Money as Debt

Money as Debt presents an animated exploration of the modern banking system and its method of money creation. Directed and produced by Canadian artist Paul Grignon, it articulates a critical perspective on how money is generated within the fractional-reserve banking system. It begins with a historical allegory known as The Goldsmith’s Tale, which illustrates the origins of banking practices and the concept of creating money from nothing.

The narrative explains that banks create money not through their own assets or customer deposits, but through the loans they issue. This process involves borrowers promising to repay loans with interest, leading to the creation of new money that is added to the borrower’s account. The film argues that this system inherently leads to an ever-increasing cycle of debt, as more money must be created to cover the interest payments, potentially leading to economic instability.

Grignon’s work highlights the concept of fractional-reserve banking, where banks are allowed to lend out multiple times the amount of actual deposits they hold. This practice is depicted as a fundamental flaw in the monetary system, contributing to a cycle where money increasingly gravitates towards banks, thus potentially impoverishing societies.

The documentary concludes by suggesting alternatives to current banking practices. These include proposals like nationalizing banks, implementing local exchange trading systems, or allowing governments to print money directly. Such measures are presented as potential solutions to mitigate the unsustainable growth of debt inherent in the current system.