From State Debt to State Money

All amounts are temporary

At agreed moments you will have to pay back the balance you received from Hard Up Bank. From the pool of all “money” in circulation you have to earn enough to pay the installments. Then Hard Up Bank writes in his book that the amount you owe him is decreased and he decreases the amount he owes you. You see the amount disappear from your account. In this way the created balances disappear out of circulation again. That is a decrease of the “money” in the country.

Interest

The interest you pay does not disappear from circulation. With it the banker pays all his costs (like interest, insurances, staff, maintenance, invoices of the companies that supply E-banking etc.) and the capital is extended to allow him to lend out still more next time.

“Money mass” must grow

The classic risk for the bankers is that borrowers don’t pay back their loans or only pay back partially. And when the pawn appears to be insufficient, he will stay with problems in his book keeping, meaning with amounts that sooner or later he will have to book as losses.

To minimize the risk of defaults of payment the banks take care that more and more loans are brought into circulation. For the more “money” is added to what is in circulation, the less each unit becomes worth. That is what is well known as inflation. The amount the borrower must pay back is set. And because this amount over the course of the loan becomes worth less, he can earn it more easily. If he must pay 6% of interest and the inflation is 2%, the load of the interest is 1/3 less. [graphic]. In this way the number of defaults of payments is considerably reduced.

By the way, the advantage for the borrowers exactly equals the loss of value that the users of the money experience. In fact, as users, they pay a part of the interest too.

Working harder all the time

It is this same inflation that causes we must work harder all the time. Each time more “money” comes into circulation, we must try to earn more, if we don’t want to get poorer.

Of course a central banker will never tell us that the growth of money is a need for the bankers. The official pretext is that inflation leads to more economic activity.

And that, in turn, is the origin of the wide spread belief that an economy must grow to be sound. A very dangerous fairytale. Eternal economic growth is impossible on a finite Earth. And the longer we continue on this path, the more we destroy. What we can say is that a money system that needs a growing mass of money to function, is not suited for a sustainable society.

State debt

Our government disposes of “money” by levying taxes. With these taxes different things can be financed that are important for all of us together, like for instance dikes, roads, bridges, schools, hospitals, police, army and so on. It regularly happens that the government spends money before the corresponding taxes have been levied. In today’s system the government must then borrow money and pay interest on it. That is the well known state debt or public debt. We may be accustomed to it, but in fact it is something weird. Within the community people execute tasks for the community, everyone is paid for his contribution and subsequently there is a debt left over. And on that debt, all of us pay interest via extra taxes.

Money creation by privately led banks

This is exclusively caused by the fact that parliamentarians in the past have ceded the creation of money to private bankers. This happened at a time that people valued the fairytale that said only bankers could keep the monetary household in good shape. If the government would bring the money into circulation, that would surely lead to a disaster!

Democracy without money

The result is that we still pretend to live in democracy, while one of the major attributes of society, the creation of money, is in the hands of private bankers. De Nederlandse Bank N.V. (the Dutch central bank) is ruled by private persons and is independent from the government. Before, they also independently set the interest rate “in the interest of the economy”, as they called it. Now, this is done by the European Central Bank (ECB), where the 17 independent central banks of the eurozone are the owners and managers.

One interest rate for all

The ECB has engaged the impossible challenge to set one interest rate for the 17 different countries, with totally different economies, which have very different potential for productivity. Of course, it is completely impossible to determine an interest rate that has the optimal effect for all countries. A change of interest rate can only be beneficial for one or some countries. The other countries bear the consequences.

• Become A Funded Futures Trader