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Money creation or the art of putting us into debt !
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Government, company and household debt has reached astronomical proportions and is ballooning on a daily basis. Where does all this money come from ? How can there be so much money to lend ? The answer is surprising: nowadays, money has turned into debt. So, if there weren’t any debt, then there would be no money.
At the private individual and company level, it is the banks who lend and in so doing create additional money-debt.
Banks can create as much money-debt as we can borrow.
Banks borrow from the Central Bank and then they lend out twenty to fifty times the amount borrowed, only retaining a “fractional reserve” of cash in the till, hoping that everybody will not come and withdraw their money at the same time. At the same time, they impose the payment of interest on the total sum of money lent.
Most people imagine that if all the debt were repaid, the economy would fare better. This is certainly true at the individual level. In the same way as we have more money to spend when we have repaid our loans, we also think that if everyone were to do likewise, there would generally be more money to spend.
However, in truth, it is exactly the opposite. There would be no money at all. This is because constantly renewed bank credits are required for money to exist. No loans, no money.
Hence, all of mankind is shackled to growing debt. If the fundamental nature of our system is a problem, the system itself has to be changed. Many economists are calling for a return to money indexed to gold and silver because for them these two metals have a long history of dependability.
By EUPOROS SA ® - Registration of Copyright © 2011
Author : EUPOROS SA® - © dépot légal 2011
Source : www.euporos.ch
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