It is well enough that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning. -Attributed to Henry Ford

By Ellen Brown

In March 2014, the Bank of England let the cat out of the bag: money is just an IOU, and the banks are rolling in it. So wrote David Graeber in The Guardian the same month, referring to a BOE paper called “Money Creation in the Modern Economy.” The paper stated outright that most common assumptions of how banking works are simply wrong. The result, said Graeber, was to throw the entire theoretical basis for austerity out of the window.

The revelation may have done more than that. The entire basis for maintaining our private extractive banking monopoly may have been thrown out the window. And that could help explain the desperate rush to “fast track” not only the Trans-Pacific Partnership (TPP) and the Trans-Atlantic Trade and Investment Partnership (TTIP), but the Trade in Services Agreement (TiSA). TiSA would nip attempts to implement public banking and other monetary reforms in the bud.

The Banking Game Exposed

The BOE report confirmed what money reformers have been saying for decades: that banks do not act simply as intermediaries, taking in the deposits of “savers” and lending them to borrowers, keeping the spread in interest rates. Rather, banks actually create deposits when they make loans. The BOE report said that private banks now create 97 percent of the British money supply. The US money supply is created in the same way.

Graeber underscored the dramatic implications:

[M]oney is really just an IOU. The role of the central bank is to preside over a legal order that effectively grants banks the exclusive right to create IOUs of a certain kind, ones that the government will recognise as legal tender by its willingness to accept them in payment of taxes. There’s really no limit on how much banks could create, provided they can find someone willing to borrow it.

Politically, said Graeber, revealing these facts is taking an enormous risk:

Just consider what might happen if mortgage holders realised the money the bank lent them is not, really, the life savings of some thrifty pensioner, but something the bank just whisked into existence through its possession of a magic wand which we, the public, handed over to it.

If money is just an IOU, why are we delivering the exclusive power to create it to an unelected, unaccountable, non-transparent private banking monopoly? Why are we buying into the notion that the government is broke – that it must sell off public assets and slash public services in order to pay off its debts? The government could pay its debts in the same way private banks pay them, simply with accounting entries on its books. What will happen when a critical mass of the populace realizes that we’ve been vassals of a parasitic banking system based on a fraud – that we the people could be creating money as credit ourselves, through publicly-owned banks that returned the profits to the people?

Henry Ford predicted that a monetary revolution would follow. There might even be a move to nationalize the whole banking system and turn it into a public utility.

It is not hard to predict that the international bankers and related big-money interests, anticipating this move, would counter with legislation that locked the current system in place, so that there was no way to return money and banking to the service of the people – even if the current private model ended in disaster, as many pundits also predict.

And that is precisely the effect of the Trade in Services Agreement (TiSA), which was slipped into the “fast track” legislation now before Congress. It is also the effect of the bail-in policies currently being railroaded into law in the Eurozone, and of the suspicious “war on cash” seen globally; but those developments will be the subject of another article.

TiSA Exposed

On June 3, 2015, WikiLeaks released 17 key documents related to TiSA, which is considered perhaps the most important of the three deals being negotiated for “fast track” trade authority. The documents were supposed to remain classified for five years after being signed, displaying a level of secrecy that outstrips even the TPP’s four-year classification.

TiSA involves 51 countries, including every advanced economy except the BRICS (Brazil, Russia, India, China, and South Africa). The deal would liberalize global trade in services covering close to 80% of the US economy, including financial services, healthcare, education, engineering, telecommunications, and many more. It would restrict how governments can manage their public laws, and it could dismantle and privatize state-owned enterprises, turning those services over to the private sector.

Recall the secret plan devised by Wall Street and U.S. Treasury officials in the 1990s to open banking to the lucrative derivatives business. To pull this off required the relaxation of banking regulations not just in the US but globally, so that money would not flee to nations with safer banking laws. The vehicle used was the Financial Services Agreement concluded under the auspices of the World Trade Organization’s General Agreement on Trade in Services (GATS). The plan worked, and most countries were roped into this “liberalization” of their banking rules. The upshot was that the 2008 credit crisis took down not just the US economy but economies globally.

TiSA picks up where the Financial Services Agreement left off, opening yet more doors for private banks and other commercial service industries, and slamming doors on governments that might consider opening their private banking sectors to public ownership.

Blocking the Trend Toward “Remunicipalization”

In a report from Public Services International called “TISA versus Public Services: The Trade in Services Agreement and the Corporate Agenda,” Scott Sinclair and Hadrian Mertins-Kirkwood note that the already formidable challenges to safeguarding public services under GATS will be greatly exasperated by TiSA, which blocks the emerging trend to return privatized services to the public sector. Communities worldwide are reevaluating the privatization approach and “re-municipalizing” these services, following negative experiences with profit-driven models. These reversals typically occur at the municipal level, but they can also occur at the national level.

One cited example is water remunicipalization in Argentina, Canada, France, Tanzania and Malaysia, where an increasing frustration with broken promises, service cutoffs to the poor, and a lack of integrated planning by private water companies led to a public takeover of the service.

Another example is the remunicipalization of electrical services in Germany. Hundreds of German municipalities have remunicipalized private electricity providers or have created new public energy utilities, following dissatisfaction with private providers’ inflated prices and poor record in shifting to renewable energy. Remunicipalization has brought electricity prices down. Other sectors involved in remunicipalization projects include public transit, waste management, and housing.

Sinclair and Mertins-Kirkwood observe:

The TISA would limit and may even prohibit remunicipalization because it would prevent governments from creating or reestablishing public monopolies or similarly “uncompetitive” forms of service delivery. . . .

Like GATS Article XVI, the TISA would prohibit public monopolies and exclusive service suppliers in fully committed sectors, even on a regional or local level. Of particular concern for remunicipalization projects are the proposed “standstill” and “ratchet” provisions in TISA. The standstill clause would lock in current levels of services liberalization in each country, effectively banning any moves from a market-based to a state-based provision of public services. This clause . . . would prohibit the creation of public monopolies in sectors that are currently open to private sector competition.

Similarly, the ratchet clause would automatically lock in any future actions taken to liberalize services in a given country. . . . [I]f a government did decide to privatize a public service, that government would be unable to return to a public model at a later date.

That means we can forget about turning banking and credit services into public utilities. TiSA is a one-way street. Industries once privatized remain privatized.

The disturbing revelations concerning TiSA are yet another reason to try to block these secretive trade agreements. For more information and to get involved, visit:

Flush the TPP

The Citizens Trade Campaign

Public Citizen’s Global Trade Watch

Eyes on Trade

Ellen Brown is an attorney, founder of the Public Banking Institute, and author of twelve books including the best-selling Web of Debt. Her latest book, The Public Bank Solution, explores successful public banking models historically and globally. Her 300+ blog articles are at




  1. Alice X
    June 15, 2015 at 8:15 pm

    Thank you! The battle is joined.

  2. Bluedot
    June 15, 2015 at 8:51 pm

    Just freaking incredible. Loans create deposits. Who woulda thunk it. The brilliance of these guys never ceases to amaze me. And there’s another one in there. The government can create its own money and can never run out of it. And holy shit that means they can never go broke. Wait a minute. Aren’t they afraid we are going to go the way of Greece? And we can’t fix the bridges why? No money, I guess.

  3. June 15, 2015 at 8:56 pm

    Ironically, it’s the 800th Anniversary of the Magna Carta…!

    Magna Carta: Queen leads celebration at Runnymede

    Monarch joins politicians and public at famous meadow to commemorate
    the sealing of the document that is a cornerstone of parliamentary

  4. Bluedot
    June 15, 2015 at 9:18 pm

    Obamacare fits right in with privatization. Next up Medicare and social security..

  5. TalkingWarrior
    June 15, 2015 at 9:19 pm

    I was wondering if anyone in the US – where habeas corpus is no more – would even notice this extremely significant anniversary. Sadly, the USG has also eliminated that most fundamental of human rights – not to be detained without charge or right to redress – throughout the world.

  6. June 15, 2015 at 9:28 pm

    A Tejas FDL pup made the journey across the Pond to be there for it…! I’ve been following her sojourn on FB, TW…! 😉

  7. TalkingWarrior
    June 15, 2015 at 9:40 pm

    That is just way too cool.

    Any chance said firepup will write a post of her adventure – and explain to all at FDL the significance of just what the US has done (re)enshrining kidnapping, torture, and indefinite detention without charge or trial?

    Talk about the Tower of London!

  8. Nylund
    June 15, 2015 at 9:58 pm

    Loans creating deposits isn’t new, nor bad, nor something unknown. It’s the basis of fractional reserve banking, and has been happening in various forms for hundreds of years. Open any first year undergrad econ textbook and there will be a chapter all about it.

    Yes, when the bank loans out granny’s money, granny doesn’t see her account suddenly drained of dollars. She still has that money. The person who borrowed money from the bank now has money too. The overall amount of money has increased even though no more pieces of paper (bank notes) have been printed since the borrower now has money and granny still has hers.

    The alternative is 100% reserve banking, where if you want to go get a $200,000 mortgage, the bank has to call up all their depositors and see if people are willing to have $200,000 removed from their accounts, where they cannot withdraw it or use it until the homeowner pays them back. “Hey, it’s the bank. We’ve got a guy named Bill in here. He wants to take your money and go buy a car with it. Hopefully he’ll pay you back. You game?”

    It’s really not the most efficient way to run a banking system.

  9. TalkingWarrior
    June 15, 2015 at 10:03 pm

    Could you please explain the difference between how private banks and credit unions work?

    Is it merely the matter of one being for-profit and the other not-for-profit – or something(s) more?

    (Sincere question.)

  10. June 15, 2015 at 10:34 pm

    Democracy Now had a segment on this morning from England talking about the Magna Carta by a professor that was located about 40 miles away from all the “celebrations” that were taking place.

  11. Alice X
    June 15, 2015 at 10:44 pm

    Queen leads celebration…

    800 years later and they still have the monarchy. Give her a freaking pink slip!

    Then send her a copy of Thomas Paine’s Common Sense.

  12. PeterPfiffer
    June 15, 2015 at 11:05 pm

    Aldobrandini-Amschel Bauder. Actually millions are aware
    It’s obviously meant to have been, but
    for changing now.

  13. June 15, 2015 at 11:14 pm

    But we’ve ended fractional reserve banking in 1971. Instead we now have fictional reserve(credit-money) banking system. A world of difference.

    “The US Federal Reserve sets a Required Reserve Ratio of 10%, but applies this only to deposits by individuals; banks have no reserve requirement at all for deposits by companies.” – Steve Keen

    The Roving Cavaliers of Credit”

  14. mulp
    June 15, 2015 at 11:23 pm

    Well, if Greece exits the Euro and just starts printing drachma as fast as the printing presses can go, how much of your property and labor will you trade for drachma so that the Greek government can own how much of everything in the world, assuming everyone believes in money and banking like you do?

    Will Greece own 100% of the world, or 0% because no one will take drachma even for toilet paper because its too cheap?

  15. June 16, 2015 at 1:24 am

    “how much of your property and labor will you trade for drachma so that the Greek government can own how much of everything in the world”

    That would tend to depend on whether the government represents the public and hence the public owns everything within the nation’s borders, or whether the government is owned by the 0.1% and thus it is they who own it…as is increasingly the case in the US and the western world.

    The proposition of Greece’s holding 100% or 0% because of the currency they may, or may not, be printing, is patent nonsense.

  16. June 16, 2015 at 1:32 am

    Banks should not be allowed to take over the world because they offer no added value. They create ‘wealth’ out of whole cloth. There is no longer any need to back ‘money’ up with a valuable commodity. With the war on cash they want to lock people into electronic accounts. Electronic money costs nothing and it’s just a value in a counter. Why do you need a bank if anybody can say “I have n amount of zeros in my account”?

    This latest round of trade agreements are nothing short of malice. This is for the profit of a very tiny select few at the great cost and to the truly crippling detriment of the vast majority of people. This is the kind of regulation against which killing bankers is an act of self-defence. People who owe no accountability but demand 100% accountability of others are to be trusted under not a single circumstance.

    Fight now!

  17. Hugh
    June 17, 2015 at 12:03 am

    If you have ever come across Modern Monetary Theory, you will know where Brown is coming from. MMT is a sort of progressive cult economics, with the emphasis heavily on cult. And you will know what I mean if you ever come across one of its adherents. Screeching, accusations, demands, but not a whole lot of coherence or attention to the argument. The problems with MMT are that while it is a reaction to traditional economics, it still remains firmly planted in them, and where it departs from them, it is either wrong or needs to be heavily caveated. My criticisms of MMT are not because I am in any sense an economic traditionalist but as an economic progressive.

    The central tenet of MMT is that we have a fiat currency. While we do in theory, in practice we continue to act in our financing of government debt like we are on the gold standard which we abandoned in the 1970s. Fiat currency refers to the ability to print, i.e. create money. While the government does create some money “from nothing” each year through coinage, it has privatized virtually all US money creation and given it over to the Fed. And this has been the case since the Fed was created in 1913.

    Another tenet is that loans create deposits. This is different from fractional reserve lending in the sense that even if a bank had zero deposits, it could still make loans, use its equity on what the loan was for and eventually borrow the money from the Fed to cover the loan. And it would still make a profit on the deal as long as the interest rate from the Fed was lower than the rate on the loan. This is actually a lot less startling a concept when you realize we live in a credit economy. It isn’t just banks creating money and then going to the private banking cartel of the Fed to back them up, you create money every time you use a credit card. It’s not just banks. It’s everyone.

  18. dubinsky
    June 17, 2015 at 12:59 am

    claiming that habeas is alive no more in the US is an unwarranted exaggeration