MONEY OR YOUR LIFE. Chapter Eight
ANOTHER NAME FOR MONEY
It is one thing to try to get you to understand what is wrong, it is going to be even more difficult to get you to understand how to put it right.
It is very interesting to observe that these two difficulties exist at the far ends of a pendulum swing.
What is wrong is so complex that it cannot be seen.
What needs to be done to put it right is so simple it cannot be true.
We human beings tend to feel more comfortable with complexity and if the truth is too stark and too simple we tend to shy away with all sorts of excuses. "Its too simplistic" is the cry that goes up. So be it. You will have to try to confront simplicity, however painful it may be.
In an earlier chapter we already discovered that less than 5% of the money now in circulation is actually kosher. Only a tiny fraction of the money we use has been issued by the Government.
Over 95% of the money now in use is wild stuff that no one really understands.
It is what is called electronic money. This money only exists as computer entry. You may have heard of money as ledger entry, but now we use computers instead of ledgers.
Give me the deeds of your house and I will allow you to make out cheques up to the value of 25% of your house. Your house is valued at £200,000, you so can spend up to £50,000 and you will pay me say 12% per annum on the money as you spend it. At the end of a year you have spent £50,000 and at the end of ten years you will then owe me £50,000 and you will have paid me £60,000 in interest.
The burden of paying that interest has wrecked your enterprise and you have lost the £50,000 and you have also lost the ability to pay any more interest.
Therefore despite the fact that I am £10,000 better off I shall now foreclose on the deal, sell your house for £200,000and I shall be richer by £210,000. You will have nothing.
All I need in order to do all this, is a licence from the Government and a computer.
I asked my MP to find out from the Bank of England, who gives to the high street banks the money they lend as credit, knowing perfectly well that they create this money out of thin air and that its existence is pure fiction.
In his reply to my MP the Governor of the Bank of England ignored my question and gave massive and complex data on how bank notes are printed and coinage minted.
As a result the value of money is pure guesswork. It is anybody's bet what a pound Sterling is really worth. Look it up in a good dictionary and you will find it is silver laced with copper. You are back to coinage again.
The fact is that over 95% of the money we use is so-called electronic money. It only exists as computer entry. How does money get into a computer.
And the obvious answer of course is that it doesn't. This money which exists as computer entry is not money, it is a record of what is owed. We fondly imagine that it is a record of what is stored in the bank vaults. But it isn't. It is merely a record of what is owed to the bank.
Although we call it money it is actually something quite different, it is credit. We use credit as money. We have a debt based economy. All nations owe more money than has ever existed.
The system of using credit as an idea to represent money seems to work very well.
If you have no money and you wish to build a factory to exploit a brilliant new idea, such as sliced bread, then you go to the bank and get some credit. The factory is built, you employ thousands of people and everyone enjoys sliced bread. A credit facility is so wonderful we would not abandon it at any price.
Credit seems to be essential for raising the quality of our lives.
That is how it looks and that is how everyone believes it to be, from the Prime Minister through the Chancellor of the Exchequer, through the Cabinet, your own MP and even your bank manager.
There it is, a monetary system that works, and has worked after a fashion ever since a ledger was invented.
But there are snags and these snags get out of hand when the system gets computerised.
Firstly you have to pay a toll for the use of this money. You pay interest.
Second it is money not issued by the Government. It is issued by private agencies called banks.
Thirdly it has no real value. As the Bank of England will tell you - " the trouble is that money is not really money". We put a value on this "money" which is merely a guess.
I shall now devote a whole chapter to each one of these snags to our monetary system.