By Andrew Mackinnon
Last updated: 15th March, 2024
The Bank of England came out in 2014 and admitted that privately owned, commercial banks create money out of nothing when they lend to citizens, (non-citizens,) businesses and not-for-profit entities and impose an obligation on them to pay interest on this money created out of nothing:
bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy
theguardian.com/commentisfree/2014/mar/18/truth-money-iou-bank-of-england-austerity
The Bank of England is the central bank of the United Kingdom. Its analogue in Australia is the Reserve Bank of Australia. Here are some extracts from the first page of the PDF document above, which originates from the Bank of England:
“- Money creation in practice differs from some popular misconceptions – banks do not act simply as intermediaries, lending out deposits that savers place with them, and nor do they ‘multiply up’ central bank money to create new loans and deposits.
– The amount of money created in the economy ultimately depends on the monetary policy of the central bank. In normal times, this is carried out by setting interest rates. The central bank can also affect the amount of money directly through purchasing assets or ‘quantitative easing’.”
and this…
“In the modern economy, most money takes the form of bank deposits. But how those bank deposits are created is often misunderstood: the principal way is through commercial banks making loans. Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.
The reality of how money is created today differs from the description found in some economics textbooks:
– Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits.
– In normal times, the central bank does not fix the amount of money in circulation, nor is central bank money ‘multiplied up’ into more loans and deposits.”
The Bank of England, which is privately owned like the Federal Reserve Bank of the United States of America, is a deceitful organisation like most central banks around the world. Having purposedly and gleefully spent the last several decades deceiving the citizens of the United Kingdom into thinking that the money that the privately owned, commercial banks lend them is the money that these banks’ customers have deposited with these banks, the Bank of England now seeks to chastise the citizenry for falling for its extremely convoluted and confusing deception as it finally let’s the cat out of the bag with the truth about the money these privately owned commerical banks lend to the citizenry. They create it out of nothing and weigh the citizenry down by charging interest on it so that they can earn exorbitant profits that their shareholders receive as dividends and that can be spent in the real economy purchasing real goods and services like high-end sports cars and overseas holidays. The citizenry work with bended back to earn the extra money necessary to pay the interest they owe to these banks from whom they borrow this money that was created out of nothing.
Of course, the Bank of England was aware of this fraud all along, but has remained silent about it for a long time, so as to enable the privately owned, commercial banks to profit from this scam over the past several decades. Television is one formidable distraction that has prevented the citizenry from discovering this scam until very recent years. Due to mounting public pressure, the Bank of England was apparently forced to come out in 2014 and admit what it has known all along by releasing the PDF document linked above which is essentially a signed confession to this fraud.
Given the subservience of Australia to the United Kingdom, there is no reason to believe that Australia’s monetary system, with the Reserve Bank of Australia acting as the central bank and setting the level of interest rates that the privately owned, commercial banks charge, is any different from the United Kingdom’s fraudulent monetary system, involving the Bank of England in the role of the central bank which sets the level of interest rates charged by the privately owned, commercial banks.
When any bank in Australia lends for any purpose, it creates the money that it lends out of nothing and charges interest on it, which causes the size of the money supply in Australia to increase by the amount of principal loaned.
The bank debits its loans asset account for the amount lent to signify the debt owing to it and it credits its deposits liability account to provide its customer with the amount it has lent to them so that the customer can utilise those funds in the bank account that the customer holds with the bank.
When a customer of any bank in Australia repays principal of their loan and pays interest on their loan, the bank debits its deposits liability account for the amount of principal repaid and interest paid, which reduces the customer’s bank account by the same amount, credits its loans asset account for the amount of principal repaid and credits its revenue account for the amount of interest paid.
Out of this interest revenue that the bank receives, it pays a large proportion, such as two-thirds, to its account holders as interest on their deposits with the bank, in order to deliberately obscure the truth that it creates money out of nothing when it lends for any purpose and charges interest on that principal created and lent, which it receives as interest revenue.
The bank also uses the interest revenue that it receives to pay the salaries of bank employees and other operating expenses. (The bank has other revenue sources, including account-keeping fees and transaction fees, out of which it also pays for its bank employees and other operating expenses.) The remainder of this interest revenue constitutes the bank’s profit, out of which company tax is paid to the Australian federal government and dividends are paid to the shareholders of the bank so that they can share in this interest revenue also.
The Reserve Bank of Australia was established in 1959 via the Reserve Bank Act. It commenced operation early the next year on 14th January, 1960, more than 60 years ago. The purpose of the Reserve Bank of Australia has always been to maximise the interest revenue collected by the banks in Australia under its authority, which were first publicly owned then later privately owned by shareholders.
All of the money in circulation in Australia, constituting the money supply, is money created by the banks out of nothing when they lend for any purpose, on which they charge interest.
Physical notes and coins are placeholders for money created by the banks out of nothing when they lend for any purpose, on which they charge interest.
The majority of the money in circulation in Australia arises from mortgage lending.
During the financial year from 2014 to 2015 in Australia, which had a population of around 24 million people at the time, the four major banks in Australia, being the Commonwealth Bank, Westpac, National Australia Bank (NAB) and the Australian and New Zealand Bank Banking Group (ANZ), earned about $120 billion in interest in Australia on the money they create out of nothing when they lend for any purpose.
Out of this $120 billion, they paid about $75 billion to their account holders as interest on the deposits of these account holders with these banks, in order to deliberately obscure the truth that they create money out of nothing when they lend for any purpose and charge interest on that principal created and lent, which they receive as interest revenue. They also paid about $5 billion dollars to their bank employees who run the banks, as well as for other operating expenses, leaving profits before company tax of about $40 billion. (These banks have other revenue sources, including account-keeping fees and transaction fees, out of which they also pay for their bank employees and other operating expenses.) These banks paid about $10 billion in company tax to the Australian federal government for the financial year from 2014 to 2015. Approximately $30 billion was earned by these banks in profits after company tax, out of which dividends are paid to the shareholders of these privately owned banks, all courtesy of the fraud of interest charged on money created out of nothing when these banks lend for any purpose.
That is a total of about $120 billion paid in one year in interest to these banks by Australian citizens, non-citizens of Australia, Australian businesses and Australian not-for-profit entities on money that these banks created out of nothing and lent to them. Conceptually, it is the equivalent of $6,383 paid during the financial year from 2014 to 2015 by every adult Australian citizen and adult non-citizen of Australia aged 18 years or over to the banks in interest, which is $122.75 per week. Around 78.3% of the population (i.e. 65.1/83.1, where 83.1 is the life expectancy in Australia) of around 24 million during the financial year from 2014 to 2015 was aged 18 years or over, being around 18,800,000 adult Australian citizens and adult non-citizens of Australia.
During the financial year from 2022 to 2023 in Australia, which had a population of around 27 million people at the time, the four major banks in Australia, being the Commonwealth Bank, Westpac, National Australia Bank (NAB) and the Australian and New Zealand Bank Banking Group (ANZ), earned about $170 billion in interest in Australia on the money they create out of nothing when they lend for any purpose.
Out of this $170 billion, they paid about $110 billion to their account holders as interest on the deposits of these account holders with these banks, in order to deliberately obscure the truth that they create money out of nothing when they lend for any purpose and charge interest on that principal created and lent, which they receive as interest revenue. They also paid about $15 billion dollars to their bank employees who run the banks, as well as for other operating expenses, leaving profits before company tax of about $45 billion. (These banks have other revenue sources, including account-keeping fees and transaction fees, out of which they also pay for their bank employees and other operating expenses.) These banks paid about $10 billion in company tax to the Australian federal government for the financial year from 2022 to 2023 (i.e. $11.1 billion in company tax in the financial year from 2022 to 2023 versus $9.4 billion in company tax in the financial year from 2014 to 2015). Approximately $35 billion was earned by these banks in profits after company tax, out of which dividends are paid to the shareholders of these privately owned banks, all courtesy of the fraud of interest charged on money created out of nothing when these banks lend for any purpose.
That is a total of about $170 billion paid in one year in interest to these banks by Australian citizens, non-citizens of Australia, Australian businesses and Australian not-for-profit entities on money that these banks created out of nothing and lent to them. Conceptually, it is the equivalent of $8,057 paid during the financial year from 2022 to 2023 by every adult Australian citizen and adult non-citizen of Australia aged 18 years or over to the banks in interest, which is $154.94 per week. Around 78.3% of the population (i.e. 65.1/83.1, where 83.1 is the life expectancy in Australia) of around 27 million during the financial year from 2022 to 2023 was aged 18 years or over, being around 21,100,000 adult Australian citizens and adult non-citizens of Australia.
Our current banking system in Australia comprises privately owned, commercial banks. We are continually told that the reason we have so many banks in Australia, including four major banks, being the Commonwealth Bank, Westpac, the Australia and New Zealand Banking Group Limited (ANZ) and the National Australia Bank (NAB), is that these various banks provide Australian citizens with a competitive banking environment as a result of these banks competing against each other. We’re told that the deregulation and privatisation of the banking industry that took place in the 1980s and 1990s led to competition that aids Australian citizens by enabling them to secure loans at the lowest possible interest rates. However, this is just propaganda to cover the real reason for the deregulation and privatisation of the banking industry in Australia in the 1980s and 1990s which resulted in the existence of so many privately owned banks operating in Australia. The real reason for this deregulation and privatisation was to enable the shareholders in these privately owned banks to profit handsomely from the revenue these banks earn as a result of the interest they charge on the money they loan created out of nothing.
As John Citizen in Sydney spends twenty years paying off his mortgage to the National Australia Bank (NAB), for example, on the property he lives in, there is no shortage of Sydneysiders keen to own shares in the NAB and profit via the dividends paid to them on these shares out of the profit that the NAB makes as a result of the interest John Citizen pays on his mortgage. Competition is just the cover story for public consumption to hide the real purpose of our banking system in Australia comprising privately owned banks, which is to facilitate a massive transfer of wealth via the interest paid on debt from borrowers like John Citizen to the shareholders in these banks operating in Australia.
Of course, these shareholders don’t just live in Sydney. They live all over the world and they’re not just individuals like foreign citizens. They’re foreign entities as well like companies, banks, insurance companies and all manner of investment funds. A significant proportion of each of the banks operating in Australia is owned by shareholders who are foreign citizens or other foreign entities. So as John Citizen laboriously pays off his mortgage, a portion of the interest he pays is transferred overseas in the form of dividend payments to these foreign shareholders. Since John Citizen worked in Sydney to earn the money to pay this interest on his mortgage, this transfer of money overseas in the form of dividend payments means that there is less money remaining in the Australian economy to support the economic activity of all Australian citizens.
Creating money out of nothing and issuing it to citizens as debt in the form of loans which carry the obligation to pay interest on those loans is the essence of the control that the Rothschilds-led synagogue of Satan has exerted over countries like Australia for a long time now. This is a system which plainly enriches the owners of the banks because the amount of money that needs to be repaid to extinguish the debt of money issued is greater than the amount of money issued, on account of the interest that is charged on this money issued as debt. Whereas the banks receive interest on the money they create out of nothing and issue as debt, the entities in the economy which take on the debt in the form of a loan, such people or companies, must generally perform work in order to earn the interest they owe and pay to the banks in the course of paying off the loan. This interest the banks receive is the generally the result of real work performed by the people, companies or other entities they lend to, however the banks performed negligible work to establish this obligation to pay them interest, since they created the money, on which they charge this interest, out of nothing. This interest that the banks receive is the basis of their profit after paying their administrative overheads and constitutes real purchasing power for the owners of the banks who receive this profit in the form of dividends. Money that was created out of nothing enables the owners of the banks to earn these dividends and use them to purchase whatever goods and services they require from the real economy in which real work is performed to produce these goods and services. For this reason, the synagoue of Satan has worked hard to make interest rates the centrepiece around which our monetary system and our banking system revolve.
Under our current banking system in Australia comprising privately owned banks, the overwhelming majority of the money in circulation is debt which imposes the obligation to pay interest on the borrowers of this debt. Unless individuals and companies borrow more money from these privately owned banks such as the Commonwealth Bank, Westpac, the National Australia Bank (NAB) and the Australia and New Zealand Banking Group Limited (ANZ), the size of the money supply doesn’t increase. When individuals and companies repay the money they’ve borrowed from these privately owned banks, this money loaned to them is destroyed and the size of the money supply decreases.
The interest rate at which these privately owned banks lend this money that they create out of nothing to Australian citizens, (non-citizens of Australia,) Australian businesses and Australian not-for-profit entities is influenced by the cash rate that the Reserve Bank of Australia decides upon.
In order to influence Australian citizens, (non-citizens of Australia,) Australian businesses and Australian not-for-profit entities to borrow less money from these banks, in order to decrease the size of the money supply in Australia and decrease economic activity in Australia, the Reserve Bank of Australia increases the cash rate.
In order to influence Australian citizens, (non-citizens of Australia,) Australian businesses and Australian not-for-profit entities to borrow more money from these banks, in order to increase the size of the money supply in Australia and increase economic activity in Australia, the Reserve Bank of Australia decreases the cash rate.
However, there is no need for banks in Australia to charge interest on the money that they lend and there is no need for the Reserve Bank of Australia to increase and decrease interest rates in order to respectively decrease and increase the size of the money supply in Australia.
A publicly owned, federal entity named the “Australian Bank” should be established to operate on a not-for-profit basis and lend to Australian citizens, Australian businesses and Australian not-for-profit entities without charging interest.
However, it will be necessary for the Australian Bank to charge rates of less than 1% on its various types of lending, in order to cover the incidence of borrowers defaulting on loans.
The Australian Bank should cover its operating costs by charging account-keeping fees and transaction fees, paid by Australian citizens, Australian businesses and Australian not-for-profit entities, who and which use the Australian Bank, which account-keeping fees and transaction fees should be limited to cover the actual costs incurred by the Australian Bank to administer the accounts of Australian citizens, Australian businesses and Australian not-for-profit entities and to process the transactions of Australian citizens, Australian businesses and Australian not-for-profit entities.
The method that should be used to increase and decrease the size of the money supply in Australia is increasing and decreasing the amount of principal that the Australian Bank is allowed to lend to Australian citizens, Australian businesses (such as sole traders, partnerships and companies) and Australian not-for-profit entities (such as churches and charities) for different types of loans, expressed as a multiples of the incomes of Australian citizens, multiples of the profits of Australian businesses (such as sole traders, partnerships and companies) and multiples of the operating surpluses of Australian not-for-profit entities (such as churches and charities).
These multiples should be different for different types of lending, such as loans to Australian citizens (including mortgages and personal loans), loans to Australian businesses (including loans to sole traders, loans to partnerships and loans to companies) and loans to not-for-profit entities (including loans to churches and loans to charities).