10 year old explains the truth about where money comes from...

[JohnyCanuck]

A video from http://positivemoney.org

Positive Money is a movement to democratise money and banking so that it works for society and not against it.

Our current financial system has left us with the highest personal debt in history, unaffordable housing, worsening inequality, high unemployment and banks that are subsidised and underwritten with taxpayers’ money. We believe that these problems have a common root: money.

[DeSwiss]

1. Capitalism: the world's oldest Ponzi Scheme.

- K&R

[JohnyCanuck]

2. So if you don't want to take the word of a 10 year old child...

Listen instead to Michael Kumhof, IMF Economist and Dirk Bezemer (PhD in Economics), Associate Professor, University of Groningen explain where money comes from in their own words...

[JohnyCanuck]

3. Some quotes on banks & money creation by bankers, ecomomists, regulators, financial reporters

The Proof That Banks Create Money

More than 97% of all the money that exists is created by banks when they make loans. When people first hear this, they often find it hard to believe. But we don’t want you to take our word for it, read these quotes to hear what central bankers, finance journalists, and commentators have to say on the subject.

snip

Under the present system banks do not have to wait for depositors to appear and make funds available before they can on-lend, or intermediate, those funds. Rather, they create their own funds, deposits, in the act of lending. This fact can be verified in the description of the money creation system in many central bank statements, and it is obvious to anybody who has ever lent money and created the resulting book entries.

ImF Working Paper Chicago Plan Revisited, p9


The key function of banks is money creation, not intermediation.

Michael Kumhof, Deputy Division Chief, Modeling Unit, Research Department, International Monetary Fund


The banking system can thus create credit and create spending power – a reality not well captured by many apparently common sense descriptions of the functions which banks perform. Banks it is often said take deposits from savers (for instance households) and lend it to borrowers (for instance businesses) with the quality of this credit allocation process a key driver of allocative efficiency within the economy. But in fact they don’t just allocate pre-existing savings, collectively they create both credit and the deposit money which appears to finance that credit.

Adair Turner, Chairman of the FSA, Speech: ‘Credit Creation and Social Optimality’, Sept 2011

More quotes at:
http://www.positivemoney.org/how-money-works/proof-that-banks-create-money/