Our Broken Money Instrument

   Clearly the satisfaction of citizens’ material needs is not the objective of the present economic order. Australians will be painfully aware that the purpose of economics is ‘jobs and growth’ or, in other words, compounding economic activity.

   Whatever differences there may be between the various political camps there is no spectrum when it comes to this. I assure you the political machinery will be in perfect synchronicity when it comes to getting you, and everyone else to work. Douglas wrote the purpose of the economy then and now is to

…make the man-hours necessary for a given programme of production equal to the man-hours of the whole population of the world, so that everyone capable of any sort of work should, by some powerful organisation, be set working for eight, or any other suitable number of hours a day.

   And it isn’t just the elected government working to this end either. According to the Reserve Bank Act 1959, the Reserve Bank of Australia is responsible for ‘the maintenance of full employment in Australia.’

    So despite the fact, obvious hundreds of years ago, that machinery replaces labour and increases production, and despite the glut of goods pouring unstoppable from the farms and factories, all the ‘powerful organisation’ of government and finance will collude to keep us at the grindstone as a matter of principle. No money, under any circumstances, will be made available to the public unless work is involved.

   Now we need to hone in on a common misconception that keeps this lunacy in play. Whether you work for a wage or you run a business that makes or sells things you need money to live. So whatever is it you do to get money you call that activity ‘work’. But you should know that money is not made by working it is made by banks lending. The problem everyone is complaining about, is we don’t have enough money to enable the smooth running of the economy. It follows then that there is no point in trying to solve it by doing more work or by selling more things because money is not made by working or selling.

   Forgive me if I point out the obvious but we should be careful about the words we use. If you do some work and are paid for it, you don’t ‘make’ money you simply get it from somebody else. So, as a matter of fact, there is no functional link between work and the quantity of money at all. Making money is the exclusive domain of banks. When banks lend money it is literally made and, ironically it is about the least labour intensive occupation imaginable.  

   To illustrate the process pretend I work in a bank and this computer I am using is in the bank where I work. I have a customer sitting before me named Sue that the bank I work for has approved for a $100,000 loan. I bring up her account, put the cursor in the correct field, smile over the top of my screen and type

  $100,000.00 (enter after the last zero)

  Money made.

   That this is the method by which modern money comes into existence is self-evident.  The $100,000 is deposited into Sue’s account and no one will refuse it as payment for goods and services. It is new money. There is no gold backing and no one’s account has been reduced so Sue can have her $100,000. The same principle applies on the national level. Virtually every nation in the world operates from a position of insolvency because the tool they require to conduct their economic affairs is created in this way. The more productive the economy, the more money is required, so the greater the national debt, take the U.S. and Japan for instance. The essential problem the financial system now confronts is that governments, business and private people are so indebted they aren’t borrowing enough to provide economies with sufficient debt money to lubricate economic activity.

   All sorts of devices have sprung into existence for the purpose of increasing the quantity of borrowed money cycling in the economy. Quantitative easing, negative interest rates, credit cards, microloans, unfunded superannuation, finance desks at used car lots, TVs that can be bought on 5-year interest free plans etc. NAB wants to finance my wedding, a holiday in London and a new house and I frequently receive mail from them telling me how much I deserve their latest low interest credit card. Apply within.  Douglas warned us that trying to solve our shortage of money problem by loan credit would increasingly mortgage property to the banks. Check the loan books of the financial industry in the country from where you are reading this (if you can) to see if he was right.

   Governments often ask ‘Where is the money going to come from?’ This question is taken to mean ‘whose money are we going to take so we can pay for this or that.’ But it is answerable in a general sense. The answer is that the banks loan it into existence. Instead our attention is diverted into all sorts of blind alleys that will have no bearing on increasing the money supply. One has to wonder whether the diversion is, on some level, deliberate.

   All, and I mean ALL, of the mainstream discussion about our economic problems fails to factor in this vital truth. It is like a magician’s sleight of hand. Everyone, from the blue collars right down to the politician, complains of there not being enough money, yet no one thinks it important enough to examine its source.

   We are lead up all sorts of barren garden paths. For instance, consider the push for innovation. To innovate means to ‘make changes in something established, especially by introducing new methods, ideas, or products.’ Innovation is fine if the new methods, ideas or products are good and useful ones but, unless it innovates in the method of money making, it’s not going to bridge a money shortage because you don’t make money by innovating.

   Neither will we solve our dilemma by developing industry for export markets. A favourable balance of trade refers to a situation where a country sells more than it buys in financial terms. It is obviously a foreign policy intended to address a national money shortage. The conundrum is that every industrialised nation simultaneously pursues this course which only serves to increase friction on the international stage. Any observer can see that the formation of trading cliques designed to secure markets for the sale of export orientated production has worrying parallels with alliances preceding past wars. Trade is fine, but it’s not going to make up a global money shortage because you don’t make money by making and selling things.

   Foreign investment is another tool in the political kit used to address the chronic money shortage. On the rare occasion the supernationals are told they are not allowed to buy some critical piece of Australia’s real wealth the international set warn us in sombre tones of the danger of discouraging foreign investment. It’s amazing what we will do for a fleeting bit of foreign cash. Australia is not just content to sell the cow and the coal they seem committed to getting rid of the farm and the mine as well. House prices in capital cities are out of reach of most Australian buyers due to foreigners having open slather in housing markets. If Australia had a reliable money supply of its own the reasons to sell the sources of our real wealth would simply vanish. Instead governments continue to allow money creation to be the exclusive preserve of banks, foreign or domestic, and take fright whenever some international rating agency whispers the possibility of downgrading our credit rating. You have to ask who is running this show. So foreign investment is another non-solution because, and I can’t stress this enough, you don’t make money by selling the farm.

  What about other proposed measures. Does building submarines make money? Does laying road make money? Does subsidising the pay packets of old people, young people, mothers, day care workers, disabled people, make money? Does taxing the rich make money? Does taxing generally make money? Does polishing Bill Shortens ample forehead make money? None of these activities makes money. None of these supposed remedies will do anything but relieve for a nanosecond our economic migraine because none of them make money.

  I could go on but you probably get the picture. Money is merely an instrument that we use to organise activity and distribute goods. The instrument is not the goods and services themselves. The method of money creation controlled by banking sets up money as the limiting factor governing economic activity. It is completely inappropriate. It is like choosing what you will wear each day by referring to a thermometer 30° out. As you would expect it leads to all sorts of bad decisions.

   On the back of one of my copies of Social Credit is printed a photo of a smiling Douglas beside the statement; ‘The scientific money system for the automation age of abundance and leisure.’ When we open our eyes to the truth of the immediate possibility of abundance and leisure by the correction of the instrument we might put together a ‘powerful organisation’ of our own and demand a scientific money system.

 

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Comments 2

Guest - Andrew Webb on Thursday, 26 May 2016 22:29

I totally agree with you. For what its worth I have also added my thoughts on this broken instrument we call money or rather the way it has been created and used. I wrote this approx two years ago and believe its worth adding here.

Kind Regards,
Andrew Webb (Melbourne)

Bank Credit or Social Credit,
Which one serves the country better?


Definition of bank credit

Bank credit is the amount of credit available in money terms to an individual or organisation. This amount available will depend on the borrower’s capacity to repay and the amount the banks have available to produce as debt. Remember This!

Most people have no knowledge on how money is presently created or why it needs to be created at a increasingly growing rate. When I say increase, it is paramount for any economy of the world that the money supply does exactly that.

Why! Well if the money supply did not increase, the economy in response has only one way to go and that is to go into recession. You see for an economy to run efficiently there must be enough money available for the process of trade to continue. Unfortunately the majority of all money in the money supply has been created as debt. As a consequence, all loans must be repaid back with the added cost of interest payments. This has the effect of decreasing the money supply!

Let me explain. Every single amount of new money created into the money supply (except in notes and coins by the government) is created as a debt to the economy as a future loan. This money must be paid back with interest. Can you see the problem here?

The very action of paying of debt and the added cost of incurred interest does exactly what we don’t want it to do; it reduces the money supply! (All debt paid back to the banks is removed from the economy) A constant supply of new money must always be sourced just to maintain the money supply. In other words we are forced to maintain the cycle of debt by further borrowing.

The biggest insult of all added to this, is that the banks can create this money out of nothing, with out representing anything of real value. It is all created on the basis of bank credit. This action has caused many recessions in history. The economy as a whole is then served with debt that can never be paid off. (Of course some people can pay their loans off, i.e. home loans paid off through inflation. But bear in mind that the people buying the home from them will need to borrow a substantial amount of money many times more than the original loan paid for the house originally, as a result debt has increased not reduced to the economy as a whole. The debt is growing and it is truly unsustainable.

The question of who should create a country’s money supply has been asked many times in history and many wars have been fought over this. Strangely our history books shed very little on this.


Definition of Social Credit

Social Credit is the amount of free credit available to a nation’s government and its people. Generally as a result of this, taxes are no longer needed to cover the upkeep of government expenditure and ongoing infrastructure. Individuals and organisations may also seek this credit, those seeking it usually have to pay it back (without interest). Exceptions on repayment would be on the order of how the country benefited from the use of this credit.

Money created this way will not incur debt to the country; on the contrary money will be represented and created on the basis of real wealth and more importantly created and distributed on a basis of sound economic management. Recessions and depressions will be a thing of the past. To ensure the money supply is adequate for the economy, additional money may be given to each citizen of the country at regular intervals in the form of Dividends. See forum here ' Why the dividend is so important'
http://www.bleedingindebt.com/forums/viewtopic.php?f=2&t=13

It needs to be understood that money is only a tool, a very useful tool that enables us a means to exchange goods of value. Its value is only recognised by the accepted faith, we the people have on money– without this, it is worthless. Money therefore has no real value. The real things of value are in the land and what we make of it. Everything around us, the land, trees, water ect, was created for our use, it is God’s creation.

Therefore if we use money as an exchange, it must be produced in correct quantities without cost. What man is physically able to produce, grow, build, and invent, must not be limited by lack of money but rather by the lack of resources. Trade need not be restricted by lack of money.


To empathise this point more, I have added this story below;

In a remote island in the South Pacific, thousands of people could feed themselves, clothe them selves in fact supply everything they ever needed. The people lived in almost paradise and never went without. This was the case until a dark day arrived in their lives. It was discovered that almost two thirds of the island’s supply of shells (money) had disappeared and also it seems their chief banker. A crisis meeting was held with all the important chiefs in attendance. It was declared that the main supply of shells had disappeared which would put the economy in a perilous position. New shells were needed desperately or all trading would come to a halt.

Bankers from Europe offered the islanders printed-paper (money). But this came at a great cost, Interest would be charged at a rate of ten percent and one third of the island’s assets were needed as insurance for the banker’s big risk. They were told this would bring them up to date with the modern world.

The islanders thought long and hard about this and almost agreed with the banks to borrow the printed-paper. Luckily a man from another island had seen this very thing happen to his own island. He told them that the banks now owned their island because they did not have the money to pay them back. They found too late that only the banks could supply this printed paper (money).

The banks forced them to give up their property and a requirement was made that one third of the food they grew would now go to the banks until the debt was paid off. There was much bloodshed lost over this until the united islands came in and ordered them to fulfill their agreements. The world islands bank offered them more money with conditions that was not in the interest of the islanders. The debt had to be serviced at all times regardless how little was left for important services such as health care, it must be paid!

Things could only get worse (the interest was killing them!) The people no longer have a home, island or any possessions, but they do have severe unemployment, unsustainable debt and a great deal of poverty. (They now owe more printed paper (money) than they did before).

The islanders took note of this and decided to revert back to bartering for six months until all the shells needed were collected. Although bartering was very cumbersome they thought it was a much better thing to do. A ton of wood for example was used as an exchange for six weeks supply of meat. After the shells were collected everything went back to normal.

The islanders in this story were self-sufficient and had every thing they could ever need. The shells they used for trade could easily have been replaced by rare feathers. They could also of printed their own debt-free money (If they had a printing press!) There was never any need to go into debt.

This story is very simple to understand yet in real life we continue to fall prey to these banks. People are dying everywhere around the world from debt induced poverty, much of it could be stopped in its tracks if policies like Social Credit was utilised, yet we the people let it happen. It can be reversed if enough people get on board. I can’t say this enough, please spread this important message!

Believe me it really is a matter of life and death!
Be thankful that you and your family were not born in any of these dreadful poverty stricken nations. Life hangs on a thread here. I implore you and others to take action.
The lives of so many people depend on it! Your nation could be the next one to fall!

0
I totally agree with you. For what its worth I have also added my thoughts on this broken instrument we call money or rather the way it has been created and used. I wrote this approx two years ago and believe its worth adding here. Kind Regards, Andrew Webb (Melbourne) Bank Credit or Social Credit, Which one serves the country better? Definition of bank credit Bank credit is the amount of credit available in money terms to an individual or organisation. This amount available will depend on the borrower’s capacity to repay and the amount the banks have available to produce as debt. Remember This! Most people have no knowledge on how money is presently created or why it needs to be created at a increasingly growing rate. When I say increase, it is paramount for any economy of the world that the money supply does exactly that. Why! Well if the money supply did not increase, the economy in response has only one way to go and that is to go into recession. You see for an economy to run efficiently there must be enough money available for the process of trade to continue. Unfortunately the majority of all money in the money supply has been created as debt. As a consequence, all loans must be repaid back with the added cost of interest payments. This has the effect of decreasing the money supply! Let me explain. Every single amount of new money created into the money supply (except in notes and coins by the government) is created as a debt to the economy as a future loan. This money must be paid back with interest. Can you see the problem here? The very action of paying of debt and the added cost of incurred interest does exactly what we don’t want it to do; it reduces the money supply! (All debt paid back to the banks is removed from the economy) A constant supply of new money must always be sourced just to maintain the money supply. In other words we are forced to maintain the cycle of debt by further borrowing. The biggest insult of all added to this, is that the banks can create this money out of nothing, with out representing anything of real value. It is all created on the basis of bank credit. This action has caused many recessions in history. The economy as a whole is then served with debt that can never be paid off. (Of course some people can pay their loans off, i.e. home loans paid off through inflation. But bear in mind that the people buying the home from them will need to borrow a substantial amount of money many times more than the original loan paid for the house originally, as a result debt has increased not reduced to the economy as a whole. The debt is growing and it is truly unsustainable. The question of who should create a country’s money supply has been asked many times in history and many wars have been fought over this. Strangely our history books shed very little on this. Definition of Social Credit Social Credit is the amount of free credit available to a nation’s government and its people. Generally as a result of this, taxes are no longer needed to cover the upkeep of government expenditure and ongoing infrastructure. Individuals and organisations may also seek this credit, those seeking it usually have to pay it back (without interest). Exceptions on repayment would be on the order of how the country benefited from the use of this credit. Money created this way will not incur debt to the country; on the contrary money will be represented and created on the basis of real wealth and more importantly created and distributed on a basis of sound economic management. Recessions and depressions will be a thing of the past. To ensure the money supply is adequate for the economy, additional money may be given to each citizen of the country at regular intervals in the form of Dividends. See forum here ' Why the dividend is so important' http://www.bleedingindebt.com/forums/viewtopic.php?f=2&t=13 It needs to be understood that money is only a tool, a very useful tool that enables us a means to exchange goods of value. Its value is only recognised by the accepted faith, we the people have on money– without this, it is worthless. Money therefore has no real value. The real things of value are in the land and what we make of it. Everything around us, the land, trees, water ect, was created for our use, it is God’s creation. Therefore if we use money as an exchange, it must be produced in correct quantities without cost. What man is physically able to produce, grow, build, and invent, must not be limited by lack of money but rather by the lack of resources. Trade need not be restricted by lack of money. To empathise this point more, I have added this story below; In a remote island in the South Pacific, thousands of people could feed themselves, clothe them selves in fact supply everything they ever needed. The people lived in almost paradise and never went without. This was the case until a dark day arrived in their lives. It was discovered that almost two thirds of the island’s supply of shells (money) had disappeared and also it seems their chief banker. A crisis meeting was held with all the important chiefs in attendance. It was declared that the main supply of shells had disappeared which would put the economy in a perilous position. New shells were needed desperately or all trading would come to a halt. Bankers from Europe offered the islanders printed-paper (money). But this came at a great cost, Interest would be charged at a rate of ten percent and one third of the island’s assets were needed as insurance for the banker’s big risk. They were told this would bring them up to date with the modern world. The islanders thought long and hard about this and almost agreed with the banks to borrow the printed-paper. Luckily a man from another island had seen this very thing happen to his own island. He told them that the banks now owned their island because they did not have the money to pay them back. They found too late that only the banks could supply this printed paper (money). The banks forced them to give up their property and a requirement was made that one third of the food they grew would now go to the banks until the debt was paid off. There was much bloodshed lost over this until the united islands came in and ordered them to fulfill their agreements. The world islands bank offered them more money with conditions that was not in the interest of the islanders. The debt had to be serviced at all times regardless how little was left for important services such as health care, it must be paid! Things could only get worse (the interest was killing them!) The people no longer have a home, island or any possessions, but they do have severe unemployment, unsustainable debt and a great deal of poverty. (They now owe more printed paper (money) than they did before). The islanders took note of this and decided to revert back to bartering for six months until all the shells needed were collected. Although bartering was very cumbersome they thought it was a much better thing to do. A ton of wood for example was used as an exchange for six weeks supply of meat. After the shells were collected everything went back to normal. The islanders in this story were self-sufficient and had every thing they could ever need. The shells they used for trade could easily have been replaced by rare feathers. They could also of printed their own debt-free money (If they had a printing press!) There was never any need to go into debt. This story is very simple to understand yet in real life we continue to fall prey to these banks. People are dying everywhere around the world from debt induced poverty, much of it could be stopped in its tracks if policies like Social Credit was utilised, yet we the people let it happen. It can be reversed if enough people get on board. I can’t say this enough, please spread this important message! Believe me it really is a matter of life and death! Be thankful that you and your family were not born in any of these dreadful poverty stricken nations. Life hangs on a thread here. I implore you and others to take action. The lives of so many people depend on it! Your nation could be the next one to fall!
Guest - William Waite on Friday, 27 May 2016 18:16

Thanks Andrew for your interest. You seem to have a fair grasp of our dilemma. One of the main difficulties for people lies in differentiating between money and real wealth, which is the point of your story. Owing to this debt money setup the money supply is our biggest liability! I think that pretty well all nations have fallen to this con, the challenge we have is getting back up.
You should register with us to get access to the advanced library section as well as the journals we have available. Like you, we (socialcredit.com.au) really want to take this thing forward.
Cheers Will

0
Thanks Andrew for your interest. You seem to have a fair grasp of our dilemma. One of the main difficulties for people lies in differentiating between money and real wealth, which is the point of your story. Owing to this debt money setup the money supply is our biggest liability! I think that pretty well all nations have fallen to this con, the challenge we have is getting back up. You should register with us to get access to the advanced library section as well as the journals we have available. Like you, we (socialcredit.com.au) really want to take this thing forward. Cheers Will