money - part 2

Who creates the money?
From the previous post, the answer to this question "Who creates it?" is not "the government", or "the country's central bank", but the commercial banks.

This seems truly remarkable - that we allow a few greedy bankers to control our primary mechanism of exchange. The propoganda machine has done its job well, since most of us believe that the present arrangement is the only way it can work.


Who benefits from this arrangement?

Perhaps more remarkable is that there is no attempt to hide this fact. In his well-known economics textbook, David Begg states: "Modern banks create money by granting overdraft facilities in excess of the[ir] cash reserves" He adds: "Bank-created deposit money [the money that people can draw from their bank accounts] forms by far the most important component of the money supply in modern economies."

Dishonest goldsmiths
So how did money creation come to be privatised? This query takes us back to the late Middle Ages when gold and silver coins were the main form of money. I recommend this article, which explains the basis of our present system. Did you know the Federal Reserve Bank of America is a privately owned corporation! I don't know about our own NZ Treasury - does anyone?

Where to from here?
If we allow ourselves to be informed, we can, by general agreement, decide to change these absurd arrangements. While watching a film titled "Alternative Currencies," I saw some inspiring and wonderful footage of people who have been using their own community currencies for years, and some direct challenges to the dominant, centralised, and abusive banking model.

There are several New Zealand examples of local regions who are using a complimentary currency, and now that they have all (but one) agreed to use the computerised CES system, there is now the ability to 'intertrade' between regions. For more information about what is happening in New Zealand the Living Economies website is a good starting point.

It's a small beginning, but an exciting and valuable one, that I imagine will grow in years to come. Anyone interested in starting up a Waiheke Currency?