“Occupy Wall Street” & the Radical Imagination

A thoughtful commentary by anthropologist and social movements scholar David Graeber in The Guardian of September 25th. One good source of daily updates is the Reader Supported News website at readersupportednews.org.

An excerpt:

The form of resistance that has emerged looks remarkably similar to the
old global justice movement: we see the rejection of old-fashioned
party politics, the same embrace of radical diversity, the same emphasis
on inventing new forms of democracy from below. What’s different is
largely the target: where in 2000, it was directed at the power of
unprecedented new planetary bureaucracies (the WTO, IMF, World Bank,
Nafta), institutions with no democratic accountability, which existed
only to serve the interests of transnational capital; now, it is at the
entire political classes of countries like Greece, Spain and, now, the
US – for exactly the same reason. This is why protesters are often
hesitant even to issue formal demands, since that might imply
recognizing the legitimacy of the politicians against whom they are ranged.

The full article is at http://www.guardian.co.uk/commentisfree/cifamerica/2011/sep/25/occupy-wall-street-protest.

One Reply to ““Occupy Wall Street” & the Radical Imagination”

  1. At last, demonstrators are taking direct action against the traders and bankers who control our financial, monetary, economic futures. Wall Street is the symbol of ‘money trading’. A trader from Goldman Sachs was interviewed by the BBC this morning[27 Sept]. He made it perfectly clear that he was not in the least interested in the ‘politicking’ of the European crisis. All he was looking for was a chance to make as much money as he could! No social morality. No social responsibility there then! The next step must be to close the CITY in London.

    Money as debt, wealth as debt.
    Today, the global banking system is Fractional Reserve Banking. This system states that private banks create new money as loans and that governments do not print new money, unless ordered to do so by the Central Bank. [We often forget that governments have the right to print money as they require.]Fractional Reserve Banking allows private banks to lend many times more money than they have as deposits. As a simple example: if a private bank has a deposit of $1, it can create loans that are x10, up to x70 according to the security offered to support the loan. So you may get a loan of $70, but the bank has only $1.A more realistic example is that the bank has cash deposits of $1million and can create up to $70 million in new loan money as debt. Most of the money created by banks is digital. It is not cash, nor hard currency. This leads to a paradox. If 97% of money is digital, created by a bank or finance house or hedge fund or investment fund as debt, what is wealth? Is it , in fact, debt? digital money created as a product of loan arrangements. The rich, [that is, the 10.1 million millionaires,] have the greatest debts and are deemed to have the greatest wealth because the banks trust them to pay back. Their assets are all offered as security against their loans? They therefore have the greatest liabilities? Someone worth $1million is able to borrow up to $70 million as debt, contracted to the bank to pay the principal + interest [$185 million @5% over 20yrs] is a debtor, not a creditor!

    Banks create new money
    According to Fractional Reserve Banking, a bank calculates the total deposits at the end of the day or week and uses the money to offer loans and to create new money. The bank may have GBP1 million in cash. This is placed in reserve. The bank offers loans and creates new money at the stroke of a pen or computer key: say GBP20 million in total. The 1 million is used to create 20 million! When I am given a loan by the bank, at a given interest rate for a period of years, I know it is digital, but I still think of it as a pile of cash in my bank vault. Let us say that I borrow GBP1000 at 8% for 20 years. When a bank makes the loan, it simply types in to its account that I owe it a sum of money – asset. It also types into my account that I have a bank deposit of the same amount – liability. There is no cash involved! It is loan money: it is digital entries. The bank has not given me actual money, but I sign a contract that commits me to pay the amount and the compound interest as if it was actual money. I have to pay for the service of making entries in bank statements that represent loan money + interest. In my case, over the 20 years, I pay the principal, GBP1000, and the interest, GBP4660. The bank gains an asset of GBP5660. What I did not realize until now is that the bank, from the start, simply gave me an electronic demand deposit. I gave the bank 240 monthly cash payments, worth in total GBP5660.
    Is this theft? Is it fraud? Is it a con-trick? Is it a Ponzi scheme?
    It is what banks are allowed to do! It is how they create new money. Of course, each transaction does have administrative costs that would justify a fee. But each transaction generates payments for the bank of principal plus interest: a complete fraud; grand larceny! given that the principal is created, and then deleted as digital entries. At the present time, the income of banks depends upon the creation of loan money.. It is in the interests of banks to make the biggest loans possible so that they can receive the principal + interest. If there are no loans, there is no new money, no interest, and no profits. New Economics Foundation [2011] tells me that in the UK each year banks create money and lend at interest, generating profits of GBP20 billion. The banks are totally dependent upon making loans so as to make new money.

    go to http://www.kelvynrichards.com A Discourse: Social Ecology
    ……the Comments chapter.

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