Posted on: September 12, 2015 by M. Oliver Heydorn

Category: Social Credit Views

What is the 'Monopoly of Credit'?

     In perusing Social Credit literature, a phrase that one encounters quite frequently is the “Monopoly of Credit”. Indeed, The Monopoly of Credit was the title of C.H. Douglas’ last major technical work dedicated to the exposition of Social Credit economics. Since the phrase is often employed without being precisely defined, and since some Social Crediters use it without being conscious of its exact meaning, it would be a useful exercise to pause and focus our attention on this particular phenomenon, a phenomenon which, more than any other, may be taken as the central characteristic of the standard financial system that presently reigns the whole world over.

     As many people are now only learning for the first time, money, the life-blood of the economy, exists in one of two forms: currency or credit.[1] Currency refers to the physical tokens of money, i.e., the bills and coins which are typically printed and minted by a government authority. Credit, on the other hand, takes the form of intangible numbers that used to be recorded in bookkeeping documents and are now stored in computer databases. In our contemporary world, the creation and issuance of credit is the prerogative of private banks.

     Yes, that’s right. Let it be restated for the umpteenth time if need be: banks do not lend their customers’ deposits; they are not intermediaries between savers and borrowers. Instead, they are creators of the deposits which they lend, invest, or otherwise spend into existence. How is this accomplished? Quite simply by an act of the will involving accounting ledgerdemain, the confirmation afforded by legal sanctions, and the regulations demanded by good business practice.[2] In accordance with the principles of double-entry bookkeeping, the creation of credit generates both assets and liabilities on a bank’s books. Credit that is held on deposit in a bank, regardless of its origin via a loan, investment, or bank operating expense, is accounted as a liability, while the loan, securities, or bank property, etc., are regarded as assets.

     The “Monopoly of Credit” is therefore the monopoly which private banks, or the private banking system considered as a whole, exercises over the creation and issuance of credit. And, since the vast majority of the money supply at any given point in time exists in the form of bank credit (that figure tallies at over 95% in developed nations), the banks’ ‘credit-monopoly’, is a near total ‘money-monopoly’.


See also: Yes, Virginia, the Banks Really Do Create Money Out of Nothing



[1] The accepted Social Credit definition of money originated in the writings of a certain Professor Walker who, in his book Money, Trade and Industry, had said that money is ‘any medium no matter of what it is made or why people want it, no one will refuse in exchange for his goods.’

[2] Only banks can legally create credit. Anyone else who attempted to do so would be charged with counterfeiting. 






Posted: September 12, 2015

By: Wallace Klinck

Yes, our money originates for all practical purposes in the form of credit entries made in bank customers' account through the process by which banks advance loans--for both production and consumption. This means that all citizens, both producers and consumers, must obtain their money from the banking system in the form of repayable debt.

Loans are extended on conditions set by the lenders and the latter have, therefore, a monopoly of policy conferred by their essentially exclusive power, granted by Government approved Charter to create the nation's money supply for all purposes.

Social Credit holds that the policy of production should be determined by consumers in a consumer-motivated economy wherein the consumer "vote" or exercise of choice motivates production by expressed demand. If consumers do not have sufficient earned income to purchase the entire current outflow of consumer goods at any given time then they must seek additional income. If they are forced to take out consumer loans issued by banks on bank conditions they cannot exercise free choice and they are penalized by loan charges. If they are forced to engage in some other production activity in order to obtain their otherwise insufficient purchasing-power they will be compelled to engage in activities which may--or may not--be something of which they approve, i.e., wasteful activities or even armaments for use in war.

Because the deficiency of purchasing-power grows with the rapid displacement of labour by automation, robots and artificial intelligence which increases the allocated capital component in prices, consumers are increasingly forced to contract debt and/or engage in evermore undesirable pseudo-economic activities.

This trend toward increasing debt and/or wasteful production activity may seem ironic but it is an inevitable outcome of the defect in the present system of industrial accounting as it interacts with the financial system and national accountancy to create a growing shortage of effective consumer purchasing-power.

Social Credit advocates the breaking of the monopoly of credit creation held by the banking system. It would issue the money required to balance consumer buying power with the price of goods flowing from the production line by an issue of money without debt from outside the banking and production price-system--not by bank debt or by money distributed by unnecessary wasteful activities as is the current practice.

Posted: September 14, 2015

By: JB

Just a couple of questions for Dr Heydorn or Mr Klinck, if I may:

1. There has long been a centralised policy of free trade, including the import of labour. (Importing and exporting equals economic growth which equals higher incomes etc. etc.)

What is the social credit position on 'free trade'? Or is there a social credit counter-argument to the 'free trade' philosophy?

It would seem Douglas was less than impressed with what he described as the mercantile theory of trade?

2. C H Douglas once wrote: "...that the primary characteristic of the that he is without say in his own policy".

To make things clear, exactly what did Douglas mean in the quotation above? In other words the economic system gives a person little if any real choice? Does it dovetail in to another saying of Douglas? "If he has to work hard and long hours...then for him civilisation fails".

Thank you.

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