Is it time for ordinary people to ask how the world’s system of money works?

Consider the words of Wright Patman, a US democratic congressman and Chairman of the Committee on Banking and Currency, 1963-1975:

I have never yet had anyone who could, through the use of logic and reason, justify the Federal Government borrowing the use of its own money….I believe the time will come when people will demand that this be changed. I believe the time will come in this country when they will actually blame you and me and everyone else connected with this Congress for sitting idly by and permitting such an idiotic system to continue. I make that statement after years of study.

I have talked to the Secretary of the Treasury and members of the Federal Reserve Board and other people who are supposed to know about the money system of our country. They know this can be done easily and conveniently and will save money…. We have what is known as the Federal Reserve Bank System. That system is not owned by the Government. Many people think that it is because it says “Federal Reserve.” It belongs to private banks, private corporations. So we have farmed out to the Federal Reserve Banking System that which is owned exclusively, wholly, 100 percent to the private banks – we have farmed out to them the privilege of issuing the Government’s money!

But that’s the USA. Consider these words, usually attributed to Josiah Stamp, Director of the Bank of England 1928-1941 and possibly England’s second-richest man at the time:

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 inequity and born in sin . . . . Bankers own the earth. Take it away from them but leave them the power to create money, and, with a flick of a 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, for then this would be a better and happier world to live in. . . . But, if you want to continue to be the slaves of bankers and pay the cost of your own slavery, then let bankers continue to create money and control credit.

Some questions:

  1. Why do governments choose to borrow money from private banks at interest when they could create all the money they need themselves?
  2. What would happen if governments spent all the money they need into existence?
  3. Why create money as debt at all?
  4. Why not create money that circulates permanently instead of money that must be perpetually borrowed at interest for the system to function?
  5. How can a money system dependent on perpetually accelerating growth be used to build a sustainable economy?

This complex subject was popular a hundred years ago: it may become popular again.

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One Comment

  1. Lord Stamp was an interesting man. He refused to move out of his London home during The Blitz, and he, his wife and his eldest son, Wilfred, were all killed by a bomb in 1941.

    Here’s another magnificent quote by him:-

    “The government are very keen on amassing statistics. They collect them, add them, raise them to the nth power, take the cube root and prepare wonderful diagrams. But you must never forget that every one of these figures comes in the first instance from the village watchman, who just puts down what he damn pleases.”