YouTube Transcript:
How MONEY & BANKING Really works - Part 1 (4 of 5)

what can we do about this downright
scary situation for one thing we need a
very different concept of money it's
time more people ask themselves and
their governments four simple questions
around the world governments borrow
money in interest from private banks
government debt is a major component of
total debt the servicing that debt takes
a big chunk of our taxes now we know
that banks simply create the money they
lend and that governments have given
them permission to do this so the first
question is why do government's choose
to borrow money from private banks and
interest when government could create
all the interest-free money it needs
itself and the second big question is
why create money as debt at all why not
create money that circulates permanently
and doesn't have to be perpetually rebar
owed and interest in order to exist the
third question how can a money system
that can only function with perpetually
accelerating growth be used to build a
sustainable economy isn't it logical
that perpetually accelerating growth and
sustainability are incompatible and
finally what is it about our current
system that makes a totally dependent on
perpetual growth what needs to be
changed to allow the creation of a
sustainable economy
at one time charging any interest on the
loan was called usury who was subject to
severe penalties including death every
major religion forbade usury most of the
arguments made against the practice were
moral it was held that money's only
legitimate purpose was to facilitate the
exchange of real goods and services any
form of making money from simply having
money was regarded as the act of a
parasite or of a thief however as the
credit needs of Commerce increased the
moral arguments eventually gave way to
the argument that lending involves risk
and loss of opportunity to the lender
and therefore attempting to make a
profit from lending is justified today
these notions seem quaint today the idea
of making money from money is held as an
ideal to strive for why work when you
can get your money to work for you
however in trying to envision a
sustainable future it's very clear that
the charging of interest is both a moral
and a practical problem
imagine a society and economy that can
endure for centuries because instead of
plundering its capital stores of energy
it restricts itself to present-day
income no more wood is harvested than
grows in the same period all energy is
renewable solar gravitational geothermal
magnetic and whatever else we discover
this society lives within the limits of
its non-renewable resources by reusing
and recycling everything and the
population just replaces itself such a
society could never function using a
money system utterly dependent on
perpetually accelerating growth a stable
economy would need a money supply at
least capable of remaining stable
without collapsing let's say the total
volume of this stable money supply is
represented by this big circle let's
also imagine that moneylenders must
actually have existing money to lend if
some people within this money supply
begin systematically lending money at
interest their share of the money supply
will grow if they continually reel own
add interest all the money that gets
paid back what's the inevitable result
whether it's gold fiat or debt money
doesn't matter the moneylenders will end
up with all the money and after the
foreclosures and bankruptcies are all
filed they'll get all the real property
- only if the proceeds of lending and
interest were evenly distributed among
the population with this central problem
be solved heavy taxation of bank profits
might accomplish this goal but then why
would banks want to be in business
if we were ever able to free ourselves
of the current situation we could
imagine banking run as a nonprofit
service to society dispersing its
interest earnings as a universal citizen
dividend for lending without charging
interest at all if it is the fundamental
nature of the system that causes the
problems tinkering with the system
cannot ever solve those problems the
system itself must be replaced many
monetary critics call for a return to
gold based money claiming that gold is a
long history of reliability they ignore
the many scans that can be played with
gold shaving coins - basing the metal
cornering the market all of which were
abundantly practiced in ancient Rome and
contributed to its fall some advocates
silver at being more abundant than gold
and therefore more difficult to corner
many questioned the need to bring back
precious metals at all no one wants to
go back to carrying heavy sacks of coins
to go shopping it's a certainty that
paper digital plastic or more likely
biometric ID money would be the real
medium of trade for the same potential
for creating unlimited debt money we
have now beyond that if gold again
became the sole legal basis of money
those who have no gold
would suddenly have no money other
monetary reform advocates have concluded
that greed and dishonesty are the main
problems and that there may be better
ways to create an honest and equitable
money system
than returning to silver or gold
inventive minds have proposed a variety
of alternate ways to create money many
private barter systems create money as
debt much as banks do but it is done
openly and without charging interest an
example is a barter system in which debt
is expressed as pledges of hours of work
all work being valued equally at a
dollar figure that then allows hours to
be equated with the dollar price of
goods this kind of money system can be
set up by anyone who can devise a way to
do the accounting and find willing and
trustworthy participants setting up a
local barter money system even if it
were little used now would be prudent
emergency planning for any community
monetary reform like electoral reform is
a big topic and one that requires a
willingness to change and to think
outside the box
monetary reform again like electoral
reform will not come easily because the
enormous ly powerful interests that
benefit from the existing system will do
their utmost to maintain their advantage
now that we've seen that money is just
an idea and that in reality money can be
whatever we make it here's one very
simple alternative monetary concept to
consider this model is based on systems
that have worked in the past in England
and America systems that were undermined
and destroyed by the Goldsmith bankers
their fractional reserve system
to create an economy based on permanent
interest free money money could simply
be created and spent into the economy by
the government preferably on long
lasting infrastructure that facilitates
the economy such as roads railroads
bridges harbours and public markets this
money would not be created as debt it
would be created as valued that value
being in the form of whatever it was
spent on if this new money facilitated a
proportional increase in trade requiring
its use it would cause no inflation
whatsoever if government spending did
cause inflation there would be two
courses of action available inflation is
equivalent in effect to a flat tax on
money whether the money goes down and
value 20 percent or the government takes
20 percent of our money away from us the
effect on our buying power is the same
view this way inflation in place of
Taxation might be politically acceptable
if well spent and kept within limits or
government could choose to counter
inflation by collecting tax monies that
it then takes out of use thus reducing
the money supply and restoring its value
to control deflation which is the
phenomenon of falling wages and prices
the government would simply spend more
money into existence with no competing
private debt money creation governments
would have more effective control of
their nation's money supply the public
would know whom to blame if things went
wrong governments would rise and fall on
their ability to preserve the value of
money