End the Banking Crisis Forever – Democratise the Banking System

… it is patent that in our days not wealth alone is accumulated, but immense power and despotic economic domination are concentrated in the hands of a few, who for the most part are not the owners, but only the trustees and directors of invested funds, which they administer at their own good pleasure. This domination is most powerfully exercised by those who, because they hold and control money, also govern credit and determine its allotment, for that reason supplying, so to speak, the life-blood to the entire economic body, and grasping in their hands, as it were, the very soul of production, so that no one can breathe against their will.”

Pope Pius XI, in the Encyclical Quadragesima Anno, 1931.

It is now acknowledged by a growing number of economists, parliamentarians, bankers and observers that national economies and international trade systems are seriously malfunctioning. The human misery and deprivation generated by these problems in all nations is so obvious as to require no elaboration. The factors contributing to this breakdown have been narrowed down by the sheer weight of experience and events, and now many are increasingly focusing on the most common denominator – debt.

There is no national economy which has not been warped by the debt factor, be it external or domestic debt. There is no industry – primary, manufacturing or service – which has not been distorted from its original purpose by the impact of debt. There are no nations, peoples, communities or families which have escaped the ramifications of inflation, recession, punitive interest rates etc. Perhaps the ultimate revelation has been that of Professor R.T. Naylor, of Canada’s McGill University, who has shown in his “Hot Money” (Unwin Hyman, 1987) that the world as a whole is running an annual deficit which can never be paid under present policies, and which is inexplicable to bodies such as the International Monetary Fund.

These crucial developments have forced a growing number of leaders in many parts of the world to direct their attention to the source of debt, rather than its effects. It is the author’s view that no remedy to the debt crisis is possible without drastic changes to the accounting procedures involved in the creation of money and debt. Unless they themselves have the fortitude to initiate and take part in the necessary remedies, Trading Banks -particularly private Trading Banks – are bound to become victims in a revolutionary rethink generated by this crisis. Communities would rather see bank profits, assets, and even bank viability sacrificed than their own future. In a world of unprecedented productive capacity, it must be possible to make it increasingly safe for individuals, industry, and financial institutions too. It is with this imminent scenario in mind that the following proposals should be considered.


Deeper than the debt problem itself, with all its attendant woes, are those factors associated with society’s inability to focus on it clearly. The focusing problem has not stemmed from a dearth of publicists. Millions of people have come to some understanding of it, with high profile names amongst them, from Lord Acton to President Lincoln to William Jennings Bryant, to Charlie Chaplin. Thousands of volumes have been written in the hope of a recognition of the debt problem reaching “critical mass”, and generating corrective action. This it has not done, though a small movement to maintain this knowledge is well based to self-perpetuate itself.

A great many monetary reformers have attributed their lack of success to the entrenched powers of those controlling money creation. This influence can hardly be overstated. No media baron, for instance, is in a position to antagonise his primary financiers. However, this acknowledged, their lack of response has been a lack of response. The first question is, why?

Kenali Core Banking, Sistem yang Telah Mengubah Dunia Perbankan

The elementary proposition taken to the public has approximately been:-

“The creation of money has been captured by private interests. These interests have enmeshed all nations in debt, financed and heavily influenced the media, industry and government worldwide, in the beginning to defend their privileges, and later to direct policy.
“The result is massive worldwide debt, with debt dependency bringing inflation and depressions, much as a dependency on alcohol results in binges and withdrawal symptoms.
“National efforts to repay debts banking jobs to gain funds to do so, have resulted in “trade wars”, and sometimes in shooting wars. When this proves unequal to the task, trading blocks (the E.E.C., NA.F.T.A.) are formed to gain greater leverage.
“Nothing has worked, and nothing can, except issuing new credit debt free. “A reform to issue all national monies debt-free to their peoples is the answer.”
The problem with the above is not that it isn’t true. It is. The problem is that it is not credible. Most people take the view, quite reasonably, that for the above to be true, there would have to be an identifiable entity (or entities) with assets about the size of all the money in the world. Where is this stupendously rich mortgagee, who creates and owns all the world’s money? The short answer – “The Banks” – is simply not credible.

Why? Take the balance sheet of any trading bank (or all of them together), and there are usually several non-bank companies of comparable size in most countries. All the shares of all the Banks in any country, could be bought for a month or two of gross national production. Who can believe that Banks create practically all the money in the world, own it, and lend it out at interest to increase it, and yet are only an investment of average returns, with assets comparable to other large companies?

The above could only be true and credible to either a lunatic, or to somebody who understood some other factor, some missing key to the enigma. This key lies in the Banks’ accounting procedures. Yes, Banks do create money, and thereby create then – own assets. The assets so created amount to over 90% of the world’s money supply. Why isn’t this obvious?


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