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Two great mysteries dominate our lives:
Love and Money.

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"What is love?" is a question that
has been endlessly explored in stories,
songs, books, movies, and television.

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But the same can NOT be said about
the question "What is money?"

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It's not surprising that monetary theory
hasn't inspired any blockbuster movies.

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But it was not even mentioned
at the schools most of us attended.

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For most of us, the question "Where does
money come from?" brings to mind a picture
of the mint printing bills and stamping coins.

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Money, most of us believe,
is created by the government.

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It's true

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but only to a point.

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Those metal and paper symbols
of value we usually think of as money

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are, indeed, produced by an agency
of the federal government called the Mint.

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But the vast majority of money
is not created by the Mint.

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It is created in huge amounts every day
by private corporations known as banks.

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Most of us believe that banks lend out money
that has been entrusted to them by depositors.

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Easy to picture.

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But not the truth.

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In fact, banks create the money they loan,

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not from the bank's own earnings,
not from money deposited,

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but directly from the
borrower's promise to repay.

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The borrower's signature on the loan papers
is an obligation to pay the bank

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the amount of the loan plus interest,

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or, lose the house, the car,
whatever asset was pledged as collateral.

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That's a big commitment from the borrower.

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What does that same signature
require of the bank?

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The bank gets to conjure into existence
the amount of the loan

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and just write it
into the borrower's account.

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Sound far-fetched?

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Surely that can't be true.
But it is.

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To demonstrate how this miracle of modern
banking came about, consider this simple story:

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The Goldsmith's Tale

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Once upon various times,
pretty much anything was used as money.

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It just had to be portable
and enough people had to have faith

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that it could later be exchanged for things
of real value like food, clothing and shelter.

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Shells, cocoa beans, pretty stones,
even feathers have been used as money.

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Gold and silver were attractive,
soft and easy to work with.

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so some cultures became
expert with these metals.

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Goldsmiths made trade much
easier by casting coins,

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standardized units of these metals
whose weight and purity was certified.

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To protect his gold,
the goldsmith needed a vault.

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And soon his fellow townsmen
were knocking on his door

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wanting to rent space to safeguard
their own coins and valuables.

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Before long, the goldsmith was renting
every shelf in the vault and earning a small
income from his vault rental business.

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Years went by and the goldsmith
made an astute observation:

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Depositors rarely came in to remove
their actual, physical gold, and they
never all came in at once.

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That was because the claim checks
the goldsmith had written as
receipts for the gold,

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were being traded in the marketplace
as if they were the gold itself.

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This paper money was far more
convenient than heavy coins, and
amounts could simply be written,

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instead of laboriously counted
one by one for each transaction.

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Meanwhile, the goldsmith
had another business.

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He lent out his gold charging interest.

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Well, as convenient claim check money
came into acceptance,

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borrowers began asking for their loans
in the form of these claim checks
instead of the actual metal.

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As industry expanded more and more
people asked the goldsmith for loans.

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This gave the goldsmith
an even better idea.

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He knew that very few of his depositors
ever removed their actual gold.

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So, the goldsmith figured he could easily
get away with lending out claim checks
against his depositors' gold,

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in addition to his own.

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As long as the loans were repaid, his depositors
would be none the wiser, and no worse off.

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And the goldsmith,
now more banker than artisan,

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would make a far greater profit than
he could by lending only his own gold.

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For years the goldsmith secretly enjoyed a
good income from the interest earned on
everybody else's deposits.

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Now a prominent lender, he grew steadily richer
than his fellow townsmen and he flaunted it.

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Suspicions grew that he was
spending his depositors' money.

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His depositors got together and threatened
withdrawal of their gold if the goldsmith
didn't come clean about his newfound wealth.

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Contrary to what one might expect, this did not
turn out to be a disaster for the goldsmith.

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Despite the duplicity inherent in his scheme,
his idea did work.

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The depositors had not lost anything.
Their gold was all safe in the goldsmith's vault.

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Rather than taking back their gold, the
depositors demanded that the goldsmith,
now their banker,

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cut them in by paying them
a share of the interest.

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And that was the beginning of banking.

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The banker paid a low interest rate on
deposits of other people's money that he
then loaned out at a higher interest.

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The difference covered the bank's
cost of operation and its profit.

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The logic of this system was simple.

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And it seemed like a reasonable way
to satisfy the demand for credit.

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However this is
NOT the way banking works today.

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Our goldsmith/banker was not content with
the income remaining after sharing the
interest earnings with his depositors.

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And the demand for credit was growing fast,
as Europeans spread out across the world.

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But his loans were limited by the amount
of gold his depositors had in his vault.

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That's when he got an even bolder idea.

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Since no one but himself knew
what was actually in his vaults,

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he could lend out claim checks
on gold that wasn't even there!

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As long as all the claim check holders didn't
come to the vault at the same time and demand
real gold, how would anyone find out?

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This new scheme worked very well,
and the banker became enormously wealthy

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on the interest paid on
gold that did not exist!

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00:08:09,393 --> 00:08:14,095
The idea that the banker would just
create money out of nothing was
too outrageous to believe,

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so, for a long time, the thought
did not even occur to people.

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But, the power to just invent money went to
the banker's head as you can well imagine.

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In time, the magnitude of the banker's
loans and his ostentatious wealth did
trigger suspicions once again.

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Some borrowers started to demand real
gold instead of paper representations.
Rumors spread.

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Suddenly, several wealthy depositors
showed up to remove their gold.
The game was up!

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A sea of claim check holders flooded the street
outside the closed doors of the bank.

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Alas, the banker did not have enough
gold & silver to redeem all the paper
he had put into their hands.

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This is called a "run on the bank"
and is what every banker dreads.

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This phenomenon of a "run on the bank"
ruined individual banks and, not surprisingly,

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damaged public confidence in all bankers.

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It would have been straightforward to outlaw
the practice of creating money from nothing.

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But the large volumes of credit the bankers
were offering had become essential to the
success of European commercial expansion.

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So, instead, the practice
was legalized and regulated.

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Bankers agreed to abide by limits on
the amount of fictional loan money
that could be lent out.

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The limit would still be a number
much larger than the actual value
of gold and silver in the vault.

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Quite often the ratio was 9 fictional dollars
to 1 actual dollar in gold.

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These regulations were
enforced by surprise inspections.

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It was also arranged that,
in the event of a run,

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central banks would support local banks
with emergency infusions of gold.

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Only if there were runs on a
lot of banks simultaneously

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would the bankers' credit bubble burst
and the system come crashing down.

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Over the years, the fractional reserve
system and its integrated network of
banks backed by a central bank

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has become the dominant money system
of the world. At the same time, the
fraction of gold backing the debt money

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has steadily shrunk to nothing.

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The basic nature of money has changed.

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In the past, a paper dollar was actually
a receipt that could be redeemed for
a fixed weight of gold or silver.

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In the present, a paper or digital
dollar can only be redeemed for
another paper or digital dollar.

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In the past, privately created bank credit
existed only in the form of private banknotes,
which people had the choice to refuse

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just as we have the choice to refuse
someone's private cheque today.

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In the present, privately created
bank credit is legally convertible to
government issued "fiat" currency,

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the dollars, loonies and pounds we
habitually think of as money.

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Fiat currency is money created by government
fiat, or decree, and legal tender laws declare
that citizens must accept this fiat money

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as payment for debt or else the courts
will not enforce the obligation.

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So, now the question is�

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if governments and banks can both just
create money, then how much money exists?

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In the past, the total amount of
money in existence was limited to
the actual physical quantities

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of whatever commodity was in use as money.
For example, in order for new gold or
silver money to be created,

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more gold or silver had to be found
and dug out of the ground.

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In the present, money is literally created
as debt. New money is created whenever
anyone takes a loan from a bank.

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As a result, the total amount of money
that can be created has only one real limit -
the total level of debt.

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Governments place an additional statutory
limit on the creation of new money,

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by enforcing rules known as
fractional reserve requirements.

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Essentially arbitrary, fractional reserve
requirements vary from country to country
and from time to time.

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In the past, it was common to require
banks to have at least one dollar's
worth of real gold in the vault

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to back 10 dollars worth
of debt money created.

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Today, reserve requirement ratios
no longer apply to the ratio of
new money to gold on deposit,

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but merely to the ratio of new debt money
to existing debt money on deposit in the bank.

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Today, a bank's reserves
consist of two things:

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the amount of government-issued
cash or equivalent that the bank has
deposited with the central bank,

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plus the amount of already existing
debt money the bank has on deposit.

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To illustrate this in a simple way�.

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let us imagine that a new bank has just
started up and has no depositors at all yet.

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However the bank's investors have made a
reserve deposit of one thousand one hundred
and eleven dollars and twelve cents

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of existing cash money at the central bank
and the required reserve ratio is 9:1.

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Step 1: The doors open and the new bank
welcomes its first loan customer.

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He needs $10,000 to buy a car.

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At a 9:1 reserve ratio, the new bank's
reserve at the central bank, also
known as "high-powered money",

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allows it to legally conjure into existence
9 times that amount, or $10,000 on the
basis of the borrower's pledge of debt.

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This $10,000 is not taken from anywhere.
It is brand new money simply typed into
the borrower's account as bank credit.

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The borrower then writes a check on
that bank credit to buy the used car.

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Step 2: The seller then deposits this
newly created $10,000 at her bank.

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Unlike the high-powered government
money deposited at the central bank,
this newly created credit money cannot
be multiplied by the reserve ratio.

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Instead it is divided by the reserve ratio.

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At a ratio of 9:1, a new loan of $9,000 can
be created on the basis of the $10,000 deposit.

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Step 3: If that $9000 is then deposited
by a third party, at the same bank that
created it, or at a different one,

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it becomes the legal basis for a
third issue of bank credit, this time
for the amount of $8100.

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Like one of those Russian dolls, each layer of
which contains a slightly smaller doll inside,
each new deposit contains the potential

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for a slightly smaller loan in
an infinitely decreasing series.

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Now, if the loan money created is not
deposited at a bank, the process stops.

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That is the unpredictable part
of the money creation mechanism.

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But more likely, at every step, the new
money will be deposited at a bank,
and the reserve ratio process

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can repeat itself over and over until
almost $100,000 of brand new money has
been created within the banking system.

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All of this new money has been created entirely
from debt, and the whole process legally
authorized by the initial reserve deposit

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of just one thousand one hundred and eleven
dollars and twelve cents, which is still
sitting untouched at the central bank!

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What's more, under this ingenious system,
the books of each bank in the chain must show

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that the bank has 10% more on deposit
than it has out on loan. This gives banks
a very real incentive to seek deposits

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in order to be able to make loans,
supporting the general but misleading
impression that loans come out of deposits.

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Now, unless all the successive loans
were deposited at the same bank,

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it cannot be said that any one bank
got to multiply its initial high powered
money reserve almost 90 times

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by issuing bank credit out of nothing.

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00:16:50,625 --> 00:16:58,353
However, the banking system is a closed loop,
bank credit created at one bank becomes
a deposit in another, and vice versa.

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In a theoretical world of perfectly
equal exchanges, the ultimate effect
would be exactly the same

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as if the whole process
took place within one bank.

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00:17:09,344 --> 00:17:14,181
That is, the bank's initial central bank reserve
of a little over eleven hundred dollars

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allows it to ultimately collect interest
on up to $100,000 the bank never had.

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If that sounds ridiculous, try this.
In recent decades, as a result of
steady lobbying by the banks,

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the requirements to make a reserve
deposit at the nation's central bank
have all but disappeared in some countries

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00:17:40,346 --> 00:17:43,623
and actual reserve ratios
can be much higher than 9:1.

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00:17:44,097 --> 00:17:48,441
For some types of accounts, twenty to one
and thirty to one ratios are common.

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00:17:50,929 --> 00:17:56,178
And even more recently, by using loan fees to
raise the required reserve from the borrower,

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00:17:56,573 --> 00:18:01,487
banks have now found a way to circumvent
reserve requirement limitations entirely.

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So�while the rules are complex the
common sense reality is actually quite simple.

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Banks can create
as much money as we can borrow.

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191
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192
00:18:17,190 --> 00:18:20,890


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00:18:22,025 --> 00:18:28,633
Despite the endlessly presented mint footage,
government-created money typically accounts
for less than 5% of the money in circulation.

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00:18:29,079 --> 00:18:34,731
More than 95% of all money
in existence today was created

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00:18:35,215 --> 00:18:39,414
by someone signing a pledge
of indebtedness to a bank.

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00:18:39,775 --> 00:18:45,562
What's more, this bank credit money
is being created and destroyed
in huge amounts every day,

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00:18:46,125 --> 00:18:49,259
as new loans are made
and old ones repaid.

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00:18:55,873 --> 00:18:59,437


199
00:18:59,935 --> 00:19:03,814


200
00:19:04,880 --> 00:19:09,037


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00:19:18,392 --> 00:19:22,940
Banks can only practice this money system
with the active cooperation of government.

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00:19:23,632 --> 00:19:28,482
First, governments pass legal tender laws
to make us use the national fiat currency.

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00:19:28,795 --> 00:19:34,270
Secondly, governments allow
private bank credit to be paid
out in this government currency.

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00:19:34,923 --> 00:19:37,907
Thrirdly, government courts enforce debts.

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00:19:38,716 --> 00:19:45,878
And lastly, governments pass regulations
to protect the money system's functionality
and credibility with the public

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00:19:46,431 --> 00:19:51,007
while doing nothing to inform the public
about where money really comes from.

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00:19:53,371 --> 00:19:55,161
The simple truth is that

208
00:19:55,483 --> 00:19:58,760
when we sign on the dotted line
for a so-called loan or mortgage,

209
00:19:59,139 --> 00:20:04,511
our signed pledge of payment,
backed by the assets we pledge
to forfeit should we fail to pay,

210
00:20:04,889 --> 00:20:08,761
is the only thing of real value
involved in the transaction.

211
00:20:09,849 --> 00:20:11,780
To anyone who believes
we will honour our pledge,

212
00:20:12,463 --> 00:20:15,977
that loan agreement or mortgage
is now a portable, exchangeable,

213
00:20:16,500 --> 00:20:19,853
and saleable piece of paper.
It is an IOU.

214
00:20:20,364 --> 00:20:23,450
It represents value
and is therefore a form of money.

215
00:20:24,030 --> 00:20:27,916
This money the borrower exchanges
for the bank's so-called loan.

216
00:20:29,098 --> 00:20:32,664
Now... A loan in the natural world means that
the lender must have something to lend.

217
00:20:33,520 --> 00:20:39,259
If you need a hammer, my loaning you a
promise to provide a hammer I don't have
won't be of much help.

218
00:20:39,923 --> 00:20:44,381
But in the artificial world of money,
a bank's promise to pay money it doesn't have,

219
00:20:44,916 --> 00:20:49,847
is allowed to be passed off as money
and we accept it as such.

220
00:20:51,832 --> 00:20:56,348


221
00:20:57,104 --> 00:21:03,296


222
00:21:06,657 --> 00:21:11,850
Once the borrower signs the pledge
of debt, the bank then balances
the transaction by creating,

223
00:21:12,357 --> 00:21:16,845
with a few keystrokes on a computer,
a matching debt of the bank to the borrower.

224
00:21:17,757 --> 00:21:21,734
From the borrower's point of view this
becomes "loan money" in his or her account,

225
00:21:22,306 --> 00:21:23,547
and because the government allows

226
00:21:24,188 --> 00:21:28,278
this debt of the bank to the borrower
to be converted to government fiat currency,

227
00:21:28,995 --> 00:21:31,229
everyone has to accept it as money.

228
00:21:32,245 --> 00:21:34,996
Again the basic truth is very simple.

229
00:21:35,839 --> 00:21:41,058
Without the document the borrower signed,
the banker would have nothing to lend

230
00:21:45,385 --> 00:21:50,252
Have you ever wondered how everyone...
governments, corporations,
small businesses, families

231
00:21:50,697 --> 00:21:54,864
can all be in debt at the same time
and for such astronomical amounts?

232
00:21:55,425 --> 00:21:59,151
Have you ever questioned how there
can be that much money out there to lend?

233
00:21:59,920 --> 00:22:01,887
Now you know.
There isn't.

234
00:22:02,397 --> 00:22:04,123
Banks do not lend money.

235
00:22:04,802 --> 00:22:06,684
They simply create it from debt.

236
00:22:07,262 --> 00:22:11,554
And, as debt is potentially unlimited,
so is the supply of money.

237
00:22:12,440 --> 00:22:13,658
And, as it turns out�

238
00:22:14,157 --> 00:22:16,808
the opposite situation is also true.

239
00:22:18,316 --> 00:22:21,906
Isn't it astounding, that despite
the incredible wealth of resources,

240
00:22:22,478 --> 00:22:25,389
innovation and productivity that surrounds us,

241
00:22:25,821 --> 00:22:28,769
almost all of us,
from governments to companies to individuals,

242
00:22:29,219 --> 00:22:31,093
are heavily in debt to bankers!

243
00:22:32,327 --> 00:22:35,530
If only people would stop and think -
How can that be?

244
00:22:36,037 --> 00:22:40,054
How can it be that the people who actually
produce all of the real wealth in the world

245
00:22:40,516 --> 00:22:44,568
are in debt to those who merely lend out
the money that represents the wealth?

246
00:22:45,241 --> 00:22:49,340
Even more amazing is that once we realize
that money really is DEBT,

247
00:22:49,993 --> 00:22:54,051
we realize that if there were no debt
there would be no money

248
00:22:59,361 --> 00:23:00,572


249
00:23:01,470 --> 00:23:04,552


250
00:23:05,039 --> 00:23:07,833


251
00:23:08,840 --> 00:23:11,429
If this is news to you,
you are not alone.

252
00:23:12,164 --> 00:23:17,567
Most people imagine that if all
debts were paid off, the state
of the economy would improve.

253
00:23:18,309 --> 00:23:20,320
It's certainly true on an individual level.

254
00:23:20,805 --> 00:23:24,532
Just as we have more money to spend
when our loan payments are finished,

255
00:23:25,008 --> 00:23:29,117
we think that if everyone were out of debt,
there would be more money to spend in general.

256
00:23:29,945 --> 00:23:34,720
But the truth is the exact opposite.
There would be no money at all.

257
00:23:37,526 --> 00:23:44,293
There it is... We are totally dependent
on continually renewed bank credit for
there to be any money in existence.

258
00:23:44,992 --> 00:23:49,047
No loans, no money - which is what happened
during the Great Depression,

259
00:23:49,942 --> 00:23:53,963
the money supply shrank drastically
as the supply of loans dried up.

260
00:23:56,728 --> 00:24:00,168


261
00:24:00,683 --> 00:24:03,530


262
00:24:04,649 --> 00:24:06,954


263
00:24:07,679 --> 00:24:10,949


264
00:24:11,532 --> 00:24:14,286


265
00:24:14,779 --> 00:24:18,241


266
00:24:18,850 --> 00:24:22,091


267
00:24:30,394 --> 00:24:32,550


268
00:24:33,345 --> 00:24:37,283
That's not all. Banks create
only the amount of the Principal.

269
00:24:37,887 --> 00:24:39,759
They do no not create
the money to pay the Interest.

270
00:24:40,616 --> 00:24:42,480
Where is that supposed to come from?

271
00:24:44,484 --> 00:24:47,606
The only place borrowers can go to obtain
the money to pay the Interest

272
00:24:48,067 --> 00:24:50,661
is the general economy's
overall money supply.

273
00:24:51,134 --> 00:24:55,316
But almost all of that overall money supply
has been created exactly the same way -

274
00:24:55,777 --> 00:24:59,554
as bank credit that has to be paid back
with more than was created.

275
00:25:00,188 --> 00:25:03,458
So everywhere, there are other
borrowers in the same situation,

276
00:25:03,898 --> 00:25:07,806
frantically trying to obtain the money they
need to pay back both Principal and Interest

277
00:25:08,411 --> 00:25:11,551
from a total money pool
which contains only Principal.

278
00:25:12,263 --> 00:25:16,220
It is clearly impossible for everyone to
pay back the Principal plus the Interest

279
00:25:16,658 --> 00:25:18,753
because the interest money does not exist.

280
00:25:19,413 --> 00:25:23,064
This can even be expressed by
a simple mathematical formula.

281
00:25:27,661 --> 00:25:32,234
The big problem here is that for long term
loans such as mortgages and government debt,

282
00:25:32,814 --> 00:25:35,575
the total Interest far exceeds the Principal.

283
00:25:36,011 --> 00:25:38,980
So unless a lot of extra money
is created to pay the Interest,

284
00:25:39,381 --> 00:25:44,913
it means a very high proportion of foreclosures,
and a non-functioning economy.

285
00:25:46,338 --> 00:25:50,657
To maintain a functional society
the rate of foreclosure needs to be low.

286
00:25:51,297 --> 00:25:52,614
And so, to accomplish this,

287
00:25:53,083 --> 00:25:55,918
more and more new debt money
has to be created

288
00:25:56,321 --> 00:25:59,570
to satisfy today's demands for money
to service the previous debt.

289
00:26:01,254 --> 00:26:03,506
But, of course,
this just makes the total debt bigger.

290
00:26:04,099 --> 00:26:06,471
And that means more interest
must ultimately be paid,

291
00:26:06,887 --> 00:26:12,569
resulting in an ever-escalating and
inescapable spiral of mounting indebtedness.

292
00:26:19,053 --> 00:26:21,788
It is only the time lag
between money's creation

293
00:26:22,388 --> 00:26:24,467
as new loans and its repayment

294
00:26:25,054 --> 00:26:29,490
that keeps the overall shortage of money from
catching up and bankrupting the entire system.

295
00:26:30,453 --> 00:26:34,042
However, as the bankers'
insatiable credit monster
gets bigger and bigger,

296
00:26:34,621 --> 00:26:40,074
the need to create more and more debt money
to feed it becomes increasingly urgent.

297
00:26:40,470 --> 00:26:42,075
Why are interest rates so low?

298
00:26:42,559 --> 00:26:45,343
Why do we get
unsolicited credit cards in the mail?

299
00:26:45,832 --> 00:26:48,331
Why is the US government
spending faster than ever?

300
00:26:49,063 --> 00:26:53,265
Could it be to stave off collapse
of the entire monetary system?

301
00:26:54,191 --> 00:26:55,798
The rational person has to ask:

302
00:26:56,470 --> 00:27:00,379
Can this really go on forever?
Isn't a collapse inevitable?

303
00:27:01,159 --> 00:27:06,876


304
00:27:07,404 --> 00:27:11,981


305
00:27:17,214 --> 00:27:20,312
Money facilitates production and trade.

306
00:27:20,999 --> 00:27:24,857
As the money supply increases,
money just becomes increasingly worthless

307
00:27:25,509 --> 00:27:30,122
unless the volume of production and trade
in the real world grows by the same amount

308
00:27:30,447 --> 00:27:35,476
Add to this the realization that when we hear
that the economy is growing at 3% per year,

309
00:27:35,963 --> 00:27:38,986
it sounds like a constant rate.
But is not.

310
00:27:39,338 --> 00:27:47,060
This year's 3% represents more real
goods and services than last year's 3%
because it is 3% of the new total.

311
00:27:47,585 --> 00:27:51,252
Instead of a straight line as is naturally
visualized from the words,

312
00:27:51,762 --> 00:27:55,869
it is really an exponential curve
getting steeper and steeper.

313
00:27:57,550 --> 00:28:00,762
The problem, of course, is that perpetual growth

314
00:28:01,316 --> 00:28:04,230
of the real economy requires perpetually escalating use

315
00:28:04,833 --> 00:28:06,663
of real world resources and energy.

316
00:28:07,271 --> 00:28:11,760
More and more stuff has to go from
natural resource to garbage every year

317
00:28:12,242 --> 00:28:15,138
...forever,
just to keep this system from collapsing

318
00:28:15,549 --> 00:28:18,165


319
00:28:18,672 --> 00:28:20,826


320
00:28:21,561 --> 00:28:24,722
What can we do about
this downright scary situation?

321
00:28:26,013 --> 00:28:30,325
For one thing, we need
a very different concept of money.

322
00:28:31,929 --> 00:28:36,806
It's time more people ask themselves
and their governments four simple questions.

323
00:28:37,503 --> 00:28:41,381
Around the world, governments borrow money
at interest from private banks.

324
00:28:42,052 --> 00:28:48,289
Government debt is a major component
of total debt and servicing that debt
takes a big chunk of our taxes.

325
00:28:48,750 --> 00:28:51,957
Now, we know that banks
simply create the money they lend�

326
00:28:52,409 --> 00:28:55,046
and that governments
have given them permission to do this.

327
00:28:56,319 --> 00:28:57,651
So the first question is�

328
00:28:58,147 --> 00:29:01,423
why do governments choose to borrow money
from private banks at interest

329
00:29:01,900 --> 00:29:05,495
when government could create
all the interest free money it needs itself?

330
00:29:06,649 --> 00:29:08,186
And the second big question is:

331
00:29:08,601 --> 00:29:10,725
Why create money as debt at all?

332
00:29:11,146 --> 00:29:16,358
Why not create money that
circulates permanently and doesn't
have to be perpetually re-borrowed

333
00:29:16,575 --> 00:29:18,553
at interest in order to exist?

334
00:29:19,409 --> 00:29:20,321
The third question:

335
00:29:20,521 --> 00:29:24,830
How can a money system that can only function
with perpetually accelerating growth

336
00:29:25,307 --> 00:29:28,100
be used to build a sustainable economy?

337
00:29:28,588 --> 00:29:35,489
Isn't it logical that perpetually accelerating
growth and sustainability are incompatible?

338
00:29:36,098 --> 00:29:37,644
And finally:

339
00:29:38,157 --> 00:29:42,612
What is it about our current system
that makes it totally dependent
on perpetual growth?

340
00:29:43,047 --> 00:29:47,609
What needs to be changed to allow the
creation of a sustainable economy?

341
00:29:48,172 --> 00:29:50,501


342
00:29:52,580 --> 00:29:56,142
At one time, charging any interest
on a loan was called usury

343
00:29:56,549 --> 00:29:59,458
and was subject to severe penalties,
including death.

344
00:29:59,899 --> 00:30:02,624
Every major religion forbade usury.

345
00:30:04,695 --> 00:30:07,734
Most of the arguments made
against the practice were moral.

346
00:30:08,203 --> 00:30:14,550
It was held that money's only legitimate
purpose was to facilitate the exchange
of real goods and services.

347
00:30:15,006 --> 00:30:20,277
Any form of making money from simply having
money was regarded as the act of a parasite

348
00:30:20,952 --> 00:30:22,504
or of a thief.

349
00:30:23,043 --> 00:30:28,371
However, as the credit needs of commerce
increased, the moral arguments eventually
gave way to the argument

350
00:30:28,858 --> 00:30:32,805
that lending involves risk
and loss of opportunity to the lender

351
00:30:33,214 --> 00:30:36,878
and therefore attempting to make
a profit from lending is justified.

352
00:30:37,574 --> 00:30:39,392
Today, these notions seem quaint.

353
00:30:39,971 --> 00:30:44,239
Today, the idea of making money from money
is held as the ideal to strive for.

354
00:30:44,653 --> 00:30:47,990
Why work when you can
get your money to work for you?

355
00:30:50,881 --> 00:30:53,636
However, in trying
to envision a sustainable future,

356
00:30:54,033 --> 00:30:59,133
it is very clear that the
charging of interest is both a
moral and a practical problem.

357
00:31:02,657 --> 00:31:07,700
Imagine a society and economy
that can endure for centuries because,

358
00:31:08,262 --> 00:31:14,558
instead of plundering its capital
stores of energy, it restricts
itself to present day income.

359
00:31:15,137 --> 00:31:19,205
No more wood is harvested than
grows in the same period.

360
00:31:19,798 --> 00:31:25,999
All energy is renewable: solar,
gravitational, geothermal, magnetic
and whatever else we discover.

361
00:31:26,500 --> 00:31:33,744
This society lives within the
limits of its non-renewable resources
by reusing and recycling everything.

362
00:31:34,089 --> 00:31:37,253
And the population just replaces itself.

363
00:31:38,970 --> 00:31:45,479
Such a society could never function
using a money system utterly dependent
on perpetually accelerating growth.

364
00:31:46,390 --> 00:31:52,614
A stable economy would need a
money supply at least capable of
remaining stable without collapsing.

365
00:31:53,888 --> 00:32:00,201
Let's say the total volume of
this stable money supply is
represented by this big circle.

366
00:32:00,489 --> 00:32:05,157
Let us also imagine that moneylenders
must actually have existing money to lend.

367
00:32:06,429 --> 00:32:11,339
If some people within this money supply
begin systematically lending money at interest,

368
00:32:11,814 --> 00:32:14,296
their share of the money supply will grow.

369
00:32:15,102 --> 00:32:22,012
If they continually re-loan at interest
all the money that gets paid back
what is the inevitable result?

370
00:32:22,762 --> 00:32:25,658
Whether it is gold, fiat
or debt money doesn't matter.

371
00:32:26,127 --> 00:32:28,665
The moneylenders will end up
with ALL of the money.

372
00:32:29,181 --> 00:32:34,892
And after the foreclosures and
bankruptcies are all filed, they
will get all the real property too.

373
00:32:36,264 --> 00:32:41,087
Only if the proceeds of lending at interest
were evenly distributed among the population

374
00:32:41,472 --> 00:32:44,025
would this central problem be solved.

375
00:32:45,357 --> 00:32:48,949
Heavy taxation of bank profits
might accomplish this goal.

376
00:32:49,371 --> 00:32:53,106
But then why would banks
want to be in business?

377
00:32:54,538 --> 00:32:58,467
If we were ever able to free ourselves
of the current situation,

378
00:32:59,009 --> 00:33:03,038
we could imagine banking run as a
non-profit service to society,

379
00:33:03,458 --> 00:33:07,036
disbursing its interest earnings
as a universal citizen dividend,

380
00:33:07,486 --> 00:33:10,068
or lending without charging interest at all.

381
00:33:11,575 --> 00:33:14,611


382
00:33:15,166 --> 00:33:18,714


383
00:33:19,283 --> 00:33:22,227


384
00:33:22,888 --> 00:33:26,173


385
00:33:26,763 --> 00:33:28,649


386
00:33:29,287 --> 00:33:32,153


387
00:33:32,878 --> 00:33:35,815


388
00:33:36,201 --> 00:33:38,955


389
00:33:39,334 --> 00:33:43,845
If it is the fundamental nature of the system
that causes the problems,

390
00:33:44,348 --> 00:33:48,379
tinkering with the system
cannot ever solve those problems.

391
00:33:48,817 --> 00:33:51,463
The system itself must be replaced.

392
00:33:54,536 --> 00:34:01,536
Many monetary critics call for a return
to gold-based money, claiming that
gold has a long history of reliability.

393
00:34:02,450 --> 00:34:05,216
They ignore the many scams
that can be played with gold:

394
00:34:05,688 --> 00:34:08,737
shaving coins, debasing the metal,
cornering the market,

395
00:34:09,268 --> 00:34:13,974
all of which were abundantly practiced in
ancient Rome, and contributed to its fall.

396
00:34:14,654 --> 00:34:19,571
Some advocate silver, it being more
abundant than gold and therefore
more difficult to corner.

397
00:34:20,521 --> 00:34:23,520
Many question the need
to bring back precious metals at all.

398
00:34:24,141 --> 00:34:27,716
No one wants to go back to carrying
heavy sacks of coins to go shopping.

399
00:34:28,956 --> 00:34:34,018
It is a certainty that paper, digital,
plastic or more likely biometric ID money

400
00:34:34,722 --> 00:34:41,490
would be the real medium of trade with
the same potential for creating
unlimited debt money we have now.

401
00:34:42,410 --> 00:34:49,074
Beyond that, if gold again became the
sole legal basis of money, those who have
no gold would suddenly have no money!

402
00:34:51,505 --> 00:34:56,593
Other monetary reform advocates have
concluded that greed and dishonesty
are the main problems,

403
00:34:57,215 --> 00:35:03,900
and that there may be better ways to create
an honest and equitable money system
than returning to silver or gold.

404
00:35:04,915 --> 00:35:08,972
Inventive minds have proposed
a variety of alternative ways to create money.

405
00:35:09,855 --> 00:35:14,078
Many private barter systems create
money as debt much as banks do,

406
00:35:14,601 --> 00:35:18,240
but it is done openly and
without charging interest.

407
00:35:18,765 --> 00:35:22,984
An example is a barter system in which debt
is expressed as pledges of hours of work,

408
00:35:23,591 --> 00:35:26,068
all work being valued
equally at a dollar figure

409
00:35:26,545 --> 00:35:30,283
that then allows hours to be equated
with the dollar price of goods.

410
00:35:31,176 --> 00:35:33,293
This kind of money
system can be set up

411
00:35:33,691 --> 00:35:36,139
by anyone who can devise a
way to do the accounting

412
00:35:36,594 --> 00:35:39,073
and find willing and
trustworthy participants.

413
00:35:39,532 --> 00:35:43,924
Setting up a local barter money system,
even if it were little used now,

414
00:35:44,307 --> 00:35:47,386
would be prudent emergency
planning for any community.

415
00:35:50,124 --> 00:35:54,190
Monetary reform, like electoral reform,
is a big topic,

416
00:35:54,590 --> 00:35:59,148
and one that requires a willingness to change
and to think outside the box.

417
00:35:59,827 --> 00:36:04,136
Monetary reform, again, like
electoral reform will not come easily

418
00:36:04,624 --> 00:36:08,458
because the enormously powerful interests
that benefit from the existing system

419
00:36:08,968 --> 00:36:11,980
will do their utmost
to maintain their advantage.

420
00:36:13,028 --> 00:36:16,425
Now that we have seen that money
is just an idea and that, in reality,

421
00:36:16,807 --> 00:36:18,452
money can be whatever we make it;

422
00:36:18,887 --> 00:36:22,807
here is one very simple alternative
monetary concept to consider.

423
00:36:23,806 --> 00:36:26,905
This model is based on systems
that have worked in the past,

424
00:36:27,300 --> 00:36:28,672
in England, and America,

425
00:36:29,043 --> 00:36:32,433
systems that were undermined
and destroyed by the goldsmith-bankers

426
00:36:32,957 --> 00:36:34,625
and their fractional reserve system.

427
00:36:39,808 --> 00:36:43,469
To create an economy based on
permanent, interest free money,

428
00:36:44,013 --> 00:36:48,205
money could simply be created and spent
into the economy by the government,

429
00:36:48,696 --> 00:36:52,805
preferably on long-lasting infrastructure
that facilitates the economy,

430
00:36:53,330 --> 00:36:57,125
such as roads, railroads, bridges,
harbours, and public markets.

431
00:36:57,673 --> 00:37:00,406
This money would not be created as debt.

432
00:37:00,790 --> 00:37:06,486
It would be created as value, that value being
in the form of whatever it was spent on.

433
00:37:07,085 --> 00:37:11,863
If this new money facilitated a proportional
increase in trade requiring its use,

434
00:37:12,342 --> 00:37:15,192
it would cause no inflation whatsoever.

435
00:37:15,964 --> 00:37:21,063
If government spending did cause inflation,
there would be two courses of action available.

436
00:37:22,486 --> 00:37:26,082
Inflation is equivalent in effect
to a flat tax on money.

437
00:37:26,626 --> 00:37:32,167
Whether the money goes down in value 20%
or the government takes 20% of
our money away from us,

438
00:37:32,646 --> 00:37:35,727
the effect on our buying power
is the same.

439
00:37:37,054 --> 00:37:44,456
Viewed this way inflation in place of
taxation might be politically acceptable
if well spent and kept within limits.

440
00:37:45,238 --> 00:37:51,289
Or, government could choose to counter
inflation by collecting tax monies
that it then takes out of use,

441
00:37:51,732 --> 00:37:55,131
thus reducing the money supply
and restoring its value.

442
00:37:55,721 --> 00:37:59,972
To control deflation,
which is the phenomenon of
falling wages and prices,

443
00:38:00,440 --> 00:38:03,783
the government would simply
spend more money into existence.

444
00:38:04,902 --> 00:38:07,460
With no competing
private debt money creation,

445
00:38:07,909 --> 00:38:11,811
governments would have more effective
control of their nation's money supply.

446
00:38:12,343 --> 00:38:15,332
The public would know whom to
blame if things went wrong.

447
00:38:16,164 --> 00:38:20,907
Governments would rise and fall on their
ability to preserve the value of money.

448
00:38:21,960 --> 00:38:27,383
Government would operate primarily
on taxes as it does now, but tax
money would go much, much further

449
00:38:27,546 --> 00:38:31,917
as none of it would be required
to pay interest to private bankers.

450
00:38:33,884 --> 00:38:39,844
There could be no national debt
if the federal government simply
created the money it needed.

451
00:38:40,340 --> 00:38:47,330
Our perpetual collective servitude to
the banks through interest payments on
government debt would be impossible.

452
00:38:49,324 --> 00:38:52,930


453
00:38:53,666 --> 00:39:00,099


454
00:39:02,267 --> 00:39:04,914


455
00:39:06,243 --> 00:39:11,299


456
00:39:12,943 --> 00:39:16,441
What we have been taught to believe
is democracy and freedom has become,

457
00:39:16,998 --> 00:39:21,770
in reality, an ingenious and
invisible form of economic dictatorship.

458
00:39:22,216 --> 00:39:27,277
As long as our entire society
remains utterly dependent on bank
credit for its supply of money,

459
00:39:27,866 --> 00:39:36,495
bankers will be in the position to
make the decisions on who gets the
money they need and who doesn't.

460
00:39:40,924 --> 00:39:43,681


461
00:39:44,497 --> 00:39:48,591


462
00:39:49,156 --> 00:39:51,859


463
00:39:52,402 --> 00:39:54,215


464
00:39:54,958 --> 00:39:57,420


465
00:39:57,926 --> 00:40:01,543


466
00:40:02,121 --> 00:40:05,814


467
00:40:06,447 --> 00:40:10,256


468
00:40:11,105 --> 00:40:14,842


469
00:40:15,443 --> 00:40:19,054


470
00:40:19,568 --> 00:40:24,582


471
00:40:27,837 --> 00:40:30,830


472
00:40:31,281 --> 00:40:34,393


473
00:40:34,854 --> 00:40:40,161


474
00:40:41,390 --> 00:40:47,468
Few people are aware today that,
the history of the United states,
since the Revolution in 1776

475
00:40:47,993 --> 00:40:51,157
has been in a large part,
the story of an epic struggle

476
00:40:51,516 --> 00:40:56,692
to get free and stay free of control
by the European international banks.

477
00:40:57,728 --> 00:41:00,613
This struggle was finally lost in 1913,

478
00:41:01,100 --> 00:41:05,262
when President Woodrow Wilson
signed into effect the Federal Reserve Act,

479
00:41:05,809 --> 00:41:10,784
putting the international banking cartel
in charge of creating America's money.

480
00:41:12,820 --> 00:41:15,537


481
00:41:16,106 --> 00:41:19,094


482
00:41:19,484 --> 00:41:21,219


483
00:41:21,631 --> 00:41:25,291


484
00:41:25,681 --> 00:41:27,430


485
00:41:27,926 --> 00:41:29,490


486
00:41:29,931 --> 00:41:32,282


487
00:41:32,822 --> 00:41:34,281


488
00:41:34,751 --> 00:41:36,567


489
00:41:37,013 --> 00:41:39,317


490
00:41:39,817 --> 00:41:42,687


491
00:41:43,858 --> 00:41:50,396
The power of this system is deeply
ingrained. So is the educational
and media silence on the subject.

492
00:41:50,786 --> 00:41:56,399
Years ago, a Canadian Deputy Prime Minister
surveyed scores of non-economists,

493
00:41:56,865 --> 00:42:01,041
both highly educated professionals
and common sense people on the street

494
00:42:01,411 --> 00:42:06,435
and found that not one of them
had an accurate understanding
of how money is created.

495
00:42:06,886 --> 00:42:11,875
In fact it is probably safe to say
that most people, including the
front line employees of banks,

496
00:42:12,281 --> 00:42:15,393
have never given the matter
a moment of thought

497
00:42:17,923 --> 00:42:20,101
Have you?

498
00:42:22,563 --> 00:42:25,727


499
00:42:26,237 --> 00:42:29,645


500
00:42:30,133 --> 00:42:32,455


501
00:42:33,066 --> 00:42:35,425


502
00:42:36,545 --> 00:42:40,567
The modern money as debt system was
born a little over three hundred years ago,

503
00:42:41,077 --> 00:42:43,028
when the first Bank of England was set up

504
00:42:43,448 --> 00:42:48,983
with a royal charter for fractional lending
of gold receipts at a modest ratio of 2:1.

505
00:42:50,213 --> 00:42:53,826
That modest ratio was just
the proverbial foot in the door.

506
00:42:54,428 --> 00:42:59,932
The system is now worldwide, creates virtually
unlimited amounts of money out of thin air,

507
00:43:00,345 --> 00:43:07,589
and has almost everyone on the planet
chained to a perpetually-growing debt
that can NEVER be paid off.

508
00:43:12,204 --> 00:43:14,248
Could it have all happened by accident?

509
00:43:15,381 --> 00:43:17,829
Or is it a conspiracy?

510
00:43:20,965 --> 00:43:25,234
Obviously,
something very BIG is at stake here.

511
00:43:34,850 --> 00:43:38,773


512
00:43:39,373 --> 00:43:44,795


513
00:43:45,296 --> 00:43:52,686


514
00:43:53,744 --> 00:43:56,095


515
00:43:56,501 --> 00:44:00,351


516
00:44:00,715 --> 00:44:03,908


517
00:44:04,529 --> 00:44:07,478


518
00:44:07,841 --> 00:44:12,989


519
00:44:16,244 --> 00:44:17,523


520
00:44:17,898 --> 00:44:21,084


521
00:44:21,557 --> 00:44:25,369


522
00:44:25,838 --> 00:44:28,948


523
00:44:29,505 --> 00:44:35,925


524
00:44:38,571 --> 00:44:41,193


525
00:44:41,795 --> 00:44:42,828


526
00:44:43,293 --> 00:44:47,059


527
00:44:47,494 --> 00:44:50,141


528
00:44:50,569 --> 00:44:53,370


529
00:44:53,861 --> 00:44:56,873


530
00:44:57,399 --> 00:45:01,679


531
00:45:02,079 --> 00:45:05,096

532
00:45:05,595 --> 00:45:08,996

533
00:45:11,799 --> 00:45:13,899

534
00:45:14,282 --> 00:45:18,575


535
00:45:23,610 --> 00:45:29,538




0
00:00:0,500 --> 00:00:2,00


1
00:00:03,000 --> 00:00:13,000