Chapter 10 - More on Money

The Cost of Providing a Circulating Medium

Greece has a velocity of about one. This means that only 8% of the Money Supply is changing hands each month. 92% of money is idle in the hands of people who hold it rather than spend it. The 8% of money that is circulating is doing the work of money in the real economy that feeds, clothes, and houses the Greek people. In Greece, there is three and a half times as much debt as money. Total Debt is €548 billion. If the average interest rate in Greece is 5%, there is €27.4 billion in interest. For the €14.6 billion that is working as Circulating Money, there is an associated interest of €27.4 billion. (People with Hoarded Money do not pay interest because they do not borrow money.) For each €1000 that is working, there is an annual interest of €1877. It is costing Greek citizens €1877 in interest charges to lenders for each €1000 that is circulating. These interest charges by lenders for the provision of a circulating medium are a little on the high side. If the velocity was brought up to say: two or three or four or five, the charge would be brought down significantly. These interest charges make it difficult to escape the debtor’s bind as discussed to by Moses, Jesus, Mohamed, and other prophets.

The Flow of Money

Cash Currency in Greece is created by the Greek branch of the European Central Bank. The government does not use Cash Currency to pay its bills. Cash Currency enters circulation when people exchange it for credit in their bank accounts. The banks purchase Cash Currency from the ECB using credit. Cash Currency is used almost exclusively in the retail sector. Other than the retail sector, transactions are affected by shuffling numbers in bank accounts. So let us study bank accounts. In Greece, there is €29 billion Cash Currency as folding notes. [14]. Much of this is in people’s wallets. The Money Supply is listed as €163 billion. €163 billion of this never originated from the ECB. It vastly exceeds the volume of Cash Currency issued by the ECB. This money is virtual. It is credit for €124 billion in real money that does not exist [14]. It is the amount that the banks owe their customers. No bank collects all the money at once, so the system works. The banks create more credit which allows previous interest to be paid. This credit is created by the fascinating process of double entry accounting. If you are buying a house for a million euro, the bank does what it is good at and that is bookkeeping. The bank writes one million euro with a plus sign in the seller’s account and one million euro with a minus sign in your account. From that second, there is one million euro more money in the nation and one million euro more debt. The rate at which banks lend credit determines how much credit there is in the nation. Cash Currency can only be obtained from banks in exchange for Bank Credit, so bank lending entirely determines the magnitude of the Money Supply.

Some money in the Money Supply sits idle in accounts for years on end. The money that changes hands regularly in the real economy is the only money that benefits society. I draw the line at one month. If a money unit changes hands within one month, I class that unit as Circulating Money. Money that sits idle, I class it as Hoarded Money. Greece has a velocity of one which is equivalent to 8% of money being Circulating Money. Velocity tends to change very slowly and so it is often ignored in economic analysis. This is a major flaw of economics. Velocity is a killer or a savior. Velocity influences the economy just as much as the magnitude of the Money Supply. Ignore velocity at your peril. The Money Supply is so highly considered that it is divided into different sections: M0, M1, M2, M3 and other terms like Monetary Base and Broad Money are used. Velocity has the same influence as all of these. A horribly simplistic assumption is made that the economy depends upon the Money Supply. This is totally unrealistic and misleading. The GDP is equal to Money Supply times velocity. It should be obvious from this equation alone that Velocity has the same influence as Money Supply. In simple terms: The Gross Domestic Product is equal to the Money Supply and how many times the Money Supply is turned over in a year. If you have a million euro in a suitcase and travel to Egypt and buy one million of shoes, then your annual turnover is the number of times you go to Egypt in one year. If you go to Egypt six times, then your turnover is six million. It is the same with a nation. If you turn over the one billion Money Supply six times in a year, velocity is six and your GDP is six billion. Money needs to change hands many times in a year to be useful to society.

Let us consider how money gets into circulation. People take out loans for houses, boats, businesses, and cars. The money is created as book entries and passes from person to person by transferring ownership in bank accounts. Thus the banks are the only creators of money. Cash Currency is a side show. You buy it with bank credit from a bank and it goes on a repeated cycle of: ATM > citizen > retailer > bank > ATM > citizen > retailer > bank > ATM. So the source of all money is bank loans.

If a business needs money, it goes to the bank and the bank creates fresh credit. The Money Supply increases by the amount of the loan. If an individual needs money, the individual gets a job or goes to the bank and the bank creates fresh credit. The Money Supply increases by the amount of the loan. If a company needs money, it has a few extra choices. It may borrow money from a bank and increase the Money Supply. It may issue shares or it may issue bonds. If it issues shares, it is giving away ownership of the company to those with more money than they can spend. These people take no stress in the day to day running of the business but get the financial reward at the end of the year. The purchase of the shares is done with existing bank credit. No new Bank Credit has been created. If the company creates a bond, the bond is an IOU with a fixed redemption date. The bond will be purchased with existing credit. There is no increase in the Money Supply but there is a strange effect. The bonds are prone to be bought with Hoarded Money and the company spends it into circulation. A minor rise in velocity occurs.

When a government needs money, it borrows money by issuing bonds. The bonds are paid for with existing bank credit transferred to a government bank account. There is no increase in the Money Supply. However, the bonds are prone to be bought with Hoarded Money so there will be an increase in velocity. On rare occasions when the government cannot obtain money from the sale of bonds, the central bank steps in and creates money out of thin air and purchases government bonds. If the central bank purchases freshly issued bonds from the government, the Money Supply increases, and the money is spent into circulation. This increases the velocity. If the central bank purchases existing bonds from financial institutions, there is an increase in the Money Supply but the money is prone to become hoarded. This is what happened with Quantitative Easing. The money became hoarded. You now know more than all the treasurers in the world combined.

When the banks lend money, it is important how it is spent. This characteristic decides whether new credit causes inflation or business activity. If new money is lent to purchase assets such as houses or shares, inflation will occur without any increase in the real economy. The GDP will not rise and may even fall due to increased rents to businesses. If money is lent to businesses for expansion, the real economy will expand and the GDP will rise. This is why a public bank is essential. The public bank makes sure that credit is available for business and infrastructure. The public bank is run for the benefit of the nation.

Living with Debt

One of the first readers of this booklet, Eileen, could not accept the level of debt that I suggest has to be accepted. I sympathize with her. All the nations of the world have been bequeathed a debt banking system. The whole money system will need an overhaul to achieve this. We have lived with heavy debt for a few hundred years. We have lived with unpayable debt for a few hundred years. We can live with debt. It is collapse that is to be feared. Debt is a minor problem compared to financial collapse. With debt, some go hungry. With collapse, we starve. Rich and poor alike will fight for scraps of food.

There is some advantage with operating under debt. Everybody works hard to pay off debt. This means that farmers produce plentiful crops, workers work hard to pay their mortgages, entrepreneurs are productive, and inventors are creative. There is plenty of product to be absorbed with your income. Debt tends to be nullified by inflation. People get nice houses and a nest egg for retirement. Thus, I have given the formula to make the money that exists work faster. There is no way the current system can operate without the great debts. When all money originates as a credit to a seller and a debt to the purchaser, interest will ensure that debt grows faster than money. There is no escaping this.

If you wish to operate a system with no debt, you will need what is called a sovereign money system. In this system, the government creates money at the treasury and spends it into society. The society is basically debt free. Many nations have had this system until a debt based system is teased into place. England had the tally stick system for seven hundred years. The king had notched sticks of wood split in half. One-half was retained to prevent forgery. The other was spent into society. The king would build bridges, roads, ports, and public buildings. It is a beautiful debt free system, but it has one massive flaw and some minor flaws. The minor flaw is that the volume of money in society is dependent on the whimsical spending of the king. The big flaw concerns businesses. Businesses need money before they can make money. Businesses need credit so that they can start. Then they need money to cover operations. Banks are remarkably good at this. Banks evaluate risk extremely well. Government entities are extremely poor at evaluating risk. The modern way to operate a sovereign money system would be for the treasury to create the money in both paper form and digital unit form. Each digital unit would be numbered and traceable and would be like a digital drachma note. The government would spend the drachma digital notes into circulation. To ensure that business had access to credit, the treasury would fund the banks with loans at a very low interest rate. The treasury would lend banks paper and digital notes on an ‘as needs basis’. Lending patterns and inflation could be controlled. Loans for asset appreciation and asset speculation could be curbed. So money would be available to first home buyers at a low interest rate. Money would be available for business startups and for business operation. Money would not be available for stock market speculation or for land and property speculation. Money for property speculation is commonly masked as ‘investment in property’ to hide its speculative nature.

Pastor Sheldon Emery words it this way: “Under the Constitutional system, no private banks would exist to rob the people. Government banks under the control of the people's representatives would issue and control all money and credit. They would issue not only actual currency, but could lend limited credit at no interest for the purchase of capital goods, such as homes.

A $100,000 loan would require only $100,000 repayment, not $270,456.00 as it is now. Everyone who supplied materials and labor for the home would get paid just as they do today, but the bankers would not get $170,456.00 in interest.

That is why they ridicule and destroy anyone suggesting or proposing an alternative system.” [13]

I shall enhance and reword the words of Pastor Sheldon Emery:

You may wish to take on the bank system. If you win you may crash the money system. You will win, then you will starve. It is better to make a few adjustments to the tax system.

London Times -1865: “If this mischievous financial policy [of creating a debt-free currency], which has its origin in the American Republic, shall become permanent, then that government will furnish its own money without cost! It will pay off its debts and be without debt. It will have all the money necessary to carry on its commerce. It will become prosperous without precedent in the history of the world. The brains and the wealth of all countries will go to America. That government must be destroyed or it will destroy every monarchy on the globe!” [13]

Debt-free drachmas would make your country prosperous beyond imagination. But alas, it is not going to happen because you cannot even make the money you have in Greece work for you. You will have to stand by and watch these coordinated corporations mortgage your nation. They will takeover the lands, the houses, the businesses, the farms and the factories. Land has titles. They will own the titles. Houses have mortgage papers. They will own the paperwork. Businesses become companies. Companies have shares. They will own the shares. The nation has a propaganda system. They will own the propaganda. The nation has politicians. They will own the politicians. They will own the land you stand on. They will own the water you drink. They will own the factory you work in. They will own the political parties you vote for. By craft and cunning, they will follow the formula of Moses and own everything that sustains your life. They will destroy the Christian basis of European order. They will create social disharmony and change the racial mix. They will make the working man reliant on their drab factory jobs. They will make politicians dependent upon their funding. They will make parliaments dependent upon their financial control of the money supply. They will lend so that you can buy what was freely provided by nature for all living things to share. You cannot change this. But you may be able to change the way the tax system works to make sure that those with swimming pools do not hoard the money. It matters little how many swimming pools they own. It matters that the money moves. There is only be half the money supply that could have been if the banks had not ceased to issue credit. Double the speed of movement of money and you will achieve the same affluence. Everyone in Greece has the potential to have access to a pool or own a pool. It will never happen if the money is idle. The unemployment has gone from low to high. There are vast numbers of Greek people available to work. There is a vast amount of work to be done. The missing ingredient is the transport medium. There is a lack of circulation of money. Make the money move faster. Remove the money from those that sit on money. Because Greek people do not understand the money system, they are easily robbed of their assets, saving, and their property. Do not ask an economist. They don't know either. They think that the current debt banking system is normal. They see no anomaly that every nation is in debt to international banks.


It should never be forgotten that humans live by trading services with each other. Someone invented the money token. The token made the trade very much easier. The token is much easier than carrying a cow around. A token holds the value of one transaction until the next transaction. The token was invented to enable trade. It was a gift to the human race. There are other gifts to the human race which include the land, the sea, the air, and the biodiversity. The money token is perhaps the best gift ever given to mankind. It was a gift for the whole human race. It is ‘our’ money system and it was not invented so that rich could abuse poor. It was not given so that a certain few could abuse it. It was never invented for people to hoard. It was never invented so that some could make more tokens from tokens. Any person that hoards tokens is standing against the human race. Anyone who manipulates money to make money is standing against the token system that was a gift for all in the human race to use to trade the essentials of life. These people must be told in no uncertain terms that their actions are wrong. We need a revival of the approach by Jesus and also that of the Essenes. They stood against the abuse of the poor through the manipulation of the money system. The stand of Jesus was particularly against the use of money to make more money. Mohamed was even more detailed than Jesus. The new messiah declares that the making of money from money is evil. Much evil has been perpetrated on the Greek people. The monetary straightjacket of the EEC is a significant problem, but the immediate problem is that the money that actually exists in Greece simply is not moving. Money must be taken from Hoarded Money by adjusting the tax mix. Money must also be taken from money likely to become Hoarded Money. As such, a minuscule transaction tax needs to be implemented. This is very likely to be 0.1% of every transaction occurring in Greece, without any exceptions. There should be no exception for financial transactions. Land Taxes of all types should be increased slightly. Circulating Money can be treated more kindly than at present by relaxing depreciation rules, by adjusting the non-deductibility for trading stock, and reducing Sales Tax.


Do not forget that the bank system is not protected against implosion. Glass-Steagall is needed to accomplish the protection. Glass-Steagall separates the Commercial Banks from the Investment Banks. Commercial Banks operate the fabulous payments system that is essential for life as we know it. Commercial Banks look after businesses operating in the real economy. If Commercial Banks are tied to Investment Banks, a failure of one or more Investment Banks could collapse the financial system and bring the Commercial Banks down with them. If you think the past few years have been tough in Greece, imagine what it is going to be like if the banking system collapses.


The IMF claims to do this:

“The IMF’s main goal is to ensure the stability of the international monetary and financial system. It helps resolve crises, and works with its member countries to promote growth and alleviate poverty.” [IMF website] [1]

And this:

“The International Monetary Fund (IMF) is an organization of 189 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.” [IMF website] [3]

And this:

“The IMF’s primary purpose is to ensure the stability of the international monetary system—the system of exchange rates and international payments that enables countries (and their citizens) to transact with each other. The Fund’s mandate was updated in 2012 to include all macroeconomic and financial sector issues that bear on global stability.” [IMF website] [2]

It has a membership of 189 countries and is conveniently headquartered in Washington, D.C.

The IMF has been remarkably ineffective at its major tasks. The world economy is still prone to collapse. Poverty has not abated.

What the IMF actually does is this:

“The IMF lends money to member countries faced with balance of payments problems, ie when a country fails to earn sufficient foreign currency—through exports or provision of services—to pay for its imports. In return for financial assistance from the IMF, borrower countries must implement a set of economic reforms aimed at overcoming their balance of payments problems. Loans are disbursed in installments and payment is tied to the countries’ compliance with the structural adjustment policies.” [IMF website] [2]

Those last words are not the words of a conspiracy nut, they are the words on the IMF website. The IMF gave ‘surveillance consultations’. There were 130 consultations in 2013, 132 in 2014, and 124 in 2015. [2]

The IMF uses its lending to influence and direct the internal policies of democratic nations. The IMF instructions are worded as ‘practical help’. [3] Even without loans, the IMF has influence:

“... the IMF is charged with (i) overseeing the international monetary system to ensure its effective operation, and (ii) monitoring each member’s compliance with its policy obligations.” [IMF website] [2]

All the above quotes were from the IMF website. The IMF has created a type of ‘global governance’. If the IMF lends money to nations, the conditions are particularly stringent. These nations then operate under a debt induced control. This is why you see protesters with banners such as:


World’s predatory lender.


Trapping countries in debt.

End structural adjustment.

IMF + World Bank = Hundreds rich. Billions poor.

IMF and World Bank.

Economic Terrorists.

IMF World Bank out.

Here are some more quotes from the IMF website to show the depth that the IMF reaches into your nation:

“IMF offers technical assistance and training to help member countries strengthen their capacity to design and implement effective policies. Technical assistance is offered in several areas, including fiscal policy, monetary and exchange rate policies, banking and financial system supervision and regulation, and statistics.” [IMF website] [4]

“The IMF promotes economic stability and global growth by encouraging countries to adopt sound economic and financial policies.” [IMF website] [4]

“The IMF provides technical assistance and training mainly in four areas:

[IMF website] [4]

The IMF is strengthening the legal framework for its surveillance. This quote is from a European Central Bank annual report:

“Nonetheless, there is still margin for further enhancing IMF surveillance of the EU and the euro area.” [European Central Bank website] [5]


“...which enables the IMF to survey all policies that are relevant both for a member’s external and domestic stability.” [ECB website] [5]

The IMF enforces policies with the dubious claim that the policies will promote stability. Stability is very difficult to argue against. If an official says that a policy is needed for stability, it is difficult to argue that the policy is not needed for stability.

Criticisms of the IMF

Critics of the IMF’s policies comprise a wide range of people. This includes: activists, journalists, social scientists, government officials, academics, politicians, and heads of governments. The list of criticisms about the IMF is long:

Unfortunately, most of these policies are the policies that one would choose if one was trying to follow Moses in Deuteronomy:

Moses  “For the Lord thy God blesseth thee, as he promised thee: and thou shalt lend unto many nations, but thou shalt not borrow; and thou shalt reign over many nations, but they shall not reign over thee.” [Deuteronomy 15:6]


Moses  “When the LORD your God hands these nations over to you and you conquer them, you must completely destroy them. Make no treaties with them and show them no mercy.” [Deuteronomy 7:2]

As Christians, we must abandon the old testament. Jesus rejected the Old Testament concept of an Eye for an Eye.

Some relevant quotes about the IMF:

Kari Polanyi Levitt 1983: “It is important to note that IMF programmes are not designed to increase the welfare of the population. They are designed to bring the external payments account into balance.... The IMF is the ultimate guardian of the interests of capitalists and bankers doing international business” [6]

Jeffrey Sachs, the head of the Harvard Institute for International Development in 1997 said: “In Korea the IMF insisted that all presidential candidates immediately ‘endorse’ an agreement which they had no part in drafting or negotiating, and no time to understand. The situation is out of hand...It defies logic to believe the small group of 1,000 economists on 19th Street in Washington should dictate the economic conditions of life to 75 developing countries with around 1.4 billion people.”

Jakaya Kikwete: “There were times when there were riots in Africa, demonstrations against the IMF because of the policy advice they were giving, the conditionalities they were imposing, and the difficulties that arose out of the implementation of those conditionalities.”

Che Guevara 1959: “If it is an element of liberation for Latin America, I believe that it should have demonstrated that. Until now, I have not been aware of any such demonstration. The IMF performs an entirely different function: precisely that of ensuring that capital based outside of Latin America controls all of Latin America.” [7]

Luis Ignacio Silva, Brazil 1985: “Without being radical or overly bold, I will tell you that the Third World War has already started - a silent war, not for that reason any the less sinister. This war is tearing down Brazil, Latin America and practically all the Third World. Instead of soldiers dying there are children, instead of millions of wounded there are millions of unemployed; instead of destruction of bridges there is the tearing down of factories, schools, hospitals, and entire economies . . . It is a war by the United States against the Latin American continent and the Third World. It is a war over the foreign debt, one which has as its main weapon interest, a weapon more deadly than the atom bomb, more shattering than a laser beam . .” [9]

Brandon Smith 2014: “The IMF, like all central banks, is dominated by the international corporate banking cartel. Central banks are merely front organizations for globalists, ...” [11]

Who Owns the IMF

I cannot give you a definitive answer on that. The IMF has contributions from member nations. Irrespective of who owns the IMF, it is the control of the IMF that is of concern. Like the car that I bought for my daughter to use, it is not the ownership that is of concern, but who controls its use. It is the same with central banks. It is not a matter of who owns the central bank. It is of concern who controls the central bank.

A debt crisis provides an opportunity to quickly impose conditions upon countries when they are desperately in need of credit. Conditions are called “Structural Adjustment Programs” which demand changes to a nation’s policies that open the nation to international takeover by multinational corporations working in tandem with private corporations masquerading as international banks. There is less questioning about Structural Adjustment Programs when a country is in need of a bailout.

The policies implemented during a Structural Adjustment Program tend to be devastating to a developing nation. When the debt crisis arrived, Greece was starved of credit. Greece had little choice but to sell out their economy to foreign purchasers. Greece came under a form of financial colonialism neatly packaged as a neo-liberal economic theory.

John Perkins wrote an interesting book called the “Confessions of an Economic Hit Man”, in which he described his time as an economic planner in the 1970s. He wrote how Third World nations were enticed into debt by the IMF and World Bank. He would negotiate very large loans to Third World nations which the borrowers would have no hope of repaying. When default occurred the lenders would demand the natural resources and utilities and would gain control of its economy and political system. Enticements included cash, hookers, cocaine, and luxury. Any leader who would not cooperate would be overthrown in a CIA coup or even be assassinated. As is usual with bank lending, the money lent by the IMF and World Bank did not exist until it was lent. John Perkins was describing usury of a truly international level.

Edward S. Herman: “The World Bank, IMF, and private banks have consistently lavished huge sums on terror regimes, following their displacement of democratic governments, and a number of quantitative studies have shown a systematic positive relationship between U.S. and IMF/World Bank aid to countries and their violations of human rights.” [12]

IMF Riots

Joe Stiglitz: “Every country the IMF/World Bank got involved in ended up with a crashed economy, a destroyed government, and sometimes in flames with riots.”