When you take out a “loan” from a commercial bank, that money is created on demand. It is not “recycled from savings”, as it would be at a credit union or if you were taking out a loan from a friend.
If all goes well, and you repay the loan, then full sum of the interest, and any fees associated with both loan and any current accounts held at the bank, then the bank has made a profit on paper, but society has made a loss. The banks destroys all of that money, rather than recycling it.
Not only did you lose the excess of interest and fees, but that money is now no longer within the money supply.
In fact, the money supply of the current world economic system, based on “imbalanced fractional reserve banking”, has two main flaws:
- The creation of money is only done by loans
- There is no difference in treatment, between created money and earned money
As a result, the banks generate a type of “basic income”, or usury, from this process.
If the commercial banks do not continue to create money via loans, then the central bank for that region has to “print money” to make up the difference. This does not refer to the physical printing of money, but rather, to complex accounting tricks designed to make everything balance in a state of perpetual imbalance.
Individuals versus Society
In the past, when I have attempted to speak about this, people mistook my concerns for personal concerns. They are not. I can prosper with the system as it is. However, most people cannot, and most people will not.
This increases social unrest, and is a direct cause of the social conflicts and emotional illnesses which create the opportunity for various criminal and other anti-social organizations to recruit members.
If society is in unrest, then everyone is less safe.
Putting more people in prison, repossessing houses, telling people to earn more, does not solve the core issue, which is that, ultimately, value is being sucked out of society by the imbalances in the current fractional reserve banking system.
At its root, it needs to be changed, as well as attendant changes to the legal system to protect the poor, the vulnerable, the working person who cannot be expected to also be an economist, leader of a trans-national corporation, and so forth.
For both individuals and society, I believe there is hope, there is also a lot being done. The full solutions, for both the individual and society, will be complex, and require a boldness which is discouraged.
People will lose their jobs if they try to fix the system, and individuals will be misunderstood when they focus on building themselves up to face the system.
However, a discussion of “basic income” should start with the realization that commercial banks already have this, in effect.
Not only that, but it is the direct cost of hyperinflation, rising taxes, and the suffering of the middle class, but instead of focusing there, people blame social support, governments, and unsophisticated labor.
The sole creator of money, in a modern system, is commercial banks.
These banks create the money, destroy the money, and reduce the value of money, by mathematical design.
Governments, politicians, and all forms of employers and employees can only respond to it, but students, children, and the infirm can only react to it.
None of them can take proactive action to change it, because of a control gap built into the system.
Let the blame stay at the source, but also, they are many ways for an individual to promote themselves to a place of autonomy, without being dishonest. Not simple ways, but ways.
The streams of income which commercial banks have, are derived both from the unsophisticated persons who use them as stores of their cash, as well as from the sophisticated persons who use them to gear corporations forwards rapidly. I would suggest that, if you have to deal with them, take only the latter option. Save your money in credit unions, instead.
Those common people who do not use complex systems as a shield for dealing with banks are vulnerable in ways that they (we, since I am still reforming my own situation) cannot fathom until they actually face a great crisis.
Society may not change, but you have to
I would have liked to have simply linked to a single comprehensive solution, but there is none. It varies with each individual: circumstance, ability, access;
To keep the current economic system going, you have to “gear” a company against this system. Do not do this personally, but study it first, before you do it. On purpose, I will not explain what I mean by “gearing a company” here.
So, my take-away to you all, is that, yes, basic income is a great idea, and it should be done immediately. It would allow governments to be for society, rather than for the service of the imbalanced banking system.
However, assuming that various complexities prevent it from changing, then there is another way. We can learn to value big-impact projects more than direct interactions, and we can prosper by having a wider impact on society in a professional manner.
Further writing will follow, as apparently I have a lot to say on this topic, and had to cut out more than 80% of it!
Drafted 16th May, 2017. Was supposed to be a “quick” reply but I had to restrain my enthusiasm to focus on the core issues.