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EP PODCASTSXML

March 14, 2014

Whose Money?

Digital moneyIf you think about it, money is a public good, albeit of a somewhat unique sort. By nature benign, when it falls under the control of a tiny minority to be used mainly for their own benefit it becomes toxic. Our recurring and increasingly severe financial crises, then, are only superficially about money: in fact, we're having a deep, epochal crisis of democracy. To talk about all of this I turned to the brilliant documentary filmmaker (formerly of the BBC) and blogger, David Malone. Another real revolutionary, in the best sense. Total runtime fifty five minutes. Alia tentanda via est.

Listen

« Strike Debt! | Main | The Bane of Financialization »



Comments


I note that a good part of this excellent interview was taken up with the question of how to motivate people to take up the cause. I have been trying to do this in my small way for some months now.

I thought the best way to do this would be to bring impact home to people. So I ask them "When you borrow money for your mortgage from the bank, where does the bank get it from?"

Hardly anybody knows the right answer to this question. And I have asked some very bright people; a theoretical physicist, a medical specialist with 2 phDs as well as his MD, a partner in a major international computer consultancy, and various other similar sorts. (If you are reading this stop a moment and see if you know.)

The answer is that out of every 36 dollars of loaned money, 1 is a dollar that actually doesn't belong to the bank, but is held in trust by them. The remaining 35 come from the air around the keyboard where a number is typed. This is called Fractional Reserve Banking.

Having created this money from nothing, the bank now wants it back, and not just once but several times, through the magic of compound interest. And woe betide you if you should not meet your payment. The legal system will be after you with remarkable speed and brutality.

In the old days there used to be a fair amount of cost associated with administering such loans, but of course these have been dropping close to nil, as the banks have successfully hired their customers to do most of their transaction processing, and computer power continues to decline dramatically in price.

I sometimes think that there are two forms of robbery, one committed by poor people, for which they are duly punished, the other committed by the rich, for which they are richly rewarded, and with the full blessing of society.

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