Near the conclusion of my essay explaining an alternative solution to the global financial crisis (The People’s NWO: Every Man His own Central Banker), I pointed to an October 2010 speech by the central Bank of England governor, Mervyn King.
In that speech, King suggested that the world should “divorce the payment system from risky lending activity – that is … prevent fractional reserve banking (for example, as proposed by Fisher, 1936, Friedman, 1960, Tobin, 1987 and more recently by Kay, 2009)”.
My warning then, was that the elite string pullers of the present global financial system appear to be planning their own “solution” to the crisis; one that is particularly cunning and dangerous. Why? Because often it is not falsehoods, but the deceitful mis-use of truth that is the most dangerous to our well-being.
The “solution” being canvassed by the world’s economic, academic, and banking elite does appear to address one (1) fundamental structural flaw that most of the “sound money” and “anti-bankster” activists correctly identify and oppose – fractional reserve banking, or, the creation of “credit” out of thin air by banks, in the form of loans-at-usury.
To recap, this is what I wrote on 7/7/11 in reference to Mervyn King’s suggestion that the world should now “prevent fractional reserve banking”:
Their current plan to address the fear of global systemic banking risk – a fear which they have created through control of the boom-and-bust “cycle”, of which the GFC is only the most recent example – is to divorce the transactional currency system from the store of wealth system.
This is precisely what my idea would achieve … without the centralised control.
We need to understand the true and proper nature of “money”, and “currency”. So that we are not hoodwinked by the next stage of the global bankster scam.
Many are aware of the evils of “fractional reserve banking”. And it is these who will be the first to sing “Hallelujah!” and fall for the trap, when TPTB suggest doing away with fractional reserve banking as a “solution” to the global systemic banking crisis that they have created.
Well, it appears that I was right.
(More correctly, Dave Harrison was right.)
From Positive Money, one of those well-meaning activist groups who I fear are just the kind to fall for the trap being prepared, and thus naïvely serve as “useful idiots” in supporting a deceptively appealing proposal to “fix” the problems of the global money system, without removing the two greatest problems of all (usury, and central control by elite bankers), we learn that:
A very interesting conference took place on 17th April 2013 in Philadelphia, USA. Big senior figures in the economic, monetary, and financial worlds, including Adair Turner, Laurence Kotlikoff, Michael Kumhof and Jeffrey Sachs were discussing fundamental solutions to current global monetary and banking problems.
This was probably the first conference ever where the top academics were seriously discussing ending fractional reserve banking.
Now you can watch the recording of their presentations, highly recommended:
If the video doesn’t play on your browser, please click here.
Michael Kumhof, Deputy Division Chief, Modeling Unit, Research Department, International Monetary Fund, explained in very clear and straightforward way how exactly banks work and presented the Chicago Plan proposal.
“The key function of banks is money creation, not intermediation. And if you tell that to a mainstream economist, that’s already provocative, even though it’s hundred percent correct.”
His presentation starts at 1:02:12
Adair Turner, Former Chairman of the UK Financial Services Authority and Senior Fellow at the Institute for New Economic Thinking, gave a noteworthy presentation on “Money and Debt: Radical Solutions to the Challenge of Deleveraging”
“Fractional reserve banks create whole new level of danger. Because the fundamental fact is, that when people say ”banks take savings and intermediate it to loans” – that’s not true.
One of the most fundamental insight is that banks simultaneously create new credit and new money ex nihilo.
And that is one of the most fundamental, important things for people to be taught, which economics undergraduates should be taught about the nature of how monetary economy with banks works.”
His presentation starts at 4:06:07
Jeffrey Sachs, Director of The Earth Institute, Quetelet Professor of Sustainable Development and Professor of Health Policy and Management at Columbia University, on Implications for Global Development
“Could we really have liquidity without fractional reserve banking? If we could, we might be able to address another degree of this problem.”
His presentation starts at 2:35:08
In the opinion of your humble blogger, herein lies great danger.
What these lauded men are saying here … is the Truth.
This is how the world’s modern “money” system works. Most people in the world do not understand that this is how it really works. And yes, the power of banks to create endogenous money via the fractional reserve system is dangerous, risky, and profoundly flawed, and does lie near to the root of the world’s financial troubles.
The great danger here rests in the fact that so many intelligent, well-meaning activists and opponents of the present global financial system are certain to applaud and support the act of stating these truths, and as a result, be lulled into a false sense of security – the idea that these “truth-tellers” must therefore be “honest brokers”, whose proposed solution to the problem they (now) highlight is the best solution for all of us.
And not just the best solution for them.
I will state the case bluntly, dear reader.
The only way that humanity can ever be truly freed from the power of the moneylenders, and the only way for “money” to be rendered a true servant of humanity rather than our master, is for usury – the taking or offering of any interest on “money” – to once again be outlawed.
And for the power of issuing “currency” to be maximally de-centralised.