The Banking Secret that Neither Economists Nor Laypeople Know … Which Makes the Fatcats Richer, While Destroying the Real Economy

Private Banks – Not the Government or Central Banks – Create 97 Percent of All Money

Who creates money?

Most people assume that money is created by governments … or perhaps central banks.

In reality – as noted by the Bank of England, Britain’s central bank – 97% of all money in circulation is created by private banks.

Bank Loans = Creating Money Out of Thin Air

But how do private banks create money?

We’ve all been taught that banks first take in deposits, and then they loan out those deposits to folks who want to borrow.

But this is a myth …

The Bank of England the German central bank have explained that loans are extended before deposits exist … and that the loans create deposits:

The above is from an official video released by the Bank of England.

The Bank of England explains:

Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.

The reality of how money is created today differs from the description found in some economics textbooks:

  • Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits.


One common misconception is that banks act simply as intermediaries, lending out the deposits that savers place with them. In this view deposits are typically ‘created’ by the saving decisions of households, and banks then ‘lend out’ those existing deposits to borrowers, for example to companies looking to finance investment or individuals wanting to purchase houses.


In reality in the modern economy, commercial banks are the creators of deposit money …. Rather than banks lending out deposits that are placed with them, the act of lending creates deposits — the reverse of the sequence typically described in textbooks.


Commercial banks create money, in the form of bank deposits, by making new loans. When a bank makes a loan, for example to someone taking out a mortgage to buy a house, it does not typically do so by giving them thousands of pounds worth of banknotes. Instead, it credits their bank account with a bank deposit of the size of the mortgage. At that moment, new money is created. For this reason, some economists have referred to bank deposits as ‘fountain pen money’, created at the stroke of bankers’ pens when they approve loans.


This description of money creation contrasts with the notion that banks can only lend out pre-existing money, outlined in the previous section. Bank deposits are simply a record of how much the bank itself owes its customers. So they are a liability of the bank, not an asset that could be lent out.

Similarly, the Federal Reserve Bank of Chicago published a booklet called “Modern Money Mechanics” in the 1960s stating:

[Banks] do not really pay out loans from the money they receive as deposits. If they did this, no additional money would be created. What they do when they make loans is to accept promissory notes in exchange for credits to the borrowers’ transaction accounts.

Monetary expert and economics professor Randall Wray explained to Washington’s Blog that:

Bank deposits are bank IOUs.

Economics professor Richard Werner – who obtained his PhD in economics from Oxford, was the first Shimomura Fellow at the Research Institute for Capital Formation at the Development Bank of Japan, Visiting Researcher at the Institute for Monetary and Economic Studies at the Bank of Japan, Visiting Scholar at the Institute for Monetary and Fiscal Studies at the Ministry of Finance, and chief economist of Jardine Fleming – was granted access to study a bank’s books, and confirmed that private banks create money when they simply create fictitious deposits into a borrower’s account.

Werner explains:

What banks do is to simply reclassify their accounts payable items arising from the act of lending as ‘customer deposits’, and the general public, when receiving payment in the form of a transfer of bank deposits, believes that a form of money had been paid into the bank.


No balance is drawn down to make a payment to the borrower.


The bank does not actually make any money available to the borrower: No transfer of funds from anywhere to the customer or indeed the customer’s account takes place. There is no equal reduction in the balance of another account to defray the borrower. Instead, the bank simply re-classified its liabilities, changing the ‘accounts payable’ obligation arising from the bank loan contract to another liability category called ‘customer deposits’.

While the borrower is given the impression that the bank had transferred money from its capital, reserves or other accounts to the borrower’s account (as indeed major theories of banking, the financial intermediation and fractional reserve theories, erroneously claim), in reality this is not the case. Neither the bank nor the customer deposited any money, nor were any funds from anywhere outside the bank utilised to make the deposit in the borrower’s account. Indeed, there was no depositing of any funds.


The bank’s liability is simply re-named a ‘bank deposit’.


Banks create money when they grant a loan: they invent a fictitious customer deposit, which the central bank and all users of our monetary system, consider to be ‘money’, indistinguishable from ‘real’ deposits not newly invented by the banks. Thus banks do not just grant credit, they create credit, and simultaneously they create money.


Instead of discharging their liability to pay out loans, the banks merely reclassify their liabilities originating from loan contracts from what should be an ‘accounts payable’ item to ‘customer deposit’ ….

How Can Banks DO This?

Professor Werner explains the reason that banks – but no one else – can create money out of thin air is that they are the only institution exempted from normal accounting rules.

Specifically, every other company would be busted for fraudulent accounting if they conjured new money out of thin air by reclassifying a liability (i.e. an accounts payable) as an asset (i.e. a deposit).

But the banks have pushed through exemptions so that they don’t have to follow normal accounting rules:

What enables banks to create credit and hence money is their exemption from the Client Money Rules. Thanks to this exemption they are allowed to keep customer deposits on their own balance sheet. This means that depositors who deposit their money with a bank are no longer the legal owners of this money. Instead, they are just one of the general creditors of the bank whom it owes money to. It also means that the bank is able to access the records of the customer deposits held with it and invent a new ‘customer deposit’ that had not actually been paid in, but instead is a re-classified accounts payable liability of the bank arising from a loan contract.


What makes banks unique and explains the combination of lending and deposit-taking under one roof is the more fundamental fact that they do not have to segregate client accounts, and thus are able to engage in an exercise of ‘re-labelling’ and mixing different liabilities, specifically by re-assigning their accounts payable liabilities incurred when entering into loan agreements, to another category of liability called ‘customer deposits’.

What distinguishes banks from non-banks is their ability to create credit and money through lending, which is accomplished by booking what actually are accounts payable liabilities as imaginary customer deposits, and this is in turn made possible by a particular regulation that renders banks unique: their exemption from the Client Money Rules. [Werner gives a concrete example on British law for banking and non-banking institutions.]

Sound fraudulent? Professor Werner thinks so, also:

But he also makes some more important points …

What Does It All Mean?  The Implications of Money Creation By Private Banks

Mainstream economists believe that private debt doesn’t even “exist as a force that acts on the economy.  For example, Ben Bernanke and Paul Krugman assume that huge levels of household debt don’t hurt the economy because more debt among households just means that savers have loaned them money … i.e. that it is a net wash to the economy.  To make this assumption, they rely on the myth debunked above … that banks can only loan as much money out as they have in deposits.  In reality, 143 years of history shows that excessive private debt – in and of itself  – can cause depressions.

Moreover, Professor Werner points out that attempts to shore up the banking system with capital requirements (such as the Basel accords) are doomed to failure, since they don’t recognize that banks create money at will:

Basel rules were doomed to failure, since they consider banks as financial intermediaries, when in actual fact they are the creators of the money supply. Since banks invent money as fictitious deposits, it can be readily shown that capital adequacy based bank regulation does not have to restrict bank activity: banks can create money and hence can arrange for money to be made available to purchase newly issued shares that increase their bank capital. In other words, banks could simply invent the money that is then used to increase their capital. This is what Barclays Bank did in 2008, in order to avoid the use of tax money to shore up the bank’s capital: Barclays ‘raised’ £5.8 bn in new equity from Gulf sovereign wealth investors — by, it has transpired, lending them the money! As is explained in Werner (2014a), Barclays implemented a standard loan operation, thus inventing the £5.8 bn deposit ‘lent’ to the investor. This deposit was then used to ‘purchase’ the newly issued Barclays shares. Thus in this case the bank liability originating from the bank loan to the Gulf investor transmuted from (1) an accounts payable liability to (2) a customer deposit liability, to finally end up as (3) equity — another category on the liability side of the bank’s balance sheet. Effectively, Barclays invented its own capital. This certainly was cheaper for the UK tax payer than using tax money. As publicly listed companies in general are not allowed to lend money to firms for the purpose of buying their stocks, it was not in conformity with the Companies Act 2006 (Section 678, Prohibition of assistance for acquisition of shares in public company). But regulators were willing to overlook this. As Werner (2014b) argues, using central bank or bank credit creation is in principle the most cost-effective way to clean up the banking system and ensure that bank credit growth recovers quickly. The Barclays case is however evidence that stricter capital requirements do not necessary prevent banks from expanding credit and money creation, since their creation of deposits generates more purchasing power with which increased bank capital can also be funded.

Moreover, Werner points out that banks create the boom-bust cycle by lending too much for speculative, non-productive purposes:

By failing to take into account the fact that banks create money, economists and governments are sowing the seeds for future crashes.

But the economics field is very resistant to change …

Economics professor Steve Keen notes in Forbes:

In any genuine science, empirical data like this would have forced the orthodoxy to rethink its position. But in economics, the profession has sailed on, blithely unaware of how their model of “banks as intermediaries between savers and investors” is seriously wrong, and now blinds them to the remedy for the crisis as it previously blinded them to the possibility of a crisis occurring.

A wit once defined an economist as someone who, when shown that something works in practice, replies “Ah! But does it work in theory?”

And a 2016 IMF paper notes:

Around [the 1960s] banks began to completely disappear from most macroeconomic models of how the economy works.­

This helps explain why, when faced with the Great Recession in 2008, macroeconomics was initially unprepared to contribute much to the analysis of the interaction of banks with the macro economy. Today there is a sizable body of research on this topic, but the literature still has many difficulties.­


Virtually all recent mainstream neoclassical economic research is based on the highly misleading “intermediation of loanable funds” description of banking …


In modern neoclassical intermediation of loanable funds theories, banks are seen as intermediating real savings. Lending, in this narrative, starts with banks collecting deposits of previously saved real resources (perishable consumer goods, consumer durables, machines and equipment, etc.) from savers and ends with the lending of those same real resources to borrowers. But such institutions simply do not exist in the real world. There are no loanable funds of real resources that bankers can collect and then lend out. Banks do of course collect checks or similar financial instruments, but because such instruments—to have any value—must be drawn on funds from elsewhere in the financial system, they cannot be deposits of new funds from outside the financial system. New funds are produced only with new bank loans (or when banks purchase additional financial or real assets), through book entries made by keystrokes on the banker’s keyboard at the time of disbursement. This means that the funds do not exist before the loan and that they are in the form of electronic entries—or, historically, paper ledger entries—rather than real resources.­


This “financing through money creation” function of banks has been repeatedly described in publications of the world’s leading central banks—see McLeay, Radia, and Thomas (2014a, 2014b) for excellent summaries. What has been much more challenging, however, is the incorporation of these insights into macroeconomic models [how true].

What’s the Solution?

We’ve seen the problems created by failing to take into account the fact that private banks create money.

But there are solutions …

Initially, Professor Werner notes that preventing banks from creating new money to loan for speculation and mere personal consumption would prevent booms and busts:

Werner says that the “Asian Miracle” happened for exactly this reason:

Additionally, allowing small community banks to grow would cause the real economy to flourish … since small banks loan to small businesses (which create most of the jobs), while big banks only loan to giant companies and speculators:

Indeed, big banks are virtually out of the business of traditional lending … and small banks are the only ones funding Main Street.

Werner says this is the secret of Germany’s economic success:

Postscript: Due to their unique money-printing powers, banks now literally own the world … including the entire political system.

There’s a war raging in connection with banking.  Remember that the giant banks tried to kill off community banking through the Trans Pacific Partnership. And as Professor Werner points out, the European Central Bank is currently in a war to destroy community banks:

One of key battles for prosperity and democracy today is decentralization of the banking system.

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  • No More Neos

    In neoliberalism’s lust for privatization, credit creation was the most deadly. This led to the massive credit card and student debt of the past few decades, when it was all totally unnecessary. Now that neoliberal ideology has gone belly up and its economic era is in its twilight, we must revive fiscal policy once again and spend on investing in social programs instead of just on private bank $29 trillion bailouts and defense spending. The .01% has been enjoying fiat currency expansion to the maximum while maintaining gold standard straitjacket restraints on the rest of us.

    MMT provides a clear understanding of how the economy works, debunking myths that taxes DO NOT fund spending and that the federal debt is actually private savings. We now KNOW that we can and should fund single payer, a jobs guarantee program, free college education, green energy, infrastructure, etc. and increase aggregate demand.

    The neoliberals still haven’t gotten the memo that it’s a failed ideology and won’t be happy until the entire government, save for the military and police force, are completely dismantled and/or privatized. Forty years of unbridled greed is a hard habit to break.

    • diogenes

      The “neoliberals” and the “neoconservatives” and all the other Donkey and Elephant masked players are in perfect agreement. Privately owned fractional banking is wonderful and absolutely indispensable. Because that’s who pays them. All of them.

      Including Hillary, the noted “speaker” to Goldman Sachs at $250,000 minimum per hour. And Trump, whose millionaire daddy’s fortune would have been completely impossible without access to the abracadabra funny money of big lenders to big players. And every congressman and woman, every state legislator and officer, every county supervisor and city mayor.

      Exceptions are so rare as to be negligible. Money is the mother’s milk of politics, and the Big Banks control the Big Tit.

    • jadan

      The father of the privatized banking system is now celebrated on stage and who knows why? Hamilton, son of a whore (excuse me, “sex worker”) and an acolyte of wealth and power all his life sold the country into debt to financiers. Borrow from one’s enemies was his solution to the post-war crisis. These enemies had destroyed faith in Constitutional money, the “continental”, through a very successful campaign of counterfeiting. People speak of “fiat” money today, as though it were illegitimate. It is the only form of money that can serve a mass population. The problem is that it must be managed in a responsible way. The “greenback” experiment, that won the Civil War, as the Continental had won the Revolution, proved that it can be. Hamilton’s buddies, the oligarchs, now operate the monetary system in disguise as a federal agency, that is, a “democratic”agency, supposing our government were democratic. It isn’t, of course. It is an oligarchy, which is what ass-kisser to the rich & powerful Hamilton set in motion in the first place. The Constitution be damned. Aaron Burr shot the posturing royalist, but that didn’t do much good, given that Burr was an even worse specimen……

      • diogenes

        Hamilton is being heroized because he is the founding father in the corruption of government on behalf of plutocrats and therefor a suitable figure for heroization by the absentee investor oligarchs who have usurped control of America and turned it into a moneymachine for their criminal gang headquartered on Wall Street, a criminal gang that has killed as many people in the past 100 years as Hitler.

      • diogenes

        You forget to mention a fundament point. The “Federal” Reserve is not “federal” in the sense of being part of the federal government. On the contrary, it is privately owned by a consortium of private bankers and banking families, many of them not even Americans. But Americans aren’t allowed to know who. Because that’s their business and not ours!

    • Auldenemy

      Superb commentary! The problem is that Western society is long addicted to easy credit (with seemingly no regard for the fact that it turns every individual who participates in it, into a debt slave). Banksterville are addicted to showering everyone in debt and as they now control much of government I don’t see anything forcing them into a re-hab programme. The time for an honest and objective appraisal of our Western monetary policies was post 2008. It never happened. Banksterville got the eye watering government bailouts and the bill was handed to the citizens of the West. The MSM in every Western nation didn’t question it so nor did the people. It is surely a cruel irony that those who caused 2008, actually managed to profit by it (along with their big corp. cronies who have enjoyed years of virtually interest free loans so as to indulge in Buybacks). If anything, 2008 proved to the likes of JP Morgan (one of the biggest receivers of public bailout money), that they really can get away with anything and still come out of it rolling in money and directing government! How can this ever change for as long as politicians are allowed to take vast bribes from Banksterville? The Hillary Clinton Pay-To-Play meme has been repeated in the UK and EU numerous times and is on-going. Our former Chancellor, George Osborne is still a sitting MP but picking up vast sums from banking and big corp world. How can there ever be true democracy for as long as banksters are allowed to buy the politics they want? When will the US, UK and EU separate politics from the interests of greed driven bankers? I am not holding my breath. I don’t think it will ever happen.

  • diogenes

    Yes, the key impediment that must be faced is, that the big banks have totally corrupted and control the governments which they have paid to legalize their counterfeiting — to call it what it is.

    In America, our Constitution specifically deligates the creation of money to our Federal government. In 1913 a president whose principal backers included Paul Warburg, who first proposed and campaigned (among bankers) for its creation, and a Congress pervasively “subsidized” (or “lobbied,” or “bribed”) by the same interests, passed the Federal Reserve Act — GIVING AWAY, unconstitutionally, this public power and right to a tiny coterie of extremely rich predators, many of them not even Americans — Warburg, a Rothschild in-law, was from Frankfurt, for example. But Bernard Baruch, another of Wilson’s big backers, was home-grown, as were the Morgan Partners that funded Wilson. Other Morgan partners backed Taft, or Roosevelt — in the best Wall Street tradition, the bankers own the race-track, all the horses, all the jockeys, and all the betting parlors.

    Ain’t it grand to live in a democracy. The democracy that has more people in prison than any other country on the planet, whose police kill more citizens every year than all the police in Europe kill in twenty, whose infant mortality rate is lower than Cuba’s or Turkey’s, and its life expectancy plunging alongside it. And so on. Yes, Rule by Bankers, it’s the way to go. Straight to Hell, that is. Jesus had the right idea. He used a whip to drive them out of the temple. It’s the only time in all four gospels — and it’s in all four — that he gets seriously annoyed. Maybe he has a point.

    • Raqueljcantin

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    • Auldenemy

      Well said! Goldman Sachs is all through UK and EU government departments. Goldman and JP Morgan threw buckets of money at ex Prime Minister, David Cameron’s pro EU referendum campaign. Western Banksterville is very pro the EU because it’s much easier to loot entire economies when they share the same currency. JP Morgan have been paying the slime ball, war criminal Tony Blair, £3 million a year ever since he left office as UK Prime Minister, to peddle their interests in the EU. The USA, UK and EU are at the complete mercy of Banksterville. Politicians are their paid out puppets, ditto the MSM. Perceived enemies are everywhere, a perfect distraction for the masses. In reality the greatest enemy of the West is our own banks!

  • cettel

    As usual, George Washington has offered us a masterpiece on the subject he reports. Frankly, he has documented to my satisfaction what Ellen Brown never persuaded me of, though now I recognize that she’s right.

  • The first video is linked to this longer paper by the same author/speake: To be honest, I find the paper’s description a) clear and b) the same as conventional descriptions of fractional-reserve banking. The Wikipedia page on this is describing the same thing: The laws/practices of financial regulation and the heuristic “laws” of business practice & the bank’s forecasts determine the exact amount of leverage it takes on for lending. As the article emphasizes repeatedly, the banks use funny words to describe the amounts they are owed (in the future) from the loans they have made in the past.

  • Carl_Herman

    Great summary and update, GW; thank you for maintaining and building upon this key element of the .01%’s enslavement tools.

    Yes, this paradox is both complex and twisted, yet is essentially giving the oligarch’s legal authority to create what we use for money as debt owed to them. The system is like adding negative numbers forever, with the certain future of increasing and accelerating total debt forever.

    I keep making this point to ~2,000 AP Econ teachers, with so far the result of stunned silence with a few feeble responses about their unsubstantiated beliefs of what “experts” would never do. So far, it’s been too much to ask of college educated Econ teaching professionals to have the intellectual integrity and moral courage to embrace this “Emperor’s New Clothes” truth so fundamental to their teaching, so well documented, and presented directly to them.

    So we serve in the topics we find most important another day 🙂

    We connect to the One who invited us here in good-faith work, confident in a plan that merited our agreement to participate upon Earth: a most beautiful and dominated planet in apparent desperate need of pointing out the most obvious and important facts of enslavement.

    • Southern

      In the end, for the aristocrats and their neocons submissives, its all about being exceptional.

      Even the bankers are exceptional, while everything lower down the food chain will be regarded as unpeople.

  • Todd Millions

    To further explore this ,a review of Critical Path by Buckminister Fuller would be of use. The -“Ink Pot Cash” accounting system was explored and detailed much better in this than in other accounts I’ve perused. Moreover-his sequence and events leading to the 1929 crash, and FRD’s Bank moratorium as he was sworn in-match reality much better than most history and economic text book accounts. The clipping files and microfiche I had to go through to confirm ,doesn’t bear thinking about.
    What wasn’t covered in useful detail is how fictional dollar account balances created by swiss banks to “balance” interest payments on petro dollar deposits-was tapped into by the CIA to pay Russian mobsters, via Catholic bagmen thru Poland and thus inflate and under cut the Soviet economy. This play book was I suspect, copied from Canadian Chartered Bank(all of em) practices, and they were green with envy on how well it scaled up. Opus Dei was I suspect very pleased with the bigger sand box handed to them by this Ponzi.

  • Steven

    Until the discussion moves beyond the blinders imposed by the illusion of money as wealth rather than the debt (or credit, or whatever you want to call it) it really is, we aren’t going to get very far. Pretty much all of this was discovered close to a century ago by the Nobel Prize winning chemist Frederick Soddy. At once horrified by the murderous misuse of scientific prowess and at the same intrigued by the ability of industrial technology to produce the vast amounts of ‘wealth’ required to sustain the global warfare to which Europe’s oligarchy had become wholly committed.

    Anyhow, “… a logical definition of wealth is absolutely needed for the basis of economics if it is to be a science.”
    Frederick Soddy, WEALTH, VIRTUAL WEALTH AND DEBT, 2nd edition, p. 102

    P.S. Soddy could have added “government” to this requirement.

  • Bev

    Prof. Richard Werner has been a speaker at The American Monetary Institute annual Conference, the organizing group to restore debt-free money to our nation. See:

    13th Annual AMI Monetary Reform Conference / Chicago, September 14-17, 2017

    The NEED Act

    I keep thinking that we all need 3 things to survive:

    1) Regain Our Democracy 

    2) Public Money 

    3) Climate Catastrophe Reversal

    To Regain Our Democracy Support Greg Palast:

    Wednesday, March 15 at 6pm 

    Greg Palast‏ @Greg_Palast
…And so, when ballots weren’t counted in November, the #DemocraticParty was silent. … 

    #TrumpStoleIt #ElectionFraud and #Crosscheck

    All 3 in that order, to have the leaders, who then create the debt-free, public money to pay for the important, massive job of trying to save our species, our kids by reversing climate collapse that the GOP Mafia are causing by stealing elections in order to steal resources (as John Dean said in his book, Conservatives Without Conscience, this is an unholy alliance of Oil, Bankers, and Christian Fascists. Dean based his book on the work: The Authoritarians by Bob Altemeyer, ).

    The fastest, biggest plan to try to reverse climate catastrophe is the Green Party’s The Green New Deal. We have to do this fast because of worst case scenarios. See:

    A Rapidly Warming Arctic Could Loose a Methane Climate Bomb Causing Mass Extinction in Nine Years
    February 9, 2017 – 9:03pm — lindorff

    Looming climate catastrophe? 
by: Dave Lindorff 

    Big, Fast Solution:

    The Green New Deal

    The Green New Deal will convert the decaying fossil fuel economy into a new, green economy that is environmentally sustainable, economically secure and socially just. The Green New Deal will guarantee full employment and generate up to 20 million new, living-wage jobs, as well as make the government the employer of last resort with a much-needed major public jobs program.


    Our nation – and our world – face a “perfect storm” of economic and environmental crises that threaten not only the global economy, but life on Earth as we know it. The dire, existential threats of climate 
change, wars for oil, and a stagnating, crisis-ridden economic system require bold and visionary solutions if we are to leave a livable world to the next generation and beyond.

    These looming crises mean that the question facing us in the 2016 election is historically unique. The fate of humanity is in our hands. It is not just a question of what kind of world we want, but whether we will have a world at all.

    Building on the concept of FDR’s New Deal, we call for a massive mobilization of our communities, government and the people on the scale of World War II – to transition our energy system and economy to 100% 
clean, renewable energy by 2030, including a complete phase out of fossil fuels, fracked gas and nuclear power. We propose an ambitious yet secure economic and environmental program that will revive the economy , turn the tide on climate change, and make wars for oil obsolete – allowing us to cut our bloated, dangerous military budget in half. [1]

    The Green New Deal is not only a major step towards ending unemployment for good, but also a tool to fight the corporate takeover of our democracy and exploitation of the poor and people of color. It will provide a just transition, with a priority on providing resources to workers displaced from the fossil fuel industry, low-income communities and communities of color most impacted by climate change. The Green New Deal will provide assistance to workers and communities that now have workers dependent on the fossil fuel, nuclear and weapons industries, and to the developing world as it responds to climate change
damage caused by the industrial world.

    The transition to 100% clean energy will foster democratic control of our energy system, rather than maximizing profits for energy corporations, banks and hedge funds. It will promote clean energy as a 
human right and a common good. It will include community, worker and public ownership, as well as small businesses and non-profits. 

    We will cut military spending by at least half to bring our troops – currently stationed in over 800 bases worldwide – home to their families, deploying our valued servicemen and women in their own 
communities to build up our country’s future and prosperity here at home. Maintaining bases all over the world to safeguard fossil fuel supplies or to shore up repressive oil monarchies could no longer be 
justified as “protecting American interests.”


The Green New Deal not only saves us from climate catastrophe. It also pays for itself through health savings alone, from the prevention of fossil fuel-related diseases – which kill 200,000 people every year and afflict millions more with asthma, heart attacks, strokes, cancer and other illnesses. This program not only addresses the urgent crises facing our society, but puts America’s leading role in the world to work in a constructive way: to build a just, sustainable, and healthy planet for our young people and future generations.

    What the Green New Deal Will Do

    Right now, our federal subsidy programs benefit large agribusiness corporations and the oil, mining, nuclear, coal and timber giants at the expense of small farmers, small business, and our children’s environment. We spend billions of dollars every year moving our economy in the wrong direction, turning our planet uninhabitable while imposing the greatest harm on communities of color and the poor. The Green New Deal will instead redirect that money to the real job creators who make our communities more healthy, sustainable and secure at the same time.


  • parasitstopp

    Great article!

    I think avoiding the them “money” is the easiest way to understand what the banks do. Just staring with the simple question:

    Do banks create currency or not when they “lend” to a customer account? That to say – do banks for instance create dollars ( US currency) and “lend” it to a customer account?

    The simple answer is that bank can’t lend out dollar to a customers account since a customer account can’t hold dollar. A customer account can only contain a notation of what the bank owes the customer. The account is, just as Werner points out, a liability to the bank. So the bank “lend” its own debt and never dollar (currency) to a customer account.

    Werner put it this way i an more recent interview (my complementary comments in parenthesis):

    -”Its (the banks) record (on your account) of what it owes you is what you think you are getting as money”
    We think that the banks debt (IOU), that is to say your account, contains dollars since we can pay each other through our accounts. But we are not paying each other dollars – we get more or less of the banks debt on our accounts (the banks use digital dollars on their central banks account to clear the differences – the central bank acts as a clearinghouse. The flows will mostly cancel each other since the flows of exchanges
    between the central banks accounts goes in both directions. So the two
    bank wait until the day has passed and settle the clearing when the
    banks close. The net amount one bank owes another bank is then usually
    rather small. The bank owing another bank can then borrow from a bank
    that got a surplus. The inter-bank lending is hence a zero sum game since
    it´s a closed system that only the the big banks having access to
    central bank account can use ).

    I wrote more extensively here:

  • Southern

    Doesn’t make sense right — quite some time ago, having money in a bank account meant that one could expect a certain amount of interest that would be repaid to the depositer — no wonder this has just about disappeared since banks shown to have absolutely no intention to lend out the deposits made by their customers, they’ve ”discovered that they can create deposits out of thin air and then charge interest on top of them.

    Like someone going to work but only to clock on, going home for the duration of the working day and only to return just in time to clock off….fully expecting to get paid.

  • francesco magistra

    The Swiss people will have to vote on a constitutional initiative limiting the issue of currency to the Swiss National Bank which would become kind of lender of last resort. This would strengthen the currency and the banking system. Through the fact that our biggest bank UBS had to be rescued by the governmente in 2008 gives this initiative good chances to be approved.
    more info

  • 789

    The content of this article is only news to those who grew up on conspiracists garbage, peddled by charlatans to make money and to lead the sheep in circles to nowhere.

    All this has been know 150 and 200 years ago:

    What is a Bank? “An association of financiers, who, without having any means, contrive to get into their hands all the money of the country, by persuading the people that out of a small sum they can at once create a large one.”

    “Twaddle==To talk of ‘regulating’ Banks. So long as they exist, they will regulate every thing around them.”
    “we ought not to have incorporated Banks, which give credit to some, by taking it from others. These institutions owe their credit to acts of Assembly. If their charters were taken from them, not even their own stockholders would trust them”

    “They coin money out of paper. What has always been considered one of the most important prerogatives of Government, has been surrendered to the Banks.”