Skip to main content

Words by Jem Bendel, Richard Wolff, and Stephanie Kelton

I’m here to rip apart your assumptions about money. I’m going to show you that behind the financial crisis and the environmental crisis, lies a hidden crisis, in our monetary system, the very way our money is created.

Money is so defining of our civilization that it would be naive to hope for any authentic civilizational shift that did 120/120e use money everyday, many people have so many completely unfounded assumptions about what money is.

Someone asked me the simplest of questions: “Where does money come from?”

So when you go to a bank, did you think that the bank had the money to lend you, when you borrow it? I did. But no, they create it out of nothing.

3% of all money is created by governments in the mints, so these are the coins and the notes we have. But the rest, in nearly all countries of the world, 97%, is made by banks, private banks, it’s electronic. And they create this money with interest.

But they don’t create the interest? The interest is created with another loan with more interest. So it means today, there is more debt in the world than money.

We can’t pay off the debts, there is just not enough money. Individually we might, but collectively, we are in debt forever. We are paying compound interest forever!

Now this creates a lot of problems.The first is this system of money creation as debt with interest means that increasing economic inequality is a mathematical certainty.

The second problem is environmental. Because of all the interest, we must have more and more products and services traded, and therefore we must have more consumption of natural resources, otherwise the system will collapse, and we’ll have defaults, recession, and so on.

Now we don’t have an exponentially expounding planet, and so for all our ingenuity, all we are doing is delaying the ultimate crash that has been pre-programmed by this stupid money system.

So that’s the theory. But how does this really feel?

We know this is just paper, don’t we? As paper is not that useful to us. We choose to make it worth something more than that because that’s helpful for us, but it would be a delusion to think it has value in itself. It’s just paper.

We are the wealth. Us. Our ability and our desire to do things for each other. It would be a delusion to think this is wealth. And If we run our society as if this is wealth, haven’t we gone completely mad?

So I used to think anyone talking like this was a nutter. And I think it was my desire to be relevant and my fear of being ridiculed that held me back from working on these critical issues. And I’ve realized that the mass media help to define what’s considered relevant or ridiculous. So you have a key responsibility to encourage effective debate about the real causes of all these crises we are seeing.

And what if journalists asked our top politicians the simplest of questions: “Where does money come from?” You might get some funny answers.

The Federal Reserve therefore is given an incredible amount of power because it decides how much money there is. Because in our system, we permit private banks to likewise create money by literally a keystroke on a computer that a bank is allowed to do.

We need to be clear about what kind of money is going to serve us and I think that must be money that is issued as a public utility and it’s not issued for private profit.

The current money system has been ripping apart our planet and is now even tearing apart our communities. Maybe, when you looked at the news in the last week, it’s even ripping itself to pieces. But it doesn’t have to be that way.

We can stand for what we really value in each other and we can start by losing our delusions about money, working for real reform, trying real alternatives, and telling a whole new story about money, and ourselves.

We face unprecedented economic, health, and environmental crises. Our leaders will tell us we don’t have enough money to address these crises...but nothing could be further from the truth.

The government is the issuer of the currency and as a consequence is not financially constrained. If Congress wants to write trillion dollar spending bills, the government is going to spend trillions of dollars. The question is, “Can they go too far?” And the answer is, “yes, of course.”

However, right now, we have an economy in a very depressed state. Tens of millions of people have lost their jobs. In this economic environment, the government can safely spend out this $2.2 trillion Cares Act, the $3 trillion Heroes bill, we could do infrastructure, we could do a lot of things right now without pushing prices beyond some modest inflation - 2% or whatever. If we push too far, the punishment for that is going to be inflation. It’s not going to be default. It is not going to be insolvency or bankruptcy of the country.

Every country in the world owes money. But to who? Who does everybody in the world owe money to? And why don’t we just kill the bastard and relax?