Money as Debt

Money as Debt

Widespread debt slavery created by an insane banking system is undoubtedly one of the biggest problems we all face.

This video animation, Money as Debt by Paul Grignon, is undoubtedly one the most important films ever made.

If you don’t yet understand why money is such a big problem, WATCH THIS VIDEO.

Please help spread this video far and wide.

I’ve embedded it here, but you can watch and download it on Google Video too.

Further introductory reading

Some of the many examples of successful alternatives to the Money as Debt madness:

See also:

Again, please help to spread this video and information far and wide.

Thank you.

Further reading:


  1. says

    shit don’t tell everyone… just make sure you know how the system works and play it like that…

    this makes me feel very good about bank fraud indeed…

    now put your money where your mouth is and put up some real cash sterling to seed a sanford ‘barter-coupon’ cash economy… the notes could be traded for eco washing up liquid, weed, painting and decorating or web-design work and everything else the local economy encompasses…

  2. says

    While I encourage the viral spread of my video I also encourage people to post my website URL whenever they embed or recommend the movie. I have a sequel in the works and INCOME is required to make finishing it possible. Please buy a copy and see how good it really looks!

    Buy 10 WHOLESALE and you get unlimited rights to hold FREE (by donation) public screenings and sell the DVD’s retail to cover your costs.

    Paul Grignon

  3. Jojo says

    The underlying assumption of the video is incorrect. The bank doesn’t create 9 times it’s deposits out of thin air. It lends up to 90% of the deposits that it has. There’s a subtle difference. If I have $1000 in deposits from people in my bank, I can loan out $900 of those deposits, holding $100. I cannot magically create $9000 out of thin air to loan to people and then say that I have $1000 in reserves. The reserve limit is against deposits not against outstanding loans. I cannot believe that a video based on such an incorrect understanding of economics was created.

  4. John Williams says

    Jojo you are %100 wrong this video explains exactly how the banking system works. Most people think that the bank has to have deposits equaling or more than they loan out but they do not!! In fact our system would rapidly collapse if that were the case since all money is loaned out (none is given away) it is all owed to the banks plus interest which at any given point in time does not exist and has to be created out of thin air to service the existing debt which is on an exponential curve.
    This is definitely one of if not the most important issue in our world today and after much reading I know that is a fact. In an economy without interest prosperity would become the norm it would drastically reduce inflation and the amount of hrs worked to buy a good.
    Look up fractional reserve banking which is the standard practice today and you will see how banks make money out of thin air and then in effect trade them for our work.

  5. Suman says

    I agree with JoJo. I watched this video and sorry to say that what is presented in it is misleading.

    Banks must have deposits equaling or more than they loan out.

    Banks X collect $100 from deposits and loan $90. The borrowers buy stuff and the sellers get $90 and deposit back in the Bank X (or banking system). Out of this $90, the Bank-X lends $81.

    The video shows this as Bank-X lending $90 + $81 while having deposits of $100 only.

    This view is wrong.

    The bank-X has deposits: $100 + 90
    The Bank-X lent: $90 + 81

    It doesn’t really matter that it is the same money-notes that come back to Bank-X, and lent in turn.

    The video also says that Bank-X earns undue fees by charging interest on both loans. There is nothing wrong here either. Each loan is a separate risk and interest is charged as a fee for accepting the risk.

  6. John Williams says

    Just want to say the problem is more fundamental than you are making it out to be. The problem is that money is a commodity of a country and its citizens. If money was lent out at %0 interest through a national bank structure or the interest was used as a form of tax for infrastructure, social programs etc there would be massive positive changes in our society. The way it is now money ,which is created by the government, is used by private corporations to make money from interest. If government owned the banking industry interest profits would drastically offset tax rates as a new source of revenue would be created. Why the government basically gives this money away to a private industry makes no sense as currency should be one the main responsibilities of government since it is one of the most important aspects of a society.
    No matter how the numbers work out the fact is there is really nothing backing money and therefore banks are making money from something that requires very very little effort to produce. The reason counterfeiting is such a big crime is because without that deterrent which gives banks a monopoly it would become readily apparent how worthless paper money really is and it’s real value would become obvious. That is not to say it has no value to society but it needs to be seen as a service to society to facilitate trade not something to be used as a product to make money of off. The biggest proof to me that our current monetary system is flawed is exemplified in recessions or depressions. It makes no sense that the potential productivity of a country is exactly the same in a recession as it is in a boom cycle but solely because of a shortage of paper money people suffer this makes no sense. Money should be geared to always encourage the maximum amount of efficient productivity possible without cycles of overproduction and underproduction. This type of monetary system is entirely possible but due to greed it has not been put into effect. The biggest roadblock to a fair monetary system is not having a banking industry that is of the people and for the people with all the profits or benefits being utilized for the betterment of society through infrastructure etc or cheaper access to capital. Whether it is an institution that gives interest free loans like a bank does now except non-profit or one that uses the profits as a revenue stream would not matter as long as the money now wasted on interest was used for the benefit of the country individually (through cheap capital) or on a larger scale (interest profits used for infrastructure etc).

  7. olisb says

    Barney: Do you think it’d be worse than a system that rapes and pillages the planet and actively encourages exploitation to the point that civilisations collapse?
    Anyway, the point still stands, creating money as debt seems like a pretty flawed system right now. We need new ways to trade.
    I think Mike’s on the right track, local currencies might be quite important pretty soon. And the quicker we can figure out how to deploy a replicable ‘Local Trading System’, controlled by the people who use it, the better for everyone, whatever ‘ism’ they prefer.

  8. John Williams says

    Barney you are %100 wrong one of the main tenets of communism and socialism is a lack of private property rights and I am not suggesting that at all. The strangest thing abut peoples aversion to socialistic institutions is that they are an integral part of capitalism. Without socialistic institutions we would not have government, roads, water, police, military, public education, jails, courts, government etc the list goes on and on. All of these institutions are socialistic because everyone pays for them whether we use them or not. Socialistic programs are integral to our way of life and money is no different than roads as a public resource. As long as these institutions do not interfere with private property rights and competition which drives efficiency they are needed and useful.
    Direct democratic control of a national money supply would be much much less socialistic than the current state of affairs.

  9. joe magner says

    Suman on Aug 27. You are correct that the bank has the 10% reserves..but you foget that the reserves say the bank only has to hold 10% so 190 bucks was deposited there remains only 19 dollars in the vault.

    100 bucks in – 90 bucks out = 10 bucks in the vault
    90 bucks in and 81 bucks out = 9 bucks in the vault

    money held by enteries in a savings books = 190 bucks
    money loaned out to be collected = 181 bucks in two loans
    money held in the bank vault = 19 bucks

    so there is still a total of 100 REAL dollars.
    there is a total of presumed money in the system of:

    the loans were made sequencially as were the deposits which confuses things.

    the total cash in the system is still only 100 bucks because the first loan of 90 dollars, not paid off yet, was returned to the bank and then 81 dollars loaned out so that the 81 dollars is somewhere in the society and the 19 dollars still in the vault show that the total REAL dollars is still 100 total but the system thinks there is a total of:
    there is a total of PRESUMED money in the system of:

    190.00 – owed by bank on call in books for savings entries
    181.00 – loans the banker is yet to collect
    19.00 – real bucks in the vault
    390.00 – total presumed money

    and this is not even counting interest!!!!!

    it is not wrong to charge interest on a loan, as stated there is a risk that the loan will be defaulted on and there is also the time and labor to handle the transactions and the interest to pay the savers…………these ADD to the presumed money and must come from OUTSIDE this little triangle if all is to eventually settled up.


    if we widen the circle large enough to cover all transactions we find lots of time delays and other issues but the same fundemental problem – there is more money effectively created on the BOOKS then the is REAL MONEY in the system……someone will eventually loose.

    It is not that it is evil – it is just the way a central banking system works and why there are issues every so often and debt re-alignment and retirement and distruction has to take place.

    before you yell at me about being a socialist or a communist i want to state I AM A CAPITALIST having run business of my own and hopeful will have one up and running when I retire from Oregon State Univ in a couple years………assuming the both the petty capitalist and petty socialist and petty communists of the world have not distroyed it arguing over IDIOLOGIES and unable to face the facts of how a currency system works.

  10. says

  11. says

    It seems there is a lot of confusion over fractional reserve banking, so I’ve built a simple javascript model to show how it works:

    Yes, with a reserve ratio of 10% say, the banking system does only lend $90 from a deposit of $100. This $90, however, is eventually redeposited into the banking system (whether it is the same bank or not is irrelevant). As a result, a further $81 is lent out. This process repeats until the amounts approach zero. See the model for more detail – try putting your own numbers in.

  12. Dont Believe the propaganda says

    THIS VIDEO IS INCORRECT! IT IS PROPAGANDA. It fails to make the distinction between narrow money and broad money correctly. Narrow money is the settlement asset. Banks CANNOT create this. Broad money is only the store of value and unit of account. This is the only think a bank will create. When you ‘spend’ money from you bank account into the economy the bank has to come up with the narrow money.

    • says

      Perhaps you’d like to more fully explain what you are talking about? Either way, can you not see that if a bank only has to have a tiny fractional reserve of what you are calling “broad money” it is still in effect creating money when it issues loans? Especially when that money is then deposited in another bank, ad infinitum, etc. I’m aware there are some technical inaccuracies in the video, but the essence of it is stop on. At least, it fits my understanding with how things work, and I’ve discussed stuff with leading academic professors of banking and they seem to agree.

  13. says

    No matter what terms you apply to various aspects of this banking phenomenon, it is still a gigantic scam pulled off by the few to get the money of the many and keep it flowing that way until there’s no more money to flow and the bankers own everything. Pretty cool if you’re at the top of the banking chain. Not so cool if you’re not. I’m going to do something about it when I get to Congress in 2010 and in the meantime engage in a huge information dispersement campaign to make as many people aware as possible about the flaws in the monetary system that will absolutely prevent a large segment of society from ever getting above where they currently are economically.

  14. Kersey says

    Whenever I see arguments that talks of radical change and the uprooting of an entire system I get shills. Those who advocate the creation of utopian societies through the drastic and sudden change of the monetary system scares me more than the “evil” bankers. The road to hell is paved with good intentions and the change that created the new system that arose from the revolutions in Russia and China only accomplished murder of a lot of people. The assumption that government will be able to do justice and is absent of the kind of fraud that the banking system is engaged in is very questionable. Considering how corrupt politicians become when they get more power and how government institution has a tendency to overgrow into entities that does not serve its people then one quite quickly sees the dangers monopoly of monetary power in the hands Government.

    The bust and boom of the economic cycle will be there no matter what you do just like dawn and dusk.

    Attacking money and the financial system and the big corporation has been a favorite of communists and socialist for a long time.

    Ask yourself this question why is it that when most powerful people in the private sector such as banking reaches the pinnacle of their wealth they move into the political realm? Why is Soros now involved in politics ranting like some deranged socialist? The answer is that this is the new power trip they are looking for, as the man once said I sometimes feel like god! Study the Rockefellers and the rest of the power grabbers.

    What this video suggests is that we need to concentrate power even more then today and into even fewer hands then today, I say NO!

    If the money creation is to be in the hands of the PEOPLE it better be decentralized to the point that it is within the grasp of all of us.

    Please clarify how this should be done before you try to bring down the current system.

    • josef says

      The system doesn’t need anyone’s help to bring it down. The whole thing has pyramid scheme dynamics and is absolutely destined to crash anyway (we seeing the beginnings of that now). This video is shared here primarily to educate people about how the banking systems operates, rather than any particular solutions it advocates.

      The maker of this film, however, does not believe is handing power to the goverment. He thinks community should create currencies themselves using open source digital coins (see his Digital Coin.

      I’m inclined to agree, and am encouraged by the many existing open source software development efforts to achieve this goal such as Community Forge, Open Transactions, BitCoin, OpenCoin, Open Source Currency, Ripple, Meta Currency, Threebles and others.


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