One of the most widely spread socialist anti-Semitic rhetorics is the “creation of money out of thin air” story. It is extensively used by socialists of both kinds i.e. socialists of communist and socialists of Nazi origin. Those of communist origin talk about the “greedy” banker, and those of “Nazi” origin talk about the “greedy Jewish” banker. All the difference is this one word, which can be added or subtracted according to personal tastes.
This anti-Semitic propaganda says that “greedy Jewish” or “greedy” bankers create electronic money out of nothing. They press their keyboard and they create money, and they use that money to indebt people and control the world. This is one of the most important and widely spread socialist anti-Semitic rhetorics, and it is very important that it is destroyed.
Before destorying it, I have to explain what socialists mean when they say create money “out of thin air”. They mean that a banker, agrees with a customer to give him a loan, and when the contract is agreed, the banker opens a deposit account in the name of the borrower. This new account is money, since the borrower can write a cheque on it. Therefore the heart of this propaganda theory is that a Jewish banker, sitting at his chair, issues a loan, hits his keyboard and opens a deposit account too, and charges interest on the borrower.
Therefore socialists claim, that Jewish bankers create money out of nothing and indebted the people in order to control the world, since they create money and charge interest on it. I will come back with a much longer and detailed document combating socialist anti-Semitic banking rhetoric, but I want to offer a first shorter and more general explanation of why this is pure anti-Semitism. Do you know how easy it is for a government to stop this “out of thin air” money creation? All it would have to do, would be to ask private banks to back deposits by 100% of paper money i.e. euro notes. Imagine an economy, where there is 1.000 euros circulating in the economy.
If the government asks private banks to back deposits with 100% of paper money, the following will happen. Let’s assume that I am the greedy Jewish banker, and one of you holds the 1.000 euros circulating in the economy. And you come and deposit it to my bank. If the government requires that I back my deposits with 100% of paper money, I cannot create money. If I want to create money, I will have to do the following. Issue a loan to a customer, and open a deposit account to this borrower. Let’s say I issue a loan of 1.000 euros, and I open a deposit of 1.000 euros to the borrower. Now deposits in my bank are 2.000 euros, and covered only by 1.000 paper euros, which is illegal, and my bank goes down.
If on the other hand the government asks me to back my deposits with 50% of paper money, I can do the following. Issue a loan of 1.000 euros, open a deposit to the borrower of 1.000 euros, and my total deposits will be 2.000 euros, while my reserves in paper euros will be 1.000 euros, which means 1.000/2.000=50% exactly as required by the law. Therefore a banker’s ability to create what socialists call “money out of thin air”, derives from the much lower than the 100% reserve requirement imposed by governments. To stop this “out of thin air” thing, all a government would have to do, would be to require private banks to back deposits by 100% paper euro notes. But do you ever hear socialists either of Communist or of Nazi origin saying so? No, you never do. You always hear them crying that “greedy Jewish” bankers create money out of thin air.
But they are so silly, that they forget that for a person to borrow, and indebted himself, he must know what he can buy with the money he borrows. I borrow 500 euros, because I want to buy a tablet. And as soon as I get the money I buy it. And I pay an interest of 3-5% which is very low. It is not real. It is the European Central Bank that keeps interest rates artificially low. They should be at the level of 15-20%. But that’s not the issue. Therefore if the Jewish banker creates money out of nothing, it is not the borrower who is his victim. His victim is the producer, whose products the borrowers buys with money produced from nothing, and on which they pay very low interest rates.
Therefore if the Communists and Nazis were honest, they would attack the Jewish banker because he harms the producer, whose products are bought with money produced out of thin air. But do you ever hear them saying so? No you don’t. They always present the borrower as the victim. The reason is that all socialists care about is controlling the banking system. And producers are the depositors/savers. And deposits are a liability for the banks. Therefore socialists always see positively a haircut in deposits because it makes banks healthier. But loans i.e. mortgages etc, are the banks’ assets. And if you allow the houses of the borrowers who do not pay their mortgages to be sold, their prices will go down. And if their prices go down, the banks’ assets will worth less and will be easier for foreign investors to buy them.
The truth is that producers’ goods were bought with money produced out of thin air by governments and not by Jews. But someone must be blamed. Moreover socialists like fractional reserve banking, because they want private banks to expand money supply swiftly, because they use the money supply to finance government spending, and as a means of stimulating the economy, as I was explaining in my essay “The Socialist Myth of the Greedy Banker”, which can be downloaded for free in pdf, mobi, or epub format from Smashwords, at the following address
Reading my essay “The Socialist Myth of Economic Bubbles” will also help one debunk socialist anti-Semitic propaganda. This essay can be downloaded for free from Smashwords at the following address
Or you can download for free my essays from Apple’s ibook store at the following address
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If you enjoyed this essay you might want to have a look at some of the following essays too:
The Socialist Myth of the Greedy Banker
The Socialist Myth of Economic Monopoly
The Socialist Myth of Economic Bubbles