Healthy Money Healthy Planet - library.uniteddiversity.coop

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6 Facing the Critics
Through the first part of this book we have looked at how money is created and
the problems associated with this system. Before we move on in Part 2 to look at
healthier alternatives, I want to revisit the arguments that support the status
quo and answer any critics I may have.
Banks have always issued money as interest­bearing debt; that is the
function of banks.
It is true that several centuries ago goldsmiths printed receipts for gold they
didn’t have, lent them out and charged interest on the loans. That they got away
with this deceit is an unfortunate historical fact, but it doesn’t justify the
continuation through the centuries of a banking system in which the banks will
collapse should all their depositors come at once for their money. Nor does it
justify an inherently inflationary and unsustainable money system.
The practice of issuing money as interest­bearing debt, which many
describe as fraudulent, has now become entrenched in academic, business and
government institutions. Universities teach that it is the function of banks to
create money and then to charge interest on this money. This is regrettable,
because universities are supposed to teach people to think and to question, not
to justify centuries of past errors. Full evidence only becomes available to us
when, from time to time, governments order public enquiries into banking and
credit. The last time such an enquiry was held in New Zealand was in 1955,
which closed with the Solicitor­General citing case law dating back to a 19thcentury
judge’s decision in favour of fractional reserve banking.