in "Voice of the Unions", February, 2004
It's time to wake up - the unions are being deceived.
The deception starts when credit-money, bearing interest,
is borrowed from a bank. Or rather, the bank claims the
credit-money is borrowed. Except that it is not borrowed.
Borrowing implies that the borrower has agreed to repay
something owned by the lender. But how can the credit-money
be truly owned by the bank when it has created the money
out of nothing merely by making (at tiny administrative
cost) entries in electronic ledgers? For that is what happens
And what is the situation if, to that electronically created
credit-money, interest is added - as also happens nowadays?
The interest is in addition to the tiny administrative cost.
Interest continues, moreover, eternally compounding, until
the original sum is repaid. It can soon build to an astronomical
sum. So, since the borrowed credit-money is not cash, but
created electronically; and since it is not depositors’
money, interest can now be seen in its true light - as an
arbitrary, continuing and unnecessary tax on the borrower
which far exceeds the cost of the original creation and
any cost of administration.
The addition of interest, as well as the electronic creation
of the credit-money, is allowed by law. However, lending
something created out of nothing and then (in addition to
a tiny administration cost) adding interest is a very long
way from true borrowing and calling it borrowing is akin
When government today wants to finance a road, sewage works,
bridge, fire station, or light railway, it goes to the banking
system to ask for the creation of, say, £1,000,000.
Yet the need to pay the interest over time easily doubles
the cost to £2,000,000 or more. Moreover, to pay that
doubled cost, each person in the UK now pays £8/9
each week (in interest on the National Debt)!
Which is outrageous! The unions are told there is no money
for public capital investment. Yet that money could easily
be created by the state via its central bank as interest-free
loans. The original loan would be repayable (as borrowed
money always is) but there would be no need to pay interest
on top. Administration charges would be minimal because,
at present, the cost of collecting money to repay the loan
is virtually all borne by the borrower. Thus state-issued
interest-free loans could be issued and repaid for little
more than the original sum. The result would be a capital
expenditure half or less the present cost.
Moreover, such expenditure cannot be inflationary. Existing
bank credit-money is created out of nothing and is repaid
and cancelled, and in exactly the same way the state-issued
loans would be repaid (but without interest) and cancelled.
And when the loans are repaid and cancelled, the capital
project remains behind but the money that created it has
Now consider green investment. Today there are green technologies
that can provide clean, renewable energy. However, they
are not commercially viable because they have to be financed
by bank money bearing interest. Yet if the money were to
be interest-free loans these technologies could become viable.
Ah! say the know-alls - such money squeezes out the private
sector. It does not. A public capital project can, if wished,
be built by the private sector, and managed by the private
sector (although the finance for it would be publicly created
as a loan, repayable without interest). A project can even
be owned by the private sector (although that would only
be acceptable if workers and unionists become the owners
of the capital). Nor do interest-free loans require that
the total spend be increased. If the total spend is the
same as at present, you can get twice the amount of building
for the same amount of money. Nothing wrong in that, is
Here is a possible short Motion for the House of Commons:
- Public Capital Projects Financed by Publicly Created
Interest-free Loans: "This House, wishing
to halve the cost of public capital projects, proposes the
use of publicly-created, interest-free loans."
invites readers to visit www.globaljusticemovement.net
to discover some of the immense possibilities of interest-free
money. He thinks all unionists and workers should own productive
capital - it is unwise to rely on insecure, poorly paid
jobs. Rodney is a MA and qualified barrister, works as a
tutor and co-wrote the textbook on "Binary Economics
- the new paradigm (capital ownership for everybody)".
With Canon Peter Challen, his latest book is "Seven
Steps to Justice".