Just as one can quibble endlessly about how landowners acquired
titles, so can one quibble endlessly about how banks create money, or
whether they actually just create credit that is so insured by
government that it functions as money, or whether it is really the
depositors or the borrowers who create money, etc.
I propose that we start at the other end, with how money *should* be
created. That way we cut through the tangled web the moneylenders
Just as the productivity of human beings gives value to land, so does
that productivity give value to money. This is neatly summed up in the
statement that price inflation results from "too much money chasing
too few goods." The people who are producing the goods are also
producing the value that attaches to money.
Yet, instead of rewarding these producers with additions to the money
supply, we tax them for producing, and we allow bankers, treasury bill
buyers and other wealthy people to effectively lend money into
circulation. The poor producer must not only pay a fine on his
production, but must borrow bank-issued money, or Fed-issued
money, or whatever kind of borrowed monopoly money to pay that
Never mind how the moneylenders do it. That is as distracting as how
landlords rent out their land. Some improve the land first and rent out
the improved package. Some some set fixed rents while others
sharecrop. Some inherited the land and some paid good money for it.
Each has his own circumstances, but it doesn't really matter.
What matters is that the landlord is charging for a value he didn't
create, just as the money-issuer is doing. What matters is that this
creates a shortage of land for producers, and makes producers pay a
monopoly premium for access to land that should be either free or cost
much less. And so do producers pay a premium for access to money
that should be either free or cost much less.
And just as rents continue to rise until they collapse the economy, so
does monetary debt continue to rise until it collapses the economy.
And so are the solutions the same. Just as we must make land
common (not collective) property, so must we make money common
property. Just as every person in a society has an equal right of access
to the land of that society, so does every person have an equal right to
any newly issued money.
What this means is that the solution to the money problem is almost
exactly the same as the solution to the land problem. Just as we would
share the rent of land, either by providing services that had been
provided from productivity taxes, or by distributing the rent on a per
capita basis, so should we do this with money.
That is, newly issued money should either be spent on government
services, allowing for reductions in productivity taxes, or should be
distributed on a per capita basis. Of course, the new-money dividend
can only be applied on top of a rent dividend. While it would be
cumbersome and impractical to issue new-money dividends of only a
few cents per month, it would be no trouble at all to add a few cents
per month to the much larger rent dividends.
The solution is as simple and elegant with regard to new money as it
is with land, and the knee-jerk superstitions with regard to money are
as numerous as they are with regard to land.
With land, we hear that assessors deliberately raise assessments so
they won't have to raise tax rates. Just the opposite is the case,
however. It is the land monopolists who drive up land prices, and
government is more often guilty of illegally failing to make
assessments capture that increase than of concocting a false increase.
And so do we hear with regard to money that politicians deliberately
inflate the currency and drive up prices rather than raise tax rates,
when in fact it is usually banks who issue too much credit-money
because they want to make more interest on more loans. On the few
times that governments actually create inflation deliberately, it is
usually because the bank debt is so extreme that it is impossible to
repay *without* inflating the currency.
So are other opponents of banking privilege distracted by the intrigue
of how banks acquired this privilege, or whether the bankers are
foreign, or whether they are Jewish (Some are, but a larger number are
Presbyterian.), or whether they were behind the assassination of
Abraham Lincoln, and so on.
None of this matters, in the sense that none of it bears on the injustice
and the disastrous consequences of lending money into circulation.
Even if all the profits of banking privilege went to Santa Clause, and
resulted in children having wonderful toys every year, the fact of the
matter is that lending money into circulation creates huge debts that
cannot be paid, and creates spectacular economic collapses. These
debts and these collapses can only be avoided by either spending
money into circulation or by giving equal shares to all.
If we can agree on that, we can cut through a lot of confusion.