Money As Debt 2 (Promises Unleashed): a homely ramble through the global financial system

Paul Grignon, “Money As Debt 2 (Promises Unleashed)” (2009)

Where the first episode in Paul Grignon’s “Money As Debt” series is a general overview of the global financial system and the problems associated with it, the subsequent episodes delve into more detail of how this system operates and the alternative economic and money systems that could replace it. The second episode “Promises Unleashed” explains more fully how banks work, starting with an everyday experience that most viewers born before 1985 would be familiar with: earning money from odd jobs like delivering newspapers around the neighbourhood or mowing the lawn for the elderly lady down the road, a child fills its piggy bank and with the help of mum and dad takes the piggy bank to the local bank and opens a savings account with it. Everyone in the family thinks the savings account is a record of the money the child owns and puts into the bank. Far from it: the account is actually a record of what the bank promises to pay the child in the unlikely event that the youngster will suddenly want to pull out all the money – in other words, the savings account book is just a listing of transactions of money the bank owns. From this misconception of the function of a deposit account – that it’s a record of the money owned by the child – develops the film’s deconstruction of myths surrounding money, its supply and creation, and the revelation of who actually does create and circulate money and why debt is so central to the continued circulation of money.

Using simple, easy-to-follow computer-generated animation and graphs, narrator Bob Bossin leads viewers through the distinctions between creating counterfeit money and creating real money, and pointing out that there’s not much difference between crooks making money and banks making money: the difference is that where the victims of the crooks can be identified, the victims of the legally fraudulent way of making money are harder to find because the way in which they are affected is so indirect. (They turn out to be the real world resources and the owners of those resources and the labour that go into making and supplying products that are paid for with loans from banks.) We then go through various topics arising from the debt-based system of money creation and circulation: how business cycles are made up of overlapping individual loan cycles which themselves incorporate a life cycle of inflation in money, a plateau and then a deflation as the principal and interest are steadily paid off. From this concept of the business cycle, we can see how business cycles are inherently unstable especially when crossed with aspects of human social psychology.

Bossin’s homely voice-over belies the seriousness of some issues dealt with: the narrative touches on how the Great Depression of the 1930s, caused by a series of events which included an economic boom in the US resulting in an oversupply of goods and an overheated stock market among other things, leading to a share price crash, panic resulting in a run on banks as investors tried to cash in on their shares all at once, bank failures when banks couldn’t pay out and declared themselves bankrupt, leading in turn to more panic, more withdrawal attempts, further reductions in bank lending and business investment, and subsequently loss of jobs, high unemployment, lost savings and reductions in consumer spending. This in turn led to even more reduced business investment and a vicious cycle was in place. Although President Franklin D Roosevelt attempted to kick-start the US economy out of the Depression with his “New Deal” package, it was with a boom in jobs making armaments and military hardware and increased government spending during World War II plus the Marshall Plan that revitalised war-devastated Europe after 1945 that the Great Depression ended. This had the unfortunate effect of linking war with a booming economy; war became profitable for banks. From 1945 onwards, the world was at war in one way or another: for 45 years the Cold War allowed governments to build up their military forces and armaments; and after the Soviet Union fell, the United States found new enemies to replace its old foe to justify continual arms spending.

The film digresses to explain the history of bills of exchange and how they facilitated overseas trade. Legislation enacted by the Parliament in England from 1664 to 1699 legitimised bills of exchange and encouraged the rise of stock exchanges. In the last few minutes, the narrative calls for returning the function of creating and supplying money to governments and offers alternative financial systems based on economic conservation and sustainability to the present debt-based one which is premised on unending economic growth.

Although the film has a relaxed pace and explains the concepts and issues associated with our flawed financial systems in a gentle and straightforward way, some viewers may need to see the documentary at least twice to get a full grasp of the issues and what is at stake when banks deliberately encourage or at least appear indifferent to people’s misconceptions of what banks do and don’t do. Grignon’s narrative points out the ultimate effects that debt-based finance has on society, culture, the way resources are allocated and used (or misused) and the environment: the results certainly aren’t pretty at all. The film does not go into all the details of the tyranny exercised over all aspects of life by debt-based finance; a fuller picture can be found in books like Michael Rowbotham’s excellent “The Grip of Death”.

Where the film falls flat is in not providing a fuller historical context to the way in which banks have seized control of Western economies and societies, and how governments now collude with banks or dance to their tune. Although the film does a good job of explaining the phenomenon of spiralling debt, in which debt is paid off only with more debt and that ends up snowballing into bigger debt, it has little to say on how banks have forced individuals, households and businesses to take on more debt and how this has warped the ethical fabric of business transactions and ultimately the societies in which the transactions take place. There is no mention of how US governments in particular (because the documentary is aimed at a US audience) have removed regulations on the financial industry since 1980 at least and how such removals have gradually led to recurring financial crises. There is also no mention of the close links that banks have with companies manufacturing and selling armaments and military equipment.

Nevertheless for its faults and controversies, the film is a much-needed introduction for the general public into the workings of the global financial industry and how it has brought global civilisation to its current crisis where it must now choose between endless cancerous economic growth leading to environmental crisis and breakdown on the one hand, and economic contraction to preserve planetary environmental systems.

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