“In Keynes’s view capitalism’s driving force is a vice which he called ‘love of money’ … in the General Theory ‘the propensity to hoard’ or ‘liquidity preference’ plays a vital part in the mechanics of an economy’s rundown, once something has happened to make investment less attractive. And this links up with Keynes’s sense that, at some level too deep to be captured by mathematics, ‘love of money’ as an end, not a means, is at the root of the world’s economic problem.”
– Robert Skidelsky; “John Maynard Keynes: Vol. 2, The Economist As Saviour 1920-1937″ (1994)
“There are a thousand hacking at the branches of evil to one striking at the root.”
– Henry David Thoreau
Would you be inclined to agree, that the best way to solve a problem, is to begin by looking for a root?
Economy
Definition of economy
1. the state of a country or region in terms of the production and consumption of goods and services and the supply of money
Who is responsible for the “supply of money”?
Changes in the quantity of money may originate with actions of the Federal Reserve System (the central bank), depository institutions (principally commercial banks), or the public. The major control, however, rests with the central bank.
– Federal Reserve Bank of Chicago, Modern Money Mechanics: A Workbook on Bank Reserves and Deposit Expansion
How is “money” supplied?
The actual process of money creation takes place primarily in banks. As noted earlier, checkable liabilities of banks are money. These liabilities are customers’ accounts. They increase when customers deposit currency and checks and when the proceeds of loans made by the banks are credited to borrowers’ accounts.
– Federal Reserve Bank of Chicago, Modern Money Mechanics: A Workbook on Bank Reserves and Deposit Expansion
Why is money supplied (by banks)?
…banks basically make money…
How do banks “make money” (ie, make profits)?
…by lending money at rates higher than the cost of the money they lend. More specifically, banks collect interest on loans and interest payments from the debt securities they own, and pay interest on deposits, CDs, and short-term borrowings. The difference is known as the “spread,” or the net interest income…
Er… let’s hear that again … HOW do banks “make money” (profits)?
They make money just like any other business. The difference is that their product is money. In other words banks sell money, mostly in the form of loans. Their profit is the difference between what they pay in interest on your deposits and what you pay them in interest for the loan they made you. Banks also charge fees for services.
– National Australia Bank, How Banks Work
What is “interest”?
The charge for the privilege of borrowing money, typically expressed as an annual percentage rate.
Is interest on money natural?
The most hated sort (of money-making), and with the greatest reason, is usury, which makes a gain out of money itself and not from the natural use of it. For money was intended merely for exchange, not for increase at interest. And this term interest (“tokos”, i.e., “children”), which implies the birth of money from money, is applied to the breeding of money, because the offspring resembles the parent. Wherefore of all modes of money-making, this is the most unnatural.
– Aristotle, Politics, Book One, Part X (c. 350 BC)
DIGGING DOWN
- The global economy has a problem.
- The supply of money is a defining component in the functioning of the economy.
- Banks supply the money in the economy.
- Banks supply the money by creating it ex nihilo (“out of nothing”).
- Banks create new money when they make loans.
- Banks make loans in order to make profits.
- Banks make profits by charging interest on money they create.
- Banks make profits by charging more in interest, than they pay in interest.
- Interest is a charge for the “privilege” of borrowing money.
- Making money out of money, by charging “interest” / usury on money … is not natural.
Would you be inclined to agree, that it is not a “privilege” but a burden, to have to borrow money at interest?
Would you be inclined to agree, that it is banks who have an incredibly privileged position and role in the functioning of the economy?
Would you be inclined to agree, that it is immoral and unjust to charge “interest” for the “privilege” of “borrowing” something that was created out of nothing — mere electronic digits, typed into a computer?
Would you be inclined to agree, that because banks are legally permitted to make profits from the production of money — “their product is money” — that bankers are likely to have a vested interest in selling as much of their product — that is, creating as much debt — as they can get away with?
Is it possible that usury — the making of gains (profit) on the lending of money; the unnatural “birth of money from money” — is the root of the problem in the global economy?
For the love of money is the root of all evil: which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows.
– St. Paul, 1 Timothy 6:10
…no one shall deposit money with another whom he does not trust as a friend, nor shall he lend money upon interest; and the borrower should be under no obligation to repay either capital or interest.
– Plato, Laws, Book V (c. 348 BC)
And if you lend to those from whom you hope to receive back, what credit is that to you? For even sinners lend to sinners to receive as much back. But love your enemies, do good, and lend, hoping for nothing in return; and your reward will be great, and you will be sons of the Most High.
– Jesus Christ, Luke 6:34-35
See also:
A Tale Of Usury, Explosions, And A Used Car Salesman
Babylon = Usury: We Want Interest-Free Money at realcurrencies.com
Barnaby Is Right 
On the same theme I found this article interesting –
http://www.veteranstoday.com/2013/05/27/ayn-rand-usury-and-capitalism-and-goldman-sachs-part-ii-2/
“A capitalist may wish to sell drinking water, but Mammon wants to poison all water in order to force everybody to buy drinking water. A capitalist may build the mall; Mammon wants to destroy the world outside the mall, for the outside world interferes with the only meaningful occupation, shopping…Mammon will try to eliminate every distraction to shopping, be it churches, art, forest, rivers, seaside, fresh air, mountains.”—Israel Shamir
Goldman Sachs—The “Vampire Squid”
Goldman Sachs is probably one of the most visible representatives of Jewish oligarchy that is bent to weaken the economy through rapacious usury. It has been well known that Goldman Sachs was implicated in a sex trafficking scandal with sex trafficking forum Backpage.com, which happens to be “the biggest forum for sex trafficking of under-age-girls in the United States.”
Mitt Romney and his wife were also implicated in the deal, though they probably did not know that Goldman Sachs had ties with Backpage.com. But whether the Romneys knew it or not, they certainly benefited from Goldman Sachs.
Isn’t it interesting that sex, economy and usury always play a role in destroying society? Isn’t it interesting that Dante put sodomy and usury in the same circle of hell? Isn’t it interesting that this topic has always been a heated topic in economic discussion?
More recently, Jeet Heer of the American Prospect has put out an article entitled “Sex, Economics, and Austerity,” in which we read: “Historically, attempts to prohibit sodomy (defined broadly as non-procreative sex) have had an economic dimension as well as a moral one.” And isn’t it interesting that both usury and sodomy are sterile intercourse?
When thousands of people were suffering from foreclosures in places like Florida, Romney was making a huge profit from this through Goldman Sachs. Former presidential candidate Newt Gingrich did the same thing with companies like Fredie and Fannie Mae.
Goldman Sachs donated more than $1 million to the Obama campaign in 2008, but in 2012 the company was supporting Mitt Romney. Matt Taibbi of The Rolling Stone wrote in 2010:
“The first thing you need to know about Goldman Sachs is that it’s everywhere. The world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”
Hey BI,
Is INTEREST the root cause of the problem with “money/currencies” and the global economy OR is the problem HOW MUCH (as in QE to infinity) currencies are created (at interest, of course) and WHO creates the the currencies of the world.(as in Central Banks) and their “Banking System” as a whole, via fractional reserve lending?? (i.e. whipping currency out of thin air) and charging interest on it.
And let’s not forget Crony Capitalism and Corruption. (Libor, ICAP, QE,Tarp,Tarf, Bailouts,Cyprus, the ESF, IMF & World Bank, Carbon Credits, etc,etc, etc). Wipe out crony capitalism and political corruption and we’d probably go a long way to cleaning up the mess.
It’s a BIG topic.(probably well above my pay grade)
IMHO it is all of the above, TF. That said, if usury (making gain on money) were once again outlawed — as it was in the earlier years of the Roman Republic (ie, before “Empire”), and as it was for approx. 1,000 years under “Christendom” / Catholic Church — this would remove what is the most powerful weapon of the money-lenders. If you pause to think about it, if usury were outlawed, there would be no benefit (gain, profit) to money-lenders in creating excessive “credit” in the first place. Banking as we know it (along with all those acronyms you mentioned), would come to an end.
Again.
You got me all excited there for a moment, TBI.
Wow, talk about 50 questions. I’ll just cherry-pick questions instead. As for “the love of money is the root of all evil”, this is the basis for socialism, but unfortunately is demonstrably wrong.
Exhibit A: Adolf Hitler
Exhibit B: Josef Stalin.
Need I go on? A better explanation for evil is “power corrupts, and absolute power corrupts absolutely”. This not only explains greed, but all other forms of evil as well.
Most people only believe in capitalism insofar as it benefits society via competition. The complaints about usury are somewhat unfounded, as the non-profit portion reflects the cost of risk – a cost that is very real and can only be quantified in monetary terms. The profit is aspect is indeed arguable, but the alternatives to profit are non-profit or non-existence, which means either a central bank or no loans whatsoever. The latter would be as nonsensical as disallowing people to loan tools to their next door neighbours.
As i’m sure you’ll agree, central banks are just as corrupted by power as private banks, with the addition of monopoly to corrupt them even more.
FWIW, I disagree with pretty much all you have said here. Especially re usury. I would grant one qualified exception to my overall disagreement; that being for your final sentence.
Interest is the price a borrower pays to the owner of the money for the right to use it to do something she needs to do today.A part of the interest is to cover the effect of expected future inflation on the lenders money.
Thanku