In a world of plenty, there is no need for poverty

and debt. We have the technology to feed, house and

clothe all people on earth without destroying our
environment. Whatever is physically possible and
socially and environmentally desirable can be made
financially possible. This is everyones concern and
it is urgent.

Wheres the Money

to Come From??
Where does money come from?

a discussion document outlining the

reasons why we need to look at the issue
of monetary reform, as the most
fundamental issue for a sustinable future,
and to formulate and promote appropriate
policy, urgently.
1

Where's the Money

to Come From??
This is the constant refrain from
government when solutions to social or
ecological problems are proposed.
What is physically possible and socially/
ecologically desirable must be financially
possible.

Written, printed on recycled paper,

and published on behalf of
the Monetary Reform Policy Working Group
of the Green Party of England and Wales
by
Brian Leslie, 12 Queens Road, Tunbridge Wells, TN4 9LU
www.sustecweb.co.uk
editor@sustecweb.co.uk

Eighth edition, revised, updated and enlarged

February 2013

Where does money come from?

a) Trees?
b) Thin air?
c) The government?
d) The Bank of England?
e) Commercial banks?

Well, yes; not a). It really doesn't grow on trees!

but b)? In essence, YES!
c)? Notes and coins are created by government, and then spent into circulation
via the banks but this means that because of the decline in their use, now
only under 3% of our money is created by government, despite popular belief.
d)? e)? Over 97% of the money used by society currently consists of nothing
more than book-entries or data in computers, kept mainly by the commercial
banks so the correct answer is, almost entirely, e). [Long ago, governments/
monarchs created nearly all of their nations money, but the banks have been
increasingly taking over this function during the last three centuries or so, and
especially over the last few decades.]
When a bank makes a loan, it does not take the money from anyones account,
or even from its own funds. It simply creates the money, by crediting its
customers account with the amount of the loan a liability of the bank and
balancing its books by entering the new amount owed to it by the customer as
an asset. When the borrower spends it, the credit circulates among accounts
indistinguishably from other money, but the borrower is left with the debt,
which attracts interest until it is repaid, at which point the principal is cancelled out of existence. Every loan makes a deposit in someones account;
note: its not the other way round! This is how the money supply grows: by
continuous increase in borrowing but therefore with a corresponding growth
of debt, which grows even faster, due to the interest added onto it.
It has to grow, because always more has to be found for repayment than has
been loaned, due to the interest charged on the loans which has been created
as someone elses loan so more loans have to be made, for this to be possible.
The interest received by the banks is partly paid out again, as its operating
expenses and dividends to shareholders, but some is retained as reserves,
which have to grow in proportion to the growth of the money stock, and are
not then available to perform as part of the money supply. If new loans are
not taken out faster than old ones are paid off, the economy is in trouble:
experiencing a recession or, worse, a depression. Recently, whole national
economies around the world have collapsed, essentially because of this as
is now happening, perhaps globally.

The levels of debt personal, commercial and governmental throughout the

world are at record levels, and still growing fast, along with record levels of
wealth for the elite few.

NET LENDING AND WRITE-OFFS

Total net lending by UK Banks and Building Societies rose by 1.6 billion in
February 2012.
Net secured lending rose by 1.2 billion in the month; net consumer credit
lending rose by 0.4 billion.
UK Banks and Building Societies wrote-off 6.9 billion of loans to individuals
over the four quarters to Q4 2011.
In Q4 of 2011 itself they wrote-off 1.48 billion (of which 907 million was
credit card debt) amounting to a daily write-off of 16.23m.
Data from Halifax House Price Index (Standardised, Non-Seasonally
Adjusted)

-- from Credit Action, April 2012

Money paid to shareholders goes largely into further shares, currency exchange,

derivatives, and other more exotic forms of gambling, tax havens, existing
housing, and luxury items, e.g. antiques and works of art, circulating in an
upper level. This makes it largely unavailable for purchase of industrys
current products, which must be sold to enable the debts incurred in their
production and distribution to be repaid, with interest. Money invested in
shares is mostly a matter of gambling selling and buying already-existing
shares in the hope of increasing dividends and not of buying new shares,

which help to fund companies business. This practice also drives companies
to seek to maximise their profits, at the expense of socially responsible
operation.
The banks also create vast sums of money to lend specifically for this
gambling, which now totals far more than is used for the real economy. Since
the deregulation of the 1980s, banks themselves also join in this gambling.
More and more has been gambled on derivatives, and the bubbles this has
created are now imploding.
None of the money used in these ways can at the same time be used to buy the
products of industry. This is a reason for the drive to export more than is
imported: because of the lack of money available to buy all the goods
home-produced.
To service the increasing debts created by this method of money creation,
there is a constant effort to increase the money supply by persuading people
to increase their level of debt as consumers, in the form of mortgages, HP,
credit card spending; as businesses, for expansion, for modernising, for
automating, for aggressive advertising. Enormous effort and materials are
expended by the advertising industry, and on wasteful, persuasive
packaging.

-- from Credit Action, April 2012

Banks especially favour loaning for asset purchases, such as leveraged

buy-outs of existing businesses, for the new buyers to downsize them by
selling off the most profitable bits, cutting staff. They then claim tax relief on
the interest payable on the loans, which eat up the profit the businesses would
otherwise have been taxed on. Banks also favour loans for real estate house

mortgages, etc., since these retain value the banks can claim in case of default
on repayments: much safer that loans to new businesses! This has caused the
house-price bubble which has recently burst, causing the crash in 2008.
The levels of debt personal, commercial and governmental throughout the
world are at record levels, and until the crash in 2008, were still growing fast,
along with record levels of wealth for the elite few.
------------------------------------------------

A Potted History of Banking

Until the last few centuries, though money was used for government purposes,
trade in luxuries and foreign trade, most people did not use money. Instead,
there was a range of social obligations, free use of local commons, and free
exchange.
For most of history, at least since year 0 AD, most money was coin of the
realm, giving the sovereign the seigniorage the face-value, less the cost of
producing it as it was spent into circulation, without creating any debt as it
was spent, so allowing it to circulate indefinitely.
Gradually, this was supplemented by bills of exchange or other receipts
issued by goldsmiths, who later became bankers, for the gold coin deposited
with them for safe-keeping. These were made payable to bearer on demand,
so that they could be used by the depositor in place of the coin, to make
payments; they slowly became widely accepted as money. Over time, the
bankers realised that only a small fraction of the coin deposited with them
was ever demanded back, so they could make loans themselves by issuing
these receipts, which became known as banknotes, instead of actual coin,
and could do this for more coin than they held. As long as they were not too
greedy, and caused a run on the bank by worried depositors demanding back
their coin when they suspected that there was not enough there, the bankers
were safe. This was the start of fractional reserve banking.
Modern banking is regarded to have started with the founding of the thenprivate Bank of England in 1694, when it lent money to the king, in exchange
for the right to issue the same value of banknotes, backed by the debt of
the government. This was the start of the National Debt.
The total of banknotes, issued by the Bank of England and by a growing
number of other banks, grew until they became recognised as causing
inflation, bankruptcies and other problems, and futher issue was banned by the
1844 Bank Act, giving the sole right of issue to the Bank of England.
Gradually, the other banks notes were withdrawn. This led to the growth of
the use, instead, of cheques to transfer funds between banks depositors, and
for the borrowers from the banks to make payment to others from their loans,
which had the same effect as banknotes of increasing the money supply;
money in current accounts is effectively, money-in-circulation.
The Bank of England was eventually nationalised in 1946, but its profit from
issuing banknotes had long been subject to payment to the government of
some part of it, and then in its entirety since 1928.
For most of this time, the law required banks to hold a proportion of their

liabilities (see p.1) as reserves in notes or coin, or in their own deposits in their
accounts at the Bank of England. This is the fractional reserve system. The
proportion slowly reduced, from 25% down to 10% or less, and now, with
bank deregulation (see below), it is up to the banks discretion. In some
cases, this is only 2-3%!
Until the 1940s, up to the end of the Second World War, coin and banknotes
were the main money-in-circulation. At that time, about half of the money
supply was still in this form few blue-collar workers had bank accounts.
Since then, however, the use of coin and banknotes has steadily declined,
much more rapidly since the bank deregulation of Reagan and Thatcher in
the late 1970s, as cheques and more recently electronic transfer became
increasingly used instead. As already noted, now over 97% of the money
supply is electronic bank-account money.
------------------------------------------------

from The Grip of Death see Further Reading

Note from this graph (above) that in 1984, for the first time, domestic debt
became greater than the money stock essentially, the sum of notes, coins
and money in current accounts, available for immediate spending. It has since
grown even more and even faster than the money stock.
As reported by Michael Meacher in The Sunday Telegraph, 24 Dec. 2006:
Britain is now one of the most unequal countries in the world. A recent
report on boardroom pay reveals that the average salary of chief executives
of the top FTSE 100 companies is now a staggering 46,154 a week. That is

115 times the average wage in Britain today, 249 times the national
minimum wage, and 519 times the basic state pension.
The latest Government figures, entombed within their publication
Households Below Average Incomes, show that the rich have made quite a
killing out of the last decade and that inequality rose sharply between 1997
and 2002. It has, however, fallen back somewhat since then, but it remains
above the level of 1997. This reflects the fact that though child credits,
working family tax credits, and pensioner benefits have given a modest and
very welcome lift for the poor, the rich have done hugely better. Official
statistics now show that 1.5 million people now earn more than 1,100 a
week.
Since then, the gap has grown a lot worse.

Why does this matter?

It matters in many ways:
1)By giving the banks the benefit of their interest charges on all the
outstanding loans, so on virtually the whole of our money supply, it sucks
wealth from the producers of it to the money-managers, and up to the 1%,
the target of the Occupy movement.
2) It does not ensure that the money supply is matched to societys needs,
and results in a cycle of booms and slumps. With a money supply based
on interest-bearing debt, booms and slumps are inevitable. When banks are
confident of a growing economy, they lend freely until they become worried
about the security of their loans and start calling them in, and refusing further
loans. This starts a vicious circle: contraction in the money supply, making
it difficult for firms to stay in business; less money paid out for employment,
making less money available for purchases; lower sales figures causing more
business failures; etc. Eventually something will reverse the process: in the
1930s, massive government spending (of money borrowed from banks) for the
New Deal in America; for rearmament in Britain and Germany and now?
This process was most dramatically evident in and following the 1929 stock
market crash, and has been happening repeatedly on a smaller scale before and
since. The ratio of total debts to bank reserves is now far greater than in the
1920s, and the total of consumer debt in this country now far exceeds
1.3trillion much greater than the money supply. Bankers and governments
are seriously worried about how to cope.
3) It gives the banks power to decide who can get loans, on what terms, for
what purpose. They then decide this according to their own needs for reliable
repayment of the loan and interest, and for collateral which they can claim
in case of default. Societys needs are irrelevant to their decisions as noted
above.
This results in their support for many socially/environmentally damaging
projects, as long as they can expect to bring in enough profit; and in their

support of large companies, and discrimination against small firms and

individuals, with often punitively high interest-charges for small loans, even
where these are actually granted and not refused. The recent housing price
bubble, leading up to the crash in 2007-8, was due to the banks preference
for lending on existing collateral, with claimable value in case of default,
rather than the more risky lending to business for speculative ventures.

Many small firms have been bankrupted when banks have called in their loans
or refused to extend or increase them at critical moments, just when profitable
trading was in sight. Armament production is seen as a more reliable
investment than renewable energy projects!
Dependence for a money supply on Banks willingness to make loans, with
a money supply continuously dependent on the granting of these loans, gives
the banks effective unaccountable power over the economy. The growth of the
TNCs (Trans-National Corporations) is the result of banks support for them
and for their influence on legislators. This is the fundamental reason for the
promotion of globalisation, by the elites in banking and the
multinational companies, supported by their chosen and promoted economists
and politicians acting in their own interest, but against that of the vast majority
of people throughout the world.
4) It results in growing indebtedness, and growing competition for funds and
profits to discharge the debts. It causes the crazy, desperate struggle between

nations to export their internally-unsellable goods, in exchange for foreign

debt. This has caused two world wars, as well as countless other wars.
It is the prime reason for the growth worldwide of national debts.
Banks also impose high levels of interest on this debt, causing the growing
divide of extreme wealth and poverty and giving the banks huge profits,
out of proportion to the service they perform. Practically every country has a
fast-growing national debt and the country with by far the biggest national
debt is the richest: the USA.
More and more farmers are going bankrupt.
More and more people in the UK have large mortgages. In 1960 3.3 million
properties were mortgaged; by 1996 this had risen to 11 million from under
20% to 45% of all houses and has grown further since. Mortgage debt now
forms over 80% of our money supply.
Industrial and individual debts are now increasing by about 10% a year.
Since the total of debt is far, far larger than the money supply, it is quite
impossible for all debts to be repaid and any serious effort in that direction
would collapse the whole money supply!

http://www.positivemoney.org/

5) It requires a growing money stock, to pay the interest on these increasing

debts. This makes essential the growth economy or price inflation, or both.
To attempt to repay these debts we cut expenditure and try to improve productivity (per person; not of non-renewable resources, machines, etc.!) Yet,

or rather because of this, we cannot afford to employ all those seeking work.
Despite the incredible productive capacity of the modern economy the
workforce is required to work ever harder, with increasing stress and poor
pay we are always chasing insufficient money. (In the 1960s, the TUC was
looking forward to a future Leisure Society!)
There is not enough money circulating because of the money system, and not
because of any shortage of resources though the profligate use of finite
resources, together with a growing world population, if not checked, will lead
to growing real shortages, which have in fact now begun. Meanwhile, the
usury built on the money supply, combined with the promotion of greed, is a
major cause of the growing extremes of wealth and poverty, and consequent
maldistribution of resources.
The shortage of money for consumer-spending creates intense competition
for sales, driving down prices while adding to costs, and driving down the
quality of the products in order to reduce costs. It also compels firms to
reduce and exploit their workforces and to move production overseas to
exploit cheaper and less protected workers in Third World countries.
6) It raises the cost of everything! The interest charged on all these loans is
added into the prices charged to cover costs and profits; on average, about half
the price of everything can be traced back to the interest charges.
Usury making money out of money has been condemned for its
destructive effect on society for thousands of years, by philosophers and
religious leaders. Having our money based on interest-bearing loans justifies
other charging of interest, to counter the inflationary effect of the drop in value
of earnings and savings.
7) It is the driving force of Finance-Capitalism; and Finance-Capitalism
requires scarcity, to maintain markets and thus profits. Between the two
World Wars, surplus food was destroyed on a massive scale, to maintain
prices while millions starved for lack of the means to pay for it. Poverty
in the Midst of Plenty! was the campaigning cry of the growing monetary
reform movement of the time, while politicians declared: We must export or
die!.
Toward the end of the Second World War the deliberate policy of planned
obsolescence was dreamed-up in the USA (and soon spread worldwide)
along with the arms race and wars, to ensure that the huge wartime increase
in productive power should never, applied to peacetime production, be able to
saturate the markets that is, we should never achieve abundance, and meet
everyones needs. If abundance were ever allowed to emerge, the markets
would collapse, and finance-capitalism would collapse in unredeemable debts!
To maintain demand for its goods, ever since the last world war industry has
been developing and perfecting this strategy of planned obsolescence as it
squanders resources and pollutes the planet. Products, or major components,
are now deliberately designed to be unrepairable, or spare parts are
deliberately overpriced, while the original article is underpriced, for the sake

of competitive advantage. This is an essential part of this strategy: to persuade,

if not to force people to throw away what they have and buy new in fact, to
regard buying new as a prime objective in life! Constantly changing fashions
are a deliberate part of this. Massive resources are devoted to this campaign of
persuasion, and the giving of new meanings to such words as disposable is
an essential part of this effort.
The advertising and packaging industries are responsible for massive waste
also in their own use of paper, card and plastics, in addition to the waste
inherent in the success of its persuasion to throw away and buy new.
A more widely recognised, more obviously murderous aspect of this plan is
the build-up of the arms industry, supported by the military build-up. This was
ably summarised by Philip Agee in 1991*:
Bush is trying to use the Gulf crisis, as Truman used the Korean War, to
justify enormous military expenditures in reaction to economic slump and
recession, while reducing as much as possible spending on civilian and
social programs. Exactly what Reagan and Bush did, for example, in the
early and mid 1980s with the evil empire scenario as justification.
In early 1950 the Truman Administration adopted a program to vastly
expand the U.S. and West European military services under a National
Security Council document called NSC-68. This document was Top Secret
for 25 years, and only by error was it released in 1975 and published. The
purpose of military expansion under NSC-68 was to reverse the economic
slide that began with the end of World War II wherein the U.S. GNP had
declined 20% and unemployment had risen from 700,000 to 4.7 million.
U.S. exports, despite the subsidy program known as the Marshall Plan,
were inadequate to sustain the economy, [my italics] and remilitarisation
of Western Europe would allow transfer of dollars, under so-called defense
grants, that would in turn generate European imports from the U.S.
As NSC-68 put the situation in early 1950: the United States and other
free nations will within a period of a few years at most experience a decline
in economic activity of serious proportions unless more positive
governmental programs are developed.
The solution adopted, the more positive governmental programs, was
expansion of the military. But support in Congress and the public at large
was lacking, for a variety of reasons, not least the increased taxes the
program would require. So Trumans State Department, under Dean
Acheson, set out to sell the so-called Communist Threat as justification,
through a fear campaign in the media that would create a permanent crisis
atmosphere.
Since that was written, we have had the Gulf War and the tragedy of 9/11,
the resurrection of the Star Wars project, and the wars on Afghanistan and
Iraq, then Libya, etc., soon to be followed by Syria,?
* in Gulf War Launches New World Order, in Open Eye, Issue 1

10

 The War on Terror is the replacement for the Communist Threat.

By the insane logic of the debt-based money system, governments cannot
afford the socially beneficial spending on welfare and infrastructure, but can,
indeed must, afford unlimited spending on armaments for their own
countrys defence against trade-war competitors driven to desperation, if
not to attack other countries to gain control of increasingly scarce resources,
especially oil. Armaments are also the most profitable and reliable export
commodity, needed to bring in the money to allow their citizens to buy their
necessities.
Governments and central banks nowadays try to steady the economy to avoid
the extremes of boom and slump, by manipulating interest rates. Raising them
makes borrowing more expensive, and so cools an overheating economy
regardless that it causes an increase in bankruptcies and house-repossessions
from mortgagees who can no longer afford the repayments, especially if they
are also the unfortunate victims of the cut-back, who have lost their jobs or
gone bankrupt. High interest rates are, of course, a boon to the lenders: the
banks and the rich.
(Before Thatcher and bank deregulation, adjustment of the banks reserve ratio
the ratio of the deposits they were legally obliged to keep as reserves with
the central bank to their liabilities, i.e. to the amount of money they had
created and lent into circulation was an alternative way of adjusting the
amount banks could lend, but was one that did not enrich the banks! Limits
were also imposed on levels of borrowing: on mortgages, as a multiple of
annual income; on hire-purchase, as a required % down-payment; etc.)
When the recession appears to be getting out of hand, interest rates can be
lowered again, to re-stimulate borrowing and spending. Consumer
confidence must be restored! though with the recent near-collapse of the
system, this is no longer working.
8) It allows financial speculators, using this unreal money, to gamble the
worlds currencies against each other, and destroy the worlds economies.
The Asian Meltdown and its spread to Russia, etc. would not have been
possible without bank-created credit used in speculative trading in
currencies. Over 95 times the money needed for international trade in goods
and services changes hands in this gambling. Bank deregulation now allows
these gamblers to borrow vast sums from banks for this, and banks themselves
join in this gambling.
9) It is behind the rise of third world debt. Loans were made to the Third
World, to provide extra markets for TNCs (Trans-National Corporations) and
profits for Western banks. These were denominated not in their own
currencies but in (mainly) US dollars. This placed their national debts under
the control not of their own governments, but of foreign powers, especially
the USA, and the international institutions they control: the World Bank, IMF
(International Monetary Fund), etc.; and consequent pressure to repay, with
mounting interest added, drives their efforts to export in competition with each

11

other, so driving down the prices they can get for their goods. The IMFimposed structural adjustment programmes add further injury.
10) This issue has been the fundamental driving force of the growth economy, and makes the collapse of the global economy imminent! Peak oil
the end of the increase of oil production, and start of its decline has arrived,
and desperate measures fracking, tar-sands extraction are being used in a
vain effort to stave off the decline. This decline will make continuing the mad
aim of economic growth impossible.
We must end the obscene waste involved in planned obsolescence, and
change back to producing durable, repairable goods. Ending this waste will
make the continued growth of the economy, and so the servicing of the
mountain of debt, impossible, with disastrous consequences, unless the way
money is created is changed; read on!
We now have also the belated recognition of the growing threat to the future
possibly, even to the continuation of life on Earth caused by the growth
of fossil-fuel use to make all this increase in production possible. Climate
Change has belatedly been recognised even by the vested-interest-dominated
governments of most of the world, as reality. This demands a drastic
reduction of use of fossil fuels, even without the exhaustion of their supply,
and the development of renewable energy and energy-efficiency. It also needs
a drastic reduction and localisation of production, concentrating on supply
and fair distribution of necessities smooth but rapid contraction, to avoid the
collapse of the economy!!

World population growth

World population continues to increase. With current world population now

over 7 billion people, there is significant pressure for excess population to
migrate from more densely populated countries to those less populated.
[see above right]
The alarming growth of World population has coincided with the
globalisation of the Western debt-based money system and its distortion of
wealth distribution, wanton destruction of resources, and growing insecurity in
the Majority World.
This in itself makes it clear that the elimination of debt, equitable sharing of
resources and security of provision in old age, are vital. We need also to make
it possible for women the World over to receive a good education and control
over their own fertility. Efforts must be made to publicise the need for
stopping or reversing the growth of world population, as urgent requirements
for transition to a sustainable World economy.

Radical change is urgent and possible!

The last few centuries have seen a struggle between bankers and governments
or people within them who understood the issues and were not in the pockets

12

From http://www.susps.org/overview/numbers.html

of the bankers for the power to create our money supply. The bankers sought
to gain the enormous power and wealth they now command.
The issue is not simply which is the right institution to hold this privilege, but
how the money should be brought into circulation.
When a government issues notes and coins, it gets the benefit of their face
value, less their production cost, as revenue. This is known as seigniorage. It
spends the money it creates, allowing it to circulate as a medium of exchange,
without a matching (and interest-bearing) debt so it can continue indefinitely
to circulate.
At the end of the last World War, about half of our money still existed as
notes and coins and we could afford to extend free education, introduce a free
National Health Service, and build a vast quantity of social housing as well as
restore the devastation of that war. Now, with the near-disappearance of use of
notes and coins, despite the huge increase of productive potential due to
mechanisation and automation, we can no longer afford these things!
Additionally, many countries central banks, including our Bank of England,
are now owned by their governments, so if these governments chose to borrow
from them, they would in effect get interest-free loans, since any nominal
interest charged, less the minimal cost of administration, would return to the
government as profit.
Incredibly, however, for political reasons, most government borrowing is from

13

commercial banks, and some from private individuals. The resulting interest
charge on the National Debt, paid out of taxation, is comparable with the
spending on education and health.
In contrast to the money the notes and coins issued by government, which
once issued can continue to circulate, money existing only as credit resulting from a bank loan is constantly being chased to be repaid and cancelled out
of existence, as well as accumulating massive debts, with the added interest,
owed to the banks of issue. It requires an ever-growing total of new debts to be
taken on, to replace those paid off and so to keep the system functioning.

What alternative is there?

Government has the power to create all our money, and can spend it all into
existence, not only as notes and coins but also as electronic/book-entry money
(credit) but without the corresponding debt, and so also without the interest
currently charged on it.
There is nothing new about this proposal. In fact, the conflict between private
and public power to create and issue any form of money has strongly
influenced history from early times.
In early Roman times, the government issued copper coins, with a statefixed face-value far above their metal-value, as the only legal tender within
their territory, and Rome flourished until it adopted gold and silver as trading
currency for domestic as well as international trade when private interests
then manipulated it, with disastrous consequences. (See Zarlenga Further
Reading at end.)
The Chinese were the first to use a government-issued paper currency, which
circulated for several centuries at least until the time of Marco Polo.
In colonial days, several American colonies issued their own paper
currencies, with great benefit, until the British government outlawed them
with the resulting problems leading to the war of independence.
Both sides in the American civil war financed their war-spending with
government-issued paper currency, since there simply was not enough gold or
silver, and banks were demanding too much interest for loans of debt, aka
credit. The Confederates over-issued, and so devalued their paper, but
Congress legislated for government-issued greenback notes to the extent of
just $450 million. These were issued as legal tender, so avoiding increasing the
national debt, much against the wishes of the banking interests, who hoped to
profit massively from the interest which would have been extracted from the
people by taxation.
The Guernsey States (its Parliament) in 1816 first issued its own paper currency to pull itself out of a serious depression and rebuild its public buildings,
roads and harbour. Despite determined opposition from the private banks, it
still continues to do so, but to a limited extent.
There are many other examples recorded of similar action by governments,

14

both local and national, with dramatic improvements resulting; and many
proposals from prominent economists of the past for monetary reform on these
lines.
We do not need to go back to more use of notes and coins to have the government create more of our money; it can create credit just as banks do, but
without creating any interest-bearing debt along with it. There have recently
been several EDMs (Early Day Motions) put to Parliament on these lines.

Fear

Many who have understood the implications of monetary reform are afraid to
rock the boat. They fear a backlash from the powerful people benefiting from
the present system, and/or a collapse of the economy.
They are right to be worried; many atrocities have been committed in the past
to preserve those privileges. But fundamental reform is becoming desperately
urgent. Society, the economy and the environment are all on the verge of
collapse and that should worry everyone! Increasingly, influential
economists and campaigners are speaking out, and gaining respect for it.
Increasingly, those at the top of the pile are realising how precarious and
damaging is their position. They too must be experiencing fear!

All the main political parties around the world, and the corporate media, are
still firmly in the pockets of the bankers and the multinationals that the banks
have created by their policies; their leaders are the dupes or paid servants of
them. Bribery and corruption are rife. (See the periodical Corporate Watch,
or David Kortens book, When Corporations Rule the World.)
In the last few decades, many countries have suffered a near-collapse of their

15

economies: Mexico, Argentina, Japan, the Asian Tiger economies, Russia

... Greece, Spain, Ireland the EU Now the USA is seriously threatened;
this could well trigger the final (imminent?) collapse, worldwide!
When that final collapse does occur if reform is not adopted in time to
escape or forestall it we need to be ready with workable alternatives, to stop
history repeating itself.

How can it be done?

Many ways have been proposed to make the changeover, at a stroke or

gradually, and their merits need to be compared. MERVYN KING, Governor
of the Bank of England, recently suggested that some form of functional
separationto divorce the payment system from risky lending activity that
is to prevent fractional reserve banking (for example, as proposed by Fisher,
1936, Friedman, 1960, Tobin, 1987 and more recently by Kay, 2009) [should
be considered]. He ended: Of all the many ways of organising banking, the
worst is the one we have today.
In 1926 the leading radiochemist, Frederick Soddy published a book, Wealth,
Virtual Wealth and Debt, in which he advocated ending the banks
fractional-reserve money-creation. This idea was taken up in 1935/6, by a
leading US economist, Irving Fisher, who published a book, 100% Money,
which was supported by the influential Chicago School of the time
Henry Simons, Milton Freidman, &c. It proposed ending the banks
fractional reserve privilege and restoring to government the sole right to
create the nations money. This was not implemented at the time, but a recent
working paper by a Dr. Michael Kumhof of the IMF (the International
Monetary Fund) found that the plan exceeded Irving Fishers best
expectations. (See http://www.imf.org/external/pubs/cat/longres.aspx?sk=26178.0)
James Robertson and Joseph Huber co-authored a book published by the New
Economics Foundation in 2000, Creating New Money. In essence it updates
Fishers proposal. They propose that on a given date, all the banks customers
chequeable sight deposits (i.e. current accounts) should cease to be part of
banks liabilities. Money in customers current accounts would henceforth
belong to those customers, though lodged with the banks for safekeeping and
accounting they could no longer be claimed by the banks, and owed to the
customers, as is now the case. (Thus customers current-account money would
be safe from disappearance as the result of the failure of any bank.)
Banks customers deposit (savings/investment) accounts would become the
sole source available for bank-loans to private businesses and the public, other
than the banks own capital or money borrowed from other banks, on the open
market, or from abroad.
Banks would no longer be allowed to lend money into existence.
To complement the removal of customers current-account balances from their
liabilities, all the banks assets which consist of outstanding loans at that
time would be transferred to the central bank, so that the repayments would be
made, via the banks, to that central bank.

16

Credit in bank accounts, as well as coins and notes of the realm, would
henceforth be legal tender Plain Money. (See Creating New Money,
details at the end of this booklet.)
The central bank, or a national monetary authority, would then have the
responsibility to decide the amount of new money needed by society at, say,
monthly intervals, and credit it to the government to spend it into circulation
ideally, in part, as part of Citizens Incomes (see below); or if there were ever
found to be too much in circulation, to recall some of the governments money
for cancellation. The monetary authoritys workings must be open to public
scrutiny. To maintain a constant volume of money in circulation (if this is
accepted as needed), it would have initially to create the new money at the
same rate that outstanding bank-loans were being repaid and cancelled.
This change would rapidly reduce the amount of debt-based money in
existence, rather than increasing the total money supply. It would, over time,
drastically reduce the levels of outstanding debts, ultimately to a negligible
amount and so reduce the need for further borrowing. It would also give the
monetary authority direct control of the money supply, instead of the current,
insanely counter-productive method of varying interest rates.
Similar proposals have since been put into draft Acts of Parliament/Congress
by the groups Positive Money, in the UK, and the American Monetary Institute, in the USA.
Other proposed schemes would operate more gradually, by reintroducing
and progressively increasing the statutory reserves banks are required to hold
eventually to 100% and also by progressively increasing restrictions on
peoples borrowing, so reducing banks capacity to create money by lending,
as the government increases the money it creates in place of this.
How to decide how much money is needed in these new circumstances will
have to be determined over time in light of experience, but this period of trial
and error cannot be worse than the present situation.
With the level of indebtedness reducing, the stresses and strains created by
this system should progressively reduce, and it is probable that ensuring that
enough money is available is far more important than making sure not to
over-supply it. There must be enough to allow the purchase of the goods on
sale, and for investment in new production, for savings, etc. (but not for
gambling on the Foreign/Stock Exchanges, or derivatives!) but the velocity
of circulation, as well as development/use of local/alternative currencies, or
the size of the gift economy, etc. will influence this.
The only limits which need be placed on production would be those arising
from nature the need to limit pollution to the absorbing capacity of the
environment, and the need to conserve and recover non-renewable or
over-used resources. Whatever is physically possible and socially
desirable can and must be made financially possible, and this includes the
drastic reduction of employment needed, to cut our demands on the
environment, allowing in its place freedom of choice of occupation, without
the imperative of gaining income by this means; and gaining increasing
leisure! See Citizens Incomes, on next page.

17

As plain money replaced debt-based money, and the general level of debt
shrank, banks would be competing hard to find borrowers, so interest rates
should eventually drop to, perhaps, % to 1% to cover administration costs,
with a small margin for profit. Also, with the reduction of debt levels, the cost
of interest charges entering into prices should greatly diminish (even if usury
is not eventually prohibited!), leading to falling prices.
Banks would probably compensate for the loss of income from the interest on
the money they were now prevented from creating, by reintroducing/extending
service charges on transactions, but competition should also keep these low.
The result would be a fairer distribution of the costs of banking than occurs
now and the lifting of them from those without bank accounts! (As noted
above, as well as the interest charged on the National Debt and paid out of
taxation, interest charges enter significantly into the prices of everything see
Interest and Inflation Free Money, by Margrit Kennedy.)
Reducing the opportunities to gamble with debt-based money, as well as
paying off all the accumulated debts in society, along with introduction of
Citizens Incomes, would also do much to reduce the extremes of wealth. The
shadow banking and other financial profiteering must be restricted or banned,
but ending the banks power to create money to lend for this purpose would
itself limit this activity.
Other factors influencing the amount of national money needed are the extent
of use of alternative currencies, such as LETS, or local community currencies,
and the regrowth of the moneyless gift economy. While the law continues to
require taxes, debts and certain other payments to be made in national
currency, and it is also needed for exchange into foreign currency, these
alternatives cannot replace it, but they could significantly reduce the volume
of it required.
The velocity of circulation is another factor affecting the amount of money
needed in the economy. This is generally fairly constant, however. Rapid
change has in the past been induced by depressions; but given the reforms
proposed, there should be little cause for much variation in velocity. If needed,
the monetary authority could easily and rapidly adjust the supply to
compensate.
Though not specifically part of the Robertson/Huber proposal or most others,
the new money should be used in part to buy back government bonds as they
mature, and so reduce and eventually cancel the National Debt.

Inflationary?

This is the usual dismissive accusation launched by bankers and their

friendly economists and politicians to dismiss any proposal for government
to create more of the money supply, when in fact it is the banks interestbearing debt-based money which is itself the main cause of inflation as well
as of far more serious problems. (Usually no attempt is made to justify this
accusation; it is assumed to be self-evident!) The very meaning of inflation
is, in fact, highly debatable, as well as are its other causes, and ways of
measuring it.

18

The only justification for this accusation is that, if banks were free to use the
new money as reserves to increase their debt-based money loans, then this
could lead to extra inflation through the banks use of it as base to further
increase the money supply. But with the proposed reform, banks could no
longer do this. One conclusion of Dr. Kumhofs study of Fishers Chicago
Plan is that the potential for inflation is much, much smaller when money is
created by the government instead of by the banks.
The reform proposals would give a publicly accountable body such as a department of the central bank full control of the volume of the money supply,
and the possibility to make money serve society, instead of controlling and
destroying it.
The monetary authority must be democratically accountable, and charged with
the duty of managing the money supply to meet the needs of society. The data
and criteria used must be open to public scrutiny and debate. In the last resort
the monetary authority should be open to direction by parliament (not by the
Government).

Citizens Incomes

For a sustainable economy, we need to end the need for growth, which is
supposedly required to provide the incomes which derive from paid
employment, and which are generally accepted as necessarily the main source
of income for nearly everyone. This means that basic (or Citizens) incomes
must be provided independently of employment, if we are to enjoy the
potential of modern technology to provide increasing leisure, with efficient
production for need, in place of the present mad competition to exploit people
and resources to keep an unsound system going. We must end wage-slavery!
The threat posed by global warming means that we need to drastically reduce
use of fossil fuels, and after the initial readjustments, be prepared to enjoy a
life of leisure instead of compulsive consumption!
If Citizens Incomes were introduced and initially funded out of new, debt-free
credit (or plain money) then the combined effect of these proposals would
be dramatic indeed. Citizens Incomes would replace most benefits, such as
JSA, and given monetary reform, could be set at a much more generous level
than is possible without it.
This would have the effect of freeing people from the compulsion to find paid
employment. Self-employment and co-operatives could flourish, with the
fall-back of Citizens Incomes to support their members, and no longer would
people be forced into telesales; distributing free, unwanted advertising
material; road building; armament production; the armed forces; (The list is
almost endless!)
The pathetic efforts to escape poverty by starting unwanted businesses,
doomed to failure, need no longer be made. No employer would be able to
exploit its workers, as they would be able to dictate terms. It would spell
the end of wage-slavery, as well as of the poverty trap. Industry could be
transformed to produce, efficiently, the high-quality, repairable, indefinitely
durable goods we need and would all prefer, given the money to allow us this

19

choice without worries about redundancies or saturation of markets as needs

were met.
Citizens Incomes would also have a major effect in countering the uneven
distribution of income among the various regions of the country.
The gift economy could flourish as never before, and increasingly replace
the money economy, starting with the areas in which it has been driven out
over the last century and more: the domestic and local community.

Taxation

Not all government expenditure can be funded by its creation of Plain

Money, even in the initial stages of conversion, when funding entirely in this
way might not replace all need for taxation. Ultimately, once all the debt-based
money had been retired, since the Plain Money would continue to circulate
unless in part withdrawn deliberately by the Monetary Authority, no further
creation of Plain Money would be needed, unless the economy ever needed to
grow.
With the ending of the pressures and distortions created by debt-based
money, contraction of the economy should be expected and to reduce the
threat of climate change, must urgently be accomplished, after an initial
period of possible expansion while all the needed but neglected aspects of the
economy and infrastructure were put right (changeover to organic farming;
repair and insulation of the housing stock; development of renewable
energy sources; local production developed to meet local needs; redesigning
and producing high quality products designed for energy efficiency, durability
and easy repair; repair, modernising and rebuilding of the Victorian sewage
system; extending the rail network and repairing roads {not building more!}
etc.).
The pressures to create artificial demand would have been removed. Debt
would have become the exception, instead of the rule.
This means that taxation would then again be needed to fund most government
expenditure; but most people would have become far better off, and so better
able to afford it. Conversely, as people gain in prosperity, less government
spending will be needed to support them.
Eventually some additional taxation may well sometimes be needed to
withdraw surplus money from circulation, as use of money contracts, to avoid
a situation where there is genuinely too much money.
The type of taxation must change, however. Just as Citizens Incomes can be
seen as the distribution to all of their share of the value of the common
cultural inheritance from the past the infrastructure of knowledge, skills,
roads, buildings, organisation, tools and equipment developed by past
generations on which present productive capacity essentially depends and
of the value of the commons all the natural resources on which all wealth
is based; so that value should be collected for redistribution by Land Value
Taxation a tax on the rental value of all land and resource taxation on all

20

non-renewable or overused natural resources, such as metals, aggregates and

timber.
These taxes should be applied as near as possible to the point of extraction
from the environment, and by pushing up their prices closer to their true value
to society, would give a great boost to economy of use, to recycling and to
substitution by more abundant/sustainable alternatives. Pollution taxes
should also be applied, to protect the environment from damage,
supplementing direct regulation or prohibitions.
The benefits of the common cultural inheritance of infrastructure,
mechanised/automated production, etc., are currently claimed mainly by the
very rich and by large commercial companies. This suggests that those people
and companies should initially be heavily taxed. Though this would push up
the prices of the companies products, it therefore would make competition
from small, local enterprises catering to local needs far more viable.
To avoid gross initial injustices, Land Value Taxation would have to be
introduced at a small percentage of rental values perhaps the 10% at which
level it now exists in a number of places around the World and slowly but
systematically increased, eventually at or close to 100%. As revenue from this
source increased, income tax a tax on effort could be reduced; I would
suggest, by progressive raising of the tax threshold, so that fewer and fewer
people would remain in the tax bracket. Eventually it should be possible
to end income tax altogether. By then, the extremes of income should have
shrunk to socially acceptable and justifiable levels.

Government spending

Any government adopting this measure will have no problem funding

needed infrastructure repair, social services, etc.; conversely, it would not need
to yield to pressure from Big Business for subsidies to create or to
preserve jobs, or to bribe foreign firms for inward investment. It would
not need to subsidise armaments firms for them to get export orders, or to
guarantee their losses.
It could spend as much as society required it to, limited only by the physical/
ecological constraints on production of wealth. But with adequate Citizens
Incomes, the need for Government spending on support services would be
greatly reduced. As already mentioned, the National Debt could be redeemed,
as the bonds and securities it consists of came to maturity.

Foreign Exchange

These internal changes need not affect present arrangements for foreign
exchange, except in the detail that private banks would not themselves be able
to create the money for exchange.
If this country introduced monetary reform on these lines, other countries
which have not also reformed their money systems would remain desperate to
export to us, glad to accept our debt in exchange, to prop up their economy
(and if we needed to export our goods to gain needed imports, our government
could, if necessary, choose to subsidise them).

21

Low or eventually perhaps even zero interest rates on money loaned for
investment, and greater funds available for reinvestment without need for
borrowing, would not encourage inward investment, but we would have
no need to seek such inward investment, since we would be creating enough
money to fund our own investment.
Exchange with any other countries with reformed systems would be a matter
of exchanging genuine surpluses for mutual benefit. Neither country would be
desperate to export in order to keep its economy going.
The Pound Sterling is one of the worlds reserve currencies, used by other
central banks as a more dependable alternative to their national currencies.
(The US Dollar is currently the major one, though it is now in serious trouble.)
With reform, this country should not need to hold large reserves of foreign
currency, but as the Pound could far more dependably be made to retain a
steady value, as it would be directly related to the countrys productive
capacity instead of being vulnerable to manipulation by speculators and
misguided counter-measures by our central bank, so it should become a more
favoured reserve for currencies not yet reformed.
However, holding a foreign currency as a reserve gives the country of origin
of that currency the seigniorage on it. The US has benefited in this way from
trillions of dollars worth of imports, much of it at the expense of the Third
World. Third World debts are mostly denominated in US dollars, and with US
inflation and IMF-enforced Third World currency devaluations, this has hugely
increased the debts of the Third World to the USA.
It is clearly wrong for any country to enjoy this advantage, and there is need
for an international currency. A number have been proposed.
In 1944 J M Keynes proposed an international currency, the Bancor, which
would be administered by a World Bank, and would charge interest on both
creditor and debtor countries outstanding balances, to encourage balance of
trade. This was rejected by the US delegates at the Bretton Woods conference,
when the World Bank and IMF were created.
A more recent proposal for an international currency, from the Global
Commons Institute, is for the IMF to administer a currency based on
tradable emission rights for greenhouse gases, issued on a per-capita basis.
These would be issued annually, in progressively smaller amounts, until the
emissions had reduced to a sustainable level. They could be linked to internal,
national per-capita allocations. This idea, known as Contraction and
Convergence, has been gaining much support among official bodies, national
and international.
Other proposals base the international currency on the value of a basket of
internationally traded primary commodities.
If all countries adopted plain money systems, the foreign-exchange
gambling would not be possible on any significant scale. This now forms
some 95% of international exchanges, with less than 5% being used for trade
in goods and services. Meanwhile, the general adoption of the proposed
Tobin tax a small tax imposed internationally on all currency transactions

22

 would either kill-off this gambling or restrict it and yield substantial funds
for, e.g., international poverty relief, while not seriously affecting international
trade in goods and services. Such a tax could fund international initiatives by
the UN or other existing or future bodies.

Final thoughts ...

As Mike Rowbotham wrote in The Grip of Death, in1998:

Monetary reform is an approach to economics an approach to improving the
foundation upon which economies are built. Those who have advocated it are part
of a unique tradition of social and economic criticism. Monetary reform is therefore
radical in the literal sense, in that it involves first identifying the root cause of related
problems and second, searching for solutions that can make a constructive contribution to solving these problems. Not only are there a large number of possible systems
of reform, but within each basic scheme or proposal there are a host of options additional decisions, considerations and possibilities which again underline the scope of
monetary reform. .
The second point is that monetary reform, whilst it may have simple
principles, is a complex issue, involving supportive measures to back up the new
monetary flows involved. Any scheme is bound to be speculative and sketchy in the
initial stages, and would have to compensate for events as they occur. But with a
negative 100 billion monetary base in the UK, there is an undeniable need for a
healthy supply of debt-free money, and an awful long way to go before any question
of excessive debt-free money creation arises, by which time the major trends would
have become evident and any problems begun to be anticipated.
The final point to be made is that not starting a programme of reform is as much an
act of faith and a policy decision as deciding to embark on one. It is an act of faith
that a financial system that has developed almost by default, based upon minimalist
government support and maximum banking activity and deregulation, will not go on
to cause even greater damage and social misery. It is also the continuation of a policy
of repression and covert rule by finance, and the exclusion of democratic principles
from the economic domain.

Other relevant quotes:

Only Congress shall have the power to coin [i.e. issue] money, regulate the value
thereof... Constitution of the United States of America. All banks in America therefore operate in clear breach of the American constitution.
We believe that the existing system of debt-finance, whereby practically all money
comes into circulation as interest-bearing debt is prejudicial to human well-being, a
drag on the development and distribution of wealth, finds no justification in the nature
of things, and perpetuates a wrong conception of the function of money in human
society.
Congregational Union of Scotland; report 1962
. why not challenge the virtual monopoly we have allowed the private sector
bankers to exercise over the creation of credit? Why shouldnt a socially aware and
economically responsible government create credit where it is
appropriate in order to ensure .... investment is made and at the same time strike a
great blow for the democratic control of the economy?
Bryan Gould, M.P.; New Statesman. 19 Feb 1993
We should study credit and how to use it. Why not even appoint a commission on

23

it rather than stand in awe of finance, mouthing the platitudes of piggy-banking? ...
Credit is the key. We can control the excesses of private credit. We can mobilise the
power of public credit. Government is required to borrow or tax for every penny it
spends.... This privatisation of credit cant be right. Using public credit eases the debt
burden. It is creating money, not borrowing it.
Austin Mitchell M.P.: Borrowers can be Choosers. 1994.
A BALANCED FINANCIAL SYSTEM
It is important to be quite clear over what is meant by debt-free money. What is being
proposed is that money be created that does not have to be repaid. The two questions
which have always vexed both those who have sought such a reform, as well as those
who have not fully understood the need for such a reform are these: first, how much
of this debt-free money should be created, and second, who is to get this free money?
How much debt-free money is needed, and how should it be distributed within
society?
This latter is a major issue. Debt-free money has to get into the economy, and whoever gets it first, gets it literally, free.
As for a Basic Income, this is simply the most obviously democratic way of distributing the debt-free money needed. It is also highly constructive, since it would offer a
positive basis for unemployment, and an end to total wage dependence. Over a period
of years, this would inject stable money at a controlled rate into the economy. As debt
decreased, and the gap between purchasing power and prices closed, so the need to
create money would also decrease.
No-one goes into debt unless they have to; no-one wants to borrow unless they have
to; no-one takes out a loan if they have other funds available. In other words, get the
supply of debt-free money right, and the loan system will fall into place. The steady
creation of debt-free money would allow consumers to settle past debts, and buy
without going into further debt, gradually leading to the replacement of the current
stock of debt-money with a permanent stock of stable money. The need to borrow
to buy would be substantially reduced. People and businesses are individually
responsible for repaying loans, plus interest, and only use the loan system if there are
no other funds available.
Mike Rowbotham

Further reading:

The England and Wales Green Partys Money Reform Policy Working Group
publishes a magazine, Sustainable Economics, (SustEc) at 12/year (6 issues) or
1.20 per copy + 60p p&p, payable to Brian Leslie (see inside front cover) or view it
on its website, www.sustecweb.co.uk
Andrew Jackson and Ben Dyson, Modernising Money, 2012 Positive Money ISBN
978-0-957448-0-5 14.99 www.positivmoney.org
- documents, in more detail than ever before, exactly how we could fix the monetary
system for the benefit of business, society, and the environment.
Joseph Huber and James Robertson, Creating New Money - A monetary reform for
the new age, New Economics Foundation June 2000 ISBN 1 899407 29 4 7.95
Looks at changes brought about by computerisation, money as information, and
proposes a way to return the seigniorage on money creation to government, its benefits

24

and possible objections, and how this would affect society. Extensive literature list.
(pdf of it viewable on www.jamesrobertson.com/book/creatingnewmoney.pdf)
A 47 minute DVD, Money as Debt, from Canada, by Paul Grignon, outlines in
cartoon form in 47 minutes, the way the modern debt-money system developed, its
effects and possible reforms. Can be viewed on line at http://video.google.com/videoplay?docid=-2550156453790090544.
Stephen Zarlenga, The Lost Science of Money: The Mythology of Money the Story
of Power. 724 pp. Survey from ancient times to the present, highlighting the
deliberate mystification about the nature of money for exploitation of the system.
American Monetary Institute, 2002 ISBN 1-930748-03-5 (See the web site, http://
www.monetary.org/lostscienceofmoney.)
James Robertson Future Money Breakdown or Breakthrough? Green Books, 2012
Expands on the themes in this booklet; recommended!
Ellen H Brown, The Web of Debt, Third Millennium Press, 2007 ISBN 978 0 9795608
0 4 www.webofdebt.com
524 very readable pages covering the disastrous development of the web of the
global money-power and the efforts by politicians and others to counter it over the
past centuries, and how we can break free. Focusing mainly on the developments in
the USA, since these are most clearly documented and show most clearly the struggle
and the need for reform, and covering also its dominant relationships with Europe and
the rest of the world, and the UKs part in the origins of central banking. Very fully
referenced.
Michael Rowbotham, The Grip of Death, A study of modern money, debt slavery and
destructive economics, Jon Carpenter Publishing (see below),1998 ISBN 1 897766
40 8 Traces the influence of the debt-pressures deriving from the money-creation
process on the development of the modern, destructive economy and see its fine
Further Reading section.
Michael Rowbotham, Goodbye America! Globalisation, debt and the dollar empire
Publ. May 2000 ISBN 1 897766 56 4 - Explores the relation of Third World debt to
globalisation, to the debt-money system, and to the issue of political power. 11 Post
free in the UK from Jon Carpenter Publishing, Alder House, Market Street,
Charlbury, Chipping Norton, Oxfordshire OX7 3PH (Add 10% for Europe, 20%
ROW)
Visa/Mastercard by phone: 01689 870437
Where Does Money Come From? A Guide to the UK Monetary and Banking System
by Josh Ryan-Collins, Tony Greenham, Richard Werner and Andrew Jackson, with a
foreward by Prof. Charles A.E.Goodhart. Published by the New Economics
Foundation in Sept 2011. ISBN 978-1-908506-07-8
also free downloads of other publications from http://www.positivemoney.org/
publications/
Patrick S J Cormack & Bill Still, The Money Masters. How International Bankers
Gained Control of America, 1998 Royalty Production Co. A 3-hour video,
covering events from Christs expulsion of the money-changers, through European
events of the last three centuries, to the US of the 19th & 20th C, in the struggle for
power between banks and politicians See www.themoneymasters.com. Also the
sequel, the Secret of Oz, book or DVD.

25

Frances Hutchinson What EVERYBODY really wants to know about

MONEY 1998. ISBN 01608 811969. 12 Pb Order post free from Jon
Carpenter Publishing, see above.
This relates the subject of money to a huge range of issues past and
present. These include feminism, Christianity, land tenure and enclosure,
power relationships and politics, &c, but her primary topic is the Guild
Socialist and Social Credit ideas, developed jointly by C H Douglas and A R
Orage, in the Guild Socialist NEW AGE weekly, contrasted with the
philosophy and background history of the present state of global money.
Especially valuable for those new to the debate on
monetary reform, the book addresses a host of issues that need attention to
challenge the current mindset and stimulate fresh thought, and it is to be
highly recommended for this. Emphasis is placed on the important distinction
between real and financial credit crucial in considering the current global
economic (i.e. financial) crisis!
Margrit Kennedy, Interest and Inflation Free Money Seva International;
ISBN 0-9643025-0-0 fine examination of the widespread and dire effects
of interest-charges, but proposes demurrage-charges (negative interest, la
Gessel) as a remedy.
Richard Douthwaite, The Growth Illusion, second edition, Green Books, 1999
12.95 ISBN 1 870098 76 5 Updated discussion of economic trends,
especially the harm done by growth.
Molly Scott Cato, Market Schmarket Building the Post-Capitalist Economy
2006 New Clarion Press, 5 Church Row, Gretton, Cheltenham GL54 5HG,
UK Pb 13.95, hb 27.50 A wide-ranging survey of historical and current
economies, critical of the myth of the free market and the effects of the
usurious debt-money system, then outlining alternatives. Written in plain
English!
Roy Madron and John Jopling GAIAN DEMOCRACIES Redefining
Globalisation & People-Power. Schumacher Briefing No.9. 2003. Green
Books 8 ISBN 1 903998 28 X Analyses the world economy in terms of
systems theory, and identifies the dominant, self-perpetuating human system,
which threatens our future, as the Global Monetocracy.
Alan D Armstrong, To Restrain the Red Horse, Towerhouse Publishing Ltd,
1996 ISBN 0 9529320 0 8 - Well researched update of Social Credit.
Richard Douthwaite, The Ecology of Money, Schumacher Briefings No. 4.
Green Books, 1999 5 ISBN 1 70098 81 1 Review of the historical and
potential future forms of money, and their effects.
David Korten, When Corporations Rule the World, Earthscan, 1995 - Powerful
attack on the power and destructiveness of corporate commerce and financial
institutions, esp. the IMF and World Bank.
William Hixson, A Matter of Interest. Reexamining money, debt and real

26

economic growth, Praeger, 1991 - A closely-argued, historically referenced

study.
William F Hixson, Its Your Money, COMER Publications, 1997 ISBN 0
9680681 1 1
$10 + P&p A concise, closely argued case for government
to create more, and banks less, of our money supply.
William Hixson, Whats the Difference between Bankers and Counterfeiters?,
2005. E-BookTime, LLC ISBN 1-59824-060-9 A collection of his essays,
organised into three parts.
Eric de Mar, A Matter of Life or Debt, Humane World Community Inc., 1983
ISBN 0 961987`7 0 7 Passionately argued condemnation of the effects of
the debt-based money system, but weak on remedies.
Herman E Daly and John B Cobb Jr, For the Common Good, Beacon Press
edition, 1994 ISBN 0 8070 4705 8 Environmental economics, with an
afterword arguing for monetary reform, on lines of the 100% Reserve
proposal of Irving Fisher in 1935.
J K Galbraith, Money: whence it came, where it went, 1975. Penguin
James Gibb Stuart Fantopian Update Ossian Publishers, 268 Bath Street,
Glasgow G2 4JR 6 A parable illustrating the case for monetary reform.
Richard Heinberg, The Partys Over Oil, War and the Fate of Industrial
Societies, 2003, ISBN 1 902636 45 7 and Power Down Options and Actions
for a Post-Carbon World, 2004, ISBN 1 902636 63 5. Clairview. Predicts the
serious consequences of the imminent peaking of oil supplies, and their impact
on the debt-based money-driven economy. Looks at likely consequences and
options for action.

Websites worth a look:

An Abbreviated Monetary History of

the US:
Part 1 by Stephen Zarlenga on
www.monetary.org/
briefusmonetaryhistory.htm
Monetary reform:
www.sustecweb.co.uk
www.positivemoney .org.uk
www.monetary.org
http://www.resilience.org/stories/
2013-01-18/a-return-to-sovereignmoney
www.moneyreformparty.org.uk/
www.moneyasdebt.net
www.prosperityuk.com

Social Credit on:

www.douglassocialcredit.com
www.scss.gil.com.au
www.democrats.org.nz
Land Reform/LVT:
The Land new magazine:
www.thelandisours.org
www.tlio.org.uk
www.henrygeorge.org.uk
The Land Value Tax Campaign:
www.landvaluetax.org.uk/index.htm
www.earthrights.net/
www.prosperityuk.com
www.moneyasdebt.net

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More quotes:

Since I entered politics, I have chiefly had mens views confided to me

privately. Some of the biggest men in the United States, in the field of
commerce and manufacture, are afraid of something. They know that there is
a power somewhere so organized, so subtle, so watchful, so interlocked, so
complete, so pervasive, that they better not speak above their breath when they
speak in condemnation of it.
Woodrow Wilson, The New Freedom (1913)
www.gutenberg.org/etext/14811
I am afraid that the ordinary citizen will not like to be told that banks can
and do create money...And they who control the credit of the nation direct the
policy of Governments and hold in the hollow of their hands the destiny of the
people
Reginald McKenna, past Chairman of the Board, Midland Bank of England
The inability of the Colonists to get power to issue their own money
permanently out of the hands of George III and the international bankers was
the PRIME reason for the revolutionary war.
Benjamin Franklin http://www.english.udel.edu/lemay/franklin/

The Government should create, issue, and circulate all the currency
and credits needed to satisfy the spending power of the Government and the
buying power of consumers. By the adoption of these principles, the taxpayers
will be saved immense sums of interest. The privilege of creating and issuing
money is not only the supreme prerogative of government, but it is the
governments greatest creative opportunity.
Abraham Lincoln, assassinated president of the United States
If all the bank loans were paid, no one could have a bank deposit, and there
would not be a dollar of coin or currency in circulation. This is a staggering
thought. We are completely dependent on the commercial banks. Someone
has to borrow every dollar we have in circulation, cash, or credit. If the banks
create ample synthetic money we are prosperous; if not, we starve. We are
absolutely without a permanent money system. When one gets a complete
grasp of the picture, the tragic absurdity of our hopeless situation is almost
incredible but there it is.
Robert Hemphill. Credit Manager, Federal Reserve Bank of Atlanta
www.worldnewsstand.net/today/articles/fedprivatelyowned.htm
Whoever controls the volume of money in our country is absolute master
of all industry and commerce...and when you realize that the entire system is
very easily controlled, one way or another, by a few powerful men at the top,
you will not have to be told how periods of inflation and depression originate.
James A. Garfield, assassinated president of the United States

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The world is governed by very different personages from what is imagined

by those who are not behind the scenes.
Benjamin Disraeli, first Prime Minister of England, in a novel he published
in 1844 called Coningsby, the New Generation.
Anyone who believes exponential growth can go on forever in a finite world
is either a madman or an economist.
Kenneth Boulding, economist
http://cepa.newschool.edu/het/profiles/boulding.htm
The powers of financial capitalism had another far reaching aim, nothing
less than to create a world system of financial control in private hands able to
dominate the political system of each country and the economy of the world as
a whole. This system was to be controlled in a feudalist fashion by the central
banks of the world acting in concert, by secret agreements, arrived at in
frequent private meetings and conferences. The apex of the system was the
Bank for International Settlements in Basle, Switzerland, a private bank
owned and controlled by the worlds central banks which were themselves
private corporations. The growth of financial capitalism made possible a
centralization of world economic control and use of this power for the direct
benefit of financiers and the indirect injury of all other economic groups.
Tragedy and Hope: A History of The World in Our Time (Macmillan
Company, 1966) by Professor Carroll Quigley of Georgetown University,
highly esteemed by his former student, former US President, Bill Clinton
The modern banking system manufactures money out of nothing. The process
is perhaps the most astounding piece of sleight of hand that was ever invented.
Banking was conceived in iniquity and born in sin. Bankers own the Earth.
Take it away from them, but leave them the power to create money, and with
the flick of the pen they will create enough money to buy it back again...
Take this great power away from them and all great fortunes like mine will
disappear, and they ought to disappear, for then this would be a better and
happier world to live in. But if you want to continue to be slaves of the banks
and pay the cost of your own slavery, then let bankers continue to create money and control credit.
Sir Josiah Stamp, Director of the Bank of England 1928-1941
(reputed to be the 2nd richest man in Britain at the time)
http://members.shaw.ca/theultimatescam/index.htm
Those who manipulate this unseen mechanism of society constitute an
invisible government which is the true ruling power of our country. Our minds
are molded, our tastes are formed, our ideas suggested, largely by men we
have never heard of.
Walter Bernays Propaganda 1928

29

The study of money, above all other fields in

economics, is the one in which complexity is
used to disguise truth or to evade truth, not
to reveal it.
and
The process by which banks create money is so simple the mind is repelled. Where
something so important is involved, a deeper
mystery seems only decent.
John Kenneth Galbraith, Economist
Money - Whence it came, where it went, 1975,
Penguin

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