Book
Ellen Hodgson Brown, Web of Debt: The Shocking Truth About Our Money System And How We Can Break Free. Baton Rouge, Louisiana: Third Millennium Press, 2008.
Reviewer
George Crowell, University of Windsor, Department of Religious Studies (retired), Windsor, Ontario
People concerned about social justice need this book! In Web of Debt, Ellen Brown provides an extraordinarily compelling and vivid analysis of one of the most crucial yet least understood of the major social problems that currently imperil humanity. She exposes and explains the hidden workings of our money system.
The problems deriving from this system pervade and worsen the whole range of social problems that confront us globally. Brown shows how the money system has a devastating impact, but also how it could be transformed to provide powerful impetus for needed social change.
The great majority of social activists who have worked diligently for many years to overcome a wide variety of social problems, striving to achieve social justice and peace, know almost nothing about the workings of the money system.
For many years I have been among such activists, and have seen how our analyses of social problems -- poverty, environmental destruction, and war, in all their many manifestations -- have omitted any reference to it. Our goals have been worthy. But our analyses have been weakened and our strategies often ill-conceived because we have failed to understand or to confront the potent realities of the money system.
Our ignorance is not surprising. The workings of the money system have been carefully obscured from public scrutiny and understanding by those in the private banking system who control it.
In the Foreword to Web of Debt, Reed Simpson, a veteran banker, writes: “I can report that even most bankers are not aware of what goes on behind closed doors at the top of their field.... I am more familiar than most with the issues raised in [Brown’s book] and I still found it to be an eye-opener, a remarkable window into what is really going on.... [The way our money system functions] has been the focus of a highly sophisticated and long-term disinformation campaign that permeates academia, media, and publishing. The complexity of the subject has been intentionally exploited to keep its mysteries hidden.” (ix)
At the heart of Brown’s revelations is her explanation of the source of our money. It is no longer based in any way on gold. Nor, as is almost universally assumed, is it supplied by governments. Some 97 percent of the money supply in capitalist economies around the world is created out of nothing by private commercial banks in their process of making loans. Banks do not lend out the money of depositors, as is also widely assumed. As they make loans, the banks create new money that is added to the total amount of money in circulation.
Huge problems result. Especially notable is the fact that, when the banks supply almost all the money essential for our economic transactions, they create money for the principal of the loans but do not for the interest that they invariably require to be paid. They create only debt-money. And they impose a demand impossible for us to meet collectively! Money to pay interest is simply not available.
In order to make payments that include both interest and principal, people are driven to compete with each other, “to fight with each other in order to survive” (31). People must continue borrowing from the banks, further increasing their indebtedness. Inevitably some borrowers default, enabling the banks to take over their collateral. The few favored in this system become ever more wealthy, while many are impoverished.
Much more analysis of the dynamics of this system is provided in the book. The abuses perpetrated through our money system are possible only because governments have been manipulated into allowing private banks to control the system. Governments at the federal level could be using their own powers for money creation to provide interest-free loans for much-needed infrastructure, and, as the economy expands, could not only lend but spend debt-free money into existence to provide public services.
Brown explains how the alternative of democratically controlled government-created money could make enormously creative contributions to human welfare.
Dealing primarily with US history, Brown describes successful cases of government-created money -- as in colonial Pennsylvania under Benjamin Franklin, and in the Civil War with the greenbacks -- and shows how private banking interests fought constantly to control the US money system. Brown’s book is an antidote to our ignorance of the money system, as is also her website: webofdebt.com.