What is the most widespread problem of everyday life? Whether it be individuals, families, municipalities, school boards, parishes, public sectors, private institutions, the main dilemma is a problem of finance — where to find the funds — the money. A money problem; which is neither natural nor supernatural.
To grow vegetables, raise livestock, put products on the store shelves, transporting men or goods, finding workers and equipment to build — any of these things could be a problem, but today, all of this is easily dealt with.
This money problem is neither an act of God, nor of nature. It is an artificial man-made problem of which everyone complains and continues to suffer, as though it were brought about by a sudden drought or a hurricane or something.
Yet, money is never an issue, when those who have the authority choose to create it. We had a perfect example of this in 1939. For ten years, all civilized nations were in, what was called, the Great Depression. This was not brought about because of a lack of goods or of workers, there were even too many of those. It was not caused by natural disaster either, or Divine Providence: nothing had changed. The “problem” was that there was no money.
Individuals, companies, governments, they were all short of money. There was no shortage of workers; only a shortage of money to pay the workers. People were not buying the products because they just did not have the money. Yet all these same people, suffering from the Great Depression in their countries, entered into a major war, which required billions of dollars.
It would seem that, as soon as the war was declared, the money problem disappeared. Suddenly, in all those countries at war, there was no longer a shortage of money to finance and keep the war going. There was as much money as needed, for as often as it was needed, for as long as there were men and equipment to keep it going. No more laments of “no money!” which had been heard over and over before the war began. Never once was that mentioned during the time of war.
How did it happen that the world went from the Great Depression, where there was no money, to then finding plenty of money for financing the war? The answer to this is quite simple. By making money! By actually creating the money needed!
Canada, a government whose coffers were completely empty, created $80 million at the mere declaration of war; a process which took no longer than five minutes — and millions more followed. There were billions, all the billions wanted, to transform the unemployed into soldiers, or for manufacturing the ammunition, aircraft, vessels and all other paraphernalia of war.
After the attack on Pearl Harbor, Roosevelt, President of the United States, declared that he would not allow financial nonsense to prevent his nation from putting all able-bodied men and all means of production to the service of the war.
The “financial nonsense” referred to, is the paralysis of production and non-distribution of wealth, brought about by a lack of “dollars”, dollars which are not of any heavenly origin, and of which are not even difficult to produce, as was proven when we entered overnight into a great worldwide slaughter.
In order for all that money to be available, neither the Canadian government nor any other government had to send workers down into the gold mines. Men were needed for the army and for producing ammunition. It was not even necessary to hire workers to run the presses for printing out dollar bills. No, it was much simpler than that. The government simply asked the bankers to make, yes, create the money.
For so long, people had not had any money at all in their own pockets. They most certainly did not, therefore, have any to spare for the war effort. And all bank reserves were quite flat. Yet, it was millions, even billions that was needed. There was no other solution. Money had to be made; created.
In order to do this, it was not required of the banks to devise new techniques. They only needed to employ the same techniques that they were already using whenever they lent out large sums of money to the industrial or public sectors. They created the money they lent, then credited the borrower; all without debiting anyone else’s account.
We all know what a checking account is. When we have one, we can make a payment to someone, without any money leaving our own pockets. We simply write a check. The recipient of our check can then deposit it into their own bank account. What happens then is that our bank account will be decreased, and their bank account will be increased. No gold, silver, or nickel, or paper dollars were needed — a simple subtraction from one bank account, and an addition into another bank account. That is all.That is how it works for the big businesses — that is how it works for war.
Now, you’re probably thinking that, in order to have a bank account, one must save his money and then deposit it into a bank account. Yes, that is how it is done. But there is also another way; loans.
Suppose I am a big industrialist. I want to expand my factory. I need $100,000 immediately, so I go to the bank and arrange with the manager for a loan of $100,000. He asks me, of course, for guarantees. I do not need to bring a single penny with me to the bank. The bank manager fills out some paperwork with me, and we both add a few signatures. I am then able to go to the cashier who, upon opening to my account, sees that $100,000 has been registered into my account. I leave the bank with an account of $100,000 on which I can now draw checks to cover the cost of my factory’s expansion.
Do you see how different that is from a regular savings account? Without having brought a single penny into the bank, I leave the bank with an account credited to me for $100,000, just as though I had actually brought that $100,000 into the bank with me and deposited it into an account. Another remarkable fact is that, in order to lend me this money, the banker did not remove even a single penny from his own drawer, nor was anything taken from the accounts of any of the other customers. Everyone still has just as much money in their accounts as they had before, and I have a brand new $100,000 in my account. This $100,000 was made on the decision of the banker and his signature in ink. — One decision, some ink, and that’s it!
This is how modern money is created — and only the bank can do that. The government, which still lacks money, cannot do that; the banks outrank the governments!
Obviously I will have to repay the $100,000 to the bank, and even a bit more because of the interest. And when I do repay it, that money will be withdrawn from circulation; the spending capacity of the country will have been reduced by $100,000, plus interest.
Money therefore comes into existence when the banker lends what is known as credit; the principle source of today’s money. And money ceases to exist or is destroyed when the loan is repaid to the bank. Since the reimbursements must be larger than the loans, it is necessary that there continually be more new loans. Otherwise, there would soon be no more money available. We live with money that has been borrowed at some point somewhere in the banking system. In other words, some individual, or company, or public sector, somewhere, has to acquire more debt.
When loans are taken out faster than debts are repaid, money then becomes more plentiful. But when loans become more difficult to acquire, even though old debts must still be repaid, the money in circulation then decreases. This is called a credit crunch. If the restriction is acute and lasts for a longer period of time, we call this a crisis. This is when everyone is made to suffer deprivation, even though there is still an abundant capacity to produce.
Money is a useful tool, invented for the purpose of paying for, or buying things. It is essentially a kind of “title” authorizing us to a choice of products or services. This title is made up of numbers, or figures, engraved on metal and printed on paper. We call this pocket money. There are also figures in our bank accounts. This type of money is convenient for business and industry.
And then there are those figures which we call prices. These are posted on product labels. These price-tag figures appear quickly and at the rate that products are produced. Yet the money figures in our pockets, or in our bank accounts, do not come at all as quickly, or at the rate that products are produced. This is why everyone is complaining; lack of money.
This is why so many go without their needs being met, while there is an abundance of products that go to waste. Either that, or go into debt, taking years to repay something that took but a few days, or even a few hours, to manufacture. This is why municipalities and school boards and other public bodies struggle with lack of money or large debts, unable to tax the citizens more, as they too are lacking the money needed to make a decent living for their families. Homes end up being sold for taxes.Agricultural products, even though they are good and people need them, don’t sell, because those who would like to purchase them do not have the money to pay for them.
This is why so many are unemployed, despite the fact that they would rather be working, and there is plenty of work to do — but no money to pay. This is what causes social unrest, people willing to tear each other apart, because money has become a scarcity. No one is fighting because of lack of products — there is an abundance on the store shelves.
The solution is obvious. To put money at the service of the people. There should be as much money available as there are products available. In countries like Canada and the United States where production is in such abundance, there should be available a purchasing capacity to match that abundance.
For this reason, it is important that the volume of money in circulation be a social affair — not something that is conditioned to the interest of profiteers, according to their interests.
This is why we ask that money be created by a national bank or a national organism, according to the needs and according to production. A national bank or an organism which exists to serve the needs of the population, and not for their own profit, in the same way that the courts of justice and other public departments exist for the nation and not for the personal benefit of the ministers or judges.
But the current controllers of money and credit want to keep their privileges and their power. They go to great extremes in order to keep this power. Unless people unite in stronger opposition, nothing will change.
We therefore call on all citizens of any party to unite, putting a stronger and increasing pressure upon the governments so that they will feel that the strength of the people is far more than that of the financiers. That we may be rid, once and for all, of this financial nonsense. And that money be created so as to serve individuals, families, public bodies, etc. This would be the greatest reform of our times, and well worth all our efforts.