6. It's Just Not Scientific

The World's Most Powerfully Misused Words


The words 'lend' and 'borrow' already have their use and meaning in the world outside of finance. Say I have some power tools and you would like to 'borrow' and make use of those tools for a period before returning them to me, I could 'lend' those tools to you and the interaction between us really would be an example of what our language conveys through the words 'lending' and 'borrowing'.


But banks of course don't do that. Banks record money into and out of existence in the process of facilitating our debts. We know that these are debts, but we know they are not the result of any 'lending' or 'borrowing' in the accepted meaning of those words. Money is endogenous and creditary; that is, it is debt and it comes into (and out of) being when we go into (and out of) debt.


In my experience, it's actually common enough that other economists and finance professionals will understand that money works this way, coming into and out of being when people go into and out of debt (something economists might call "multiplying money" or "expanding banks' balance sheets" etc. when people "take out a 'loan'"). What is much harder to find are those among them who recognize that there's something fundamentally wrong in couching that whole process in the incredibly misleading language of lending and borrowing, which in turn allows for the establishment of otherwise unwarranted and exploitative lender-borrower relationships.


Recording money into and out of being is an existentially different phenomenon to that of lending and recovering already-extant money that is the rightful property of another. It's outrageous that that scientific fact, which can be readily understood by children at elementary levels of schooling, is being totally overlooked or obscured by the academic, financial and political communities.


This is a clear case of the abuse, or at best the unscientific treatment, of language. I'm sure there are many professionals who use these terms unconsciously, who, for a lack of a better education themselves, use this language carelessly, uncritically. But that isn't what we'd expect from professionals. From the professional community, we expect honesty and accuracy. And as much as there may be some whose use of this language could be described as careless, there are clearly many others who know very well that this is an inappropriate and misleading language with which to describe financial relationships. And if there are any out there who are reading who are versed in matters of the law, I'm sure it must be possible to bring charges against them.


The economics community is suffering a crisis of reputation, as it's become plainly obvious to just about everyone that our economic system is failing, that it is absolutely lost to corruption and about as far from the ideals of civilized society as economies have ever been.


If you know, as children can and should know, that money comes into being when we need it, when we go into debt, would you still be happy to hand up many thousands of dollars of your hard-earned income - many thousands of hours of your working life - in interest payments to people who are not only already rich, but simply did not earn that money? Working people will pay 3 times for their homes (35 year average mortgage rates to 2007); once for their home, twice as a simple gift to the rich. And the rich, the beneficiaries of the working family's interest payments, are able to pay only once for a far more luxurious home, without having to lift a finger for it.


If you knew that much of governmental debts, both at home and abroad, were also the result of simple money creation and not the actual lending and borrowing of money, would you continue to accept the endless mainstream chatter about deficits, over-spending, the cost of public services and public debt, as well as the rationale for public austerity? Would you accept the enormous drain capitalist banks inflict on many of the poorest countries in the world, in the name of their so-called 'debts' to banks like the IMF or World Bank? Would you still believe that the capitalist system is one of fairness, where wealth is "earned", where we reward 'entreprise', 'endeavor' and 'merit'? Or would you at least suspect that this is the economics of the greatest crimes and corruption they can get away with? I don't imagine for a minute that you'd fail to have serious questions about what is going on; I think you'd recognize that we have all fallen victim to an almost unbelievable fraud. I think you'd look very differently at how property, income and opportunity is being allocated under capitalism and I think you'd wonder exactly what kind of alternative world we are all missing out on.


So let's go from knowing this world is set up by and for the corrupt to actually doing something about it. Basic economic literacy is the foundation for a better economic future, for economics founded on the literacy and the fair rights of all. Let's promote that literacy and ensure we're around to see the day when the theft ends and life and opportunity are returned to all those from whom they are currently being stolen. And that's pretty much every last person on Earth. Including economists. What might the world look like then?




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