Money is a freely created commodity.
Land is fascinating stuff. Humans did not create land. Land existed before humans. Humans cannot exist without land. Land is needed to grow the food we need to exist. We need land on which to live. Land was created by god or nature (depending on your way of thinking) for all living creatures to share. Since we invented civilization, we have developed methods of apportioning land to humans. Often, we unreasonably exclude the other animals of the world as if we have a superior claim. We exclude certain plant life. Sometimes we exclude all animal and plant forms as if humans have a greater claim on the land than other life forms. Sometimes we use hereditary or financial power to claim use over other humans. Most methods of apportioning land in the current society involve the use of money. This is often not our money but borrowed credit. We effectively rent the money by contracting debt to someone who specializes in creating money. Those without the income to contract debt from the creators of money become homeless. We borrow bank credit to obtain our fair share of the land that was freely created before humans existed. Using twisted logic, we purchase from those that claim they have a title to the land, using money created by those that lend credit that they create in computer registers. We work very hard to pay off debt to the credit creators so that we can call a piece of land our own. Yet, we were born free with equal rights to all other humans, but the right to a share of the land is not automatic. We must pay in a restricted market. Mostly we pay to credit lenders. Although better than a sword fight, the money system does allow a level of security and safety, once one starts making repayments to those that create the credit in society. No violence is required to obtain or hold the land. The removal of violence as a method of holding land was a big step forward. We get quite uptight when ‘inappropriate’ methods are used to remove land from others. However, we show little sympathy to those that do not have enough ‘borrowing’ power to ‘purchase’ the right to use their share of the land of the nation.
When we purchase land we claim that we own the land but what does ownership represent? We only own down to a certain level. How much of the air above the land do we own? In most cases, we are highly restricted as to what we can do with the land. You cannot make a lot of noise. You cannot put ugly features on your land. You must get permission to build and the buildings must be of a certain style and color and not exceed a certain size. You may not be able to run a business. You can’t stop the birds and planes flying overhead. You don’t own the minerals beneath the land. You don’t own down to the center of the earth. If there is an underground train below, you don’t own the train tunnel. Ownership of land does give you some rights:
The land remains the land of your nation. Land is exceedingly popular, wherever the land has a use. So the value of land is high in areas where there is employment. The value of the land rises to a value so that the interest takes a large portion of the income of the purchaser. The value of agricultural land increases in proportion to the productivity of the farm such that a good proportion of the income from the toil of those farming goes in interest to the loaning entity. And here is the rub, the entity making the most money from the farm is likely to be the money lender rather than the toiling farmer. In the event of a crop failure, it is the hard-working farmer that loses his farm to the bank and maybe his life to suicide. The bank does not lose, it gains the farm in the event of bad weather. So who has the upper hand on the land? The farmer or the bank? We need to consider land and what gives it its ‘value in dollar terms’. What is ridiculous is that we need the food the farmer produces but the sustainability and viability of the farm depend on bank interest which depends upon its value and its value depends upon its ability to produce. So we have a landlordism of money that makes farming problematic. If the output falls to half, in a bad year, the farm is unviable, even though we need the reduced output more than ever. We need the food, but the farm goes ‘belly up’ because it has not produced as much food as forecast during its valuation. It has not produced enough food to pay the pushers of credit their share. They might as well say; “If you want to live in this area, you have to deal with us.” Drug pushers use the same approach. Rather than using thugs to enforce payment, the government uses a legal system to push defaulters off their land.
Land effectively belongs to the nation. It belongs collectively to the people of the nation. Man did not create the land. It has existed for 4.5 billion years. Genus Homo evolved 2.5 million years ago. Homo sapiens evolved about 200 thousand years ago. Land was created by nature to be shared amongst all life forms including humans. Some would say that it is a gift from god. We pass it on to future generations. Future generations need to live on it and so it is beholden to us to leave it in a usable state. Thomas Jefferson said strong words to this effect in 1816: “every generation coming equally, by the laws of the Creator of the world, to the free possession of the earth he made for their subsistence, unencumbered by their predecessors, who, like them, were but tenants for life.” [1] Irrespective of legal tenets, we are, but, temporary tenants of the land. It is beholden upon us to use it in an equitable and sustainable manner. We must leave it in a fit condition for the future.
Land did not naturally have lines drawn upon it. Some system of apportioning land to citizens is required so that it is used fairly by all and contributes to the wellbeing of society as a whole. If a farmer wishes to grow food, it is quite sensible to give the farmer land so he can grow food for us to eat. To deny the land is to starve the community. Currently, land is apportioned on the basis of the citizen most able to pay. The money to pay for the bulk of the land, dwellings, and factories is generated by banks using Double Entry Accounting. This greatly increases the selling prices of land. Effectively, the bank creates $1 million in credit to purchase the land and creates $1 million of debt at the same time. No transaction occurred at the central bank. Interest is then payable on the debt. So the apportioning of land in countries with banking systems is done on the basis of ‘who can get the greatest loan’. The land moves to those with the greatest access to Bank Credit and a small amount of land goes to those very few who were previously wealthy. The size of the loan depends on the income of the applicant almost in a mathematically direct relationship. The result of this is that the banks receive the total financial benefit of this system of apportioning land. The asset backing for the loan is the land. The bank actually uses the land you are purchasing as the backing for the money it creates with Double Entry Accounting. The bank effectively owns the land of the nation by the very act of creating entries in bank ledgers.
Consider what happens when banks arrive in a freshly created nation. Until that time, land was very likely given away, as ‘land grants’, to anyone who was prepared to make good use of it. They may sell the land but they would lose their livelihood. Money was in short supply. When the banks arrive, they create credit for anyone wishing to purchase land, either from the government or from a private seller. The act of creating loans effectively means that the bank instantly owns most of the land in the nation. Most land is purchased using bank loans created by creating money by ledger entries. The value of the land is such that a high proportion of the wage and business income of the nation is taken as interest on money created out of thin air. We have replaced a feudal landlordism of land by a ‘landlordism of money’.
If we are to use a financial means of allocating land, it would be much better that the financial benefit of this system went to the community for community projects. When land and property is in mild short supply, the citizen will borrow ‘as much as possible’ to obtain the land. This effectively bids up the price of land to the maximum sustainable by the earning ability of the tenant. The land price rises to the limit of the affordability such that the landowner has sufficient to feed the family after paying bank interest. Thus land prices are very dependent upon interest rates. Land prices rise when interest rates are low and fall when interest rates are high. There will be a constant upward pressure on land values that is completely dependent on the amount that the bank is prepared to loan. It would be more appropriate for the excess to go to local councils or the government of the area. One such system would be to have much higher rates and Land Tax. Financially this would make little difference to the citizen, as a citizen will still bid the land price up to take the bulk of his/her income. However, the benefit to the community would be massive. The result of a Land Tax system would not affect the payments made by a citizen for the use of land but would much improve facilities. Taxation, in the form of rates and Land Tax, would allow Sales Tax and Income Tax to be greatly reduced. Sales Tax and Income Tax damage the economy. Land Tax does not damage the economy.
Humans, when we changed from being hunter-gatherers to farmers, learned to apportion land to those that need it to live. This was often achieved on a family and community basis. Someone that was keen to grow food for the community would automatically be apportioned appropriate and suitable land. Never forget that we need to eat food. The land would revert to the community if the farmer ceased farming and re-allocated to another person to farm. Then someone drew lines on a map and created the land-title system. The land-title system gives the so-called owner of the title various rights including the right to exclude others from the land and the right to sell the title. The selling process gives monetary value to the title. The land title system is quite clever as it gives people exclusive use of the land but at a heavy cost. The heavy cost is to the benefit of the credit creation industry. What then determines the value of the land? If the land is popular or productive the value rises. Where is the money coming from to purchase the land? The money mostly comes from a mortgage loan. This loan is created by the bank by using Double Entry Accounting. A positive entry is recorded in the digital bank account of the seller and a negative entry is made in the account of the purchaser. If the bank did not exist and was not creating money for the purposes of land purchase, land would sell for whatever money was available in society. In newly created states, land is freely granted to those prepared to use the land. This all changes when banks arrive in the nation. The value of land then depends on what a bank is prepared to create out of thin air, which is dependent upon the income of the purchaser or farmer. The value of the land is almost completely dependent on the income of the purchaser and the interest rate. The bank is effectively saying that ‘you can have the land if you give us most of your income’. The land then fairly accurately acquires a value that reflects its income potential. The interest effectively becomes a private tax to the banks. The bank reaps all income above a survival income for the occupants. If the income of the temporary tenants falls, the land is foreclosed and recycled to new tenants. To add to the madness, when interest rates fall, the so-called value of land increases. This is nonsense. The value of land does not suddenly change because somebody changes the interest rate, it changes because of the affordability of the interest repayments. So the value of land is entirely dependent on its debt carrying ability. The value of land depends on the prevailing interest rate. The value of land effectively capitalizes all the future rent earning ability of the land. The next thing to notice is that the so-called purchaser does not actually own the land. It is, after all, a mortgage. If there is a missed payment, the land title passes to the bank. The bank has the first claim on the land until the mortgagee has made the last payment. So we might as well say that the bank owns the land until the last payment is made. By deceptive wording, the purchaser is led to believe that he is the landowner, when in fact, he is a ‘mortgage note holder’. The purchaser does not have the full title of the land until the last payment is made to the bank. So we have another interesting observation, that by creating accounting entries in bank accounts, the bank can effectively own all the land in the nation.
Money is a freely created commodity.
Interest is effectively a private tax to the money lenders.
This was first explained to me by a homeless Mexican in a covered public area in New York last year. He had worked in the real estate industry and described it as follows: “The bank uses deceptive language by suggesting that the purchaser is the landowner, when, in fact, the purchaser is only a mortgage note holder. The bank likes you to have a loan period of thirty years. Sometime during that thirty years, you will have a financial problem or possibly a marriage problem or you will move. Thus, the mortgage will terminate. The land is appropriated and the bank will keep all your payments up to that time and the property will then be recycled to the next mortgage note holder.” I sometimes say that we have gone from landlordism where we rent the land from a landowner to a system where we rent the money for a similar purpose. Both systems take the advantage out of living in an area and transfer money to those that make money without toil. This has the effect of making a nation inefficient. There is an interest burden on almost every activity we take. Various calculations by a few wise economists suggest that around 30% of everything we spend goes to banks as interest. I have done a thumbnail calculation for Australia and again I came up with the figure of about 30% of everything we spend goes to banks as interest. Every level of production tends to have an interest component and the sum of all the interest expenses of a product comes to 30% of the final sale price.
If you wish to run a factory operating under this land title bank mortgage system, you have to pay high wages so that the employees can afford to live in the area. You have to pay a high price to purchase the land on which to build your factory. What is ironic is that it is your factory that is creating the work and paying the wages that causes the land prices in your area to appreciate. Thus, it is the usurious bank lending system that makes our production inefficient. It eventually makes the manufacturing process so uncompetitive that the manufacturing collapses. Go visit Detroit to see what it looks like.
Let us consider what gives value to land. Land is worth more when it is near employment. Its value will depend upon the typical income in the area. So the value of the land is linked to externalities rather than some characteristic of the soil. It is also influenced by local planning rules. If it is deemed that all living blocks should have an area of one-quarter acre, then this will be the norm and will reach a price affordable to an average family income. So Perth, Western Australia has large blocks, because that is the way it was when the council divided the land. You don’t have much of a choice on land size so the quarter acre block is the norm. As soon as they allowed these blocks to be subdivided, the price rose to the limit of affordability.
Let me give you another scenario. You buy a block of land in the middle of the desert for one dollar. There are utterly no facilities whatsoever. There are no roads, no water supply, no schools, no shops. To use those fun double negatives, there is no nothing! You were ripped off. The land is not worth one dollar. Someone finds some minerals underground a few miles away. People start to build houses to live in. The government is pressed to build access roads, a school, a hospital and other facilities. Your land is now worth good money. It is the same piece of dusty dirt and you have done nothing to the land. So the land appreciation occurred due to the effort and toil of others who built the facilities using the tax from the other citizens of the nation. Your land has value, not through any effort you made but due to the effort and expenditure of others in the community. So the value of land has very little to do with your action, but is based on the toil of others and the actions of the government in providing local services. It is what is in the local area that gives land its value rather than the land itself. Real-estate sellers call it “Location, location, location.”
There were various practices that enabled us to move from a life as hunter-gatherers to a civilized way of life. I have so far listed these as:
In small village life in sparsely populated regions, land would be apportioned by village elders on an as-needs basis for the benefit of the whole village. A farmer would be given appropriate land and protection so that food was available for all. As capitalism took hold and the land title system developed, land was available to those able to inherit or purchase a title. You may have noticed the homeless sleeping on the steps of a vacant building. The needs of the homeless are overridden by the search for capital gains by the wealthy. The illogic accepted by most is that they should ‘get a job’, even though there are only jobs available for 95% of the population and the so-called ‘owner’ borrowed bank credit for the purchase. He pledged half his future income for the next thirty years to the person that created the credit out of thin air by accounting entries. The homeless person had no money to purchase the property, but nor did the affluent purchaser until he borrowed money that did not exist until the bank created it. Under a city-based civilization with work specialization, there is almost always 5% without work. Our twisted logic condemns them to a zero land share. Land is not apportioned according to need but according to banks willingness to lend. We have developed a system of private ownership of land that:
Under this ‘Usury of Land’ situation, the business becomes unprofitable in a region because the rents are high for the factories and the wages are high because of high house rents in the area and food prices are high due to high shop and farm rents. The business collapses and along with it the house prices fall significantly, causing repossession. A strange word repossession. It suggests the bank owned the property in the first place. Go visit Detroit to get a feel of what happens to a city when the industry collapses. It is an experience never to be forgotten. A new factory is set up in a less developed nation in a quiet area with low land prices, low rents, and low food prices. Thus business moves to an area where the Usury of Land has not taken hold. As the factory starts to do well and a few banks move into the area, the land prices start to rise. Food prices rise. The land prices push up wages until eventually, this factory collapses due to the ‘Usury of Land’. The production moves to another faraway area where there is empty land and the process starts over again. My story is designed to illustrate that it is the lending of money under interest that drives up business costs until the business becomes unviable, causing a local collapse and a move to another area where the Usury of Land has not taken hold.
In the past, there were areas of common land where anyone could graze their animals. Humans need resources to exist. If man is denied access to the land, it becomes difficult to support oneself. Without access to land, humans have no access to the resources vital to human survival. As hunter-gatherers, we knew the local resources. We knew where to fish, find food, water, and shelter. If we are denied access to these features, we become dependent on others. When we are denied resources we rely on charity or work. If these are missing we have little choice but to rely on hunter-gatherer violence. So when there is a lack of resources to humans we finish up with a welfare system. This welfare system is paid for, not by those who have ‘ownership’ of the land, by the people through taxes on income, not land. The whole concept of land ownership has more to do with denial of access to resources than access to resources. We currently deem it acceptable to own land and do little with it. We even have situations where you cannot use it in a productive manner. Never forget that land was created for all living things to share as was the water we drink and the air we breathe. Ownership of land is something that is an extension of the ‘Theft of the Commons’. We need to question whether it is acceptable that the land title owners, as a group, has the right to exclude all others from the right to access to resources unless rent is paid to the ‘landowning’ class. The landowning class at present is that group of persons approved for usury by banks.
In the Medieval times in Europe, the people were moving towards cities. The kings were beginning to create nation-states. The lending of money was occurring and some of the usurers were taking over the finances of nations. The Landed Aristocracy were provided with loans creating unpayable debt. The Aristocrats would default and the land would pass to the money lenders. Even the kings were fooled into believing that borrowing was to their advantage. The Landed Aristocracy was eventually pushed aside by usury and marriage. The French Revolution was effectively a win for the oligarchs who practiced usury.
The issues and ideologies concerning private ownership of land are quite contentious. I don’t wish to push any particular viewpoint. However, all people born in a region should have reasonable access to a fair share of the land without an unnecessary burden to any organization, private or public. Land and facilities at present are currently available to those with the ability to pay (or borrow) rather than those with need. In areas of increasing population pressure, usually due to the availability of work, the economically weak, lose their land and the land becomes concentrated in the hands of those with access to money or loans. In this case, money has allowed exploitation. This was particularly noticeable towards the end of the Roman Empire as peasants were moved off the land to make way for the large landowners. The peasants became fringe dwellers and subsistence dwellers in Rome. This also happened in America. The Indians were pushed off the land to make way for the invaders with their European farming techniques. Australia was similar. The government enforced land title system displaced the original Australians from the land that gave them their sustenance. The social costs of this are still being felt.
In my city of Perth, I can see horse studs and mansions appearing in local arable farming areas as the ability to purchase overrides the need to create the food on which our city-based civilization relies. As I travel around the world, I often see empty land or buildings held purely for speculative gain. In Sri Lanka, there was overgrown coastal land, fenced off to keep the locals out, purchased for speculative financial gain. Its price had been affected by the tsunami. Fishing communities lived further back from the coast and had to walk to their fishing fleets. Yet the speculators eat the food generated by the displaced farmers and fisher-people. Financial issues take precedence over society’s need for food.
Land was freely created by our maker to be shared by all living things. It is a free resource like the ocean, the rain, the clouds and the air we breathe. Nobody owns the air. Nobody owns the sea. Nobody owns the birds in the trees, nor the fish in the sea. Nobody owns the clouds nor the space beyond our planet. All these resources are to be used by all living things. Any use of these items beyond reasonable use is restricted. Any activity that damages any of these is restricted. One exception is Fracking, which has the potential to permanently damage the land, permanently damage the water supply all for a short term financial gain.
Some thought needs to be put towards a system where land is used appropriately in a manner that is sustainable into the future and is available to those that have a functional need for the use of land, whether it be to raise a family, to create products or grow food. A heavy rent, in the form of interest, to the creditor class is very counter-productive to the overall efficiency of our society.
“Land was created by god or nature for all living creatures to share.”
The enclosure of commons over several centuries has deprived most of the people of Europe access to land on which to make a living. Land has been progressively privatized. We have a land ownership system based on speculation. When I talk to the young as I travel through many countries, I often ask: “Can you buy a house in the city where you were brought up.” The answer is always negative. I then ask: “Don’t you think that is wrong?” We are depriving our young of access to land and property that was freely created for all living things.
A petition from the Scottish Land Action Movement
The value that is put on land is obviously the amount that a person is prepared to pay. The amount they are prepared to pay is dependent on how much a bank is prepared to lend. The lender arrives at a figure that is directly dependent upon the interest rate and the amount that the borrower can afford. The amount the borrower can afford depends on the person’s income and the amount needed to feed the family. Thus the value of land is such that a borrower can barely afford to eat. The interest value is somewhat equal to the rental earning capacity of the land. If the borrower can obtain a tax deduction on the interest as with a ‘negative gearing’ tax regime, the value rises further. This prices the land out of the hands of young couples wishing to purchase who get no such deduction. With a negative gearing arrangement, it is possible for the selling price, and thus the interest payable to be greater than the rental earning potential because the profit from the arrangement is deferred until some date in the future. Under a tax arrangement that benefits the well-off, ‘negative gearing’ allows a purchaser to deduct expenses from their business immediately. This includes the bank interest. The profit from the arrangement is deferred until the property is sold. If the sale is deferred indefinitely, the tax on the profit is deferred indefinitely. If the property is sold, a ‘Capital Gains Tax’ is payable. However, the Capital Gains Tax is actually a discount on tax. The wealthy pay a lower tax rate on their windfall unearned income than someone earning through sweat and toil.
Land Tax
Land Tax is an interesting tax that would encourage owners to put their land to the most productive use. It would tend to discourage speculative hoarding of land in the expectation of future gain. No-one would hold land for the purpose of making money from the rise in the value of land. This would allow the reduction of Income Tax and Sales Tax, both of which tend to damage the real economy.
Land Tax has the potential to encourage economic activity. It enables a reduction in activity stifling taxes. The tax burden on enterprise and employment can be reduced and housing costs can be reduced. Business suffers high wages because the employees have to pay high housing costs because house prices are elevated by the speculative nature of house prices. Business rents are high because of the speculative nature of land prices. Business costs rise until the business becomes unviable and the business moves to an area where land speculation has not become dominant.
Land Tax is fair because it treats land in a special way because land is a special asset. Land is an unusual asset of limited supply. It was not made by humans and humans can make no more. We are temporary tenants and we need to keep it in good condition for future generations. The current land apportioning system allows exclusive use of land by individuals in a form of private ‘ownership’ rights in perpetuity that tolerates the transfer of these rights through sale. Unfortunately, this leads to exclusion from that land that would otherwise be available to the whole society. Land Tax returns to society some of the lost value.
The land was created by nature for all living things to share. At the same time, nature created the atmosphere, the rivers, and the seas the forests for all living things to share. Beyond a Land Tax, there might be a tax on organizations that create pollution or damage the air, the seas, the rivers or the forests.
British land is British land. Land was created for all living things to share. It seems logical that only the people of the nation should have ‘exclusive use’ rights over the land. Thus, I reason that only British Nationals should be able to own British Land.
The Chinese government taxes land to limit land speculation [13] Only Chinese citizens are allowed to own real property in China. Similar exists elsewhere.
In 1978, Muammar Qaddafi decreed that a person may only own one house. He said that he would live in a tent until each person had a house. It was a marvelous idea. He didn’t quite get there and so he lived in a tent right up to the time that the west killed him because he was setting up a gold dinar money system for Africa. He wrote the following in his green book: “The house is a basic need of both the individual and the family, therefore it should not be owned by others.”
When we changed from our hunter-gather past to a life in small communities, a method of apportioning land was needed. The logic would follow that if a person wanted to grow crops, that person would be assigned land of appropriate area. The new farmer may even receive assistance from the community to clear, level, and fence the land as necessary. Land was assigned on the basis of need. Land was community owned but security was given to the individual until situations changed when the land would revert to the community for reallocation. Regions might be claimed as hunting and foraging territories in collusion with other communities. Land had a collective ownership. The collective ownership would thus preclude private ownership. All land, facilities, and items on the land were used for the collective good of the community. Thus, early communities forbade private exclusiveness in land. The allocation of land on this basis has the potential to be efficient. In some ways, the land is close to being ‘private’ as the holder has exclusive rights bestowed by the community through its leaders.
Other systems have occurred where each young man was allocated an appropriate area for the use of his family. Collective land is thus allocated for private exclusive use. This system has the potential to be an exceedingly productive and efficient food production system.
Our common system is to allow the selling of the rights to the exclusive use land. Although this sounds wonderful, it creates a speculative market for land where the sale price capitalizes the earning potential of the land. The gain becomes a windfall income to those that deal in credit creation. It creates a dreadful distortion of the money system where greater and greater quantities of freshly created money are demanded which push up the purchase price of land to the point of limited return. The solution is a Land Tax so that the gain goes to the community who collectively own the land. All British land is British land in that it is there to be collectively shared by all Britons. If anyone is to gain from its popularity, it should be the British people. When a Land Tax is in place, it becomes unprofitable to hold land in the expectation of land price appreciation. Anyone with excess or unused land will sell it to someone who will use it. Land will only be purchased when a person is going to use it for some productive purpose.