FAQ on National People's Banks

What will happen to savings and pensions if interest and debt to private banks is abolished?

The banking crisis has already slashed payouts from savings and pension plans. Besides which, who can afford to save right now, except the rich? No one, on the othe hand would need to save for private pensions in the first place if their state pension – granted by a National People’s Bank - is big enough? As for public and private pension schemes, we can see now that they were a scam right from the start - an attempt to buy off workers and reduce their wage demands – but one which now brings few returns. It is private banks that have wiped billions off the value of pension funds and reduced their payouts - whilst at the same time governments in debt to those banks want to increase the contributions of employees to those funds.

Where will a National People’s Bank get its money from?

Where do private banks get their money from? No, not from savings accounts but from the loans they hand out and the interest they get on them. For they literally have the power to create the money for those loans out of nothing – just by entering a figure onto a customer’s account. And they are not required to hold in reserve anything more than a tiny fraction of the money they lend out – 10 per cent or less. If private banks are free to create ‘money from nothing’ in this way, then why can’t a public bank – a National People’s Bank? The only real reason is that the private banks would then lose the profitable interest on their loans – along with the power to seize the property of individuals, companies and whole nations who can’t afford to pay off their interest-laden debts. Private banks would also lose the power to lend and speculate with 90% or more of the money deposited in them – for example in your current account – accumulating interest and profits from which you get nothing.

How can any bank function without charging interest rates?

Hold on a minute! The tiny interest that some banks offer on current accounts is next to nothing. Unless you are rich therefore (in which case you would invest your money in shares or saving accounts and not current accounts) your current account is effectively and right now an interest-free loan to a private bank. In other words, it is the people who are the real lenders to the banks and not the other way round! Their money is actually our money - but it is they who can lend out 90% or more of it – at interest - to others. And because that money of ours which the private banks lend out ends up as deposits in other people’s accounts, the banks can lend out 90% or more of their deposits too - resulting in yet more deposits in other accounts from which they can lend out. In other words, for every £100.00 you deposit in your own current account you yourself gift your bank with £90.00 of interest-free money to lend out to others. And since every loan ends up as a deposit with the same or another bank - one that can also lend out up to 90% or more of this deposit - the mathematical result is that for every £100.00 that you either deposit in your bank or borrow for a purchase, you effectively gift the retail banks together with a total of at least £750.00 of interest-free money, all of which they can lend out and draw interest from for themselves!!!

How would a National People’s Bank change this system?

A National People’s Bank would totally reverse this system and turn it upside down completely – the literal meaning of ‘revolution’. Instead of the people giving money to private banks to lend out and speculate with for their own profit, a National People’s Bank would give money to the people to finance their real needs. For example, a National People’s Bank could pay a basic living wage to everyone – whether employed or not. This would give people the financial security and time they need to seek and engage in the type of work they really want to do, and not the type of jobs they have to do just to survive – jobs which in many cases do not pay a living wage and so force people into debt to (…guess who?) private banks!

Wouldn’t money creation by a National People’s Bank increase inflation?

On the contrary. Only a state-owned National People’s Bank would have sufficient direct control of the nation’s money supply to regulate it in a way that prevents inflation! And though we all know that VAT adds to prices, almost no-one knows what proportion of the prices we pay goes to paying off the interest burden of manufacturers. In Germany it has been estimated that on average 33% of the price of goods does nothing more than repay interest to private banks. That is 13% more and 13% in addition to VAT!

What is the difference between what a National People's Bank would do and 'Quantitative Easing'?

As explained in the page of this site called Debt Crisis for Dummies, Quantitative Easing is neither 'printing money' nor directly injecting electronic money into the real economy - and so it is not truly Public Banking or People's Banking. Instead it relies on governments purchasing government bonds from banks, investment and insurance companies and pension funds. These bonds however are themselves nothing but government issued IOUs - in other words a form of interest-bearing government debt. Quantitative Easing then, means nothing more than buying back government debt from its existing private holders, thus increasing their money supply and not that of the real economy or the people! And yet QE is indeed all that today's so-called 'national' or 'central' banks (such as the Bank of England) can do - since they no longer have the right  to create and inject new money directly into the real economy - to and for the people.