Money as Debt

In class, we watched a video dealing with money as debt and it truly opened my eyes. I always wondered where money came from and why it didn't just grow on trees. This entire discussion reminds me of one as a little child. Do you often recall the times when you may have asked for money from your parents and they say, "Who do you think I am? Do you think money grows on trees?" Children often reply yes, and parents are quick to share that the abundance of money is not the case. Through this movie, I was able to see how money is "created", how it becomes important to us, and why there is generally limited access to it. In easy terms, money used to be limited because gold, what people traded and considered to be valuable was limited. However, through the banking industry little paper promissory notes have been developed that are easily traded through society. This is great initially if each paper really did accurately represent the amount of money backing it up in the safe, yet it doesn't. Bankers as well as the government are able to make up money through loans and mortgages a.) according to the signed agreement of the patrons obligation to pay the debt back, and b.) based on the actual money they have in the bank. For example, for ever gold dollar that actually exist in a banks safe another 9 dollars can be created.
There a few problems with this system. First, if the initial gold depositors desire their gold back, then much of the system will collapse because the bank may not have enough to accommodate the requests. Second, money is made up to give out loans and mortgages from the banks. The banks add interest, and that leads to the question of where that money will come from. If people are borrowing money to begin with, where would they really get money to pay this additional expense? It is a moral, ethical, and practical issues. The last issue I will bring up and discuss is that we are forever put in a system of debt. If everything were paid off, there would be no money because there would be no loans or made up money to support other made up money. My opinion is that this system is inconsistent and unreliable, and needs to be completely revamped. I like the ideal of the local barter system where people can borrow money and pay it back without interest.

Looking at Grignon's 4 critical challenge questions, I answer as follows:

1. Why do governments choose to borrow money from private banks at interest when the government could just create all the interest free money it needs itself?
* Governments choose to borrow money from private banks instead of creating it themselves because these private businesses and corporations, including banks are what drives the economy and are what support the world trade system.
2. Why create money as debt? Why not create money that circulates permanently and does not have to be perpetually re-borrowed in interest in order to exist?

3. How can a money system based on perpetual accelerating growth be used to build a sustainable economy?

4. What needs be changed to allow the creation of a "sustainable economy"?
* The entire system of money needs to be changed in order to create and encourage a sustainable economy.