(Part one of a four-part series examining the monetary system.)
“Until the control of the issue of currency and credit is restored to government and recognized as its most conspicuous and sacred responsibility, all talk of the sovereignty of Parliament and of democracy is idle and futile.” – William Lyon Mackenzie King, 1935
Running for his fourth term as Prime Minister, Mackenzie King said this amid the rubble of the depression because he saw that money creation was the bitter root of a fundamentally unjust economic system. Today, you cannot find one politician in Canada connecting the economic crisis to our money system. Most people don’t realize that private banks create virtually all of today’s money supply. For example, when you take out a mortgage of $250,000, the bank is not lending you cash sitting in its vault – it creates it on the spot by typing digits into a computer. (Editor’s note: while the United States requires reserves of 10 per cent for any loan, Canada has no such rule.) The money didn’t exist before you were approved for the loan. When you pay back the principal it becomes what they call “dead money”. It cancels out the loan and it no longer exists in the system. The bank makes its money by charging you interest. Only you have to toil in the real world by producing goods or services in order to pay the interest. Earning tangible wealth takes time. Meanwhile, the accumulating interest can easily double the cost of your initial purchase. It is a sweet deal if you’re a banker: produce nothing of tangible value but get real wealth in return. But banks only create the principal, not the interest. This creates a chronic shortage in the money supply because businesses and workers are competing to extract interest payments from a money supply that never created it in the first place – the proverbial “rat race”. The money supply is continually being diverted into the coffers of the bankers. Bankruptcies are actually inevitable in such a system; it’s something bankers know full well. That’s why they arrange to seize your property should you default on your payments. Usury – charging interest on money for profit – is nothing new. Throughout the ages it has been condemned by many of the world’s major religions. The only record of Jesus acting violently was when he threw the moneychangers out of the temple. Jesus was enraged and accused them of turning a house of prayer into a “den of thieves”. The backstory is that people who came to worship had to pay a temple tax, and although there were many different kinds of currency used in everyday commerce, temples would only accept a certain kind of coin called the shekel. The moneychangers soon vacuumed up most of the shekels in circulation and proceeded to lend it at interest to the faithful. Jesus saw that the moneychangers were fixing the fight, and that the system was manufacturing losers. The moneychangers were the bankers of their time. The question today is: Who is going to challenge the moneychangers of our time?