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Austerity, Commercial banks, Crisis, Debt, Debt-based monetary system, IOU the truth is out, modern banking system explained, modern slavery

Lords and Serfs (2): ‘modern banking system’ or the grandest fraud in history?

The ultimate fraud revealed: we are being punished with Austerity because we are being punished with a Debt-tied monetary system.

Suddenly we are informed [1]: commercial banks create new money whenever they extend loans (IOUs). Banks create money by a magic wand – just by entering the respective numbers after a $, £ or € on a keyboard – without drawing funds from a preexisting money-base. This info should arrive as a massive shock for us who have been told by our Governments that there is not enough money for public spending on infrastructure, pensions, health-care, education, etc.

  • “Of course, the flip-side to this creation of money is that with every new loan comes a new debt. This is the source of our mountain of personal debt: not money that had been prudently saved up by pensioners, but money that was created out of nothing by banks and lent to people who could not repay.” [5]
    “Without a banking system that creates money every time it makes a loan, we wouldn’t have these crises and wouldn’t need to use taxpayers’ money to rescue banks.” [9]

Until now this information has been a top secret; it is missing even from the finance-economics textbooks and classroom curricula [3]. Yet, after operating such monetary system for decades, the Lords – via the Bank of England [1] – decided to convert the top secret into mainstream news. Why? And what exactly are they hiding behind the revealed portion of the truth?

The information-bomb – cui bono?

Paranoia is just having the right information.‘ (William S. Burroughs)

Some time ago, in a previous episode of my blogger-existence, I arrived at the observation that in a perfect web of lies even telling the truth shall deceive. It creates a unique spectacle – and multiplies the extant amount of confusion – whenever a long-suppressed piece of the truth circulating only in the alternative sphere of social media, all of a sudden becomes officially confirmed information, hence ‘the truth’.

By now it is nearly mainstream knowledge that most mainstream media do not function as source of knowledge. But on the occasions they do, they are deployed as the weapon of mass-distraction, mass-intimidation and mass-manipulation by the ruling class. Thus the only reasonable reaction to such information-explosion is to ask ourselves: cui bono? – then to search for the best explanation on how the ruling class (banks, corporations, politicians) benefit from a certain information-bomb?

With reference to a previous case in point we can recall the information-explosion around Snowden and Manning. The truth is out there merely because it serves the purpose of mass-intimidation: through which the Lords can demonstrate the sort of punishment all whistle-blowers are facing. (Ironically enough, the effect of mass-intimidation carried out by the mass-media is so immense that it renders the actual deployment of any NSA sort of mass-surveillance system unnecessary, and most likely it is indeed nothing more than a mere intimidation-strategy.)

Just an unopened can of worms

As far as the topic at hand is concerned, the truth we have been told about money-creating commercial banks does not offer any resolution: the Bank of England does not apologise for allowing several privately owned companies, the commercial banks, to control the nation’s money supply. They do not enclose a promise towards a democratic revision of this blatantly undemocratic and abusive monetary system, and do not leave us with any actionable information. The Bank Of England bulletin’s presentation of redundant, esoteric technical details of an overly complex system [1] is offset with a childish, patronising style in bulletin [2], while neither of these authoritative documents explain in a consistent, clear and comprehensive manner, how money creation and destruction are accounted for by the commercial banks.

Even though this highly controversial monetary system is a central issue across the domains of politics, finance, economics and legal matters, it is not discussed by any segment of the official politics, not even by the opposition. If the truth is out there – exposed by an excellent Guardian post [4] – why is the political opposition silent about it? What remained after the truth-explosion is only vast silence – even thicker than it was before – and a huge unopened can of worms stuffed with a multitude of unanswered questions, including:

1) Why are we presented with the fact, out of thin air, that the private banks enjoy the unique privilege of creating money out of thin air?

2) In what sense does the public information-bomb about private banks creating money, serve the interest of the Lords: those individuals who effectively OWN both the banking system and mass media, and who actually force this system upon the Serfs?

3) What practical merit lies behind sharing this provoking statement, why is it repeated ad nauseam in the official Bank of England document [1], why is it so important that we, the otherwise grossly misled and ignored public, fully grasp this particular aspect of the monetary system?

Even though in lack of the necessary information we are not in the position to obtain answers to above questions, they may be worthy of further investigation.

In search for the answers, the first clue we can start from is the observed pattern that whenever we express our concern that there is something inherently wrong, in fact criminal, with the practice of private banks creating money out of thin air, our concerns are debunked by the circular argument that this is how banks function in the “modern economy”, period. Meanwhile we are immediately informed that these banks don’t just create money; they are “decent” enough to destroy it as well.

From the discovered pattern – and from the fact that strong claims require strong evidence yet we are presented with none – we can derive this knowledge:

  • The private money-creation ‘business’ in the commercial banking sector is the ultimate weapon of the modern feudal Lords to control, impoverish and enslave the Serfs. The Lords force us into Debt-slavery by the very monetary system they invented, then deepen our dependence and poverty via Austerity, into which the Lords force us with reference to the Debt into which they have forced us. Meanwhile they channel the many $/ £/ € trillions to their private selves.

The unknown, unproven and unprovable

Since the emergence of neoliberal politicians like Thatcher and Reagan, who introduced the current era of deregulated economies, at present we can’t even assume that there are any effective accounting and auditing regulations in place to regularly check the monetary system the Lords operate. Hence we have no evidence that these banks, creating – then allegedly destroying – the 97% of the total money supply, actually comply with any prescribed statutory reporting standards.

Even if such standard existed, the question of who controls the controllers is obviously another key consideration. Those who have ever audited these banks, who reviewed their accounting practices and financial statements (if at all), also belong to the circle of the Lords; hence none of these activities or the checks performed on these activities are under the oversight of any democratically controlled, independent committee.

The above altogether boils down to this major question: are there any Generally Accepted Accounting Principles legally enforceable as for the money-creation by commercial banks, and if there are any, how are these enforced and by whom?

The main reason why this is a most crucial question: if there is indeed money-creation and destruction underlying the IOU-issuing banking processes, such acts are reflected in the accounting and financial reporting system – so is the information of how much of the created money is effectively destroyed or channeled into the possession of those individuals who own these banks. But none of us have ever seen and evaluated the REAL accounting entries made by these money-creating and money-destroying commercial banks. The only source for the respective accounting information, albeit far from complete, is the aforementioned Positive Money (*), but they do not demonstrate the entire accounting process and do not offer references to the official sources of the demonstrated ledger entries.

Hence, to the question how the mind-blowing activity of private money-creation is actually tracked by an independent investigative authority, the only answer we can derive from the context is in the negative. Also by consideration of the fact that this topic is not even part of the finance-economics education curricula. Even now, when the official stance of the Bank of England is declared, top economists [3] sharply disagree on IOUs being money or not. The confusion couldn’t be any deeper than it is. Paul Krugman, leading economist claims “banks are just another kind of financial intermediary” [8], others say IOUs are currency but not money, while the Bank of England claims IOUs are money but not currency: “97% of the money held by the public is in the form of deposits with banks, rather than currency”. [2]

By the same token, we have enough reason to assume that the accountants and auditors who end up in the banking sector, are equally untaught, uninformed and uncertain as to the nature of the procedure they follow or audit. And if that’s what we assume, we are proven correct. According to experts interviewed by Positive Money, most of those working in the banking sector are unaware that what they actually do is creating and destroying money.

The first conclusions we can derive from these circumstances:

1) The very emphasis on how to define IOUs – as mere ledger entries representing mutual liabilities, money, currency, or green banana – is grossly irrelevant compared to the grave consequences and implications of the entire debt-based (more precisely debt-tied) monetary system.

2) If economists, banking experts, accountants and auditors are never taught or informed regarding what their activities actually cover, whatever these commercial banks record and report on their activities – as well as the amount of the funds they channel, either directly or indirectly into these banks’ Shareholder’s Equity – remain deeply buried in the realm of the unknown, unproven and unprovable.

Back to Part 1

Continue to Part 3

References / related posts:

[1] Bank of England: “Money creation in the modern economy”
http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q102.pdf

[2] Bank of England: “Money in the modern economy: an introduction”
http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q1prereleasemoneyintro.pdf

[3] Business Spectator: “The BoE’s sharp shock to monetary illusions”
http://www.businessspectator.com.au/article/2014/3/18/economy/boes-sharp-shock-monetary-illusions

[4] Guardian: “The truth is out: money is just an IOU, and the banks are rolling in it”
http://www.theguardian.com/commentisfree/2014/mar/18/truth-money-iou-bank-of-england-austerity

[5] Positive Money: “How Banks Create Money”
http://www.positivemoney.org/how-money-works/how-banks-create-money/

[6] Positive Money: “How Money is Destroyed”
http://www.positivemoney.org/how-money-works/advanced/how-money-is-destroyed

[7] Positive Money: “The Proof That Banks Create Money”
http://www.positivemoney.org/how-money-works/proof-that-banks-create-money/

(*) So far I could only spot a notable civil organisation called Positive Money who has been focusing on some aspects of this subject. For more information see the referenced articles / videos posted by them.

[8] “Commercial Banks As Creators of “Money”
http://krugman.blogs.nytimes.com/2013/08/24/commercial-banks-as-creators-of-money/

[9] Positive Money: “Taxes & Public Spending”
http://www.positivemoney.org/issues/taxes/

Lords and Serfs (2): ‘modern banking system’ or the grandest fraud in history?

Lords and Serfs (3): the truth is out, money is just an IOU and THAT is the fraud

 

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About Sky Wanderer

Global Political Analysis, Research & Commentary. Multidisciplinary research and analysis revealing the big picture of the global status quo versus the mainstream myths. Searching the way out of the global financial tyranny and slavery, before the system ends up in a full-blown version of global fascism.

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