10 May 2012

The History of EU Interest Charges - or Legal Extortion

I've been moaning about the massive amounts of money that European taxpayers have been paying out every year in interest payments to the banking sector - €5.6 trillion since 1995. This has to be one of the longest running extortion rackets in history. Remember that the banks lend money to governments that they don't actually have - they use the magic conjuring trick of fractional reserve banking to create the "money" out of thin air. They then charge taxpayers interest despite the fact that lending to governments must surely be one of the safest bets around.

The figures for long-term interest rates in the European Union can all be found on the ECB's website. If you click here, you can see the figures for the last year or so. But I've just discovered that you can easily generate graphs showing the interest rates for all EU countries since as long ago as 1993. First, here is the official ECB graph showing interest rate variations for the 17 Eurozone countries.

Intringuingly, there was a moment back in 2007-2008 when all the countries were paying the same rate of roughly 4% - it was a good time to be in the Eurozone. But since then, the rates have gone all over the place with Greece, Portutal and Ireland being forced to pay extortionate rates - so high that they might as well pay using a credit card. Some countries, such as Germany have done very well since their rates are now down below 2%. This gives them a fantastic competitive advantage. Could that explain why they are so keen on maintaining the status quo?

The second graph shows the curves for the Non-Eurozone countries. Again, the curves go all over the place, with Hungary and Romania currently being very hard hit. Sweden, Denmark and the UK are doing very nicely thanks. But note that even they pay over three times the interest charges that the Bank of England is charging for money lent under quantitative easing.

But the overall impression you get from both graphs is that we have all been ripped off for decades. Remember that we are paying interest on loans that were made by banks using money that they essentially created the money out of thin air.

Central banks also have the right to create money - but currently, the bankers have convinced people that any money created by central banks can only go through the commercial banking system. Surely, this is total lunacy. We should be campaigning to end this insane monopoly.

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