Costless Money and Costly Credit

Abstract

Money and its link to debt-creation is not well understood. However, the link is fi rmly established. By creating money at virtually no cost, charging high real rates of interest on loaned money, and then adding additional ‘charges’, banks and creditors:

• extract assets from the productive sector in a manner that can fairly be described as parasitic;

• transfer assets from those without, to those with assets;

• make a claim on the future;

• build up exponentially rising levels of debt, which are unlikely to be repaid in full.

The Colonel: I don’t read no papers, and I don’t listen to radios either. I know the world’s been shaved by a drunken barber, and I don’t have to read it.

Long John Willoughby: Hey, stop worryin’, Colonel, fifty bucks ain’t gonna ruin me.

The Colonel: I’ve seen plenty of fellas start out with fifty bucks and wind up with a bank account!

Beany: Hey, what’s wrong with a bank account, anyway?

The Colonel: And let me tell you, Long John, when you become a guy with a bank account, they gotcha! Yes sir, they gotcha!

Beany: Who’s got him?

The Colonel: The helots!

From the film Meet John Doe (1941). Directed by Frank Capra. Writing credits Richard Connell and Robert Presnell Sr.