Overflight, 48
(all orthodox economists are necessarily eminent, as otherwise they would be incredible) …
Those who want to understand how a conjurer performs his tricks should take the advice of one conjurer to another, and watch the other hand, not the one to which the attention of the audience is being so volubly and persuasively directed. …
Since wealth cannot be created out of nothing, but is a product of human effort expended on the raw material and sources of energy of the globe, no individual should be able to manufacture a new money claim to wealth out of nothing, and the purchaser should give up something equal in value to (as difficult to come by as) that which he so acquires. It is in this vital point that the modern methods of multiplying claims to wealth fail.
But even more fatal to democracy has been its failure to provide any proper authority and mechanism for the making and issue of money, as and when it is required, to keep pace with the growth of its wealth. National money – whatever it is made of – does not bear, and never has borne, interest, which is the raison d’être for the issue of most modern money. Whatever ends it may be supposed to subserve, bank money is created primarily for that end, and, what is worse, then decreated again when that end is served. But a sovereign issued in the reign of George III is now worth no more than when it was issued, and obeys the ordinary law of the conservation of matter. It does not mysteriously appear and as mysteriously disappear like bank money. …
This is the pons asinorum of banking, and at this point its apologists always seem to be distracted from the principles that money is supposed to subserve in a community to an ex parte defence of the system. It certainly does seem odd to a tyro to discover that the law proceeds with the utmost severity against the fraudulent counterfeiter for uttering new money tokens, but allows the banks in effect to create it wholesale to lend at interest by these methods, which is a far more profitable business and infinitely more serious in its consequences to the general community than counterfeiting. To any other age it would have been the most obvious form of treason against the State. …