In a post-Oxi appearance on the Keiser Report (episode #780), noted economist Steve Keen spoke about the Greek economic situation specifically, then about the nature of debt generally, and in so doing perfectly encapsulated what I recently have been chastised on FB for pointing out (approx. 22:08):
Keen: It’s again this fallacy about the nature of money. Because if they [Keen is referring to German citizens] realized what the nature of money was, debt relief doesn’t mean they’ve gotta hand their saving over to the Greeks. This is the myth that unfortunately gets in the way of us instituting a system of global debt reduction, because we’ve gotta reduce the level of private debt, and German workers will benefit just as workers everywhere else in the world will if we can reduce the levels of private debt. That’s what we’ve gotta do.
And when we think about debt, it’s like [gesturing to Keiser’s glasses], you lend me your glasses, okay? If I don’t give them back to you, I’ve stolen the glasses from you. And that’s the sense of debt which—apparently the German word for “debt” also means “shame” or something like that in German—so it’s tied up with that personal not-giving-something-back.
And here’s the (pun intended) money quote that takes the piss out of everyone defending the idea that money created out of thin air (as all money currently is and really has been for all of history) has to be paid back or else it’s chaos and the moral fiber of the universe itself will completely unravel, inevitably leading to dope, guns, and fucking in the street:
But when debt is created by a bank, it writes a positive entry for itself on the asset side saying “Here’s a loan, which we’re going to get an income stream from you out of,” and a negative entry for itself on the liability side saying “Here’s the money we have loaned you.” And it’s simply double-entry bookkeeping. There’s no cost involved in doing it. So if we set it up and rewrite it, debt can be written off easily, and in fact if you don’t allow debt write-offs, capitalism will always collapse into a black hole of debt. And that’s what we’ve got. Greece, unfortunately, is deepest into the black hole.
And then Keiser follows-up and hones in on Keen’s point:
Keiser (approx. 23:35)…and so now you’re saying, linguistically, there’s almost a shame built into the word, and so, the perception is that: all debt is to be paid, it’s sacrosanct. Whereas what you’re saying is, “No, all debt is a two-way contract, there’s a borrower and a lender, and they’re always negotiating throughout the entire life of that debt, and there’s many, many ways that debt can be written. The debenture for a debt—there’s thousands of ways to write it…
And of course, Keen agrees with Keiser’s assessment. The financial contract has become “comply or die” much the same way the police force has been behaving in America lately. They don’t want to work with you. They would rather see you homeless, impoverished, dead, or all three rather than work out something that mutually benefits everyone involved. That is what is being done to Greece, and there comes a point when you have to say “Oxi.” And saying “No, Oxi” is much easier and you feel much less shame when you understand the nature of how money actually works, which is why Keen’s explanation above is so very important.
And that’s why money is fake
So that’s why money is fake—as Keen said above, “there’s no cost involved” in a bank creating money, and that is true for any bank, whether it is the World Bank, European Central Bank, the Federal Reserve, or your local bank. If there’s no cost involved, there’s no risk involved. And if there’s no risk involved, there should be no reward involved. Isn’t that what capitalism is supposedly based on, a system of risk and reward? But then the system was rigged around, oh 1971, when the system was set up to let banks put all the risk on us, then take all the reward and pretend that is capitalism.
I don’t know how it can be any clearer—money doesn’t exist, except as a concept, a fiction. And that is why we must stop living and dying by it. We must stop letting banks force entire nations into austerity, stop letting them strip assets from individuals. We must get this one simple truth through our thick heads: the “money” that banks “loan” is nothing more than your signature on a piece of paper, sold back to you. It’s imaginary. It has no value other than what we give it in our own heads.
And this is why I offer self-issued currency as a solution—since (not if) money is fake, then it must be treated as though it is fake. And the best way to do that is to just let everybody create as much money (denominated in dollars, not “[your name here] dollars”—just regular dollars]) as they need and soon enough, it’s likely that no one will need very much. Because no more can we tolerate governments and their bosses, the banks and corporations, acting as though we have stolen something from them if we find ourselves—for whatever reason—unable to “pay back” one of their “loans.” That’s the underlying assumption of all this, as Keen points out above, that the Greeks and the rest of us plebs are stealing from banks if we don’t “pay back” the “loans” that they made to us at zero cost, zero risk to themselves. But it’s a completely false assumption, and it’s one that has been inculcated by the education system and the press for years now and it has been inculcated on purpose (as the Bank of England explained here: scroll down to the section entitled “Economics textbooks as mind control devices”).
Indeed, it would be one thing if we called the riskless act of creating money out of thin air something other than a “loan.” At least that way, it would be easy to understand what we’re actually talking about and the media wouldn’t be trying to make us hate those thieving Greeks, the media would be saying that “these weren’t loans, after all, it was only imaginary money created out of thin air, because if these had been actual loans, maybe these banks might have a point.” But now that I say that, I realize that the whole nomenclature is even trickier than I thought—what is now called a “loan” from a bank to you actually is a loan, it’s just that it’s really a loan from you to the bank. And that is the reverse psychology/prestidigitation of the whole thing that they’re hoping we don’t realize.
So if banks creating money out of thin air was referred to as—trying to think of a sufficiently legalistic, seemingly harmless term…”conjuration,” maybe…or what about…I really can’t think of a good weasel word that would sort of describe the fakery involved yet also make it seem legitimate. But it’s clear that the word “loan” being used in conjunction with what banks actually do is laughable and merely pretense designed to get us to think that banks somehow have more money and skill than we do. It’s literally an insane situation and I find it difficult to explain to people just how insane it is, so I’m overjoyed when someone summarizes the insanity as well as Keen did on the Keiser Report.
Your thought for the day, in the words of Steve Keen: “Debt can be written off easily.” Not “paid back”—written off. Because in reality, there’s nothing to pay back since it was created out of thin air at your request.