Best film to understand money: highly recommended

A little while back I got sent in the post an unsolicited DVD - a 47-minute animated presentation of "Money as Debt" by Paul Grignon - it tells in very simple and effective graphic terms what money is and how it is being created. I highly recommend it as a painless but hard-hitting educational tool and encourage the widest distribution - indeed would like to make it essential viewing for all politicians.

I have a copy which I will loan around the DVD version to those interested - email me - alternatively see it here online:
http://www.moneyasdebt.net/ Or here.

The DVD is being promoted by the Money Reform Party - their website also covers many of the issues and why we need reform - Greens have been calling for a economic reform for years - we are lucky to have in Stroud the Green Economics spokesperson Molly Scott Cato who moved here last year - she is doing a talk and leading a discussion in Stroud on 28th Sept on 'Is Capitalism Sustainable?':
http://www.glosgreenparty.org.uk/coffeehouse

Our present money supply is responsible for so many of the world’s economic, social, political, environmental, medical and other problems - without reform we wont be able to tackle those problems. It was some time ago that I first started to understand this issue - and greatly helped along the way by "The Little Book of Money" by David Boyle. Heres some more based on what the Money Reform Party have written:

Prior to that I thought - if I thought at all about it - that money in the British economy was created by the Royal Mint and/or the Bank of England in the form of notes and coins - and backed by the tons of gold lying in the Bank of England. This is far from the truth - less than 3% of the money in the British economy has been created by the government. The remaining 97% has been created by the private banking system.

Harvard economist J K Galbraith wrote: “The process by which the banks create money is so simple, the mind is repelled.” He described the fact that banks just write money into existence when anyone - an individual, a business or a government - borrows money from them, just by tapping a few buttons on a computer keyboard. You might suppose this money that you borrow from a bank is some fellow customer’s hard-earned savings. It is not. Banks do not lend ‘real’ money when they grant you a loan. Instead they grant you credit. This credit can be spent like money and to all intents and purposes it is money.

Money is created out of thin air like this by the private banks not only when then lend to private individuals, but also when then lend to businesses and to the government. The banks have been able to extend their credit creation to its present 97% of the total money supply because in today’s economy, with increasing use of credit cards, debit cards, cheques and BACS transfers, very little of the money that we use, either as individuals or as organisations, exists in the form of cash.

It is extraordinary that the banks happily pass cheques and similar payments between each other which are ‘backed’ by nothing more than a ledger or computer entry in the form of somebody’s debt. In the minds of most people such behaviour would be tantamount to fraud. That it occurs on a massive scale is possible only through the widescale ignorance of the process on the part of not only the British public, but also of most of our politicians and commentators.

Money created as a debt by the banks bears a charge of interest - this increases the amount of money that the economy owes by an amount greater than the amount in existence - ie the economy is a saddled with a debt that can never be paid off, merely passed around like a game of Pass-the-Parcel - but someone somewhere has to lose out.

What options are there if we find ourselves deeply in debt? One course of action is to reduce our spending, to buy less, and the second is to increase our income, to sell more. Yet these courses of action are not possible within an entire economy, because if large numbers of people buy less, then necessarily the amount of sales will go down. One cannot have some people selling without there being other people buying. It is a zero-sum game. The only way that an economy can sell more without buying more is if it sells its products abroad, but every economy in the world is based upon debt-based money. Every country starts from the position of indebtedness. Every country is desperately trying to sell more than it buys to reduce its own debt.

The attempt by countries to ‘export’ their debts to each other is an absurd and quite impossible target because the sum total of the amount of money in circulation around the world is effectively a negative figure. More money is extracted from the real economy each year in the form of interest charges than new money is fed in. This extracted money, the interest payments to banks is largely siphoned off to be used for currency speculation, because that is more profitable and less risky than conventional trade and so plays no role in the trade of goods and services.

This is totally crazy - why is it only Greens and a few others trying to highlight the absurdity of this situation? Cannot Brown, Cameron and Ming see the reality?