Pay the piper, call the tune

The recent discussion about loans to political parties in the UK misses an important point. The key issue is not whether donations and loans should have been declared or whether it amounts to political sleaze that some large donors or lender were able to buy themselves a seat in the House of Lords. The central lesson is that democracy is a corruptible form of government where money buys policy. It explains why the policies of the major parties don't differ essentially when it comes to protecting the interests of big money.

There is another important truth: Western governments and the political parties running them have bankrupted themselves and are entirely dependent on loan financing. All our public institutions are in debt and debt servicing is a continuous drain on the resources of our people. Taxes will rise and services will be cut. The alternative, a thorough reform of the debt financing system at the heart of the problem will not be contemplated by any party in power because of their own dependency on the loan sharks.

Nor is the question being asked where a lender obtains so much money from that it exceeds the totality of the social product of all the industrialised nations. How can individuals or institutions be so much richer than governments representing their people that the latter must borrow from the former? The answer is a simple confidence trick called fractional reserve banking: The lenders lend what they have not got, but want real value in return. By allowing private banks to lend a multiple of their asset base and then charge interest for it, our governments have sold us out to them and enslaved us to keep paying the interest on this fictitious money. By borrowing money from banks who create it into existence, instead of issuing the same money themselves free of the burden of interest, our democratically elected governments are covering up the largest fraud ever committed in history which makes the currently suggested improprieties look distinguishably pale.

The required remedy, therefore, is not another law on the statute book which defines how party donations and loans should be declared, but a complete overhaul of our financial system which has given banks far too much power for far too long. Of course, in this struggle between the banks and the people the bankers won't go without a fight, and there are no prizes for guessing on whose side the leading political parties are on.