Out of the Mouths of Babes: Twelve-Year-Old Money Reformer Tops a Million Views

The youtube video of 12 year old Victoria Grant speaking at the Public Banking in America conference last month has gone viral, topping a million views on various websites.

Monetary reform—the contention that governments, not banks, should create and lend a nation’s money—has rarely even made the news, so this is a first.  Either the times they are a-changin’, or Victoria managed to frame the message in a way that was so simple and clear that even a child could understand it.


Basically, her message was that banks create money “out of thin air” and lend it to people and governments at interest.  If governments borrowed from their own banks, they could keep the interest and save a lot of money for the taxpayers.

She said her own country of Canada actually did this, from 1939 to 1974.  During that time, the government’s debt was low and sustainable, and it funded all sorts of remarkable things.  Only when the government switched to borrowing privately did it acquire a crippling national debt.

Borrowing privately means selling bonds at market rates of interest (which in Canada quickly shot up to 22%), and the money for these bonds is ultimately created by private banks.  For the latter point, Victoria quoted Graham Towers, head of the Bank of Canada for the first twenty years of its history.  He said:

Each and every time a bank makes a loan, new bank credit is created — new deposits — brand new money.  Broadly speaking, all new money comes out of a Bank in the form of loans.  As loans are debts, then under the present system all money is debt.

Towers was asked, “Will you tell me why a government with power to create money, should give that power away to a private monopoly, and then borrow that which parliament can create itself, back at interest, to the point of national bankruptcy?”  He replied, “If Parliament wants to change the form of operating the banking system, then certainly that is within the power of Parliament.”

In other words, said Victoria, “If the Canadian government needs money, they can borrow it directly from the Bank of Canada. The people would then pay fair taxes to repay the Bank of Canada. This tax money would in turn get injected back into the economic infrastructure and the debt would be wiped out.  Canadians would again prosper with real money as the foundation of our economic structure and not debt money. Regarding the debt money owed to the private banks such as the Royal Bank, we would simply have the Bank of Canada print the money owing, hand it over to the private banks, and then clear the debt to the Bank of Canada.”

Problem solved; case closed.

But critics said, “Not so fast.”  Victoria might be charming, but she was naïve.

One critic was William Watson, writing in the Canadian newspaper The National Post in an article titled “No, Victoria, There Is No Money Monster.”  Interestingly, he did not deny Victoria’s contention that “When you take out a mortgage, the bank creates the money by clicking on a key and generating ‘fake money out of thin air.’”  Watson acknowledged:

Well, yes, that’s true of any “fractional-reserve” banking system. Even before they were regulated, even before there was a Bank of Canada, banks understood they didn’t have to keep reserves equal to the total amount of money they’d lent out: They could count on most depositors most of the time not showing up to take out their money all at once. Which means, as any introduction to monetary economics will tell you, banks can indeed “create” money.

What he disputed was that the Canadian government’s monster debt was the result of paying high interest rates to banks.  Rather, he said:

We have a big public debt because, starting in the early 1970s and continuing for three full decades, our governments spent more on all sorts of things, including interest, than they collected in taxes. . . . The problem was the idea, still widely popular, from the Greek parliament to the streets of Montreal, that governments needn’t pay their bills.

That contention is countered, however, by the Canadian government’s own Auditor General (the nation’s top accountant, who reviews the government’s books).  In 1993, the Auditor General noted in his annual report:

[The] cost of borrowing and its compounding effect have a significant impact on Canada’s annual deficits. From Confederation up to 1991-92, the federal government accumulated a net debt of $423 billion. Of this, $37 billion represents the accumulated shortfall in meeting the cost of government programs since Confederation. The remainder, $386 billion, represents the amount the government has borrowed to service the debt created by previous annual shortfalls.

In other words, 91% of the debt consists of compounded interest charges.  Subtract those and the government would have a debt of only C$37 billion, very low and sustainable, just as it was before 1974.

Mr. Watson’s final argument was that borrowing from the government’s own bank would be inflationary.  He wrote:

Victoria’s solution is that instead of paying market rates the government should borrow directly from the Bank of Canada and pay only token rates of interest. Because the government owns the bank, the tax revenues it raises in order to pay that interest would then somehow be injected directly back into the economy. In other words, money literally printed to cover the government’s deficit would be put into circulation. But how is that not inflationary?

Let’s see.  The government can borrow money that ultimately comes from private banks, which admittedly create it out of thin air, and soak the taxpayers for a whopping interest bill; or it can borrow from its own bank, which also creates the money out of thin air, and avoid the interest.

Even a 12 year old can see how this argument is going to come out.

67 Responses

  1. Victoria,
    “GREAT NEWS !! Zero Income Taxes Solves Worldwide Financial Crises” by justaluckyfool.wordpress.com
    Help the world take back its right to life, liberty and posperity.
    Please post your reply.

  2. Basically, Victoria’s message was loud and clear – that currently banks create money “out of thin air” and lend it to people and governments at interest. If governments borrowed from their own banks, they could keep the interest and save a lot of money for the taxpayers.
    It’s true that you never hear this kind of proposal on the news. Victoria is the first person I’ve heard frame the message in a way that is so simple and clear that even an ADULT politician or economist can understand it.
    Why would a government, which already has the power to create money, give that power away to a private monopoly and then borrow the money which the government can create itself, to point of bankruptcy? Because they are bought by the corporations who want not only all the money they can get their greedy hands on, but also want the 99% to lose theirs, and then to be under their control. This allows the 1% to enslave us, and keep us in bondage, as they have done through most of our history.
    Victoria’s speech was so inspiring because she proposed a solution that would free the 99%, and help us break free of our shackles to the Money Changers. Ellen’s many articles show how the creation of public banks on a state, city, county, and local level, modeled on the Bank of North Dakota, can belong to the 99%, and will be able to help create jobs, build infrastructure projects for their communities, help with the housing crisis, and even the student debt fiasco. These public banks are better than credit unions, which, although better than the behemoth banks, cannot do the larger and more costly projects, like infrastructure, to name one example, that our economies need.
    I hope to see the public banking movement push on full steam ahead.

    • Justafoolish question from justaluckyfool,”Doesn’t a state bank system have a fatal flaw ?” They cannot on their own create all the money needed because they are not “monetarey sorvereign” and must get money coming in to cover their debt. In other words, only the Federal government is sovereign and can print “unlimited quanity of “money”.
      Albeit they should be aware of the consequences, both intented and unintended.
      This is covered in the solution, “Great News !! Zero Income Taxes..”
      Google “Justaluckyfool”

    • Victoria Grant is indeed an amazing child. She has learned her lesson and presents it well. The problem is this: The person who taught Victoria the lesson is either misinformed or deliberately deceitful. My guess is that it is the later. I do not hold Victoria responsible for the content of the presentation.

      However, someone should be held accountable for the disinformation being spread and for using a child to spread it.

      Here are a few important facts.

      The Bank of Canada is a privately controlled entity. It is not an agent of her majesty or of the crown.

      The Bank of Canada was started as a privately owned central bank and opened for business in 1935. Because of activist and political activity, the government nationalized the Bank of Canada in several moves in the mid to late 1930s.

      It is true the minister of finance holds all the shares of the Bank of Canada. What is not being said is that those shares do not carry the legal requirements of incorporation in Canada. There is only one class of shares. No voting rights are attached to any of the shares. There are no salvage rights attached to any of the shares.

      The preamble of the Bank of Canada Act gives a general description of its powers and duties, allows the Bank of Canada to control monetary expansion and contraction, and credit availability in Canada.
      “[T]o regulate credit and currency in the best interests of the economic life of the nation, to control and protect the external value of the national monetary unit and to mitigate by its influence fluctuations in the general level of production, trade, prices and employment, so far as maybe possible within the scope of monetary action, and generally to promote the economic and financial welfare of Canada.”

      Up to 1974, Canada’s debt was controllable because interest rates had been controlled by legislation. In the late 1960s, the law was changed and interest rates were allowed to fluctuate; and fluctuate they did. Many people remember the interest rates climbing late in that decade and beyond to in access of 20%. It was during this time that the Bank of Canada created an exponential jump in Canada’s debt because of the increased price of borrowing.

      The Bank of Canada has the authority to manage Canada’s national money supply and its debt. It is solely responsible for Canada’s debt situation. It is responsible for the trade deals, the higher than necessary unemployment rate, the export of manufacturing jobs, and more.

      The Bank of Canada has not acted in the best interests of the nation. It has fed inflation and caused deflation, recessions, and depressions.

      Who, except the financial establishment, would seek to have the public believe that the answer to our debt and growing poverty is the same parasitic entity that caused it?

      Victoria Grant’s recital has generated an interest in the subject. For that we should all be appreciative. Beyond that, we need to learn and think about where we will go from here. Having faith in a child and believing a presentation she could not and did not prepare, will be advantageous to the establishment and delay by at least a century an opportunity to make a true difference to the human condition.

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  4. Stripped of the intentionally abstruse bankeresque doubletalk the monetary banking fraud is really quite simple. She has put to shame not only the liars but the arrogant skeptics and dupes.

  5. Victoria explained it quite simply to her elders in the simplest way and I am sure they still don’t get it. Great news of the younger generation. Thanks for the article since we don’t get this in the mainstream media.

  6. But, but, but…. who is going to pay for the gold clad office towers in Toronto if the government stops borrowing billions from private banks? And what of all the lambos, ferarri’s, porsches, etc in those office towers parking garages. (and yes, I’ve been down there enough to know they exist)

  7. Irregardless of who is right or wrong here private banks have invented a real money maker-its called “service charges” and there is absolutely no risks-while they will not tell you what it represents as a fraction of their total profits it is a significant amount-in the billions-they take a bite of every buck that passes through their system and the service industry which has replaced the manufacturing industry in north America in a great way is ideal for banks because the service industry is all about recycled cash. Anyways we should all stop whining because at the end of the day we are all part of the problem! We all “demand” to get serviced and we do not want to pay for it, we also want to buy everything cheap which has made some of the Chinese vastly rich and replaced high paying mfging jobs here with low paying big box store jobs–nuff said.

  8. Public Banking vs. Federal Reserve…..the pot calling the kettle black.

    • No, they’re pots of different colors: one black, one white; one private, one public. The Fed is privately owned. Everything it does is in the interest of its financial sector owners and constituents, not those of the real economy or the people. If the govt. borrowed from its own bank, any interest would be owed to itself and there would be no compounding debt problem. Just as Victoria explained.

      • WRONG….both are run by corrupt people with a personal agenda that never know how much fiat money is too much.
        When has Gov’t ever run an efficient and/or honest program? When has a fiat currency ever been successful?

        • All modern currencies are fiat, backed by nothing other than agreement and government authority. Read some MMT and get real. For examples of good government and successful use of fiat currency look at the Scandinavian countries and their economic models.

          • The operative part of your statement is “backed by NOTHING”. As long as a currency’s value is based on whimsical regulation/policy it will never be fair to all parties and its inevitable end will be as easy to prevent as holding back the wind.
            Perhaps if you read more non-fiction you would know there is no such thing as “good” government, only a necessary evil. As gov’t grows so does its evil nature.
            FYI, all fiat currencies throughout history were “modern” during their time, but being “modern” never saved any of them.

        • Interest free fiat currencies have been successful in ancient Rome under caesar using copper coins, in England under Henry I with Tally sticks for 700 yrs, in colonial American with continental script, and in civil war America with greenbacks. None of these currencies were discontinued because they lead to hyperinflationary or deflationary crashes or depressions; rather they were either sabotaged (e.g,., colonial script) or lobbied against by large private banking interests.

        • As long as many people have this idea that they are some how separate from Government, we will keep having this dilemma. If everyone viewed themselves as part of government and thus directly involved in government and directly involved in it’s programs and institutions, they might stop mistrusting “government,” because in a democracy that is truly “for the people and BY THE PEOPLE,” we are all “the government.” the government is you! Cynicism about the government plays right into the hands of the status quo. If you are cynical and don’t exercise your own democratic rights, than you and many others are just allowing the status quo to continue on it’s merry way.

          • WRONG! We are NOT the government no matter how much we dream and imagine it to be true.

            Voting every four years for people we don’t know, who are able to raise millions for an election campaign — ask yourself, who can donate that kind of money — is not democracy. The voters are expected to turn out on election day, cast their votes for a few people as if these are the smartest people in the whole country, and then crawl into their burrow and wait. The elected politicians will do what they want, when they want, and how they want.

            Democracy – Not a chance. Stop the rhetoric!

            • Apparently you do not understand the profound effect a nationalized bank will have on the finanacial capacity of the current private banks, trans corps, and the host of villians that do their bidding. In spite of corruption and inefficiencies, a national bank will completely cut these people off of the money supply they need simultaneously to enrich themeselves and oppress us with debt. Money in a national bank will be wasted only on the people and projects that benefit the people.

              • You are joking, right?

                Nationalized banks do not do any of the things you suggest.

                • Surely, you’re not one of those idiots that believe the govt is financed by our tax monies? Our govt exists solely through the usurous fiat the Fed loans to our govt at compound interest. These loans comprise the entirely of our money supply and with compound interest can never be repaid but only be rolled over from year to yr with more loans. Our govt is debtor to a private corp, the Fed; and as such must do their bidding not ours. A national bank would destroy that relationship doing away with usury to privately owned institituions. An interest free currency would take the power of private cabals to extract parasitically wealth from our economy.

                  Maybe you just don’t know the history of interest free fiat money lent from govt owned banks. Probably you don’t even know that they have existed with the success that i have so understatedly described. In my comments above i gave a few examples of ancient Rome and England; there are more if only you would stop reapeating the simple minded narratives written by the banker funded historians. Read Ellen’s Web of Debt or Bill Still’s “No more National DEbt” before you try to lecture people on what national banks can or cannot do.

                  • You might be glad to know that I am not an idiot.

                    I don’t believe the government is financed entirely by tax dollars. I know all about how governments borrow huge amounts of money — which can never be repaid except by rolling it over. These loans by government do not comprise the the entire money supply. The loans made by financial institutions (not only banks) contribute significantly to the entire money supply. National banks do not destroy the relationship that exists between government and banks. If that statement was true, many countries would not have the debt problems they have currently.

                    Actually, I do know the history of debt-free (as opposed to interest-free) money; and, I know about the other points you mention. I also know a few other things that you may not know.

                    I have read Ellen’s Web of Debt and I find it riddled with inaccuracies. I have written several comments pointing out those errors together with references to source documents (not opinions) for verification. She apparently chooses to ignore the information, which suggests to me that she might be on a mission to mislead the public yet once again.

                    I spent more than ten years researching this topic. I know and have definitive proof that some of the things Ellen Brown claims are ABSOLUTELY UNTRUE. So don’t tell me I don’t have the right to speak (lecture) on this subject.

                    Every piece of information, factual or otherwise, you have offered up so far is not verifiable except from people who knowing deceive the public, which is exactly why we have this huge problem.

              • Wouldn’t that be solved by “SEPARATION” of private for profit banks and The Central Bank of the Monetary Sovereign. But, of course taking away all those privileges legislated that allowed them
                to “print” currency and also guaranteed their liability for redemption of that “printing”.
                Mises, Desoto, Minsky,Keynes, and others seemed to have agreed on that.

                “Don’t End The Fed, Amend the Fed”

                Please improve or correct after due consideration and post it, or at least use it as a guide.

            • “The voters are expected to turn out on election day, cast their votes for a few people…”
              The American system is designed “so that the people govern the government”. They have the only voice as to how they govern and have the promise of secrecy for their protection.
              And get an opportunity every TWO years “to elect their representatives to do their bidding”.
              They, yes, the people are not doing their due diligence, they must demand disclosure from local,tiny office candidates up to national
              and greater candidates. They must asked,”If you are elected, will you
              do. ..? Make their answer known and then in the privacy of the voting booth elect only those to office that have stated your wishes regardless of party or backing.
              And they had better come thru or kick them out, replace with someone

              else that will do…
              That is how to govern. But beware of unintended consequence-
              simply because 51% want something done may not be what you desire. We have the best form of government, we simply must use it and only hope that we have not thrown it away.
              Google: “Don’t End The Fed, Amend The Fed”
              Challenge it, ask any wannabe elected official, Will you ? Then vote only for those who will.

            • O.K, let me clarify, because I think the point of my comment was missed: The kind of democracy I am talking about being a participant in doesn’t exist right now. Right now, we have a Corporatocracy that has hijacked democracy by putting the politicians firmly in their pockets whilst bleeding jobs and wealth out of the countries in which they do business and funneling it right into their own off shore bank accounts. What I am talking about is realizing that you and everybody else have power as individuals to change the current paradigm; to take down the “false” democracy that we have right now, and replace it with the real thing. Which– means you and me and everyone else you and I know participating in the governing of our own countries or sovereign state(s) directly, not through pulling levers or punching cards or voting for your nearest representative. I’m talking about direct action, hitting the streets, and taking it all back from the elites, which we cannot do if every one believes that “governance” is somehow outside of ourselves. The “government” as stated in the constitution of the United states, a government “Of the People and by The People!” Which, obviously we don’t have right now. So, hopefully I cleared up my point. If people believed all along that they should be active participants in democracy, not just by voting, but by getting their butts out the door and raising a holy ruckus when it’s necessary, then maybe we wouldn’t be in this current mess in the first place.

  9. the child is too young and naive to understand that there is a big picture: palms must be greased; wheels must be lubed; and shady characters aren’t too willing to share their place in the sun; and an honest day’s work or profit are anathema to those shakers, movers, and shovers who keep the world go round. Maybe the Age of Aquarius will come to pass and make the world a better place for goodness and pristine notions and the goodness of man.

  10. “Let’s see. The government can borrow money that ultimately comes from private banks,”

    This statement is not correct. In fact it is very wrong

    We borrow money that comes from private banks. Either directly or indirectly. Euro countries, state Govts and companies likewise


    Like the US, US Canada, Aust etc

    They do not borrow money. Rather they create new money and central bank reserves when they spend. And then drain reserves (and money) when they issue bonds or tax.

    It is the one point that most (but not all thank goodness) economists (and Ellen) are very ignorant about

    And why

    Because they can not understand that monetary sovereign Govt’s (google it) are NOT LIKE HOUSEHOLDS. In fact completely different.

  11. Unless a sovereign nation has a national bank that prints or “creates” their own sovereign currency, and none in the world does to my knowledge, then all govts must obtain their currencies from private banking institutions through bond sales. When a govt needs money to rollover their unrepayable loans, they buy bonds from these same banks — which is the same thing as borrowing money that the private bank creates ex nihlo.


    Or must we cue up Victoria’s speech again?

    • This is completely wrong. The US does not obtain money at interest from private bank. Nor does Canada

      it why the US interest rates are so low. The US just creates new money and new reserves (without any economic limit) via the FED when they spend (unlike non sovereign countries and everyone else that must obtain money FIRST from financiers or banks) . And then drains both by bonds issues.

      I know it is difficult to understand but monetary sovereign Govts are not like households.

      • The interest rates are so low so that the banks can lend to each other to make speculative bets without any cost or risk. They also do this to contain the amount of money they owe on their outstanding leveraged debts.

        Zero interest punishes the working classes by giving them zero return on their savings and retirement funds.

        The Fed is a private bank and it not part of the governement. Maybe this is why you are having so much confusion.

      • Canada obtains money at interest from private banks. Every person who takes out a mortgage, buys a vehicle on credit, uses a credit card for a purchase borrows money from a bank and pays interest on it. This process also creates no money which did not previously exist.

        Businesses and corporations borrow money and pay interest to banks whenever banks buy company stocks or shares.

        Government bonds are purchased by individuals, who pay for bonds with their own money. When financial institutions buy government bonds or treasury bills, they create new money and the taxpayers pay to the government the necessary taxes to pay the interest … but it is never enough. The debt grows!!!

  12. “Towers was asked, “Will you tell me why a government with power to create money, should give that power away to a private monopoly, and then borrow that which parliament can create itself, back at interest, to the point of national bankruptcy?”
    What a foolish question? Why no profound answers?
    Could the answer be ? ,Maybe the banks bought Parliament so they would “use the most powerful force in the universe,compoud interest”
    for their use and if allowed at any rate over a period of time “OWN

    • The euro countries have given this power away. Canada has not

      Banks are powerful. But in Canada the govt and central bank are the top dog. Banks need reserves and these come from the central bank. They are released whenever the Govt pays someone. And then drained when tax is paid or treasury bonds purchased

    • It was an excellent question. This is exactly what happens. The Canadian treasury prints bonds on behalf of the government when the government needs to borrow money. The bonds are deposited in the government’s account at the Bank of Canada (BOC).

      The BOC then sells those bonds (if it thinks the government can handle more debt) and then deposits the proceeds of the sale of those bonds into the government’s account.

      The BOC, which is not an ” … agent of Her Majesty” has full control of how much money the government can borrow through the sale of treasury bills and government bonds..

      • Your reply begs the foolish question, “Why would a Monetary Sovereignty borrow and pay interest for the exact amount of money they issue ?
        Perhaps, as justaluckyfool (google it) believes is because:,
        ““The banks — commercial banks and the Federal Reserve — create all the money of this nation and its people pay interest on every dollar of that newly created money. Which means that private banks exercise unconstitutionally, immorally, and ridiculously the power to tax the people. ”Jerry Voorhis (five terms US House)

        “All the perplexities, confusion and distress in America arises not from deficits in the Constitution or Confederation , nor from want of honor and virtue, so much as downright ignorance of the nature of coin, credit, and circulation, “wrote Adams in the very early 19th century America.”
        Yes, that’s so well put;– “ignorance of coin, credit, and circulation;” that goes for a good many authorities some 200 years or more since Adams was in the White House.
        Even more pointedly, Adams charged that “Banks have done more injury to religion, morality, tranquillity, prosperity, and even wealth of the nation than they have done or ever will do good.”

        As Thomas Jefferson said,(12/26/11 N.B. Great quote, except that it’s not an exact quote-see notes))”‘I believe that banking institutions are more dangerous to our liberties than standing armies.If the American people ever allow private banks to control the issue of their currency, will deprive the people of all property… The issuing power (of currency) should be taken from the banks and restored to the people,to whom it properly belongs,’
        Click to view link Click to view link…/
        It is to be noted that it is perhaps someone else’s opinion of an interpertation of Thomas Jefferson’s fellings and beliefs about private banks
        THE ACTUAL QUOTES (with verification):Click to view link
        “‘The system of banking [is] a blot left in all our Constitutions,
        which, if not covered, will end in their destruction…
        I sincerely believe that banking institutions are more dangerous
        than standing armies…’(Letter to Taylor 1816)
        Click to view link
        ‘… the circulating medium must be restored to the nation to whom it belongs.’ (Letter to Eppes 1813)

        • The answer to your first question is this:It is an old, long-standing, and bad habit brought to North America from England.

          The Bank of England was created in 1694 and was granted by law the right to issue and control the money supply of the Great Britain. Read:

          The solution to this debt problem is to establish alternatives to the Fed and the Bank of Canada and to educate the public.

          Government must create debt-free money under three strict conditions:
          1) Government cannot create it for its own use;
          2) The amount must be controlled to guard against inflation which only devalues the currency; and
          3) The money must be sovereign to the jurisdiction in which it is created.

          Any suggestion that a possible solution is to borrow from the current establishments at little or no interest is no solution and is likely contrived by the establishment itself to avoid conversations about the problem of debt and alternative solutions.

          END THE FED but not before the public has confidence in an alternative; DO NOT TRY TO AMEND THE FED! The consequence will be civil war and unimaginable poverty.

          • That’s right, simply ending the fed as pols like Ron Paul advocate seems like your doing something to solve the problem, but in actually you are only perpetuating the status quo at best or establishing a world currency based upon a deflationary commodity like gold at worst.

            Debt (interest) free money cannot be manipulated because it is not tradeable commodity.

            Debt free money is a pure medium of exchange and does not place unproductive taxes on labor for the enrichment of unproductive classes, e.g., 1%.

            Nationalize the Fed (Bank of Canada, ect.) or live as debt slave!

            • This is an extremely important discussion and thank you for participating.

              Correct me if I am wrong; i seems to me you are using “interest free” and “debt-free” interchangeably but that is not how I use these terms.

              Interest-free means without the added burden or charge of interest, which has only the benefit of not having a confiscatory component to it. Because it is debt, it is still subject to repayment and thereby contracting the money supply – another really bad idea.

              Debt-free means the money will circulate, will not ever need to be repaid (like air and sunlight; they have found a way to charge urban dwellers for water,) It cannot be contracted except in cases of decreased population or a depletion of goods and services which are no longer needed or wanted.

              Living in Canada and having researched this subject at great length, I can say unequivocally that nationalizing the Fed will prove to be an exercise in futility. The Bank of Canada was started in 1935 and nationalized by 1938 but it changed nothing. Canadians have been subject to inflation, recession, and/or depression like any other country. It is because central banks serve their masters (BIS) and not the countries in which they are domiciled. Much of the time, Canada’s federal debt is greater than the entire money supply of the country.

              Do not even dream that things will be better if the Fed is nationalized.

              • Yes, that is how i use the term. Interest charged on fiat currency establishes a monetary system whereby from its inception there will always more money owed than can ever be repaid — especially regarding compound interest of which you are more than familiar. To pay off the national debt, for example, would completely eliminate the money supply. Pols promising a balanced budget know this and say this nonesense just to appear fiscally responsible to the uneducated public.

                An interest free fiat currency is debt free not because it does not have to be repaid when lent, but that it can be repaid without any extraneous charges. The money supply isn’t contracted by this as money is just the means by with wealth exchanges are met as they arise organically through commerce and production. Govt. can issue more or less based upon demand of the latter.

                I don’t think canada can be used as an example of a national bank failing. Canada, if im not mistaken, never fully implemented a nationalization of banking plan. Canada’s national bank was temporarily established to resolve a debt crisis. Once this was over, the national bank was dissolved by your parliment and the previous private bank took its place — which is why you have the same debt problems again. Our greenbacks issued during the civil war were discontinued by private bank lobbying as well — and not due to any inherent monetary unsoundness — but due to the lobbying of avarice ridden private banking cabals.

              • “Correct me if I am wrong; i seems to me you are using “interest free” and “debt-free” interchangeably but that is not how I use these terms.”

                Please allow me to correct. A bottom line premise of “Don’t End The Fed, Amend The Fed” (www.justaluckyfool.wordpress.com) is :
                A…Someone must put new currency in circulation.
                ***Under present rules and regulations private banks are allowed to do this and charge interest on that issuance. The banks are allowed for their own self interest to gain wealth, a gain to them from the borrower.
                ***Amend the Fed so that ONLY the FEDERAL RESERVE BANK OF AMERICA can issue new currency and the method would be by lending
                that currency with a rate of interest attached. This allows for control of the quality and quantity of issuance, also provides revenue (income) to the US Treasury.
                B….It is a proven fact that the present system has so much “moral hazard” and may have even perhaps created a posible condition that could ,as Mises states, “end in total collaspe of that (nations) currency”
                ***We need to take away (Einstein)”the most powerful force in the universe,
                compound interest” from the banks and (Jefferson) “give it back to the people”.
                ***** “Believe nothing merely because you have been told it…But whatsoever, after due examination and analysis,you find to be kind, conducive to the good, the benefit,the welfare of all beings – that doctrine believe and cling to,and take it as your guide.”- Buddha[Gautama Siddharta] (563 – 483 BC), Hindu Prince, founder of Buddhism
                READ: How the Banks Broke the Social Compact, Promoting their Own Special Interests by Prof. Michael Hudson ; http://www.globalresearch.ca/index.php?context=va&aid=28938
                READ ( http://michael-hudson.com/2001/04/the-mathematical-economics-of-compound-rates-of-interest-a-four-thousand-year-overview-part-ii/
                By Michael Hudson
                READ:”Don’t End The Fed, Amend The FED” , http://www.justaluckyfool.wordpress.com

                • Let me be annoying and repeat myself.

                  Canada has already experienced what all these authors you promote and the wonderful little girl, Victoria Grant, are espousing. Serious researchers know about what happened in Canada and they know that nationalizing an entity changes nothing.

                  What follows is the real story of the Canadian experience. Just before I tell it, I would recommend to you to visit the website of the Bank of North Dakota. When you have read its history and what it does, do a search for unemployment levels by the states in the US. If you have an open mind, you will see that you are best off not to try to tell the Fed what to do but rather adopt an alternative.

                  The Canadian Story –

                  In 1932, Canada was in an deep depression, particularly in the western provinces, Manitoba, Saskatchewan, Alberta, and British Columbia. In Alberta, a baptist preacher found out about the workings of the banks and how they contracted the money supply which caused recessions and depressions. He was also the first preacher to have a weekly radio show called, Back to the Bible Hour. He did not hesitate to mix the gospel with a little political economics in an effort to convince the government to act on behalf of the people of the province. Neither the government nor the other parties which hoped to come to power at the next election had any time for the preacher and his ideas about money but the federal government was listening … carefully.

                  In 1933, the prime minister set up a commission to hear arguments for and against a central bank. One week after the report was released, the prime minister announced that the recommendations for a central bank had been adopted. The Bank of Canada Act received Royal Assent on July 3, 1934. “In March 1935, the Bank of Canada opened its doors as a privately owned institution, with shares sold to the public.” We are not talking about the general public; we are talking about people who had money and position.

                  Meanwhile, the preacher in Alberta, had started a political party and in a provincial election in 1935, this party won 56 of 63 seats!

                  The depression continued without relief.

                  By 1936, the general public in Alberta and in the rest of the county was becoming extremely agitated at the fact that the Bank of Canada was not making the necessary monetary changes to provide relief from the depression. The federal government decided to nationalize the Bank of Canada. By 1938, the good news was that the Bank of Canada ‘belonged’ to the people of Canada. The bad news was (which few people would know for many years) that no member of the government could sit in on the meetings of the board of directors of the bank, and no one in government had a vote on any decision.

                  You can read all about this history at http://www.bankofcanada.ca/about/who-we-are/history

                  The last paragraph in this link reads as follows:

                  The Bank of Canada Act, which defines the Bank’s functions, has been amended many times since 1934. But the preamble to the Act has not changed. The Bank still exists “to regulate credit and currency in the best interests of the economic life of the nation.”

                  I cannot count the number of recessions and serious depressions we have had in this country since that time. And when times are ‘good’ the inflation is staggering and the debt of the provinces, municipalities, businesses, and households increases exponentially.

                  The debt of the federal and provincial governments can be viewed at http://www.cfib-fcei.ca/debt-clock-en.html

                  This does not include the debt of corporations, NGO, and individuals.

                  Do not believe that nationalizing the fed is a solution to the problem. It will give people hope that there is a solution but when they find there is none, they will cave in the face of defeat and will not rise to fight this battle again for a century or more. Meanwhile, the changes that will come about by the establishment will make it more difficult to implement the necessary changes.

                  • You say:”Serious researchers know about what happened in Canada and they know that nationalizing an entity changes nothing.” And:
                    “The bad news was (which few people would know for many years) that no member of the government could sit in on the meetings of the board of directors of the bank, and no one in government had a vote on any decision.”

                    True nationalization would mean that any debt owed to it is owed to yourself, and so is not really a debt. Your second statement indicates that it wasn’t fully nationalized. The statistics on debt and when it was accumulated given by Ellen Brown show that actually borrowing from your own bank rather than privately keeps debt from accumulating. The situation is clearly explained in this video: https://www.youtube.com/watch?v=P8fDLyXXUxM&feature=player_embedded, about Europe, but the change happened at the same time in Canada, showing international forces at work.

                  • Please compare you history of Canada’s experience with nationalized banking and that chronicled by ellen brown in an article she published on the subject last month in which she states the real reason the national bank of canada failed:

                    ” The debt shot up only after 1974. That was when the Basel Committee was established by the central-bank Governors of the Group of Ten countries of the Bank for International Settlements (BIS), which included Canada. A key objective of the Committee was to maintain “monetary and financial stability.” To achieve that goal, the Committee discouraged borrowing from a nation’s own central bank interest-free, and encouraged borrowing instead from private creditors, all in the name of “maintaining the stability of the currency.”


                    • “the Committee discouraged borrowing from a nation’s own central bank interest-free, and encouraged borrowing instead from private creditors, all in the name of “maintaining the stability of the currency.”
                      Perhaps she explains it a little better with, “Stop paying interest on (your) own money to private banks, which can lead only to servitude or bust.”
                      However justaluckyfool believes, “If that interest was revenue FOR THE PEOPLE, that’s a different story!
                      For the Americans, “Don’t End The Fed, Amend The Fed”
                      Justafoolish question, Why is it something that seems too good to be true is not challenged, made better, then used as a guide ?
                      “The most powerful force in the universe is compound interest” – Albert Einstein.
                      Google: “Great News!!Zero Income Taxes Solves Worldwide Economic Crises !”
                      For the solution:”We cannot solve our problems with the same thinking we used when we created them”.Albert Einstein

                      How could you not challenge a statement that claims, “Paying ZERO personal income taxes could help prevent a total collaspe of a fiat monetary system?
                      “There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of the voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.” — Ludwig von Mises

                      Great News !! states , If a monetary sovereignty issue new currency by way of interest bearing loans which payment of these loans GOES DIRECTLY TO SOVEREIGN NATION so that it can control its currency,
                      it solves inflation , etc potential crises.”

          • Thank you, Thank you for a very sincere reply to the question.

            A reply that is in fact correct as to how “the issuance of currency by private banks started”.
            But I wanted to go further with “WHY” they used that method.
            Please read :
            “…. The Mathematics of Compound Interest
            A syndicate of less than one hundred American capitalists, if allowed to collect interest on their capital at a low rate and re-invest for 150 years or less, would at the end of that time own the earth and all real and personal property thereon. This is a simple mathematical proposition, capable of exact demonstration, and any one who doubts the truth of this statement may set all doubts at rest by computing compound interest on one and one-half billions of dollars for one hundred and fifty years, at five per cent per annum.
            READ MORE: Prof. Michael Hudson, http://www.globalresearch.ca/index.php?context=va&aid=28938
            READ More ( http://michael-hudson.com/2001/04/the-mathematical-economics-of-compound-rates-of-interest-a-four-thousand-year-overview-part-ii/
            Then, please, read:
            “Don’t End The Fed, Amend The Fed”
            As Ellen Brown says,”Stop the stupid practice of paying interest on our own money”.

            • Nice blog. It’s hard to go wrong with Michael Hudson and Steve Keen.

              • BUT perhaps, I did.
                Please read and challenge, either you or they ,please improve,Google:.
                “Don’t End The Fed, Amend The Fed”
                Keen says,
                “The fundamental cause of the economic and financial crisis that began in late 2007 was lending by the finance sector that primarily financed speculation rather than investment. The private debt bubble this caused is unprecedented, probably in human history and certainly in the last century
                Hudson says,”
                “The fundamental cause of the economic and financial crisis that began in late 2007 was lending by the finance sector that primarily financed speculation rather than investment. The private debt bubble this caused is unprecedented, probably in human history and certainly in the last century ”


  13. IHudson’s quote should read,
    “If there is any silver lining to today’s debt crisis, it is that the present situation and trends cannot continue. So this is not only an opportunity to restructure banking; we have little choice. The urgent issue is who will control the economy: governments, or the financial sector and monopolies with which it has made an alliance.”

  14. The younger generation is definitely more savvy than the ones who preceded them. Many were sucked into the vortex of credit without really understanding it. My son is thirteen and he recognizes the value of money and that you can’t get it from thin air. It gives us hope for the future.

  15. Ellen doesn’t have it quite right at the end, and should know better. RJ corrects her on the same point, and unfortunately other commenters do not understand. Here is what I wrote at commondreams:

    Let’s see. The government can borrow money that ultimately comes from private banks, which admittedly create it out of thin air.

    Even if you want to call government bond sales to banks or the private sector “borrowing” – which they are not – it is NOT “borrow[ing] money that ultimately comes from private banks”. The money the banks give to the government in return for a bond does NOT ultimately come from the banks, but from the government itself.

    Bank money – bank credit – bank deposits are money – but not as good, as universally acceptable money as government money, reserves ( or bonds). They cannot be used as final settlements with the government. Only cold hard government cash can do there.

    The banks must pay government money, reserves from
    their account at the central bank in return for the bond. “Borrowing”
    is just a reserve-draining interest-rate maintenance operation. The
    banks are just moving their money from a checking account at the
    government, to a higher interest savings account at the government.

    This makes the arguments of those who think interest rate caps,
    “printing money”, governments borrowing from central banks, QE etc –
    all names for about the same thing – are inflationary even more
    ludicrous. If most of the money in the economy is government debt, like
    at the end of WWII, or the economy is in a (quasi)depression like now,
    government “borrowing” from private banks is very probably
    significantly more inflationary than “printing money”.

    • I have struggled with that explanation before, but I have to admit that I don’t understand it. This is a paragraph from a book I’m working on now on public banking, citing former Fed Reserve Chrmn Marriner Eccles [Committee on Banking and Currency, “Hearing on H.R. 2233 An Act to Amend the Federal Reserve Act.” (Washington DC: United States Government Printing Office, 1947). Fraser Economic Library and Archives. fraser.stlouisfed.org]:

      In 1935, however, legislation was passed requiring that the sale of U.S. Treasuries go through private middleman bond dealers (largely Wall Street banks). In 1947, Federal Reserve Chairman Marriner Eccles supported a bill to eliminate the unnecessary cost of these middlemen. He said in a statement, “Those who inserted this proviso were motivated by the mistaken theory that it would help to prevent deficit financing.” He noted that the Federal Reserve had been allowed to purchase securities directly from the government from its inception in 1914 until the Banking Act of 1935. Nothing constructive would be accomplished by requiring them to be purchased in the open market, which just meant that a commission had to be paid to Government bond dealers. But the bill did not pass, and today the government still has to sell its bonds through private bond dealers rather than funding them directly through its own central bank.

      I’m wondering if bond sales don’t have to go through bond dealers (banks) because in 1933 we went off the gold standard, and this was an alternative way to set up a reserve system. But I’m still struggling with it and researching. Any good references appreciated!

      • I am not American and do not have access to American source documents, but I have researched the Canadian banking system thoroughly and know something of the American banking system as a result.

        I think the first mistake is that the quoted article talks of the Federal Reserve as being an entity belonging to the government, which was false. The Federal Reserve has always been privately owned and had the ability to control the private banks.

        I believe the reason it was done in the way described is that the public, who viewed the Fed as part of the federal government would not be suspect or accused of causing harm to the public if there was someone else to blame.

        As for your query about the reason perhaps being because the government had gone off the gold standard, I doubt it. I believe the reserve system was in place between the treasury and the Federal Reserve which passed on the requirements to the banks.

        • ELLEN READ: William K Black, Michael Hudson, and Steve Keen.
          Get on the roller coaster I got on since 7 months ago when I first started to get involved after reading “Web of Debt”
          then read the few pages of http://www.justaluckyfool.wordpress.com

          1…William K. Black – Wikipedia, the free encyclopedia
          en.wikipedia.org/wiki/William_K._BlackCached – Similar


          Professor Black on Endemic Financial Fraud « Adask’s law
          You +1’d this publicly. Undo
          Nov 23, 2011 – Professor William K Black led the investigations of the Savings and Loan … Pingback: Banking System Rotten to the Core | Machholz’s Blog …

          2…MICHAEL HUDSON
          Michael Hudson | Michael Hudson’s official website on finance, real …
          michael-hudson.com/Cached – Similar
          You +1’d this publicly. Undo
          Michael Hudson’s official website on finance, real estate and the powers of neoliberalism. A critical interpretation of global economic trends through the eyes of …

          From Marx to Goldman Sachs – Hudson, Keiser on 2012 … – About – Austerity still?
          Michael Hudson (economist) – Wikipedia, the free encyclopedia
          en.wikipedia.org/wiki/Michael_Hudson_(economist)Cached – Similar
          You +1’d this publicly. Undo
          Michael Hudson (born in 1939, Chicago, Illinois, USA) is research professor of economics at University of Missouri, Kansas City (UMKC) and a research …

          Background – Career – Influential writings – Views
          Michael Hudson on the Federal Reserve System « naked capitalism

          . STEVE KEEN

          Steve Keen’s Debtwatch
          http://www.debtdeflation.com/blogs/Cached – Similar
          You +1’d this publicly. Undo
          10 hours ago – Analysis of the global debt bubble and the prospects for a Great Depression.

          About – Steve Keen’s Debtwatch – My HARDtalk interview … – Research
          Steve Keen – Wikipedia, the free encyclopedia
          en.wikipedia.org/wiki/Steve_KeenCached – Similar

          Debunking Economics

          • Steve Keen is getting there but still does not understanding how Govt spend and how central banks work

            MMT (modern monetary theory) does.

            Its the Govt NOT THE BANKS (although they act like the haven’t) that have all the power if they are monetary sovereign.

            Its a point that most do not understand and form wrong conclusions because of this misunderstanding.

            Monetary sovereign Govt debt is completely and utterly different to all other debt. These Govts do not borrow money from banks or the markets. Rather they issue reserves as required that banks need to operate.

            • Its the Govt NOT THE BANKS (although they act like the haven’t) that have all the power if they are monetary sovereign.” This is an interesting issue! If you look at the reality of what is happening, the banks seem to have most of the power. They own the Fed, the media, Congress, the executive branch, etc. The judiciary defers to them. They get their way. MMT seems correct as an analysis of what money is and its basic mechanics and the source of its legitimacy. But mainly it just talks about potential: the govt. can in principle spend completely unrestrained by tax revenue, dictate prices it is willing to pay rather than defer to “the market”, etc., but in fact it doesn’t do this. Or does it? MMTers insist that the government is sovereign, can just keep issuing all the money and bonds it wants no problem. As Ellen Brown describes in her latest article, Jim Willie and Rob Kirby think the UST bonds are in a bubble supported by JPM IRSswaps and the recent JPM losses are actually much bigger and mean the collapse of this bubble and the financial system. In this interview of Willie here he says that Greenspan admitted privately that UST bonds are a bubble that will pop. Who’s right? Willie says the collapse will happen within months, so we’ll find out. Let it collapse. Public banking is there as a model for rebuilding on a sounder basis.

              • Willie is wrong. MMT is correct.

                • We’ll see. I doubt if either are entirely correct. Willie quotes Greenspan as having said in private that Treasury Bonds are in a bubble, implying that they can, will, must fall.

                • RJ
                  “Govt like the US do not borrow money ”
                  Will you please get back for us (US) the $10 trillion plus interest paid on this non-borrowed money ? Therein lies the rub. Private for profit banks had to power to screw with our legislators and turned our money issuance into a “profit for them” and for added measure
                  they also got them to allow private banks to print sovereign currencey ” via thin air as the govt does , call it “credit” instead of US Treasurys yet still charge interest on it.

                  “Its the Govt NOT THE BANKS (although they act like the haven’t) that have all the power if they are monetary sovereign.”
                  OK, what your saying here is “if they are monetary sovereign”
                  well I guess the govt isn’t if they pay interest on their issuance,
                  THEY HAVE TO PAY SOMEONE ELSE TO PUT IT INTO CIRCULATION.you might have that “if” correct

            • Governments DO borrow money. Governments issue bonds but they cannot spend those bonds. You may give your home as security for a loan. Governments give bonds as security for loans.

              Banks do not need bonds to operate. Banks can use your promissory note as security to issue credit (create money by making a loan.)

              • Not correct. Govt like the US do not borrow money

                And Govt issue bonds IN EXCHANGE FOR GOODS, SERVICES OR ASSETS. In two steps

                1 Issue reserves
                2 Drain reserves in exchange for bonds

  16. Minsky, “The financial instability hypothesis takes banking seriously as a profit seeking activity…Bankers (financial institutions) are merchants of debt…” also that profit seeking institutions always try to leverage their assets to the maximum.
    And with Keynes concept of a “veil of money” between what the real assets are and the ultimate owner,they discovered the secret.

    Money = Debt. Money = Credit. Money = debt + credit.
    Private banks exist solely for the purpose of gaining wealth for its owners.
    A central bank should be established to control the currency, quality and quantity as a not for profit, rather as an agency to redistribute its currency , ” in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity…”

    Read : Where we went wrong and how we can fix it.
    Google “justaluckyfool”
    “Great News !! Zero Income Taxes…”
    “Don’t End The Fed, Amend The Fed”
    Challenge it, Improve it, then make it your guide.

  17. […] on webofdebt.wordpress.com Share this:TwitterFacebookLike this:LikeBe the first to like […]

  18. Well…I really dont know much about politics and all but I just have to say this blog on Victoria Grant was breathe taking. Besides the fact that shes so young and involved with whats going on with the government and the way that banks function, seems to me that this generation is heading on the correct path. By reading this blog and all of you guys opinions on the banks and how they create money “out of thin air”, I’ve somehow discovered my thirst in learning more about this topic. It involves alot of debate, but Im all in it !

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