For months and months now are the news full of stories of cuts and austerity. We are told that this is necessary and inevitable in order to reduce the debt.
But somehow very little is told about the reasons – Why are we all in debt? There is an astonishing lack of attention being directed at debt itself.
Every country in the world suffers from a massive and constantly increasing national debt. Britain has a national debt that is fast approaching Ł1 trillion. USA has a national debt now in excess of 15 trillion dollars! The overall picture is of a world suffering acute and ever worsening insolvency.
But this is really quite illogical and absurd… The question almost asks itself. If all the nations of the world are in debt, who are they in debt to? Rationally, where there is a debtor there should be someone else who is a creditor. If every nation is in debt, who, precisely, owes whom?
In addition to mounting national debts, the level of private debt shouldered by people and businesses is also escalating. (£ 2.7 trillion in UK). And the Americans, supposedly the richest citizens ever to walk the face of the planet, are the most heavily indebted people of the world.
Apart from the logical absurdity of all nations being simultaneously insolvent, such escalating debts are a complete contradiction of the real and obvious wealth of these nations.
Any realistic assessment of the situation must conclude that America, Britain and the many other developed nations possess fantastically wealthy economies. Such extensive personal debt is a complete misrepresentation of the true situation.
What is more, nations are becoming more, not less wealthy all the time, as further technological advances compound their already enormous ability to produce. But where is the financial reflection of this development? And why is there no natural feedback of this real wealth in a decreased pressure to work and to produce? The financial reflection of wealth does not exist; in fact the financial system registers the complete opposite of wealth. There is only increasing debt subjecting our economies and those who work in them to increasingly intense financial pressure and monetary poverty.
This situation is accepted because it is assumed that monetary statements are valid, and that a lack of money means a lack of something vital. But what is missing? If the lack of money were paralleled by a lack of manpower, raw materials, desire or demand, that would at least be rational.
For any one person not to have enough money is rational, but for an entire economy constantly not to have enough money, and thereby prevented from doing what it is clearly capable of doing, is absurd.
Money is simply the medium we use to exchange goods and services. To keep trade and economic activity going, there has to be enough of this medium of exchange called money in existence to allow it all to take place.
In the Great Depression, people wanted to work, they wanted goods and services, all the raw materials for industry were available, yet national economies collapsed because there was far too little money in existence.
The only difference between growth and recession, is money supply.
Someone has to be responsible for making sure that there is enough money in existence to cover all the buying and selling that people want to engage in.
In Britain today, notes and coins now account for only 3% of our total money supply, (down from 50% in 1948). The remaining 97% of money is supplied as a debt by commercial banks. This pattern is repeated across the globe.
With bank created credit now at 97% of money supply, entire economies are run for the profit of financial institutions. This is the real power, rarely recognised or acknowledged, to which all of us including governments the world over are subject.
Our money, instead of being supplied debt-free as a means of exchange, now comes as a debt owed to bankers providing them with vast profits, power and control, as the rest of us struggle with an increasing burden of debt.
How much could prices fall and wages increase if businesses did not have to pay huge sums in interest payments which have to be added to the cost of goods and services they supply?
How much could taxes be reduced and spending on public services such as health and education be increased if we would stop borrowing money at interest from private banks?
Because we’ve allowed private banks to take control of creating digital money, we’ve lost out on literally nearly £2.1 trillion of potential government revenue to date. That’s £2.1 trillion that we’ve had to pay in taxes unnecessarily, and more than double the current national debt.
There are few alternatives how to avoid cuts and austerity, but perhaps the most sustainable one would be to get rid of the major flaw in our system. Do a systemic change rather than trying to regulate an inherently unstable and destructive system.
Condensed and updated from the excellent 1997 book Grip of Death by Michael Rowbotham.