Global debt is spiraling and has now surpassed 300 % of global GDP. Not only are households borrowing more  to buy properties, they are also increasingly borrowing for consumption. It is the combination of low interest rates and mainly deregulated banks that create a looming new great financial crisis.What is preventing governments, central banks and financial regulators to intervene? Ulf Dahlsten, PhD and visiting professor at London School of Economics, will talk about how faulty theories, the lack of proper institutions and the emergence of a  mighty global conglomerate are preventing responsible actions.

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  1. About halfway through this presentation by a very affable man truly concerned about the future, he admits that, in his view, “we still don’t know what creates these financial crises”. He also admitted to being mystified by how everyone except economists now seems to “know” about money creation. He seems like a man who aspires to have an open mind so I hope he and others will read the following with one.

    I published my initial 47-minute Money as Debt animation in July of 2006 explaining how money is created by the borrower, that “banks can create as much money as we can borrow” and explaining why a mathematically inevitable default crisis would result whenever new money creation slowed down, for any reason.  I made the movie with the encouragement and reference help of two elderly sovereign money reformers, both now deceased, one a retired Canadian high school teacher, the other a senior member of the American Monetary Institute. Both had seen the initial private-use 2002 version I made for United Financial Consumers, a Canadian borrowers’ advocacy group.

    For the most recent explanation of my analysis see my comments on Steve Keen’s Debt Trap video. 

    I received emails from people who watched Money as Debt at the London School of Economics and the Koffi Annan School of Economics.  A young banker from the City of London told me every banker he knew had watched my animated cartoon.  I was also thanked by bankers for explaining their business to them. University professors thanked me as well.  I have more glowing reviews than I deemed necessary to post on my Reviews Page.  

    Sample comment: “I have only had the opportunity to view the original Money as Debt video, but it is hands down the single most important and eye opening educational video of our time.”

    Money as Debt is online in at least 26 languages, 4 of them full versions that I did, the rest were sub-titled and/or dubbed by anonymous volunteers. My wife mailed DVDs to buyers in over 50 countries.  

    My idea to explain money creation as an animation, with cartoon characters and animated diagrams, made the information accessible to millions world-wide who watched the movies on Google Video and Youtube. From November of 2007 to March 2008,  if you searched the term “money” on the internet, Money as Debt was usually the #1 Google video in the world.  It regularly stole the Pink Floyd music video’s perennial top spot until, on the first day of the first international financial emergency conference,  Google took it down in all languages falsely claiming I had told them to do so.  It did not take long for many more online postings of Money as Debt to be back online, along with many more volunteer translations.  

    A variety of groups were eager to learn about money creation. It was shown by the original Tea Party, the Occupy Movement worldwide, the Indignados in Spain and similar anti-austerity groups elsewhere in Europe. And, most recently, I was asked for permission from someone in the Yellow Vest Movement to use my French versions to educate the public there. That is why so many ordinary people know more about money creation than most economists.

    In Money as Debt 2 (2009) I predicted the emergence of “digital coins” – cryptocurrency, well before Bitcoin was launched.  As a result, I received a phone call 2 years later offering me first opportunity to explain blockchain and promote Bitcoin to the world.  Bitcoin was at 1/3 of a cent US and the promoter predicted it would go to $10,000 US. My reaction was that such a thing should never be money, so I declined the offer.  It would have been possible to create a stable Bitcoin by definition, but since the universal motivation on the nascent Bitcoin forums was about getting something for nothing, stability was not on the agenda.

    The invitation to promote Bitcoin occurred while I was just wrapping up Money as Debt III, my 2 1/2 hour animated proposal (in great detail) for a radical yet non-disruptive solution that even the mega-corps Ulf mentions would like.  In MAD 3, I put the entire blame for our money crises on our limited concept of money as “a single quantity of anything made valuable by its own scarcity”. That applies equally whether money is cowrie shells, gold or silver coins, fiat cash, bank credit or Bitcoin and its thousands of conceptual imitators. Most crypto currencies are cutting edge technology applied to repeating the fundamental money mistake that plagues the current system.

    The current system, as Ulf notes, serves the interest of speculators – gamblers not producers. It is a house of cards by design. 

    The remedy is to put the producers, both large and small, in control of their own credit, making the source of this new money promises of current short-term production redeemable ONLY in the products or services the Issuer of the credit offers for sale.

    In shorthand, it is “crowdfunding” production by having the producers borrow directly from the customers with such credit creation strictly limited to proven demand for the promised goods and/or services. This second form of money is actually ancient, preceded the invention of coins and has always been with us in one form or another. Customer reward points like Air Miles and Canadian Tire money are Producer Credits.

    This alternate concept of money, implemented with modern technology, could enable anyone from an individual with a market garden to a global corporation like Toyota to spend these Producer Credits rather than borrow money from a bank. Banks would be wise to add Producer Credits to their system for self-preservation purposes as this parallel form of money (an actual “note” -a promise of something in the real world) offers them the mathematical solution to the fundamental flaw in the current system. 

    Also, the job of due diligence in researching and verifying any Producer’s credit creation worthiness would be a social role worthy of compensation. According to a report prepared for the City of London some years ago, about 20% of world trade in real goods is already done business-to-business in “common tender” money systems with credits payable only in the goods and services of the credit issuer. In the report linked to below, the current practitioners themselves are proposing banking involvement and government regulation to make the system more effective.

    I propose to go further and make these disparate systems compatible and linked to the current bank credit system so that savings always take the form of pre-bought goods and services (which can also be spent or traded as “money”). Initial implementation could be as simple as selling Producer Credits as savings at retail outlets.  This is just buying what you were going to buy anyway but maybe 6 months to a year in advance. For extending this existing bank credit to the Producer, on redemption the buyer gets a time-proportionate discount on prices as “interest” equal to or better than what the banks are paying. The bank credit is, thereby, always in the process of being spent and made available to the borrowers that need it, rather than unavailable or lent a second time. 

    The debt to savers is demonetized.  It is removed from the money accounting. This solves the fundamental mathematical problem with the current system which also stays in place because, with this addition, the two systems are not just mathematically stable, they are entirely compatible and synergistic. 

    It is an expansion of the concept of money, something that is inevitably happening anyway. Some software startups I have read about have financed their development by pre-selling their services as “digital coins” the way I imagined.  Across the street from my home stands a beautiful artisan bakery that was built in part by trading “bread credits” issued by the individual baker/builder for Canadian cash and bank credit.  Synchronistically, I had already made this 7 1/2 minute cartoon illustrating how Producer Credits were used in medieval times using a trustworthy baker and in-demand bread credits as the stars of the show.

    Naturally, any tax-collecting government has “assured demand” and the right therefore to issue Tax Credits in the Producer Credit system.  Thus I support “sovereign money” but not as a national fiat monopoly. Government is a service provider. Producer Credits are defined in value by what the Producer offers in real goods and/or services to get them back. It makes no difference at all how much “money” exists relative to GDP. It’s a different money paradigm altogether.

    There’s much, much more at

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