssentially arbitrary, fractional reser e re;uirements ary from country to country and from time to time. /n the past, it was common to re;uire banks to ha e at least one dollar=s worth of real gold in the ault to back 1E dollars worth of debt money created. 11. Today, reser e re;uirement ratios no longer apply to the ratio of new money to gold on deposit, but merely to the ratio of new money to e<isting money. 1". Today, a bank=s reserves consist of the amount of go ernmentFissued cash or e;ui alent that it has deposited with the central bank, and the amount of already e<isting debt money the bank has on deposit. 1(. To illustrate this in a simple wayP. let us imagine that a new bank has Bust started up and has no depositors at all yet. 5owe er the bank=s in estors ha e made a reser e deposit of one thousand one hundred and ele en dollars and twel e cents of e<isting cash money at the central bank and the re;uired reser e ratio is D61. 1-. Step 16 The doors open and the new bank welcomes its first loan customer. The customer needs Q1E,EEE to buy a good used car. 1t a D61 reser e ratio, the bank=s reser e at the central bank, also known as highFpowered money!, allows it to legally conBure D times that amount, or Q1E,EEE, into e<istence on the basis of the borrower=s pledge of debt. This Q1E,EEE is not taken from anywhere. /t is brand new money simply typed into the borrower=s account as bank credit. The borrower then writes a check on that bank credit to buy the used car. 1>. Step "6 The seller then deposits this newly created Q1E,EEE at her bank. Unlike the highFpowered go ernment money deposited at the central bank, this newly created credit money cannot be multiplied by the reser e ratio. /nstead it is divided by the reser e ratio. 1?. 1t a ratio of D61, a new loan of QD,EEE can be created on the basis of the Q1E,EEE deposit. 1A. Step (6 /f that QDEEE is then deposited by a third party, at the same bank that created it, or a different one, it becomes the legal basis for a third issue of bank credit, this time for the amount of QC1EE. 1C. Gike one of those 2ussian dolls, each layer of which contains a slightly smaller doll inside, each new deposit contains the potential for a slightly smaller loan in an infinitely decreasing series. 1D. 7ow, if the loan money created is not deposited at a bank, the process stops. That is the unpredictable part of the money creation mechanism.

"E. 3ut more likely, at e ery step, the new money will be deposited at a bank, and the reser e ratio

process can repeat itself o er and o er until almost Q1EE,EEE of brand new money has been created within the banking system. "1. 1ll of this new money has been created entirely from debt, the whole process legally authorized by the initial reser e deposit of Bust one thousand one hundred and ele en dollars and twel e cents, which is still sitting untouched at the central bankK "". 9hat=s more, under this ingenious system, the books of each bank in the chain must show that the bank has 1ER more on deposit than it has out on loan. This gi es banks a ery real incenti e to seek deposits in order to be able to make loans, supporting the general but misleading impression that loans come out of deposits. "(. 7ow, unless each successi e loan were deposited at the same bank, it cannot be said that any one bank got to multiply its initial high powered money reser e almost DE times by issuing bank credit out of nothing. 5owe er, the banking system is a closed loop, bank credit created at one bank becomes a deposit in another, and ice ersa. /n a theoretical world of perfectly e;ual e<changes, the ultimate effect would be e<actly the same as if the whole process took place within one bank. "-. That is, the bank=s initial central bank reser e of a little o er ele en hundred dollars allows it to ultimately collect interest on up to Q1EE,EEE the bank ne er had. ">. /f that sounds ridiculous, try this. /n recent decades, as a result of steady lobbying by the banks, the re;uirements to make a reser e deposit at the nation=s central bank ha e all but disappeared in some countries and actual reser e ratios can be much higher than D61. For some types of accounts, twenty to one and thirty to one ratios are common. "?. 1nd e en more recently, by using loan fees to raise the re;uired reser e as well as the .rincipal of the loan from the borrower, banks ha e now found a way to circum ent reser e re;uirement limitations entirely. "A. SoPwhile the rules are comple< the common sense reality is actually ;uite simple. 3anks can create as much money as we can borrow. "C. Hespite the endlessly presented mint footage, go ernmentFcreated money typically accounts for less than >R of the money in circulation. 0ore than D>R of all money in e<istence today was created by someone signing a pledge of indebtedness to a bank. 9hat=s more, this bank credit money is being created and destroyed in huge amounts e ery day, as new loans are made and old ones repaid.

T>

/ am afraid that the ordinary citizen will not like to be told that banks can and do create money ...1nd they who control the credit of the nation direct the policy of ,o ernments and hold in the hollow of their hands the destiny of the people! )2eginald 0c+enna, past 4hairman of the 3oard, 0idlands 3ank of $ngland "D. The banks can only practice this money system with the acti e cooperation of go ernment. (E. First, go ernments pass legal tender laws to make us use the national fiat currency. (1. Secondly, go ernments allow pri ate bank credit to be paid out in this go ernment currency. (". Thirdly, go ernment courts enforce debts. ((. 1nd lastly, go ernments pass regulations to protect the money system=s functionality and credibility with the public while doing nothing to inform the public about where money really comes from. 451.T$2-6 T5$ S/0.G$ T2UT5 The Simple Truth 1. The simple truth is that, when we sign on the dotted line for a soFcalled loan or mortgage, our signed pledge of payment, backed by the assets we pledge to forfeit should we fail to pay, is the only thing of real value in ol ed in the transaction. ". To anyone who belie es we will honour our pledge, that loan agreement or mortgage is now a portable, e<changeable, and saleable piece of paper. /t is an /8U. /t represents alue and is therefore a form of money. This money the borrower e<changes for the bank=s soFcalled loan. (. 7ow a loan in the natural world means that the lender must ha e something to lend. /f you need a hammer, my loaning you a promise to pro ide a hammer / don=t ha e won=t be of much help. -. 3ut in the artificial world of money, a bank=s promise to pay money it doesn=t ha e is allowed to be passed off as money and we accept it as such. >. 8nce the borrower signs the pledge of debt, the bank then balances the transaction by creating, with a few keystrokes on a computer, a matching debt of the bank to the borrower. From the borrower=s point of iew this becomes loan money! in his or her account, and because the go ernment allows this debt of the bank to the borrower to be con erted to government fiat currency, e eryone has to accept it as money. T? Thus, our national circulating medium is now at the mercy of loan transactions of banks, which lend, not money, but promises to supply money they do not possess.! '/r ing Fisher economist and author

?. 1gain the basic truth is ery simple. 9ithout the document the borrower signed, the banker would ha e nothing to lendK %.ause, music up and down& C. 5a e you e er wondered how e eryone... go ernments, corporations, small businesses, families can all be in debt at the same time and for such astronomical amounts: 5a e you e er ;uestioned how there can be that much money out there to lend: 7ow you know. There isnt. 3anks do not lend money. They simply create it from debt. 1nd, as debt is potentially unlimited, so is the supply of money. D. 1nd, as it turns outPthe opposite situation is also true. 451.T$2>6 78 H$3T 78 087$I 7o Hebt, 7o 0oney 1. /sn=t it astounding, that despite the incredible wealth of resources, inno ation and producti ity that surrounds us, almost all of us, from go ernments to companies to indi iduals, are hea ily in debt to bankersK ". /f only people would stop and think F 5ow can that be: 5ow can it be that the people who actually produce all of the real wealth in the world are in debt to those who merely lend out the money that represents that wealth:KKK (. $ en more amazing is that once we realize that money really is DEBT, we realize that if there were no debt there would be no money!!! T? That is what our money system is. /f there were no debts in our money system, there wouldn=t be any money.! )0arriner S. $ccles, 4hairman and ,o ernor of the Federal 2eser e 3oard -. /f this is news to you, you are not alone. >. 0ost people imagine that if all debts were paid off, the state of the economy would impro e. /t=s certainly true on an indi idual le el. *ust as we ha e more money to spend when our loan payments are finished, we think that if e eryone were out of debt, there would be more money to spend in general. 3ut the truth is the e<act opposite. There would be no money at allK TA This is a staggering thought. 9e are completely dependent on the 4ommercial 3anks. Someone has to borrow e ery dollar we ha e in circulation, cash or credit. /f the 3anks create ample synthetic money, we are prosperousS if not, we star e. 9e are, absolutely, without a permanent money system. 9hen one gets a complete grasp of the picture, the tragic absurdity of our hopeless position is almost

incredible, but there it is.! )2obert 5. 5emphill, 4redit 0anager of Federal 2eser e 3ank, 1tlanta, ,eorgia, US1 ?. So you see we are totally dependent on continually renewed bank credit for there to be any money in e<istence. 7o loans, no money F which is what happened during the ,reat Hepression, the money supply shrank drastically as the supply of loans dried up. 451.T$2?6 .$2.$TU1G H$3T .erpetual Hebt 1. Get us now note that bankers create only the amount of the .rincipal. They no not create the money to pay the /nterest. 9here is that supposed to come from: ". The only place borrowers can go to obtain the money to pay the /nterest is the general economy=s o erall money supply. 3ut almost all of that o erall money supply has been created e<actly the same way Oas bank credit that has to be paid back with more than was createdK (. So e erywhere, there are other borrowers in the same situation, frantically trying to obtain the money they need to pay back both .rincipal and /nterest from a total money pool which contains only .rincipal. -. /t is clearly impossible for everyone to pay back the .rincipal plus the /nterest because the interest money does not e<ist. This can e en be e<pressed by a simple mathematical formula. %pause& >. The big problem here is that for long term loans such as mortgages and go ernment debt, where the total /nterest far e<ceeds the .rincipal, unless a lot of e<tra money is created to pay the /nterest, it means a ery high proportion of foreclosures, and a nonFfunctioning economy. %pause& ?. To maintain a functional society the rate of foreclosure needs to be low. 1nd so, to accomplish this, more and more new debt money has to be created to satisfy today=s demands for money to ser ice the pre ious debt. 3ut, of course, this Bust makes the total debt bigger. 1nd that means more interest must ultimately be paid, resulting in an e erFescalating land inescapable spiral of mounting indebtedness. A. /t is only the time lag between money=s creation as new loans and its repayment that keeps the o erall shortage of money from catching up and bankrupting the entire system. 5owe er, as the bankers= insatiable credit monster gets bigger and bigger, the need to create more and more debt money to feed it becomes increasingly urgent. C. 9hy are interest rates so low: 9hy do we get unsolicited credit cards in the mail: 9hy is the US go ernment spending faster than e er: 4ould it be to sta e off collapse of the entire monetary system:

D. The rational person has to ask6 4an this really go on fore er: /sn=t a collapse ine itable: TC 8ne thing to realize about our fractional reser e banking system is that, like a child=s game of musical chairs, as long as the music is playing, there are no losers.! )1ndrew ,ause, 0onetary 5istorian 1E. 0oney facilitates production and trade. 1s the money supply increases, money Bust becomes increasingly worthless %inflation& unless the olume of production and trade in the real world grows by the same amount to soak it up. 11. 1dd to this the realization that when we hear that the economy is growing at (R per year, it sounds like a constant rate. /t is not. This year=s (R represents more real goods and ser ices than last year=s (R because it is (R of the new total. /nstead of a straight line as is naturally isualized from the words, it is really an e<ponential cur e getting steeper and steeper. TD The greatest shortcoming of the human race is our inability to understand the e<ponential function.! '1lbert 1. 3artlett, physicist 1". The problem, of course, is that perpetual growth of the real economy re;uires perpetually escalating use of real world resources and energy. 0ore and more stuff has to go from natural resource to garbage e ery year ...fore er, Bust to keep this system from collapsingK T1E 1nyone who belie es e<ponential growth can go on fore er in a finite world is either a madman or an economist.! '+enneth 3oulding, economist 1(. 9hat can we do about this frightful situation: 1-. For one thing, a ery different concept of money is needed.

1>. .erhaps it is time more people asked themsel es and their go ernments four simple ;uestions. 1?. 1round the world, go ernments borrow money at interest from pri ate banks. ,o ernment debt is a maBor component of total debt and ser icing that debt takes a big chunk of our ta<es. 1A. 7ow, we know that banks simply create the money they lendP and that go ernments ha e gi en them permission to do this. 1C. 9e also know that go ernment creates fiat currency and certainly has at least the same right as the banks to create its own money.

1D. So the first ;uestion isP why do go ernments choose to borrow money from pri ate banks at interest when government could create all the interest free money it needs itself "E. 1nd the second big ;uestion is6 why create money as debt at all 9hy not create money that circulates permanently and doesn=t ha e to be perpetually reFborrowed at interest in order to e<ist: "1. The third ;uestion is6 5ow can a money system that can only function with perpetually accelerating growth be used to build a sustainable economy: /sn=t it logical that perpetually accelerating growth and sustainability are incompatible "". 1nd finally6 !hat is it about our current system that makes it totally dependent on perpetual growth: 9hat needs to be changed to allow the creation of a sustainable economy: 451.T$2A6 USU2I Usury 1. 1t one time, charging any interest on a loan was called usury and subBect to se ere penalties, including death. "very ma#or religion forbade usury. ". 0ost of the arguments made against the practice were moral. /t was held that money=s only legitimate purpose was to facilitate the e<change of real goods and ser ices. 1ny form of making money from simply having money was regarded as the act of a parasite or thief. (. 5owe er, as the credit needs of commerce increased, the moral arguments e entually ga e way to the argument that lending in ol es risk and loss of opportunity to the lender and therefore attempting to make a profit from lending is Bustified.

-. Today, these notions seem ;uaint. Today, the idea of making money from money is held as the ideal to stri e for. 9hy work when you can get your money to work for you: >. 5owe er, in trying to en ision a sustainable future, it is ery clear that the charging of interest is both a moral and a practical problem. ?. /magine a society and economy that can endure for centuries because, instead of plundering its capital stores of energy, it restricts itself to present day income. 7o more wood is har ested than grows in the same period. 1ll energy is renewable6 solar, gra itational or geothermal, magnetic and whate er else we disco er. This society li es within the limits of its nonFrenewable resources by reusing and recycling e erything. 1nd the population Bust replaces itself. A. Such a society could ne er function using a money system utterly dependent on perpetually accelerating growth. 1 stable economy would need a money supply at least capable of remaining

stable without collapsing. C. Get=s say the total olume of this stable money supply is represented by this big circle. Get us also imagine that moneylenders must actually ha e e<isting money to lend. /f some people within this money supply begin systematically lending money at interest, their share of the money supply will grow. /f they continually reFloan at interest all the money that gets paid back what is the ine itable result: D. 9hether it is gold, fiat or debt money doesn=t matter. The moneylenders will end up with $%% of the money! 1nd after the foreclosures and bankruptcies are all filed, they will get all the real property tooK 1E. 8nly if the proceeds of lending at interest were e enly distributed among the population would this central problem be sol ed. 5ea y ta<ation of bank profits might accomplish this goal. 3ut then why would banks want to be in business: 11. /f we were e er able to free oursel es of the current situation, we could imagine banking run nonF profit ser ice to society, disbursing its interest earnings as a uni ersal citizen di idend, or lending without charging interest at all. T11 / ha e ne er yet had anyone who could, through the use of logic and reason, Bustify the Federal ,o ernment borrowing the use of its own money... / belie e the time will come when people will demand that this be changed. / belie e the time will come in this country when they will actually blame you and me and e eryone else connected with the 4ongress for sitting idly by and permitting such an idiotic system to continue.! ) 4ongressman 9right .atman. 451.T$2C6 4517,/7, T5$ SIST$0 4hanging the System 1. /f it is the fundamental nature of the system that causes the problems, tinkering with the system cannot e er sol e those problems. The system itself must be replaced. ". 0any monetary critics clamour for a return to goldFbased money, claiming that gold has a long history of reliability. They ignore the many scams that can be played with gold6 sha ing coins, debasing the metal, cornering the market, all of which were abundantly practiced in ancient 2ome, and contributed to its fall. (. Some ad ocate sil er, it being more abundant than gold and therefore more difficult to corner. -. 0any ;uestion the need to bring back precious metals at all. 7o one wants to go back to carrying hea y sacks of coins to go shopping. /t is a certainty that paper, digital, plastic or more likely biometric

/H money would be the real medium of trade with the same potential for creating unlimited debt money we ha e now. 3eyond that, if gold again became the sole legal basis of money, those who ha e no gold would suddenly ha e no moneyK >. 8ther monetary reform ad ocates ha e concluded that greed and dishonesty are the main problems, and that there may be better ways to create an honest and e;uitable money system than returning to sil er or gold. ?. /n enti e minds ha e proposed a ariety of alternati e ways to create money. 0any private barter systems create money as debt much as banks do, but it is done openly and without charging interest. 1n e<ample is a barter system in which debt e<pressed as pledges of hours of work, all work being alued e;ually at a dollar figure that then allows hours to be e;uated with the dollar price of goods. The system charges fees to co er its costs, not interest for profit. A. This kind of money system can be set up by anyone who can de ise a way to do the accounting and find willing and trustworthy participants. Setting up a local barter money system, e en if it were little used now, would be prudent emergency planning for any community. C. 0onetary reform, like electoral reform, is a big topic, and one that re;uires a willingness to change and to think out of the bo<. 0onetary reform, like electoral reform will not come easily because the enormously powerful interests that benefit from the e<isting system will do their utmost to maintain their ad antage. D. 7ow that we ha e seen that money is Bust an idea and that, in reality, money can be whate er we make itS here is one ery simple alternati e monetary concept to consider. This model is based on systems that ha e worked in the past, in $ngland, and 1merica, systems that were undermined and destroyed by the goldsmithFbankers and their fractional reser e system. 1E. To create an economy based on permanent, interest free money, money could simply be created and spent into the economy by the go ernment, preferably on longFlasting infrastructure that facilitates the economy, such as roads, railroads, bridges, harbours, and public markets. 11. This money would not be created as debt . /t would be created as value& that alue being in the form of whate er it was spent on. /f this new money facilitated a proportional increase in trade re;uiring its use, it would cause no inflation whatsoe er. 1". /f go ernment spending did cause inflation, there would be two courses of action a ailable. 1(. /nflation is e;ui alent in effect to a flat ta< on money. 9hether the money goes down in alue "ER or the go ernment takes "ER of our money away from us, the effect on our buying power is the same. Tiewed this way inflation in place of ta<ation might be politically acceptable if well spent and kept within limits.

1-. 8r, go ernment could choose to counter inflation by collecting ta< monies that it then takes out of use, thus reducing the money supply and restoring its alue. 1>. To control deflation, which is the phenomenon of falling wages and prices, the go ernment would simply spend more money into e<istence. 1?. 9ith no competing pri ate debt money creation, go ernments would ha e more effecti e control of their nation=s money supply. The public would know whom to blame if things went wrong. ,o ernments would rise and fall on their ability to preser e the alue of money. 1A. ,o ernment would operate primarily on ta<es as at present, but ta< money would go much, much further as none of it would be re;uired to pay interest to pri ate bankers. There could be no national debt if the federal go ernment simply created the money it needed. 8ur perpetual collecti e ser itude to the banks through interest payments on go ernment debt would be impossible. T1" 0oney is a new form of sla ery, and distinguishable from the old simply by the fact that it is impersonal'that there is no human relation between master and sla e.! 'Geo Tolstoy T1( 7one are more ensla ed than those who falsely belie e they are free.! ',oethe 451.T$2D6 T5$ /7T/S/3G$ .89$2 The /n isible .ower 1. 9hat we ha e been taught to belie e is democracy and freedom has become, in reality, an ingenious and in isible form of economic dictatorship. 1s long as our entire society remains utterly dependent on bank credit for its supply of money, bankers will be in the position to make the decisions on who gets the money they need and who doesn=t. T1The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was e er in ented. 3anking was concei ed in ini;uity and born in sin. 3ankers own the $arth. Take it away from them, but lea e them the power to create money, and with the flick of the pen they will create enough money to buy it back again... Take this great power away from them and all great fortunes like mine will disappear, and they ought to disappear, for then this would be a better and happier world to li e in. 3ut if you want to continue to be sla es of the banks and pay the cost of your own sla ery, then let bankers continue to create money and control credit=.! )Sir *osiah Stamp Hirector, 3ank of $ngland 1D"CF1D-1

%reputed to be the "nd richest man in 3ritain at the time&

". Few people are aware today that, 1merica=s history since the 2e olution in 1AA? has largely been the story of an epic struggle to get free and stay free of control by the 2othschildFdominated international banks. This struggle that was finally lost in 1D1(, when .resident 9oodrow 9ilson signed into effect the Federal 2eser e 1ct, putting the international banking cartel in charge of creating 1merica=s money. T1> / am a most unhappy man. / ha e unwittingly ruined my country. 1 great industrial nation is controlled by its system of credit. 8ur system of credit is concentrated. The growth of the nation, therefore, and all our acti ities are in the hands of a few men. 9e ha e come to be one of the worst ruled, one of the most completely controlled and dominated ,o ernments in the ci ilized world, no longer a ,o ernment by free opinion, no longer a ,o ernment by con iction and the ote of the maBority, but a ,o ernment by the opinion and duress of a small group of dominant men.! ) 9oodrow 9ilson (. The power of this system is deeply ingrained. So is the educational and media silence on the subBect. -. Iears ago, for a book he wrote, a 4anadian Heputy .rime 0inister informally sur eyed scores of nonFeconomists, both highly educated professionals and common sense people on the street and found that not one of them had an accurate understanding of how money is created. /n fact it is probably safe to say that most people, including the front line employees of banks, ha e ne er gi en the matter a moment of thought in their entire li es. 5ow about you: T1? 1ll of the perple<ities, confusion, and distress in 1merica arises, not from the defects of the 4onstitution or 4onfederation, not from want of honor or irtue, so much as from downright ignorance of the nature of coin, credit, and circulation.! ) *ohn 1dams, Founding Father of the 1merican 4onstitution >. The modern money as debt system was born a little o er three hundred years ago, when the first 3ank of $ngland was set up with a royal charter for fractional lending of gold receipts at a modest ratio of "61. ?. That modest ratio was Bust the pro erbial foot in the door. The system is now worldwide, creates irtually unlimited amounts of money out of thin air, and has almost e eryone on the planet chained to a perpetuallyFgrowing debt that can 7$T$2 be paid off. A. 4ould it ha e all Bust happened by accident: 8r is it a conspiracy: 8b iously, something ery 3/, is at stake here.

T1A 9hoe er controls the olume of money in our country is absolute master of all industry and commerce...and when you realize that the entire system is ery easily controlled, one way or another, by a few powerful men at the top, you will not ha e to be told how periods of inflation and depression originate.! )*ames 1. ,arfield, assassinated president of the United States T1C The ,o ernment should create, issue, and circulate all the currency and credits needed to satisfy the spending power of the ,o ernment and the buying power of consumers. 3y the adoption of these principles, the ta<payers will be sa ed immense sums of interest. The pri ilege of creating and issuing money is not only the supreme prerogati e of go ernment, but it is the go ernment=s greatest creati e opportunity.! )1braham Gincoln, assassinated president of the United States T1D Until the control of the issue of currency and credit is restored to go ernment and recognized as its most conspicuous and sacred responsibility, all talk of so ereignty of .arliament and of democracy is idle and futile... 8nce a nation parts with control of its credit, it matters not who makes the nation=s laws... Usury once in control will wreck any nation. ) 9illiam Gyon 0ackenzie +ing .rime 0inister of 4anada who nationalized the 3ank of 4anada T"E #9e are grateful to the 9ashington .ost, the 7ew Iork Times, Time magazine and other great publications whose directors ha e attended our meetings and respected the promises of discretion for almost forty years. /t would ha e been impossible for us to de elop our plan for the world if we had been subBect to the bright lights of publicity during those years. 3ut, the world is now more sophisticated and prepared to march towards a worldFgo ernment. The supranational so ereignty of an intellectual elite and world bankers is surely preferable to the 7ational autodetermination practiced in past centuries#FFHa id 2ockefeller in an address to a Trilateral 4ommission meeting in *une of 1DD1 T"1 8nly the small secrets need to be protected. The big ones are kept secret by public incredulity.! ) 0arshall 0cGuhan, media guru!

moneyasdebt.net
NNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNN 42$H/TS 1. 0oney as Hebt was created L produced by .aul ,rignon

". Toiceo er 3ob 3ossin (. $diting 1ssistance Tsiporah ,rignon -. 0usic compositions Ti aldi .aul ,rignon >. Higital 0usic .roduction L (H 0odeling .aul ,rignon ?. 1dditional (FH 0odels 4ourtesy of free stuff! at (dcafe.com and help(d.com A. 0oney as Hebt! owes its origins to the work of many dedicated educators and ad ocates of monetary reform. C. /t is intended as a general introduction to the conceptual basis of money. D. To learn more isit6 moneyasdebt.net NNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNNN T/SU1GS 1. Hebt ". Go e meK (. 9hat is money: -. 4oming SoonK >. 3ank ?. The Term depositor (Terminator mo%ie& 'o#e wor#s onl( in )n*lish+) A. he=ll demand your interest (do,-le entendre in )n*lish) C. monetary theory will 78T be studied D. where does money come from: 1E. loans mortgages 11. mortgage 1". /n return for the Gender=s agreeing to lend the .rincipal 1mount to the 3orrower, the 3orrower grants and mortgages the Gand to the Gender as security for payment of the 0ortgage 0oney and the fulfillment of all the 3orrower=s other promises and agreements as set out in this 0ortgage until the 3orrower has performed all the 3orrower=s obligations under This 0ortgage. 1(. 3y the pri ilege of our corporate bank charter 1-. The borrower=s pledge of debt 1>. 3ecomes

1?. 8ur money to lend 1A. 1 brief and broadly allegorical history of banking 1C. The ,oldsmith=s Tale 1D. Fresh buffalo "E. Tipi warming tonight (new home !ele-ration) "1. Ie 8lde ,oldsmith "". 7o acancy "(. 4lerk "-. ,old withdrawal clerk (./ll ta#e 0a(ta* man o,t) ">. / promise to pay the bearer of this claim check 1 Hucat of gold "?. 9e accept claim checks "A. Guigi=s Fruit Stand "C. 7o more hea y bags of coins "D. ,et your paper money walletK (E. GoansF2FUs tr( ,oldsmith Goan 4o. (1. /=ll take it in paper pleaseK ('o#e a-o,t s,1ermar#et -a*s, 1,n+) (". The Town 4rier ((. Trade L /ndustry $<panding (-. 4apital /n estment needed immediately (>. 2epaid (?. 9hat they don=t know won=t hurt them (A. R of my own gold (C. R of my depositors= gold (D. hmmmmm. -E. Today=s rates6 deposits (R loans AR -1. $uropeans spread across world -". Hemand for credit growing fast -(. 3efore --. 1fter ->. 7o peeking -?. 8h yeahK -A. ,oldsmith 3anker -C. /=m soFoFoFo richK -D. 7o claim check thank you. Fill her up the oldFfashioned way. >E. 4losed >1..aper cash >". ,old >(. Gaw courts >-. 3anker *okes >>. They are so badK >?. Hon=t do itK >A. The fractional reser e system >C. D to 1

>D. loans ?E. central bank ?1. money used to represent alue ?". money now represents debt ?(. aluable commodity ( o (o, ha%e an Gold or Sil%er notes from (o,r !o,ntr(+ )mail 1i!t,re) ?-. central bank credit ( o (o,r !entral -an# notes ha%e le*al tender noti!e+ )mail ?>. Take a check: ??. 7ot a chance sonny ?A. *ewelry sale ?C. /f legal tender was offered, the court considers the debt discharged. 7e<t. ?D. 3anks L go ernment AE. 5ow much money e<ists: A1. Haily 9rap up A". ,old hoarding causes money shortage A(. ,old mine A-. 4ash back A>. $asy credit A?. 7o money down AA. Total 1merican Hebt AC. Trillion AD. bank inspector CE. That=s your limit C1. Fractional 2eser e 2e;uirements C". 1nnouncing 7ew Federal 3anking 2egulations C(. 7ew rules better than the old rules C-. debt money 6 gold C>. new money 6 e<isting money C?. reser e CA. deposits only CC. 8ur deposits are actually loans to the bank. CD. ,rand 8pening DE. 7ew 3ank D1.highFpowered money D". current account D(. Get=s make! some moneyKKKK D-. Step 1 D>. For sale D?. 2eser e ratio DA. Goan agreement DC. 1ll the money in e<istence at this moment DD. 7ew 4redit 1ccount 1EE. 4ommercial 3ank Heposit 1E1. new loan 6 reser e

1E". / will pay you back darling. 1E(. 7ew Goan of 1E-. Total 0oney 4reated 1E>. 1mount of each loan 1E?. 7umber of times money is deposited and reloaned 1EA. Total approaches Q1EE,EEE 1EC. 3anking system 1ED. Heposits Goans 11E. 9e are the really friendly bank 111. Sa e your money with us 11". 9e= e been misled: 11(. 3ig 3ank U1 11-. 4entral 3ank 2eser e 11>. 3ank collects interest on almost Q1EE,EEE it ne er had. 11?. 3anks loan money they do not ha eK 11A. /n some countries 4entral 3ank 2eser e 2e;uirement VQE 11C. no reser e at all in some cases 11D. Goan Fees 1"E. Sum it all up for us will you: 1"1. 3ank credit 1"". ,o ernmentFcreated money 1"(. The amount of the loan %.rincipal& is created from the borrower=s promise to pay. 1"-. .rincipal payments unFcreate! the loan, ceasing to e<ist as money. 1">. .1/H 1"?. Goan agreements 1"A. 4ash 1"C. .ortable, e<changeable and saleable 1"D. The borrower=s promise to pay is a form of money 1(E. 2eal 9orld 1(1. 4an / borrow a hammer: 1(". That only works at the bank Had 1((. 0oney 9orld 1(-. 3asic Truth 1(>. ,o ernments, corporations, small businesses, families 1(?. 9here does it all come from: 1(A. / ponder no longerK 1(C. Foreclosed 1(D. Soup kitchen 1-E. 2esumW 1-1. 9ill in ent for food 1-". 9ho took all the money: 1-(. +ill the banksK 1--. 4rowd control

1->. 3ig 1-?. 7ews 1-A. 7ational Hebt Skyrocketing 1-C. Final .ayment (EFyear mortgage 1-D. Gast payment honeyK 1>E. IayK 7o more cat food. 1>1. /ndi idual debts paid off lea e indi iduals with 082$ money 1>". 1GG H$3TS paid off lea es society with 78 087$IK 1>(. 3ank 4redit $conomy 1>-. 78 G817S 78 087$I 1>>. 087$I SU..GI 1>?. "AR reduction 1D"DF(( 1>A. your loan 1>C. 8 erall 0oney Supply 1>D. .rincipal .rincipal X /nterest 1?E.Treadmill of .erpetual Unpayable Hebt 1?1. Foreclosed 1?". will fulfill their loan contract 1?(. will be foreclosed 1?-. household 1?>. state L local 1??. federal 1?A. corporate 1?C. financial 1?D. 087$I 89$H 1AE. 087$I 42$1T$H 1A1. time lag 1A". 417 interest rates ,8 lower: 1A(. Gow, low interest rates 1A-. 78 0oney HownK 1A>. .referred 1A?. Iou are in ited to 1pply 1AA. 2ecord HeficitsKKK 1AC. Federal Hebt 3allooning 1AD. 2$H /7+ 1CE. 5uge /nflu< of Spanish ,old causes massi e /7FG1T/87 1C1. money supply 1C". olume of trade 1C(. 177U1G $48780/4 ,289T5 51S 3$$7 ST$1HI 1T (R 1C-. ST$1H/GI 144$G$21T/7, T51T /SP 1C>. G1ST I$12=S T8T1G 1C?. T5/S I$12=S T8T1G 1CA. ST$1HI 1T (R:

1CC. $Y.87$7T/1G 4U2T$ 1CD. resource L energy use 1DE. There can be shortages of resources and skills but why should there e er be a shortage of money: 1D1. - Simple Muestions 1D". 4reate money backed only by debt 1D(. Muestion 1 1D-. 9hy do go ernments 4588S$ to borrow money from pri ate banks at interest when go =t could create all the interestFfree money it needs itself: 1D>. 9hy create money as H$3T: 1D?. 9hy not create money that circulates permanently: 1DA. 5ow can a money system dependent on perpetually accelerating growthPbe used to build a sustainable economy: 1DC. 9hat specifically needs to be changed: 1DD. 9e=ll not tolerate Usurers in this +ingdom "EE. *ust say 78 to Usury "E1. To profit from money alone is like unto thie ery "E". .ope says 78.$ to 4harging /nterest "E(. 4anal Street *ournal "E-. /nterest 2ates from Bust CR "E>. Z Goans Z 3onds Z Stock 0arket trading Z 4urrency speculation Z 2eal $state flipping the list goes on "E?. 1ndP / did it all without producing one actual useful thing "EA. 9all Street *ourna "EC. Sustainable "ED. 9orld 8il Supply "1E. 3oom 3ust "11. Solar /nput "1". Z solar Z wind Z tidal Z hydro Z biomass Z geothermal "1(. Full reco ery of nonFrenewable resources "1-. Stable .opulation "1>. 0oney supply real world economy "1?. 1GG the money in e<istence "1A. 78 creating money as debt "1C. Gending at interest "1D. Ta<es ""E. 8h what=s the point: ""1. So simple """. ,o =t announces interest free loans for municipalities

""(. Strangely, no matter how / adBust it, it always does the same thingK ""-. 5onest 0oney V "">. Gead (the metal) ""?. Sil er ""A. 4ommodity 0oney6 Z distorts the alue of the commodity Z is easily stolen Z supply cannot be controlled beneficially ""C. paper digital plastic ""D. *ane Hoe (0a#e ,1 name and address for anon(mo,s female !iti2en in 3,n*arian) "(E. licensed to spend "(1. credit history on infostrip "(". 5a e a nice day "((. They still fall for it "(-. 1ir today, gone tomorrow (so,nd ali#e 'o#e& 3ere toda( *one tomorrow) "(>. ,o =t L 4orporate Hishonesty Stretching the /magination "(?. .irate 5ead;uarters "(A. Gocal $<change Trading System "(C. G$TS "(D. 0onetary 2eform "-E. $lectoral 2eform "-1. 0oney is an /H$1 Z symbolic Z commodity Z receipt for commodity Z bogus receipt Z fiat %go =t cash& Z debt %bank credit& Z debt %pledge& "-". Tally Stick System "-(. 4olonial Scrip "--. 9e must put a stop to thisK "->. This interestFfree currency m,st be destroyed "-?. /f people catch onP "-A. 9e will be 8UT 8F 3US/7$SSK "-C. .ermanent /nterestFFree 0oney "-D. 3anker=s 0agic 5at %now e<tinct& ">E. .ublic 0arket ">1. 8pening Soon ">". T1GU$ ">(. .ublic 0arket 789 8.$7 ">-. 3uying .ower ">>. 2eduction of ">?. /7FG1T/87 V T1Y ">A. Shrinks ">C. 0inus "ER ">D. 2ight now we ha e both inflation 17H ta<esKK "?E. Tooooo muchK "?1. /nfrastructure 2enewal predicted to cause CR /7FG1T/87 "?". $G$4T/87 31TTG$ G880SK "?(. 7ew ,o =t committed to ER /7FG1T/87

"?-. Praises Sales Ta< to 1"R "?>. 9ages L .rices show signs of decline "??. 7icely timed before $G$4T/87 "?A. 8h manP how hard (diffi!,lt) is that: "?C. 3anker=s 0agic 5at %now e<tinct& "?D. 0useum "AE. 0oney added through go =t spending "A1. 0oney remo ed through added ta<ation "A". This go ernment is to blameK "A(. 9e caused half the inflation your party did "A-. 3ut we got 3$TT$2 T1GU$ for itK "A>. 9heels of go =t "A?. FU$G "AA. Ta< 2e enue "AC. 0edical Facilities 2oad 2enewal 3ridges Sewage Treatment 2ecreation 4enters $mergency Shelters Subsidized 5ousing Haycare "AD. 7o more interest payments "CE. ,o =t Hebt %now e<tinct& "C1. T8T$ for 383 "C". /7HUST2I "C(. Hirection of Society "C-. 9hat was the ;uestion again: "C>. depressions "C?. /nflations "CA. bank panics "CC. war "CD. infiltration "DE. media ownership "D1. mass deception "D". assassination "D(. education! "D-. 1nonymity is essential "D>. go ernment corporate household "D?. 1( I$12S 78T 87$ 4G1SS 87 087$I 42$1T/87 "DA. and not 87$ word about it on TTP $T$2K "DC. 4harity 412 91S5 "DD. Iou are stepping on the carrots (EE. 3ank of $ngland 1?D(E1. That=s the way it happened (E". *ust grew like Topsy (E(. lucky for us (E-. Secret 8rder of the Tery Special (E>. 0aking things happen! since 1AA?