It was heartwarming to read the accounts of the work (that) dedicated people and groups are doing to alleviate the pain and suffering of the unemployed, the under employed and the underpaid. However I feel the article; REASON FOR JOBLESSNESS NOT CLEAR-CUT (The Monitor, July 28, 2016, page 18), while dynamically highlighting the effects of joblessness, in no way addresses the reason for joblessness.
Over the past decades, Holy Mother the Church has spoken on this issue with clarity. I refer in particular to the writing of Pope Pius XI.
In his 1931 encyclical Quadragesimo Anno Pius XI writes,”… immense power and despotic economic domination are concentrated in the hands of a few… . This domination is most powerfully exercised by those who, because they hold and control money, also govern credit and determine its allotment, for that reason supplying so to speak, the life blood of the entire economic body, and grasping in their hands, as it were, the very soul of production …”.
The process, whereby the few control money and credit, is systematically presented in a 2014 paper, Money Creation in the Modern Economy, (Mc Leary, M., Radia, A., and Thomas, R.,) published by none-other than the Bank of England.
The BOE’s publication states, “Commercial banks create money, in the form of bank deposits by making new loans. When a bank makes a loan, for example to someone taking out a mortgage to buy a house, it does not typically do so by giving them thousands of pounds worth of bank notes. Instead, it credits their bank account with a bank deposit of the size of the mortgage. At that moment new money is created. For this reason, some economists referred to bank deposits as ‘fountain pen money,’ created at the stroke of banker’s pens when they approve loans.”
Thus, money that never was, money that belonged to no one, was created out of nothing; simply by the stroke of a pen.
Hence, the question may be asked, “Why is there a shortage of money when money, “…the lifeblood of economic activity” (Pius XI) can be created out of nothing?” Again we can turn to the BOE’s publication. We are told that the amount of money they create is directly controlled by their self-determined interest rate. They specifically refer to the interest rate borrowers are willing to pay in order to secure a loan. What they don’t mention, and what is well known to the general public, is the bank’s unwillingness to lend if they (the bank) determines that the hopeful borrower cannot pay the interest. What this amounts to is; no interest for the bank, no money of the needy. Therefore we have few private individuals (the owners of commercial banks) controlling, in the words of Pius XI, “the lifeblood of society.”
Thus we have two documents, “Quadragesimo Anno” and the BOE’s “Money Creation in the Modern Economy” both, albeit from different perspectives, outlining the clear cut reason for joblessness. It is control, by a few private individuals, “of the very soul of production” (Pius XI), the money supply!
James O’Brien, Tuckerton