NEO Magazine Issue 2 - Page 28

The New Earth Exchange yet been created – hence the perpetual and intentional cycle of boom and bust). • Income taxes pay the interest to the bondholders. It’s no great secret that today’s modern economy does not serve the people of our beautiful planet – it has been made in the • The central bank can control the supimage of those with an insidious need for control. Genius is its design, and chaotic its ply of credit money by buying and selling its holding of government bonds at will. In nature… this way does one single corporation conHow is money created in the legacy trol the entire economy. system? • It is the promise of the future labour Under the current fractional reserve banking of mankind which underwrites this entire operation. The ‘security of the person’ model, operating in almost every country (birth certificate) of every man, woman and across the globe, money is created in the child alive today is collateralized to fulfil following way: this function, based on the presumption • The central bank decides to increase that we all will agree to stand as surety for the debt money created... indentured servithe money supply by say £1m. It does so by purchasing government bonds/treasury tude. bills from a dealer in government securities. The £1m created by the central bank can then be expanded to a theoretical £10m • In order to pay for these bonds the central bank creates a liability against itself through the following process: – a simple accounting exercise. • The dealer’s bank account is credited with £1m as payment for the bonds. • £1m of credit money that did not previously exist, now exists in the banking system. • Because the government bonds are interest bearing, the government has effectively borrowed the credit money for its banking system, from what is effectively a private corporation, at interest (there can never be enough money in circulation to pay back this loan because the interest payable on the government bonds has not • The high street bank(s) who received the £1m from the dealer’s transaction is allowed to lend £900,000 of the original £1m, assuming a 10% fractional reserve requirement. • However it does not lend any of the original £1m, if it did this no new money would be created. Instead it keeps the whole £1m in its vault and creates, out of thin air, up to another £9m to satisfy the 10% requirement. • It can do this because it accepts promissory notes [loan application forms and offers] in exchange for credits to the