UK Guardian, Bank of England: ‘Banks create money as debt.’ Translation: debt-free money, at-cost credit create instant prosperity

The UK Guardian is Earth’s third most-read on-line newspaper. In a revealing article, The truth is out: money is just an IOU, and the banks are rolling it in, the author explains what the Bank of England and US Federal Reserve admit:

What we use for money is created as debt by private banks.

This system is like adding negative numbers forever. The aggregate debt only gets larger, and will never be repaid because this is what we use for money. Also, as we see today, the interest and debt total become so tragic-comic we can’t get close to affording to pay.

What this also means is that with monetary and credit reform the public could have instant prosperity: full-employment, zero public deficits and debt, the best infrastructure we can imagine, falling prices, and release of public TRILLIONS held in “rainy day” accounts.

These solutions are OBVIOUS with a few moments of attention, and affirmed by leading Americans since Benjamin Franklin. See for yourself with what we have now, and what these solutions offer.

What we have:

US “leaders” psychopathically pretend to care about American labor while lying about a real unemployment rate of close to 25% (the so-called “official” rate excludes under-employed and discouraged workers). Along with unemployment, Americans receive policy enabling oligarchs to “legally” hide $20 to $30 trillion in offshore tax havens in a rigged-casino economy designed for “peak inequality.” For comparison, $1 to $3 trillion ends global poverty forever, saving a million children’s lives every month from slow and gruesome death (here, here).

We have escalating and unpayable national debt, a real-inflation rate more than double the stated rate, and because private banks and their admitted privately-owned pinnacle bank, the Fed, create credit/debt for what we use as money, this becomes the literal mother of all conflicts of interest. If the Fed were to deliver its three stated goals of “maximize employment, stable prices, and moderate long-term interest rates,” we have a stunning observation:an honest Fed would at least ask for independent professional cost-benefit analyses to determine if government-created debt-free money and public credit would do better than their ever-increasing and unpayable aggregate debt

In addition:

And, as always please keep in mind, US “leaders” also  lie-begat Americans into unlawful Wars of Aggression (in comparison, 11 days of US war cost would pay for all tuition of US college students).

OBVIOUS solutions:

What is monetary and credit reform?  Since the 1913 legislation of the Federal Reserve, the US has had a national “debt system;” the Orwellian opposite of a monetary system. What we use for money is created as a debt, with the  consequence of unpayable and increasing aggregate debt. This is the simple description of the sum of forever increasing negative numbers. Although it’s taught in every macroeconomics course in structure, the consequences of increasing and unpayable debt are omitted (unpayable because it destroys what is used for money, and eventually the debt becomes tragic-comic in amount).

Monetary reform creates debt-free money as a public service for the direct payment of public goods and services. This would replace the existing system of creating what we use for money out of debt; both from the Federal Reserve issuing credit for US federal debt instruments charged to taxpayers with interest, and private banks issuing credit through fractional reserve lending.

Closely related is credit reform that replaces private bank credit with public credit (and here). This transfers interest payments from private profits to public service.

Benefits of monetary and credit reform: no debt, optimal infrastructure, falling prices: The benefits include paying the national debt, ending a national debt forever, issuing money and credit for full employment, and optimal infrastructure. The prima facie case of benefits should undergo professional multiple and independent cost-benefit analyses. The facts that a Federal Reserve-type debt-based system causes unpayable debt, unemployment, inflation, and decaying infrastructure is relatively easy to demonstrate.

Debt begone: Monetary reform pays the national debt of over $18 trillion dollars virtually without cost, and ends its gross $400 billion+ annual interest payments. This saves the ~100 million US households an average of ~$180,000 in total debt cost, with ~$4,000 gross annual interest cost. Another way to calculate the savings is to figure those amounts per $50,000 annual household income (for example, if your household earns $100,000/year, you save $350,000 in national debt costs and $8,000 every year in gross interest).

The way the national debt is paid nearly cost-free is to use government-created money to pay the debt securities as they are due instead of what is done today: never pay them and “roll them over” (re-issue the debt to existing owners or issue new debt to pay for redeemed debt instruments) while only paying the interest. What is done today is similar to only paying the interest on a credit card with ever-increasing debt total. The inflationary effect of paying the debt will be counteracted by simultaneously removing private banks’ fractional reserve authority proportional to the payments (increasing banks’ reserve requirements).

When government has authority to transparently create money, a national debt becomes a tragic-comic part of history. Trial and error will inform total money supply, with an option of removing money from the supply through some form of simple taxation. For example, if public credit issues mortgages and credit cards at ~5%, this form of taxation can pay for public goods and services with the ability to raise or lower the interest rate. It also releases CAFR funds back to the public worth TRILLIONS. Again, proposals such as these should be subject to professional and independent cost-benefit analyses.

Full employment, optimal infrastructure, falling prices: Government can become the employer of last resort for hard and soft infrastructure investment. This provides triple benefits for employment, the best infrastructure we can imagine, and falling overall prices to the extent infrastructure investment contributes more economic output relative to costs of inputs. History demonstrates infrastructure investment does reduce overall prices in the current debt-funded model that typically adds ~50% of the projects’ nominal cost to its total cost. Monetary reform with infrastructure means the cost of debt-funding disappears, making this employment even more attractive.

Additional anticipated benefits are reductions of crime and other social costs related to human despair as people see and participate in creating a brighter future for all.

What’s missing for the implementation of these solutions: Our .01% “leaders” will not and can not implement solutions without becoming visible in criminal culpability for having the current system that parasitically transfers literal trillions from the 99.99%.

The solution to this problem is also obvious: prosecute obvious criminals in “leadership” in government, economics, and corporate media for fundamental fraud by lying to the 99% that debt is “money,” and lying in omission by failing to inform that public credit and money would solve all current economic issues. The public costs of this fraud are trillions of dollars, harm to millions of Americans, and significant totals of deaths.

An alternative to criminal prosecution is Truth and Reconciliation (and here).

Nomi Prins (and here), former Goldman Sachs Managing Director, explains what she says are the “no-brainer” benefits of credit reform in this 35-minute talk to the Public Banking Institute’s 2015 Banking on Colorado Conference:

** Note: Examiner.com has blocked public access to my articles on their site (and from other whistleblowers). Some links in my articles are therefore now blocked. If you’d like to search for those articles other sites may have republished, use words from the article title within the blocked link. Or, go to http://archive.org/web/, paste the expired link into the box, click “Browse history,” click onto the screenshots of that page for each time it was screen-shot and uploaded to webarchive. Then switch the expired URLs with webarchived ones of that same information. I’ll update as “hobby time” allows; including my earliest work from 2009 to 2011 (blocked author pages: here, here).

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  • scott_ewing

    Great summation of the slavery mechanism. This is why our lives are getting more expensive.

    Like frogs in a saucepan on a low heat – people are being slowly eaten without knowing why or how.

  • unheilig

    Socialism, in a nutshell. Most people would want it if they understood it, like single payer healthcare. But it’s the last thing the psychopaths want. Good luck Carl, you’ll need it, but you get my vote.

  • nick quinlan

    “Banking was conceived in iniquity and was born in sin. The Bankers own the Earth. Take it away from them, but leave them the power to create deposits, and with the flick of a pen they will create enough deposits to buy it back again. However, take it away from them, and all the fortunes like mine will disappear, and they ought to disappear, for this world would be a happier and better world to live in. But if you wish to remain slaves of the Bankers and pay for the cost of your own slavery, let them continue to create deposits.” — Sir Josiah Stamp, President of the Bank of England in the 1920s, the second richest man in Britain

    Read more: whatreallyhappened.com http://whatreallyhappened.com/WRHARTICLES/allwarsarebankerwars.php#ixzz3SLBQGEbM

    Great article, Carl.
    Until the control of economies and countries is removed from bankers and corporations, humanity is doomed.

    • Carl_Herman

      Thanks, Nick. Yes, the .01% at the present in control of economies, countries, Wars of Aggression, and literally ~100 other areas of crucial concern are arrested (legally stopped) from these obvious crimes, we are indeed doomed to more debt, more wars, more poverty, more death, more misery.

      Americans must call out these Emperor’s New Clothes facts and demand arrests, if we want anything better.

  • Southernfink

    Quite like this article and the proposed solution.

    Just how will this effect other economies… Will they have to follow suit ?

    • Carl_Herman

      Thanks, Southernfink.

      The best way I know to show what would happen if any nation created their own money is to consider Nazi Germany in the 1930s having breakthrough economic productivity with investment in infrastructure (military buildup came a few years later). They went from tragic-comic hyperinflation in the 1920s to really take this topic of money seriously. When they initiated debt-free money, they almost instantly ended their economic depression that everyone else had in the 1930s.

      There’s much more to the story of the Nazis, of course, and economic monetary policy is the narrow focus to see how powerful a tool it can be when directed for infrastructure advance.

      • Southernfink

        They made counterfeit notes and flooded other nations with the sole intend to devalue their economies.

        There needs to be an alternative to the privately owned credit.

      • Southernfink

        I just noticed this (Thanks Veri)

        Considering the numbers suggested below, they might as well create their own money.

        under Bush, the 1% captured a disproportionate share of the income gains from the Bush boom of 2002-2007. They got 65 cents of every dollar created in that boom, up 20 cents from when Clinton was President. Under Obama, the 1% got 93 cents of every dollar created in that boom. That’s not only more than under Bush, up 28 cents. In the transition from Bush to Obama, inequality got worse, faster, than under the transition from Clinton to Bush. Obama accelerated the growth of inequality.” (Growth of Income Inequality Is Worse Under Obama than Bush, Matt Stoller, Naked Capitalism)

        93 cents of every buck has gone to the 1 percenters under Obama.

        http://www.counterpunch.org/2015/01/15/40-years-of-economic-policy-in-one-chart/