ABSTRACT
In this chapter the legacy of the system of ‘circular credit’ highlighted in the previous chapters is examined. Central to the discussion is the issue of ‘money creation’ and how, as a consequence of the system of circular credit, control over the money supply was essentially devolved to private, unaccountable and secretive institutions. It is demonstrated that belying the silence that surrounds this issue, those who have benefitted from it have enjoyed immense power and influence as the arbiters of credit and regulators of the money supply. The questions of who can create money (in the form of credit), for what purpose, and for whose benefit are also raised. The secrecy and lack of understanding around these issues (especially with regard to the issue of bank-credit) in both history and economics is examined and the profound consequences regarding misunderstanding on this issue are highlighted. Crucially, the dependence of the credit-fuelled operations of financiers on government protection, when such operations are subjected to exogenous shocks (such as in 1914) is examined. Finally, the contemporary relevance (post-2008) of the system of circular credit is explored.
