Page 30 - Michael October 2021

u That’s fair enough, you might say. But wait. The The banks are really financial cuckoos in the com-
banks lend money against the assets of the commun- munity’s nest. The banks issue and cancel money
ity. These assets were created by the total efforts of without any regard to the total production of goods
the community. They were created by the resources and services. They cancel financial credit arbitrarily,
of enterprising individuals, skilled executives and ad- unscientifically, sometimes causing deflation and de-
venturous management in producing articles or ser- pression.
vices to satisfy a public need. As we go on, we shall see that the ownership of
The banks made no contribution whatsoever to the real credit of the community is the great issue
the development of a farm, a business, or a manufac- that must be solved if Australia — and all nations
turing company in its early formative years. The bank which work under the same monetary system — is
comes into the picture when most of the hard pion- to survive as a free democracy or as a slave state.
eering work is done and by granting a loan — a costless Today, the banks enjoy a monopoly of the pub-
and effortless proced- lic credit. They create
ure — it merely monet- and cancel (destroy)
izes the REAL CREDIT money as though the
created by a functioning real credit was created
industry and a consum- by them. Whereas they
ing public. haven’t lifted a little
In other words, the finger in its creation.
banks merely create But by usurping the
— by the stroke of a nation’s sovereign pre-
pen, mark you, or fig- rogative to issue all its
ures in a bank ledger monetary requirements
— the financial credit — not merely the small
which is backed by the change (the legal ten-
real credit created by der) — the banks have
the joint operations established a powerful
of producers and con- monopoly of credit by
sumers. The people do which they wield the
all the work and run greatest power with-
all the risks. The bank out any responsibility
does nothing — noth- whatsoever.
ing to create the assets — and runs no risk whatso- This monopoly of credit by the banks is not new.
ever with the credit it lends. It has been going on for over 100 years and during
Real credit may be defined as the faith or be- that time, the banks have consolidated their position
lief (credo, I believe) that a free community has the to one of almost unassailable power.
knowledge, energy, and capacity to cooperate in The power of life and death
satisfying its needs. This is its power in association,
and the end product is the sum total of the commun- It charges interest upon this credit creation and
ity’s real credit. when the loan is repaid, both the debt and the money
We see, therefore, that the real credit of a nation used in payment of the debt are automatically can-
is created by the people through their abundant and celled. (Their cancellation, of course, does not apply
many sided energies — what economic textbooks to any cash or legal tender used in the repayment of
refer to as “the increment of association”. the bank’s loan, but legal tender usually represents
no more than a very small percentage of bank trans-
Now, the financial credit of a nation should be a actions.)
reasonably correct reflection of its real credit. Since The banks have the power to call up the overdraft
money is merely a convenient token system to en- partly or wholly at any time they decide. The fate of
able the people to purchase goods and services, it companies and individuals — and governments — is
should be issued at the same rate that goods and entirely at their mercy. Their power is stupendous,
services are produced, neither more nor less. both in the creating and granting of loans and in their
Cuckoos in the nest arbitrary recall, with or without notice!
But even more important is this point: since the The banks give and the banks taketh away. They
community creates all real credit, the ownership hold the power of life and death over the whole econ-
of the financial credit which should reflect the real omy.
credit — the goods and services — also belongs to As practically all money issued has its origin in
the people. But it doesn’t! It belongs to the banks! interest-bearing debt, it follows that all forms of taxa-
Or rather, it has been appropriated by the banks. tion must increase, inevitably, mathematically and re-

30 MICHAEL October/November/December 2021 www.michaeljournal.org