"The bank hath benefit
of interest on all moneys
which it creates out of nothing."
William Paterson
(1658-1719) Founder of the Bank of England in 1694, the privately owned central bank for the Kingdom of England.
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Reader comments about this quote:
How silly, how shallow. Quote fails to mention that depositors are receiving interest also. The bank is providing a community service based on queing theory, probability, and statistics.
 -- Waffler, Smith, Arkansas     
  • 1
    Waff, if you have a checking account at a bank, please check out how much interest you are getting on your deposits. Mine is around one half of one percent, almost enough to buy a cup of coffee. Owning a bank is a license to steal.
     -- jim k, austin     
    All middle men have a license to steal. The wealth in my village comes from cotton brokers, peanut brokers etcetera. Like banks they buy the stuff from the poor farmers and sell it to some body else. The banks buy money from us by giving us interest and sell it to someone else for more interest. Yeah they all make a profit but they are also providing a service. You could run all around the country paying your folks in currency, what would that cost you?
     -- Waffler, Smith, Arkansas     
    Banks extend credit and charge interest without needing any deposits at all -- that is what creating money out of nothing means. At different points in time, banks were required to have 5-20% of cash on deposit as a 'reserve'. This means that when you deposit $1000 in a bank and get 5% interest, the bank may create $10,000 of checkbook money and charge 8% interest. So while you earn around $50 on your $1000 deposit, the bank earns over $800 (and potentially lots more when compounded daily and over longer terms). And yet there is still only $1000 in the bank. Except when someone deposits the $10,000 they 'borrowed' into another bank then allowing that bank to create $100,000 and earn tens of thousands of dollars interest over the term. Meanwhile only $1000 is actually on deposit. And on and on. Consider that every dollar in circulation has indeed been borrowed and someone somewhere is paying interest on it. The bankers are not middlemen -- they are monopolists with a license to counterfeit.
     -- E Archer, NYC     
    I've had enough. I can't take anymore of the bankers, politicians, or lawyers. I will never vote for anyone that is either of these. Lets get them all out of office and put real people in their positions. We will all be much better off. While we are at it, lets yank, right off of the bench all of these crass, obnoxious judges, who abuse the people, and who think that they are judge Judy. Same with abusive cops. And by the way, judge Judy needs to be publicly flogged
     -- Billy Yank, Boston     
    I had a highly educated friend (in science at least) and he was of the belief that since the US has a 30 trillion dollar economy there must therefore be 30 trillion dollars floating around. He had never heard of the accelerator effect, that is when 30 people exchange the same one dollar bill over a 30 day period they have just created $30 dollars worth of transactions, which equals $30 dollars worth of income and expense to each other. Never forget that one persons income is another persons outgo but net effect is a boost in the GDP.
     -- Waffler, Smith, Arkansas     
     -- Mike, Norwalk      
    Interesting point, Waffler. As per the quote, however, the bank says it may charge interest for the money it created out of nothing, instead of charging interest on money it actually has and is loaning to another. This is a license not only to print up money that people want to borrow but to force people to pay interest for the privilege. The bank has no risk and would lose nothing if the loan was not repaid. Waffler's scenario on how one dollar bill is used for dozens of transactions is correct -- the bill is but a medium of exchange. But when someone pays back a 'loan' in which the money was created out of nothing, the money is destroyed and taken out of circulation. There are then less tokens with which to trade even though there may be an abundance of supply and demand. When the omnipotent counterfeiter (the bank) can dump millions in new tokens into the picture, they can buy up anything and everything without having to earn those tokens through providing goods and services. Then they can remove the same millions when they call the loans (this is referred to as the expansion and contraction of the money supply). Waffler's example works best when the tokens used as a medium of exchange remain in circulation and the value of the tokens is backed by something with real intrinisic value and can be redeemed in real goods or services. Waffler's example does not account for debts or savings.
     -- E Archer, NYC     
     -- A Miller, SRQ      
    This is what the Federal Reserve Bank [the US subsidiary of the Bank of England] does in America. It creates money out of thin air as Fed Chair Bernanke said on a 60 Minutes interview on Sunday March 15,2009. Then charges the people who borrow this funny money interest at rates the bank controls, so it pays very little back to the few depositors to the bank interest with more money it creates out of thin air. The end result is the bank has managed to inflate the currency or more exactly DEVALUATE or CHEAPEN the currency forcing prices to rise. The rise in prices means your savings becomes worth less each year forcing more and more people to borrow ever greater sums of money at interest rates it controls so the Bank is always the winner and you lose your FREEDOMS because you have now lost your property in debt. This is why John Adams the second President of the United States of America said, ”There are two ways to conquer a nation, first is by the sword the second is by debt.” The third President of the United States of America, Thomas Jefferson, said “I believe that banking institutions are more dangerous to our liberties that standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.” The US “our” constitution, written by John Adams & Thomas Jefferson, states in, Article 1 [the power of congress] Section 8 Clause 5, “To coin money, regulate the value thereof”. This is Debt Free Money not the self-generating debt of the Federal Reserve Bank’s Federal Reserve Note! Now a quote from NERO, 'the constitution of the United States of America did not fail the American People, the American People failed the Constitution!'
     -- Nero, Paterson, NJ     
    Waffler, your peanut and cotton example doesn't fit the banks ex nihilo creation of money. Farmers worked hard planting, growing, and harvesting their products (money), Farmers are in the business of growing, not brokering. The farmer did what he did and then exchanged his money (peanuts, cotton, etc.) A broker added his labors (farmers and brokers labors are necessary in fulfilling the measure of the money's creation). The money had an added intrinsic value - and so on, and so on, and so on. The banker created money out of thin air with no intrinsic value association. The farmer worked for it, the broker worked for it, the banker lent it to you without intrinsic value. The bank can create all it wants, the farmer can not.
     -- Mike, Norwalk     
    Nero, interesting that you would point out the subsidiary connection to the Bank of England. My research on the subject takes us back to the 1700's right after the War of Independence: Meyer Rothschild (nee Bauer) had just arrived in london with a fortune stolen from a German Prince (William of Hanau) and was in a tremendous position to offer the English Court the money it needed to pay its sailors and soldiers returning home from a lost war in America. Here was the situation that led to the creation of Inland Revenue and a Private Bank issuing funds to a sovereign government. Inland Revenue being the collection agent for that private bank. The model for what we see today was created there and then. The Rothschild's started out as theives and con artists and remain so to this day.
     -- J Carlton, Calgary     
    Does anyone know the origin of this quote? Was it in his pamphlet "A Brief Account of the Intended Bank of England" or elsewhere? How can we rate a quote when we can not be sure of its authenticity? No source is given so are we to assume that none exists?
     -- Charles Pinwill, Brisbane, Australia     
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