Debt & Destructive Economics

Excerpts from The Grip of Death: A Study of Modern Money, Debt Slavery and Destructive Economics, Michael Rowbotham, Jon Carpente Publishing, Oxford, 1998

Michael Rowbotham, a teacher and a writer, has written this powerful book. A few excerpts of this are given below to give some idea of fresh thinking of the west on the issue of debt. This is not the mainstream thinking; yet this represents an important voice of dissent.

“There have been many explicit warnings in the past concerning the ability of banks to acquire a nation’s assets, and leave its people in a state of dependency. In the context of the discussion on housing, the following statement by Thomas Jefferson is sobering:

If the American people ever allow the banks to control the issuance of their currency, first by inflation and then by deflation, the banks and the corporations that will grow up around them will deprive the people of all property until their children will wake up homeless on the continent their fathers occupied. The issuing power of money should be taken from the banks and restored to Congress and the people to whom it belongs. I sincerely believe the banking institutions having the issuing power of money are more dangerous to liberty than standing armies.”

As we have seen, debt does not just apply to housing. Sterling Pound 411 billion has been raised against the housing stock, Sterling 300 billion has been raised against industry, farming, the service sector, and other areas of the economy. Sterling 380 billion has been raised against the public assets of the nation through the national debt. If calculations are made of the total assets, private and public, of the nation as a whole, a steadily increasing proportion is subject to secured debt of the financial system. Legal title and ownership of these assets thereby rest with the banking system. As with all these issues, this is not a situation peculiar to Britain. In Australia, the Commonwealth Bank was set up in 1912 with assets totaling $ 20,000. By 1984, its assets had reached $ 30,496,000,000. The Australian Institute for Economic Democracy commented:

“In magnetizing the real wealth of Australia (i.e. creating its monetary equivalent) the banks have issued the money as a debt and so acquired assets equal to about one third of the entire wealth of Australia. Does it not strike you as preposterous that an institution that produces nothing more than figures in books, can acquire the ownership of assets more vast than our greatest industries which employ thousands of people in all states, and upon whose physical production the entire economy of Australia depends?”

However, the most powerful and forthright warning ever made concerning the power of banking is that offered by Lord Josiah Stamp, former director of the Bank of England.

“The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was ever invented. Banking was conceived in inequity and born in sin. Bankers own the earth; take it away from them, but leave them with the power to create credit, and with the stroke of a pen they will create enough money to buy it back again. If you want to be slaves of the bankers, and pay the costs of your own slavery, then let the banks create money.”

It may seem astonishing, but the matter of not owning our own houses and progressively losing control off the assets of the nation to the financial system are perhaps the least serious results of debt-financing. What is ultimately far more important and damaging is the effect of this increasing debt on the wider economy. The effect is not restricted to people having to borrow-to-buy, and industry having to borrow too invest, and so create and circulate money. That money has to be repaid. Throughout the economy, the scramble to meet costs and repay debts in a debt-based financial system introduces an unrelenting pressure, fostering trends, which utterly dominate industry, agriculture and the provision of services. It is a pressure that penetrates every corner of our lives, binding us to permanent employment, distorting our economies, forcing them to grow and change at an ever increasing rate and complete with ever greater ferocity. The way this pressure takes effect is the subject of the next chapter and it gives far greater substance to the chilling warning by Lord Stamp. ‘If you want to be slaves of the bankers, and pay the costs of your own slavery, then let the banks create money’. Now, slavery is a big word, and it might be thought that Lord Stamp was merely using it for literary effect. Unfortunately, as the discussion shows, it is a term that is both justified and penetratingly accurate.”  

Source: Contemporary Economic Challenges and Islam, Khurshid Ahmed. Republished with permission.