Secrets, Ignorance and Lies: Money, Credit and Debt.

(Bank Robbery, Chapter 7: what follows is a draft prior to publication. Comments welcome).

“The tyranny of fraud is not less oppressive, than that of force.” John Taylor of Caroline, Virginia, 1814.

This chapter is about the bad effects of creating money as debt.


We all know what money is. It is something we own, which can be swapped for other things that are up for sale. For people who like their truths to be stated with a bit more gravitas, here is an economist saying the same thing:

‘So long as in any community there is an article which all producers take freely and as a matter of course, in exchange for what they have to sell, instead of looking about at the time for the particular things they wish to consume, that article is money, be it white or black, hard or soft, animal, vegetable or mineral. There is no other test of money than this. That which does the money work is the money thing.’[1]

Today, money is debt from a bank.[2] In 2014, the Bank of England confirmed that ‘the majority of money in the modern economy is created by commercial banks making loans’. At last, this simple fact – long known, but long denied by most economists and bankers – must surely be generally accepted.[3]

The creation of money out of nothing, as two equal and opposite debts, is an extremely simple process. If a banker was struck by a bolt of honesty, he or she might utter these words to a customer about to borrow some money: ‘Starting from nothing, we’re going to agree to owe each other a million pounds. You can use what I owe you to pay people: they’ll be happy to know that I owe them instead of you, and they’ll take debt from me as a form of payment. Your debt to me will be an asset on my books. In the meantime, you’ll pay me interest. So tomorrow, we’ll each have a lot more than we have today! Isn’t that clever!’

When debt becomes currency, conventional understanding of borrowing and lending is turned on its head. Most debts carry an interest charge from borrower to lender: a bank, however, is ‘in the delightful position of charging interest on money it owes’.[4]

Before this kind of money – debt from a bank – could become currency, a law was needed to support the buying and selling of debt. The first law to do that was the Promissory Notes Act (passed by the English Parliament in 1704); similar legislation was subsequently adopted by ‘most if not all commercial nations’.[5] This legislation opened the most corrupt century in British history; it was also, for better or worse, the foundation of the commercial and military British Empire, financing war and ownership of resources across the world.[6]

Once debt became negotiable, the door was open for value to be created in a variety of different ways. Adam Smith noted in 1776 that it had become easy for governments to borrow: it could charge the debt to the people, and the lender would not lose or forgo anything by lending: ‘the security which it [the government] grants to the original creditor is made transferable to any other creditor; and from the universal confidence in the justice of the state, generally sells in the market for more than was originally paid for it. The merchant or monied man makes money by lending money to government, and instead of diminishing, increases his trading capital.’[7]

Negotiable debt was the foundation of a new privileged class. The old feudal aristocracy, its privileges on the wane, was joined and to some extent superseded by a privileged class of financiers. This was obvious to people at the time and widely commented upon (see chapters 3 and 4 of this book).[8]

Negotiable debt is a versatile source of ‘created value’. New ways of creating value are still being invented: derivatives, repos, ‘shadow’ banking etc. are some fairly recent additions. If you believe that riches should be gained in return for contributing something, we live not in democracies but in kleptocracies. A massive industry of debt-creation is devoted to creating value for the already-rich. It has become an enormous cancer on humanity, draining life and livelihood from the working, the would-be working and the world’s poor, which is now an increasing portion of the world’s population despite all the advances in science, technology, entrepreneurship, productivity, mechanisation and organisation.

Bank Money as Currency.

Banking was not born in 1704; it has been around since Babylonian times (at least). Many historical records exist of payments being made by transfer of bank liabilities (the official word for bank debt). Bank liabilities only started to become dominant as a form of currency, however, after buying and selling debt became legally supported and enforceable.[9]

As well as creating money, banks also destroy it. When a customer repays a debt, the money disappears along with the bank’s asset (the debt from the borrower).[10] Limited life is an important quality of credit-money. It means that new money can be continuously created, making new profits for banker and borrower without necessarily increasing the money supply. The profit of making cash is a one-off: bank-money, on the other hand, transfers assets and income from those who work to those who accumulate in a sort of interrupted continuum.

So three key differences mark out bank-money from traditional ‘commodity’ currencies: it is rented out at interest; it is allocated to specific persons for specific purposes; and it is destroyed again once its extra-monetary function (i.e. its function of making a profit for both banker and borrower) is fulfilled.

Despite being only debt from a bank, money is, nevertheless, a kind of property. In our modern world property, which is such a simple idea, comes in many shapes: intellectual property rights for instance, or mineral rights on a piece of land. When we own money, we own legal recognition that we are the creditor of a bank. That recognition is our property, and if someone steals it, we hope they will be in trouble.


Gaining control of the money supply has always been an ultimate dream of the ambitious. ‘The Richest Man Who Ever Lived’ – Jacob Fugger, a German born in 1459 – kick-started his career by getting control of the Emperor’s silver mines. Command of the money supply brings with it command of much else besides.

Today, it is not an individual but a class that profits from the way money is made. That class consists of governments, predatory financiers and commercial bankers (who are bagmen for the rest). Debt-currency has gradually replaced almost entirely older forms of currency, such as coin which had a value as metal similar to its value as money.

It should surprise no one when a minority manages to commandeer the fruits of human labour and invention. Throughout recorded history, production over and above what keeps people alive has been fought over. The winners have usually made laws to ensure that they carry on being the main profiteers. Usually (as, for instance, in feudalism) these laws have been open and acknowledged, but the laws which support today’s oligarchies – laws around the creation of money and financial value – are shrouded in secrecy and sometimes in outright lies. Many of the observations that follow have been made frequently in the past, only to be buried; others (such as the relationship between bank-money and inequality) are actively and repeatedly denied.


Many of the bad effects of the way we create money are exacerbations of things that tend to happen anyway. Some are inherently bad (like war); others would not be bad in small doses. An economist has made an analogy for the second type: a domestic cat is generally a well-loved addition to a home: enlarge it into a tiger, and it is less desirable.

The privilege of profiting from negotiable debt is protected by the difficulty the human mind experiences when it tries to grasp complications that arise when debt can be bought and sold. ‘The creation and exploitation of mutual and reciprocal obligations that favour a few’ is not a familiar subject area. This protects economists from having to acknowledge what’s going on even to themselves, let alone to the general public.

Some suggested bad effects of creating money this way are listed below. Many of them feed into each other; all are fed by the way we create money. The list is tentative.


Underlying many of the bad effects of credit-money is the extreme inequality it promotes. Inequality is in the ‘household cat’ category. A certain amount is inevitable and many would say even desirable. Extreme inequality is a different matter. At the one end, excessive amounts of power are in too few hands. At the other end there is poverty, disempowerment and displacement – desperate people searching for how to make ends meet, and many others at a loss how to flourish.

Despite the cultural myths of our age, most people do not wish to give their lives over to getting more and more ad infinitum: they merely wish for enough. Our systems of money and power favour people for whom ‘getting more’ overrides all other considerations (this is a theme that will return).

How credit-money promotes inequality is gone into in more detail in Chapter Two of this book.

Arms Proliferation.

Bank-money forms a vicious circle between arms production and purchase. Banks create money for governments who borrow at the expense of their citizens. Governments compete to acquire arms: if your neighbour gets missiles, you want them too. Competing governments guarantee a strong demand; so banks willingly create money for manufacturers. Citizens, unaware even of how money is created, remain unaware of how their economies are skewed to arms purchase and/or production. Without bank-money, governments would have to borrow pre-existing money to finance arms purchases.

To make things worse, in economies where inequality is a problem, armaments manufacture acts as an economic stimulant. It employs a workforce to make products that will not be bought by workers (even in America, citizens do not buy missiles and bombs).[11] This fills workers’ pockets with spending-money that will be spent on other products. This method of re-setting the balance between capital and spending has another attraction: it is politically acceptable to the traditional ‘right’ (a liking for expenditure on arms for ‘defence’ goes with a dislike of distributing money as ‘welfare’). An example: during the Cold War, the U.S. enjoyed a rare patch of financial growth and stability. When the state acts as banker, things can get even worse: a poor country can prosper by arming itself to the teeth: bankrupt Germany (1933-9) became all-too-well again by armaments production: North Korea builds nuclear weapons.

Even more grotesquely, a nation with a strong and productive arms industry may earn huge foreign income from selling arms into warring nations. All around the world we have ‘proxy wars’ being fought in unstable countries, using arms made by arms-selling nations. Lobbyists of the arms-manufacturers encourage (very successfully) their governments to funnel ‘foreign aid’ to rival factions in unstable countries, stirring conflict and war.[12]


Perhaps it’s an impossible dream that humanity should be done with war; perhaps not. Whatever the future holds, it is certain that money created out of nothing makes war more likely to happen. To begin with, it makes it much easier for governments to raise finance: they can borrow as much as they like, created out of nowhere, using their citizens as guarantee. As already mentioned, England’s head-start in legalising ‘negotiable debt’ (1704) gave it an advantage in making war.

Grotesquely, (a common observation) war can also be economically ‘beneficial’.[13] War was always profitable as theft-writ-large. Now, it serves as an economic stimulus in a similar way to armaments production: via government expenditure, war relocates money with those who wish to spend it and away from those who wish to invest it. It is resorted to as a way out of depression: ‘The Second World War, not the New Deal, ended the Great Depression’ – for the United States as well as in Nazi Germany. A need for re-construction has the same effect: defeated countries often do rather well after a devastating war (for example France after 1871; Germany and Japan after World War II).

A Multitude of Corruptions.

The system of money-creation by banks is corrupt in itself in that it favours and advantages some over the rest. But it also fosters and favours other forms of corruption:

Democracy Corrupted. Political parties need a lot of money to organise and fight elections. The democratic process becomes somewhat theatrical, as different parties claim to represent ‘the common interest’. In reality, the continuance of the financial system is a paramount objective of all mainstream parties, who offer future benefits in return for financial support. Money is created and borrowed in large amounts, in expectation of future benefits.

Straightforward Corruption in Politics. Many countries in the world suffer from the simplest form of corruption – favours handed out by individuals in power in return for payment. In such countries, money manufactured secretly by banks for private citizens makes transparency in public affairs difficult if not impossible. Scrutiny of financial dealings in the public sphere – formerly a central requirement of any democratic constitution – is not a realistic possibility. A blunt illustration: each Russian oligarch has his own bank manufacturing money for (among other things) bribes. A bribe to a politician may be a profitable investment – even a necessity, for someone who wants to climb to riches.

In a substantial number of countries, public life is corrupt to an extent that politics and business cannot function without engaging in corrupt practices. This gives outside agencies the opportunity to disrupt the political process by selectively disclosing corruptions: this technique is being actively used by (for instance) agents of Putin’s Russia, to destabilize neighbouring governments and install Russia-friendly regimes.[14]

Law Corrupted. Law is as vital to us as the air we breathe – and equally vulnerable to pollution. It is the job of professional lawmakers to make laws, and they make them in quantity, far too many for ordinary people to scrutinize.

Laws entrust government agencies with power to issue permits, grants, special tax breaks and so forth. Lobbying today involves vast sums of money devoted to influencing the law and its application. Evidently it works, or the money would not be spent.

‘Crony capitalism’ describes businessmen conniving with politicians for a bigger slice of the pie. When the connivance is illegal, we call it corruption. When laws and regulations are made which favour particular interests, the law itself is corrupted.

The ultimate and original corrupt law is the law that makes debt a negotiable commodity.

Capitalism Corrupted. Bank-money transmogrifies free-market capitalism into a form of covert kleptocracy. Capitalism supposedly consists of savings and profits lent, via banks, for investment. When money is created by banks as reciprocal debt, however, this narrative becomes an outright lie (though it is propagated in many economics textbooks): newly-created money dwarfs true savings. The lie looks particularly threadbare when base rates go towards or below zero. Nobody lends at minus interest! If I have £1,000, I would rather keep it than lend it, if in a year’s time I will only get £990 back!

It used to be said that the ‘Holy Roman Empire’ was neither holy, nor Roman, nor an Empire. In just the same way, it can be said that ‘liberal capitalist democracy’ is neither liberal, nor capitalist, nor democratic, but a kleptocracy which gets away with writing its own laws.

Radicalization in Politics.

The knock-on effects of the corruptions listed above are increasingly severe. They create an opportunity for political extremists. There is strong public awareness that working people are being cheated: but because public ignorance is carefully cultivated (in media and academia, see below) no one is familiar with how capitalism might be restored to its honest form. Extremists offer themselves as less-bad alternatives to the status quo. Many voters feel that it is better to live with one openly dishonest crook than with an anonymous myriad.

The Cultivation of Ignorance.

Ignorance of money-creation is positively cultivated by professional economists and the media. Academics in sensitive disciplines are compliant with the demands of power. To give an example: when the Iron Curtain came down, east European professors in disciplines such as Political Theory, History, Philosophy and Economics were replaced en masse by Western-trained professors.

Mainstream media, owned either by the State or by large corporations, are also compliant. In the words of a financial journalist: ‘It’s part of a journalist’s job to know instinctively – no one tells you! – how close you can go to those lines that can’t be crossed.’ Over the past sixty years, ownership of the media has been consolidated into a very few hands, and the media are now run as money-making machines. Good journalism is done not for profit but for moral belief – belief that humans want and need to know the truth. Purchase of media companies by oligarchs is one of the most damaging trends and a sign of the times: not just because ‘who controls the media controls the message’ but also because whole populations are subjected to dumbing down, propaganda and demoralization as a result.

Nature Destroyed: the Need for Economic Growth.

A steady-state economy is inconceivable when the money supply takes from many and gives to a few; soon, most money sits waiting for investment, and spending dries up. (A rich man can only wear one suit of clothes at a time, and has only one stomach; owning more than one yacht and a dozen houses becomes not a pleasure, but a bore.)

In these circumstances, economic growth becomes a necessity, because it is the simplest means by which money will return to the pockets of spenders. In times of growth, money waiting for investment pours into new factories, new employment, and the pockets of workers who will spend it.

This necessity for growth means that resources and environments are plundered and destroyed without (necessarily) doing very much for human welfare. ‘Economics’ has developed a set of values, or assumptions, to justify this destructivity: the more stuff we have, the more needs are cultivated in us and satisfied, the happier we will be. This set of values is certainly not substantiated by experience, common sense, or statistics: it is put forward to justify the activities of those with an insatiable lust for getting richer.

Large concentrations of capital, managed for profit, push for familiar goals: to employ as few workers as possible, to pay them as little as possible, and to manufacture as much as possible. Goods then have to be produced as cheaply as possible, so that workers and the state-assisted can afford them. They must also be made short-lived, to encourage repeated purchase. Thus we have built-in obsolescence, our land and seas ever more polluted with rubbish.

False Goals: ‘Homo Economicus’.

From this set of values or assumptions, it is a logical step to set goals for society generally of maximised efficiency and productivity. These goals are not merely deadly to future human life; they smother consideration of reality. The productive capacity of man-and-machine is today almost unimaginable: we are nowhere near its limits. We could all be buried a hundred foot in products made by machines, if they worked at full output! A new model of production and consumption is urgently needed, although it may be too late to avoid environmental catastrophe.

Booms and Busts.[15]

During booms, large amounts of money are created for speculative finance to purchase profitable businesses: ownership becomes located with a few, rather than being widely dispersed. Steady production, the profits going to the owners, continues the build-up of money looking for investment.

Money is also created (against the security of their assets) for borrowers who wish to spend; in other words, for people getting into debt with no way of repaying the debt except to sell assets.

For a while all seems rosy: then, the growing debt of the many and the growing assets of the few – in other words, growing inequality – makes it obvious the worm must soon turn. The many slow their spending, and the few enjoy less profits of production.

Banks respond to the change in circumstances by calling in debts and destroying money. Economists have called this characteristic of bank-supplied money ‘perverse elasticity’ – easy money during booms, money disappearing during busts.[16]

Debt, National and Personal.

It seems obvious that if money itself is created as debt, the amount of debt in the world will increase. But who, as a result, becomes more indebted to whom, is not quite so easy to answer. The fact that money is created as debt FROM banks does not help clarify the issue.

It helps a bit when we consider that every time a bank creates a debt from itself, it creates a matching debt TO itself; and what is more, the bank gets interest on what it owes. It also helps if we remember that money is only created when both bank and borrower are confident that it will be profit them both. Some of the bank’s profits are shared among customers – thus reducing their bank costs: this makes banks super-competitive with other forms of transaction management and money-storage. They have an unfair advantage.

The system has been nurtured over the centuries because of these profits, because the money it produces does other things, besides just ‘be money’: it takes interest, it provides new money in very large quantities to those who already have assets, and it enables governments to borrow at the expense of their citizens without agreement or scrutiny. This is consonant with the historical account of how bank-money developed: see Chapter 1 of this book.

National Debts. Laws that allow debt to be bought and sold make it easy for governments to borrow. As Adam Smith pointed out 250 years ago, once debt becomes negotiable, lenders get an asset in exchange for their money – government bonds – which start life equal in value to what has been lent, and may well increase in value thereafter.

Again, history is consonant with this account: national debts became significant as soon as debt could be traded. After 1704, national debts became exploding phenomena. The South Sea and Mississippi Bubbles (both 1720) are landmark reminders of what can happen.

There is an often-repeated cliché that ‘the national debt is a way of making our children and grandchildren pay for what we use today’. This is not correct: everything, from missiles to food, has to be paid for before it is used. If the government borrows in order to pay for things, it is actually creating assets for one class – the class of ‘lenders’ – and taking from another, the passive class of citizen-borrowers.[17] True, the descendants of those citizen-borrowers are also in hock; for in this human world of ours, subjugation is an inherited condition.

Private Debt.

Booms-and-busts prepare the ground for private debt. When times are good, banks create easy money for lenders and people get into debt, confident they will be able to pay it off – or at least pay the interest. Then the worm turns, money is no longer easy to get, and debt becomes a burden. The relationship of debtor-debt keeps the masses complicit, compliant, up to their nostrils not just in debt but also in subjugation.

House ownership is another minefield laid by negotiable debt. Money created for would-be homeowners is also created for speculators. The result is an inflation in property values; year on year, more debt must be assumed to aim at a position of ownership. Meanwhile, actual (effective) ownership goes down as governments, reacting to business cycles, diminish the value of genuine savings by inflating the economy with money fed to banks and speculators.

Economic Crisis: Booms and Busts.

A boom is a period of exceptional affluence: the economy is expanding and massive amounts of new money are being created for borrowers. To begin with, a good proportion finds its way into the pockets of producers and employees. However, the way money is created – for those who already have large assets – ensures that ownership increasingly resides with a few.

There is a limit to the amount rich people can consume: that is, to how much they can spend in a way that money re-locates with the poor (purchasing a Rembrandt, for instance, has little effect on inequality: money passes from one wealthy individual to another).

As the poor have less to spend, consumption goes down, and production becomes less profitable. A respectable way of talking about this (in the language of economics) is: ‘modern economies are prone to settle into states of inadequate aggregate demand to sufficiently employ their labour forces.’ A less respectable way is to imagine a café: a hundred people are sitting there, and somehow we know that between them they have a thousand pounds. But only one person has bought a cup of coffee. What has gone wrong? Well, it so happens that one person has all the thousand pounds, and all the others have nothing.

Economists don’t like talking about the café situation as a model for the economy; but they need some way of referring to spending drying up: it is too obvious, and it has too many undesirable consequences for the rich as well as for the poor. It’s an ‘elephant in the room’ and it’s making itself felt by crashing around and breaking up the furniture. Mainstream economists talk of ‘demand deficit’ and look for other ways to explain it besides the way money is created. Other factors do apply (such as the tendency for capital to increase by compound interest) and they concentrate on those.

Various recipes are suggested for curing the café situation. The most common one is to tax the man with all the money and redistribute it, so that others can buy coffee too. A better recipe, often suggested but never (so far) followed, would be to reform the system that helped one person get all the money in the first place.

Busts rectify the situation somewhat by reducing capital values, but the process is usually held back by lawmakers and regulators who intervene in the interests of the wealthy, propping up the value of assets (while pretending to prime the pump of money-creation) with devices like ‘quantitative easing’. These do not work because the underlying cause – the gulf between on the one side massive wealth, on the other poverty and debt – remains unaffected.

International predation.

Nations with a strong economies and banking sectors are able to generate money out of nothing – along with individuals and corporations skilled at using it. International predation proceeds along two different tracks, state and non-state.

State: The national currency of a strong country is a powerful weapon. Currency manufactured at no cost is sold abroad, where it becomes an international currency. Laws adopted internationally (authorizing the buying and selling of debt) ensure that the newly created money has parity with local currencies. In this way, nations behave like banks: the exported money is effectively national debt, which the creator country hopes will never have to be paid, although it has been exchanged for very real goods. Strong nations compete to put their currencies into a dominant position, to enjoy the benefits of buying a lot for no expense.

Non-state (private): Private predatory finance acts in a similar way, but transfers ownership to private, usually corporate hands. An efficient financial sector manufactures money in a strong currency for speculators who appropriate the resources, labour and production of a less sophisticated nation.

These two processes make it easy for a strong country to appropriate resources, labour and production. The process is made seamless by the corruption of a weaker nation’s government and political/civil process. The weaker nation, instead of receiving proper purchase value for its labour, resources and production, gets a corrupted government, heavily armed to suppress dissent and to oversee rule by thugs.

What is done today by finance is a continuation of what used to be done by conquest. The English economist Piercy Ravenstone wrote in 1821: ‘Ireland sends her surplus produce to pay the rents of her landlords in England, and her surplus poor follow to consume it.’ Today, we see millions walking towards countries who have in one way or another contributed to their ruin.

Unemployment and Forced Idleness.

Unemployment is enhanced in two ways by huge amounts of capital created out of nothing (as opposed to borrowed out of personal savings):

  1. Jobs are outsourced to where labour is cheaper: this supposedly leads to greater prosperity in low-paid countries, but most noticeably it leads to greater riches among corporate shareholders.
  2. Money created by banks upon promise of profit pushes businesses to ever-greater internal efficiency, throwing workers onto state benefit, where taxpayers pick up the bill for their continued livelihood.

With increasing concentrations of capital and power, humans are increasingly faced with a choice between corporate servitude and unemployment.


The concentration of power and money in the hands of individuals who are addicted to getting more has consequences that are multifarious and deadly.

For many decades now, foreign policy among Western nations has been dominated by the desire of big financial players, and the political parties they fund, to get (and maintain) access to resources in foreign lands. Support for gangster governments; bombing; deals with corrupt foreign elites; these and other nefarious techniques have become everyday policies for countries of the prosperous West. Pervasive hypocrisy – ‘the bad things WE do are justified, the bad things others do are monstrous’ – blinds us to the reality that the only behaviour we can reliably change is our own.


Culture is our name for everything which conditions collective group behaviour – whether that group is a nation, a class, a religion, or a tribe. Culture, transmitted across generations, is always changing but yet has a certain continuity; it attempts to nurture collective well-being. The effects on culture of how we allocate wealth and power are probably the worst of all for our future survival, but they are also hardest to describe.

It is a well-worn cliché that power tends to corrupt those who hold it. It’s nearly as much of a cliché that power tends to degrade and infantilize those whom it promises to protect. Culture promoted by commerce and power tends towards anti-culture – that is, it promoting not well-being but self-destruction. Instead of searching for how best to live, it becomes a series of transgressive, trivial or meaningless acts held up for applause.

The Corporation and Freedom.

The commercial corporation is the prime vehicle for concentrations of money and power, hiding ownership and making it easy for people to avoid human obligations such as paying taxes. It began to achieve full legal ‘personhood’ soon after debt was made negotiable.[18] It obliges workers to devote their working lives to maximising the income of owners who know little and care little about what the corporation does – besides make money. “Of all the differences between man and the lower animals, the moral sense or conscience is by far the most important,” wrote Charles Darwin. ‘Moral sense or conscience’ withers away as individuals in corporate employment must obey the corporate objective – to increase the affluence of those who might have no interest in how that money is gained.

In these circumstances, freedom loses its meaning of ‘freedom to do what one believes is right’, and adopts a series of other meanings.

Humans, a sociable and moral species, are dissatisfied living in the variety of circumstances outlined above. No wonder drugs, either legal or illegal, are needed by so many to get through their days.


We like to assume the world is run on lines that are vaguely just. We also like to think of ourselves as ‘democratic’ but it is an illusion to imagine that ordinary people are in charge. The real content of contemporary ‘democracy’ is that ‘we the people’ vote for political parties who exercise power. Money and political parties are adjacent rooms, with a revolving door between them. The people who hold power and wealth in our world are interconnected.

Humans are fond of blaming others for things that are their own fault. Patriarchal societies blame women for the evils of the world (from the Bible we have Eve; from Greek mythology we have Pandora releasing the evils of the world from a food storage jar). Christians have long blamed Jews for destructive financial arrangements even though money-creation has long been a protected Christian activity. Today, citizens blame politicians and bankers for the madness of the world – even though they (we) have the collective ability to demand change.

Only citizens can make reform happen. It is mere foolishness to expect an oligarchy to voluntarily give up the source of its power. Power attracts those who want more: it is an addiction. So, in large amounts, is money. The world and its beauties, human life, our ideals of freedom and democracy, are being destroyed. How lazy are we? Do we feel no compunction to intervene?

Removing laws that support negotiable debt and preferential creation of money would be a start. Digital cash could then be created to replace it, which could still be borrowed and lent, but it would not consist from the very outset of debt.[19]

We could go further. Sharing the benefits of human achievement, past and present, would mean some variety of basic income (that is, provision of spending money for every citizen by the government, regardless of need). This would not just be more equitable; it would also reduce crime; it would reduce how much people need over and above basic income and therefore decrease employment costs; and it would increase meaningful human freedom to do what seems right. When experiments in equitable money distribution have been undertaken, reductions in crime, mental disease and drug-use have been reported. Implemented on a wider scale, we might expect reductions in all the evils listed above.


[1] Frances Walker, 1888.

[2] In England, 97% of this is debt from commercial banks; the other 3% – notes and coins – is debt from the central bank. See Bank of England Quarterly Bulletins 2014 Q1 and 2010 Q4.

[3] ‘…rather than banks lending out deposits that are placed with them, the act of lending creates deposits — the reverse of the sequence typically described in textbooks.’ The Bank of England, Quarterly Bulletin 2014 Q1.

[4] Frank D. Graham, ‘Partial Reserve Money and the 100 Per Cent Proposal’. The American Economic Review (1936).

[5] Joseph Story, Commentaries on the Law of Promissory Notes (1845).

[6] For ‘corrupt century’ see Brantlinger, Fictions of State (1996); for ‘war’ see Dickson, The Financial Revolution in England (1993); for ‘resources’ see W.J. Thorne, Banking (1948) p.31 and also pp 97-9 for a description of how bank-loans create deposits.

[7] Wealth of Nations, Book V, Chapter 3.

[8] A somewhat later comment: ‘The direct tendency of the principles of the Economists is … to replace the feudal aristocracy, from which Europe has suffered so much, with a monied aristocracy more base in its origin, more revolting in its associations, and more inimical to general freedom and enjoyment.’ John Wade, 1832.

[9] Many writers have addressed this subject, among them R.D. Richards (The Early History of Banking in England) and W.S. Holdsworth (A History of English Law).

[10] Reserve, sold on demand by central banks, includes cash (notes-and-coins): they are the equivalent of lubrication, allowing bank-money (97% of actual money in circulation) to operate smoothly.

[11] See, for instance, Joan Robinson, Freedom and Necessity Chapter 8, for a conventional account.

[12] Often the same government will fund several opposing factions: the activities of the United States in Central America are a well-documented example. Ask D.G. for reference.

[13] Lekachman.

[14] See for instance the Legatum Institute report Is Transition Reversible? The Case of Central Europe (2016).

[15] Schumpeter, a leading 20th century economist, asserted that the old-fashioned argument used in this paragraph to explain business cycles is ‘contemptible’ and ‘beneath discussion’. Apparently, ‘it involves neglect of the elementary fact that inadequacy or even increasing inadequacy of the wage income to buy the whole product at cost-covering prices would not prevent hitchless production in response to the demand of non-wage earners either for ‘luxury’ goods or for investment.’ If this were true, the trillions being held today (2016) at near-zero interest rates would be busy employing the poor to make luxury goods and build new factories.

[16] Lester, Richard A. Monetary Experiments (1939, 1970) p. 291; and on p.292, ‘If the monetary system is to moderate rather than magnify the business cycle, money must be segregated from banking.’

[17] Just as banks create money as negotiable debt, so governments create debt as a negotiable commodity. The difference is that banks charge interest on what they owe; governments pay interest on what they owe. Here we see the worst of all collusions between governments and money-power.

[18] Joint-stock companies, ancestors of the modern corporation, were originally licensed by Royal Charter. The corporation began to gain an independent legal existence during the 18th century: see A Treatise on the Law of Corporations, Stewart Kyd (1793–1794). The process was made complete in a legal ruling, Salomon v A Salomon & Co Ltd (1896), since when corporations have concentrated on acquiring more ‘human’ rights – without acquiring any more human duties.

[19] See the paper published by Positive Money, Digital Cash: Why Central Banks Should Start Issuing Electronic Money (Jan 2016). The Cobden Centre suggests one-off replacement of bank liabilities with state-created cash.


‘Law and The Banking System’

Banking and Civilization, after Gustave Dore

How banking came to enjoy special status in law, including the ability to create money, leading to not just the huge inequality we see today but also easy finance for war and loss of independence for most people across the world. ‘Law and the Banking System’, Chapter Three of my book Bank Robbery, is now up on the websites Positive Money and The Cobden Centre:

Rescue the migrants, but even better: don’t ruin their countries in the first place.

The terrible witness of people drowning as they strive for better conditions in the West leads to the question: how are they reduced to such desperation, that the lowest-paid jobs and racist humiliation in strange lands are preferable to their lives at home?

Clues can be found in the massive international purchases, aided by corruption, of their lands at home, resulting in forced evictions and destructions of ways of life. Clues can be found in the corrupt, brutal kleptocracies called governments, which we in the West support in exchange for their lands, natural resources and riches. Clues can be found in the wars that rage on, fed by Western arms supplies in exchange for… the same.

Western nations have lost the capacity for self-criticism. Our media are full of outrage at ISIS, at Israel in Gaza, at Putin. When do we reflect on the massive damage done to human societies across the planet by our implantation and support of corrupt, murderous, kleptocratic states; the lust of our arms industries for perpetual war; the stream of murder that is our bombings by aeroplane and drone?

Home & Blog

Welcome to my website. Here you will find details of work that has been published and/or performed, and examples of work in development.

Pages can be accessed via the menus above . Some pages are still under construction.

This page continues with a few blog pieces.

Two Chapters Published on Positive Money and The Cobden Centre.

Two chapters of my book BANK ROBBERY are now published, on the websites of Positive Money and The Cobden Centre.

Chapter One:
Chapter Two:

Chapter One:
Chapter Two:

Details of other chapters still to come can be found on this site, under the menu item LATEST BOOK: BANK ROBBERY.

Democracy? Meritocracy? Oh, Really?

We are sometimes given the impression that the best among us rise to the top, and that we, the people, choose how we are governed.

‘Representation and democracy are a contradiction in terms,’ wrote John Adams, third President of the United States, and it’s not hard to agree with him. He was referring to the obvious fact that if we, the people, choose others to rule us, we are not doing the ruling ourselves. But what sort of system does representation turn out to be, if not democracy?

People who offer to ‘represent’ us want power. In the party system, those hungriest and most ruthless reach the top. They may not kill (though in many countries they do); they may not steal (though in many instances they do); but anyone who wants to stay in the race must lie, avoid inconvenient truths, and be ruthless: and, of course, have that dubious characteristic known as ‘charisma’. Such a character competes aggressively; it manipulates; it provokes; it is the very antithesis of a peaceful world. Enough is known about such a character type that it should be the last type on earth to be given power. In a world bristling with automated weapons systems, international relations need honesty, consistency and consensus.

And what about those who rise to the top in ‘civil’ society? Corporate systems favour much the same character type as does politics. Meanwhile millions – billions – of honest, conscientious people trudge on, doing their work as conscientiously as they can within terms set by the ruthless, greedy and manipulative. But conscientious people end up in the middle and at the bottom of society, if they are not excluded altogether.

Of course, we COULD change things! We COULD have some real democracy. We COULD rein in the power of corporations. We COULD contemplate the development of political systems that lead to consensus, not strife. We COULD develop a meaningful system of international law. But at the moment, we don’t look as if we are doing any of those things.

Noticing The Obvious

Economists are geniuses at avoiding the obvious and saying what various factions among the powerful want to hear. A good example is their discussions of bank-money, which avoid noticing how destructive our modern system is to the human and natural world.

Money-creation has been assigned as a privileged activity to banks for the profit of capitalists and governments. As a result it consists of credit and debt, not as a straightforward commodity.

There are three main differences between bank-created money and money created as a commodity:

1. Newly-created bank-money is allocated to persons (human or corporate) by banks on the speculation that, one way or another, it will turn a profit. It is also allocated to governments on the promise of payment out of future taxes, burdening the citizenry with debt.

Newly-created commodity money, on the other hand, could be allocated in any way subject to democratic approval (e.g. spent by government in lieu of taxation, or distributed equitably, or given entirely to homes for retired cats).

2. Bank-money is created with an inbuilt demand for interest, which takes money out of circulation and into investment. This transfer inflates asset values, making everyone who is rich richer and the rest poorer.

Commodity money on the other hand can be lent, spent and even hoarded: it has no inbuilt widget taking from ‘have-nots’ and giving to the ‘haves’.

3. Once bank-money has done its work, it is destroyed, as loans are repaid. This creates a need for new money, which can only be created by making more loans.

Commodity money, on the other hand, can be managed actively with the objective of maintaining a steady value for money. If there is too much money in circulation, some can be removed via taxation and destroyed; if there is too little, more can be created and allocated as mentioned above.

Because of the above three points, it is foolish to be surprised when money accumulates in vast pools owned by governments and the very rich, leaving savers, independent producers and the poor worse off.

Total Stupidity? Or Total Hypocrisy?

Does any central banker seriously believe that ‘quantitative easing’ will produce spending and recovery? Or do they know the obvious – that QE makes the rich richer?

Economists profess that if a 100 people, with a thousand dollars between them, want a cup of tea, and tea is on offer at one dollar per cup, everyone will probably buy a cup of tea.

They refuse to discuss the obvious fact that if one person has all the thousand dollars and everyone else is broke, only one cup of tea will be sold.

Are economists stupid? Disingenuous? Or do they merely serve those who get the money – that is, governments, capitalists and banks?

There are liars, there are hypocrites, and then there are economists….