Where Does Money Come From? | Ole Bjerg | TEDxCopenhagen

Where does money come from? How is money created? Can commercial banks create money by issuing new loans? Knowing that electronic money represents 95% of the total money supply, have we privatized the creation of money in our societies?

Ole Bjerg believes that we have handed a vital societal power -- money creation -- to the financial sectors, and that this leads to instability, inequalities and a concentration of power outside democratic institutions. Facing this gloomy situation, he highlights the solution: a sovereign money system.

Ole Bjerg is an Associate Professor in the Department of Management, Politics and Philosophy at Copenhagen Business School, and co-founder of Gode Penge, an initiative for the democratization of the monetary system.

Ole Bjerg is an Associate Professor in the Department of Management, Politics and Philosophy at Copenhagen Business School. After his book, Making Money – The Philosophy of Post-Credit Capitalism, Ole published Parallax of Growth – The Philosophy of Ecology and Economy. He also co-founded Gode Penge, an initiative for the democratization of the monetary system.

[erakkovaatainen]

This is why I never had debt. It's a scam! They create money out of nothing and then I am paying for that with interest? I rent cheap, I live cheap, I buy only food and necessities. Minimalism is the answer. Don't spend money you don't have!

[seensnakes]

I studied money creation for a long while and I have learned to explain the money creation very simply.
When someone goes to a bank to borrow money the banks provides the individual with a promissory note. When the customer signs the promissory note the banks sees that note exactly as money. "An unconditional promise to pay is money". So the bank deposits this promissory note into a TRANSACTION ACCOUNT and from there the ENDOGENOUS FUNDS are produced to write the check for the loan. The endogenous money does not come from deposits. There is no fractional reserve lending. Presently there is 1.39 trillion exogenous dollars created by the government, and the banks create 12 trillion + of endogenous money. There is no multiplicity effect. What is wrong with this?

1) If a signed promissory note is exactly the same as money well...I could signed a promissory note and buy a new car, or a house. In fact everybody could do it.They dont need to pay it back because the promissory note is itself "money". Soon the entire economy will collapse because no one would want to work when they can simply issue promissory notes just like the commercial banks do.

2) Banks gets rights to a house/car/business when someone signs for a loan but they have done nothing to get the house/car/business. All they did was an accounting trick.

3) The media and schools are controlled by bankers, other wise this would be common knowledge.

4) Banks do not tell "borrowers" that they are providing the funds for the loan. In a proper contract full disclosure is required.

5) Most of our money is created by debt. it is a promise to pay. So we will never get out of debt. Most people wont have enough capital to start their own business and savings will be dismal.

6)The bankers control the housing market and will price homes out of the reach of most people.

7) When a promissory note is paid off, it loses value. Fulfillment voids the value of a promissory note. This causes the money supply to shrink. It means that we are going to be forever in debt if we are to have money.

[jackjackson]

Brilliant young man...His observations are correct...They lay the ground for new ways of looking at things...But we still have a long, very long way to go.

[JohnDaniels]

"If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property"
- Thomas Jefferson

[SAL-fsmr]

Nah, it is time to decentralize money. Money should belong to **sovereign individuals** rather than the state!

[stachowi]

Environmentalists need to understand how money works before they can address the environment. Banks can create ungodly amounts of money with a few keystrokes, but then people spend that money in the real world (e.g. electronics, cars, houses, etc...) and those things require resources and energy.

[earlpierce]

I like the idea of publicly owned banks with 100% of the profit from loans going to benefit the local community that uses the loans for spending and future production. A recycling affect if you will.

Also like the idea of completely separating money creation from investment and commercial banking. This is very much needed to stabilize an economy and limit boom/busts cycles.

Allow private banks to fail. And public banks to only do responsible investments with community benefit in mind.

[kbombin]

Good talk!

Interest = Usury: The borrower whose original loan consisted of principal only, must also pay an extra amount that the Banker specifies (interest). Therefore, the new money never equals the new debt added. The amounts needed to pay the interest on the original loan is not "created", and therefore does not exist! To conceal the fraud of lending nothing, Bankers charge interest, whereby borrowers (of nothing) agree to return more imaginary "credit" than they borrowed. Creating a system of perpetual compound interest owed to the bankers.

We must change the design of how money is created for our childrens sake.

[MrMoss]

Excellent presentation condensing a very complex topic

[s.sadiqal-alawi]

Great speech and presentation specially to the weaknesses of current banking system. One note on the suggested solution is that he proposed the solution to the payments not to credit extension. The main failure on banks side is the role played in credit extension not the payments.

[ismailovic]

That's quite a difficult subject to tackle, Because even if we apply the solution mentioned, ( creating accounts in the central bank ) This also can lead to inequality because the commercial banks will be forced to pay interest if they borrow money from central bank, so the interest rate paid by the borrower will increase because the general interest he'll be paying equals the interest of central bank plus the profit margin fixed by the commercial bank. Consequently, This will deepen the inequality between people who have money and people who don't.

[slovokia]

The interesting thing is that the reason we have independent central banks is because we don't trust politicians to directly control the money supply and interest rates. Governments can screw things up too and have many times in the past. This is sort of like the debate between socialism and capitalism.

[racerxtoday]

In this video he refers to the Central banks as being private and goes on to referring to them as government when he talks about how it's a good system. The Fed et al, are ALL private banks, any Central bank is. They respond to requests for private currency (Federal Reserve Notes aka dollars in the U.S.) in the form of loans because few realize they're adding to the national debt.

[shawnkovac]

well spoken speech. good start on beginning to understand the global monetary system. but speaker failed to realize that the central banks themselves are not run by the democratic governments, but are in truth private banks themselves which *claim* to be run by the government. in truth, all major central national banks are privately *owned* banks. and the laws have been intentionally masked to look like they are run by the governments tho. so in truth, private banks create 'money' out of thin air and sell us pieces of paper (or numbers in a database) and we work our sweat and labor for their pieces of paper or their numbers in their databases. hmm, it sounds like a system that needs a major overhaul to me.

[yabbadabbadoo]

The Central Bank of Australia describes money as ''Pure Confidence!!''
JP Morgan described money as Gold. There's nothing else.

[darkanser]

In other words, the world of credit ( credit, loans, etc. ) is a

[georgechristou]

i dont understand why interest would work better if we all have accounts with the central bank. Commercial banks just charge us interest based on what the central bank rate is. So Central bank would also charge us interest anyways. can someone explain?

[moiquiregardevideo]

The proposal that the government of each country which print paper money should also offer a saving account to allow people to pay electronically seems good if we believe that our government will use that money in a more responsible way than commercial banks do. There is a possibility that some countries choose to waste the extra money either to military or to hide in private account like is the norm in dictatorial regimes.

Another option not mentioned is credit unions.

[francescorampone]

Good talk, but the speaker does not say: 1. what happens to electronic money when you pay the loan back; 2. that the banks also pay interests to clients for deposits on their bank accounts. If I really delve into n. 1 and 2, I'm not sure I totally agree with Ole Bjerg.

[mjames]

I consider Money is "Anti Debt Paper". Money just facilitates transferrence of debt