Debt and the money in your pocket

Can you do me a favour?

Take a £1 coin and hold it in your hand.

97% of all our currency is made via debt
which has serious ramifications for our economy.

Did you know that 97p of that £1 was created by debt?

We have two mechanisms for creating money. One good and one bad.

GOOD

• ·         The Bank of England mints new coins and notes
• ·         These new notes and coins are then sold to other banks for a small profit.
• ·         The profit is returned to the Treasury
• ·         The Banks the distribute the cash
• ·         Only 3% of our money is create in this way.

BAD

Privately-owned banks have been given the ability to create digitial money. Sounds a bit complicated? I’ll explain

• ·         Family X wish to buy a house for £200k
• ·         They successfully apply at a privately-owned bank for a £200k mortgage.
• ·         The privately-owned bank creates £200k and credits into Family X’s bank account.
• ·         The privately-owned bank also creates £200k in debts that Family X now owes them.
• ·         To make a profit, the Privately-owned bank then puts interest on the debt which Family X will have to pay in full.

This process is called Fractional Reserve Banking and this process has some very bad effects on our economy and campaigners claim that it is this that was the core reason for the credit crunch.

·         Money creation by the banks creates an artificial boom

·         Eventually the debt becomes too much and the boom turns into bust

I highly recommned watching this documentary and/or visit this website: http://www.positivemoney.org