Based in Geneva in 1981 as a systems analyst and programmer, I was on the way to a computer networking meeting at the Centre for Alternative Technology in Wales. In Paris I heard Bernard Benson speaking about his Peace Book which was published in 1979. The posters announced him as The Peace Bomb. Little did I know that I would end up in London learning about money as the root of the peace issue.
Through my passion for networking ideas, people and computers, I got to know not only LETS but also its grandfather John Turmel who introduced me to the Christian Council for Monetary Justice (CCMJ). And thus I also met James Gibb Stuart, the author of The Money Bomb published in 1983. Bernard Benson’s Peace Bomb was an appeal from peace children to adults to stop wars. James Gibb Stuart’s Money Bomb is about curtailing the State’s mechanism of borrowing money for spending it on public services by using ‘publicly created money’ instead.
Bernard Benson was not only an inspirational speaker but also a scientist. One of the facts I got from him was that 1.7% of humanity are responsible for the arms race. According to him, this comprises the arms producers, military, scientists, politicians and financiers. At the time, my networking spirit wanted to wake up the 98.3%.
25 years later, I dare to enter into dialogue with the ‘enemy’: the Bank of England, the Monetary Policy Committee which became the Economic Affairs Committee at the House of Lords, the Treasury and possibly the Office of National Statistics next.
“There is always enough money for war, but never enough for health and education” – this is one of the quotes from Norman Smith, a Labour MP in 1944. Sixty-two years and many wars later, things have hardly changed, for money remains the tool to employ people and thus to determine what is being produced: arms or toys, environmentally friendly technologies or tools that are damaging to nature and our climate. Stopping the arms production would be the obvious way to peace. But who orders the weapons and pays for them? Who decides how much to produce and where to sell?
In the UK, the Bank of England was founded in 1694 by a banker who gave £1.2m credit to the then king so that he could fight a war against France. Similarly, the Swedish Riksbank was founded to fight a war against Denmark.
‘Employment’ was thus the privilege and right to kill: the duty of young soldiers to follow the orders of older generals.
‘Borrowing’ – the then royal privilege – has become the taxpayers’ burden as the national debt.
Since its inception in 1694, the national debt has also been cancelled. But in 1998, the Debt Management Office was created to institutionalise this mechanism. I.e. money is used to employ and pay a few people to ‘manage’ the debt in the name of their nation. According to the website this means working towards an annually changing remit relating to ‘financing arithmetic’ i.e. to find acceptable balances between annual interest repayments and issuing new debt requirements.
Working to remits is the essence of employees who follow orders. As long as their salary and pension are guaranteed, they do what they are told: whether to kill physically or economically – who cares???
The creation of money has been subject of my analysis ever since I touched upon it through LETS (Local Exchange Trading Systems) which advocates credit between mutually consenting adults. My Green Money Network was the first LETS in London and taught me about monetary solutions: the difference between a public or private currency and money in our individual pockets.
Understanding the creation of money boils down to understanding time and the steepness with which compounding interest upon interest grows over time. This steep or ‘exponential’ growth clicks into gear especially after around 21 years which happens to be the time of a generation.
Psychologically, money is the contract between generations: the older generation pays the younger ones to work, produce, serve and deliver. As long as most people are employed by the State, there is no unemployment as in the former DDR. The State decides what people’s working time is used for between weapons and soldiers, hospitals and nurses, schools and teachers.
When free market capitalism reigns, corporations are the employers who decide what people’s time gets used for. But just as the generals don’t get their feet dirty in the trenches, so do the corporations’ shareholders not work for their income. Passive income from interest payments, share dividends or other ‘financial products’ is the goal.
And who are the corporations that have the privilege to create money? The publicly accessible data base of the Bank of England is the source for my information.
The State creates ‘public money’ or cash which is free of interest. But for a variety of reasons this not-interest bearing (Nib) share has become virtually negligible in the money supply. Most of it is created by Monetary and Financial Institutions (MFIs) as interest-bearing credit.
However, computerisation has made the process of creating money as credit much simpler than printing cash and minting coins.
And thus the MFIs have used this power not only to create more and more credit but also more and more corporations and institutions. I.e. money is not used to pay soldiers to kill physically but to maintain an institutionalised mechanism that shows its effects mainly to older people when they are better able to think long-term. But institutions like banks and governments always live longer than people…
Next to MFIs, there are now PNFIs, short for Private Non-Financial Institutions and OFCs, short for Other Financial Corporations. So far, I have not been able to find out who these institutions are. However, their privilege of creating credit is institutionalised on two levels: retail and wholesale.
The institution called the State has lost its influence on a number of levels:
- there are multinational corporations which have far bigger budgets than nation states and are carefully guided into tax havens to avoid payments to states
- the state’s budget is becoming a smaller and smaller share of the total money in circulation and thus an employer of less and less people to supply public services
- while the military budget has to be seen in comparison with the health and education budget, it is questionable which kind of war is more terrible: the occasional physical war of killing with military weapons or the permanent economic war with subtler effects of killing:
- our planet with its climate through financing unsustainable ways of living:
- from passive income rather than real work
- funding the centralised distribution of money and bureaucratic jobs rather than mutual credit with centralised credit control
- its people through turning them into ‘economic slaves’ during their working lives:
- student loans are the first step to over-indebtedness
- its pensioners through depriving them of the human right to live
- real inflation is going to rob every longer living adult of any long term savings
- our climate through the emission of greenhouse gases
- scientists as part of the institutions that benefit from the centralised creation of money and its funding mechanisms are paid to publicise mis-information
- our planet with its climate through financing unsustainable ways of living:
- the myth that the Government runs the economy has to be compared with the following realities:
- the Bank of England promoting an ‘inflation target’ of 2% which is part of a strategy issued by the World Bank
- the Treasury publishing figures on ‘sustainable rates of growth’ which are based on the National Office of Statistics
- the National Office of Statistics publishing figures on price indices over such a short time that acceptable figures can result
- no institution makes long term figures available
- the not interest-bearing (Nib) part of the money supply ceased to be published by the Bank of England in 1991
- no Government seems to be interested in finding income from
- either increasing its Nib share of the money supply
- or the ‘seignorage’ which is the difference between the face value of cash and the cost of printing and minting
- since the last election, even less MPs have supported our Early Day Motions on publicly created money
5. when debating the pension issue, MPs were the first to look after themselves.
25 years later, in the wake of the Peace Bomb and the Money Bomb, I have found that the Money Bomb is a Money Fuse, but it is attached to the Climate Bomb.
For those who dare to look, the ticking of the Money Bomb has caused devastating effects by financing the wars of Governments who are democratically elected.
For those who dare to see, the ticking of the Money Bomb is causing devastating effects by enslaving people through debt to monetary and financial institutions who are entrusted to regulate themselves.
Gregory Palast has published The Best Democracy Money can Buy – but even his journalistic investigation overlooks the mechanisms of creating money.
What can we do but follow our inner voice and intuition that tells us where to look next?