Money As Debt II: Promises Unleashed

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If two parties instead of being a bank and an

individual were an individual and an individual,

they could not inflate the circulating

medium by a loan transaction,

for the simple reason that the lender could

not lend what he didn't have, as banks can do...

Only commercial banks and trust companies can

lend money that they manufacture by lending it.

Professor Irving Fisher, economist

in his book "100% Money" (1935)

The study of money, above

all other fields in economics,

is one in which complexity is used to

disguise or to evade truth not to reveal it.

John Kenneth Galbraith economist, author

The issue which has

swept down the centuries

and which will have to be fought sooner

or later, is the people versus the banks.

Lord Acton (1834-1902),

English historian

Money as Debt II

Promises Unleashed

Anybody here want lemonade?

For a job well done!

You kids are real go-getters!

It's time we opened

some bank accounts...

so you can put your

money to work for you!

We'd like to open bank accounts please.

We're just like grownups!

Yeah, we have our money in the bank!

Maybe your first experience of putting money in

the bank wasn't quite as hard warming as this...

but odds are years later, you still refer to

the balance showing on your bank account...

is being your money in

the bank, but it isn't.

If we had a deposit box in the bank, the

valuables we put in it are still ours.

We're just renting secure

space to store them.

In common usage, the word "deposit"

means to set something down.

But the use of the word "deposit" to

refer to a bank account is misleading.

The bank deposit is in reality a loan.

With the amount in our bank account really

indicates is how much money the bank owes us.

It's a record of the bank's promise to pay

us money not the money we deposited itself.

The difference is important.

The truth is when we hand the contents

of piggy bank to the bank teller...

our money becomes the bank's

money to do with it as it pleases.

All the money in the bank is the

bank's money, none of it is ours.

That's why the bank pay us interest,

we have loaned the bank our money.

This may seem to be a

semantic distinction.

We know, we can go to the bank at any time

and take our money out in cash if we want to.

But the distinction is not

semantic nor is a trivia.

The distinction is crucial.

What happens if banking affects everyone

and yet few of us know anything at all...

about how banking really works?

The entire world economy now runs on

a system of credit provided by banks...

and when that credit system

breaks down, everyone suffers.

Defaults, foreclosures, bankruptcies,

bank failures, gov't bailouts.

To make things worse, the explanations for

these break downs offered by the experts...

never look at the root cause.

Namely that other than cash and coins which

make up just 1-5% of money in circulation...

all the money in existence today was

created as the principal of a bank loan

with the banks requiring

principal+interest as so called repayment.

Not only does this make the existence of money

entirely dependant on the existence of bank credit.

It makes the system as a whole bankrupted by design as

total debets (principal+interest) exceed total assets

from the moment the first

loan document is signed.

As the global banking system

staggers towards worldwide collapse...

more and more people are realising they can no longer

ignore the realities behind banking as it is practiced today.

Many have lost their homes and jobs due

entirely unastainable practises of money lenders.

It's time people understood money and the pressing

need to fundamentaly change the way it works.

Clarifying what the words used in

banking really mean, is the first step.

Now that we know that a deposit

is in truth a loan to a bank

the next question is what is a

loan that we take out from a bank.

When we sign for a loan, we give the bank a

pledge to pay the amount of the loan plus interest.

In return the bank credits our account

in the same amount as the so-called loan.

When we speak of the bank is having

put the loan money into our account...

in reality the only thing the bank puts into

our account is its promise to pay the money.

What has actually happened

is an exchange of promises.

Neither party has delivered anything to

the other except matching pledges of debt.

So who's the borrower

and who's the lender?

The terms loan, lender and

borrower are all misleading.

The truth is, the two parties

have traded promises to pay and...

in the process created something

called bank credit or checkbook money...

that can be legally spent as money.

Bank credit can be spent because we in our innocence

notice that each time we deposit into our account...

it increases our balance

by the same amount.

In fact, unless we put something

in our account would be empty.

Thus, it's a natural assumption that money

in an account is money someone put in.

The account is a promise

to pay not the money itself.

In fact, a promise always indicates

the absence of the item promised.

Otherwise why does it

need to be promised?

Now, because all bank

accounts are promises to pay...

the bank and the borrower can

simply exchange promises and...

in the flash of few key strokes a positive

balance appears to the borrower's bank account...

with no anyone putting

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