It seems every week or so I find a new reason to stay away from Facebook and Google.

…as I call it; a branch of Mossad, the Babylonian banker’s espionage and assassination service, poisoning human society since 2000BC.

The Nature of Money
A Dialogue between Socrates and his student Amphytrion

Amphytrion: Master, yesterday I heard Kallikles give a speech. He proclaimed that the savings of the city of Athens lent by the bankers were being wasted.
Crokus the banker supported Kallikles and said that the savings of the citizens of Athens would be jeopardised if its rulers did not show restraint in their spending. Bankers are asking for a return to the blessed old days of Draco.

Socrates (laughing): I suppose that Kallikles did not remind the assembly who Draco was?

Amphytrion: No, but why?

Socrates: My dear Amphytrion, Draco is remembered as a King who ordered the sale of half the citizens of Athens as slaves because they couldn’t pay the outrageous tax he had decreed to pay for his wars. His laws were so abject and insulting that Athena herself appeared and revealed to the citizens of Athens that the Draconian laws will be forever reviled as a symbol of evil.

Amphytrion: I am stunned by your knowledge, Master. Could you explain why Draco did not simply borrow money from the bankers in Babylon?

Socrates: You raise a good question. Let us remember that King Draco and his advisers were obsessed by what they called the sacred laws of sound finance. They refused to get money from Babylonian Bankers because they regarded Babylon as the essence of evil.

Amphytrion: But Socrates, how could they ignore the reality of credit? Did they fear the high interest rates charged by the bankers of Babylon?

Socrates (laughing): How true it is – History is no longer taught in the City of Athens. King Draco and his advisers were the most powerful land and slave owners of their times. They were defending their own interests against change. They willingly ignored the real role of banks because taxes were the best way to enslave Athenians and to ensure their absolute power.

Amphytrion: But Master, let’s assume that King Draco and his advisers had been more educated and less blinded by their self- interest and had borrowed the money from the Babylonian Bankers. The debt would still have had to be paid back by the City. This, in turn, would have meant higher taxes. This is common sense.

Socrates: You are influenced by Kallikles. Kallikles himself is heavily indebted to Babylonian bankers to finance his investments in Asia Minor and Sicily.
The flaw in Draco’s policy was that his spending would never have increased the wealth of Athens. He was a mad man obsessed by war.
According to the scriptures of the blessed Solon, Draco and his supporters from the old oligarchy were incessantly destroying public wealth. Any banker would have either refused to grant credit, or would have charged very high interest rates. Naturally the army of the Emperor of Persia would have guaranteed repayment.

Amphytrion: I understand, Master. But this does not answer my question. The only way to pay back the bankers would have been to raise taxes.

Socrates: My point, Amphytrion, is simple. Kallikles talks about the threat of returning to the times of high taxation to pay the bankers. What he says is irrelevant to the current situation.
Kallikles should know that the Great Xerces, the King of Persia himself, built Persepolis exclusively by borrowing from the bankers of Babylon. The bankers had no problem in lending Xerces all the money he needed because they knew that these loans would ultimately increase the wealth of Babylon and ensure the long-term support of the King of Kings.

Amphytrion: But Master, Xerces would still have had to raise taxes to pay back the bankers.

Socrates: But that is precisely the point. He could not have raised taxes because his empire was too weak. He especially feared that the riots in Egypt and Asia Minor would spread to Babylon. This would likely have caused the ruin of the Babylonian bankers.
That is precisely why the bankers moderated their appetite. They relied on the king’s armies to support and protect their trade. Their interest rates were reasonable and, as a bonus, they did not expect full repayment of the loans. The ensuing economic boom in Babylon brought so much private business to the city that, overall, they never suffered losses.
The Chronicles of what is now the largest bank in Babylon, Egidu Brothers Inc., stated “everybody will seek our business, when all the civilised world gazes at what has been achieved by our Bank for the greatest city in the world”. And they were right, my dear Amphytrion.
It is ironic that Kallikles argues against our dear friend General Pericles who wishes to undertake productive expenditures and expand the wealth and the glory of Athens. It is an insult to history and to logic to compare Pericles to Dark Lord Draco. The latter lived in primitive times.

Amphytrion: Another thought occurred to me. How could our banks lend more money to the city since according to Kallikles and Crokus the source of these loans, our savings, has already been depleted by the folly of Pericles.

Socrates: My dear Amphytrion, banks do not initially need money to lend money. Xerces, borrowed from Babylon banks because he was short in gold coins. The money to build Persepolis was created through promissory notes. Everybody honoured these notes in the civilised world, from the Indian Kingdom of Magadha to the borders of Libya.

Amphytrion: Promissory notes. I am confused by this notion, Master

Socrates: It’s quite simple. When King Xerces needed sandalwood from India to build the sacred pillars of the audience courtyard he went to see his bankers in Babylon. They issued for him notes which guaranteed that any holder of the note could summon a payment of, say, one hundred talents from their vaults. Xerces’ special envoys sailed to India, where they bought the required quantity of sandalwood. Indian merchants accepted these notes in payment. In turn, they used these notes to pay the landlords who supplied the sandalwood. In turn, the landlords used these promissory notes to repay their debts to their own bankers in Magadha. Ultimately Indian bankers used the promissory notes in their dealings with the King of Magadha. The entire system rested on the credit worthiness of the bankers of Babylon.
And these notes circulated and travelled_
The Indian King spent those notes to acquire luxury items and equipment from Ionia, Phoenicia and Egypt. Like Ulysses, but much faster, these notes returned to the Persian Empire, where they were used to pay taxes to the King who in turn, paid back his debts to the bankers. This is the miracle of money, my dear Amphytrion. All these economic transactions took place with just clay tablets and Egyptian scrolls and the bankers never had to pay the holders of their notes with gold or silver.

Amphytrion: This is quite a revelation, Master. But the banks in Babylon could not have created these notes without at least a deposit of gold.

Socrates: Not quite so. Although an initial deposit and a capital would certainly help, what is crucial is the support of the King.
Why would bankers hoard too much gold if nobody asks them for gold in exchange of notes? No rational trader would hoard too much gold. We know very well what happened to the gold hoarded in Egypt, which was robbed even in the most sacred places by invaders, including King Kambyses when he plundered Egypt.

Amphytrion: But Master, do you mean to say that bankers are able to create money? How can this be?

Socrates: My dear Amphytrion, money is but the shadow of credit.
When the King decides to pay back his initial debt the credit notes are cancelled and money is destroyed. As soon as a new supply of sandalwood is needed, the banks issue new promissory notes at the request of the king, which guarantee that the holder of these notes could ask the banks for a payment in gold. I must stress that these notes are created as a result of a credit granted to the King.

Amphytrion: But Master, what is ultimately needed is gold.

Socrates: Ultimately perhaps, but it is not a requirement in the meantime. It is more difficult to get credit than to get gold when you are a commoner. It is important to understand that the creation of money through credit can only be initiated by those who are the most creditworthy, such as The King and his court, the priests and the wealthiest merchants in Phoenicia and Ionia.

Amphytrion: I understand how this might work in Persia, but what is true in despotic Asia cannot be true in our democracy. Clearly, in Athens there is no despot to sustain the artificial value of a banker’s promissory note. Is it not our savings that allow our banks to lend coins and notes to the people?

Socrates: My dear Amphytrion I commend you for being such a good and inquisitive disciple. Let us say that our banks do not create money. Then, tell me where do the savings they are lending come from?

Amphytrion: The savings come from the unspent revenues of families, which are deposited with the bankers.

Socrates: Let’s say you are right. But these family revenues, how are they earned?

Amphytrion: Through trade, the sale of farm products and business in general.

Socrates: Right, but where does the money come from?

Amphytrion: The silver mines of Laurion, controlled by the oligarchy. The city mints the coins and_uh_

Socrates: Precisely. The liabilities created as a result of trade attract the silver into the system. This brings us back to the stage of the promissory notes with one big difference. As you had indicated in Athens unlike in the Persian Empire and in the Indian Kingdoms where the subjects and small trader were left in the hands of the usurers, our banks do lend to every citizen.

Amphytrion: Yes, but through loans stemming from the savings!

Socrates: So you are saying, my dear Amphytrion, that savings are used to pay for the revenues which create them?

Amphytrion: Yes.

Socrates: So you are saying my dear Amphytrion that savings exist before they are created. Is this possible?

Amphytrion: Uh, of course not. But then, where do savings come from?

Socrates: From the lending of our banks. If our banks did not create credit, the production of silver from our Laurion mines would not suffice and the creation of silver would simply finance the luxury expenditures of the owners of the mine. We know that all that the owners care for are imports of silk, perfumes, ivory and gold from Asia. All the production of silver would be exhausted in a heartbeat. If savings truly created credit, then the amount of money would have remained constant, at best, since the Trojan War. That is clearly not the case.

Amphytrion: No, it certainly is not.

Socrates: You also said that the act of saving is a righteous act. It is a portion of revenues that we resist using.

Amphytrion: It surely is.

Socrates: Therefore, the revenues of Athens would be inferior to what they were during the blessed era of Solon. Since families have to spend, their savings can only be a small portion of their revenues. There are other leaks, on which I have no need to focus. You know of algebra through the teaching of your friend Democrites. We know the revenues of Athens are twice what they were under Solon.

Amphytrion: I admit that this is very troubling. But what should we think of what Kallikles and Anaxagoras said?

Socrates: My dear friend, our sophists seem to have only one purpose in life, to cleverly obfuscate the truth. For them, truth is a luxury that no one can afford. You also know who pays their salary.

Amphytrion: Master, by the Gods now I understand. The savings of Athens are created by prosperity and the prosperity of Athens is not the result of savings. Anyone who denies this truth is either blinded or an enemy of the citizens of Athens.