Tag Archives: fractional reserve banking

IMF Admits Usury Is The Root Problem Of The Global Financial System

6 Sep

usury

There is much of interest in the IMF’s Financial System Stability Assessment of Australia, published in November 2012.  The following line in particular caught my eye, and is worthy of comment. The context is the IMF’s consideration of what are the “key risks” to our banking system (page 10-11):

Pressure on the net interest margin, which accounts for almost two-thirds of operating income, has the potential to encourage more risk-taking by banks in order to preserve profitability.

Thoughtful readers will observe that this statement unintentionally lends direct support to a fundamental argument your humble blogger has made — that usury is the root problem of the global monetary system, and that fractional reserve banking (or endogenous money creation) is only a secondary problem.

Consider again the conclusion to my recent post, IMF Economist Says Banks’ Key Function Is To CREATE Money:

As we have oft-repeated here at barnabyisright.com, while this power to “create money” ex nihilo (out of nothing) is a key problem, it is not THE root problem.

The power to create “money” (in the form of debt) out of nothing, simply gives banks leverage.

What they leverage, is Usury.

The “net interest income” — that is, the difference (or “spread” or “margin”) between the interest % they give on deposits, and the interest % they take on loans — is the heart of the banks’ profit (and power) business model.

The power to create more and more money (“credit”), simply allows them to magnify (or leverage) their “returns” (profits) on that difference between usury paid, and usury taken.

It deeply saddens your humble blogger that there are so many highly intelligent (far moreso than I), sincere, well-meaning, altruistic men and women in the world who are keenly interested in reforming the financial system for the betterment of humanity … and yet, almost none have yet recognised that usury is the root problem.

The IMF has directly admitted that the root of banks’ profit-making model is net interest income, and that pressure on the “margin” between what they charge in interest for loans, and must offer in interest on deposits, “has the potential to encourage more risk-taking by banks in order to preserve profitability”.

What exactly is meant by “more risk-taking”?

In the footnote (3) to the IMF’s comment, we are told that:

“Riskier activities could include, for example, loosening underwriting standards or expanding too quickly into new business or geographic regions.”

In other words, making it easier for more people to borrow more debt.

Using the leverage of increased fractional reserve / endogenous money creation.

Barnaby Is Right … is right.

See also:

Looking For A Root

A Tale Of Usury, Explosions, And A Used Car Salesman

A History Of The Legal Case Against Usury

An Historical Warning For Proponents Of A Modern Debt Jubilee

Full Reserve Banking Advocates Are Myopic: Here’s Why

23 Jul

myopic-lasik

From central bank governors, to the IMF, to brilliant contrarian economists, to well-intentioned activist groups, there is a growing chorus of voices calling for an end to fractional reserve banking … or, more correctly, fractional reserve lending.

These voices are of those suffering from myopia.

Their complaint is this; that the root cause of the world’s ongoing economic ills is that, due to fractional reserve lending, private banks have been permitted to create too much “money” (debt) out of nothing, and lend it for profit.

Alas, they are only seeing what is immediately in front of their eyes.

The creation of “money” out of nothing, is only a lever.

Usury (ie, net interest income), is what is being lever-aged.

Consider the words of the National Australia Bank:

How Banks Work

…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.

Creating money — debt — out of nothing, does not make profits for bankers.

Charging interest on money (debt) created out of nothing, is what makes profits for bankers.

For those with full vision, the Big Picture is clear.

Every “solution” to the economic crisis that does not focus on the real problem — usury — is a short-sighted, and inevitably short-lived, non-solution.

4,500 years of recorded economic history prove it so.

See An Historical Warning For Proponents Of A Modern Debt Jubilee

“Money Has To Serve, Not Rule!” – Pope Francis Is Right

17 May

From the Age (my emphasis added):

francis-620x349

Vatican City: Pope Francis has denounced the global financial system, blasting the “cult of money” that he says is tyrannising the poor and turning humans into expendable consumer goods.

In his first major speech on the subject, Francis demanded Thursday that financial and political leaders reform the global financial system to make it more ethical and concerned for the common good. He said: “Money has to serve, not to rule!”

I suggest that, if ‘Frank’ is frank about his rhetoric, that he begin by carefully, prayerfully, and conscientiously reexamining ‘his’ church’s teaching, right back through its entire history, on the key question of Usury.

He might like to purchase Michael Hoffman’s “Usury In Christendom: The Mortal Sin that Was, and Now Is Not” to save him spending an eternity in research purgatory.

When ‘Frank’ humbly recognises that he, along with all his preceding “Infallible’s” since the Renaissance, are — by practice and decree of the church in its first millennia and a half — all flagrant heretics on the question of Usury, then this blogger might begin to take his preaching seriously.

In the meantime, I will continue pontificating my own “vision” for an alternative “money” system. One that would indeed “reform the global financial system to make it more ethical and concerned for the common good”

Imagine A World With No Banks

The People’s NWO: Every Man His Own Central Banker

Great Minds Discuss How To Fix The Banking System For Good

3 May

Screen shot 2013-05-03 at 10.57.49 AM

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.

See also:

The People’s NWO: Every Man His Own Central Banker

The World’s Most Immoral Institution Tells You How

A May Day Economic Jeremiad For All Ages

On Savages, Barbarians, And Money-Lenders

A Tale Of Usury, Explosions, And A Used Car Salesman

Usury – The Golden Age Of Big Money Oligarchy

A History Of The Legal Case Against Usury

Conspiracy Theorists Proved Right: Everything Is Rigged

If The CIO Of The World’s Biggest Bond Fund Doesn’t Trust The Global Banking System, Why Do You?

19 Apr

From CNN Money (h/t MacroBusiness reader “Mav”):

When Wall Street nearly collapsed

Would panic prevail? That was the question gripping the world in the days surrounding the fall of Lehman Brothers on Sept. 15, 2008. One year after that terrifying Monday, the people who struggled to cope with the financial crisis share what they were thinking as chaos broke out.

Mohamed El-Erian: Hit the ATMs

mohamed_el-erian

Chief Executive and Co-Chief Investment Officer of PIMCO

On the Wednesday and Thursday after Lehman filed for Chapter 11, I asked my wife to please go to the ATM and take as much cash as she could. When she asked why, I said it was because I didn’t know whether there was a chance that banks might not open. I remember my wife sort of pausing and saying, “Are you serious?” And I said, “Yes, I am.” We had long felt that the world was increasingly in disequilibrium, and by March of 2008 we decided that things were critical and that the unthinkable was thinkable…

The firm had been preparing for catastrophe for a long time, but even so, there was a sense of apprehension because things were accelerating very, very quickly.

See also:

* Think You’ve Got Cash In The Bank? Think Again
* Our Banking System Operates With Zero Reserves
* The Bank Deposits Guarantee Is No Guarantee At All
* G20 Governments ALL Agreed To Cyprus-Style Theft Of Bank Deposits … In 2010
* The World’s Most Immoral Institution Tells You How

A Tale Of Usury, Explosions, And A Used Car Salesman

16 Mar

used-car-salesman

Let me tell you a tale.

On a fine and sunny day this past week, your humble blogger accompanied his brother on a long journey.

To inspect a used car.

Having been reassured over the telephone by the salesman that this car – a premium brand convertible – was as-advertised in “excellent” condition, we embarked on our journey from the country to the Big City with my brother in high spirits. And myself in low expectations.

What we found in the Big City failed to live up to even my low expectations.

And yet, on the positive side, what we found may now serve the purpose of guiding you, dear reader, towards a better understanding of the negative impact of usury on our everyday lives.

Picture, if you will, a very small allotment of used cars, crammed mirror to mirror, in what must surely have been a low rent area on the outskirts of an outlying suburb. The sight of this site would have been enough to prompt your humble blogger to immediately turn around and drive away, had it not been for the innocent exuberance of his beloved brother, the budding buyer.

Prospects only sank the further on spotting the salesman and likely owner of this establishment, seated in the shade outside the hut which passed for an office. Perched on a stool, rotund beer gut resting on the table, his well-coiffed bouffant appropriately dyed rust red, talking earnestly on his mobile phone.

As my brother – a truly beautiful, innocent-in-the-ways-of-the-world fruit always ripe for the plucking – followed my advice to “Always go straight up to salesmen and state your purpose clearly, briefly, and confidently; don’t roam around aimlessly looking at stuff, waiting for them to size you up and plan their attack”, I walked to the front of the yard, where stood … actually, where slumped … the object of our long journey. Proudly positioned front and centre. The pinnacle, the most potent object of automotive desire that this particular dealership had to offer to the wandering eye of passing motorists.

Oh dear.

Not one body panel had escaped the telling sign of dents, scratches, or delaminating clear coat. The plastic rear window boasted an inconsistent, weak-piss shade of yellow discolouration, doubtless attained from many a long hour spent roasting beneath our sunny southern skies. The split seams and frayed stitching on the fabric roof loudly proclaimed their propensity to ingest any H2O that may fall in their immediate vicinity. And things only got worse from there.

Our aforementioned salesman approached, wide-eyed buyer in tow, car keys in hand. Having already questioned and confirmed that my brother “hasn’t had one of these before” – my alertly protective ears had overheard their conversation – he proceeded to inform him of a “unique safety feature”. One that “only these models” boast. Rust red-dyed bouffant then proceeded to demonstrate.

Inserting key in the lock, our beer-gutted new friend placed one pudgy paw upon the door, and gently pressed his not-inconsiderable body mass against it, while turning the key with the other.

Fail.

Try again. With rather less gentle application of body mass this time.

Win! We were in.

You see, extolled the salesman, most folks don’t know about this “safety feature”. Brilliantly, it renders the model less vulnerable to thieves, because most people don’t know how to open the door.

Groan.

I did mention that this was a premium brand automobile, did I not?

At this point, having taken but a single stroll around this four-wheeled (and mismatched-tyred) wonder, your humble blogger had seen and heard quite enough. His thoughts turned decisively to “Oh gawwwd!!! How can I get us the flock out of here, quickly, without hurting anyone’s feelings, or denting anyone’s pride?”

You see, my dear brother is, shall we say, a little socially inept. His still-innocent exuberance and enthusiasm for life and people – commonly manifested in an apparent belief in the good intentions of all strangers – typically overwhelms his negligible capacity to pick up on the many and varied non-verbal signals that are part and parcel of human interactions.

Nonetheless, I first tried the subtle, wordless communication medium of body language to convey my message to him.

Standing well aside from said vehicle, leaning against the flaking-painted post of the security fence protecting this yard-full of former automotive glories, spine stiffened, chest thrust out defiantly, arms folded, teeth clenched and jaw muscles twitching, exasperated expression writ large upon my darkened visage, and casting my gaze disinterestedly to yonder hills. The exasperation, it should be said, not wholly feigned, conscious as I was that such subtle signals would inevitably be overlooked by my excited brother with the pocketful of burning cash.

And why not overlook any negative signalling, indeed. After all, the tan leather interior was plush!

That, by the way, is the best thing that can be said of this particular automobile. The tan leather was plush. And remarkably, at a cursory glance, in reasonably good condition. Though not sufficiently so as to distract the discerning eye from immediately noting other significant interior features. Such as the two large, prominent, non-OEM holes in the driver’s door trim. And the numerous zip ties, struggling in vain to hold the roof lining in the position of the manufacturer’s original intent.

Having failed to catch my brother’s attention, I stepped it up. By stepping out. I spent the next minutes – which of course, seemed like hours – wandering off around the yard, arms still crossed and facial expression now transformed into a disinterested annoyance. But to no avail. Indeed, the fun had only just begun.

I gave up on sending the “disinterested wandering” signal and returned to the scene of the crime. How much of a crime we were only now set to discover. The salesman – given the size of the establishment, a sole trader would be my guess – kindly demonstrated the vehicle brand’s most famous attribute. The engine.

Now, you might reasonably be forgiven for expecting an automobile wearing the badge of this particular marque to respond to a turning of the ignition key in a manner rather like that we expect on flicking a light switch. And then, to convey a smoothness of sound and motion rather like that of a sewing machine.

Er… no.

Not to belabour the point – unlike the battery, which was most certainly belaboured – eventually the engine did burst into life. Most of it, anyway. What was immediately apparent, is that at least one cylinder was no longer responding to the spark of life. As evidenced by the engine note. And by the knocking noises. And by a significant rocking side-to-side of the engine, one that was sufficiently in excess of that which the engine mounts had been designed to absorb, that the entire car adopted a most determined lateral gyration in sympathy. Unlike the door locks, apparently this was not a “unique feature” of this particular model. Unless, that is, our now somewhat less enthusiastic-looking salesman simply forgot to mention it.

I do not know if his decidedly less eager expression can be attributed to his having picked up on my oh so subtle body language, or, to the less than encouraging response from his motor. In any event, he clambered clumsily out of the driver’s seat to come around and peer (un)knowingly into the engine bay.

Through the passenger window, I caught my brother’s eye. And rolled mine. Judging from his downcast glance in return, happily, it appeared that my brother too, had belatedly reached a similar conclusion. If not, then the events of the next few moments certainly did successfully transmit the “This is a sh!tbox, let’s leave NOW!!” signal that my own efforts had heretofore failed to do.

Bravely, my brother – who was now ensconced in the plush tan leather of the driver’s seat – tried gently pressing the accelerator. No doubt in a hopeful attempt to “clear its throat”.

The engine stalled.

He turned the key, and prodded the accelerator. Ever so briefly, the engine again sprang to life. And then…

BANG!!!

A very large volume of smoke belched from beneath the engine covers, and mushroomed out into the afternoon sunshine in a manner reminiscent of an atomic explosion. Seated inside the vehicle, my brother was quickly enveloped by a rush of acrid smoke billowing from every orifice in the dashboard.

Quickly escaping the fumes, he informed the salesman that the engine diagnostic warning light was on. Visibly straining to not appear crestfallen, the salesman went through the motions of checking the dashboard light for himself, and then flailing in vain with his rhetorical whip at a now quite dead horse, by quaveringly insisting: “That’s normal, it will go out soon”. After waiting for the interior smoke to clear, he climbed in and engaged the battery and starter motor in a futile struggle to revive the engine of this, the pride of his fleet.

With the salesman earnestly preoccupied and my brother out of the car, I seized the opportunity. Leaning over with a polite-but-firm “Thanks for your time”, I turned to my brother with a steely expression and a flick of the eyes towards our own car, grabbed him by the shoulder … and bolted.

Before my brother had a chance to reengage a pointless conversation.

And before anything else could happen that might cause that poor man’s dignity to melt away entirely, and join company with the other sad stains in the carpet.

I leave you, gentle reader, to imagine the conversation that ensued during the first minutes of our long journey home.

********

Given a little more time for emotions to settle and calm to return, as the kilometers rolled by beneath our wheels and the wind whispered quietly about our windows, I began to reflect on our experience.

And the longer I reflected, the more my feelings altered.

Instead of anger, or annoyance, or disgust, or contempt, I began to feel a great empathy with, and sadness for, that poor fellow soul.

An (other) Aussie brother.

Trying desperately to flog that complete heap of sh!t iron horse. Which had now suffered an apparently terminal myocardial infarction.

After all, what is he really doing, but that which we are all doing?

Just trying to get by.

Or is that, to “get buy”.

To pay the bills.

To feed the family.

To get ahead. Whatever that means.

Doing whatever we can, within and often beyond our personal limits – physically, mentally, spiritually, and morally – to take care of those whom we are closest to, and naturally love the most.

“Me and mine”.

I do not know anything of that used car salesman’s circumstances. His education and skills, or the limits thereof. The size and scale of the difficulties and stumbling blocks in his life’s journey. The pressure he feels to deliver.  Who am I to judge that poor soul, to feel affronted, or to criticise his means-to-an-end?

I reflected on the fact that there are so many in our world in not dissimilar circumstances.  Who find themselves resorting to not dissimilar actions, in order to “get buy”.  Indeed, this is in truth hardly a tale of woe at all, when one pauses to consider the plight of many 100’s of thousands of our brothers and sisters right here in our own “advanced” economy.  Not to mention the billions of others who are born into even less … “fortunate” … circumstances, and are right now living and dying just across the seas from our “Lucky Country”.

I was reminded of a short story that is recounted in a book that I have only just received and begun to read. It is called Rethinking Money: How New Currencies Turn Scarcity Into Prosperity.”

The story appears in an early chapter titled, “A Fate Worse Than Debt – Interest’s Hidden Consequences”. As it explains a subject that is very close to my heart with a style and a clarity far better than I could ever attain, I would like to share that story with you now (emphasis added):

The small village was bustling with locals proudly displaying their wares, chickens, eggs, cheeses, and bread as they entered into the time-honored ritual of negotiations and trade for what they needed. At harvests, or whenever someone’s barn needed repair after a storm, the village-dwellers simply exercised another age-old tradition of helping one another, knowing that if they themselves had a problem one day, others would come to their aid in turn. No coins ever changed hands.

One market day, a stranger with shiny black shoes and an elegant white hat came by and observed with a knowing smile. When one farmer who wanted a big ham ran around to corral the six chickens needed in exchange, the stranger could not refrain from laughing. “Poor people,” he said, “so primitive.”

Overhearing this, a farmer’s wife challenged him: “Do you think you can do a better job handling chickens?”

The stranger responded: “Chickens, no. But, I do know a way to eliminate the hassles. Bring me one large cowhide and gather the families. There’s a better way.”

As requested, the families gathered, and the stranger took the cowhide, cut perfect leather rounds and put an elaborate stamp on each. He then gave ten rounds to every family, stating that each one represented the value of a chicken. “Now you can trade and bargain with the rounds instead of those unwieldy chickens.”

It seemed to make sense, and everybody was quite impressed.

“One more thing,” the stranger added. “In one year’s time, I’ll return and I want all the families to bring me back an extra round – an eleventh round. That eleventh round is a token of appreciation for the improvements I made possible in your lives.”

“But where will that round come from?” asked another woman.

“You’ll see,” said the stranger with a knowing look.

A year passes and on another market day the stranger with the stylish hat returns, and from his vantage point he observes the village below. While sitting under the broad-limbed oak tree, he reaches into his knapsack and pulls out a silver canteen filled with single-malt whiskey, takes a swig, savoring the peaty warmth at the back of his throat, and waits for the village folk to file past him with each family’s repayment of the eleventh round.

Below on the village outskirts, a family begs for alms, having lost everything in a fire. Focused on their obligations, the villagers pass by without as much as a glance.

The eleventh round is a very simplified illustration of an important principle regarding money. The point of the anecdote is that, with all other things being equal, the competition to obtain the money necessary to pay the interest is structurally embedded in the current money system. Somebody will have to be without the eleventh round for payment for somebody else to have it and make the interest payment.

So how does a loan, whose interest is not created, get repaid?

Essentially, to pay back interest on a loan requires using someone else’s principal [Note: that principal is also debt, owing interest in turn]. In other words, not creating the money to pay interest is the device used to generate the scarcity necessary for a bank-debt monetary system to function. It forces people to compete with each other for money that was never created, and it penalizes them with bankruptcy should they not succeed. When a bank checks a customer’s creditworthiness, it is really verifying his or her ability to compete successfully against the other players – that is to say, assessing the customer’s ability to extract from others the money that is required to reimburse the interest payment. One is obliged in the current monetary system to incur debt and compete with others in order to perform exchanges and pay the resulting interest to the banks and lenders.

In a manner of speaking, it’s like a game of musical chairs in that there are never enough seats for everyone. Someone will end up getting squeezed out. There isn’t enough money to pay the interest on all the loans, just like the missing chair. Both are highly competitive games. In the money game, however, the stakes are elevated, as it means grappling with certain poverty or, worse still, having to declare bankruptcy.

Those billions of our brothers and sisters living in poverty and hardship around the world?

These are the families who have been forced to beg for alms on the outskirts of our global village. While the rest of us – focused as we are on our obligations, on the ceaseless struggle of competing for money – we daily pass them by, with neither a thought nor a glance, as we make our way to pay the usurers.

If, like me, you have ever pondered the reasons why people nowadays seem to be even more materialistic than in times past; why the business of doing business seems more cut-throat and profit-driven than ever; why advertising and marketing are seemingly all-pervasive and more aggressive than ever; why there are seemingly so many more, varied, and greater ills in the world than, say, 50 or 100 years ago – poverty, wealth and income inequality, “-ism’s”, dishonesty, disrespect, dishonour, amorality, fraud, corruption, drug and alcohol abuse, pharmaceutical dependency, and increasing physical, mental, and spiritual violence – then I hope you may now begin to see that here is a – and quite possibly the – major culprit.

Usury.

It is a prime cause of slowly but surely, devolving mankind. Of causing us to increasingly behave like … indeed, often much worse than … mere animals.

Just to “get buy”.

Here is a final thought for you to ponder.

It hails from a section of the above chapter, and is sub-titled “Compulsory Growth Pressure”. It concerns the direct relationship between our 300 year-old, central-banking driven, usury-based debt-money system, and the global obsession with economic “growth” that is often (and rightly) blamed for all manner of social and environmental ills.  For those readers who may hold concerns about climate change, natural resource depletion, environmental degradation and pollution, or similar ecological anxieties, please pay close attention (italics in original):

Interest… has hidden dynamics that result in detrimental costs not only to personal relationships, commerce, and society at large, but also to the sustainability of our fragile planetary home, Earth. The effects are so well-concealed, in addition to being so deeply embedded in the money system, that they go, for the most part, unnoticed.

Debt-based money requires endless growth because borrowers must find additional money to pay back the interest on their debt. For the better-rated debtors (e.g., in normal times, government debt), the interest is simply covered through additional debt, resulting in compound interest: paying interest on interest. Compound interest implies exponential growth in the long run, something mathematically impossible in a finite world.

…the exponential growth of money through interest rates has shattering real-life consequences in which entire nations of people are marginalized and stuck in debt forever. For instance, after a G8 summit former President Obasanjo of Nigeria stated: “All that we had borrowed up to 1985 or 1986 was around $5 billion and we have paid back so far about $16 billion. Yet, we are being told that we still owe about $28 billion. That $28 billion came about because of the foreign creditor’s interest rates. If you ask me, ‘What is the worst thing in the world,’ I will say, ‘It is compound interest.'”

See also –

The World’s Most Immoral Institution Tells You How

1 Apr

To understand why The Banking System is The World’s Most Immoral Institution, you need only to understand how it actually works.

Not how it works in the lofty, rarefied atmosphere of incomprehensible acronyms like ARM and RMBS and CFD and CDO and QE and LTRO.

Just the basics of banking.

The works that you and I deal with every day, at our local bank.

Fortunately, The Banking System has grown so proud of its near God-like power, it is happy to tell us how the basics really work.

From Modern Money Mechanics – A Workbook on Bank Reserves and Deposit Expansion, a complete booklet originally produced and distributed free by the Public Information Center, Federal Reserve Bank of Chicago, now out-of-print (emphasis added):

Who Creates 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.

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.

In the absence of legal reserve requirements, banks can build up deposits by increasing loans and investments so long as they keep enough currency on hand to redeem whatever amounts the holders of deposits want to convert into currency. This unique attribute of the banking business was discovered many centuries ago.

NB: This is why governments the world over are so obsessed with maintaining public “con-fidence” in the banking system. It is why they so fear any hint of a “run on the banks”. As we have seen previously ( “Think You’ve Got Cash In The Bank? Think Again” ), the Australian banking system only has around $183.50 in stored ‘reserve’ cash for every employed person in the country.  According to Australia’s central bank, the RBA, there is only $53.2 billion in actual cash notes in existence (or $4,655 per employed person) … even though Australian households and non-financial businesses believe that they have a combined $986 billion in total Deposits. If 1 in every 19 Aussies insisted on withdrawing their bank “Deposits” at the same time … all the cash would be gone. To add injury to insult, The Banking System is “earning” (?!) interest (thus, profits) from a grand total $1.95 Trillion in “loans” created out of thin air, and “lent” to Australian households and businesses.  Interest on “money” that does not exist … except as a series of electronic digits that a banking clerk typed into a computer.

It started with goldsmiths. As early bankers, they initially provided safekeeping services, making a profit from vault storage fees for gold and coins deposited with them. People would redeem their “deposit receipts” whenever they needed gold or coins to purchase something, and physically take the gold or coins to the seller who, in turn, would deposit them for safekeeping, often with the same banker. Everyone soon found that it was a lot easier simply to use the deposit receipts directly as a means of payment. These receipts, which became known as notes, were acceptable as money since whoever held them could go to the banker and exchange them for metallic money.

Then, bankers discovered that they could make loans merely by giving their promises to pay, or bank notes, to borrowers. In this way, banks began to create money. More notes could be issued than the gold and coin on hand because only a portion of the notes outstanding would be presented for payment at any one time. Enough metallic money had to be kept on hand, of course, to redeem whatever volume of notes was presented for payment.

Transaction deposits are the modern counterpart of bank notes. It was a small step from printing notes to making book entries crediting deposits of borrowers, which the borrowers in turn could “spend” by writing checks, thereby “printing” their own money.

Consider what this really means.

A bank creates “money”, authorised by your signature on a loan document.

Your signature is your legally-binding agreement, to become the bank’s debt slave.

With a few taps on the keyboard and clicks of a mouse, the “loan” that you must pay back, with interest, is created right out of thin air.

An electronic book-keeping entry is made under your name, as a new bank “Deposit”.

And another electronic book-keeping entry is made under the bank’s name, as an “Asset”.

Your legally-binding agreement to pay back the “loan” … with interest … is the bank’s “Asset”.

Every person, every business, every nation with a debt to a banking institution, is in plain truth a slave to their own wilful ignorance.

Working and slaving away, day after day, to pay back with interest something that came from nothing.

While the “Big Club” of elite bankers stride the earth like princes, on the back of everyone else’s daily toil and trouble.

Producing no thing.

Gaining every thing.

The Banking System.

It is the World’s Most Immoral Institution.

It is also the World’s Most Unnecessary Institution.

Here is my solution, for how we should do it.

Some of you, we all know, are poor, find it hard to live, are sometimes, as it were, gasping for breath. I have no doubt that some of you who read this book are unable to pay for all the dinners which you have actually eaten, or for the coats and shoes which are fast wearing or are already worn out, and have come to this page to spend borrowed or stolen time, robbing your creditors of an hour. It is very evident what mean and sneaking lives many of you live, for my sight has been whetted by experience; always on the limits, trying to get into business and trying to get out of debt, a very ancient slough, called by the Latins aes alienum, another’s brass, for some of their coins were made of brass; still living, and dying, and buried by this other’s brass; always promising to pay, tomorrow, and dying today, insolvent; seeking to curry favor, to get custom, by how many modes, only not state-prison offences; lying, flattering, voting, contracting yourselves into a nutshell of civility or dilating into an atmosphere of thin and vaporous generosity, that you may persuade your neighbor to let you make his shoes, or his hat, or his coat, or his carriage, or import his groceries for him; making yourselves sick, that you may lay up something against a sick day, something to be tucked away in an old chest, or in a stocking behind the plastering, or, more safely, in the brick banks; no matter where, no matter how much or how little.

I sometimes wonder that we can be so frivolous, I may almost say, as to attend to the gross but somewhat foreign form of servitude called Negro Slavery, there are so many keen and subtle masters that enslave both North and South. It is hard to have a Southern overseer; it is worse to have a Northern one; but worst of all when you are the slave-driver of yourself.

– Henry David Thoreau, Walden; or, a Life in the Woods, 1854

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