– Money As Debt (ZeroHedge, April 20, 2012):
On a day when Lagarde happily trots out statement after statement that the IMF has another bucketful of promises to solve the world’s excess debt problems with its own debtors providing more of the wealth-creating debt in ever-increasing circles of ridiculous indebtedness, we may have found the perfect antidote. Perhaps, given the weakness in European sovereign markets this week, bond market investors have already watched the following presentation. Explaining in simple terms and for the broadest audience Paul Grignon’s ‘Money As Debt’ explores the baffling, fraudulent and destructive arithmetic of the money system that holds us hostage to a forever-growing debt – and how we might evolve it into a new era. Get your popcorn ready.
Where does Money Come From?
By Paul Grignon, the creator of “Money as Debt”, the animated cartoon seen online by millions worldwide and available on DVD from moneyasdebt.net. This is a condensation of an article that may be downloaded from http://paulgrignon.netfirms.com/MoneyasDebt/Money_or_Credit.pdf
The simple answer to the title question is DEBT. Whether paper cash or numbers on a computer screen, all money (except coins) is “evidence of debt”.
What is “cash” and where does it come from? Cash can be the familiar paper stuff, or it can be credit at the national central bank which banks use to settle accounts between banks. “Credit cash” at the central bank is always convertible to “paper cash” upon demand.
So, where does cash come from? Is it just printed by the government as we are shown on TV?
NO. Cash is created out of thin air by the central bank of the country (which is often privately owned). The central bank can just have it printed for the cost of printing, by the government or privately. The central bank then uses this cash it creates out of thin air to buy interest-bearing public debt in the form of government bonds.
Government debt is perpetual and thus interest paid on it is perpetual. Therefore a good definition of cash might be: evidence of public debt on which taxpayers will be paying interest forever.
So what is credit? Everything else that isn’t cash.