What about below logic:
...We will explore some of these terms, starting with the most
obvious feature of financial systems, their role in supplying
credit.
Credit involves lending money to people on the understanding
that they will pay the money back later along with a bonus or
'royalty', usually in the form of a rate of interest.
There is nothing necessarily capitalist about credit and large
parts of national credit systems are not related to production at
all. Workers can put their savings into a credit co-operative and
draw loans from it in hard times in the hope of paying the money
back in better times.
They pay a royalty for the service but this can be small because
the co-operative is non-profit-making. Such co-operatives
serve consumption needs, not production and they are not
capitalist. Building societies confined to the housing market play
a similar role in supplying credit for people to purchase
housing.
A common feature of these kinds of organisations is that the
credit-money that they issue is directly derived from savings
deposited within them. In other words, their resources come from
the past production of value in the economy: employees' savings
come from wages that they have already earned in production.
>Banks are different because they are able to create
new money in their credit operations. We can see this when
we realise that at any one time, the banks as a whole could be
giving overdrafts to everybody in the entire economy. Thus, far
more money is circulating in the economy than the money derived
from savings generated by past value creation. Part of the money is
actually what we can call fictitious money -- money derived
not from the past but from expectations that it will be validated
by future productive activity.
Within capitalism, banks also do not have to be operated as
private capitalist companies. At the beginning of the 1990s, for
example, more than half of the 100 biggest banks in Europe were
publicly owned and their financial criteria for operating were, in
principle, matters of public choice.
And even if they are private, the banks play such an essential
and powerful role in the public economy because of their capacity
to issue credit money that any sensible capitalist class will
ensure that the state is constantly interfering in their
operations (even though, for ideological reasons, one wants
to keep these state functions 'low profile'). As Kapstein
puts it: "Banks are told how much capital they must hold, where
they can operate, what products they can sell, and how much they
can lend to any one firm."10
The existence of this fictitious credit money is very beneficial
for the whole economy because of its role in facilitating the
circulation of commodities. Without it,
economic
development would be far slower. It is especially
important to employers, enabling them to raise large amounts of
money for equipment which will yield up its full value in
production only over many future years. If employers could invest
only real savings -- the money derived from past value-creation --
investing in fixed capital would be far more costly --too costly
for a lot of investment.
>And credit
has also become a very important means of expanding the sales of
goods to consumers. This is another way of saying
that modern
economies run on large amounts of debt. So the
banks do play an important role in both channelling savings and
creating new funds (fictitious money) for productive investment. An
entire capitalist economy could be run with a financial system
consisting entirely of such banks...
http://www.marxsite.com/Global%20Gamble2.htm
Essentially, I agree. But this piece doesnt really come to a
conclusion about the way society is run. It leaves out how
privately-owned banks lend money to the government at
interest, which guarantees a country in debt, subjected to
the control of the corporate banking elite.
Furthermore, I also agree that today money is debt. So we are being
subjugated ECONOMICALLY; ergo economic slavery.
Even under a fractional reserve system, but controlled by the
government, with no infiltration by corporate elites, things would
be better for the common man.