Source – webofdebt.com
– “Not only is virtually the entire money supply created privately by banks, but a mere handful of very big banks is responsible for a massive investment scheme known as “derivatives,” which now tallies in at hundreds of trillions of dollars”:
Our money system is not what we have been led to believe. The creation of money has been “privatized,” or taken over by private money lenders. Thomas Jefferson called them “bold and bankrupt adventurers just pretending to have money.” Except for coins, all of our money is now created as loans advanced by private banking institutions — including the privately-owned Federal Reserve. Banks create the principal but not the interest to service their loans. To find the interest, new loans must continually be taken out, expanding the money supply, inflating prices — and robbing you of the value of your money.
Not only is virtually the entire money supply created privately by banks, but a mere handful of very big banks is responsible for a massive investment scheme known as “derivatives,” which now tallies in at hundreds of trillions of dollars. The banking system has been contrived so that these big banks always get bailed out by the taxpayers from their risky ventures, but the scheme has reached its mathematical limits. There isn’t enough money in the entire global economy to bail out the banks from a massive derivatives default today.
Web of Debt unravels the deceptions in our money scheme and presents a crystal clear picture of the financial abyss towards which we are heading. Then it explores a workable alternative, one that was tested in colonial America and is grounded in the best of American economic thought, including the writings of Benjamin Franklin, Thomas Jefferson and Abraham Lincoln. If you care about financial security, your own or the nation’s, you should read this book.
Chapter 5: From Matriarchies of Abundance to Patriarchies of Debt
“I’m melting! My world! My world! Who would have thought a little girl like you could destroy my beautiful wickedness!”
– The Wicked Witch of the West to Dorothy
When Frank Baum made his witch-vanquishing hero a defenseless young girl, he probably wasn’t thinking about the gender ramifications of economic systems; but Bernard Lietaer has given the subject serious thought. In The Mystery of Money, he traces the development of two competing monetary schemes, one based on shared abundance, the other based on scarcity, greed and debt. The former characterized the matriarchal societies of antiquity. The latter characterized the warlike patriarchal societies that forcibly displaced them.
The issue wasn’t really one of gender, of course, since every society is composed half of each. The struggle was between two archetypal world views. What Lietaer called the matriarchal and patriarchal systems, Henry Clay called the American and British systems – cooperative abundance versus competitive greed. But that classification isn’t really accurate either, or fair to the British people, since their own economic conquerors also came from somewhere else, and the British succeeded in withstanding the moneylenders’ advances for hundreds of years. The “American system” devised in the American colonies was actually foreshadowed in the tally system of medieval England. Lietaer traces this archetypal struggle back much farther than seventeenth century England. He traces it to the cradle of Western civilization in ancient Sumer.
When Money Could Grow
Located where Iraq is today, Sumer was a matriarchal agrarian economy with a financial system based on abundance and shared wealth. One of the oldest known bronze coins was the Sumerian shekel, dating from 3,200 B.C. It was inscribed with the likeness of the Goddess Inanna-Ishtar, who bestowed kingship in Sumer and was the goddess of fertility, life and death. Inanna wore the horns of a cow, the sacred animal that personified the Great Mother everywhere in ancient myth. Hathor, the Egyptian equivalent, had cow ears and a human face and was the goddess of love, fertility and abundance. Her horn was the “cornucopeia” from which poured the earth’s plenty. Isis, an even more powerful Egyptian mother figure, was portrayed wearing the horns of a cow with the sun disc between them. In India, the cow goddess was Kali, for whom cows are sacred to this day. Cows were also associated with money, since they were an early medium of exchange. The Sumerian word for “interest” was the same as the word for “calf.” It was natural to repay advances of cattle with an extra calf, because the unit of exchange itself multiplied over the loan period. This was also true for grain, for which the temples served as storehouses. Grain advanced over the growing period was repaid with extra grain after the harvest, in gratitude to God for multiplying the community’s abundance.
The temples were public institutions that also served welfare functions, including the support of widows, orphans, the elderly and infirm. Temples were endowed with land to provide food for their dependent labor, and resources such as herds of sheep to provide wool for their workshops. They operated autonomously, supporting themselves not through taxation but by renting lands and workshops and charging interest on loans. Goods were advanced to traders, who returned the value of the goods plus interest. The temples also acted as central banks. Sacrificial coins inscribed debt to the Gods” were paid to farmers in acknowledgment that wheat had been contributed to the temple. These coins were also lent to borrowers. When interest was paid on the loans, it went back to the temple to fund the community’s economic and social programs and to cover losses from bad loans.
It was only after the Indo-European invasions of the second millennium B.C. that moneylending became the private enterprise of the infamous moneychangers. The Goddess Inanna was superseded as the source of supreme kingship by the male god Enlil of Nippur, and the matriarchal system of shared communal abundance was forcibly displaced by a militant patriarchal system. The cornucopia of the Horned Goddess became the bull horns of the Thunder God, representing masculine power, virility and force.
In the temple system, the community extended credit and received the money back with interest. In the system that displaced it, interest on debts went into private vaults to build the private fortunes of the moneychangers. Interest was thus transformed from a source of income for the community into a tool for impoverishing and enslaving people and nations. Unlike corn and cows, the gold the moneylenders lent was inorganic. It did not “grow,” so there was never enough to cover the additional interest charges added to loans. When there was insufficient money in circulation to cover operating expenses, farmers had to borrow until harvest time; and the odd man out in the musical chairs of finding eleven coins to repay ten wound up in debtor’s prison. Historically, most slavery originated from debt.1
The Proscription Against Usury
“Usury” is now defined as charging “excess” interest, but originally it meant merely charging a fee or interest for the use of money. Usury was forbidden in the Christian Bible, and anti-usury laws were strictly enforced by the Catholic Church until the end of the Middle Ages. But in Jewish scriptures, which were later joined to the Christian books as the “Old Testament,” usury was forbidden only between “brothers.” Charging interest to foreigners was allowed and even encouraged. The “moneychangers” thus came to be associated with the Jews, but they were not actually the Jewish people. In fact the Jewish people may have suffered more than any other people from the moneychangers’ schemes, which were responsible for much anti-semitism.
In the informative documentary video The Money Masters, Bill Still and Patrick Carmack point out that when Jesus threw the moneychangers out of the temple, it was actually to protect the Jewish people. Half-shekels, the only pure silver coins of assured weight without the image of a pagan Emperor on them, were the only coins considered acceptable for paying the Temple tax, a tribute to God. But half-shekels were scarce, and the moneychangers had cornered the market for them. Like the modern banking cartel, they had monopolized the medium of exchange and were exacting a charge for its use.
Despite the injunctions in the New Testament, there were times when the king needed money. In the Middle Ages, England was short of gold, which had left during the Crusades. In 1087, when King William (Rufus) needed gold to do business with the French, he therefore admitted the moneylenders, on condition that the interest be demanded in gold and that half be paid to the king. But the moneylenders eventually became so wealthy at the expense of the people that the Church, with urgings from the Pope, prohibited them from taking interest; and in 1290, when they had lost their usefulness to the king, most Jews were again expelled from the country. This pattern, in which Jews as a people have been persecuted for the profiteering of a few and have been used as scapegoats to divert attention from the activities of the rulers, has been repeated over the centuries.
Money as a Simple Tally of Accounts
Meanwhile, England was faced with the problem of what to use for money when the country was short of gold. The coinage system was commodity-based. It assumed that “money” was something having value in itself (gold or silver), which was bartered or traded for goods or services of equal value. But according to Stephen Zarlenga, who has traced the origins and history of money in his revealing compendium The Lost Science of Money, the use of coins as money did not originate with merchants trading in the marketplace. The first known coins were issued by governments; and their value was the value stamped on them, not the price at which the metal traded. Zarlenga quotes Aristotle, who said:
Money exists not by nature but by law. [It acts] as a measure [that] makes goods commensurate and equates them. . . . There must then be a unit, and that fixed by agreement.
Money was a mere fiat of the law. Fiat means “let it be done” in Latin. “Fiat money” is money that is legal tender by government decree. It is simply a “tally,” something representing units of value that can be traded in the market, a receipt for goods or services that can legally be tendered for other goods or services. In Mandarin China, where paper money was invented in the ninth century, this sort of fiat currency funded a long and prosperous empire. Fiat money was also used successfully in medieval England, but in England it was made of wood.
The English tally system originated with King Henry I, son of William the Conqueror, who took the throne in 1100 A.D. The printing press had not yet been invented, and taxes were paid directly with goods produced by the land. Under King Henry’s innovative system, payment was recorded with a piece of wood that had been notched and split in half. One half was kept by the government and the other by the recipient. To confirm payment, the two halves were matched to make sure they “tallied.” Since no stick splits in an even manner, and since the notches tallying the sums were cut right through both pieces of wood, the method was virtually foolproof against forgery. The tally system has been called the earliest form of bookkeeping. According to historian M. T. Clanchy in From Memory to Written Record, England 1066-1307:
Tallies were . . . a sophisticated and practical record of numbers. They were more convenient to keep and store than parchments, less complex to make, and no easier to forge.
Only a few hundred tallies survive, Clanchy writes, but millions were made. Tallies were used by the government not only as receipts for the payment of taxes but to pay soldiers for their service, farmers for their wheat, and laborers for their labor. At tax time, the treasurer accepted the tallies in payment of taxes. By the thirteenth century, the financial market for tallies was sufficiently sophisticated that they could be bought, sold, or discounted. Tallies were used by individuals and institutions to register debts, record fines, collect rents, and enter payments for services rendered. In the 1500s, King Henry VIII gave them the force of a national currency when he ordered that tallies must be used to evidence the payment of taxes. That meant everyone had to have them. In War Cycles, Peace Cycles, Richard Hoskins writes that by the end of the seventeenth century, about 14 million pounds’ worth of tally-money was in circulation. Zarlenga cites a historian named Spufford, who said that English coinage had never exceeded half a million pounds up to that time. The tally system was thus not a minor monetary experiment, as some commentators have suggested. During most of the Middle Ages, tallies may have made up the bulk of the English money supply. The tally system was in use for more than five centuries before the usury bankers’ gold-based paper banknotes took root, helping to fund a long era of leisure and abundance that flowered into the Renaissance.
A Revisionist View of the Middle Ages
Modern schoolbooks generally portray the Middle Ages as a time of poverty, backwardness, and economic slavery, from which the people were freed only by the Industrial Revolution; but reliable early historians painted a quite different picture. Thorold Rogers, a nineteenth century Oxford historian, wrote that in the Middle Ages, “a labourer could provide all the necessities for his family for a year by working 14 weeks.” Fourteen weeks is only a quarter of a year! The rest of the time, some men worked for themselves; some studied; some fished. Some helped to build the cathedrals that appeared all over Germany, France and England during the period, massive works of art that were built mainly with volunteer labor. Some used their leisure to visit these shrines. One hundred thousand pilgrims had the wealth and leisure to visit Canterbury and other shrines yearly. William Cobbett, author of the definitive History of the Reformation, wrote that Winchester Cathedral “was made when there were no poor rates; when every labouring man in England was clothed in good woollen cloth; and when all had plenty of meat and bread . . . .” Money was available for inventions and art, supporting the Michelangelos, Rembrandts, Shakespeares, and Newtons of the period.
The Renaissance is usually thought of as the flowering of the age; but the university system, representative government in a Parliament, the English common law system, and the foundations of a great literary and spiritual movement were all in place by the thirteenth century, and education was advanced and widespread. As one scholar of the era observes:
We are very prone to consider that it is only in our time that anything like popular education has come into existence. As a matter of fact, however, the education afforded to the people in the little towns of the Middle Ages, represents an ideal of educational uplift for the masses such as has never been even distantly approached in succeeding centuries. The Thirteenth Century developed the greatest set of technical schools that the world has ever known. . . . These medieval towns, . . . during the course of the building of their cathedrals, of their public buildings and various magnificent edifices of royalty and for the nobility, succeeded in accomplishing such artistic results that the world has ever since held them in admiration.
The common people had leisure, education, art, and economic security. According to The Catholic Encyclopedia:
Economic historians like Rogers and Gibbins declare that during the best period of the Middle Ages – say, from the thirteenth to the fifteenth century, inclusive – there was no such grinding and hopeless poverty, no such chronic semi-starvation in any class, as exists to-day among large classes in the great cities . . . . In the Middle Ages there was no class resembling our proletariat, which has no security, no definite place, no certain claim upon any organization or institution in the socio-economic organism.
Richard Hoskins attributes this long period of prosperity to the absence of usurious lending practices.15 Rather than having to borrow the moneylenders’ gold, the people relied largely on interest-free tallies. Unlike gold, wooden tallies could not become scarce; and unlike paper money, they could not be counterfeited or multiplied by sleight of hand. They were simply a unit of measure, a tally of goods and services exchanged. The tally system avoided both the depressions resulting from a scarcity of gold and the inflations resulting from printing paper money out of all proportion to the goods and services available for sale. Since the tallies came into existence along with goods and services, supply and demand increased together, and prices remained stable. The tally system provided an organic form of money that expanded naturally as trade expanded and contracted naturally as taxes were paid. Bankers did not have to meet behind closed doors to set interest rates and manipulate markets to keep the money supply in balance. It balanced the way a checkbook balances, as a matter of simple math. The system of government-issued tallies kept the British economy stable and thriving until the mid-seventeenth century, when Oliver Cromwell needed money to fund a revolt against the Tudor monarchy . . . .
1. See Deuteronomy (New World Translation) — 15:6 [Y]ou will certainly lend on pledge to many nations, whereas you yourself will not borrow; and you must dominate over many nations, whereas over you they will not dominate. 23:19 You must not make your brother pay interest . . . . 23:20 You may make a foreigner pay interest, but your brother you must not make pay interest.