Monetary Reform - Need and Method (excerpt 2 (1941))

the present System is contrary to the Laws of God, inasmuch as it is predicated on the charging of usury (interest) -- it is impractical, inasmuch as it creates debt which is physically impossible of payment, and which results in a long chain of inequities -- the fact that, under the present System, those who control the manufacture and issue of money wield a power actually superior to the power of Government, thus rendering Democracy inoperative -- there should be no "mystery" about money - coins, bills and bank credit - than about any other manufactured product - "money" is simply the "manufactured product" of the banking system - a product which they "rent out" to the public for the transaction of business -- each and every time a bank makes a loan, (or purchases securities) new bank credit is created - new deposits - brand new "money" - it is not necessary that there be in existence a dollar of physical money, (coins and bills) for every dollar of "deposits" - the bulk of the deposits arise out of the action of the banks themselves, for, by granting loans, allowing money to be drawn on an overdraft, or purchasing securities, a bank creates a credit in its books which is the equivalent of a deposit, and a deposit is "Money" - the great bulk of "money" has no physical existence - broadly speaking, all new money comes out of a bank in the form of loans - all the money in existence has at one time been loaned by a bank -- it is a common fallacy to believe that the money which banks lend to the public belongs to their depositors - IT POSITIVELY DOES NOT - they lend brand new money which they create for the purpose - the manufacturing process consists of making an entry in their books - when a bank loan is re-paid the money is destroyed or "goes out of existence" -- and this brings us squarely face-to-face with the basic truth that under the present Monetary System ALL MONEY IS DEBT - debt on the part of the public to the banks - debt at INTEREST.