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Tuesday, 5 March 2013

UK: Can Islamic Finance save us from the Banksters?

The governments of the world lurch from crisis to crisis as they try to prop up the corrupt, debt-based money system, but there is a positive alternative if they have the courage to take it.
PAY THE BANK TO HOLD YOUR CASH was the headline in the February 27 issue of City A.M. That may not sound like an attractive proposition, nor may the suggestion that we should adopt negative interest rates, but there is a positive side to it.

On page 17, the overpaid so-called experts disagreed: Ross Walker, an economist with the Royal Bank of Scotland voted yes; Philip Booth of the Institute of Economic Affairs voted no. We've been here before, but imagine you were diagnosed with a serious illness and half the doctors recommended antibiotics while the other half said you needed no treatment at all. What would that do for your opinion of the medical profession?

Today, it was reported that the banks were lending less, in spite of all the promises by Vince Cable and others of funding for lending and yet more Quantitative Easing. So should we have negative interest rates? No, we should have no interest rates at all.

The propaganda that is still peddled by mainstream economists to this day in the face of overwhelming evidence to the contrary is that people deposit money in the bank, which then lends it. The bank pays depositors X%, lends at X+Y% and makes its profit by the difference - ie Y% plus fees and so on. The truth is very different.

What happens is the money stays in the bank, the bank then creates credit out of thin air, lends it at interest to a businessman, company or whatever, and when this new money is deposited in another bank, it increases the money supply. When the borrower repays the loan, this new money is cancelled out of existence, but any interest remains as new money and new debt. This can be proven mathematically, and was by the great Major Douglas before any of you were born, but if you can't understand his equation (below), just remember this simple saying: "Every bank loan creates a deposit; every repayment of a loan destroys a deposit".

(Digital Journal / 04 March 2013)

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