Keen’s point in all of this is that credit money is created first before fiat money. Put simply, the bank extends credit, but the fiat end where this money then gets deposited in another bank where credit can again be created doesn’t really work out that way.
What he is getting at is that money is almost always debt. A bank doesn’t wait for its deposits to increase for it to participate in fractional-reserve banking. Rather, it just creates the money, immediately, out of thin-air. Thus, our money supply is really a credit supply with the money part taking place later on in the exchange of goods.
His argument than is that there will in fact be credit crunches where banks no longer lend, but the idea that helicopter Ben can just add to the reserves of the banks doesn’t mean that this money will end up in the pockets of the people who then will spend it.
As we’ve started to learn hear at “Where’s the Interest?”, the velocity of money has a role in the nominal money supply where $1 can be used in many transactions thus increase the apparent money in the system. What Keen is saying though is that velocity and nominal money supply is a follow-on phenomenon of credit creation and without more credit creation, velocity will surely slow.
Thus, getting back to “Where’s the Interest?”, is there less nominal money available in the system to even produce the interest need to pay on debts? More research is needed.
The film talks at the end about a two tier credit system. Directed government credit for certain activities. Loans are provided at 1% or 2%. All other debt is performed privately in the second tier.
Other provisions of the Homeowners and Bank Protection Act of 2007 included:
1. Congress must establish a Federal agency to place the Federal and state chartered banks under protection, freezing all existing home mortgages for a period of how ever many months or years are required to adjust the values to fair prices, restructure existing mortgages at appropriate interest rates, and write off all of the cancerous speculative debt obligations of mortgage-backed securities, derivatives and other forms of Ponzi Schemes that have brought the banking system to the point of bankruptcy.
2. During this transitional period, all foreclosures shall be frozen, allowing American families to retain their homes. Monthly payments, the effective equivalent of rental payments, shall be made to designated banks, which can then use the funds as collateral for normal lending practices, thus recapitalizing the banking system. Ultimately, these affordable monthly payments will be factored into new mortgages, reflecting the deflating of the housing bubble, and the establishment of appropriate property valuations, and reduced fixed mortgage interest rates. It is to be expected that this process of shakeout of the housing market will take several years to achieve. In this interim period, no homeowner shall be evicted from his or her property, and the Federal and state chartered banks shall be protected, so they can resume the traditional functions, serving local communities, and facilitating credit for investment in productive industries, agriculture, infrastructure, etc.
3. State governors shall assume the administrative responsibilities for implementing the program, including the “rental” assessments to designated banks, with the Federal government providing the necessary credits and guarantees to assure the successful transition.
The film is worth the historical review which is the first hour or so, but if you want to hear more about just the reforms on banking and lending, just skip the first hour.
Received this quote in my email today. I know it is referencing taxes, but the same could be applied to usury.
You cannot legislate the poor into freedom by legislating the wealthy out of freedom. What one person receives without working for, another person must work for without receiving.
The government cannot give to anybody anything that the government does not first take from somebody else. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that my dear friend, is about the end of any nation. You cannot multiply wealth by dividing it.
~ Adrian Rogers, 1931 – 2005
The author of this quote was a famous Baptist minister who probably knew full well the meaning of usury. If one is reminded of the banker or investor who does no work yet insists on being paid for doing no work, the above quote fits quite nicely. Think of the “What one person receives without working” as the person who thinks his money is “working” for him. What that really means is that he’s enslaved someone else to do the “working” for him.
As for the worker, maybe he needs to ask the “What one person receives without working” this question: “Where’s the Interest?”
Here’s the news this morning from December spending and income:
Spending:
Expected: Down .9 %
Actual: Down 1 %
Income:
Expected: Down .4%
Actual: Down .2%
Now, you’re probably thinking isn’t that good? After all incomes didn’t fall as much as expected and people are saving more instead.
Wrong, this is not good for the economy. If spending was down because incomes were down, that would be one thing. But what these numbers say is that people aren’t taking on new debt. That says deflation and contraction of the economy.
Let’s review. Money=Debt. Less debt on the right side of the equation means less money on the left side of the equation. Less money, falling prices. Falling prices, loss of jobs until we implode.
Tell your friends about this problem. Point them to this website. We need to educate people and get them to ask, “Where’s the Interest?”
If you want a pretty thorough wrap-up of the history of usury throughout the Church, then I suggest you start here. I’ll be referring to many of the topics, sources, etc. that Jeff brings up here.
A difficult concept to understand is the idea of usury. Over time we’ve adopted the idea that usury is charging an excess of interest in a transaction. But as you learn more about usury, you discover that any amount of interest is the siphoning of wealth from one person to another.
This article talks about Allina Health System charging 18% interest for medical debts where Minnesota state law limits this charge to 8%. This is one example of how we continue this idea that usury is just high interest.
Let’s crunch some numbers. Say you have $10,000 in medical debt at 8% interest and you agree to pay this off in 10 years. You’ll pay $4559.31 in interest over that time. Now, how about we change the terms to 18% interest for 4 1/2 years. The amount of interest paid will be $4661.75.
So, is the amount of interest really the problem? Sure, the payment will be larger for the shorter term, higher interest rate loan, but does that really mean that 18% is that much worse or more usurious then 8%? No.
Here we go again. Time has an explanation of the financial crisis. Blaming all the wrong things…
Good Times
Alan Greenspan
Twisted Regulation
Wall Street
The Homeownership Obsession
Too Much Money
The Myth of the Rational Market
You and Me
George W. Bush
Commodity Futures Modernization Act
The Rating Agencies
Letting Lehman Go
What about the siphoning off of wealth from the workers and people who produce to those people who create money from money through the use of usury? Why isn’t that idea on the top of the list? Maybe we should ask, “Where’s the Interest?”
"In this manner, by creating ourselves our own paper money, we control its purchasing power, and we have no interest to pay, to anyone. You see, a legitimate government can both spend and lend money into circulation, while banks can only lend significant amounts of their promissory bank notes, for they can neither give away nor spend but a tiny fraction of the money the people need. Thus, when your bankers here in England place money in circulation, there is always a debt principal to be returned and usury to be paid. The result is that you have always too little credit in circulation to give the workers full employment. You do not have too many workers, you have too little money in circulation, and that which circulates, all bears the endless burden of unpayable debt and usury."-Benjamin Franklin explaining to directors of the Bank of England government issued money (link)
"People who will never turn a shovel full of dirt on the project (Muscle Shoals Dam) nor contribute a pound of material, will collect more money from the United States than will the people who supply all the material and do all the work. This is the terrible thing about interest...but here is the point: If the Nation can issue a dollar bond it can issue a dollar bill. The element that makes the bond good makes the bill good also. The difference between the bond and the bill is that the bond lets the money broker collect twice the amount of the bond and an additional 20%. Whereas the currency, the honest sort provided by the Constitution, pays nobody but those who contribute in some useful way. It is absurd to say our Country can issue bonds and cannot issue currency. Both are promises to pay, but one fattens the usurer and the other helps the People. If the currency issued by the People were no good, then the bonds would be no good, either. It is a terrible situation when the Government, to insure the National Wealth, must go in debt and submit to ruinous interest charge at the hands of men who control the fictitious value of gold. Interest is the invention of Satan."-Thomas A. Edison
