From the Moment Purchasing Power Money Is Created and Then Released As a Book Entry In

Social Questions 1

Chapter Nine

Social Questions

In Western Economies, most money comes into existence simply as amake believe deposit in a bank’s computer. It is put into market- place circulation, with compound interest, as an exponentially growing debt of the commercial world to the privately owned financial system. Banks are not allowed to on-lend any part of the public's deposits to other members of the public (although they are able to on-lend their reserves to other banks). If they tried to do so, they would be sued for theft. All bank loans to members of the public involve newly created credit deposits of purchasing power money.

There is a fundamental question arising from this marketplace situation which is the concern of social morality and justice. It can be stated as The Great Social Question. Who is the rightful owner of the financial credit or monetized estimate of the real wealth of a community or nation?

Does it not belong in justice to the people by whose toil of mind and body, sweat and tears, the real wealth was produced? Have they not an intrinsic title to its ownership? Or does it belong to the banking system by whose virtually costless signature the money or make-believe ticket entitlement to real wealth is begotten out of nothing and put into circulation as their very own price-inflated commodity and their monopoly in the distribution of all real wealth?

It is the insistence that this credit-money thus created must be repaid with interest by the community which implies its ownership by the banking system, and denies its rightful ownership by the people who provide the real credit and without which all the money in the world would be useless.

This claim of ownership of money and the demand that it be repaid to the banking system is equivalent to the demand of the printer of a book of train tickets that he is the rightful owner of the transport system serviced by the tickets and that he is therefore entitled to repayment of the face value of the tickets.

Bank loans, for production not speculation, are only begotten on the strength of the community's capacity to produce and deliver consumable goods and services. They charge the community interest for the community's use of its own real basic wealth and turn the true credit of the nation into a catastrophic suicidal debt for all, except their international selves who profit handsomely by this fraudulent usurious trick of interest burdened debt. In such a procedure there is something intrinsically unjust and unnatural.

The banks only create and lend their purchasing powermoney against the real assets of others in the community. These assets were made real by the resources of enterprising and hardworking individuals, skilled executives and adventurous management in producing goods and services to satisfy a public need. By granting loans or extending overdrafts which is a costless and effortless procedure, banks monetize the real credit created by a functioning industry and a consuming public. By the mere stroke of a pen or the touch of a computer key the banks simply create the financial credit which serves as a sign of the real credit originating in the joint operations of producers and consumers.

The real credit of any nation is created by its people through their abundant and diversified energies and togetherness power in association or in solidarity as a self-functioning-feedback-system. A nation's financial credit should be a reasonably correct reflection of real wealth credit. Since purchasing power money is merely a convenient token in a community's economic system to enable people to purchase goods and services, it should be issued as a commercial catalyst at the same rate that goods and services are produced, neither more nor less. This is far from the case at present.

The banks issue and cancel credit-money without any regard to the total production of goods and services. By manipulating financial credit in an arbitrary and unscientific manner, they sometimes engineer inflation and sometimes deflationary recessions and depressions. Their sole consideration and motivation is to maximize profits for their exploitative owners and shareholders.

The ownership of the real credit of a community and also its financial equivalent in token money is the great issue that must be resolved if all nations working under the same monetary system are to survive as free democracies or become as slave states. By usurping the nation's sovereign prerogative to issue all its monetary requirements, and not merely the small change legal tender, the banking system has established a powerful monopoly of credit by which it is able to wield the greatest power without any responsibility whatsoever.

From the moment purchasing power money is created and then released as a book entry in a bank's ledger or as data in its computer, this make-believe illusion of wealth conjured into existence by the bank and loaned to a company or individual, travels throughout the production system. Much of it is used for wages and subsequent purchases in an employment-consumption cycle and is finally cancelled out when the debt is repaid to the bank by the borrower. Cancelled out of existence is not exactly correct. One debt may be cancelled, but it is done so only at the expense of being replaced by greater other new debt. Because modern industry cannot function on its own resources, as is evident from the universal need of a bank's overdraft accommodation, this huge total of national assets is now in pawn to the financial institutions. In the event of any individual or company defaulting in its loan obligations, the individual or the firm would be put into liquidation in satisfaction of the bank's claim.

In such a procedure there is something intrinsically unjust and unnatural. The people do all the work and run all the risks. The banks do nothing to directly help produce the assets of others in the community and run no risks whatever with the counter-feat credit that they invent and lend. If clients do not fulfil their bank's anticipations and are unable to repay all that they have borrowed, the bank has virtually lost nothing except some ink and a teller's time. You cannot be said to lose what you never had or what you created costlessly out of nothing. The loss is as make believe as the fairytale wealth that was loaned.

Since it is the community itself which creates all real credit and sanctions the rights and duties of individual members in regard to private property, the ownership of the virtual financial credit which reflects the real credit of property, goods and services also belongs to the people, or at least it should. In practice, it does not, having been appropriated by the banks, which are like financial cuckoos in the community's nest.

Increasing national debt through continued deficit financing from international institutions is a terminal disease. If a community with its own abundant resources of materials and manpower undertakes any new project, then the obligation to repay the financial debt occasioned by its inception in the way it is at present demanded, is unnatural, illogical and unjust. The real credit of the community is their intelligent ability to carry out the project successfully. It is represented token-wise by the make-believe finance issued in order to permit them to do so, but they are not regarded as the owners of this financial credit. It is regarded as the property of the banking system which creates it out of nothing and issues it as an interest-bearing debt to them.

Perhaps the greatest contradiction in today's political arenas is the situation that whereas Governments rightly legislate against counter- feiters to protect the value of the nation's currency, at the same time they legislate to allow banking institutions the sole right to do legally for their own shareholders' personal profit what for anyone else would be high treason. Governments, through their nation's properly constituted Reserve Bank, have the power to create wisely and prudently, and both debt and interest free, the required amount of financial credit or money necessary for the efficient exchange and distribution of the goods and services of the community which they represent. This sovereign right of the people to the creation and use of their own credit has been treacherously transferred to heartless corporations and avaricious private individuals by their rulers and-or elected politicians who have betrayed their office and sold their electors and subjects into the slavery of interest burdened debt and perennial inflation.

We go to market places and find that we now pay $11 for a quantity of goods for which a few months previously we only paid $10. We are told this 10% increased price is the effect of inflation.

We go to a bank to purchase the use of one thousand dollars of purchasing power credit - in other words - a loan of $1000 for a year at say, 10% interest. We have to pay $1100 for the loan of $1000 of purchasing power. The 10% increase in cost is not the effect of inflation - it is both the CAUSE and VEHICLE of inflation. It costs extra money to buy and use money. It is not economical. Not only has money become a commodity whose own price is self-inflating,but it can be an artificial store of make believe counterfeit wealth.

People go into business in the marketplace, producing goods and services. They hire their own necessary purchasing power (capital) from financial institutions by means of overdraft-credit. A signifi- cantly high rate of compound interest is charged for used credit. At the end of a period of trading in goods or services, the debtor is required to pay the creditor for the overdraft which has been used plus its compounding interest. How is the debtor supposed to get the extra money to pay the interest? Consensus Capitalist Economics advocates increased productivity obtained from employing fewer people who are made to work longer hours for less wages.

Inevitably, business persons have to continually charge more and more to accommodate the compounding interest payments to their creditors. In theinterconnected marketplace network, all capital expenses have to be anticipated and incorporated in the selling price of goods and services.Forhome owners with mortgages, they must try to obtain wage increases which then find their way into production costs and regained by further price inflation.

We deem it absurd if the length-measuring device called a ruler should self-contract or self-expand according to the whim of the builder using it. Owners of banks and their shareholders demand that the price-measuring device called money should cease its proper altruistic function as a stable bartering intermediary. With autistic mindsets, they constrain its price, as a commodity, to self-contract or self-expand according to what gives them the greatest individual profit and power.

As long as the lifeblood money of the economic body remains subject to usurious interest bearing debt, increasing INFLATION must result. If money were solely a catalyst, perennial inflation would not exist. Neither would there prevail the absurdity of continual growth. A just and sustainable society would easily and quickly be achieved. When Reserve Banks and economists talk about curbing inflation by raising interest rates, they are trying to put out the fire by dousing it with more petrol.

The modern monetary system is a most convenient method of transferring and utilizing purchasing power. Because of its strategic role in bestowing purchasing power upon those who in some way, possess or manipulate it, it is necessary that such money itself be put into its own very special category of economic entity as a commercial and industrial catalyst of marketplace activity. In Chemistry, catalysts are substances that increase or modify the rate of a reaction without themselves being consumed. Enzymes are naturally occurring catalysts responsible for most biochemical reactions.

Money, as catalyst capital, could be a very great blessing for the commercial benefit of Earth dwellers. Public and private financial institutions should exist, as stakeholders, for the provision of catalyst capital for domestic and industrial needs and public works. They would justly exact a reasonable service fee and an equitable share in the profits of trading, as is done in much Islamic banking.

Bringing money into existence as a price inflated commodity on which never ending compound interest has to be paid is at the root of all economic disorder. As in the Chemistry of life, money should be a priceless catalyst. There is nothing in Nature analogous to the man-made interest burdened debt which infects the business world’s money life with terminal self-destructive cancer. To exploit the real needs of Earth dwellers, as a whole, for individual greed is unjust, unnatural and a crime against humanity.

In 1891, Pope Leo XIII issued his much acclaimed Encyclical RerumNovarum known as The Workers' Charter. Early in the latter, Leo XIII refers to a sequence of situations responsible for social problems and their injustices. He concludes, "Hence by degrees it has come to pass that workingmen have been surrendered, isolated and helpless, to the hard-heartedness of employers and the greed of unchecked competition. The mischief has been increased by rapacious usury which, although more than once condemned by the Church, is nevertheless, under a different guise, but with the like injustice, still practised by covetous and grasping men.”

There are two short paragraphs of Pope Pius XI in his Encyclical Letter QuadragesimoAnno in May 1931, commemorating the fortieth anniversary of Pope Leo XIII's much-acclaimed Encyclical RerumNovarum which are among the most quoted of Papal state- ments pertinent to social injustice. "In the first place then, it is patent that in our days not alone is wealth accumulated, but immense power and despotic economic domination is concentrated in the hands of a few, and that those few are frequently not the owners, but only the trustees and directors of invested funds, who administer them at their good pleasure. This power becomes particularly irresistible when exercised by those who, because they hold and control money, are able also to govern credit and determine its allotment, for that reason supplying, so to speak, the lifeblood to the entire economic body, and grasping, as it were, in their hands the very soul of production, so that no one dare breathe against their will."

This last sentence becomes alarmingly real and meaningful when it is considered that Pope Leo XIII was the last pope to officially and categorically condemn usury. Over one hundred years have passed since then and no other Pope, nor Pontifical Commission has dared breathe one single word against the will of the global usurers. Indeed the word usury no longer receives even a mention nor has it a place in the considerations and determinations of Canon Law.

The evolution of Christianity’s teaching on usury has witnessed a development from intolerant condemnation to tolerant justification. To make a profit from lending to someone in real need was always considered reprehensible. In Nature, there is no precedent for either debt or usury. Money which was exacted purely for a loan as such, whilst always being deemed contrary to Nature, began to be viewed in a new light. Changed economic considerations preferred the deceptive misuse of the word interest in the place of the more objectionable usury, which now became permissible, provided it followed statutory regulations and did not become excessive.

It is instructive to examine closely the historical evolution of the word interest. In ancient Roman law, when one party defaulted on a contract, the other could then exact over and above the actual agreement of the contract, a form of compensation based on the difference between the position of the creditor, before and after, the situation caused by the debtor's default. This difference was termed in Latin, idquodinterest, from the verb interesse which meant, tobe between, and could be reckoned according to the actual loss which had occurred. Justice demanded that this interest of the creditor be taken into account. In its original meaning, interest did not belong to the sphere of borrowing but to the sacred realm or court of justice.

Through a debtor's default, a creditor might have missed out on a possible profit, but this profit-losing was not classified as interest because one could not be said to lose that which one never ever had. The only concern of interest was with an actual gain ceasing (lucrum cessans) or with a damage emerging (damnum emergens) and not some mere hypothetical eventuality. Receiving interest was an honest seeking of real equity. The creditor lent freely but the debtor was obliged by law to compensate the creditor for any costs involved in defaulting on the contract. Idquodinterest was a matter of justice.

As generally understood by theologians in past centuries, usury was the sin of exacting money purely for a loan of money. The creditor aimed for a real gain, to get more money, over and above the loan, for nothing, from the borrower. In time canonists rationalized usury and misappropriated the interest of Roman justice to cover up the malice and injustice of the prevailing financial system's usurious interest. The tools of ecclesiastical casuistry were a well-seasoned array of semantic distinctions, like the right to an object and the right to its use and usufruct, intrinsic and extrinsic titles, gain ceasing and damage emerging. Does the sanction of an uncivil Civil Law or corrupt custom make what is intrinsically an injustice, become now legitimate and acceptable even though it is contrary to Natural Law?