The Filthy Lucre

I picked this title deliberately. I did not want to confuse the subject with honestly earned money.

(Click on the title to go to a website called The Secret People. There you will find a potted history of the Bank of England).

The word lucre comes from Latin originally (lucrum) and at some point around the 14th century it evolved into Middle English and became lucre. Since 1546, however, William Tindale preceded the word lucre with "filthy" and we rarely see it on its own anymore.

Filthy lucre means shameful gain. Bear that in mind as you read on.

Money has changed a great deal, but the biggest change came about in 1931 when sterling was no longer tied to gold. The government had used all the gold to support wars, (notably against France), and something had to be done. So, a quiet, innocuous little statute was rammed through, with indecent haste, and money lost its "value" overnight. No longer could we bang on the door of our bank and ask to trade our paper money for real gold. Instead, it became a promissory note.

Today, 78 years later, sterling is known (by them that knows these things) as fiat money. It has no intrinsic value and we use it largely based on trust. If you hold up a £50 note alongside a blank piece of A4 paper and ask your friend "Which one of these bits of paper is worth more?", your pal will plumb for the £50 note every time. In reality, the A4 sheet is worth more, simply because it is bigger. If you write the words "I owe you £1,000,000" on the A4 sheet and sign it, you'd better have funds in the bank to cover your debt. Believe it or not, an IOU is a most powerful piece of paper. To write one is to enter into a contract and you are obliged to make good on your debt. In California today, the state is bankrupt. The Governator has instructed his state tax offices to write IOU's to those citizens that have overpaid their taxes, or are due a refund. Companies supplying the various state offices with goods and services are also receiving IOU's instead of payments in cash or cheques. Interestingly, California has lost over $100,000,000 in revenues in the ten years since they enacted a smoking ban. I wonder if, without this insane ordinance, they would be skint today? Just saying.

Bank notes aren't entirely worthless, it has to be said. They cost around 3p to make. Whatever the note denomination. You may well disbelieve that and I would ask you simply to visit whatdotheyknow and search for FOI's concerning the value of money. Although he had to be badgered into it, the HM Treasury bloke eventually admitted that our currency is worthless.

Here's a definition of fiat money: Fiat Money-Money that a government has declared to be legal tender, despite the fact that it has no intrinsic value and is not backed by reserves. Most of the world's paper money is fiat money.

When asked "How is money created?", 99.99% of people say "Well, they print it down at the Royal Mint". And yes, that is true, but only partially. When you realise that less than 5% of our currency is in circulation, you know, the stuff that goes in and out of your wallet or purse, you really, really, have to ask "Where is the other 95%?". It doesn't exist. At least, not physically. The remaining wealth takes the form of noughts & ones. It is digital. Years ago, as a young apprentice, I had to pop down to Accounts every Friday afternoon. At a little serving hatch I was handed a small brown envelope. It contained the cash for my 40 hours of labour for that week. By the time I was 18 I had joined the British Army and I don't think I have been paid cash wages ever since. It just magics its way into my bank account and I spend it using a piece of plastic, and it magics itself to whomever it is that I have just bought goods and services from.

While we are on about magic, we should explore where money comes from. We have established that the Royal Mint do not produce enough of the stuff, and besides, if you want to know what happens when you simply leave the printing presses rolling, have a quick peek at Zimbabwe. Within days, (hours, sometimes) hyperinflation kicks in. Unkie Bob ordered his mint to produce bigger and bigger notes and they ended up with a Z$1 Trillion note. It paid for two loaves of bread. A friend of mine, a Zimbabwean, told me that it was cheaper to use bank notes in the toilet. They cost less than Andrex 4-ply. They also have a "use by" date on them.

So, it doesn't come from HM Treasury. And it has been illegal for many, many years for banks to lend out depositors money. If the banks cannot lend you money from a big pile of notes in their vaults, where the hell does it come from?

You.

That's right. Every time you go to a bank, building society, or even your credit card company, you create money simply by asking for it. They will ask you to "please fill this in sir, sign here, here and here", and voila!, your money is available. What you have just done is utterly magic. 10 seconds after signing the form, (in reality, it has now become a promissory note) you created money!

Actually, you didn't. You created debt. You created debt out of thin air. Not that you care, right? You needed that car, or that mortgage, or that holiday, and hell, you're going to pay it back. With interest.

My question is this: does that seem fair to you? You made all the effort, you went to the bank, you filled out the form, you signed it, you magicked the money into being, and now they want you to pay it back! With interest! The guy at the bank did fuck all. The bank itself did fuck all. The Bank of England, well, they had a little bit of work to do after seeing your promissory note. They had to type a few keys and send those noughts & ones from Threadneedle Street all the way to your bank. And they do that thousands and thousands of times each and every day. Without you, me, and the neighbours, their reason to be would be null and void.

Now, I don't know about you, but I would call that shameful gain.

Anyone else see this for the scam it is?

Anyone else feel like they have been robbed, time and time and time again?

If you are having trouble assimilating all this, and you have doubts, that's okay. I urge you to investigate yourselves.

And while you are doing that, ask yourselves this: if it doesn't happen the way Captain Ranty says, how does it happen?

There. Is. No. Other. Way.

You think that debt is bad. You couldn't be more wrong. Debt is good. Not for you, but for the economy. More loans = more debt. More debt = more "money" in circulation.

I have tons more information on money for you, but I will save it for another day.

IOU data. And that is one promissory note I intend to honour.