The History of Money as Debt

Paul grignon 2009

The history of my movies has been put up on my website as it happened.

Producer's Comments

There has been, since written history began, the concept of money as

It was used 4,000 years ago as credits for grain stored at the temple, and credits for other things denominated in common units like grain, cattle and salt. It was beautifully developed in Medieval Times as illustrated in my short cartoon,

The Essence of Money

The exact same principle is in use today and according to a report to the City of London, accounts for an estimated 20% of world trade already. This report's executive summary is well worth reading:
Capacity Trade and Credit: Emerging Architectures for Commerce and Money.

I have made a proposal, a vision if you like, of how society and the economy could be beneficially restructured based primarily upon using these reliable business-to-business barter credits, essentially money backed by anything of proven value, as money in general circulation.

In my proposed system, there is complete freedom
for anyone, individual, society, corporation or government
to self-issue credit to buy from those that will accept it for future value.

This is a fundamental human right
proclaimed by E.C. Riegel before I was born.

For the first time in history, technological advance now enables us to use barter credits, previously limited to local circulations, as a completely liberated global money system of organic voluntary connection.

And it is already happening.

My proposal however, not only allows simple interest, it is based on it.
However, the purpose and effects are different because it is payable only in the goods and services of its issuer.

All FLOWS in my concept are complete and never create any mathematical problems.


I started from first principles in designing my proposal.

I have known about self-issued credit since 1979
as I was friends with the late David Weston who set up the
Community Exchange in Vancouver in 1976 with Michael Linton
and attempted to set it up himself on the nearby island where I live.

Based on this experiment, Michael Linton developed the LETS system.

I also live in gifting relationships.

Gifting is wonderful, I'm all for it. But once it is organized,
as would be needed for any scale of production,
it has to "keep score" and that becomes EXCHANGE.

Once you have a defined value unit like a bushel of wheat,
the idea arises to make a portable object to represent that value
rather than using centralized records.

Humans have the same two kinds of money they have always had:

1. Money as a thing-in-itself, redeemable for anything


2. Money as a "promise of something specific from someone specific."
redeemable for the goods and or services of its issuer.

The first kind creates mathematical problems as I have described,
as well as being a system of state/banking "monopoly" and political control.

The second kind gives rise to the possibility of a completely liberated type of money
FREE from inflation and deflation, monopoly and political control,
because the money's value is defined by
the PORTION OF REAL WORLD ABUNDANCE promised by the issuer,

There is a long list of people who uphold the same truths about money that I do.

E. C. Riegel said the same things in the 1940's.

That said, any system of barter credits would logically consist of
the credits for the things we have to buy.

And therefore the corporations will also seize this power if we do.

Most of the credits in use would be theirs because we want to buy their stuff.

This is not so much a recommendation on my part but a concession to reality.
Corporations and governments are not going away. They have to be reined in and reformed and, to do so,
a vivid alternative vision and valid reasons for it
need to be provided to the people of the world first.

In my proposal everyone is a "business" if they are offering anything of value in exchange for value from someone else.

Local personal networks are totally encouraged.

The automated market system I propose both enables and compels producers to provide the full required purchasing power to their intended customers one way or another.

Money reformers have long been working toward re-implementing the natural right of human beings, individually, or collectively as government, to issue their own credit
rather than give it away to a bank and use the bank's.

The Problem is Socio-economic not Mathematical.

At any moment in time, what the borrower is compelled by contract to pay is just the next payment.  Not the whole amount of interest. In fact until the time has elapsed, that future interest is NOT EVEN OWED.

Even if the interest portion is most of the payment, it is still just an infinitesimal portion of all the money in existence at that moment. So where is there any conceivable mathematical shortage that has to be made up?

The only shortage is the opportunity to EARN IT.

And that isn't a math problem, it's a SOCIO-ECONOMIC ONE.

Fortunately, with barter credits, the ONLY way to finally redeem money
as a "promise of something specific from someone specific" is to
within a time limit. 

Every credit cycle must complete or perish.

Debts can simply ripen to a maximum value like fruit and, like ripe fruit, must be redeemed for the issuer's offerings or expire. There is never a legacy of debt nor any mathematical "shortages" to be made up.

The "interest" is only a motivation for the credit to return to it's own Issuer,
the only one who will give interest on it,
and the
only one that guarantees redemption at par with the value unit.

There are also many other beneficial potentials described in entertaining detail in
Money as Debt III - Evolution Beyond Money
and at digitalcoin.info
Here is an economists' review of the Digital Coin proposal.

"Self-issued credit" is what we really do now anyways under the pretense of banks making "loans" and this needs to be understood by everyone.

The design of my current proposal is my own, distinct from all others I am aware of, and is simply updated from the original principles of a 4,000 year old concept, and created in response to an invitation from David Irvine at maidsafe.net, a Money as Debt fan who asked me for ideas for using a completely secure file as private anonymous currency.

My ideas were very much guided by reading Thomas Greco's book, The End of Money and the Future of Civilization which he asked me to review at the very moment I was needing to know what it contained. Thomas Greco's book detailed the actual experienced failures of self-issued credit systems particularly LETS.

As mentioned earlier on this page, my friend David Weston tried to introduce his Community Exchange Trading System where I live, back in 1979, the design of which was later implemented as the initial LETS software by the acknowledged inventor Michael Linton who also lives nearby.

We have had Frances Ayley, the founder of the largest LETS system in the UK (as well as most of them) stay with us twice and make start-up presentations.

I first understood how banking really works in 1993 (2 years before I got my first computer). It was explained to me by the logger-developer who later logged off the island forest I, as founding President of our new conservancy, was trying to save. He very patiently explained to me why no other outcome was economically possible and he was correct. In the process he also explained very clearly how banks create money.

That was also the birth of my "twice-lent" money theory.

As I sat in front of the logger-developer's computer and scrolled through screen after screen of mortgages he had bought with his profits he explained to me that he NEVER spent his own money on logging or development.

He told me (paraphrased) "I just go to my bank and they create new money on the spot for me to buy the land and pay for the logging. I cut down the trees, sell the logs and pay off the bank in short order.

The principal was created by my promise to pay it back and is extinguished when I pay it back.
I use the profits to buy mortgages."

He owned screensful of mortgages, listed in small type, and he told me he had no intention of spending this money. His proudly announced lifetime goal was to own BILLIONS of dollars in mortgages.

From this simple explanation it follows logically, that if ALL money is created as someone's debt,
then the logger/developer's profits are someone else's debt.
Once he lends it out as existing money it becomes a second debt of the same principal.

P < 2P

And, because he is a professional lender of existing money,
this bank credit will remain as multiple debts of the same principal INDEFINITELY.

But he is only the extreme example.

Slowly it dawned on me that the same is true for ALL of us that have savings.

Savings are money only available as a loan from the saver.
However, to complete the debt cycle,
this same money needs to be available to the original borrowers as earnings, ON TIME.

Otherwise, it is impossible to extinguish the debt that created it,
without creating another one at least as big.

The entire profession of economics has ignored this rather obvious fact for centuries. It applies also to any form of money-as-a-thing-in-itself in limited supply, such as gold and silver coinage. All that is needed to create a money supply that is largely created as debt is income disparity. In 14 years of reading economics and monetary theory I have never encountered so much as a glimmer of recognition of this amazingly simple dynamic except as the vague idea, derived no doubt from empirical observation, that "income disparity" somehow causes periodic debt crises.

Many of the ideas presented in Money as Debts 1 & 2, particularly the idea that the borrower commits fraud when pledging the seller's property as collateral, and the history about "Bills of Exchange" were gleaned from Tim Madden whose 5-hour seminar I was hired by United Financial Consumers to record in Jan. 2002, and edit into something short. Instead I talked them into paying me to make the17-minute original Money as Debt, which was The Goldsmith's Tale followed by short sample video clips of Tim speaking.

bill abram

with Bill Abram 2013

This was seen by the recently deceased local money reformer Bill Abram. He is the man I credit for encouraging me to make the 2006 Money as Debt. He also predicted it would "go big".

Bill forwarded the 2002 movie to long-time money reformer, Dick Distelhorst from Iowa (also now deceased) a senior at the American Monetary Association. Dick told me his personal tutor was Wright Patman, long-serving Congressman and Chair of the United States House Committee on Banking and Currency, a vocal opponent of the Federal Reserve and Wall Street, and author of the 1964 Committee Report, A Primer on Money. Both wanted permission to use the initial Money as Debt movie right away but I asked for time to make a more complete production.

They coached me on the first movie which premiered at an ambitious Monetary Seminar Bill Abram organized for municipal politicians in Victoria BC, May 28, 2006. To meet this deadline I worked for 6 months, 16, 18 and even a few 21-hour days near the end. Stephen Zarlenga was the feature presentation at this event, which is when I met him. This history has been on my website since 2006. Money reformer and partner of Democrat presidential hopeful Dennis Kucinich, Elizabeth Kucinich, who met Dennis through her work with Stephen, helped make the first movie an instant success with her numerous contacts in the money reform movements, as did many others on my Reviews Page.

During the same period I also volunteered to create new promotional materials for the Canadian Action Party, Canada's money reform political party, working directly with the leader, Connie Fogal.

We sold a few thousand DVDs initially, before it was so widely pirated, and were invited to be hosted by Money as Debt fans and two distributors in Europe. Using years of accumulated Air Miles, we visited several money reformers in Europe in late summer 2009.- including We are Change activists in Holland and Belgium, Alistair McConnachie, James Gibb Stuart, and many more in Glasgow.


with Alistair McConnachie and James Gibb Stuart in 2009

I have also read Margrit Kennedy and met with Bernard Lietaer two of the best known authors and scholars on many concepts of money, particularly business-to-business barter systems such as the very successful one we visited in Belgium in 2009 (picture below).

RES exchange

At his kind invitation, my wife and I visited and stayed overnight at Bernard's apartment in Brussels.
We were unable to accept Margrit's invitation to visit her in Germany.

Like many, I was hugely informed by G. Edward Griffin's Creature from Jekyll Island which I read twice and Pat Carmack and Bill Still's major opus, The Money Masters, which I watched 6 times and showed to friends. Pat Carmack retails Money as Debt DVDs along with their own movie productions, for the value of the explanations of current banking and alternate monetary ideas, and despite the fact that my movies have entered conceptual territory beyond the scope of their own proposals.

As for early exposés of the banking system here's one from 1932.

Louis T. McFadden is quoted as saying this in Congress:

"Mr. Chairman, we have in this country one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board and the Federal Reserve Banks. The Federal Reserve Board, a Government board, has cheated the Government of the United States and the people of the United States out of enough money to pay the national debt. The depredations and iniquities of the Federal Reserve Board has cost this country enough money to pay the national debt several times over. This evil institution has impoverished and ruined the people of the United States, has bankrupted itself, and has practically bankrupted our Government. It has done this through the defects of the law under which it operates, through the maladministration of that law by the Federal Reserve Board, and through the corrupt practices of the moneyed vultures who control it.

Some people think the Federal Reserve banks are United States Government institutions. They are not Government institutions. They are private credit monopolies which prey upon the people of the United States for the benefit of themselves and their foreign customers; foreign and domestic speculators and swindlers; and rich and predatory money lenders. In that dark crew of financial pirates there are those who would cut a man's throat to get a dollar out of his pocket; there are those who send money into States to buy votes to control our legislation; and there are those who maintain international propaganda for the purpose of deceiving us and of wheedling us into the granting of new concessions which will permit them to cover up their past misdeeds and set again in motion their gigantic train of crime.

These twelve private credit monopolies were deceitfully and disloyally foisted upon this country by the bankers who came here from Europe and repaid us for our hospitality by undermining our American institutions. Those bankers took money out of this country to finance Japan in a war against Russia. They created a reign of terror in Russia with our money in order to help that war along. They instigated the separate peace between Germany and Russia and thus drove a wedge between the Allies in the World War. They financed Trotsky's passage from New York to Russia so that he might assist in the destruction of the Russian Empire. They fomented and instigated the Russian revolution and they placed a large fund of American dollars at Trotsky's disposal in one of their branch banks in Sweden so that through him Russian homes might be thoroughly broken up and Russian children flung far and wide from their natural protectors. They have since begun the breaking up of American homes and the dispersal of American children."

After that, Eustace Mullins published his book "The Secrets of the Federal Reserve Bank"in 1952
which was an update of the original book Mullins on the Federal Reserve
commissioned by incarcerated poet Ezra Pound in 1948.

Here is an excerpt from the text of the book:

I wish to thank my former fellow members of the staff of the Library of Congress whose very kind assistance, cooperation and suggestions made the early versions of this book possible. I also wish to thank the staffs of the Newberry Library, Chicago, the New York City Public Library, the Alderman Library of the University of Virginia, and the McCormick Library of Washington and Lee University, Lexington, Virginia, for their invaluable assistance in the completion of thirty years of further research for this definitive work on the Federal Reserve System.

About the Author
Eustace Mullins is a veteran of the United States Air Force, with thirty-eight months of active service during World War II. A native Virginian, he was educated at Washington and Lee University, New York University, Ohio University, the University of North Dakota, the Escuelas des Bellas Artes, San Miguel de Allende, Mexico, and the Institute of Contemporary Arts, Washington, D.C.

The original book, published under the title Mullins On The Federal Reserve, was commissioned by the poet Ezra Pound in 1948. Ezra Pound was a political prisoner for thirteen and a half years at St. Elizabeth’s Hospital, Washington, D.C. (a Federal institution for the insane). His release was accomplished largely through the efforts of Mr. Mullins.

The research at the Library of Congress was directed and reviewed daily by George Stimpson, founder of the National Press Club in Washington, whom The New York Times on September 28, 1952 called, "A highly regarded reference source in the capitol. Government officials, Congressmen, and reporters went to him for information on any subject."

Published in 1952 by Kasper and Horton, New York, the original book was the first nationally-circulated revelation of the secret meetings of the international bankers at Jekyll Island, Georgia, 1907-1910, at which place the draft of the Federal Reserve Act of 1913 was written. (emphasis added)

I have also read the writings of Henry George, C. H. Douglas, E. C. Riegel, Alfred Lawson, Carrol Quigley (Tragedy & Hope), Antony C. Sutton (Wall Street & the Rise of Hitler etc.), James Gibb Stuart, Hazel Henderson, Friedrich Hayek, Ludwig von Mises, Lew Rockwell, John Maynard Keynes, G. Edward Griffin, Stephen Zarlenga (The Lost Science of Money), J.W. Smith, Webster Tarpley, Paul Hellyer, William Krehm, COMER, Connie Fogal, Tom Kennedy, Mike Nickerson, Duane Willing, Willard Cantelon, Andrew Gause, Dr. John Coleman, David C. Korten, John Perkins, Michael Ruppert, Catherine Austin Fitts, Michael Hudson, Steve Keen, Marc Gauvin, Ellen Brown (Web of Debt), Wackernagel and Rees, Erik Andersen, Jeffrey Tucker and the Laissez-faire authors, Weiss Research authors, Max Keiser, and Austrian and Keynsian economists on countless economics blogs as just a partial list.

My twice-lent money theory was honed in public in an argument with two mathematically-inclined gentlemen in the Comments Section of Jean Paul Flintoff's review of Money as Debt. My opponents mistakenly accused me of believing in the "interest can't be paid because it wasn't created" fallacy and conclusively proved to me why it is a fallacy, despite my protests that twice-lent money was my argument, not interest. They both declined to argue the concept of twice-lent money, dismissing it as "all phoney money".

Asked for one single source that I would credit most for providing the broad motivation that eventually led to the production of my movies, it would have to be: Jay Hanson's Dieoff website and Brain Food newsletter (1998). The essays there led me to many critiques of economics and banking by many authors I have not named.

Where to now? I correspond with Richard Logie of GETS.CC  who has been in the liberated barter exchange business for 16 years and offers very sophisticated self-issued credit systems in endless customized options. The technological solutions are available any time the will to change arrives.



The thought that bankers were extorting us unfairly and that debt was a trap first occurred to me back in Grade 10, 1962 when I made a life vow never to get into debt to a bank.

See my partner's article in Common Ground Magazine

That vow in 1962 is why my life-partner Tsiporah, and I
are in the position to do what Tsiporah and I are doing now.
spending our days doing work we feel we are on the planet to do,
for no assured pay whatsoever.

Throughout the world there are more and more people
devoting to their lives to spreading knowledge and truth
and most of important of all, unconditional love
without expectation of reward.

I stand by the basic universal human truth
expressed by E. C. Riegel
at the end of Money as Debt III - Evolution Beyond Money

E.C. Riegel

To trade goods and services
is a natural right of all people.

To issue the money necessary
to make these exchanges
is also the natural right of all people
who are intelligent enough to do so.

We need not beg for money.
We do not need to be money slaves:
we can be money masters.

~ E. C. Riegel (1878 -1954)

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