Here is an excellent piece about the myth of “financial products” from long standing campaigner and activist David J Weston:
Beware Of Electronic Currency Clippers [Revised edition]
A few months ago, Barclay’s Bank and HSBC industries announced that each had ‘made’ three thousand million pounds in a mere three months. What do they mean by ‘made three thousand million pounds’? With what product did they ‘make’ three thousand million pounds? Where is the ‘industry’, and where is the product, or products? These assumptions are myths which must be contested.
The reality is that banking is not, and never has been, an ‘industry’. It is part of the service sector. Nor has banking ever produced a product. Banks (and money markets) use others’ products, such as coins produced by The Royal Mint, and notes produced by printers like De La Rue. But who gave the authority to produce these coins and notes?
Further, it is a myth that these banks ‘made’ the amount they claim, nor did they ‘produce’ anything, for they have no product to show. All they have done, like money merchants of old, is to have clipped many, many small slices of value off currency that just happened to pass through their hands during those three months.
In days of yore, clipping the edges off currency was illegal – in some cases punishable by death. Indeed, clipping was stopped: 1) by the threat of punishment; and 2) by minting coins with milled notches or ridges around the edge. Just look at the edge of some of the coins in your pocket – a reminder of a bygone age.
Today, currency clipping has taken a different form. Instead of a knife, the clipping tool is the computer, that is, electronic clipping of currency. And this kind of behaviour is not yet illegal, because the law has not kept pace with the technology. Indeed, legislators have turned a blind eye to electronic clipping, because the speculators who fund the political process make sure the legislators are accountable to the financiers, instead of to the people. It is surely true that: ‘S/he who pays the piper calls the tune’.
In 1985, a fellow student explained to me how he was designing a computer-based program that would enable a client to extract money from the money market, even while he slept – a more sophisticated example of currency clipping. Since then, currency extraction technology has expanded beyond all imaginations and expectations.
For example, on BBC’s ‘Moneybox Live’, the host, Paul Lewis interviewed a speculator from a firm which specialises in electronic currency clipping, who made it known that the latest super-computers can operate 24/7/52 – not merely upon the basis of a year, or a month, or a week, or a day, or an hour, or a minute, or a second, but on a millisecond, whereby their super-computers can sense the fractional movement of any currency, and buy and sell, making just a few pennies. Multiply those millisecond transactions by millions of computer transactions, and the pennies become billions of unearned Pounds, Dollars, Euros etc..
The outrage is that no product is produced. Indeed, the currency has been, and is being, depreciated and debased. Debasement of the currency of the realm leads inevitably to recessions and depressions, with the concurrent destruction of society and the environment.
The answer? We need legislation that will ensure that our currency of the realm is protected from the electronic currency clippers.
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Note: Social critic, George Monbiot was asked to comment. He wrote back: “Excellent piece David, puts it in a powerful context.” G.
© Oct. 2009 & Aug. 2010: David J. Weston: “Democracy for a Change.” & “Can anyone ‘own’ an aquifer?”