I want you to imagine two scenarios, one involving a young lady named Rowling - that’s her below, testifying to the Leveson Inquiry. The other involves a bloke named Elton John.
At the time of writing, Miss Rowling’s book Harry Potter And The Deathly Hallows is reported to have sold around 44 million copies, some 15 million of them in the first 24 hours it was on sale, a quite extraordinary figure.
Elton John’s Goodbye Yellow Brick Road was released in 1973, and has sold over 30 million copies to date.
By the time both these products hit the shelves - Miss Rowling’s book and Elton’s much earlier double album - they were both already very wealthy. The album and the book generated a lot of wealth for other people too, purely on account of their sales. They generated advertising revenue, work for reviewers and DJs, sales staff...Books are made from paper, which in turn is made from wood, which means that quite a few trees went into the production of the book, which in turn generated employment for timber companies, paper companies, and so on. A lot of wealth, a lot of people’s livelihoods, a lot of industry.
Now, supposing that both these works of creativity had existed only in cyberspace; imagine for a moment the Internet existed and was universal in 1973. It would have been possible for Elton to record and distribute his album and Miss Rowling her book without either existing in hard copy.
What would have changed? Well, if they had both elected to donate the fruits of their labours to Mankind for nothing – like a certain Philippe Bernard - they would neither of them be quite so wealthy today, and many other people would not have grown so wealthy or made so much money, including Elton’s lyricist Bernie Taupin, Miss Rowling’s publisher, nor all those others enumerated above such as the logging companies, and so on. Yet the end result would have been precisely the same for both the reader and the listener. Indeed, as neither of them would have had to pay for either the book or the album, both would have been better off.
Now fast forward to the present, the Internet is distributing wealth on a truly massive scale, it is producing and enriching all our lives in the process, yet newspapers and other publications are going bust or introducing paywalls or doing both. What is missing from this equation? Money - pure and simple.
With the exception of around 3% – the note and coin issue, which is printed and minted by the government – the banks have the monopoly of credit. As the great Major Douglas pointed out way back in the 1920s, it is bank loans and bank loans only that permit economic activity, and if the banks stop lending or otherwise creating credit, that economic activity runs down and eventually ceases, which is where we are just about today. Yet the banks themselves produce nothing, it is a fiction that they lend money - they create it through the mechanism of lending, and when these loans return to source, the money created is cancelled out of existence, save for the interest, which is a debt. The banks are purely bookkeepers; purchasing power is, or should be, the property of producers, which means those who create real wealth.
It should therefore be incumbent on our governments to create new, debt-free money equivalent to the wealth generated by the Internet, and pay it to the Internet companies, who should in turn distribute it to those further down the food chain.
In short, the Federal Reserve, the Bank of England and other central banks should be abolished, and their function be taken over by Facebook, Google, Microsoft, Yahoo!, and all the other big Internet companies.
Furthermore, much of the money created by banks is done so not for productive purposes but for an ongoing orgy of speculation, including currency speculation, futures, and property. This is fine, when prices are rising, but what goes up must come down.
If the power to create credit were turned over to the Internet companies, the new money so generated would be in direct proportion to the real wealth they create, and would not be contingent on someone saying yea or nay, or taking security from a businessman in order to facilitate a loan.
Taking this power from the banks would mean they would revert primarily to their original functions, namely that of strongroom and bookkeeper. The so-called investment banks would as good as disappear up their own exhaust pipes, and we would be left with both a sound retail banking system and a sound and honest financial system.
Now that you guys know the truth, what is stopping you?
[The above blog was first published by Digital Journal on January 26, 2013. In the original, the words bookkeeper and bookkeeping were hyphenated.]
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