1) What is money... how is it created and who creates it?

2) Why is almost everyone up to their eyeballs in debt... individuals, businesses and whole nations?

3) Why can’t we provide for our daily needs - homes, furnishings cars etc. without borrowing?

4) 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...?

5) How much could taxes be reduced and spending on public services such as health and education be increased if governments created money themselves instead of borrowing it at interest from private banks…?

"If you want to be the slaves of banks and pay the cost of your own slavery, then let the banks create money…" Josiah Stamp, Governor of the Bank of England 1920.


It is simply the medium we use to exchange goods and services.


"Let me issue and control a nation’s money, and I care not who writes it’s laws." Mayer Amschel Rothschild (Banker) 1790

  1. Central banks are controlled not by elected governments but largely by PRIVATE INTERESTS from the world of commercial banking.
  2. In Britain today, notes and coins now account for only 3% of our total money supply, down from 50% in 1948.
  3. The remaining 97% is supplied and regulated as credit - personal and business loans, mortgages, overdrafts etc. provided by commercial banks and financial institutions - on which INTEREST is payable. This pattern is repeated across the globe.
  4. Banks are businesses out to make profits from the interest on the loans they make. Since they alone decide to whom they will lend, they effectively decide what is produced, where it is produced and who produces it, all on the basis of profitability to the bank, rather than what is beneficial to the community.
  5. 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.
  6. Our money, instead of being supplied interest 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....
  7. By supplying credit to those of whom they approve and denying it to those of whom they disapprove international bankers can create boom or bust and support or undermine governments.
  8. There is much less risk to making loans than investing in a business. Interest is payable regardless of the success of the venture. If it fails or cannot meet the interest payments, the bank seizes the borrower’s property.
  9. Borrowing is extremely costly to borrowers who may end up paying back 2 or 3 times the sum lent.
  10. The money loaned by banks is created by them out of nothing – the concept that all a bank does is to lend out money deposited by other people is very misleading.


"The process by which banks create money is so simple that the mind is repelled." Professor. J. K. Galbraith

This is how it’s done…. a simplified example...

New "money" into the economy...

The key to the whole thing is the fact that :-

  1. Cash withdrawals account for only a tiny percentage of a bank’s business.
  2. Bank customers today make almost all payments between themselves by cheque, switch, direct debit or electronic transfer etc. Their individual accounts are adjusted accordingly by changing a few figures in computer databases – just book keeping entries. No actual money/cash changes hands. The whole thing is basically an accounting process that takes place within the banking system.


NON CASH PAYMENTS - Book keeping entries



Thus a bank faces claims from two sources (which it meets out of its liquid assets) – its customers wanting cash, and other banks when it has a clearing house debt to settle.

Unless all the banks are faced with big demands for cash at the same time, the banking system as a whole is safe, although an individual bank is vulnerable, should a large number of depositors for some reason withdraw their deposits in cash or transfer their deposits to other banks.

Interest …. Big Profits for the bank...

More debt for the rest of us....


1) Goods and services are much more expensive...

The cost of borrowing by producers, manufacturers, transporters, retailers etc. all has to be added to the price of the final product.

2) Consumers’ have much less money to spend...

They are burdened by the cost of mortgages, overdrafts, credit cards, personal loans etc. As a result of 1) and 2) there is...

3) A surplus of goods and services...

...because the population overall can’t afford to buy up all the goods and services being produced. This in turn creates.....

4) Cut throat competition...

Businesses try to cut prices and costs to grab a share of this limited purchasing power in the economy, as illustrated by:

(i) Wages being held down as much as possible.

(ii) Shedding of jobs.

(These both reduce people’s spending power

even more.)

(iii) Retailers importing cheap products from

abroad where wages are much lower.

(iv) Production of cheaper goods that don’t last

as long.

(v) Protection of the environment a low priority.

(vi) Mergers and take-overs - corporations get

bigger and bigger, driven to search out new


(vii) Big companies shifting production to

poorer countries which have cheap non-

unionised labour and the least stringent

safety and environmental laws or....

(viii) Demanding large government subsidies and

tax free incentives as the price for setting up

new production or not relocating abroad.

5) Ever increasing indebtedness.

6) Inflation....

is guaranteed because producers constantly have to borrow more, and must add the cost of that increased borrowing to the price of the goods produced.


Exporting is good for a nation’s economy...

because when exported goods are paid for, this brings money into the exporting nation’s economy free of debt.

Importing is not so good for a nation’s economy...



British national debt now stands at 400 billion - the annual interest on that debt is around 25 -30 billion. The government can only pay it by taxing the population as a whole, so we pay! National debt is up from 26 billion in 1960 and 90 billion in 1980.

How the Government Borrows Money


enormous increases in national debt...

enormous profits for the banks...

The Constant Increase in National Debt

Phasing out of National Debt.

"If the government can issue a dollar bond, it can just as easily issue a dollar bill." Thomas Edison.


Seeking to redistribute what money there is by taxing the rich to pay for services for the less well off does nothing to solve the problem of the overall shortage of money in the economy caused by interest payments on a debt based money supply - a problem which most socialists have yet to recognise.

The world’s economies are our economies. We create the real wealth through our ingenuity, enterprise and hard work. The current banking system operates as a massive drain on that wealth as well as concentrating power and control in the hands of a tiny minority.

Money is the means of facilitating the exchange of goods and services . There is nothing wrong with creating it out of nothing, because this is the only way to provide the means of exchange. The amount that is printed or created simply needs to be matched to the amount of economic activity that is taking place. What is wrong is that the right to do this has been allowed to pass to private interests who create it as loans for private profit.



The European Union single currency gives the power to regulate the money supply of all those states that join up, to the European Central Bank. The Maastricht Treaty (article 107) forbids national governments and all other EU institutions to seek to influence the bankers who make up the ECB. For the first time this puts the creators of money totally beyond any form of democratic control or accountability.

ALTERNATIVES – see below


THIS HAS BEEN A VERY BRIEF INTRODUCTION…. I go into more detail with fuller explanations including how creating money as a debt produces the cycles of growth and recession and how banks profit from both. Also housing and mortgages and a little bit of history showing how the present system developed. All contained in a 20 page A4 sized resume available for 10 second class stamps from my address below. I also have a 4 page introduction to the alternatives available for 3 second class stamps (this includes state owned banks lending money interest free, a national credit office, local currencies operating alongside national currencies, a citizens dividend etc.) Both available for 11 second class stamps.

Book: "The Grip of Death" - a study of modern money, debt slavery and destructive economics.. by Michael Rowbotham - 326 pages 15 Jon Carpenter ISBN 1-897766-40-8. Highly recommended for the most detailed examination of the problem and how the current system could be phased out over a period of time.

News sheet: "Prosperity" - Freedom from Debt Slavery - monthly from 268 Bath Street, Glasgow, G2 4JR.

Contacts: The British Association for Monetary Reform, 27 Imberhorne Lane, Felbridge, West Sussex, RH19 1QX..


Campaign for Interest Free Money, Global Cafe, 15 Golden Square, London W1R 3AG. Tel. 020 7328 3701.


Richard Greaves - member of the Bromsgrove Group of monetary reformers and contributor to "Prosperity" "The Old Stables", Cusop, Herefordshire, HR3 5RQ. E-mail: Tel: 01497 821406. Revised - September 2001.