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

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They know that there is a power somewhere so organized,
so subtle, so watchful, so interlocked, so complete, so pervasive,

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that they better not speak above their breath when they speak in condemnation of it."
~Woodrow Wilson, former President of the United States

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"Each and every time a bank makes a loan,
new bank credit is created - new deposits - brand new money."

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~Graham F. Towers, Governor, Bank of Canada, 1934-54

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"The process by which banks create money is so simple the mind is repelled."
~John Kenneth Galbraith, Economist

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"Permit me to issue and control the money of a nation,
and I care not who makes its laws."

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~Mayer Amschel Rothschild, Banker

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Money as Debt
{Subs by OSK}

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Debt

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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 have expected,
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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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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The Money System Today

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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 good used 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 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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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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and actual reserve ratios can be much higher than 9:1.

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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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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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"Everyone sub-consciously knows
banks do not lend money.

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When you draw on your savings account,
the bank doesn't tell you you can't do this

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because it hast lent the money to somebody else."
~Mark Mansfield, economist and author

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Despite the endlessly presented mint footage, government-created money
typically accounts for less than 5% of the money in circulation.

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More than 95% of all money in existence today was created

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by someone signing a pledge of indebtedness to a bank.

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What's more, this bank credit money is being created and destroyed
in huge amounts every day,

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as new loans are made and old ones repaid.

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00:18:55,873 --> 00:18:59,437
"I am afraid the the ordinary citizen will not like
to be told that banks can and do create money.

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00:18:59,935 --> 00:19:03,814
...And they who control the credit of a nation
direct the policy of Governments

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and hold in the hollow of their hand the destiny of the people."
~Reginald McKenna, past Chairman of the Board, Midlans Bank of England

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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.

205
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

206
00:19:46,431 --> 00:19:51,007
while doing nothing to inform the public
about where money really comes from.

207
00:19:53,371 --> 00:19:55,161
[The Simple Truth]
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
"Thus, our national circulating medium
is now at the mercy of loan transactions of banks,

221
00:20:57,104 --> 00:21:03,296
which lend, not money, but promises to supply money they do not possess."
-Irving Fisher economist and author

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
[NO DEBT NO MONEY]
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
"That is what our money system is.

249
00:23:01,470 --> 00:23:04,552
If there were no debts in our money system,
there wouldn't be any money."

250
00:23:05,039 --> 00:23:07,833
~Marriner S. Eccles, Chairman and Governor of the Federal Reserve Board

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
"This is a staggering thought.
We are completely dependent on the Commercial Banks.

261
00:24:00,683 --> 00:24:03,530
Someone has to borrow every dollar
we have in circulation, cash or credit.

262
00:24:04,649 --> 00:24:06,954
If the Banks create ample synthetic money,
we are prosperous; if not, we starve.

263
00:24:07,679 --> 00:24:10,949
We are, absolutely,
without a permanent money system.

264
00:24:11,532 --> 00:24:14,286
When one gets a complete grasp of the picture,

265
00:24:14,779 --> 00:24:18,241
the tragic absurdity of our hopeless position
is almost incredible, but there it is."

266
00:24:18,850 --> 00:24:22,091
~Robert H. Hemphill, Credit Manager of Federal Reserve Bank,
Atlanta, Georgia

267
00:24:30,394 --> 00:24:32,550
[PERPETUAL DEBT]

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 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
00:26:07,087 --> 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
"One thing to realize about our fractional reserve banking system
is that, like a child's game of musical chairs,

304
00:27:07,404 --> 00:27:11,981
as long as the music is playing, there are no losers."
~Andrew Gause, Monetary Historian

305
00:27:17,914 --> 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 greatest shortcoming of the human race...]
The problem, of course, is that perpetual growth

314
00:28:01,316 --> 00:28:04,230
[is our inability to understand the exponential function."]
of the real economy requires perpetually escalating use

315
00:28:04,833 --> 00:28:06,663
[ -Albert A. Bartlett, physicist]
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
"Anyone who believes exponential growth
can go on forever in a finite world

319
00:28:18,672 --> 00:28:20,826
is either a madman or an economist."
-Kenneth Boulding, economist

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 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 --> 00:29:16,558
Why not create money that circulates permanently
and doesn't have to be perpetually re-borrowed

333
00:29:17,075 --> 00:29:18,553
at interest in order to exist?

334
00:29:19,409 --> 00:29:21,521
The third question:

335
00:29:21,521 --> 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
[Usury]

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 --> 00:30:59,733
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 or 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
00:31:34,289 --> 00:31:37,453
And the population just replaces itself.

363
00:31:39,270 --> 00:31:45,779
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
00:32:00,789 --> 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 --> 00:32:52,806
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
"I have never yet had anyone who could,
through the use of logic and reason,

382
00:33:15,166 --> 00:33:18,714
justify the Federal Government
borrowing the use of its own money...

383
00:33:19,283 --> 00:33:22,227
I believe the time will come
when people will demand that this be changed.

384
00:33:22,888 --> 00:33:26,173
I believe the time will come in this country
when they will actually blame you and me

385
00:33:26,763 --> 00:33:28,649
and everyone else connected with the Congress

386
00:33:29,287 --> 00:33:32,153
for sitting idly by and permitting
such an idiotic system to continue."

387
00:33:32,878 --> 00:33:35,815
~ Wright Patman. Democreatic Congressman 1928-1976
Chairman Commitee on Bankin & Currency, 1963-1975

388
00:33:36,201 --> 00:33:38,955
[CHANGING THE SYSTEM]

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 clamour 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 --> 00:38:27,083
Government would operate primarily on taxes
as it does now, but tax money would go much,  much further

449
00:38:27,546 --> 00:38:31,617
as none of it would be required
to pay interest to private bankers.

450
00:38:33,884 --> 00:38:39,344
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
"Money is a new form of slavery,
and distinguishable from the old simply by the fact that

453
00:38:53,666 --> 00:39:00,099
it is impersonal-that there is no human relation
between master and slave." -Leo Tolstoy

454
00:39:02,267 --> 00:39:04,914
[THE INVISIBLE POWER]

455
00:39:06,243 --> 00:39:11,299
"None are more enslaved than those
who falsely believe they are free." -Goethe

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 --> 00:39:35,495
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
"The modern banking system
manufactures money out of nothing.

461
00:39:44,497 --> 00:39:48,591
The process is perhaps the most astounding
piece of sleight of hand that was ever invented.

462
00:39:49,156 --> 00:39:51,859
Banking was conceived in iniquity
and born in sin.

463
00:39:52,402 --> 00:39:54,215
Bankers own the Earth.

464
00:39:54,958 --> 00:39:57,420
Take it away from them,
but leave them the power to create money,

465
00:39:57,926 --> 00:40:01,543
and with the flick of the pen
they will create enough money to buy it back again...

466
00:40:02,121 --> 00:40:05,814
Take this great power away from them
and all great fortunes like mine will disappear,

467
00:40:06,447 --> 00:40:10,256
and they ought to disappear,
for then this would be a better and happier world to live in.

468
00:40:11,105 --> 00:40:14,842
But if you want to continue to be slaves of the banks
and pay the cost of your own slavery,

469
00:40:15,443 --> 00:40:19,054
then let bankers continue to create money and control credit'."

470
00:40:19,568 --> 00:40:24,582
~Sir Josiah Stamp - Director, Bank of England 1928-1941
(reputed to be the 2nd richest man in England at the time)

471
00:40:27,837 --> 00:40:30,830
The inability of the Colonists to get power to issue
their own money

472
00:40:31,281 --> 00:40:34,393
permantently out of the hands of George III
and the international bankers

473
00:40:34,854 --> 00:40:40,161
was the PRIME reason for the revolutionary war."
~Benjamin franklin

474
00:40:41,390 --> 00:40:47,468
Few people are aware today that,
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
"I am a most unhappy man.
I have unwittingly ruined my country.

481
00:41:16,106 --> 00:41:19,094
A great industrial nation is controlled
by its system of credit.

482
00:41:19,484 --> 00:41:21,219
Our system of credit is concentrated.

483
00:41:21,631 --> 00:41:25,291
The growth of the nation, therefore,
and all our activities are in the hands of a few men.

484
00:41:25,681 --> 00:41:27,430
We have come to be one of the worst ruled,

485
00:41:27,926 --> 00:41:29,490
one of the most completely controlled

486
00:41:29,931 --> 00:41:32,282
and dominated Governments in the civilized world.

487
00:41:32,822 --> 00:41:34,281
No longer a Government by free opinion,

488
00:41:34,751 --> 00:41:36,567
no longer a Government by conviction
and the vote of the majority,

489
00:41:37,013 --> 00:41:39,317
but a Government by the opinion and duress
of a small group of dominant men."

490
00:41:39,817 --> 00:41:42,687
~ Woodrow  Wilson - President of the United States 1913-1921

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 informally
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
"All of the perplexities, confusion,
and distress in America arises,

499
00:42:26,237 --> 00:42:29,645
not from the defects of the Constitution or Confederation,
not from want of honor or virtue,

500
00:42:30,133 --> 00:42:32,455
so much as from downright ignorance of the nature of coin,
credit, and circulation."

501
00:42:33,066 --> 00:42:35,425
~ John Adams, Founding Father of the American Constitution

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 just 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
"Whoever controls the volume of money in our country
is absolute master of all industry and commerce...

512
00:43:39,373 --> 00:43:44,795
and when you realize that the entire system is very easily controlled,
one way or another,by a few powerful men at the top,

513
00:43:45,296 --> 00:43:52,686
you will not have to be told how periods of inflation and depression originate."
~James A. Garfield, assassinated president of the United States

514
00:43:53,744 --> 00:43:56,095
The Government should create, issue, and circulate
all the currency and credits

515
00:43:56,501 --> 00:44:00,351
needed to satisfy the spending power of the Government
and the buying power of consumers.

516
00:44:00,715 --> 00:44:03,908
By the adoption of these principles,
the taxpayers will be saved immense sums of interest.

517
00:44:04,529 --> 00:44:07,478
The privilege of creating and issuing money
is not only the supreme prerogative of government,

518
00:44:07,841 --> 00:44:12,989
but it is the government's greatest creative opportunity."
~Abraham  Lincoln, assassinated president of the United States

519
00:44:16,244 --> 00:44:17,523
Until the control of the issue of currency and credit

520
00:44:17,898 --> 00:44:21,084
is restored to government and recognized
as its most conspicuous and sacred responsibility,

521
00:44:21,557 --> 00:44:25,369
all talk of sovereignty of Parliament
and of democracy is idle and futile...

522
00:44:25,838 --> 00:44:28,948
Once a nation parts with control of its credit,
it matters not who makes the nation's laws...

523
00:44:29,505 --> 00:44:35,925
Usury once in control will wreck any nation."
~ William Lyon Mackenzie King Prime Minister of Canada
who nationalized the Bank of Canada

524
00:44:38,571 --> 00:44:41,193
"We are grateful to the Washington Post,
the New York Times, Time magazine

525
00:44:41,795 --> 00:44:42,828
and other great publications

526
00:44:43,293 --> 00:44:47,059
whose directors have attended our meetings
and respected the promises of discretion for almost forty years.

527
00:44:47,494 --> 00:44:50,141
It would have been impossible for us
to develop our plan for the world

528
00:44:50,569 --> 00:44:53,370
if we had been subject to the bright lights
of publicity during those years.

529
00:44:53,861 --> 00:44:56,873
But, the world is now more sophisticated
and prepared to march towards a world-government.

530
00:44:57,399 --> 00:45:01,679
The supranational sovereignty of an intellectual elite
and world bankers is surely preferable

531
00:45:02,079 --> 00:45:05,096
to the National autodetermination
practiced in past centuries"

532
00:45:05,595 --> 00:45:08,996
~David Rockefeller in an address
to a Trilateral Commission meeting, 1991

533
00:45:11,799 --> 00:45:13,899
Only the small secrets need to be protected.

534
00:45:14,282 --> 00:45:18,575
The big ones are kept secret by public incredulity."
~ Marshall McLuhan,  media "guru"

535
00:45:23,610 --> 00:45:29,538
Money as Debt