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Since 2006 the sites here above have published one or more of the court fool's articles. Some seem to be out of reach today, either because these websites or pages do not exist anymore, or because of other causes. To compliment them, I have chosen to keep them in the list.
Rudo de Ruijter
Special thanks to:
Christine, Corinne, Francisco, Evelyne, Françoise, Gaël, Peter, Ingrid, Ivan, Krister, Jorge, Marie Carmen, Ruurd, Sabine, Lisa, Sarah, Valérie & Anonymous...
Acknowledgements for translations:
Come Don Chisciotte
Ermanno di Miceli
Manuel Valente Lopes
Traducteur sans frontière
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Rudo de Ruijter
Private banks or a bank of the government.
by Rudo de Ruijter,
Last modified 30 November 2015
1. Today's private banking system
Today it is the private banks that determine society more and more. They decide which investments are or are not financed. For this, banks consider their own interests, their possibilities for benefits and if borrowers can pay back their loans.
The so-called "money"-creation out of thin air
Th private banking system is based on the creation of "money" out of thin air.
 In fact, it isn't about money, but about bank balances. The creation
consists of a bookkeeping entry at the supply of loans. The bank writes the debt
of the borrower on the activa side and an the same amount as a balance for the
borrower on the passiva side. The borrower now disposes of a balance at his
Bank balances without money
In theory, a balance means, that the holder can claim the corresponding money from his bank. But because banks create these balances without having the corresponding money, this money doesn't exist. For all created balances banks only have very little money, often between 2 and 5 percent of what they owe to their customers.
So, a bank balance isn't money. It is only a recognition by the bank, he owes you money, even if that money doesn't exist. So you cannot pay with your bank balance. With a payment order, a bank card or via internet banking, you can only order your bank to execute payments for you.
The real money
Banks obtain the real money by selling bonds, like government bonds, to the central bank.
The latter will write up the value into the account the bank has with the
central bank. This is the way the real (official) money comes into existence.
In the transaction the bank must promise to buy back the bonds at an agreed date at an agreed higher price. The difference in price resembles interest. That is why it is often said, banks borrow the money from the central bank. So, the banks must continually sell and buy back bonds to dispose of the real money.
So the real money starts as numbers in accounts at the central bank. The banks can also withdraw the real money in the form of bank notes. The central bank is the only one who has the right to print them.
The real money is used for the interbank payments and to supply bank notes to customers, when they ask for them. Subject to stock being available.
When the borrower spends his balance with bank A and buys a car with an
accountholder of bank B, bank A must pay the sum to bank B and must do so with
real money, for banks do not accept each other's balances as means of payment.
That is why the payment is executed via a transfer at the central bank, where
the banks have their accounts with real money.
In practices, most payments among banks are not executed. Incoming and outgoing payments are simply crossed out against each other.
At the end of the day only the little remaining differences are truly
transfered. This way, with very little money, banks can execute huge amounts of
Note that the beneficiary of our payment orders never receive any payment. Instead, they receive a balance with their own bank, in other words a claim on thin air.
Financing of loans
Bankers like to pretend, they have costs of financing for each loan, since they
must pay the money to another bank.
The reality is, all banks supply loans continuously and the subsequent outgoing and incoming payments also annull each other for the greater part.
Here an example with three banks:
We assume there are 3 banks which respectively serve 20%, 30% and 50% of the population. We suppose all three have the same type of customers, who have the same needs for loans and expenses. It is demonstrated that all payments the banks must execute at the moment the borrowers spend their loan are counterbalanced by the reception of these payments.
As long as the individual bank just replaces the ending loans by new ones, it
can always pay the amount of each loan to another bank, when, by hasard, it is
not annulled by an incoming payment.
Only when banks grow, they will have to raise their cash reserves. Then we are talking about something like 2 cents per "lent out euro", depending on the required cash reserve at that moment.
Banks have decided rules about the required capital. each bank must have a minimum capital in proportion to the outstanding debts. (In practice around 5%). The central bank can also impose a minimum cash reserve. In a general way, these rules contribute to keeping the growth of banks in concert, and minimize the risk an individual bank cannot fulfill its payment obligations because of a too rapid supply of new loans. For the rest, these rules form merely any guarantee for the customers.
Banks have a natuaral tendancy to grow. For the individual bank director it is a matter of producing better results each year. To grow, not only the ending loans have to be replaced by new ones, but extra loans must be supplied too.
The borrowers have to take care they earn and pay off the borrowed amounts. The problem is, that not all borrowed amounts stay in circulation. A considerable part lands into savings accounts.
Here it is parked and cannot be earned by the borrowers. More and more borrowers will have to earn their pay offs out of the balances that still circulate, which also have to be earned by the original borrowers. The solution of the banks is to compensate the outflow into the savings accounts by the supply of still more new loans. (Whereby ignorant economists think the savings are lent out.)
Over 35% interest
The interest too will finally have to be paid out of the "money" that still circulates, at the sale of goods and services. Helmut Creutz has calculated on the basis of German numbers, that over 35 percent of everything we pay is interest. 
The individual banker doesn't occupy himself with the question whether his
growth of "money" also leads to more economic activity or nit. Untill the start
of the euro it was the role of the central bank to influence the interest rate
and speed up or slow down the supply of loans, in such a way the inflation was
maintained without ending up in hyperinflation.
Among others, the inflation results in a decrease of worth of each money unit, and thereby also of the principal the borrower has to pay back. When the interest is 6% and the inflation is 2%, this can be compared with a decrease of the interest burden of 1/3. This way banks avoid the non-payments that would occur at interest rates between 4 and 6 percent, that is to say, the major part of them.
So, for the banks, a decreasing inflation means an immediate danger of exponential increase of non-payments.
A century of "money"-growth
Private banks must keep growing and cause inflation in order not to fail.
International agreements can hinder the "money"-growth, like the Bretton Woods
accords of 1944, in which countries had agreed to keep their exchange rate
pegged to the dollar. Finally, in 1971 it was the US itself that could not
fulfill its obligations in gold reserves because of the high expenses of the
Vietnam war and let the dollar float.
ubsequently, the seventies were marked by an enormeous "money"- expansion with high interest rates. The problem for the banks was no longer Bretton Woods, but to find credit worthy borrowers, for little by little all credit worthy borrowers were already overloadd with debts.
In 1970, Pierre Werner (a banker and Prime Minister of Luxemburg and attendee at the Bretton Woods conference) presented the first blue print for the common European currency, that could, at once, largely extend the working area for the banks.
That new currency needed time and the banks didn't have that. Therefor a plan was concocted to convince the governments of the G10-countries to borrow no longer 'free of interest' from their central bank, but at interest from private institutions.
The society got totally disrupted. Public infrastructures and services had to be privatized (what offered the banks new reliable borrowers) and a sustained wave of budget cuts led to a gradual destruction of public services and achievements and the commercializing of care.
Public services without means...
Private banks must keep growing, even when we get drowned in debts, cannot pay the interest anymore and the economy doesn't need any extra money anymore. The regulating of banks, the free manna of hundreds of billions of euros and the creation of a eurozone with ESM-bank doesn't change anything about that.
The growth syndrome of private banks works like a devastating cancer tumor. For
each crisis you can find motives, but the structural cause sits within the
Nearly everything that is essential for the coherence of society has now ended up cut into bits.
Part 2: A bank of the government
Now you have understood the problems with the private money system, let us see how a public system - in which our government owns our money system - could work.
All money comes from the government
The government creates money and spends it or lends it out. In both cases the receivers of that money will spend it in their turn. This way the money starts circulating and each time new transactions take place with the same money.
The lent out money disappears out of circulation again, when the borrower pays back his loan. That money comes back to the government, which "destroys" it in its books.
The government raises taxes. Not to finance spendings, for it creates money for that purpose itself, but to prevent the mass of money from growing continually (= monetary inflation). The collected taxes too are "destroyed" in the books.
From the principle here above the public money system can be developed further. In particular te role of the parliament, the role of the banks and the role of the taxes need to be defined more in detail. They finally determine the role and functioning of the bank of the government.
The parliament decides about the policy and can obtain the wanted effects in society by making specific investments cheap or free. In a public system, private banks are not allowed to create "money" out of thin air. They can only be middlemen between the bank of the government and the public. For this they receive commissions, not interest. The taxes play a role in the destruction of money and specific tax-measures can help prevent jams in th money circulation.
Bank of the government
Finally the bank of the government functions as the traffic controller, which has real-time overview on money creation (government spending and loans), inflow from abroad, domestic money flows and parked savings, outflow to abroad and money destruction (taxes and pay backs of loans).
With financial instruments, monetary operations and other measures the bank of the government can stear the wished circulation. (For instance with purchase or sale of securities, purchase or sale of currencies, or speeding up or slowing down financings that have been designated for this purpose.)
With a public money system the government (and society) can adapt to political preferences and changing situations. The government can:
Note that options 2 and 3 lead to the failure of banks in today's private banking system.
Access to loans
In a public money system borrowers don't need pawn. Non-payments can be treated like tax debts. The government does not need capital to absorb losses. Indeed, with or without the forming of capital, losses are always at the charge of the population. (That is also the case today. They are taken from the benefits or from the capital of the bank that have been taken from the customers, thus from the population.) The parliament decides the policy for the supply of loans. As far as it choses to charge loans with interest, the interest can stay lower. And when low interest rates are unwanted in the international context, the interest can be compensated fiscally. Note that the interest flows back in the public means and not in private pockets.
Society comes first
With a public money system the focus is on available labor and means, not on the scarcity and cost of money.
For the moment, our governments don't have enough credibility to take up this task. They are insuffisciently controlled by the people and cannot be trusted. However, a bank of the government is our only way out of the problems and out of the destructive course of our societies. So the solution must come from a improvement in our governmental structures. They must be much more democratic and much more controlled directly by the people. It is time to make the next step towards democracy.
 See also: Out of the euro, and then?
 Money creation in the modern economy
By Michael McLeay, Amar Radia and Ryland Thomas of the Bank’s Monetary Analysis Directorate.
 Helmut Creutz & www.vlado-do.de/ money/index.php.de
• Ellen Brown: A tale of two monetary systems
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