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| June 18, 2019

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Why we need to change the rules of banking

Why we need to change the rules of banking

In a nutshell

You may not know this but when you deposit your money with a bank, the bank actually becomes the legal owner of your money. Once the bank becomes the legal owner of your money, they can spend your money as they wish. Unfortunately, they usually tend to spend it on things which are socially harmful, such as creating all sorts of derivatives which add no real value to the world whatsoever.

Yet, the most important thing you may not know but should is that banks actually create money. The general assumption is that when you deposit your money at a bank, the bank acts as an intermediary and lends out your money to a third person who will have a productive use for it, e.g. start up a business or buy a car or a house. Nothing is further from the truth however. Banks actually create brand new money every time someone demands credit. Every single time the bank grants a loan to somebody new money is created out of thin air. That is why we are in an economy whereby bankers dictate policy. We are still led to believe that central banks create most of the money in an economy. However, in most countries this figure is around 3%, meaning that 97% of a nation’s money supply is created by private banks, not as money, but as interest-bearing debt. This implies that the amount of debt in an economy will always exceed the amount of actual money. The reason behind this is usury, which is lending money at a high interest rate. So when you take out a credit card or a mortgage you are creating brand new money, also known as ‘more debt’. Hence there are two rules that govern our economy:

  • in order to have more money or to create growth, we have to have more debt;
  • if we want less debt, then we have to have less money.

Those are the rules by which we are playing right now. So the only choice we have when we allow banks to create money as debt is either more debt, or a recession.


We made bankers into what they are because we allowed them to gain this primacy, their central role in modern economies. Fundamentally they became very powerful, and according to the logic of collective action, what happens in society is that small groups become very dominant and use their power (the power of money, power of lobbyists) to enshrine this power and make sure that they effectively control things. But it gets worse. Not only did we go from real engineering of building things to financial engineering which is using debt and speculation to create wealth in the last 30 years. But time and time again huge banks losses are collectivized while their profits are individualized. Just look at what happened during the latest financial crisis. They simply switched all the private debt into public debt and still need to keep injecting hot money at an unprecedented rate in a desperate attempt to prevent a massive market meltdown. Hot money refers to the injections of cash into commercial banks by central banks. They always boost the stock market to artificially high levels and always lead to yet another bust when the injections stop as they must as inflation begins to soar as it does. Funny thing is that with the latest 750 billion the ECB pumped/lent (in)to European banks (at a rate of 1%), the European banks just deposited it right back into the hands of the ECB to use as reserves. By doing this they could then multiply it by a factor of 50 to buy bonds of the troubled European nations. A plan that many Eurocrats called ingenious. However, these bonds are nothing but more debt owed by the very troubled nations that are already under water in debt. This is a shell game, a horrendous ponzi scheme (a carefully orchestrated financial scam in which investors are paid from funds contributed by new investors instead of from real profits, Ed.) that will soon implode leaving much of the hyper-inflation monster that Europe really is devastated. The question is when the next crash will come.


It is also the first time in world history that we have a phenomenon of debt saturation starting to appear. Increasing debt no longer increases the gross domestic product of nations. Consumer debt has almost flattened out but sovereign debt, the money nations borrow from banks is exploding and this will be the doom of governments of by and for we the people.

Until we put the elimination of the debt money system front and center, no effective legislation will ever come out of any legislator to fix the world economy. Why? Simply because nations have to borrow from (central) banks, which are privately owned institutions. The only thing that keeps the world free is independent nations each pursuing the self-interest of their citizenry. Hence borrowing from banks is destructive to liberty because it surrenders national sovereignty. Banks support national governments by purchasing its bonds, but at the same time the government guarantees the banks. It is a ponzi scheme not even Bernie Madoff could have concocted. This paradox is part of the reason why Thomas Jefferson, the principal author of the United States Declaration of Independence (1776) and the third President of the United States (1801–1809) fiercely opposed the creation of the United States’ first Central Bank in 1791, which was of course privately owned. ‘If a nation can issue a dollar bond it can issue a dollar bill‘, Thomas Jefferson stated. The thing that makes the bond good also makes the bill good. So why did governments allow the privatization of the money creation process? Why do they have to borrow money when they could issue it themselves?

“I believe that banking institutions are more dangerous to our liberties than standing armies […]. The issuing power (of money) should be taken away from the banks and restored to the people to whom it properly belongs.” – Thomas Jefferson

Luckily the people sense that government and the media are no longer operating in their interest and are no longer determined to tell them the truth. The real issue is about governments, about what we can refer to as the ‘finance-government complex’, which makes the military-industrial complex of the 1950-60′s that U.S. president Dwight D. Eisenhower talked about look like Sesame Street.

In conclusion, the fundamental problem is a monetary and economic system designed to pyramid debt. This debt-money system, which is strangling the economy of every nation in the world, is the leading cause of hunger, poverty, misery and disease which we have created and exported to the ‘Third World’. Therefore monetary reform is the new human rights movement, and we need to move now. The first step is being conscious of the underlying cause of society’s problems and creating awareness. Once the people find out how much of their tax contributions go to cover interest payments; coordinated collective efforts to put a halt to the money scheme will naturally appear.

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