Tuesday, 4 July 2017

The Truth is Out From the Bank of England Itself - Money is Just an IOU



The Guardian admits the truth the banks don't want the public to know! In past blog entries and many letters to public officials we have detailed on this blog a simple truth that will destroy the current bankster Cabal once understood and properly applied to our economic marketplaces.
 Money is the original IOU! There is no reason that a handful of private corporations controlled by a select number of individuals should have the power to create money out of thin air and charge governments interest when they want to invest in their nations and the people therein. That is usury which is a form of slavery, control over people through debt. True sovereign nations control and print their own money, their are almost none left although Russia is injecting huge amounts of debt free 'sovereign' money into its economy in the coming years. By printing money with no debt the Government can finance and build infrastructure and social projects that are actually effective.
 While we have been taught that this is Communism or simply not economically viable this is not true, if money is simply an IOU then its value is either as a promise of future labour, or a promise of future goods to be returned

 We have covered this here,
Will the Defrauding of Canadians Continue With Creation of New National Infrastructure Bank?

 As well as here where we repost an open letter wrote by former Canadian Defence Minister Paul T. Hellyer who is also a member of the Prime Ministers Privy Council.
Member of the Privy Council, Former Defence Minister Mr. Hellyer Pens An Open Letter To Finance Minister Mr. Morneau

 We have touched on the issue of public banking and sovereign money vs. debt money in several other entries however the latest comes from none other then the Bank Of England as reported by the Guardian - Money is Really Just an IOU.

Exert from the Guardian below,

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Last week, something remarkable happened. The Bank of England let the cat out of the bag. In a paper called "Money Creation in the Modern Economy", co-authored by three economists from the Bank's Monetary Analysis Directorate, they stated outright that most common assumptions of how banking works are simply wrong, and that the kind of populist, heterodox positions more ordinarily associated with groups such as Occupy Wall Street are correct. In doing so, they have effectively thrown the entire theoretical basis for austerity out of the window.

 To get a sense of how radical the Bank's new position is, consider the conventional view, which continues to be the basis of all respectable debate on public policy. People put their money in banks. Banks then lend that money out at interest – either to consumers, or to entrepreneurs willing to invest it in some profitable enterprise. True, the fractional reserve system does allow banks to lend out considerably more than they hold in reserve, and true, if savings don't suffice, private banks can seek to borrow more from the central bank.
 The central bank can print as much money as it wishes. But it is also careful not to print too much. In fact, we are often told this is why independent central banks exist in the first place. If governments could print money themselves, they would surely put out too much of it, and the resulting inflation would throw the economy into chaos. Institutions such as the Bank of England or US Federal Reserve were created to carefully regulate the money supply to prevent inflation. This is why they are forbidden to directly fund the government, say, by buying treasury bonds, but instead fund private economic activity that the government merely taxes.

It's this understanding that allows us to continue to talk about money as if it were a limited resource like bauxite or petroleum, to say "there's just not enough money" to fund social programmes, to speak of the immorality of government debt or of public spending "crowding out" the private sector. What the Bank of England admitted this week is that none of this is really true. To quote from its own initial summary: "Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits" … "In normal times, the central bank does not fix the amount of money in circulation, nor is central bank money 'multiplied up' into more loans and deposits."

In other words, everything we know is not just wrong – it's backwards. When banks make loans, they create money. This is because money is really just an IOU. The role of the central bank is to preside over a legal order that effectively grants banks the exclusive right to create IOUs of a certain kind, ones that the government will recognise as legal tender by its willingness to accept them in payment of taxes. There's really no limit on how much banks could create, provided they can find someone willing to borrow it. They will never get caught short, for the simple reason that borrowers do not, generally speaking, take the cash and put it under their mattresses; ultimately, any money a bank loans out will just end up back in some bank again. So for the banking system as a whole, every loan just becomes another deposit. What's more, insofar as banks do need to acquire funds from the central bank, they can borrow as much as they like; all the latter really does is set the rate of interest, the cost of money, not its quantity. Since the beginning of the recession, the US and British central banks have reduced that cost to almost nothing. In fact, with "quantitative easing" they've been effectively pumping as much money as they can into the banks, without producing any inflationary effects."

  End exert
  See source for full story,
  The Guardian - Money is Just An IOU

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 More to come

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