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View From Here: The Shackles of Debt Locked on by the Bankers



The problem with the economy of the United States is that what is generally considered to be money is based on debt and is created by private banks, not by the government.  This is the first lesson in the animated documentary Money as Debt: Why we crash over and over again, Paul Grignon’s brilliant production on the nature of money.  

“Each and every time a bank makes a loan, new bank credit is created-new deposits- brand new money.” Graham F. Towers governor, Bank of Canada, 2934-54.

It works like this:  The bank opens with $1,200 in capital on deposit at the central bank.  The regulators allow the bank to lend ten times the deposit.  You then borrow $10,000 from the bank, and Presto! That money appears in your account with nothing behind it except the note to repay.  There is no cash, gold or silver exchanging hands.  “More than 95% of the money in circulation was created by someone signing a letter of indebtedness to a bank” say the filmmakers.  “Without the document the borrower has signed, the bank would have nothing to lend.  Banks do not lend money, they create it from debt.”
Grignon then asks the question, since the banks have only created the principal, where does the interest come from to pay it back?    The answer is the general money supply that has been created in the same magical way.   

“It’s bank credit that has to be paid back with more than what was created.”    In a laughingly poignant metaphor used to portray the predicament we’re in, a man trying to fill a principal and interest swimming pool from a pool that contains only principal.   “It is impossible for everyone to pay back principal plus interest from a pool that contains only principal because the interest money doesn’t exist.”    That’s why the big debt crisis and bailout for the banks.  They wanted to be paid for the money they created even though it was not based on any value.
And thus the perpetual cycle.  As money is created, there is an increase in the money owed, “it is only the time lag between money’s creation and its repayment that prevents  bankrupting the entire system.” 

“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 position is almost incredible, but there it is.”  Robert H. Hemphill, Credit Manager, Federal Reserve Bank, Atlanta, Georgia
Debt should be used to create value, instead, it is being used to pay interest and on wars.  We are in the hands of people who are addicted to money, there is never enough and they are amoral in acquiring it.   Humanity and warmth play no part in it.  There is only money and the power to direct the nation.


 “One thing to realize about our fractional reserve banking system is that, like a child’s game of musical chairs, as long as the music is playing there are no losers.”  Andrew Gause, Monetary Historian

This is what the debt ceiling crisis was all about.  If the government does not take on more debt, the music of the game stops. 

And then there is the problem of exponential growth. “This year’s 3% annual rate (of growth in the economy) is greater than last year’s 3% because it’s 3% of the new total,” of principal plus interest.  This is an ever-increasing curve.  “Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist,” said economist Kenneth Boulding.  “The greatest shortcoming of the human race is our inability to understand the exponential function.” Albert A Bartlett, Physicist

The filmmakers say what is needed is a different concept of money, one not based on debt.  In fact, they ask why does government CHOOSE to borrow money from private banks at interest when  government can create all the interest-free money it needs itself.

“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 why they will actually blame you and me and everyone else connected with the Congress for sitting idly by and permitting such an idiotic system to continue.”  Wright Patman, Democratic Congressman 1928-1976, Chairman, Committee on Banking & Currency 1963-1975.
And then, why create money as debt at all?  Why not instead create money that circulates permanently by having been used to create something of value?  Have the government create its own money and pump it into the economy  by using it for the physical and human infrastructure of the nation and the creation of value and not for interest payments and for wars.


Money is a new form of slavery, and distinguishable from the old simply by the fact that it is impersonal, there is no human relation between master and slave.” Leo Tolstoy

 “I am a most unhappy man.  I have unwittingly ruined my country.  A great industrial nation is controlled by its system of credit.   Our system of credit is concentrated.  The growth of the nation, therefore, and all our activities are in the hands of a few men. 

“We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the civilized world, no longer a government by free opinion, no longer a Government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men.”  Woodrow Wilson, President of the United States 1913-1921,   It was Wilson who signed the Federal Reserve Act in 1913 putting an international banking cartel in charge of creating America’s money.
Apparently Wilson had darker thoughts as well. “Some of the biggest men in the United State in the fields 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 had better not speak above their breath when they speak in condemnation of it.”   Woodrow Wilson, former President of the United States.

To suggest that there are rich and powerful people who would like to hold onto their wealth and power to control, handing it off to others of their own kind,using any means necessary, is not a half-cocked conspiracy theory, it is an acknowledgement of a common behavior of ruling classes. 


We have seen economic unrest in the Arab Spring, the Israeli Summer and the revolts in London.  If there comes a time here in the States when those who are certifiably poor and the poor who don’t acknowledge it and the rest who feel the American Dream slipping away, join forces with the anti-war, economic and electoral reforms and universal health care movements, then we will see a season of change here in the U.S.

“The modern banking system manufactures money out of nothing.  The precess 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 bank and pay the cost of your own slavery, then let bankers continue to create money and control credit.”  Sir Josia Stamp Director, Bank of England 1928-1941 (reputedly, the 2nd richest man in England at the time.) Money as Debt is available on the Web at:

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