Banking Sleight of Hand

Kevin Cox
4 min readJun 15, 2024
Figure 1 — Bankers pretending that interest is new money

Banking has evolved over centuries, but it has always charged interest twice because it claims that the interest it charges is money produced by the loan. The sleight of hand is that interest did not create profit to be repaid. The borrower's use of the money created the profit, not the money itself. Money does NOT increase in value over time.

Banks have a license from the Government to lend out new government money. Interest is a service fee the bank charges the borrower for the work it has to do to organise the loan and collect the repayments. Interest is not profit for the bank but is a charge to the borrower to ensure the money is repaid.

Banks take their service fee by taking the interest from the loan account and putting it into their capital account. It should have gone into the borrower’s loan account to repay it. The Bank later collects a payment — part of which is claimed to be interest, and the other part is repayment of the loan. The Bank has collected its interest fee twice. This false claim that money generates money is widespread throughout the finance industry and the economics profession, and it directs profits from the use of money to those who did not earn it.

There are many ways to change the accounting, but the simplest is for Banks to acknowledge that interest is a service fee with a second transaction to reduce the loan balance.

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Kevin Cox

Kevin works on empowering individuals within local communities to rid the economy of unearned income.