Michael October - November

Louis Even

The following article was first published in French

in the August 1939 issue of the “Cahiers du Credit

Social” (Social Credit booklets).

At the source of all problems

Why does our magazine persist in the question

of money? It is because money is the cause of all

economic problems, and almost all political prob-

lems in society today.

We do not say that correcting the financial prob-

lem is the only issue that we need

to be concerned with, or even that

it is the most important. But we

do say that, it is the most press-

ing. All other problems stem from

this problem of money. The chaos

that reigns in today’s monetary

system is what affects all the rest.

Money is essential in our

modern world. Though money

is not the true wealth of a na-

tion, it is the means by which the

wealth of each nation is distrib-

uted. Without money, you will

die of hunger in front of stores

filled with useful goods.

In today’s social economy,

instead of it being the nation’s

capacity to provide, that dic-

tates how we are going to live, it

is the amount of money that we

each have in our pockets. Be-

cause money is so rare today, we

choose instead to do away with

the goods. This, obviously, is not how things should

be, but this is what is most profitable to those who

have control of the money supply system.

Money is man-made

If the amount of money in circulation depended

upon the weather, or on some other cause outside

of man’s control, then we would just have to learn to

accept it. But perhaps it is actually this very state of

mind that maintains the permanence of such a false

system. We have become so accustomed to hearing

idioms such as, “

Times are hard, we need to tighten

our belts”

, that we think nothing of giving ourselves

over to being

skinned alive

economically.

God did not create money. Money was not made

by the angels, nor is it a natural phenomenon. Money

is an invention of man, pure and simple.

Money today is not created by people inspired

by the common good. The fact that billions of dol-

lars are created in order to finance wars in all coun-

tries of the world, and that this money disappears

without any explanation just when production is at

its peak, is proof enough that the motivation behind

this creation of money is neither social nor even hu-

man.

There are some who argue that the quantity of

money in circulation is decided according to the

amount of gold available.

This does not hold water. During the last World

War, men were most certainly

not concerned with the develop-

ment of gold mines. Money was

being freely created for slaugh-

ter, and in addition, during the

ten years of the Great Depres-

sion, even though gold was

stored in the vaults at Fort Knox,

the United States counted 13

million unemployed because of

lack of money. In Canada, never

had there been so much gold

produced as during the time of

the Great Depression, yet, at the

same time, never was there such

a shortage of money.

The money supply is defi-

cient when those who create it,

as well as cancel it, destroy more

than they create.

Money abounds when, these

same men create more money

than they cancel.

What is money?

Money is any instrument which is generally ac-

cepted as an exchange for products. The nature of this

instrument does not matter, as long as it is universally

accepted throughout the country, as money.

Let us say that I buy a chair for one hundred dol-

lars. I can either pay for it with ten 10-dollar bills, or

I can pay for it with one 100-dollar bill, or include in

my payment metal coins. The metal coins, as well as

the rectangular pieces of paper, are both currency

(money). It is not the material with which the curren-

cy is made that gives it some value. The exact same

amount of material is used in making both a ten-dol-

lar bill and a hundred-dollar bill.

If I have a checking account, I can draw checks

from my account for the full amount of money in that

account. So, I can also pay for the chair by means of a

check. One hundred dollars from my account would

then be placed in the account of the merchant.

A lesson on bank accounts

But aren’t all bank accounts made up of our sav-

ings of paper or metal currency? No, far from it !

There is actually ten times more scriptural money

(the money recorded in bank accounts) than there is

metal or paper money in the entire country.

A bank account is not built on savings alone. The

largest portion of the money in a bank account is

created by the banker, and does not come from the

savings of the depositor.

Let’s say that you have saved up twenty-dollars

and you bring it to the bank. The banker puts your

twenty-dollars in his drawer, he then looks up your

account and enters $20.00 to your credit. Your bank

account has now increased by twenty-dollars.

Now, a borrower comes into the bank. He needs

a loan of $20,000. He has not brought any money

with him to the bank. Instead, he needs to borrow

money. What does the banker do? After having him

sign an agreement, the banker then enters $20,000

into an account, to the credit of the borrower. The

bank account of the borrower has now increased

by $20,000. This is the same procedure used for the

commercial borrowers.

Where did the banker get the $20,000? He did

not take it from his drawer, he did not take it from

anyone else’s bank account, and he did not take it

from his own pocket, but a bank account has in-

creased by $20,000 nevertheless. And what is more,

there is now a $20,000 increase in the total of all the

bank accounts in the entire country. The amount

in the borrower’s checking account has increased

by $20,000. Where did this money come from?

comes from the banker’s pen.

Bank accounts increase in two ways:

The small way, by the savings of the deposit-

or – a simple transaction/deposit of money (as with

the $20).

The big way, by a loan – new money created

which had not existed before as with the $20,000.

So, this is a new creation of money then? Yes,

without a doubt, since the $20,000 dollars is money.

It is money by the mere fact that the borrower is

able to make checks from this account to purchase

or pay for anything, in the same way that he uses

paper currency or coins.

Public loans

Public loans are made in the same way. Let us

now accompany the Finance Minister to the bank for

a loan of one million dollars.

The Finance Minister, or Secretary of the Treas-

ury, as he is called in the United States, must first

give the bank a “bond”, or a “debenture”, which is

a promise to reimburse:

“I promise to reimburse to

the bank the sum of one million dollars, plus inter-

est, in the next twenty years.”

What, then, does the banker do? Does he give

the Finance Minister one million dollars in currency?

No, not at all ! The banker does the same thing that

we saw earlier; he enters the amount of one million

dollars into the Finance Minister’s account as credit

to the government. In addition, the Finance Minister

can now sign checks for up to one million dollars to

pay for, or buy anything.

From where did the banker take the one million

dollars? He did not take it from his drawer, and even

less, from his own pocket, and he did not take it

from anyone else’s bank account.

One bank account increased, without dimin-

ishing anything from any other account. Who else,

besides the banker, can do this? Who else, besides

him, can lend money without decreasing his own

bank account ?

For it to be possible to lend money without tak-

ing it from anywhere else, it would be necessary

to manufacture or create some, and this is exactly

what the banker does.

But, is this a good thing, or is this a bad thing?

The capacity to create money by the mere stroke

The importance of the money question

Louis Even in 1940

“When all the trees have been cut

down, when all the animals have been

hunted, when all the waters are pollu-

ted, when all the air is unsafe to brea-

the, only then will you discover you

cannot eat money.” (Cree Proverb.)

MICHAEL October/November/December 2013