A superpower dominates governments

The superpower resides in the banks

by Louis Even

Textbooks generally distinguish three great powers belonging to the Government that are necessary to keep order and stability in the nation, to protect the lives, goods and rights of the citizens: the legislative, the executive, and the judiciary.

The legislative power is the power that makes laws.

The executive power is the power which administers the nation in conformity with its laws.

Finally, the judiciary power is the power that enforces the laws of the country, to prosecute and condemn those who transgress them, to pass judgment on the litigation’s between citizens throughout that country.

It is the Constitution of the nation that defines, grants and divides the juridiction of these three powers. These are therefore constitutional powers.

It is this power that was denounced by Pope Pius XI in his Encyclical Letter Quadragesimo Anno, in 1931:

Everybody knows where the three constituional powers reside: the legislative power has its seat in parliaments, the executive power resides in the offices of ministers, and the judiciary power resides in the courts.

It is when a bank grants a loan, either to a contractor, a retailer, or to a government, that new financial credit is created. The banker doesn’t use the depositors’ money, but simply credits the borrower’s account with the loan granted, just as if the borrower had deposited that amount. But the borrower actually neither brought in nor deposited any money, since he came to the bank to get money that he did not have.

The borrower will now be able to issue checks on this account that he did not have when he entered the bank, but that he now has upon leaving.

No account of any other customer of the bank was reduced. This is therefore a new account, added to the accounts that already exist. The total credits in the total accounts of the banks in the country are therefore increased by the amount of this new account.

There is therefore an increase in financial credit, modern money, which will be put into circulation by the checks of the borrower issued on this new credit.

On the contrary, when a borrower comes to the bank to repay his loan (credit that had previously been borrowed), it reduces the quantity of credit in circulation accordingly. The total quantity of blood in the economic life is thus reduced by the same amount.

A simple bookkeeping operation, made with one stroke of the pen, had created financial credit. Another simple bookkeeping operation, when the loan is repaid, cancels, destroys this credit. This credit disappears the same way it was created, through a simple bookkeeeping operation.

It is easy to see that, if during a given period of time, the total of the loans exceeds the total repayments, this puts more credit into circulation than what is cancelled. On the contrary, if the total of the repayments exceeds the total of the loans, it causes a period of reduction of credit from circulation.

If the reduction period persists, the whole economic body is affected by it: it is called a crisis — a crisis caused by a restriction of credit.

Whatever the conditions of economic life in the past centuries, money is nowadays a must to maintain production that comes from various sources, goes through various succesive stages, until the finished goods are thrown on the market.

However, those who need these goods to live can obtain them only provided they can show the money to the suppliers. Money is basically a licence to live, and those who control these licences, who allow or refuse them, who condition their quantity and length in circulation actually control our lives in such a way, as Pope Pius XI wrote, that "no one dare breathe against their will."

Money would be worthless if there were no products on the market. Now, it is the population of the country that makes the products; as for the controllers of money and credit, they produce absolutely nothing: they do not cause a single stalk of wheat to grow, do not produce one single pair of shoes, do not manufacture one sole brick, do not dig into a mine shaft, and do not pave one square inch of road.

It is the country’s population that carries out these projects. But to be able to produce all these things, the population needs the approval of the controllers of money.

Money is nothing but a ticket, a licence that costs nothing to produce but a decision and a drop of ink. And in order to get this licence, the population must get into debt for all that they produce. Can one imagine worst economic tyranny?

The banker’s pen which consents or refuses to give to individuals, to corporations, to governments, the right to mobilize the skills of professionals, the nation’s natural resources, that pen commands; it grants or refuses; it sets conditions on the financial permits that it gives; it gets into debt those individuals or governments to whom it grants permits. The banker’s pen has the power of a scepter in the hands of a superpower — the monetary power.

This fact, on its own, should have been an eye-opener, and made everybody understand by now that this 10-year Depression was nothing but a 10-year refusal by the controllers of money and credit of releasing licences (money). It only required their decision to put an end to the depression and money shortage. For example, the decision came to instigate the war, when the money-licences were issued by the billions, to finance six years of the most expensive war ever.

Yet, you may still hear backward scholars deny that the volume of credit in circulation depends upon the action of the banks. These scholars, who resist the obvious, are an invaluable support to the superpower through their ignorance — if it is really ignorance on their part, or perhaps through vested selfish interests that bind them, or through their collusion with a power which can bring them easy promotions.

Upper-class bankers on the other hand, know very well that financial credit, which makes up the bulk of modern money, is created and cancelled in the ledgers of banks.

A distinguished British banker, the Right Honourable Reginald McKenna, one-time British Chancellor of the Exchequer (Minister of Finance) and Chairman of the Midland Bank, one of the Big Five (five largest banks of England), addressed an annual general meeting of the shareholders of the bank on January 25, 1924, and said (as recorded in his book, Post-War Banking):

Having also been Minister of Finance, McKenna knew very well where the bigger of the two powers — the power of the banks and that of the sovereign government of the country — resided. And he was frank enough to state the following, which is very uncommon among bankers of his level:

This is a statement which is in complete agreement with what Pope Pius XI wrote in his Encyclical Letter Quadragesimo Anno, in 1931, about "those who, because they hold and control money, are able also to govern credit and determine its allotment, for that reason supplying, so to speak, the lifeblood to the entire economic body, and grasping, as it were, in their hands the very soul of production, so that no one dare breathe against their will."

The solution is to replace this non-constitutional superpower with a constitutional monetary organism, similar to the judiciary system, staffed with qualified accountants instead of judges. These accountants would, like judges, fulfill their duties independently of the powers that be. They would base their operations — additions, subtractions, or rules of three — on statistics which do not depend upon them, but on the statements of the production and consumption of the country, resulting from the free activities of free producers to respond to the orders freely expressed by free consumers.

This means that money and credit would only be the faithful reflection, the expression in figures, of economic realities.

If the pen of an usurped superpower can create or refuse, according to the will of this tyrant, the financial credit, based on the nation’s real credit, the pen from a constitutional monetary power would be as effective to issue the financial credit, to the service of the population and all the members of society. This end would be specified in the law.

There would no longer be a purely financial hindrance. Getting into debt to foreign bankers for things that we can produce in our own country — this idiocy would cease to exist. Prices that keep going up, when production becomes easier and more plentiful — such an inconsistency would cease to exist in a monetary body that is obligated by law to make the financial aspects of the economy the exact reflection of reality.

The seeking of new job creations while the machine, instead of human labour, supplies products — such a ridiculous policy would be relegated to a past history of subjection to a monster. The astronomical waste, due to the production of things that are useless to the normal needs of people, with the sole end of creating jobs, would be banned as a lack of responsibility to the generations that must succeed us.

And thousands of other things as well will ensue with this establishment of a monetary power of service, and when this unbearable rule that links income solely to employment is done away with, when the first effect of progress should be a free man. Thhis would allow him to devote himself freely to activities which are less materialistic, and to tend towards the blossoming out of his personality and freedom.