Many money reformers suppose that it is the charging of interest which accounts for the ever increasing debt in the world. 

When Banks create money by making a loan, they don’t create or issue any money with which the interest may be paid, so they say that debt must increase. When unpaid interest of 5% is added to debt it will double in 14 years, and it doubles in 7 years at 10% interest.

Never the less, this is not what causes our debt to the banks to increase. Blaming interest makes a good story, but it simply isn’t so. The reason that interest doesn’t compound our debt to the Banks is to be found in the way that Bank receipts are accounted.

All private banks keep a Shareholders’ Account. All receipts whether for interest, fees or of other descriptions, are paid into this Shareholders’ Account. From this account all expenses are paid; salaries, office rent, stationary, computers etc. Any interest they pay on deposits is also paid from this account. At the end of a period, usually half-yearly, what remains in the account is designated as profit. While varying with different banks this net profit is less than half the interest paid to them.

On average 70% of this net profit (after company tax) is then distributed to shareholders by way of a dividend. Thus far all but 30% of the banks net profit is returned into the community in some way. This 30% is retained as reserves, and depending upon how these reserves are kept, much of this money may also be returned into the community. If they buy shares or real estate bank assets increase of course, but debt to them does not. 

Of every $1.00 they receive in interest at least 50 cents goes back into the community in paying the banks’ costs. Of the remaining $0.50, another $0.15 is paid in company tax. Of the remaining $0.35, 70% is paid to shareholders as dividends; which is about $0.25 so the bank retains 10 cents. As they use this as reserves and buy assets they get richer, but they also disperse most of this 10 cents remaining into the community in doing so. It is doubtful if as much as two cents in every dollar paid in interest to them is retained in the form of money.

Debt everywhere in the world is however increasing by about 10% every year except for years of recession. If interest charges are not causing this, then what is?

This has been well argued in theory by men such as C H Douglas and John Maynard Keynes, but theories are not always necessary in the presence of facts. The facts about a corporation’s wellbeing are to be found in their books of account, and particularly in their Profit and Loss Account. Nations are the only large entities which never do Profit and Loss Accounts. Even the United States, mighty nation that it is, has never done such an account to show the income paid to their people to induce them to produce, against the value of the consumer products so produced.

A few Australians have recently done one for them, mostly using statistics from their Federal Reserve Bank and Bureau of Economic Assessment. It is published in Dr Oliver Heydorn’s Lives of Our Own, Createspace Independent Publishing, Canada, pages 263 to 281. So what does it tell us?

The aggregate personal income of all Americans in 2014 was $10.1 trillion. The total consumer products delivered by their efforts was $12.5 trillion. The profit was $2.4 trillion but the United States does not pay its citizens a dividend. If Americans want to consume the surplus of consumer products above their incomes (and they did) they have to increase their debt to the Banks (which they also did).

Federal Reserve Economic Data (FRED) tells us that while the American people’s total wages and salaries in the 1990’s amounted to over 50% of Gross Domestic Product, they are now in 2014 but 43% of GDP ($7.47 trillion) and continuously declining.

It is not true that they are living beyond their means, for by their means they produced the whole of the $12.5 trillion of consumer products. They weren’t consuming anything that didn’t exist, or which wasn’t a product of their own efforts. They did it so well that they only needed to be paid $10.1 trillion by way of incomes to deliver the $12.5 trillion worth of consumer product.

The reason that incomes are below the products’ prices is the result of cost-accounting practices, but we won’t go there for now. The deficiency of purchasing power in the hands of proper persons to buy their own products is a fact. What can we do with this fact?

We can either pay a national dividend, or continue to increase our indebtedness to the Banks. It really is that simple.

Of course there are unanswered questions about how this can and should be done. The most comprehensive single book on the subject is Dr Oliver Heydorn’s Social Credit Economics which is available through Amazon. Be warned though, it is of 532 pages, so you will have to be serious about needing to know.

And Another Fallacy

So while we are about it, there is another fallacy which needs addressing also. This is that there is a central organisation or leadership amongst the world’s money-creating bankers. It takes several forms. The favourites appear to be the Illuminati or other Masonic groups, the Bilderbergers or Zionist Internationalists.

A time was when there were probably only a dozen or so international banking houses and they were pretty well known. Today there are hundreds. They now include Chinese, Japanese, Indians, Brazilians, Russians and nationals of almost every country and of hundreds of religious and racial backgrounds who are administering, directing and controlling the creation of money in at least some part or parts of the world. That they are centrally directed is a fallacy.

They do however have a considerable degree of common cause. They enjoy the benefits of being able to create national monies, own them and loan them at interest. They enjoy all this however, only so long as other banking houses will accept their credit. Once other Banks will not accept their credit, as happened to Lehmann Brothers, they fall out of the loop and have to cease operations.

For this reason they are truly interdependent, and none will consider the creation of money on a debt and interest free basis with anything other than horror. The profit of the US National economy of $2.4 trillion must never be paid as a National Dividend, and the peoples’ profit can only be made available to them by their borrowing of increased debt from their Banks. 

This is the extent of their collusion. In some countries or regions and with some groups of Banks there is certainly more to it by way of social engineering, and conditioning manipulation largely through control of the major media to serve their agenda. From a world perspective however, its leadership is both fractured and fractious.

Attempts to dramatize the situation by overstating the influence of some particular group brings the actual situation, which needs every effort at exposure, into disrepute. Associating together for an evil purpose (the actual definition of “conspiracy”) is common to all men whatsoever who would defend an illegitimate asset or right. Bankers are included here. We would all crucify others to maintain our idea of our self-interest in the absence of sufficient moral suasion.

Let’s not go crazy; let’s not overstate the case to the point of making it ridiculous and indefensible. The truth is of itself sufficient, without exaggeration, to set us free. Let’s trust the truth in its adequacy.

Voltaire said that the he only ever asked God for one thing “That He would make his enemies look ridiculous. And He granted it!”. Can I suggest a better prayer “Please God, protect me from making myself ridiculous”.