According to an exchange in Hansard a few years ago the split between 'real' UK money (i.e. notes and coins) and made-up UK money (created from nothing by bank loans) was something like 3% vs. 97%.
Which means that 97% of British money was created with an associated interest charge.
Which means that unless more money is made up every year there isn't enough money in circulation to pay the interest charges off.
So the banks make-up more money every year. Lots of it
And if you create money at a faster rate than people can create goods and services to buy with that money prices go up
Which goes a long way to explaining all those funky exponential graphs we've been seeing - house prices, personal indebtedness, stuff like that
I remember travelling in Italy years ago, in the late 1970s and early 1980s. The rate of money creation and consequent devaluation of that money had got so out of hand that the scrap value of metal Lire coins was worth far in excess of their face value. Metal money disappeared virtually overnight. Even the smallest value coins were replaced by banknotes printed on grades of paper that made toilet roll feel durable in comparison. Attendants at motorway toll boths gave out boiled sweets instead of change. The situation was, to put it mildly, silly.
I only mention this because I couldn't help noticing that, as of December last year, the scrap value of US 5 cent coins was.... 7 cents. As with all the other recent commodity price rises this has been explained as being the result of a rise in the market price of copper not a fall in the inherent value of the dollar but, fuck it, nickels could be made out of cheetos or virtually anything else and they'd still end up being worth more dead than alive.
Of course, most politicians, bankers and economists will argue that the causes of inflation, recession/ depression and the resulting (and sneaky) wealth transfer are a lot more complex and less deliberate than a small group of decision makers simply running up, then running down the amount of money in circulation.
But they would.
And you can always make the Bankers Control the World!!! model sound less conspiratorial by making it sound more deterministic. Instead of claiming that powerful Financiers deliberately get together to mug the world by ramping up money supply and forcing debt onto ordinary people (and national governments of developed and developing countries), only to pull the plug on them later on, you can just say to yourself 'Well, these people come from the same backgrounds, thrive in the same kind of institutions and consequently just happen to think the same way. There's nothing co-ordinated about it'. Easy peasy, no conspiracy.
The end result is the same though. Take the 'independent' group of people who meet every month to set the base UK interest rate for example. Whose interests are they primarily concerned with? Who are they answerable to?
And then there are all those other spooky groups and get-togethers that people like our chancellor definitely don't attend, no sirree.
Anyway, if Bankers really do Control the World!!! and if we really are near the end of a deliberate inflationary cycle there's lots and lots to look forward to - housing crashes, lots of unemployment, social unrest and maybe exciting new forms of government.
Because if there's one thing people need after losing their job, their home and their savings it's having someone to blame (usually the wrong someone), and leaders willing to feed that need...
Extract from "Money: Whence it came, where it went" by John Kenneth Galbraith
"That the great German inflation, like the ones elsewhere in central Europe, produced a large transfer of wealth from those who possessed saving accounts, money, securities or mortgages to those who had debts or tangible property is assumed. And, despite a shortage of affirming statistics, that such transfer occurred does seem plausible. The loss so involved, the parallel lost by people of their stake in the social order and the companion anger and frustration were, in turn, thought to have much to do with the rise of Fascism or Communism. These are matters on which there is no proof, and it is unbecoming, however customary, to substitute certainty of statement for hard evidence. But the simple facts are worth a glance. All of the countries of central Europe that suffered a collapse of their currencies following the First World War were eventually to experience Fascism, Communism or in most cases - Poland, Hungary, East Germany - both. The countries that did not experience such a breakdown in their money were almost uniformly more fortunate.
What is not in doubt is that the German inflation left Germans with a searing fear of its recurrence. And whatever the effect of inflation in paving the way for Fascism, measures taken later out of fear of inflation were certainly not without effect. We have noticed, and will see again, that the strongest action is taken against inflation when it is least needed. On 8 December 1931, with one-sixth of the total German labour force out of work, the government of Heinrich Bruning decreed a reduction of from 10 to 15 per cent in most wages, this being a rollback to the level of four years earlier. It decreed also a reduction in industrial prices of 10 per cent, a similar reduction in rents, railway fares, rail freight charges and charges for municipal services. Earlier, wages of public employees had been reduced by a fifth, and taxes on wages, salaries and on incomes had been sharply increased. Unemployment benefits were also reduced. In the following year unemployment rose to one-fifth of the German labour force, and in the next year came Hitler"