Just yesterday in Brixton, in London, they launched just such a scheme. So I will return to this issue of innovation in this field later, but one of the most important things I got from beginning to work on this, is that I realize I, like many people, have so many completely unfounded assumptions about what money is.
Someone asked me the simplest of questions: “Where does money come from?”
Where does money come from?
Now, I am a Professor of Management, not Economics, but I like to think I know things, and it’s a very simple question, and I didn’t have a clue. I offered the idea that: “Wow, doesn’t Government create it?”
And then I found out that well, yes, 3% of all money is created by governments in the mint, so these are the coins and the notes we have. But the rest, in nearly all countries of the world, the rest 97%, is made by banks, private banks, it’s electronic. And they create this with interest, of course.
So when you go to a bank, did you think that the bank had the money to lend you, when you borrow it? I did. But no, they create it out of nothing. And of course, as I say, they create it with interest. But they don’t create the interest, so who creates the interest? It’s created with another loan, with more interest. So it means today, there is more debt in the world than money.