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Byron Shire
May 12, 2021

Money creation a scam

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All money these days is loaned into existence. A simple equation ‘Loan made = Loan repaid’ is do-able. But interest is charged, making the equation ‘Loan made = Loan repaid + Interest’, which is not do-able.

The interest is never created; it has to be paid out of the loan. Thus the loan itself is not repayable. To keep the scam going, more loans are made so the interest can be paid. But the non-do-ability doesn’t go away. We, including governments and councils, just go deeper into debt.

Who gets the interest? The 0.1 per cent of super rich humans who own the banks and run governments and corporations at our expense.

In 1912, the original Australian Commonwealth Bank created genuine money, against bitter opposition, by charging only 0.5 per cent interest – the era of the Lucky Country. Thus Australians did not go further into debt to the Bank of England during WW1. And in peace time Australians benefited from, and were grateful to, this genuine money system.

You can read about Governor Dennison Miller and the colourful King O’Malley in The Story of the Commonwealth Bank by D.J. Amos or The Money Trick by Colin Barclay-Smith.

Politicians can understand this issue, as they did 100 years ago. It’s already been done, it can be done again.


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1 COMMENT

  1. What nonsense. I took out a loan when I bought my house and paid it back plus interest of 15 to 17%. Of course it is do-able. People borrow money and pay interest because they can use the money in a way that generates a higher return than the interest (or if home buying because it saves them more than the interest.) Arrangements like those of the Commonwealth Bank were nothing more than a taxpayer-funded subsidy., It and other generous lending arrangements too often lead to borrowing for uneconomic projects or lending to people who cannot manage debt (remember the “Easy Start loans). The only people who object to dealing with commercial banks and paying commercial rates of interest are people who lack the discipline to only take on debt that will be affordable over the life of the loan, or people who lack the entrepreneurial skills to make more money out of the loan than the cost of the money (I am one of the latter and it why I have only ever invested out of savings). The beneficiaries of the profits made by banks are in proportion to their ownership but it is certainly not just 1%. Most Australian workers own a portion through their superannuation but of course wealthy people who have more super or bank shares own more.

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