Paul Grignon, “Money as Debt” (2006)
While looking for something else on Youtube.com, I found this very informative video on how the modern US banking system operates. With an easy-going voice-over narrative, courtesy of Bob Bossin, and colourful, educational animation stills the film explains how banks in most countries, and in particular the United States, have come to dominate economies and economic thinking to the extent that they have become central to the functioning of society, politics and modern culture, and how they control individuals, households, businesses, corporations and governments.
The documentary starts with a brief explanation of how banks arose and originally functioned, and how banks discovered that they could create money by lending it using gold, silver or another precious commodity to back it. In time, banks were lending more money to borrowers than they had gold to pay back the original depositors and eventually fractional reserve banking, in which banks had to keep some deposits as ready liquid assets to pay back sudden demands from depositors for their money, was born. Along the way the film exposes as myth common perceptions about how money is created and this exposure leads into an explanation of the relationship between money creation and debt creation, and how debt has become essential to modern financial systems.
The film then leads viewers gently into a discussion of the consequences of debt-based financial systems: they encourage inflation, distort economies into emphasising economic growth with resultant resources wastage, environmental pollution and destruction, shoehorn people into wage dependence and deny them their rights as workers and choice as to what work they want to do and what life-styles they would prefer, and transfer power from individuals, businesses, corporations and governments to banks and their owners. Not all the problems caused by debt-based financial systems are identified; only those that directly affect the general public as consumers and citizens are pinpointed. The banks’ role of imposing interest on loans, supposedly to reward risk-taking, but leading to usury is examined.
Finally the film calls attention to proposals to reform financial systems and alternatives to replace them. Different ideas about replacing debt-based systems and returning economic and financial power back to governments are evaluated as to how much power is returned to the people. In particular, the film advocates a financial system in which governments create money backed by the necessary infrastructure society needs, such as bridges, roads and public transport and the supply of money could rise or fall depending on the levels of goods and services circulating in economies and whether there is too much or too little money already in the system chasing goods and services.
Friendly and humorous cartoon figures drawn simply and visually colourful and equally simple graphics help to illustrate the concepts described. The film’s pace is leisurely though depending on the audience and its understanding of economics, the film may need to be repeated a second time. Bossin’s narration deliberately uses easy and plain English to explain the concepts. Inserted at various points throughout the film to drive home its message about the horrors of debt-based financial systems are quotations from past politicians, bankers and other significant figures.
The need to educate a wide and general audience perhaps explains why the historical context of debt-based finance systems is so general and vague as to disappear. Viewers who remember a time when banks were firmly under the control of governments using an array of regulations and laws to rein them in might wonder why, how and when governments decided to loosen controls on banks and other financial institutions. This is my main objection to the film, that it is silent on explaining the politics and ideologies involved in governments’ decisions to deregulate their respective countries’ financial industries and to sweep away the legislation that kept the banks in check and prevented them from raiding other banks.
The film is an excellent introduction to the workings of the global financial system and how it has become one of the greatest evils of modern civilisation, enslaving hundreds of millions of people around the world, threatening economic and environmental collapse and undermining social and cultural institutions by handing over vast power over resources and people’s lives to a small coterie of self-interested and often sociopathic financial specialists. The film is the first of a trilogy about money and banking. Those viewers interested in more information about “Money as Debt” and other videos Paul Grignon has made should visit his website.