Welcome to moneytruth.org, where we hope to bridge the gap between basic economic education and some of the greatest issues of our time; issues like global poverty and the persistence of economic injustice and turmoil at home as well as abroad. You'll see that looking again at money allows us to view the world in a whole new light.
Money is fascinating and, clearly, very important stuff. But did you know... money is very different to what you likely believe. And that's because you probably weren't taught the most important facts about money, like:
What money really is in the world today.
Where it really comes from.
How banks and debt, in truth, basically work.
And despite the significance of money in all our lives, the right to know these things is not properly recognized in human rights law. (Which is where we come in.)
The result has been a worldwide failure to use money properly. Instead of being a powerful tool for justice, inclusion and human rights, money is more likely to be a source of injustice, exclusion and conflict.
So this is a campaign to fix that. Welcome to a millennia old problem and our effort for progress through literacy and human rights. With your help, we really can change how the world works. These materials are aimed at informing a syllabus suitable for children; children who already have every right to be taught the most important facts about the most important parts of the world around them. Looking again at money is without doubt the most important step any of us can take in making the world a better place for all.
This part may be easier to read in landscape.
So what is money? And where does it come from?
To answer this, I'm going to start by saying what money is not.
Although people often think of money the way they think of gold or silver, it's easy to see that money is really not made from any precious materials. It's true that coins are often made to look like gold and silver, but that's really only for effect. In reality, not only is money not made of precious materials, most money isn't made of any materials whatsoever; most money doesn't exist in physical form at all.
Most money exists as nothing more than numbers in accounts within the banking system. They really are just numbers; there are no corresponding piles of notes or coins, or gold or silver, being kept in vaults. So, if money is really just numbers, then what are those numbers? What are they measuring and where do they come from?
The numbers of money are measuring a legal 'title' or 'claim'. Someone who has money has a measured claim within society and society itself, or some part therein, has a corresponding debt to that person. It may be hard to grasp at first, but money is relational, there are two sides to money: on one side claims, on the other side debts.
Another way to say that is money is debt. Like any debt, it has two sides: someone who owes and someone who is owed. Money really exists as just a record of a debt; it comes into being when someone goes into debt and remains in existence only for as long as the debt remains outstanding.
Some of you may know that money is 'creditary', or 'promissory' or like an IOU. And that's exactly right: these are legal relationships with a debt on one side and a claim on the other. They all come into being when somebody goes into debt and they last only for as long as the debt remains outstanding.
These are the simple, two-sided relations that are expressed through money. This is a reciprocal system in which money exists only to occupy the space between giving and receiving. Money comes into being when somebody (including a government) goes into debt and will cease to exist again when the debt is repaid.
I'll explain these things in more detail, but the point I want to stress is that banks are really not 'lending' and we and our governments are really not 'borrowing' other people's money when we go into debt. It's reasonable to assume, therefore, that many of these debts should be interest free. Money and debt are clearly very different to their common portrayal. And that gives us an opportunity to think again about how the economic world around us should really work.
Let's say you're selling your house and I want to buy. In our world today, almost nobody could have a home if it weren't for the facility of debt, so debt is very important to us and many, many people every day use debt to buy a home; they take out a mortgage. So where does that money come from? Where would the money come from if I needed a mortgage to buy your house?
The money would come into being, simply as transferrable numbers in my bank account, when I need it, when I sign myself into a mortgage agreement and into debt.
And when that new money is transferred to you, you will be the holder of x dollars of new claims within society (which you can redeem at your convenience). I will be the holder of the exact same amount of new debt. (But I will also now have the house.)
These numbers (→) come into being during the process and they are money. The idea that money should somehow be different to that, that someone should have to root around to find some already-existing money to 'lend' to me is, by comparison, very impractical. And it has far graver consequences too. Not only would it be restrictive and expensive, resulting in far fewer people getting access to money and at very high prices, it would set up the some of the most unjust and corrosive hierarchical relationships that can exist within society.
In practice, major financial operations like banking could never operate on physical notions of money and actual lending and borrowing. Money will inevitably resolve to its most efficient form, which is simply numbers and bookkeeping i.e. nothing more than making records of who owes and who is owed.
For that reason, what we call 'credit' (debt) currencies are just a simple practical reality for everyday society. But they are also very much more than that. Through credit currencies, through the 'creditary', debt nature of money, we all share a common platform upon which our debts and our exchanges are facilitated, not by 'borrowing', but by simply recording numbers on paper or on a computer screen.
And that really does mean most of our debts should be interest free. The money we have really should support a very different type of economics and very different economic relations in the world.
Money is a far more democratic technology than we're conventionally led to believe and it really should be at the foundation of all people's real economic rights. Every person, as well as every government, should have a democratic relationship to money and access to money on democratic terms, free of unnecessary lender-borrower relations and free of interest. Human rights demands it.
Covered in these slides are what I would call basic monetary literacy. I hope you now have a better idea of 1. What money really is in the world today. 2. Where it really comes from. 3. How banks and debt, in truth, basically work. As well as 4. How money can work differently in the future. There's more to read which explores money in greater detail and please do visit and get in touch with us on our Facebook page if you have any questions.
Ours is a campaign for greater economic literacy and rights for all, so if you feel motivated to get involved, then please feel free to join us.
We'll explore money with more examples and in more detail on the Understanding Money page. If you'd like a simple walk-through example of how money, banks and debt really work, click through to the first section on that page: How Money Really Works. Let's tie this page up with a few bullet points:
The nature of money and banking throughout the world is that of a large credit system.
Money isn't stuff like gold or silver, money is relational. Rather than being hewn from the Earth, money is socially constructed and is given its life in society and law.
Money is debt, it is a commonly tradeable, anonymous record of outstanding debt. We can also call it 'creditary' (the word 'credit' means debt here) or 'promissory', as in a 'promise to pay', or we can even think of it as an IOU. All these words reference the same thing: the debt-based, relational and therefore temporary nature of money.
Being debt, money comes into being when we need it, when we go into debt - most commonly as a simple numerical record of that debt. Conversely, when we repay our debts, the process is reversed and money ceases to be again.
What we have, then, is a common credit system upon which money exists only to occupy the space between giving and receiving. Banks are not 'lending' and neither you nor I are actually 'borrowing' anyone else's money when we go into debt. It's reasonable to assume, then, that many of our debts should be interest free.
National sovereign debts work very much the same way. In the process of deficit (debt) spending, governments' debts are turned into money (they are 'monetized') within the banking system. Domestically, it's clear that money created this way is not only not 'borrowed' money, but is at best a 'debt we owe ourselves' i.e. is very hard to regard as a debt at all. Another way of saying that is governments should have every right to create a democratic, debt and interest free monetary base and not have to 'borrow' that money into existence from private banks.
Internationally, the creditary, endogenous nature of money and debt means that, just like us, nation states also share a common credit platform upon which debt is facilitated by simple record keeping, not by the 'lending' or 'borrowing' of anyone else's money. It's therefore reasonable to assume that many international debts should be interest free also.
Rather than standing on the upper side of a vertical lender-borrower relationship, banks really have a much more horizontal relationship with their customers. Banks are more like credit agents; they record into being and then facilitate the circulation and eventual settlement of our debts. Banking should be a largely horizontal, not hierarchical, affair.
What's happened in the capitalist world is that the democratic foundation for money has been taken away. The only way money can now enter our world is through 'loans' from banks. The result is that all money in the capitalist world, including even the third world, is the interest bearing property of private capitalist banks.
In reality, money and debt are very different from their common portrayal. Seen more clearly, they lose their imposing character and can be identified as remarkable tools for universal economic participation and for universal economic rights.
Is a campaign for greatly improved human rights, for economic literacy and rights, for children's educational rights.
As it is, perpetual economic dysfunction dictates the course of all our lives. Basic aims like stability and justice have been shown over generations to be undeliverable. And it may even be getting worse. This system is, at best, a failure. And imposing it on the rest of the world is unjustifiable, if not criminal.
Things could be very different. Basic economic literacy and real human rights can be greatly advanced; poverty, rightslessness and today's extremes of economic injustice can almost certainly be eliminated. A more just, more humane economic world is there if we want it, allowing us to move away from cruel top down economic structures to those which work from a foundation of human rights up.
All that's required is basic economic literacy. So please share us with your friends and support our campaign for:
The teaching of basic economic literacy in schools.
The recognition and protection of the right to basic economic literacy in human rights law.
The request to reassess household and public debts the world over.
You may also be interested in our sister campaign Action on Education; a fight for children's wider educational rights in schools.