In fact this is precisely the logic on which the Bank of Englandthe first successful modern central bankwas originally founded. In 1694, a consortium of English bankers made a loan of 1,200,000 to the king. In return they received a royal monopoly on the issuance of banknotes. What this meant in practice was they had the right to advance IOUs for a portion of the money the king now owed them to any inhabitant of the kingdom willing to borrow from them, or willing to deposit their own money in the bankin effect, to circulate or "monetize" the newly created royal debt. This was a great deal for the bankers (they got to charge the king 8 percent annual interest for the original loan and simultaneously charge interest on the same money to the clients who borrowed it) , but it only worked as long as the original loan remained outstanding. To this day, this loan has never been paid back. It cannot be. If it ever were, the entire monetary system of Great Britain would cease to exist.
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About David Graeber
David Graeber was a 20th-century American anthropologist and activist. David Rolfe Graeber was an American anthropologist and anarchist social and political activist. His influential work in social and economic anthropology, particularly his books Debt: The First 5,000 Years (2011), The Utopia of Rules (2015), Bullshit Jobs (2018), and The Dawn of Everything (2021), and his leading role in the Occupy movement earned him recognition as one of the foremost anthropologists and left-wing thinkers of his time. Read more on Wikipedia →
Themes
- Money — Thoughts on wealth, value, and material pursuits