The Money Problem And How To Fix It

The study of money, above all other fields in economics, is the one in which complexity is used to disguise truth or to evade truth, not to reveal it. ...The process by which banks create money is so simple that the mind is repelled. {John K Galbraith, Money: Whence it Came, Where it Went (1975)} Most people believe the government or the central bank issues the money supply; and are not aware that virtually all of our spendable-earnable and saveable, investible payments media (money) is created as repayable loans of commercial bank-issued credit-debt: bank deposits. This book describes how the commercial banks'' deposit account "credit-debt" money supply creation system works; which exposes why it fails; and illuminates the technically simple way to fix it: add debt-free money into the credit-debt money supply {to prevent our deposit account credit balances from being written off as banks'' unpayable deposit liability debts; which bankruptcy Trustees did in the 1930s; and the Dodd-Frank debt-for-equity swaps program (depositor bail-ins) plans to do this time}. At bottom, money is a simple numerical payments system. We pay each other money in buy-sell, spend-earn, invest-earn, payer-payee money transactions. We use currency (the spendable cash money in our pockets) and bank deposits (the spendable balances in our bank deposit accounts) as our money supply. But money is surrounded by so many mystifying veils of obfuscating complexification that most people don''t know the simple true answers to the most basic questions about money, banking and credit-debt creation. Where does money come from? Why is there so much debt? Who is all the debt owed to? Commercial banking is a debt-based money supply creation system. Debtors'' interest-bearing loan account and bond debt balances are banks'' interest-earning assets. Commercial banks issue deposit liabilities (bank deposits: spendable credit balances in debtors'' bank deposit accounts) to "pay for" the banks'' purchases of interest-earning assets (the debtors'' new loan account or bond debt balances). Debtors pay the new bank deposits to payees (by check, online banking, debit card, etc) within the bank-operated payments system of debiting payer account balances and crediting payee account balances. Payees use the deposit account credit balances - which are commercial banks'' deposit liability debt balances - as our deposit account ''money'' supply. Debtors owe all of the credit balances back to their creditor-banks, as payment of the debtors'' loan account and bond debt balances. But debtors can''t earn back the bank deposits, because payees are keeping (not re-spending) about 80% of the total deposit account money supply as our savings account balances and investible capital. So debtors can''t pay their debts. This book translates the monetary and financial terminology into plain language that clearly describes how the commercial banks'' credit-debt system generates ever-increasing totals of creditors'' uncollectable money assets (credit balances) that are owed as debtors'' unpayable money liabilities (debt balances) until the system finally collapses in mass debtor-defaults, credit-debt writedowns, and debt deflation depression when commercial banks default on paying their unpayable deposit liability debts, which is our deposit account ''money'' supply. Monetary system reformers since the 1930s have advocated government or central bank issuance of debt-free money as a solution to the built-in failings of the commercial banks'' credit-debt system. But largely due to widely and deeply held "popular misconceptions" about money, banking and credit-debt creation, none of these monetarily necessary, financially and economically beneficial reforms have ever been implemented. This book describes how debt-free money issuance can enable an orderly debt paydown, to prevent a disorderly debt reduction that writes off our ''money in the bank''.

• | Author: Derryl Hermanutz
• | Publisher: Createspace Independent Publishing Platform
• | Publication Date: Feb 27, 2018
• | Number of Pages: 258 pages
• | Language: English
• | Binding: Paperback
• | ISBN-10: 1986058786
• | ISBN-13: 9781986058780