Money as Debt III: Evolution Beyond Money (2011) - full transcript

When the people of the world
have a common monetary language,

completely freed from
every government,

it will so facilitate
and stabilize exchange

that peace and prosperity will
ensue even without world government.

A union of peoples, rather than

a union of political governments,
is what this world needs.

~E.C Riegel, monetary theorist
The New Approach to Freedom 1949

Money as Debt III

Evolution Beyond Money

The Challenge

Life has always been a challenge.



When one has a problem
and wishes to solve it,

first one must determine what is
the root cause of the problem.

Simple problems have
simple solutions,

complex problems are, well...
more complex.

An obvious problem with our
current financial system

is that it rewards
greed and corruption.

Greed and corruption
seem to be everywhere.

But are greed and corruption
the root causes of the problem

or are they the result of
the way the system is built?

Logically, one should first ask

are there built-in reasons why
the system works the way it does,

and if there are,
can they be built out?

Interest
Stock & Flow

Some say the basic reason
the system is unstable,



and leads inevitably to corruption,
is the charging of interest.

As explained earlier in this series,

in our current bank
credit as money system,

the principal amount of a bank loan
is simply created from the borrower's

promise to pay back the
principal plus interest in money.

But the money to pay the
interest is not created.

The obvious,
but untrue conclusion,

is that it would, therefore,
be mathematically impossible

to pay off all debts.

Many who call for money reform
call for the abolition of interest

as the solution to the problem.

But is interest really the problem?

Yes, there would be a serious
mathematical shortage

if all loans where concurrent and
had to be paid back in one lump sum.

That problem might apply to gangland
loans and sometimes to farm loans,

but that's not how the
banking system works in general.

Bank loans usually get paid
back in a series of payments

over a period of time,
and for good reason.

Money is both a stock, the amount
in existence at any one time,

and a flow, the transactions over
time that the money is used for.

Flow works like this:

if I, the rich guy,
lend you a dollar

and that was the only dollar
in existence, the stock,

could you pay me back 100 dollars?

Well, if it had to be
paid in one lump sum, no.

That other 99 dollars,
the interest on the loan,

would be impossible to pay.

It would be impossible to
pay even in 2 dollar payments

because there's only
1 dollar in existence.

But if I let you pay me the 100
dollars in 1 dollar payments,

magic happens.

In fact,
in 1 dollar payments

you could pay me back
any amount of interest,

if you lived long enough.

The only condition required to make
full payment of a 100 dollar debt

with only 1 dollar in existence

is that I give you the
opportunity to earn,

or otherwise get that dollar
back, each time you pay it to me.

This is the flow.

And by means of the flow, the same
dollar can be paid any number of times

and becomes effectively
many dollars,

all legitimately representing
the work done to earn them.

It is always the work
the real value

that pays the debt and
gives the dollar its value,

not the dollar itself.

The relationship in our
example is dreadfully unequal

because the man with the money
has enslaved the man without it,

just like the real-world,
some would say.

But a simple loan at interest need
not produce a shortage of money

or cause unpayable debt if flow is 100
percent, as in our example.

Flow is the real measure
of economic activity.

It's much more significant than
the stock in the money system

because it multiplies the
effect of money in circulation.

Given that today we use an
exclusively debt money system,

what is flowing in all
these transactions is credit

or promises to pay money.

This credit is ultimately nothing
more than promises of borrowers

to pay this credit back,
usually according to a time schedule,

and usually with interest added.

To pay this credit back,

most of us will have to work
and earn it by being productive.

So, therefore, the real value of the
money that flows in our economy today

is created by our promises
of future productive work.

We take a loan in order to have
something now rather than later.

We agree to pay interest
on into the future,

thus reducing our
future spending power,

often by more than the
amount of the original loan.

However,
with an understanding of flow,

we see that there is no
intractable arithmetic problem

with the charging of interest.

The problem is a social
and systemic one.

Lenders have neither
obligation nor incentive

to spend all their interest income

so that the borrowers can
earn it again and again.

In fact,
money lent once into existence

is lent as existing money
a second and a third time

in expectation of more gain.

The problem is basically
one of incomplete recycling,

where money needs to be
spent, earned and used

to extinguish the
debt that created it.

It is, instead, lent
or invested for gain.

In other words, money
that must be extinguished

is, instead,
expected to grow forever.

Money Lent Twice

Here's another simple example of a
basic mechanism inherent to all lending.

Let's say I lend you 100 dollars
and you spend it into circulation.

It eventually ends up in the
possession of someone

who doesn't need to spend it
and decides to lend it instead.

Now, once again, let's say this is
the only 100 dollars in existence.

So you have to borrow it
from the secondary lender

in order to pay off your debt to me.

But now you have to borrow it
from me to pay the secondary lender.

This twice lent money has become
a perpetually unpayable debt.

This debt can never be extinguished,
nor even reduced without a default.

Notice that interest doesn't
even enter into this equation.

The problem of perpetual
debt remains, interest or no.

And even if the money itself
is of intrinsic value,

like gold or silver, or if it is
issued by governments as cash,

twice lent money creates perpetual
debt exactly the same way.

When the same money
is lent at interest,

several times simultaneously,
not only is the debt perpetual,

society as a whole is paying
moneylenders multiples

of the interest-rate for the
use of the same money.

There's an expectation that existing
money should increase indefinitely

by being lent at interest.

But thisr equires us to
mentally divorce the money

from the debt from which it came.

However, the reality is,
every dollar created today

has a scheduled appointment
to be extinguished

as a principal payment on
the loan that created it.

And that's why debt money can't be
separated from the debt that created it.

It's like a yo-yo spun out into
circulation in the economy for a while

and then pulled back in
at the appointed time.

In order for the yo-yo
to be free to return,

all of the debt money needed
to extinguish the debt

has to be available to be earned.

The flow must be complete.

Can't we just pay off these
debts with other money?

But what would other money be?

Today, the amount of physical cash
and coin in circulation is very small.

Almost all money is bank credit,
debt money.

So, if almost all money comes
into existence the same way,

then its a valid to picture each debt
money dollar as having its own cycle,

from creation to destruction.

So, the question, can we pay
off debts with other money?

No, there is no other money!

Because all of it is similarly committed
to debt, in one form or another.

Therefore, the only way to insure
current payments can be made

is to constantly increase the total
amount of money in the system.

But more money in a debt
money system means more debt,

so the debt hole in
reality just deepens.

Since debt is money in this system,
it creates the fantasy of wealth...

for a while.

But fantasies must come to an end.

The day of reckoning
can be pushed back

but only by passing the debt
onto generations yet unborn,

which is precisely
what we're doing now.

Government debt piles up endlessly.

Corporate debt piles up,
consumer debt too.

As long as total debt
keeps increasing,

the system can stay ahead
of the debt monster.

But all of this debt
is an absurd fantasy

that our descendants
will surely never repay.

Nor would they be advised to,

as repayment of debt would
eliminate the money stock

and plunge the world
into a depression.

Once real growth levels off

due to the inherent limits
of human productivity,

or the limited resources
of a finite planet,

this growth dependent money system

can only resolve its
impossible arithmetic

in the destruction of value.

This can either happened through a
deflationary spiral of credit defaults,

falling prices or by the
devaluation of the money unit.

Taken to extremes, either course
of events will destroy an economy

and even a civilization.

The only other choice
is debt forgiveness.

In the ancient world,
a regular debt jubilee,

a society wide forgiveness of debts,

was a common practice to deal with
these unavoidable problems with lending.

It was considered normal,
even by the rich and powerful,

that the general good of
society took precedence

over the rights of those rich enough
to be lending money for profit.

Neither a borrower nor a lender be.
~William Shakespeare, Hamlet

Hard Money

Some say that the money
systems problems would be solved

if we returned to using
gold for money, or silver,

or some other limited or
hard commodity like oil

or energy in general.

They argue that this prevents
money from being created in excess

and backs it with real value.

However, it also makes
those who actually possess

the selected physical substance
the only ones with real money.

Everyone else would only
have a claim on real money.

For instance, gold.

How would we ever transition
back to a honest gold economy

with a natural distribution
of gold among the population?

That's long gone.

And why would we want to do that?

The gold based money
system is our past,

it's how we got to
where we are today.

Gold is inconvenient,
even more so was a barrel of oil.

Therefore, whether gold,
oil or kumquats,

trade will be carried
out in promises.

The real question is

if we are going to
trade using promises

of delivering something
of real value, why gold?

In fact, why any single commodity?

At this time in our evolution,
doesn't this very old idea of money

merit serious re-examination?

Debts & Promises

It can be argued,
that our current elastic debt money

is backed by real value, every bit as
meaningfully as gold.

That's because money, most of
which is created as mortgages,

represents the value of the
assets pledged as collateral.

So, is bank credit money

actually a claim on the
real-estate pledged to create it?

Not directly.

Bank credit money can be
a claim on anything.

Now, anything includes the
real-estate pledged as collateral,

so it can be a claim on the real-estate
that was pledged to create it.

So, how is a promise of real-estate
any less valid than a promise of gold?

Both gold and real-estate can change
value relative to other commodities.

Neither is a permanent standard.

In fact, there can never be
a permanent standard of value

because value is always
subjective and variable.

So, it would seem that
the crucial difference

between a claim on
gold and bank credit

is that bank credit is not a
claim on any specific real thing,

while the promise of gold is.

The promise of gold has to be
a promise of a specific amount

of a specific real thing
from a specific promisor.

Isn't that the essential reason
why many people would consider

a promise of gold the better promise?

But that is only true if
the promise is reliable

and what is delivered is really gold.

With the discovery that some of the
gold bullion sitting in central banks

is actually relatively worthless
tungsten plated in gold,

the whole argument that gold is
the most solid reliable money

is shown to be neither solid,
nor reliable.

Precious metal is susceptible
to counterfeiting,

it's heavy and it's
vulnerable to theft.

So, to return to commerce

via the physical exchange
of precious metal coins

would mean civilization had reverted to
a pre-electronic level of technology.

In the absence of such a collapse,
the economy would still windup

running on promises,
just as it does now.

So, once again, money would only
be as good as the promises made

and there would be no need of
actual precious metal coins

if all transactions were
carried out with promises.

The VALUE of the coin
is the MEASURING UNIT

Money is the Measure by
which Goods are Valued,

the Value by which
goods are Exchanged,

and in which Contracts
are made payable.

Every thing receives a Value from
its use, and the Value is raised,

according to its Quality,
Quantity and Demand.

Money is not the Value for
which Goods are exchanged,

but the Value by which
they are Exchanged.

~John Law, political economist, 1705

The Fundamental
Questions

The fundamental question is:

What does the need for money,
to enable trade,

have to do with the amount
of some shiny metal there is?

Or the amount of any single
natural resource or commodity,

or real-estate, for that matter?

Where is there any
meaningful relationship

between the functional need for
money and any of these things?

To answer that question,

let's go back in time and
find out when money started

and why it became what it is today.

We know that Stone
age people had money.

In the Stone age,
before writing was invented,

money had to be a
portable object of value,

because that was the
only technology available.

That's why rare shells and stones,
from which jewellery could be made,

were ideal as money.

A rough standard of value
for these money objects

developed over large areas,

enabling extensive networks
of indirect trading.

This way people could
obtain specialty items

not available in
their own environment

and looked good doing it.

The popular concept of jewellery as a
store of value has continued to this day.

In later agricultural civilizations,

cattle were often the standard
value objects for large transactions

and salt for small ones.

Salt was rare in those
days and valuable.

Roman soldiers were paid in salt,

thus the term "salary",
meaning payment for services.

With the invention of writing,

trade and other commodities could
be carried out using promises

of cattle and salt.

The cattle and salt weren't necessarily
what was finally delivered.

They were just commonly
understood units of value

in which the real trade goods
could be conveniently priced.

Written credits were expressed
in these two common units,

although they represented a
variety of real goods and services.

This form of money was
ideal for local economies,

where traders were known to each other
and pledges could be collected upon.

This voucher redeemable for
pottery & tile - potter

This voucher redeemable for
boats & sails - boat builder

Agricultural surpluses allowed some
people to leave the farming to others

and specialize in particular crafts.

This resulted in improved
skills and better tools

and that led to further
gains in productivity.

This specialization of labour
required increased trade,

as more people opted to produce
a single item of enhanced value.

They would then need to
trade their specialty

for the broad spectrum of
necessities that past generations

had produced for themselves.

But direct barter was inefficient.

So, more trade lead to a
greater need for money.

Over many centuries, various forms
of money where tried.

Eventually, gold and silver coins proved
to be the most useful money objects

because they were
conveniently portable,

and similarly valued across large
areas of the civilized world.

They where also easily
standardized for weight and purity,

and did not require enforcement
of value by some authority,

nor redemption in goods
from someone far away.

Thus, for very good reasons,

gold and silver became the universally
successful international currencies,

accepted as final payment
of debt almost everywhere.

Money as a Single
Uniform Commodity

The problem with a system in
which money is a standard commodity

is that it is most efficient when
only one standard commodity is used,

but if you do that, it makes the
value of money exclusively dependent

on the quantity of that one commodity

in relation to all other commodities.

For example, the Spanish thought
they would be fabulously wealthy

with all the gold they stole
from the Aztecs and the Incas

and then turned into
money back home.

But when the gold got back to Europe,
sure, the amount of gold increased,

but it didn't increase real
productivity in proportion.

Fertilizer would have
been more useful for that.

So, because there was no big increase
in real stuff to buy with it,

the value of gold decreased,
and the Spaniards discovered

that gold had no absolute
money value in itself

as many people had
imagined it would.

Its value was determined
by its abundance

relative to the value of real
goods and services to be bought.

Yet, many continue to argue
that the value of gold,

a luxury item of no
practical use to most people,

should be the measure of value

for all the real goods and
services essential to our lives.

While some campaign
for a return to gold,

others mistakenly believe that today's
money still does represent gold

held in a vault somewhere.

That hasn't been true for decades.

In our current money system,

we use national fiat currencies

and bank promises to pay
in national currencies

as the standard
commodity instead of gold.

National currencies used to be
promises to pay in gold or silver.

But way more promises were
made than could be honoured...

so that system fell apart.

Today, national currency is
just legally enforced money,

what they call "Fiat Money".

That is, it's money you have to accept
because the government says so.

To many, this government fiat
money is just worthless paper.

But is it really?

We can pay our taxes with it, and
governments, especially local ones,

provide essential services
paid for with those taxes,

like roads, schools, hospitals,
libraries, police and military.

So, government fiat money
isn't worthless at all.

Now, it is true that consumers
of government services

have no individual
free market choice

as to what their tax
money is spent on

and what services they receive.

In fact, many taxpayers may
not want those services.

So, therefore, this money can
rightly be accused of being

monopolistic, coercive and socialist.

But government is coercive, monopolistic
and socialist by nature, isn't it?

What else should it be?

Government in a democracy or a
republic is ideally a single authority,

empowered by society
to enforce laws

agreed upon by society for
its own collective benefit.

In a free market economy,

government must provide the
level playing field of law

within which the free
market can function.

And it also has to provide the referees
to enforce the rules of the game.

Those who are nostalgic for
the freedom of the frontier

should recall that the first
thing early settlers usually did

was elect a sheriff, and build
a jail and collect taxes

to pay for both...
for good reason.

So, government fiat money isn't
inherently worthless by nature.

Governments at all levels offer
vital services in exchange for it.

It only becomes worthless when
government creates too much of it.

Which it often does and
for the worst reasons.

While many reformers are
fixated on the differences

between gold and fiat currency,

what's more important is
the essential similarity.

Being single uniform commodities,
gold, silver, national currencies

and bank credit,
all share the characteristic

common to moneis for millennia past:

the more money there is relative
to the real things available to buy,

the less the money unit is worth.

Thus the total quantity of money in
circulation is extremely important

to maintaining the
general price levels.

And today, this quantity is largely
determined by the demand for new money

to purchase real estate
and speculative equities.

This makes the supply of money for
general trade particularly vulnerable

to real estate and
stock market bubbles.

fantasy wealth

real wealth
destruction

OH NO,
IT HAPPENED AGAIN!

The Concentration
of Wealth

Perhaps the most significant problem
with money as a single commodity

is its tendency to
concentrate wealth.

Those who have no money must get
it from those who have it to lend.

Anyone with extra money
can lend it at interest

and if, rather than spending
all of the interest,

they add any of it to
their lending capital,

they will accumulate
even more money to lend.

One reputable study counted
all the ways we pay interest,

directly on our own debt,
and indirectly in prices and taxes

for corporate and government debt.

This was compared to the interest
we earn from all sources.

This study found that only the
richest ten percent come out ahead.

The next ten percent do
little better than break even

and the remaining 80%
pay more than they receive,

the poorest losing out the most.

Payment
in Money

Now, in our current
bank credit system,

money is created as debt to banks.

This debt is required to be
repaid to the banks in money,

either fiat cash or bank credit.

Therefore, the ability of
all borrowers to repay

depends on the availability
of fiat cash or bank credit.

The supply fiat cash is controlled
by the nation's central bank.

But fiat cash makes up only a
very small proportion of money.

Usually about 95% of all
money is bank credit.

And who controls the
availability of bank credit?

The banks?!

Well, on the one hand,
what the banks can do

is constrict the supply of
credit anytime they want to,

with high interest rates or
by just not granting loans.

On the other hand,
the banks could lower interest rates

and encourage borrowing, but,
they can't expand the money supply,

unless borrowers are
willing to borrow.

If cautious and reliable
borrowers are in short supply,

banks must take bigger risks

as interest must be paid to depositors
and banks cost money to run.

The bank credit money supply is,
as they say, "highly elastic".

And, because its based on the
willingness of borrowers to borrow

and the reliability
of borrowers' credit,

it is vulnerable to both rapid
expansion and drastic shrinkage.

Also, everyone is legally
obliged to pay in money.

Now, money, in reality, is
just an accounting of debt.

And accounting follows strict rules.

So, the whole situation is
governed by inflexible numbers.

That's why a sudden shrinkage in the
money supply caused by some defaults

has the inevitable follow-up effect
of causing more and more defaults

and even more shrinkage
of the money supply.

This self reinforcing
downwards suction

leads us into economic collapse and
the economic and social absurdity

of unemployed,
dispossessed people

camping outside their
empty, vandalized homes.

And what does the
government do about it?

It loads bankrupt taxpayers
with astronomical fantasy debt

that will never even be
reduced, never mind paid off.
A TRILLION used to be a big number

Not anymore!

The BANK ASSETS lost were PROMISES to
pay legal tender the banks NEVER HAD

All this is done to fill up the
negative balance sheets of the banks

with money the banks never
had in the first place.

Now you, the taxpayer, will pay
interest on those ?losses? FOREVER!!!

And then they use it to pay
themselves obscene bonuses!
Life is GOOD...

Life is good for those who
know how to play the system.
when the PROFITS are YOURS...

the losses are forced
onto the taxpayers

The bailout scam was the
biggest daylight robbery

in the history of the world...
so far!

and the government puts YOU in charge of
making sure it "never happens again"!!!

It's the System!

All of these tendencies of
the money as commodity system

are features of the system itself.

The greed and corruption comes in
as those who understand the system

profitably surf the inevitable
waves of boom and bust.

Those who understand the
system know what's coming,

and even precipitate it when the time
is right for them to take advantage

of disastrous mass events for
their personal and political gain.

But it's the structure
of the system itself

which gives them the opportunity.

Without the wave,
there would be no surfing!

And they've taken this opportunity over
and over again since ancient times.

People complain of the injustice,
blame each other,

blame the Left or the Right or
whoever the scapegoat of choice is.

But they never really catch on to
the reasons this keeps happening.

That's because most of us shy away

from trying to understand the true
nature of money and of freedom.

The basis of freedom is essentially
the freedom to exchange...

goods, services, ideas.

If you create something
in proven demand,

you and only you,
should have the right and the freedom

to create and spend the credit
money needed by someone to buy it.

Money as a portable uniform commodity
was invented a very long time ago.

Pretty stone...
maybe good for trade

It was the only choice

using the technological
means available at that time.

But times have changed.

So why is this outmoded technology

still the prevailing
concept we have for money?

Could we go beyond
money as we've known it?

Could there be a new basis,
a fresh concept,

a design that could more effectively

address the real purpose of
money in the 21st century?

"We cannot solve our problems
with the same thinking we used

when we created them. "
~Albert Einstein

"I am enough of an artist to
draw freely upon my imagination.

Imagination is more important than
knowledge. Knowledge is limited.

Imagination encircles the world.
~Albert Einstein

Back to Basics

Before we can create a better system,

we have to believe that another
system is even possible.

To do that, we need to look
at what money does for us,

what purpose it plays in our lives,

what it does well
and what it doesn't.

This can be done by asking
some fundamental questions

about the role and purpose of money.

First, what is the one
essential purpose of money

for which there is no substitute?

Buying the things we
need and want, right?

Direct barter is so cumbersome,
and money so versatile and convenient,

that money in some form must
be considered a necessity

for any kind of complex economy.

But, except on rare occasions,

most of us don't need money to
buy gold or silver or real estate,

the usual things money
systems have been based on.

This leads to question two:

why can't money be backed
by all commodities,

instead of a single specific one?

Wouldn't that completely
change the nature of money

and liberate it from the model where
money's value derives from its scarcity?

Question three:

why can't the supply of
money be created directly

by the day-to-day need for money?

If that were the case,
the demand for goods and services

would create the supply of money needed
to purchase those goods and services.

Question four:

you have to spend
money to make money.

Now, that's a familiar saying

that points to the other
essential purpose of money,

which is to fund future production.

Question four then follows:

why should money be a claim
on existing things at all?

Why can't it be a claim on
things yet to be produced?

And finally, question five:

can we set the bar higher and
make money inherently stable

and intrinsically moral?

Is it possible to
create a money system

that balances and corrects
itself automatically

and distributes wealth more fairly?

The answer to all of these questions

is to eliminate money as a
single uniform commodity.

Instead, money should be a
promise of, or a voucher for

a specific amount of any
actual thing in demand,

whether it exists already or will
be produced in the near future.

Money would then cease to be
a thing in itself and, instead,

be simply a unit of measurement
for the value of real things,

like minutes are for time, meters
for length and tons for weight.

This idea of vouchers
for real things

goes all the way back to the
invention of writing and numbers

and probably preceded the
widespread use of coins,

but until now was only practical
for limited and local use.

Our advanced technology,
at long last,

makes this concept
practical for global trade.

And there is a growing use of
trade vouchers for real products

already happening in business-to-business
barter networks around the world.

Once values can be
reconciled by a common unit

and transactions carried
out using modern technology,

there's no longer any need for
money as a single uniform commodity.

Most money is already just
accounting, not a physical thing.

Credits used as money could,

and probably would, still include
vouchers for gold, silver and taxes.

But they would also include vouchers
for food, clothing, shelter, services,

in fact,
anything in reliable demand.

Money as Vouchers
for Goods & Services

Money has no value if there's
nothing to buy with it.

This should be obvious.

Therefore,
the logical source of money

should be the value of the real
things we're going to buy with it.

That value is ultimately determined

by what the customers are
willing to exchange for it.

Therefore,
value is created by demand

and money should be also.
The bank doesn't
lend money

In the bank credit system,
money is not actually lent,

it's created by the
borrower as credit towards

demand for the borrower's
future production,

just as this movie is proposing.

But the system pretends
it's a loan of money

and repayment must be in money.

The borrower is required
to earn both the principal

plus the interest in money
within a limited time.

The alternative is to
create credit money directly

and simply spend it into existence
in the process of production.

Like bank credit,

this is credit towards the
demand for future production

to be honored within a limited time.

But the credits spent in this system

are obligations to be fulfilled
with products or services only,

there is no debt of money.

Full recycling is naturally
enforced by the system itself.

The money created
to produce something

must equal the money needed to
buy it when it's ready for sale.

If this seems novel and strange,

that's because the words used in
banking have conditioned us to believe

that banks lend money.

In truth, we self-issue credit
now by signing the loan document

and pledging our future productivity

to repay the so called loan.

Our promise of repayment in
money is what creates the money

and most of us will have
to earn the money we repay

by producing real goods and services
of value to our fellow humans,

just as if we had issued
our credit directly.

In our current system,

the bank doesn't actually have
the money it creates for us.

The bank does, however,
validate our self-issued credit

by undertaking to lose the amount
created if the loan is not repaid.

This is called an
unfunded liability,

a fancy term for gambling
money you don't have.

Thus, our personal credit

becomes both the bank
source of income as interest

and also a potential
loss to the bank.

As the bank increases its income,
it also increases its potential losses,

which it knows it cannot cover.

As banks are only required
to own assets that cover

4 to 8 % of their potential losses,

losses more than that will
put the bank out of business

and require Deposit Insurance to
bail out the failed banks depositors.

Like the banks themselves,
the Deposit Insurance

can only cover a small proportion
of its potential losses.

So, the burden of saving the system

eventually falls on
the general taxpayer,

the only one who can
be compelled by law

to take on the bank's
gambling losses.

The public as a whole
must go into debt

to create the new money needed to
make up for the private liabilities

that were unfunded
in the first place.

We can go on endlessly about
the numbers and who did what,

completely missing the point.

The problem arises because we
are enmeshed in imaginary numbers
There is no Money...

generated by an inhuman,
unnatural and ill designed system,
only DEBT

which has become completely
divorced from reality.

All payments to the bank

must be made in the form of bank credit
or fiat cash unforgiving numbers.

So, the first difference to
note between our proposal

of producer issued credit
money and bank credit

is that where bank credit
is payable only in money,

self-issued credit is payable
only in goods and services.

In the first case,

if the bank credit borrower fails to
pay the bank principal plus interest

in money, the bank takes whatever
was pledged as collateral.

Neither the bank nor the borrower

has any means to ensure there
is enough money in existence

for everyone to pay
back their bank credit.

And neither party has any control over
the value of the collateral either.

The collateral may plummet in value

and be insufficient to cover
the bank's liabilities,

causing a book loss and
threatening the security

of all the bank's depositors.

When severe and widespread,
this structural problem

can bring the entire
economy to a screeching halt

and mass bankruptcy.

This money "lost"
is the same money
the bank "created"

By contrast,
with self-issued credit,

it's impossible for the
promisor to go bankrupt. Why?

For the very simple reason that
there's no debt of money to a bank.

The debt that creates the money

is payable in goods
and services only.

Therefore, a promise
of product or service

requires the ultimate creditor
to purchase from or hire

the one making the promise.

Now, it would always be
possible to be unpopular,

unproductive and unemployed

that would render an issuer
unable to issue credit anymore,

no one would accept it.

Someone could indeed
go out of business.

But with self-issued credit,

going bankrupt and losing
assets pledged as collateral

could only happen if the issuer
breached its credit contracts

by failing to deliver the
products or services promised.

The supply of these, the credit
issuers should have control over.

Poor business usually results in
excess product, not a shortage.

Therefore, a failure to
deliver on promised production

would have to be the result of
some exceptional circumstances,

it would not be the
normal situation.

A Self-Correcting
System

There's a second difference
between our proposed concept

of producer-issued credit
money and bank credit.

The principle of money as
a single uniform commodity

could be applied to
individual producers,

rather than to the
money supply as a whole.

This could be accomplished
through an automated market.

Why would this be a good idea?

Didn't we just show
the negative effects

of money as a single
uniform commodity?

The answer is:

when the scarce commodity
principle is applied

to individual credit issuers
in a free credit market,

the system becomes
automatically self-correcting.

The scarce commodity principle would
force each individual credit issuer,

from individuals to
corporations to governments

to be responsible for spending
exactly what they take in,

a balanced budget,
full recycling of the money.

Their success at
balancing their budget

would determine the relative
value of their credit

in a free market where
credits are exchanged.

Perfect parity with the
universal value unit

could only be achieved by
perfect balance of trade.

How? By means of a
public digital exchange

based on some elementary
school arithmetic.

Take the total volume of
offers to buy any credit issue

and divide by the total
volume of offers to sell.

This is not a bargaining session
between people to arrive at a price.

The price is determined by the
demand/supply ratio automatically.

This producer-issued credit creates
money as demand for actual production

and it automatically
and relentlessly

revalues the issue credit
money in real time.

This means that the total purchasing
power created by the issuer

always equals the real current demand
for that issuer's purchasing power.

Like a claim on gold,

there's a specific value
in real goods promised

and a specific promisor
to collect it from.

However, this form of money

is not a single uniform
commodity like gold,

it is, instead,
the promise of delivery

of an unlimited quantity and variety
of commodities actually in demand.

The value of any given credit is
simply what the issuer will give

in real goods and services
to get its voucher back.

Logically, the most reliable
credit money would be issued

by those whose products
are necessities.

Producers of energy, food, minerals,
raw materials of all kinds,

manufactured goods and construction

would all be logical
choices to issue credit.

As well as these
foundational issuers,

in any given economy there
would be third parties

using the issuer's credit as money.

The more issuers in a community
and the healthier their credit,

the more abundant the
local money supply

and the more prosperous the
people of that community would be.

That money being promises of
specific products that set prices

would not be subject to revaluation

due to the total amount of
all credit in circulation.

It would be directly affected only
by its own internal balance of trade.

The productivity of the people and
the demand for their production

would directly create the
spending power available to them

without interference from afar.

There would never have to be
an artificial shortage of money

in a local town caused by the
financial shenanigans of greedy people

in distant cities or countries.

The power of money would be
localized and made self responsible.

In sufficiently productive economies
with many successful issuers,

there would be more than
enough money available

to service third-party transactions.

In fact, the prices of goods and
services in this third-party economy

could rise due a local abundance
of spending power.

As all prices would
be in the same unit,

local price rises due to abundant
money in the third-party economy

would be restrained at some point

by easy comparison
with prices elsewhere.

Whether credits as a whole were scarce
or abundant in any given community,

any given credit would
still only be redeemable

for exactly what was
promised by its issuer,

specific goods and services
at advertised prices.

Savings

In this system,

savings are simply savings,
not loans to a bank.

Like gold coins in a berry chest,

saved credits would be out
of circulation entirely.

But unlike gold coins, these
credits would also act like bonds.

They would provide a yield,
interest. Why?

Because when someone accepts
the issuer's credit as money

in exchange for their
goods and services,

they have extended
credit to the issuer.

They've traded present
value for future value.

The credit then gets
passed around as money

amongst those who will accept it.

Then, when the credit matures,
which should be within a year,

the final customer
collects the interest

in the form of a predefined
return in extra product.

In practice, this would take
the form of a lower price.

Anyone not purchasing with
the issuer's own credit money

would pay the full price.

Buyers of large items and
everyone at the wholesale level

would always take the trouble to trade
for the specific credits they needed,

in order to reap all
the benefits available.

If unredeemed, these credits must
expire shortly after maturity,

because credits are promises.

And promises should not be held
over the head of the issuer forever.

It's spend 'em or lose 'em.

So, how can these
expiring credits be saved?

Quite simply, really. Maturing credits
must be traded in for new ones.

This would create an
active exchange market,

as credits would have
to continually flow

from those who are saving them to
those who wanted to redeem them

for the issuer's goods or services.

They would have to be
replaced in exchange

by the newest possible
credits that could be saved.

This constant trading
would accurately determine

the real moment-to-moment value
of individual credit issues.

In addition, this trading would
yield truthful and timely insights

into the likely realities
of future demand.

Yes is
the Answer

To sum up.

Yes, there is a simple way
to create an exchange system

that inherently balances
and corrects itself.

Yes, this system favors a
broad and more equitable

distribution of purchasing power,

as business success very clearly
depends upon spending money,

so that potential
customers can acquire it.

And yes, purchasing power can represent
all commodities, not just one.

Purchasing power is a promise
to deliver anything specific

that's in demand, like electricity,
steel or carrots.

This purchasing power is not money,
it's measured in money.

Money being a unit of value
like minutes, meters and tons.

Purchasing power is created
and constantly revalued

by proven demand for
future production.
value x quantity = demand

Investment

Where does the money
come from for investment?

All money in this system is an
investment by its very nature.

The acceptance of an issuer's credit

in exchange for
goods or services now

is an investment in goods or services
to be delivered in the future.

Conceivably, there could be two
types of product credit money.

One type would be short-term

to be used in general
circulation as money.

This would fund current production.

The second type of product credit
could be longer-term and higher risk,

traded separately to fund
long term development.

Such long term credit would
be redeemable in product,

normal credit or equity shares.

Shares and equity would continue
to be the foundation of investment

and dividends to shareholders would
be one of the costs of production.

Dividend money would also need to be
spent or exchanged before it expired,

so that the flow of purchasing
power to the issuer's customers

would be maintained.

Profits

So, how does one earn a profit?

The same way one earns a profit now,

by selling production for more
than it costs to produce it.

However,
in this proposed new system,

the issuer of credit must maintain
a perfect balance of trade

for their credit to remain at par.

Therefore,
taking in more than was spent

would just cause a shortage
of their credit in the market.

This shortage causes the
value of that credit to rise,

relative to the prices which are
expressed in the universal value unit.

This sounds good, but it isn't.

The issuer's credit is worth
more than par when spent,

seemingly a benefit to the issuer.

However, if an issuer's credit is over
par when redeemed for goods or services,

it will cost the issuer even more in
real goods and services to get it back.

Why?

Because everything is always
priced in the universal unit.

With over par credit,
the issuer's customers

will spend less of that credit
to buy the issuer's products

than they would have at par.

This leaves more of the
issuer's credit in circulation,

compensating for the
shortage automatically.

The result is that,
if the system has to self-correct,

the issuer does not get
the potential profit.

Instead, it goes to the issuer's
customers as an additional bonus.

To make a profit, the issuer
must spend new credit as required

to keep its credit at par.

Therefore,
we can say that in this system

issuer profits could only be realized
by spending them immediately,

perfect flow.

Issuer profits can't be piled up as
money in the bank seeking further gain.

Profits must flow quickly
back into the general economy,

where customers can earn
that purchasing power again.

An employee bonus of
immediately redeemable credit

would be a fair, popular
and effective method

of quickly sharing profits
to avoid overvaluation.

Charitable donations would be, too.

Or hiring people to do socially
useful non-commercial work,

such as environmental cleanup.

Technological
Displacement

People are always losing
their jobs to machines.

What can be done about that?

This proposed system is based on a
100% recycling of purchasing power.

Gone is the overhanging
debt at interest to banks.

Gone are the loan payment schedules.

Gone is any possibility
of bankruptcy,

because there's no bank to rupt.

If the issuer wishes
to sell X units,

the issuer must spend enough
credit in the circulation

for the customer to buy X units.

If a machine replaces a person,
it's very clear

the issuers must still
supply their customers

with the purchasing power
to buy their production.

This is something Henry
Ford realized long ago.

He paid his workers 3
times the going wage.

This enabled them to buy
the cars they were building

and thus expand the industry.

But this essential principle
of a successful economy

has been forgotten in recent times.

Cost-cutting for shareholder profit

has savaged the purchasing
power of wage-earning consumers.

This is suppressed demand bringing
on even deeper cost-cutting,

offshoring of jobs to
cheap labor nations,

expanding debts at all level,
defaults, bailouts

and all the distress
we are witnessing.

In contrast, this proposed system

would require distribution of the full
purchasing power to the customers,

even if no human employees
were required.

Mortgages

How would mortgages work?
Very differently.

Builders would issue
their own credit,

they would not borrow
money from a bank.

Therefore, there would
be no payment schedule

and no interest clock to beat in order
for the builder to make a profit.

Timely delivery of desirable
product would be the only commitment

the builder would have to meet.

Buyers wouldn't borrow
from a bank either.

Instead, buyers would enter into a
partnership agreement with the builder

and buy out the builder's
share over time.

As long as the
payments were kept up,

the builder would
be a silent partner.

Subsequent buyers would do likewise.

Everyone would be free to negotiate
their own pay-as-we-go arrangements,

free of any conditions
imposed by a bank.

Bank-like services could still
exist to facilitate these processes,

but the pretense of
lending money would end.

In this mortgage partnership system,

no one would lose their
equity in any partnership,

until what they paid in
is paid back out to them.

Forfeiting collateral would
be a thing of the past.

In addition, payments in this system

would have what economists
call a counter cyclical effect.

Here's how it would work:

in a growth cycle with
a boom in housing,

the issuer could gradually
increase its credit issue

to pay more people
to build more houses,

because it would have a gradually
increasing revenue stream

from new sales.

On a downturn, the builder
must reduce production

to meet reduced demand.

This means a reduction
in new credit issue,

but incoming long term payments
remain the same,

creating an imbalance
that will eventually

over value the issuer
builder's credit.

Therefore, the issuer builder must
still spend as much as it takes in

to maintain its credit at par.

To accomplish this, the issuer
could pay laid off workers,

reduce buyer payments,
if requested,

invest in a new job creating industry,
give to charities,

or spend it all foolishly.
The point is

that by whatever means,
the same amount of credit

must be spent as is coming in.

This amount would only
very slowly taper off,

as some of the payments finished.

This would make long term debts,
like mortgages,

natural bridges over
economic downturns.

This would be the opposite to what
happens in the current system.

In the current bank credit system,

the principal is removed from
circulation once it's paid to the bank.

This money requires a
new loan to replace it.

If no one's willing to take this loan,
the money supply is reduced.

If every dollar has been lent multiple
times, as in our current situation,

the lack of $1.00 in new loans

results in an unavoidable
shortage of principal

with which to pay
off multiple loans.

In contrast, the self-issued credit

must be immediately returned to
circulation interest-free, as spending.

A decline in the real estate market

would still mean fewer
jobs building houses.

But the possibility of
widespread foreclosures

and homeless people camping
outside of their vandalized homes

would be gone.

To the house buyer and citizen,
the proposed new system

offers the following benefits:

no one is doomed by the calendar and
by the dictates of a bank formula;

no one ever loses their equity
in any property they've paid for;

and no one needs to fear
that widespread defaults

will result in a deflationary debt
spiral or ridiculous bailouts,

because in this new
self-issued credit system,

long-term mortgage payments
will provide a natural bridge

over economic downturns.

Where Do Banks
Fit In?

Where do banks fit in?
Or do they?

The answer depends on how the
system would be implemented.

Technology now allows
us to bank online.

It's only one step
further technologically

to make the safekeeping, accounting

and money transfer functions
of banking obsolete.

Money could be securely
stored and transferred online

from peer-to-peer,
directly and anonymously,

without any third party involvement,
like banks or PayPal.

Alternately, banks could function
as fee charging service providers

and record keepers for the
same self-issued credit system

applied as an accounting system.

And one method does not
have to exclude the other,

both could exist side-by-side.

Banks could also continue
to function as lenders.

But how could banks be lenders if
they could no longer create money

and if no one even
needed to deposit money?

What would banks lend?

And why would anyone need loans

if they could issue their
own credit themselves?

Well, for this simple reason:

in the self-issued credit system,

the vast majority of
people and small businesses

would not be issuers.
Why not?

Because personal credit would
never be widely acceptable.

And most individuals
and small businesses

would not want the responsibility
of being an issuer.

Issuers must ultimately back
their credit with their assets.

Should they breach their contract

by failing to deliver the
goods or services promised,

they could be forced into liquidation
to satisfy their creditors.

In a large corporation,
the equity investors

would likely put up more
funding to ensure production,

as this would be the only
way to save their investment.

But for individuals
without such resources,

it could mean selling their homes,
because they fell ill

or misjudged costs or any
number of other reasons.

Not a position most people
would want to be in.

So, while one main goal
of this system

is to develop a society that
would operate from savings

rather than debt,

there would still be a demand for
consumer loans and business loans

among non issuers.

Loans of existing credit
already in circulation

could continue to be made on the
personal or institutional level,

but new credit could only
be created by issuers

as promises of real
products and services.

Issuers could lend directly to
trusted borrowers, such as employees.

Issuers could also supply their
credit for banks to lend at interest.

These loans of product credit would
be repaid with product credit.

This product credit
would not be redeemed

for the issuer's goods and services,

but its value would be the same
as the credit that was redeemed.

This credit would come with an interest
charge, just as loans do today.

But, unlike conventional interest,
flow would always be complete,

because both the bank and the issuer

would be compelled to spend all of
this interest profit immediately,

in order to maintain the value
of their credit at par.

If borrowers defaulted
on their payments,

this would leave more
credit in circulation

than was needed to buy
the issuer's output.

Therefore, the issuer's product credit
would be devalued proportionately.

This would cause the loan losses
to fall directly upon the issuer

and also on all the holders of
the issuer's now devalued credit.

With the viability of their
core industry at stake,

issuers would surely cut off the
bank's supply of product credit

(?) at the first sign of
lacks lending standards.

In this way, banks would
be dependent for money

on the producers of real wealth,
not the other way around.

And the money that banks
would lend would be real,

which is to say redeemable for
specific goods and services

from specific providers.

As for bankers, their essential and
beneficial role in this new system

would be in moving credit from those
who have it to those who want it.

Because credits in this system, like
bonds, would mature at maximum value,

there would be an optimum time to
redeem them for goods and services.

In other words,
a period of maximum yield,

like fruit at the peak of ripeness.

And, like fruit and
other perishable goods,

credits in this system also expire.

Fruit must be eaten, or it spoils.

Product vouchers must be redeemed
for product, or become worthless.

So, to use this expiry
date money as savings

would require constant renewal.

Ripe credit would have to be repeatedly
exchanged for unripe credit.

The longest lasting
credit would be the newest

and so there would be a
constant demand from savers

for reliable issuer credit that
would keep its redemption value.

The most desirable credit
would be from an issuer

who maintains stable prices,
as well as consistent parity of credit.

Anyone could do this credit
trading from their own computer

in a matter of minutes.

However, there would be a market for
professional researchers and brokers

who could deliver reliable credit

to their individual
and corporate clients.

And this is where the financial
types could do well by doing good.

Brokers would be performing three
extremely valuable services to society:

1. they would safeguard the
value of people's savings;

2. they would help everyone get
the maximum redemption value

for the credit they've extended;

and 3. they would make sure that the
issuers got all their credit back.

For the system to work for everyone,

broker evaluations must be honest.

But this would tend
to happen naturally,

because brokers who sold bad
credit would lose their clients.

However,
it would also be important to insist

and establish by law
two restrictions:

1. the brokers always be paid by the
receivers of credit, not the sellers;

and 2. the brokers fees
should always be paid

in the same mix of credit
acquired for the brokers' clients.

With these restrictions in place,

when brokers move credit from those
who have it to those who want it,

they would of necessity provide honest
credit ratings to their clients.

There'd be no advantage
in being dishonest.

because...

Brokers get paid in
exactly the same Credits
as their clients

Insurance, Pensions
& the Like

Suppose you saved up a hundred
million dollars, feel pretty secure...

But what if there was almost
nothing to buy with it?

Now, what would it be worth?

What if everyone else
had just borrowed

a hundred million new
dollars into existence

and the money supply had become
swollen beyond recognition,

like now?

It's also important to remember

that, in a debt money system,
all money saved,

such as insurance or pension funds,
is still someone's debt.

The original borrower needs
to be able to earn this money

in order to pay off
the original debt.

So, if you invest your savings
with an expectation of gain,

while the original borrower of the money
needs to earn it and extinguish it,

there's only one way this can be
resolved to everyone's satisfaction.

Both the bank and the
borrower can be satisfied

if the money invested for gain is
ultimately used to employ the borrower,

who's then able to pay it back
to the bank and retire the debt.

As well, you, the investor, can be
satisfied if the borrower's labor

produces an increase in the
money value of your investment.

But the real money value in equity

can only be created by
real economic growth

and this can't happen
in a sustainable economy

where stability is the goal.

In a sustainable economy,
as in nature,

new growth simply replaces
that which dies off.

Thus, over the system as a whole,
the net value of total investments

could never increase
because of equity growth.

Pension funds and insurance

would have to rely on
dividends and current premiums.

But even more fundamentally,

we need to understand
that we can't eat money.

The simple truth is that,
in almost every case,

current needs must be met
from current production.

Our future cannot be ensured
with saved up money.

We can really only ensure that
supplies of real goods and services

will still be there
for us in the future

by protecting our environment,
by preserving topsoil,

protecting species,
biodiversity and by stopping war

and the poisoning of the planet.
The list goes on and on.

Taxes

What about taxes?

If we could all exchange
money anonymously,

how would the government
collect taxes?

Wouldn't it be impossible?

Everyone is sick of taxes,

not so much the principle
of paying them, usually.

But the complexity and
the nuisance of collection

and the corrupt and misguided purposes
for which the taxes are spent.

Most aggravating is the
injustice that most of our taxes

just pays perpetual
interest to bankers

on an ever-expanding
government debt.

In a self-issued credit system,
government, like private issuers,

would have to maintain
its credit at par

by operating within
a balanced budget.

To do that, it would have to collect
taxes that equal what it spends.

But the problem for government

is that existing forms of tax
would be very easy to avoid.

Imposing such taxes would, therefore,
be difficult and expensive.

It would also be unfair,
because those who complied

would be paying for
the many who were not.

So, what would be
the source of taxes?

The logical answer

would be from things that can't
escape to an offshore tax haven.

From the private use of that
which naturally belongs to us all,

usually referred to as the Commons.

The Commons means anything that is
naturally given to all by the Creator.

Bare land, natural resources,
water, air

and the electromagnetic spectrum,
the primary examples.

Taxing a common supplies tax at
the base of the production process.

This way, taxes are included in
the price of all goods and services

that consume or use
the natural Commons.

Those who privately consumed or
used the natural Commons the most

would pay the most towards the
common expense of government.

But the Commons is
not inexhaustible.

The world and its
resources are finite.

As this understanding
dawns on the world,

we propose to put governments
in a new position,

one that requires leadership,
not from bankers and lawyers,

but from eco scientists and
experts in sustainable culture.

This is because governments
stripped of other sources of revenue

would be forced to rely heavily
on the sustainable husbandry

of all natural resources and
Commons within their jurisdiction.

Most government revenues would come
from resource royalties and user fees.

In addition, a general
sales tax could be enforced

through mainstream
retail businesses.

And where there are socially and
environmentally unwelcome activities,

governments could also target
them with punitive taxes.

The result of this new
approach to taxation

would be much higher prices
on resource intensive items,

especially non-renewable ones.

But it would also result
in the elimination

of most existing forms of taxation.

The equal of all men to the use of land
is as clear as their equal right to breathe the air,

it is a right proclaimed
by the fact of their ecistence.

For we cannot suppose that
some men have a right to be in this world,

and others no right.
~ Henry George, Progress and Poverty (bk. VII, ch. I)

Negatives?

So, what are the potential downfalls
in the self-issued credit system

assuming it was fully established?

For one thing,

in a free and global trading system
backed by private production,

any issuer's money would only be as
good as the demand for their product.

As well, people might try to
buy something and discover

that the credit they want to spend
is not acceptable to the seller.

The seller can refuse
acceptance for any reason,

financial, political or personal.

This would certainly be
a nuisance to the buyer

and could easily cost the seller
the sale, even many sales.

So, most sellers would not
boycott any issuer's credit

without a good reason.

Because private credit would not
be backed up by legal tender laws,

the choices would be:

1. the buyer trades for credit
acceptable to the seller;

or 2. the seller decides to accept
the credit the buyer offers.

This is what happens now when
making a foreign purchase.

Another feature of
this proposed system

is that the amount of credit
people have in their possession

would be constantly
changing by small amounts,

as credit valuations
change with the market.

This would be
disconcerting at first,

but as all credit issues
self-correct automatically,

up should balance downs over time.

In the current system,

if you have accounts in several
different national currencies,

you know that the total calculated in
any one of them changes constantly.

The difference is that,
with national currencies,

variations in the trade value
of the national currency

affect everyone in the nation.

With self-issued credit, the value
of the credit at anyone's possession

would depend only on the balance of
trade of the producer that issued it,

not the nation's central
bank or politicians.

If a government over spends,

it would only devalue the
government's own credit,

not everybody else's.

A crisis in customer confidence

could destroy an issuer's
self-issued currency,

but that's also no different than today
trying to get credit from the bank.

Purposeful attempts to
destroy an issuer's credit

would backfire on the aggressor
because of the self balancing feature.

In every scenario we've examined,

attempted attacks on an
issuer via currency aggression

would be just as damaging to
the aggressor as to the victim.

But destruction from the inside
would always be possible.

If the issuer's employees

feared that their employer's
credit might devalue,

they might all try to trade away
their paycheck credits on mass.

This would cause the devaluation they
feared and accelerate the sell-off.

The public might join in.

This would have the potential to
trash the issuer's credit entirely

and thereby destroy its
ability to carry on business.

However,
there is a plus side to this scenario.

All that devalued credit would
still be guaranteed by the issuer.

That's because, by the rules
of this proposed system,

issuers would always have to
redeem their own credit at par,

no matter what the market value.

This brings us to another
self-correcting feature of the system.

Here's how it would work.

Those who might be considering
buying the issuer's products

would have the opportunity to obtain
more of the issuer's devalued credits

than they would pay in
higher valued credits.

Because the issuer must redeem
its own devalued credit at par,

this makes the issuer's
products more of a bargain

and, thus, more likely to sell.

Increased sales would tend to bring the
value of the issuer's credit back up.

Another self-correcting mechanism

would arise from
currency speculators.

They'd ask themselves:

will demand for the issuer's goods
or services actually be destroyed?

Or production fail to meet
the demand that survives?

If demand did survive
and production meted,

buying would replace selling as
the maturity dates approached.

This would bring the value
of the devalued credits

gradually back to par.

Those who invested in them

would enjoy an increase
in purchasing power.

In our current system,
speculation in national currencies

is a deliberately destabilizing
and parasitic practice

that can indiscriminately rob
all citizens in the target nation

of their savings.

In this proposed new system,

currency speculation
would help stabilize

and restore the value of
troubled issuer credit.

It would allow those with doubts
to voluntarily unload unwanted risk

onto those willing to take it.

It would also provide opportunities
for risk takers to enrich themselves

by good judgment

as to which credits would
survive and return to par.

By making the choice to
buy devalued credits,

currency speculators would be
rescuing the issuers they believe in,

potentially a valuable service to
both the issuers and to society.

A common question about this proposal
concerns technological capability.

Can our technology handle all the
necessary data and calculations

quickly enough to be practical?

No one wants to wait even one minute
at a grocery store checkout line

as the computer looks up the relative
value of many individual credit issues

before it calculates the payment.

The answer to this is
that in the year 2000

there were many informed
people who publicly doubted

that the internet would
ever be fast enough

to carry video of a
quality worth watching.

Ten years later,
the Internet is absolutely overrun

with free streaming
video and high-definition

available on wireless
handheld devices.

When it comes to computers and speed,
many cautious assumptions

have already been proved
ridiculously wrong.

In fact, accounting technologies that
could implement this proposed system

have been in operation for decades.

In addition,
a person-to-person digital coin

has now made the leap from
the drawing board to real use.

Security and speed are priorities
for everyone in the digital world.

Where there's a will, there's a way.
And the ways already exist.

If our political will

were to fundamentally overhaul
the world's money system,

it seems realistic to assume

that the technical solutions
would be forthcoming.

How Will this System
Define Its Value System

We've saved the toughest
question for last.

How is the value unit defined if value
is always subjective and variable?

The real answer is

one can never know what
the full value of any trade

might have been for those involved.

Every act has many potential
values in our lives,

financial, personal, karmic,
historic or whatever.

For purely commercial purposes,
the money value of something

is simply the number of money
units agreed upon when it's sold.

If it's resold tomorrow for more
or less, its value has changed,

even though the thing has not and
it could change back just as easily.

different customer
different value

We have widely agreed
upon money units now,

they're called national currencies.

They're no longer promises
of anything specific

and their relative values
are defined by speculators,

hope to profit themselves
at everyone else's expense.

Nonetheless, national currency
units are abstract measures of value

that have established
a common understanding

by being the units in
which we price real things.

They are, in fact, the only
functioning units of value we have.

It's been several generations

since the masses of people habitually
measure the prices of their daily needs

in gold or silver equivalents.

Quite the contrary, we value gold
and silver and everything else

in national currencies.

So, it makes sense to
derive any new currency unit

from these existing currency units.

Now, it's mathematically simple

to translate the often wild fluctuations
of one currency against another

into a smooth curve down the middle.

Speculators love the fluctuations

because they provide opportunities
for quick and unearned profits.

On the other hand,
productive business

does best with a smooth
and predictable trajectory.

A little bit of simple math

can make a smooth curve
out of several jagged ones.

This smooth curve creates a new
harmonized global currency unit

in the same way that removing the
noise from a scratchy audio signal

produces a clear tone.

As the debt money system tears
itself apart in wild gyrations,

this new global money unit
could come into existence

by arbitrary definition as the
stable midpoint at the center.

So, to conclude.

The proposed unit of value is to be
a purely abstract notion of value,

which, in truth, would always
be unique to each individual,

as value always is.

Initially, this new unit of value
would be defined by a simple formula,

giving it a value in relation
to today's national currencies.

It would not, however,
be tied to any of them.

Once established,

the new unit would cease to define
itself by existing currencies.

Instead, its value would be defined

by the prices issuers charged
for their goods and services.

Ties to the bank credit for national
currency system would be left behind

and the new global self-issued
credit system set free.

As long as we cling to the superstition
that we must look to government

for money supply,
instead of requiring it to look to us,

just so long must we remain
the subjects of government,

and it is vain to follow
this or that policy or party or ism
in the hope to salvation.

We can control government
and our own destiny

only through our money power
and until we exert that power

it is useless for us
to debate the pros and cons
of political programs.

~E.C. Riegel
The Surprise Weapon,
Private Enterprise Money, 1944

The Two Systems
Compared

Now we will review what we've presented
in parts 1 and 2 of this movie.

In doing so, we will be
comparing today's system,

based on promises
of payment in money,

with our proposed system

based on promises of
payment in real production.

In the current system,

money comes into existence
when it's borrowed from a bank.

The bank charges interest
on top of the principal,

but the money to pay this
interest is not created.

Therefore, as we've
demonstrated in part 1,

the bank must spend 100% of the
money it takes in as interest,

and this money must not be
lent at the second time.

Otherwise,
the debt becomes perpetual.

Perpetual debt can
never be eliminated

or even reduced without
causing a default.

When paid back as a Principal Payment
to the bank, the Credit is extinguished

PRINCIPAL
BUT... the secondary DEBT REMAINS

In this system, credit that is
the promise of repayment in money

is used as money.

By using the promises
of money as money,

the distinction between money
and credit has been lost.

Yep, even explained many times

it still sounds like some upside-down
logic from Alice in Wonderland.

But it's even worse.

Banks can issue new
promises to pay money

based on having existing
promises to pay money,

or on bets that someone
will or won't pay,

or on corporate equities,

so that an enormous inverted
pyramid of debts and bets

can be based on a few
debts at the bottom,

like the most fabulous
house of cards

all made out of
"unfunded liabilities".

This unfunded liability
money can fail dramatically

whenever a large amount
of debt is defaulted on,

bringing the whole financial
house of cards tumbling down,

unless the government steps in
and puts the taxpayer in debt.

That is,

the government creates more unfunded
liabilities to the tune of trillions

to replace all this so-called money

that was never anything but
promises to repay something

the banks never had
in the first place.

Nothing substantial is done to
reform this perverse system,

because those in control
make out like bandits

raking in huge personal gains.

We're still for us all.

The crisis is used as an excuse

to further consolidate the bandits'
control of the money system.

The very people whose
wild irresponsibility

and/or deliberate criminal intent,

those same people who
caused the problems

are given even more power
and even more of our money.

So, it will all happen
again and again.

Without an alternative,
we'll be helpless.

We'll have our happiness shattered,
freedoms stolen

and our creativity wasted
by greedy scoundrels

who produce nothing but the illusion

that they have the
power to create money.

But in reality, they don't.
Why?

For the simple, logical,
and it should be obvious reason

that if there was nothing of
value to buy with their money,

their money would have no value.

Money Debt
has NO
inherent value

The only ones who have the actual
power to create the value of money

are those with the power
to create real value

in the form of real
goods and services.

The ones who create real value
in the current money system

are called borrowers

and they must repay their
borrowing in so-called money.

But for the most part,
this so-called money

isn't money at all,
it's bank credit,

a form of debt that can
only be created by banks,

the supply of which is, thus,
limited and controlled by banks.

In complete contrast,
the self-issued credit system

creates money as a promise of
delivery of the goods and/or services

of an issuer, not borrower.

As such,
it's real money or hard money,

a positive quantity, not a negative
quantity like the debt of money.

It can be created by
anyone who can back it up

with real goods and
services in demand.

And it is payable only
in goods and services.

This ensures that the promise
can only be collected on

by hiring or purchasing from
the issuer who made the promise.

Accepting an issuer's credit over
time would be materially rewarded

as in the current system.

But this material reward, whether
regarded as interest or dividend,

would be payable in
products or services only,

not in money.

Therefore, the arithmetic problem
created by conventional money interest,

that is to say, being compelled to
pay back more money than was created,

would no longer form the
basis of the money system.

Issuers would pay this interest
or dividend to their customers

by redeeming their own
mature credit in product

at a higher value than any other.

This would create the motivation
for the issuer's credit

to flow back to the issuer
at the maturity date,

just when the issuer
planned that it would.

By means of a free market,

purchasers would trade the various
issuer credits in their possession

for the mature issuer
credit of their choice.

They would then reap the
benefits of a lower price

when they purchased the products
or services of that issuer.

Exchanging for maximum value credit

would happen constantly
at the wholesale level,

where getting the absolute
best deal possible

would be a competitive imperative.

Individuals would almost
certainly do the same

when making large purchases
directly from an issuer,

as the savings would be
well worth the effort.

Unlike the current system,

which is technically
bankrupt at all times,

this proposed system eliminates
conventional bankruptcy

for the issuers of credit.

In this proposed system,
poor issuer business

simply means below par credit.

Profitable issuer business
means above par credit.

In either case, the required action
is to match spending with demand.

And if this is not
done deliberately,

the system's arithmetic
does it automatically.

There's no escape.

However, unlike the rigid payment
schedules in the current system,

there would never be any pressure

to sell a minimum amount of products
or services within a certain time

to satisfy the fixed
conditions of a bank loan.

And should an issuer's credit
lose some or all of its value,

the loss is immediately
socialized by a flow

amongst those who voluntarily
accepted that issuer's credit.

How?
Simple.

Flow works just as well
in distributing losses

as it does in facilitating trade.

Devaluing credit could be a hot
potato set up by the software

to be spent first in
every transaction.

Flow could, therefore, spread
imperceptibly small losses

amongst a very large number of people,
harming no one.

It would be straightforward.

It would not threaten
the collapse of any bank

and the loss of depositors' savings,

nor would it require
government intervention

with taxpayer-funded bailouts
laying astronomical debts

upon future generations.

Quite the contrary.

The unavoidable loss of value
would be taken care of immediately

by an organic, somewhat random,
and entirely voluntary process.

Where's the justice in that?

There's justice in this arrangement

because producers are trying to
supply us with what we need and want.

Consumers would have nothing
to consume without producers

and producers would have no one
to produce for without consumers.

So, in reality,

consumers and producers are
indispensable partners for each other.

So, why should the
producers take all the risk

and the consumers take none?

If we think of farmers,
the concept should be clear.

If they don't grow food,
we don't eat.

That's a fact that
today's spoiled consumers

should reflect on before every meal.

So, given our total collective
dependence on farmers,

why should farmers have to
enslave themselves to banks

in order to feed us?

Where's the justice in that?

In a self-issued credit system,

farmers could form cooperatives
to support each other

and issue a common credit
currency themselves

as claims against their harvest.

All those who eat would
accept their money

and become shareholders
in these harvests.

Thus, an engaged and mutually
supportive social arrangement

would be created.

Without shoemakers,
we'd have no shoes;

without automakers, no cars.

Regardless of our race,
politics or religious beliefs,

we're all dependent on the
same basic necessities of life.

In a self-issued credit system,

holding an issuer's credit would be
a form of shareholding in the issuer.

So, to that extent,
everyone would be a shareholder

in a variety of enterprises
at all times.

To hold shares is to share risk.

This would sometimes
lead to losses of value,

since losses can't be
avoided in any system.

But in this proposed new system,
they would be immediate losses.

They would not turn into perpetual
and unpayable fantasy debts

dumped onto future generations.

Common Cause

If widely adopted,
self-issued credit

could transform society
in many positive ways.

Issuers, their employees
and the non-issuer economy,

in which the employees
spend their pay,

would all have a common interest

in maintaining the value of
their local issuer's credit.

This would be particularly true

because, to stay within
their business plans,

issuers would have to value
their own credit at par

when they pay their employees,

regardless of the actual
market value of their credit.

If the issuer was spending
more than it was earning,

the market value of its
credit would sink below par

and the issuer's employees would find
the real purchasing power of their pay

reduced proportionately.

This cut in pay would also apply

to the issuer's executives
and shareholders,

as well as everyone
else near and far

that was holding
that issuer's credit.

This would result in more
public engagement with,

scrutiny of and pressure upon
corporate decision-makers.

BAD MANAGERS

Self-Reliance

In this proposed new system,

the fundamental change in paradigm

is that money comes from within,
not without.

Any community with the resources
and resourcefulness to create value

could create its own issuer
money to represent that value.

No disapproval from
a bank or government,

no shortage of money,
no banking crisis, near or far,

needs stand in the way.

And, as an issuer, if you can
maintain your balance of trade,

then your credit is at par.

The actions of others,
even reckless governments,

can have no direct effect on
the value of your self-issued,

self-maintained and
self-reliant credit.

Voluntary
Acceptance

A basic rule of this
new system is this:

unless an issuer's credit has
been voluntarily accepted,

it is rejected.
Very simple.

No private credit money
can ever be forced upon us.

However, if the self issued
credit system were fully adopted,

governments at all levels would be
among the largest issuers of credit.

That credit being payable for taxes.

Like other issuers,

government would honor its own credit
at a higher value than any other.

So, it would be
naturally advantageous

to acquire government
credit to pay taxes.

There would be no need to make it
mandatory to acquire government credits.

Unlike private issuers,

government would still
have the exceptional powers

of a ruling authority.

For instance, government would still
be able to compel its customers

to pay for its services

without them being priced or even
accepted in a competitive market.

As well, government would very
likely continue to have a monopoly

on issuing physical cash as
part of its credit issue.

Legal tender status would have to
be retained for this physical cash

to ensure that those existing on
cash outside the digital world

could pay their debts with it.

These are the exceptional powers

that are reasonable to allow a duly
constituted government to have.

And it's unrealistic to expect
government to ever surrender them.

Outside of government,
private enterprise issuer credit

would be as competitive as the
goods and services it represents.

Its value would be established by the
pricing of real goods and services,

as value always ultimately is.

And its parity with the universal
unit would be indicative

of the issuer's success in
matching spending to demand.

The evidence would be
plain for all to see

in the issuer's credit record.

Voluntary acceptance
of issuer credits

would also make it possible
to boycott an issuer's credit,

as well as its products.

This would make credit boycotts

an additional nonviolent
tactic of social struggle.

Natural Networks

Multiple Unique Interconnected Networks
sharting a Common Unit of Value

Using a single common money unit

does not make such
a system a monopoly.

Why?

Because this is not money as
a single uniform commodity,

it is money as a measurement
unit of value.

Instead of a limited supply of dollars

from a monopolistic source
like banks or government,

there would be an indeterminate
supply of product credits

expressed in dollars.

This proposed new system is designed
on the absence of any central control,

like that of a gold reserve or
a central debt dictatorship,

such as the International
Monetary Fund

or the world bank are now calling for.

It would, in total contrast,
be a spontaneous network of networks,

a living multitude of
interwoven systems,

like nature itself.

As all relations would be voluntary,

such a system would grow just as
the social networking systems

like Facebook and
Twitter have grown,

organically and under
no-one's control.

All such networks could
be as locally limited

or globe-spanning,
as the participants require.

Open to ALL

For major industries and governments,

credit acceptance
could be very general,

amounting to a de facto
decentralized global currency,

arising naturally and spontaneously
from real productivity.

Compare that with what we have now,

an unstable, unredeemable currency

created by various
acts of outright fraud,

imposed by the top-down machinations

of an invisible and unaccountable
banking elite

and their paid-for
agents in government.

These guys control billions
of people through debt,

because our minds are
mired in the false belief

that bankers have money.

Is it not time we the people
woke up and made better choices?
Unbearable Debts

Income Inequality
TREADMILL of PERPETUAL DEBT

Accelerating Destruction
of Our Life Support Systems

COMMUNISM
Money plays the largest part in
determining the course of history
~ Karl Marx, Communist Manifesto 1848

COMMUNISM
5th Plank: Centralization of credit in
the hands of the State,

by means of a national bank with the
State capital and an exclusive monopoly.
~ Karl Marx, Communist Manifesto 1848

CAPITALISM
from Tragedy & Hope 1966 pg 324
by Professor Carrol Quigley (1910-1977)

- Professor of History at Georgetown University
- member of the Council on Foreign Relations (CFR)
- mentor to Bill Clinton, 42nd President of the USA

CAPITALISM
The powers of financial capitalism
had another far-reaching aim,

nothing less than to create a world system
of financial control in private hands

able to dominate the political system
of each country and
the economy of the world as a whole.

This system was to be controlled
in a feudalist fashion by the central banks
of the world acting in concert,

by secret agreements arrived at
in frequent meetings and conferences.

The apex of the system was to be
the Bank for International Settlements
in Basel, Switzerland,

a private bank
owned and controlled
by the world's central banks,

which were themselves
private corporations.

Each central bank...
sought to dominate its government
by its ability to control Treasury loans,

to manipulate foreign exchanges,
to influence the level of economic activity
in the country,

and to inflence cooperative politicians
by subsequent economic rewards
in the business world.

Only a revolution in the mind of the
individual is needed to accomplish

the greatest stroke
for freedom of all time.

It is a remarkable fact that
no constitution of any state,

nor any declaration of human rights,

has ever proclaimed the right
of freedom of money issue.

Yet this right is inseparable from
the right of bargain or exchange,

which is the very
foundation of liberty.

Man's ignorance of the laws
of money has blinded him

to the very touchstone of freedom.
You are indeed sovereign,

if you but realize that your money
power is your sovereign power.

You need no political laws to liberate
your power for prosperity and peace;

you are the master of your fate by
natural law, if you but discover that law.

As you scan the world scene with
all its miseries, its drab outlook,

the discouraging prospect of a solution
for humanity's problems by political means,

and the remoteness from you of
the capitols through which promised

salvation is desperately hoped for, you
are saddened be a sense of frustration.

But if you realized that the citadel of
power is your own home and that yours

is the majesty and sovereignty,
sadness will be dispelled by gladness.

To bring this transformation you
must comprehend the power of money

and that you are the money power.

~E.C. Riegel, monetary theorist
The New Approach to Freedom 1949

Monetary Reform
Movements

Gold

Awareness of the need for real change
in the money system is growing.

But what direction to take,
what exactly is the problem

and how can it be solved?

The safest and only real choice,
many people argue,

is to return to gold
or a gold standard

because this worked for
millennia in the past.

But gold itself is impractical for
transactions in the modern world.

It was impractical centuries ago,

which is why the promise to
pay gold system developed.

And so it is certain that,
in practice,

transactions would be conducted
in promises to pay gold,

not gold itself.

Thus, the promises to pay gold money

will only be as reliable
as the promises.

So, in reality, it isn't the
gold that makes the system work,

it's the reliability of promises.

Would they be reliable promises?

Maybe.

But what we would
be using as money

would be like the old
goldsmiths promises,

made in the knowledge
that only rarely

does anyone ever ask for real gold.

This was the problem with
the goldsmiths situation.

The real gold was seldom claimed,

allowing fraudulent promises of
gold to be made and used as money.

Why would history not repeat itself

if all the same elements
remained in place?

Another thing.

What most people say they
like about the gold system

is that the promise of gold money

is a promise of a specific
amount of real value.

Now, this is an odd idea,

given that the vast majority
of us have no use for gold.

So, how much real value
can it have for us?

Wouldn't a promise
redeemable in food,

clothing or shelter
be much more real?

People also like the idea
that gold is just gold,

it doesn't need a
government to create it.

However, it does need miners.

In a gold money system,
mining discoveries, jewellery making,

industrial use, hoarding and counterfeit
bars of gold-plated tungsten,

would all influence
the money stock.

What on Earth does any of that have to
do with the need for money for trade?

Lastly, gold as money is
a single uniform commodity

manifesting all the inherent
mathematical defects of lending,

demonstrated in part
one of this movie.

Being a coin with intrinsic value
doesn't make any difference.

A lot of gold and silver's appeal

comes from a belief in an
oversimplified version of history.

People assume that coins were invented
to standardize the inherent value

of the metal they contain.

This is true,
but right from the beginning,

some of the earliest
coins were created

based on a diametrically
opposed idea.

This was done because
the rulers at that time

foresaw the inevitable
negative consequences

of using limited supplies
of precious metals as money.

Therefore, they chose
to avoid that route.

Instead of precious metals,
these rulers

struck coins of iron or copper
and defined their value by decree.

What's more, these coins by decree
were heated and dipped in vinegar,

so the metal they contained
would have no intrinsic value.

These coins were in fact the
original and true fiat money.

They were merely tokens of value,

money created by law and enforced
by the ruler's authority.

And I can force my
subjects to accept it

Fiat Monopoly

Pure fiat money is the other main
idea favoured by money reformers.

They would restore fiat
money to its true status

as a national government
monopoly on money creation.

This current of money reform, in stark
contrast to the the gold advocates,

insists that true money is fiat
money by authority of the State.

This money is to be simply
spent into existence

as a promise by the State

to accept the same money
back in payment of taxes.

The taxes are compulsory

and the State also promises

to enforce the acceptance
of this money in court.

These are very reliable promises

and can result in
very reliable money,

if not abused.

The problem these fiat money
reformers have with the current system

is that government has given away
this power to private bankers

and is now borrowing at interest
money it could create itself

with a few keystrokes,
just like the banks do.

This results in a massive
unplayable national debt

on which interest
will forever be paid.

This ever growing national
debt expands the money supply

when new money is created
by the Central Bank

to buy more government debt.

And the interest burden
passed on through taxes

adds to the cost of almost everything
we buy one way or another.

In contrast to money being
created as national debt,

fiat money simply
spent into existence

would save the taxpayers
immense sums of interest.

It would free future
generations from impossible debt

and it would forestall
the tendency to inflation

because the money supply would not
grow forever with the national debt,

as there would be no national debt.

In the fiat money system,

taking fiat money out of
circulation by means of taxes

preserves or restores the value of
the remaining money in circulation.

Not taxing it back
sufficiently would devalue it.

Understanding the proper use of
government fiat money is a revelation.

If you can charge prices or
taxes for something in the future,

you can issue that much
new money now because

it is your valuable
services to others

and the reliability
of your promises

that create the real
value of any money.

The government can honour its promises
to accept its money back in taxes

and it will make your debtors
pay you in government fiat money

if you take them to court.

These are good reasons why
government issued money works now

and why it would work if governments
just self issue this credit,

instead of borrowing it from banks.

But in this pure fiat money system,

the money supply must still be
determined by a central authority.

Therefore,
the money supply is still limited,

monopolistic and
managed from above.

They have the power
to create money

and you have to get
the money from them.

They also have the power to
create way too much money

and spend it on wars and
other unproductive activities

without the approval of those whose
productivity gives that money its value.

In the current system,

these inflationary debts
are now beyond absurd,

threatening to crash
the entire system

and drag the whole world into chaos.

To save themselves, governments
are now laying impossible claims

upon the productivity of
generations yet unborn,

a truly hopeless cause given
the overall world situation.

Witnessing government
performance to date,

many people believe that returning
the full power to create money

to corrupt,
incompetent politicians,

would not only fail
to solve our problems,

it would be the height of insanity.

It would really all depend on the
quality of the people in government.

Fiat money reformers believe

there would have to be a
substantial revolution in government

to rest this power
back from the banks.

Therefore, they believe it
would be reasonable to expect

that honest and competent people

with a sincere concern for the
public good would be in charge.

But, good guys or bad,

we would still be dependent
on some distant someone else

to maintain the value of our money.

And they would have a thousand
pressures and temptations

to enrich themselves
by not doing so.

And like gold is money,

government fiat money is
a single uniform commodity

manifesting all the inherent
mathematical defects

of lending at interest
and twice lent money.

Once the government
creates the fiat money

and it goes into the banking
system to be lent at interest,

the problems created
in the current system

will continue as before.

So, this pure fiat money idea

might be very useful
in rescuing governments

from their own hopeless
financial positions,

and it is a limited example of
the self-issued credit principle

being advocated here.

But pure fiat money would
not address the root problems

inherent in the math of lending,

unless the principal were
expanded beyond government.

Advocates of pure fiat money like
to claim it is money created by law,

as if it were
independent of economics.

But if new fiat money were
just spent into existence,

year after year, without being
removed from circulation as taxes,

it would become worthless.

What these fiat reformers tend
to ignore when quoting history

is that, in ancient money
created-by-law systems,

the prices of critical commodities
were also dictated by law.

In fact, the value of money
was defined by the ruler

as so much of a certain commodity.

Charge more or less for
the designated commodities

and it could be
off with your head!

Today, price controls like this,

could only be achieved
in a self isolated

and totally bureaucratically
controlled economy,

like Soviet communism.

In a free market global economy,

money created by law

is bound by the same
laws of supply and demand

as any other single
uniform commodity money.

In other words,
pure fiat money in a free market

is an illusion,
there's no such thing.

Self-Issued Credit

In the third stream of money reform

are the various types of so-called
alternative currencies,

all of them based on some
concept of money being created

as self-issued credit.

Many examples of such systems
exist today all over the world.

Some are very successful business
to business barter networks,

in which businesses create product
credit money to use among themselves,

independent of banks and government
and usually interest-free.

Such systems are tolerated,
and in Switzerland,

the existence of the WIR
system is generally credited

with stabilizing the banking system

by expanding when the conventional
system contracts and vice versa.

But in the past,
when they became too successful,

alternative currencies were usually
suppressed by the banking system

or even outlawed by government.
This is OUR racket

So, active suppression is the most
significant external problem.

The most common inherent
problems with these systems

are their limited
scope and acceptance,

their operating costs and the
unreliability of member credit.

What the conventional
banking system provides,

worldwide reach, affordability,
credit checks and debt enforcement,

are the necessary services

that are usually inadequate
or prohibitively expensive

in the alternative systems.
whose loss is it?

Once the small group of
idealistic and honest originators

are joined by members exhibiting
the full range of human behaviour,

alternative systems discover they
must deal with cheaters.

Some are deliberately cheaters,

others just not too conscientious
about their debts.

And at the opposite
end of the spectrum

are the hyper conscientious
people who won't issue credit

because they are afraid they
wont be able to fulfil it.

The self-issued credit
system cannot work

if the members are
afraid of issuing credit.

And that is why it
makes far more sense

that government and
essential industries

like farming, forestry, mining,
manufacturing and construction

should be the main and widely accepted
sources of self-issued credit,

not vulnerable individuals
trading haircuts for pottery.

However, we are talking about creating
a truly liberated system of exchange.

Therefore,
in this proposed new system,

anyone would have the
freedom to issue credit,

because only voluntary acceptance
would determine the circulation of it.

The cost of accounting in
self-issued credit systems

could be overcome entirely
by emerging technologies

allowing the creation
of a digital coin.

Digital coins could be passed from
one owner to another, peer-to-peer,

so that no bookkeeping and
no third party involvement,

like banks and pay-pal,
is required.

This leaves only the problem
of achieving global spread.

Thanks to technology again,

this could now be
achieved at little cost

and at the same rate
and with the same ease

that the existing social networks

like facebook and twitter
have spread.

So, there is a positive answer to all the
questions we have posed in this movie.

And there is a solution that
has the potential to unite

the three seemingly conflicting
schools of money reform

into one cohesive movement
for fundamental monetary change.

Because, when examined closely,
be it gold, tax receipts

or someone's goods and services,

all three schools of money reform are
really calling for the same thing:

money that is redeemable for something
specific from someone specific.

Once one comes to that realization,

it becomes obvious
that self-issued credit,

for the full range of goods
and services in demand,

would necessarily include gold,
silver and government tax receipts,

as these are also things in demand.

We just need to look
beyond obsolete beliefs

to see the heart of the situation.

The all-inclusive
self-issued credit system,

the basis for almost all so-called
"alternative" currencies,

could contain within it
both the precious metal

and the payable-for-tax
models of money

without any contradiction.

Self-Issued Credit
Taxes PAID

Conclusion

Money has both religious and
social histories that are fascinating

and go well beyond just
the need for trade.

But for our practical
purposes in this presentation,

money is the invention that overcame
the limitations of direct barter.

Money is, therefore, a technology,

a way to solve a problem.

Most of us would agree that we have
a problem with our money system.

This is no surprise once we realize

the current system was designed
by bankers in their own interest

and governments wanting to pump
out artificial money to wage war

and pay for it with a
hidden form of taxation

called inflation.

It was not a well-thought-out
project of mathematicians and engineers

seeking to create a money system for the
general benefit of humankind.

There are now many people,
including mathematicians,

engineers, and even cartoonists,

trying to rethink money,

as the need to do
so becomes obvious.

In this presentation,

we've proposed that we return as
close to direct barter as we can,

because doing so would
anchor the money system

directly to the real world
things we want to exchange.

The destructive flights
of fantasy money,

that have brought the current
system to its breaking point,

would not be possible.

Self-issued credit is not a new idea.

It is, in fact, an idea as old as
numbers and written record keeping,

that is very old.

However,
only with our new technologies

can it finally achieve
its full potential

as an international
medium of exchange.

And this transformation
is already underway.

Extensive electronic barter networks,
some with their own currencies,

exist among businesses right now.

These could grow into a
new global money system.

In Canada, Canadian Tire money

has been a self-issued credit
for goods currency for decades.

This money is redeemable for merchandise
at Canadian Tire stores only.

But is widely exchanged as
payment by third parties,

because almost everyone eventually
buys something at Canadian Tire.

Like air miles and other
bonus-point systems,

it is only a Customer
Reward Program at present,

but anything that can
serve the purpose of money

can be money.

Private enterprise
self-issued credit money

already exists in several
forms all over the world

and more private enterprises
are going in this direction.

Money becomes money by acceptance.

So, one could say,
the path to freedom lies before us

if we can only accept new and
broader ideas of what money is.

Looked at logically,

why wouldn't a legally
binding contract

for delivery of specific goods and
services from a specific supplier

be much more acceptable
as a medium of trade

than the much abused
government bank Monopoly money

we are using now?

And does it not seem natural and
logical that the source of money

should be the same as the
source of real wealth,

the productive members of society?

And does it not seem
natural and logical

that the value of anyone's credit
should be determined solely

by their own proven success
at living within their means,

no one else's?

And does it not seem
natural and logical

that the value of what we have
earned with our work and productivity

should not be susceptible
to being destroyed or stolen

by the gambling of some
very greedy people?

We hope that watching
the Money as Debt series

has given you insights into why our
money system functions the way it does.

We also hope that we've
demonstrated how a return to gold

or a switch to any single
uniform commodity as money

does not solve the fundamental
problems with money.

Manipulation of
single commodity money

has milked productive people of
their life energies and prosperity

for millennia.

That this predatory
wealth extraction system

could soon take the form
of a single global bank

emerging as an unaccountable
big brother world dictatorship,

should concern everyone.

We hope you're encouraged to do
your own thinking about money,

a subject that has been ignored
and misunderstood by the public

for much too long to
our great disadvantage.

And, not to criticize without
offering an alternative,

we have, in this final
movie of the series,

offered a comprehensive
and detailed picture

of how a radically new
economic system might work,

if interest-bearing product vouchers
were the medium of exchange,

thus eliminating money
as a commodity in itself.

Instead, money would be
a global measurement unit

like minutes, meters and tons.

The existing physical situation
on this planet is not sustainable

and the number one
technical obstacle

to doing anything serious about it

is the current growth
addicted money system,

which is itself unsustainable.

The crisis is upon us.

If you'd rather think about solutions
than despair about the problems,

think about taking back our money
power with self-issued credit.

Join with others who realize
the need for radical change

and spread this knowledge
and understanding

as fast and as far as you can.

The masses of people
must take upon themselves

the responsibility to wake up,
realize our power

and create something better.

The WORLD belongs to us ALL

To trade goods and services
is a natural right of all people.

To issue the money necessary
to make these exchanges

is also the natural right of all people
who are intelligent enough to do so.

We need not beg for money.
We do not need to be money slaves:

we can be money masters.
~E.C. Riegel

In nature's economy
the currency is not money,
it is life.

~Vandana Shiva environmental activist, author
Earth Democracy: Justice, Sustainability and Peace

subtitle by:
Tio Beto from Brazil