How did the west's financial system become the most predatory enterprise in history?
How did the west's financial system become the greatest criminal enterprise in history?
By "lending" all of our money into existence, making it all an interest bearing debt to themselves.
We're here to promote the basic economic literacy that can challenge this structural injustice once and for all.
Global poverty and displacement.
The economic subjugation of all people, including us in the west.
Routine, devastating, worldwide economic instability.
The gutting of public services and looting of public assets.
The ever increasing consolidation of global wealth.
All these, as well as how they relate to the world's dominant economic systems, can be understood with nothing more than a simple, truthful introduction to the basic facts of economic life.
Money is by far the most important influence over all our lives. And yet none of us, through our schools, colleges or universities, will have been taught the most basic facts about money. Facts like:
What money really is in the world today.
Where money really comes from - how it is created and by who.
How banks and debt, in truth, basically work.
We aren't being taught how the system we live in basically works. This is unacceptable. We must demand that this changes and ask our schools to teach a simple, accurate syllabus.
Click through the slides below for a short introduction to the subject and some of what we do.
This part may be easier to read in landscape.
What is money? And where does it come from?
What is money... and where does it come from?
To answer this, let's start by looking at 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 is just 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. The numbers are all there are. The question, then, is what are those numbers? What are they measuring and where do they come from?
The numbers measure 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 measures out the two sides of a legal relationship: on one side claims, on the other side debts.
That's why we say money is debt. Like any debt, money has two sides: someone who owes and someone who is owed. Money exists as 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.
You may know that money is 'creditary', or 'promissory' or like an IOU. These words all describe the debt-based nature of money: a legal relationship with a debt on one side and a claim on the other.
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) makes a 'promise to reciprocate' (takes on a debt) and will cease to exist again when the debt/money is repaid.
Economists call this 'endogenous' money or "money creation within the private sector". What it means is that banks create this money, they really are not 'lending' and we and our governments really are not 'borrowing' other people's money when we go into debt. For this reason, we can state that these debts should be interest free.
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 people every day use debt to buy a home; they take out a mortgage. If you were selling your house and I needed a mortgage to buy it, where would that money come from?
My bank would create that money, simply as transferable numbers in my bank account, when I ask for 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. I will be the holder of the exact same amount of new debt. (But I will also now have the house.)
Those numbers (→) were created 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 inconvenient and therefore very expensive, it would set up some of the most corrosive relationships that can exist within society.
There's nothing wrong, fundamentally, with the way this system works. It's exactly how it should work. The problem is that the banks know their customers don't understand the system. They know they can tell them that they're "borrowing" other people's money and that they'll pay lots of money in interest because they believe they should.
This is true with respect to both household debt and public debts too. Governments too are "borrowing" money into existence and recording it as a debt with interest due. These result in enormous 'national debts' and associated service payments, which taxpayers are paying because they don't know they shouldn't have to.
In practice, major financial operations like banking could never operate on physical notions of money (like gold or silver) and actual lending and borrowing. Money will inevitably resolve to its most efficient form, which is simply numbers - numbers which record who owes and who is owed.
For that reason, what we call 'credit' (debt) currencies are just a simple practical reality. But, as you've seen, they are also very much more than that. It is through this type of money that we all share a common platform upon which our debts and our exchanges are facilitated, not by 'borrowing', but by simply recording numbers into and out of existence 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 all around the world.
Money should work much more for everyone. Money can and 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 should constitute anyone's basic monetary literacy. You now have a better idea of what money really is, where it really comes from and how banks and debt, in truth, basically work. We all have the right to understand those things. There's more to read and materials you can download which are perfect for teaching young learners. We think it's one of the most important lessons any child can have.
Help us promote better economic literacy and greater human rights. Your support can help us reach more people, produce more educational materials and make those materials cheaply/freely available to schools. And that means they're more likely to use them. Thank you!
Our Teaching Materials
This website has lots of free content for anyone interested in monetary economics, banking, household debts, national debts, taxation, privatization and overarching systems, like capitalism, in which all these things take place.
If you're a parent or a teacher, download our teaching resources for school age learners:
'Welcome to the Fascinating World of Money', Books 1-3
If you'd like to support our effort to promote better economic literacy in schools and greater human rights, please go to our support page.
Adult readers will also find value in the above resources. But the Understanding Money section contains a number of easily digested, bite-size pieces that look at different aspects of money and the economy:
From the foundational building blocks of a financial system that works for a community, including the process by which money is created - 1. How Money Really Works - through the role physical monies like banknotes and coins really play in society - 4. Physical Money - to more nuanced perspectives on economic relations - 5. Banks as Credit Agents - and a more in-depth look at how banks can account for the creation and movement of money in more complex economies - 8 & 9. Accounting for Money Creation 1 & 2. I hope you find it a helpful practical and theoretical resource.
Democratic and Human Rights
The fight for justice, for greater democratic and human rights, is the fight against structural injustice. Basic economic literacy may be the key and has the power to change everything.
Today, it is widespread economic illiteracy that forms the foundation of heartless global and national economies - economies that people do not understand and lack the power to change. It is for exactly such reasons that:
We all have the right to a basic education, to be basically literate and aware, in Human Rights law.
Today that right is simply going unobserved. And the result is widespread injustice and systematic failure. Things could clearly be different. Literacy and rights can be greatly advanced. Poverty, rightslessness and today's extremes of economic injustice and inequality can almost certainly be eliminated. A more just, more humane economic world can be built and can work much more from the bottom up, from a foundation of real human and democratic rights, rather than imposed and cruelly dictated from centers of power down.
Here are 3 simple examples of what informed citizens would demand of any democratic society:
Democratic, debt and interest free national currency base.
We're currently required to 'borrow' our currencies, into existence, at interest, from private banks. Public sectors all over the world are are being crushed and looted under a regime of expensive, inauthentic, national debts.
Interest free access to money for all households.
Every family on Earth could have access to money, for things as vital as a home, interest free, paying no more than a competitive fee. Yet at 9.3% (the 35 year average mortgage rate to the crash) working families will pay 3 times for their homes - twice as a mere gift to the already rich. This financial corruption is at the heart of the world's housing crises. In the US alone, a wealthy nation, some 4.5 million households will be evicted or foreclosed upon every year for failing to keep up these payments. Globally, many millions of families can never hope to enjoy adequate housing.
A public sector that protects public resources and their revenues, reducing or eliminating taxation on working families.
Privatizing the profits while socializing the costs of the public sector today crushes vital public services and drives up taxes on working families. Across the west, working families pay as much as 50% of their incomes in taxes to satisfy the greedy, undemocratic demands of the already super-rich.
Reforms like these would give life and opportunity back to us all - an entire humanity cut off or crushed by corrupt global capitalism. We can make that happen, we can change human rights and the way economies work all over the world, simply by promoting the basic economic literacy we promote here.