A System of Injustice

Trevon Muhammad October 10, 2011 0

While some may have joined the media and government in panic over the recession, many people were relatively unmoved. After all, we weren’t millionaires, we didn’t lose anything and as a matter of fact most of us were struggling financially long before the recession or credit crunch. However while it is widely understood that the banks were responsible, few people are aware of the fundamental role they play in keeping us bogged down in debt.

While paying off one’s mortgage may be a good thing for the individual, it is an ab- solute nightmare for the banks and the entire financial system which is relies upon keeping the public in debt. Although the function of this system is generally hidden behind complicated financial jargon, its origins and basic operation can be traced back to the Goldsmiths of centuries ago.

Back when gold was the medium of exchange, Goldsmiths loaned out their gold and charged a small fee to look after gold for the public. They issued claim cheques which acted as receipts, meaning that the depositor could reclaim their Gold at any time.
These cheques were eventually traded instead of Gold because they more conveniently transported as the amounts could simply be printed on the notes. This was the origin of paper money.

Entrepreneurial Goldsmiths realised that depositors often left their Gold for a long time and decided to start oaning their clients Gold in the form of claim cheques whilst charging interest. This system was successful for a time but depositors soon came to realise what was happening and demanded a proportion of the interest.

The Bank of England : Central banks help to prevent a "run on the bank"

Unhappy with smaller profits, they came up with a new scheme. Since no one was aware of how much Gold they had, Goldsmiths began loaning out and charging interest on more money in the form of claim cheques than they had in Gold. They became extremely wealthy off the interest of Gold that didn’t even exist and this was the birth of modern banking.

Today’s bankers are the legalized modern successors of Goldsmiths and although the system has evolved. the principle remains the same. The major flaw in the Goldsmiths system became apparent when many people came to redeem their claim cheques at the same time and there was not enough Gold in the vault to pay them all. This is called a run on the bank.

To prevent this from happening, central banks such as the Bank of England and America’s Federal Reserve were created. In the event of a run, the central bank provides the struggling bank with emergency nfusions of cash. Only if there are several simultaneous runs on the bank can the system collapse.

Much like the Goldsmiths of old, banks effectively create money from nothing and collect interest on it. According to Journalist and former financial trader Ben Dyson, this system is behind the financial crisis the world, particularly Europe and America are facing.

People Power : In 2007, Northern Rock became the first British bank in over 150 years to suffer a run after thousands emptied their accounts.

“The flawed design of the banking system makes it possible for banks to create phenomenal sums of money, all without actually breaking counterfeiting laws.They can create money whenever you or I take out a mortgage, loan, credit card or overdraft.”

 “The root cause of the financial crisis is this: money – the foundation of modern society – is no longer issued by the government. It is issued by high-street banks, lent to the public as mortgages, business loans, overdrafts and credit cards, and must be repaid back to the same high-street banks who created this money.

In other words, the money which we all need in order to pay our bills, buy food, and simply live, belongs not to ‘the people’ but to private, profit-making companies”

As Ellen Brown, author of the book “web of debt” explains, the financial system is structured to ensure the vast majority of people are in debt.

“The problem is that banks create only the principal (the loan) and not the interest necessary to pay back their loans. Since bank lending is essentially the only source of new money in the system, some- one somewhere must continually be taking out new loans just to create enough “money” (or “credit”) to service the old loans composing the money supply.”

This spiralling interest problem and the need to find new debtors has gone on for over 300 years — ever since the founding of the Bank of England in 1694 – until the whole world has now become mired in debt to the bank- ers’ private money monopoly.

This system has made Banking cartels immeasurably powerful at the expense of the general public. While they continue to create money and grow wealthier, the public are left to bear the brunt of their mistakes. The financial crisis has caused Governments to have to raise taxes and cut back on benefits, health care, education and other social necessities in order to keep the banks in business.

Community Currency : Berkshares are used instead of US Dollars in some towns within the state of Massachusetts

Despite the urging of many economists as well as protests, the Government seem unwilling to abolish this monetary system. Some people such as Documentary filmmaker and Journalist Alex Jones believe the reason for this is that the Government are under the control of the bankers.

Whether that is true or not the power ultimately resides with the people as bankers can only create money while there is a demand for loans.

Bartering is a popular way of purchasing goods without empowering the all mighty banks. It is the original form of trade and involves two parties agreeing on the value of and then exchanging goods or services. For example one person may exchange a baby’s cot for a supply of nappies and wipes.

There are a number of bartering websites such asItex, Bartercard, SwapThing and U-exchange which allow people to trade in this manner. It is also possible for local communities to create their own currency. This has happened in numerous Americans towns in cities such as New York and Detroit and this currency is used to purchase goods in their local area instead of dollars.

Working as individuals there is little hope but if communities come together to trade and supply each other’s needs freedom from the debt cycle is assured. Although we’ve been taught of the importance of money, few are aware of the crucial truth. People not money represent real wealth.

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