Iceland To Take Back The Power To Create Money


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    Gottscho-Schleisner Plaza buildings from Central Park, NY 1933 Who knew that the revolution would start with those radical Icelanders? It does, though
    [See the full post at: Iceland To Take Back The Power To Create Money]


    It will be interesting to see what develops in Iceland. It’s obvious that this is the direction needed. Are TPTB strong enough to thwart this effort?

    I was married to an Icelander for 20 years and did business there. They are one big family. They are all well educated. If any culture can take their power back from the banksters, they can do it. Once they reach critical mass on anything, they always follow through.


    Even the British Parliament held a debate (too bad more couldn’t have attended) on the creation of money, something that has not been debated for more than 170 years (since the Bank Charter Act of 1844 which prohibited the private banks from printing paper money). Michael Meacher begins at 1:08:

    “According to Bank of England figures for the decade until 2007, 31% of additional money created by bank lending went towards mortgage lending, 20% towards commercial property, and 32% to the financial sector, including mergers and acquisitions, and trading and financial markets. Those are really extraordinary figures. […] It means that only 8% went to businesses outside the financial sector, with a further 8% funding credit cards and personal loans. It is only this last sixth (the two 8%’s – lending to businesses and consumer credit) that has a real impact on GDP and economic growth, only that 16%.

    The conclusion I think is unavoidable: we cannot continue with a system where so little of the money created by banks is used for the purposes of economic growth and value creation, and instead…the overwhelming majority of the money created has the effect of inflating property prices, and therefore pushing up the cost of living.

    Now, in a nutshell, the banks have too much power and they have greatly abused it. Firstly, they have been granted enormous privileges since they can create wealth simply by writing an accounting entry on a register, and they decide who uses that wealth and for what purpose. And they have used that power of credit creation to hugely favour property and consumption lending over business investment because the returns are higher and more secure, and thus the banks maximize their own interests, but not the national interest.”

    V. Arnold

    @ Ilargi

    Thanks for that Krugman comment; I have never understood his apparent standing in the economic community.


    First task is to define “money”, before figuring out how some anointed aparatchick is turned loose in “creating” it.


    But then Gresham had a theory about that.


    V. Arnold – Krugman is pretty much the laughing stock of the blogosphere, but because he speaks “bankerese”, the bought-and-paid-for media keep his name alive. The guy does nothing but kiss ass, toe the banker elite line. Isn’t life wonderful and laughable? A Nobel Peace Prize for Obama and a pseudo-Nobel in economics for Krugman. That says it all!

    We also have the Supreme Court case in Canada that Ilargi posted a few days ago:

    The Case to “Reinstate” the Bank of Canada


    I don’t think the location of money creation matters nearly as much as the event which causes value to increase.

    The real problem is not that banks can increase the supply; the problem is that LOANS are the event that triggers creation.

    Loans do not create value. Labor and investment are the sources of value, whether the investment came from borrowing or from saving. And it’s tremendously better for everyone when the investment comes from saving.

    Ideally the banks (or some other agency) should increase money supply whenever they see a transaction that increases REAL VALUE. Part of this mechanism already exists in many countries. The VAT registers creations of value. If banks can increase the supply of money to match the numbers given by VAT, we’d have a real-value system.



    Polistra wrote:
    “Ideally the banks (or some other agency) should increase money supply whenever they see a transaction that increases REAL VALUE. Part of this mechanism already exists in many countries. The VAT registers creations of value. If banks can increase the supply of money to match the numbers given by VAT, we’d have a real-value system.”

    That is an interesting idea. Could you elaborate on that?

    For example, would banks receive a credit allocation? How would that allocation be calculated? It would certainly be useful to provide smaller, local banks with room to grow while scaling down the larger banks.

    Would a return to Glass-Steagall still be a useful reform?

    A VAT-based system is an interesting starting point that raises many questions.


    Dr. Diablo

    Wonderful to see it discussed at last. In ‘high’ places. That’s certainly a critical first step, because a child can see the present system is failed.

    However, no one can tell what adds ‘value’. How about binary math, so critical to the function of the modern world? Sorry, ‘invented’ in 1679. Fiber optics? Gorilla Glass? 1870 and 1960, respectively. Flying cars? Invented ages ago but never valuable. ‘Tis a muddle.

    At the same time, government overseeing money NEVER works. Ever. That’s how the present Central banks were chartered, and although perhaps independent at first, the two quickly form an alliance to support each other at the expense of people who actually create ‘value’ (whatever that is) and material goods with their labor. Whoever creates money cannot be trusted, as Meyer Rothschild so aptly said, “Give me control of a nation’s money and I care not who makes its laws”, because, as they found when they disbanded the 2nd U.S. Central bank after a mere 20 years in 1836, nearly every U.S. Congressman was already on the payroll of the bank. (The present U.S. bank has been in place 102 years.)

    So why should anyone control the money supply at all? Well, to prevent the business cycle, presumably, to stop the breathing in and breathing out of living systems, which has created disaster merely EVERY time in HISTORY it has been tried, storing up 4, 10, 100 winters in a row to cascade on the economy all at once, destroying the children of the system’s founders. …But who cares about them, right? Party on Wayne.

    Anyway, if you’re not d–n fool enough to hubristically attempt to stop all economic season and cycle, then you find nobody needs to authorize, create, or monitor money or its supply. Without decree, money–or base money, anyway, not its paper derivatives–tends to be a commodity. This commodity will fluctuate in value as all things do, although it is used as the yardstick and counting measure. That is fine, it causes no problems that aren’t there anyway. The one thing it DOES do, however, is contain the fraud, theft, and power of men and their governments, because ultimately they cannot create this base commodity out of thin air. They have to do work. They have to put up. Their attempted controls of this commodity are more visible to others to defend themselves. Any time men are involved in creating, controlling, or dispensing the money, you have to ask, quis custodiet ipsos custodes? Who watches the watchmen? Bad men circle the system of power until they find a way to overtake and control it, and you’re back where you started. We have no way to cure the ambition of men; the best we can do is make distributed systems which lack power centers which can be hijacked against us.

    Any system that starts, “we will give the Department of X unrestrained power over money” is certain to be a system that destroys you, regardless of who X is.

    John Day

    I love the concept of Iceland making bankers into simple bookkeepers.
    It one-ups the Bank of North Dakota in a way.
    Yes, this smacks of the kind of change which could actually be brought about and could dovetail into the transition of money into a steady state system. This is a reset, which could be reset as needed, but politically, not by game theory.
    It does not require systemic collapse in order to come about.
    Go Iceland!


    They would be wise to get rid of their currency and create the worlds first digital currency controlled by the Central Bank using the blockchain technology. The could control credit issuance, cut costs while having a eye on every transaction. They could then move to eliminate taxes and implement a consumption tax which would eliminate non taxed transactions. The Bank of England, in a report in September 2014, described the blockchain’s open ledger as a “significant innovation” that could transform the financial system more generally.

    John Day

    Greek Plan-B is BITCOIN.

    Yanis Varoufakis: “Greece Will Adopt the Bitcoin If Eurogroup Doesn’t Give Us a Deal”



    Greece goes Icelandic.

    Nick Egnatz

    Money is an abstract legal Power that belongs to the state to promote the general welfare of its people by enabling trade and commerce to exist and flourish in a society.
    Linking Social Justice to Monetary Reform should help understanding the nature of money.

    Justin Walker

    All is perhaps not quite what it seems. A bit worried about Iceland issuing its money through its central bank which is ultimately controlled by the very little known Bank for International Settlements (, a secretive and elitist bank which oversees 95% of the world’s money supply and which is where the leading banking dynasties control what goes on. If Iceland is to have its own sovereign money which is debt-free and interest-free, it must be issued by the nation’s treasury and the elected government must decide how that money is to be used. Please check out the Bradbury Pound which illustrates this very well


    To the government, more government is always the solution. Politics never distorted any “issue”, right?

    Nick Egnatz

    “True monetary reform must take a better path. The American Monetary Institute’s ( research indicates that money, properly defined, is a legal institution of society and government; not a commodity or economic good of the markets; that if money is a legal institution, then the control of monetary systems can be rightfully viewed as a proper function of government; much as the law courts are.” Stephen Zarlenga, Director

    Nick Egnatz

    “The Mistake lies in fearing money and trusting debt.”
    Henry Simons, University of Chicago economist from the depths of the Great Depression in the 1930s

    Nick Egnatz

    “When society loses control over its money system, it loses any control it might have had over its destiny.” Stephen Zarlenga, Director American Monetary Institute

    Nick Egnatz

    For those that fear government being in charge of money creation, how can you be comfortable with the current system of banks creating our money? With the current system we need only listen to U.S. Senator Richard Durbin when he famously said that “the banks own Congress.”
    The only way the people can own the U.S. Congress or any other government is if the government creates the money. Otherwise who ever creates the money will own Congress or any other government.

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