About the Discussion
Fractional reserve banking is widely misunderstood, with one dimension usually overlooked: how it disrupts the social contract between citizens and their government. Through fractional reserve banking, commercial banks empowered by a central bank use accounting entries to conjure purchasing power from nothing, rather than productive work. Practiced without the discipline of the classical gold standard, this system severs the most fundamental constraint on government power — the natural limit on the resources it can spend. Drawing on decades of monetary research and the Austrian School tradition, James Turk will explain how this mechanism — institutionalised in Britain by the 1694 Bank of England Act and in America by the 1913 Federal Reserve Act — systematically debases the savings and earnings of ordinary citizens while financing government ambitions that honest money could never sustain. The result is not merely economic instability. It is the slow erosion of liberty itself.
About the Speaker
James Turk founded goldmoney.com in 2001 and is Lead Director of Goldmoney Inc. (Toronto Stock Exchange: XAU), a gold-based financial services company that administers and safeguards $2 billion of precious metals owned by its clients. James has specialised in international banking, finance, and investments throughout his business career, which began in 1969 at The Chase Manhattan Bank (now JP Morgan Chase Bank). In 1983 he was appointed Manager of the Commodity Department of the Abu Dhabi Investment Authority, that country’s sovereign wealth fund. He is the author of several monographs and numerous articles on gold, money, and banking. His latest book is "Money and Liberty: In the Pursuit of Happiness and The Theory of Natural Money".
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Fractional reserve banking disrupts the contract between one citizen and another. It hives off money for the gain of the banks to be able to leverage previously unindebted money and changing it not just into conjured money but indebted money! So it fails the natural and basic implied contract of a fair and full ‘exchange’ of money for work and work for money!
This ability to allow unelected Banks to favour the few over the interests of the many I think is not only unfair but, undemocratic.
Money should be a fair and full exchange of work as a token of that exchange exchanging effort for money and money for effort.
But increasingly since the seventies and the introduction of computer banking and the removal of exchange control regulations by Thatcher it meant that banks control over money became the problem. Not the answer. It was under the shield of ‘save for our futures’ that led to ‘profit from the money of others and the allowance of government to abdicate control over our money’.
If money weren’t not to be saved but instead, allowed to be SPENT back into the economy not once, but exponentially many millions of times a day via citizen and government SPENDING of all possible money, with all other citizens we could have so much of a flow it would be a tsunami of SPENDING. So much so the likely outcome would be higher wages. Higher state pensions and surpluses not deficits. It’s also likely that tax would be just one. Vat. That would provide all on its own the necessary tax take to fulfil our requirement for government to pay for all our needs.
But crucially the second point that governments SPENDING and by implication our SPENDING are limited to the resources available is nonsense.
More turnover can give more share! It shouldn’t have to be at the limit of resources!
If money itself is moving by SPENDING who’s to say what share of what production and resources would be limited? If sufficient money of digital currency is calculated on Population and need of payment unlimited until it doesent have to be, not by amount but by exponential rotation of money over and over again between us all and then added into the equation is time critical emphasis then it’s the constant perpetual fast flow of money around our citizens that produces the result of money back after SPENDING to ensure the flow is full fair and perpetual to take place instead of now, our saved unspent untaxed and leveraged money.
We the people are not getting the throughput of money because most of our money isn’t being spent. It’s held by Banks here and abroad out of reach and unspent snd untaxed.
It’s that unspent unused idle money that is the cause of recessions and a lack of money in the pockets of our people who do Spend their incomes each month. They pay tax.
SPENDERS pay tax not those who don’t SPEND. They pay no tax on UNSPENT money. And it’s withheld for decades. It’s not positively affecting our needs and our economy. It’s contributing nothing to our collective need for money to return snd resupply our economy.
It’s that pot of money from which governments across the world borrow!
So we are forced to borrow because of an insufficient amount of money rotating. Whilst the remainder of the much needed money sitting unspent and untaxed in the banks who leverage it and charge us to pay it all back plus interest.
We are forced to borrow back money we should be getting freely by enforced SPENDING.
Banks should only facilitate flow. Not prevent flow if withhold money and use it to drip feed debt.
We don’t need leveraged money we need SPENDING. We need our elected government to take control of our monetary system of flow. Out in and back around in a fast time. That’s a four dimensional economy.
If we reintroduced exchange controls. Build a currency on a digital only basis in house in Country. And then put a SPEND by DATE on that money then we can ensure flow. Force SPENDING to comply with the need for full and fair “exchange of money”. In the same time frame as received. Or have unused unspent money taken by direct debit to our government to ensure it is used.
This will optimise our economy. No more debt. Much more money much more income much more state pension. No more debt.
It’s economic utopia. All from SPENDING all we receive. We don’t necessarily need extra resources. We can just pay each other more for using less resources. It’s for our combined benefit. It only SPEND what we need and let government use the rest. Be rich if assets and house we buy not money itself.
Money and SPENDING is the requirement. We ensure money and SPENDING at speed.
While we think in two dimensions nothing gets sorted. It will never work. We need three and four dimensional thinking.