Why Money Really Rules The World
This film presents serious research that answers some really important questions about our financial system. It attempts to provide well-investigated answers and tackle this issue from a UK perspective. The film painstakingly explains the inner workings of Central Banks and divulges the money creation process.
Due to the fact that money drives almost all activities on the planet, it’s essential that we understand it. Simple questions like these usually get ignored: where does money come from? Who decides how it gets used? And the impact of not knowing the real answers can be seen on every level.
The monetary system is what provides the foundation for international dominance and national control. Most people naively expect the government to solve their problems and provide everyone with a fair chance to accumulate riches. What they fail to realize is that governments don’t really have as much power as one might think they have.
Governments make a profit by issuing currency. This is called seigniorage and it’s the difference between the face value of notes and coins and their production costs. For instance, it costs the Bank of England about three or four pence to print a ten-pound note and it sells it to the banks at face value. The profit made goes directly to the treasury and lowers taxes.
Prior to 1844 private banks created bank notes. However, some of them went a little overboard and this caused inflation and destabilized the economy. Because of that, a law was passed to take away the power to create notes and coins from the bank and return it to the state.
According to Ben Dyson from Positive Money, the reality now is that most money is digital— numbers in a computer system. This digital or electronic money is what is being used to run the economy. This is how banks are creating money these days.
There is a lot of misconception about how banks work. According to professor Richard Werner, “it’s basically an accounting trick… Banks create money; they don’t lend it. When a bank gives out what is called a loan, it basically pretends that you have deposited the money… it has to invent the liability…this is how the money supply is created.” In other words, when a bank issues a loan they create new commercial bank money. When the person repays the loan, the commercial bank money is destroyed and the bank keeps the interest as profit.
It was Paul Tucker—Deputy Governor of the Bank of England who said, “by far the largest role in creating money is played by the banking sector. When banks make loans they create additional deposits for those that have borrowed the money.”
Banks create new money whenever they extend credit, buy existing assets, or make payments on their own accounts. New commercial bank money enters circulation when people use the credit that has been granted to them by banks.
If you want to discover your role in the economy, watch this now.