Central bankers can print money. To protect this power at all costs, they will cause misery and poverty, and engineer financial crises and launch wars.
I am an economist with a strong interest in monetary theory. I previously published extensively on Substack, but have since removed all of my posts. The subject matter—the fundamental nature of money, economics, and banking—often challenges deeply held beliefs, and I found that presenting its uncomfortable truths often provoke strong reactions from people. I am writing to offer a few comments on your recent video and this article, hoping to provide some refinements to the concepts you discussed. My aim is to bolster your understanding further so you can relay this valuable information to your audience and students.
I would like to respectfully outline a few key points that are fundamental to understanding our current modern monetary system, which may serve as valuable teaching tools.
Firstly, the vast majority of money is created by central banks and commercials banks, NOT governments. Printing of physical banknotes has become less predominant overtime (due to credit cards, online payments, digitalization, etc), nowadays money is mostly digitally created by central and commercial banks through keystroke entries of numbers in their accounting system ("book entries"). Once created, money is injected into the economy the instant a loan is approved or a government bond is purchased or when toxic or normal assets are bought during QE . Banks do not actually lend out existing deposits; they actually create deposit money ex nihilo by simultaneously crediting the borrower’s account (an asset for the borrower) and recording the loan (a liability for the borrower and an asset for the bank). This is a well-documented process, as confirmed by institutions like the Bank of England in publications such as their Working Paper No. 529 “Banks are not intermediaries of loanable funds — and why this matters.” This is standard practice across the entire banking sector everywhere. Simply put, banks are in the business of creating deposits ex nihilo and lending it out, and buying securities, they are not intermediaries.
Secondly, money equals debt, and debt equals money (since money creation is strictly tied to loan creation — a debt-based monetary system/currency). Consequently, broad money supply aggregates (such as M2 and M3) essentially represent outstanding debt in the economy. One person’s financial asset (a deposit) is another entity’s liability (a loan). This is why growth in the money supply is inextricably linked to growth in debt. One implication is that since GDP growth is largely correlated with expansion in money~debt, that means that GDP growth does not at all reflect real productivity gains in the economy, but rather, it reflects artificial gains — merely, money created ex nihilo, loaned out for investment and consumption — causing increases in price of assets, goods, and services which then translate into Inflated GDP numbers. Furthermore, it also implies that, since money can be created infinitely in this way, it theoretically allows for infinite GDP growth without corresponding increases in environmental impact—thereby challenging the arguments of those who advocate for degrowth or green taxes on the basis that economic growth inherently harms the environment.
Thirdly, the mechanism of inflation in this context is such that a systemic increase in the money supply—which is also an increase in debt—dilutes the purchasing power of each unit of currency. This means more units of currency are required to purchase the same goods, services, and assets, leading to overall price inflation. This is a core monetary principle that operates in tandem with supply-chain and demand-side factors. That is to say, for example, while a shortage of houses (and high demand for them) causes house prices to rise, the constant dumping/injection of newly-created money into the property market further amplifies house price hikes since each round of injection increases the money supply, which then leads to a proportional decrease in the purchasing power of that currency. According to my many years of research, supply and demand dynamics have been becoming more impotent over the years in regards to price discovery, but the devaluative monetary/currency factor has been becoming more potent, especially after 2008.
Fourthly, the process of money creation is symmetrical; money creation is counterbalanced by money destruction... and money is actually destroyed when loans are repaid. When a loan is repaid, the principal amount is effectively extinguished—the digital deposit is deleted from the bank’s ledger. This reveals a critical structural feature of the system: while the principal is created at the outset for repayment, the interest on that loan is not. This necessitates a continuous inflow of new money (via new lending) or real economic growth to generate the additional means for interest payments across the system.
To illustrate this, consider my simplified analogy below:
Imagine a secluded village with no physical cash, where all trade is done through barter. One day, a villager named Mr. Bank sets up a business. He provides everyone with a notebook (a bank account) and announces: “Instead of bartering, you can use my IOUs. I will create village dollars by lending them to you. We will all simply update our ledgers to show who owns what.”
1. The First Loan: Sarah wants to build a bakery. Mr. Bank approves a loan for 100$. Thereafter, he simply writes +100$ in her notebook (her asset) and records a loan of -100$ in his own master ledger. Ergo, at this point, money has just been created by a mere book entry. Sarah now tells Tom the lumberjack, Mike the toolmaker, and Lucy the cashier that Mr. Bank will update their ledgers whenever she pays them. Mr. Bank debits Sarah's account and credits theirs. The 100$ now circulate throughout the village as payment.
2. The Repayment Problem: Lets say that the loan terms require Sarah to repay 110$ within one year (100$ principal + 10$ interest). A year later, eventually Sarah has earned 100$ from selling her bread (her customers had Mr. Bank transfer credits from their accounts to hers). So, to repay the principal, she tells Mr. Bank to transfer her 100$ back to him. He does so, and upon receiving them, he crosses out the -100$ credit loan entry. That is to say, money (the original principal) is now destroyed (since -100$+100$=0$). However, she still owes him 10$ in interest.
The critical question here is: where will the 10$ for the interest payment come from? You see, it does not exist in the village's current money supply. Remember, the only money created was the original £100, which have now been returned and erased. Thus, the money supply of the village became 0$ after the money got destroyed when the 100$ was paid back.
Consequently, Sarah can obtain the 10$ only if:
(a) Mr. Bank issues a New Loan; He lends 10$ to another villager, lets say Dave, by writing +10$ in Dave's notebook (i.e., his bank account). Dave spends these 10$ by buying her bread, and thanks to this trade, Sarah eventually earns the 10$ necessary to pay the interest.
(b) Other Villagers Also Go Into Debt; that is to say, other villagers take out new loans for various purposes, thus injecting more $ into the system (i.e., increasing the money supply in the village economy) allowing Sarah to potentially earn the needed 10$ when she sells bread to some villager(s).
If neither (a) or (b) occurs then --> no new loans are made --> there are literally no $ in existence for Sarah to earn to pay the interest (since money supply is 0) -->Therefore she defaults. Consequently, as collateral, Mr. Bank seizes her bakery and everything therein — real, tangible assets. Then he records these new assets in his ledger, which he acquired in exchange for nothing but ledger entries he created and then destroyed. "Fake money for Real Assets".
Importantly, the entire village could become trapped in a cycle of debt if (b) occurs (which is what happens mostly in real life to countries). In order to have enough $ in circulation to pay the interest on existing debts, the villagers must continuously take out new and larger loans. Hence, the system requires perpetual, never-ending debt growth... and If the villagers ever become afraid and stop borrowing, the flow of new $ halts. Without this inflow, there is never enough money in the system to pay all outstanding interest, making widespread default a mathematical certainty. In the end, Mr. Bank ends up owning most of the village's real assets, all through the control of the ledger and funny-money creation.
This analogy unfortunately reflects the operational reality of our monetary system. These are not my speculative theories or notions, but an actual description of how the current system functions. If you need me to clarify something further, please let me know Professor!
I know this was a lengthy comment (I am sorry!), but I am passionate about these topics. My ultimate dream is to one day join you for a conversation on your channel. I synthesize economics, geopolitics, game theory, evo psych and evo biology, to build predictive models, and I believe a dialogue with you would be fascinating for your audience.
I'm sure you'd be fascinated about Knowledge-Based Economy, using Knowledge-Based Currency. Read some of my work, or have an AI summarise it for you, it is the unavoidable future of civilization - the ONLY path towards unification, real peace and real collective prosperity.
Professor Jiang, you nailed the flaw: our civilization is chained to a financial system so fragile that if people lose faith in money, the whole architecture of society teeters. The problem isn’t just inflation or digital control—it’s that we’ve outsourced “value” to a priesthood of bankers.
But there is a Plan B. It’s called Knowledge-Based Currency (KBC).
In KBC, everyone is their own banker. Value isn’t issued by institutions or propped up by debt—it’s recorded in verified knowledge. Doctors, engineers, teachers, scientists, builders—what keeps water flowing, lights on, and hospitals running—is knowledge itself. That’s the real currency.
Unlike fiat, knowledge can’t be inflated into nothing. Unlike bitcoin, it doesn’t waste energy to prove scarcity. It appreciates as it spreads, and the more people share it, the stronger the system becomes.
Where money collapses, KBC continues. Civilization shouldn’t depend on whether banks survive; it should depend on whether humanity keeps learning, connecting, and preserving truth.
In KBC, everybody is a banker—because there are no bankers.
A fascinating excavation of how mainstream economics managed to sidestep the real nature of banking for a hundred years. The conclusion that banks create money “out of nothing” when they issue loans, rather than merely intermediating deposits, is both obvious in practice and yet astonishingly absent from economic orthodoxy.
But here’s the deeper problem: proving that bankers create money doesn’t help us escape the fact that they are the gatekeepers of that creation. It just sharpens the picture of why the system is fragile and extractive—our entire economy depends on a small caste deciding which credit becomes real.
That’s exactly why Knowledge-Based Currency (KBC) matters. KBC removes the priesthood. In this system, everyone is their own banker. The unit of value isn’t debt, nor a ledger of IOUs, but verified knowledge. Instead of institutions minting money out of nothing, humans mint value out of what they know and can prove. The ledger is decentralized (the K-Chain), the network is open (the LightWeb), and growth comes not from leverage but from learning and sharing.
Where Werner shows how banks conjure money from thin air, KBC shows how we can conjure value from truth—without intermediaries, without debt, without collapse. In KBC, there are no bankers, because everybody is a banker.
Financially, there's not much we can do. The problem is that people want to fight where they control: money. They control money, and they think we can do anything about it? It's not in our hands; we have no power. What we can control is real investment: knowledge (books), land, energy self-sufficiency (solar), water and having our own crops. That's the real investment, not fiat currency, Bitcoin or even gold.
Yes, but if you think about it that way, there's no place on planet Earth where you'll own it 100% without any risk. That's a utopia. We have to do what we can, create a community and do our part
One day, I hope to meet you and we can collaborate on the creation of a new religious philosophy. Fixing the monetary system is incredibly important for fixing a wide variety of societal problems, because concentrating wealth always has negative consequences. The system I’ve been designing bans all banks, fiat currency, & credit, operating only with hard currency (gold, silver, etc.) It also employs a cultural traditions of inheritance, where wealth and housing is passed down through the generations to provide economic stability rather than “gdp growth” and consumerism.
What if the Bankers read Calhoun's Rat Utopia experiment, and understand that if money is just handed out to everyone, humanity will eventually collapse.
Also, societies like the Vikings were able to spend a significant chunk of their wealth on throwing huge feasts within the tribe, but weren't those wealth built on the misery of pillaging other tribes?
Because money has to be backed by demand, created through the illusion that it is valuable. The population’s labor (= demand) backs the money they print. If they print more than labor can support, inflation devalues that money.
2. Poverty
Poverty is what the powerful do to you. That’s true in a sense. Because in our reality, wealth is Pareto-distributed — it flows into the hands of the most powerful and is extracted from the weak simply because they can.
3. Crisis
A crisis isn’t necessarily money destruction; it is money redistribution. The money supply is still constrained by the demand created by people’s work. Those people save money and invest it into the redistribution machine called the stock market. A crisis simply transfers those savings into the hands of the powerful and prepared — often the very ones who orchestrated it. Yes, money supply is destroyed, but first it changes hands, usually from the orchestrator into the hands of the "weak".
4. War
War sole purpose isn’t to create poverty but to funnel money into the hands of the powerful. Governments need excuses to pour money into the pockets of military contractors. These excuses are manufactured to drive popular demand for the redistribution of their own wealth. War also secures control over vital resources — oil, rare minerals, trade routes — all of which tie back into the same system of redistribution.
5. In the end
Everything is governed by supply and demand. But the powerful orchestrate the flows, manipulating crises, wars, and markets to extract from below while maintaining the illusion that money itself is valuable.
I’ve been really moved and inspired by your Predictive History lectures, and I’d love to help more people discover them. I’m a social media professional with experience editing short-form videos, and I’d be happy to volunteer my skills to create 1–3 minute cutdowns with captions (for YouTube Shorts, Instagram Reels, TikTok, etc.).
I want to be clear I’m not asking for money, special access, or control over your accounts. You would post the videos yourself. I just genuinely believe more people should see and engage with your work.
If you’re open to it, I’d love to do a demo to show what I can do. Either way, thank you for sharing your lectures — they’ve had a big impact on me. My email is bbriscomb@gmail.com
Professor, great topic and thanks for the insight. I would add that when a country does not have a private central bank or its public central bank can not be controlled via a puppet government, it is then prominenntly featured in Western main stream media as authoritarian regime, dictatorship, or worse. Think Russia, China, North Korea, Cuba and Venezuela. The myth of money and hijacking of real economy are sustainable only with constant propaganda and comprehensive brainwashing. The control of narrative is then also central to this system of financial serfdom. If and when the iron grip on narrative is not, the entire house of cards will come crashing down. The last line if its defense is the threat (and the real possibility) of taking down the human civilazation with it.
I do believe, however, there is a Plan B. You, and other clear thinkers, have identified the root cause of the problem We need to bank together as a global community to found alternative social, economic and technological systems with a new (and objective) framing of history and current affairs. Throughout history, there have never been a shortage of empires with global conquest ambitions, but human society continued to survived and flourished. I believe we will once again find a path without private banks and financialization of all things valuable.
Isnt the Central Banking edified in the same way a mysterious ME state has been, via Balfour declaration, i.e. blackmail? On one side you have nucIe4r bI4ckm4il, on the other you have financial ruin bI4ckmaiI.
I have been following Professor Werner for 8 years now, he is probably the only one mainstream economist to have prostrated himself over the task of teaching people how money is created. I've watched your class and I saw your students struggling, it is a shock therapy for surez but maybe, while illustrating the concept of injecting fake money via loans(IOUs) into the market, you could've helped yourself with double-entry book-keeping. The balance sheet would have made it more clear for them, how the banks use their debts as credit to generate profit. It would solidify the incongruence of the proposal you have made. The counter-intuition in explaining banking alchemy is to invite people to accept a lie that is being explained as a lie to them, so is a double negative. To lie is easier than ask someone to accept being lied to, even harder when someone knows he is being lied to.
So felt Sisyphus as he rolled the boulder up the hill, this is the nature of trying to free slaves who do not know they are enslaved. Also important to mention, that some slaves are comfortable in their enslavement, and wish others to be captive as a twisted form of equality or justice.
I also take the opportunity to commend you for going back to China, and I hope you and your family can be finally safe and at home together, as it should be.
First of all, thank you for your brilliant work. The clarity of your analysis and the generosity of sharing it so openly are truly remarkable. I find myself waiting eagerly for the next one.
I would like to challenge two aspects of your latest Youtube video.
First, when you contrast the “ancient worldview” of polytheism with the modern individualist model, the dichotomy feels overstated. A monotheistic worldview can just as well produce the sense that human agency is fragile, subject to forces beyond control. In such a vision, wealth may vanish, triumph collapse, and joy turn to despair—not because of capricious gods, but because human beings are tested by realities greater than themselves. To equate this recognition of fragility with polytheism risks oversimplifying the intellectual landscape of the past.
Second, regarding the origins of money, individuality, and the nation-state: attributing these directly to monotheism seems historically questionable. The decisive acceleration of these concepts occurred much later, with the Renaissance and early modernity—when humanism, emerging financial capitalism, and the decline of religious authority placed man, not God, at the center. In fact, one might argue that these constructs flourished not as the fruits of monotheism, but precisely as it weakened under the weight of secular materialism.
Professor thanks so much for this. You have definitely sparked some deeper thinking on the topic.
I have to say though, I’m struggling with some of the more speculative arguments that you’ve made.
I tried to reframe it from a game theoretical perspective and many of your analogies (e.g. we could easily feed all humans) do add up.
What doesn’t add up to me is that where you assume malice coming from central banking, or that they indeed hold all the power.
Reframing from game theory: Many analogies add up, like how we could empirically feed/shelter everyone (per UN data), but scarcity emerges naturally from non-collaborative incentives… Not necessarily from inherent good/bad intentions.
Are you describing a game where non-elites are losers and elites collaborate? How does violence fit in. If I menace a central banker, doesn't coercion trump money's "illusion"?
In some ways money is just a representation of wants and desires, and this symbolism is what grants it is infinite power. It is not an inherent flaw with money per se, but almost an inevitable thing... it's like numbers and arithmetic, the structure of things just necessarily lead to its existence and it being the way it is.
Even in the past where taxes were counted by bushels of grain, whoever controlled more of it (the king) would just directly have more power because he could barter it for whatever else he wanted (labour, treasure, game). The only difference is its a lot harder to print grain than paper bills.
Also I would have explained the whole scarcity thing a bit more in depth. Printing money causes inflation, and this is given as the reason why we can't print money infinitely. At the same time, inflation is precisely what causes cash to depreciate in value -- hence rich people don't get together and decide to screw poor people, it is more of an emergent feature of rich peoples' self interest. Because one thing I don't like about the whole "powerful people want to make you suffer" conspiracy is that... they're honestly pretty incompetent most of the time, and they certainly don't cooperate between one another. The only times they cooperate is when their thoughts align (not necessarily through collusion most of the time) to maximize their self interest.
Hello Professor Jiang,
I am an economist with a strong interest in monetary theory. I previously published extensively on Substack, but have since removed all of my posts. The subject matter—the fundamental nature of money, economics, and banking—often challenges deeply held beliefs, and I found that presenting its uncomfortable truths often provoke strong reactions from people. I am writing to offer a few comments on your recent video and this article, hoping to provide some refinements to the concepts you discussed. My aim is to bolster your understanding further so you can relay this valuable information to your audience and students.
I would like to respectfully outline a few key points that are fundamental to understanding our current modern monetary system, which may serve as valuable teaching tools.
Firstly, the vast majority of money is created by central banks and commercials banks, NOT governments. Printing of physical banknotes has become less predominant overtime (due to credit cards, online payments, digitalization, etc), nowadays money is mostly digitally created by central and commercial banks through keystroke entries of numbers in their accounting system ("book entries"). Once created, money is injected into the economy the instant a loan is approved or a government bond is purchased or when toxic or normal assets are bought during QE . Banks do not actually lend out existing deposits; they actually create deposit money ex nihilo by simultaneously crediting the borrower’s account (an asset for the borrower) and recording the loan (a liability for the borrower and an asset for the bank). This is a well-documented process, as confirmed by institutions like the Bank of England in publications such as their Working Paper No. 529 “Banks are not intermediaries of loanable funds — and why this matters.” This is standard practice across the entire banking sector everywhere. Simply put, banks are in the business of creating deposits ex nihilo and lending it out, and buying securities, they are not intermediaries.
Secondly, money equals debt, and debt equals money (since money creation is strictly tied to loan creation — a debt-based monetary system/currency). Consequently, broad money supply aggregates (such as M2 and M3) essentially represent outstanding debt in the economy. One person’s financial asset (a deposit) is another entity’s liability (a loan). This is why growth in the money supply is inextricably linked to growth in debt. One implication is that since GDP growth is largely correlated with expansion in money~debt, that means that GDP growth does not at all reflect real productivity gains in the economy, but rather, it reflects artificial gains — merely, money created ex nihilo, loaned out for investment and consumption — causing increases in price of assets, goods, and services which then translate into Inflated GDP numbers. Furthermore, it also implies that, since money can be created infinitely in this way, it theoretically allows for infinite GDP growth without corresponding increases in environmental impact—thereby challenging the arguments of those who advocate for degrowth or green taxes on the basis that economic growth inherently harms the environment.
Thirdly, the mechanism of inflation in this context is such that a systemic increase in the money supply—which is also an increase in debt—dilutes the purchasing power of each unit of currency. This means more units of currency are required to purchase the same goods, services, and assets, leading to overall price inflation. This is a core monetary principle that operates in tandem with supply-chain and demand-side factors. That is to say, for example, while a shortage of houses (and high demand for them) causes house prices to rise, the constant dumping/injection of newly-created money into the property market further amplifies house price hikes since each round of injection increases the money supply, which then leads to a proportional decrease in the purchasing power of that currency. According to my many years of research, supply and demand dynamics have been becoming more impotent over the years in regards to price discovery, but the devaluative monetary/currency factor has been becoming more potent, especially after 2008.
Fourthly, the process of money creation is symmetrical; money creation is counterbalanced by money destruction... and money is actually destroyed when loans are repaid. When a loan is repaid, the principal amount is effectively extinguished—the digital deposit is deleted from the bank’s ledger. This reveals a critical structural feature of the system: while the principal is created at the outset for repayment, the interest on that loan is not. This necessitates a continuous inflow of new money (via new lending) or real economic growth to generate the additional means for interest payments across the system.
To illustrate this, consider my simplified analogy below:
Imagine a secluded village with no physical cash, where all trade is done through barter. One day, a villager named Mr. Bank sets up a business. He provides everyone with a notebook (a bank account) and announces: “Instead of bartering, you can use my IOUs. I will create village dollars by lending them to you. We will all simply update our ledgers to show who owns what.”
1. The First Loan: Sarah wants to build a bakery. Mr. Bank approves a loan for 100$. Thereafter, he simply writes +100$ in her notebook (her asset) and records a loan of -100$ in his own master ledger. Ergo, at this point, money has just been created by a mere book entry. Sarah now tells Tom the lumberjack, Mike the toolmaker, and Lucy the cashier that Mr. Bank will update their ledgers whenever she pays them. Mr. Bank debits Sarah's account and credits theirs. The 100$ now circulate throughout the village as payment.
2. The Repayment Problem: Lets say that the loan terms require Sarah to repay 110$ within one year (100$ principal + 10$ interest). A year later, eventually Sarah has earned 100$ from selling her bread (her customers had Mr. Bank transfer credits from their accounts to hers). So, to repay the principal, she tells Mr. Bank to transfer her 100$ back to him. He does so, and upon receiving them, he crosses out the -100$ credit loan entry. That is to say, money (the original principal) is now destroyed (since -100$+100$=0$). However, she still owes him 10$ in interest.
The critical question here is: where will the 10$ for the interest payment come from? You see, it does not exist in the village's current money supply. Remember, the only money created was the original £100, which have now been returned and erased. Thus, the money supply of the village became 0$ after the money got destroyed when the 100$ was paid back.
Consequently, Sarah can obtain the 10$ only if:
(a) Mr. Bank issues a New Loan; He lends 10$ to another villager, lets say Dave, by writing +10$ in Dave's notebook (i.e., his bank account). Dave spends these 10$ by buying her bread, and thanks to this trade, Sarah eventually earns the 10$ necessary to pay the interest.
(b) Other Villagers Also Go Into Debt; that is to say, other villagers take out new loans for various purposes, thus injecting more $ into the system (i.e., increasing the money supply in the village economy) allowing Sarah to potentially earn the needed 10$ when she sells bread to some villager(s).
If neither (a) or (b) occurs then --> no new loans are made --> there are literally no $ in existence for Sarah to earn to pay the interest (since money supply is 0) -->Therefore she defaults. Consequently, as collateral, Mr. Bank seizes her bakery and everything therein — real, tangible assets. Then he records these new assets in his ledger, which he acquired in exchange for nothing but ledger entries he created and then destroyed. "Fake money for Real Assets".
Importantly, the entire village could become trapped in a cycle of debt if (b) occurs (which is what happens mostly in real life to countries). In order to have enough $ in circulation to pay the interest on existing debts, the villagers must continuously take out new and larger loans. Hence, the system requires perpetual, never-ending debt growth... and If the villagers ever become afraid and stop borrowing, the flow of new $ halts. Without this inflow, there is never enough money in the system to pay all outstanding interest, making widespread default a mathematical certainty. In the end, Mr. Bank ends up owning most of the village's real assets, all through the control of the ledger and funny-money creation.
This analogy unfortunately reflects the operational reality of our monetary system. These are not my speculative theories or notions, but an actual description of how the current system functions. If you need me to clarify something further, please let me know Professor!
I know this was a lengthy comment (I am sorry!), but I am passionate about these topics. My ultimate dream is to one day join you for a conversation on your channel. I synthesize economics, geopolitics, game theory, evo psych and evo biology, to build predictive models, and I believe a dialogue with you would be fascinating for your audience.
Keep up the excellent work, Professor.
I'm sure you'd be fascinated about Knowledge-Based Economy, using Knowledge-Based Currency. Read some of my work, or have an AI summarise it for you, it is the unavoidable future of civilization - the ONLY path towards unification, real peace and real collective prosperity.
Professor Jiang, you nailed the flaw: our civilization is chained to a financial system so fragile that if people lose faith in money, the whole architecture of society teeters. The problem isn’t just inflation or digital control—it’s that we’ve outsourced “value” to a priesthood of bankers.
But there is a Plan B. It’s called Knowledge-Based Currency (KBC).
In KBC, everyone is their own banker. Value isn’t issued by institutions or propped up by debt—it’s recorded in verified knowledge. Doctors, engineers, teachers, scientists, builders—what keeps water flowing, lights on, and hospitals running—is knowledge itself. That’s the real currency.
Unlike fiat, knowledge can’t be inflated into nothing. Unlike bitcoin, it doesn’t waste energy to prove scarcity. It appreciates as it spreads, and the more people share it, the stronger the system becomes.
Where money collapses, KBC continues. Civilization shouldn’t depend on whether banks survive; it should depend on whether humanity keeps learning, connecting, and preserving truth.
In KBC, everybody is a banker—because there are no bankers.
in KBC, Google/ChatGPT is the central banker
Maybe that was supposed to be sarcastic?
The Idea of KBC is a currency you created and it can talk to you. Initially via LLMs and GPTs, yes.
In KBC everyone creates their own 'wallet', their own 'banker' and mint their own currency which is standardized and accepted amongst all other users.
Every user has a centralized currency of their own and all accounts come together to form a decentralized network of centralized knowledge-chains.
i dont need your currency if ChatGPT knows everything
The biggest wall that we need to climb is the one that we build in our mind.
Such an asinine and snide remark, God is indeed punishing us for our hubris.
This time round, kindly let the students have their own microphone they can pass to whoever is asking so that we can also hear their question.
This is a great suggestion. I am planning to do this, but I need some time to get the consent of the students.
https://www.sciencedirect.com/science/article/pii/S1057521915001477
A fascinating excavation of how mainstream economics managed to sidestep the real nature of banking for a hundred years. The conclusion that banks create money “out of nothing” when they issue loans, rather than merely intermediating deposits, is both obvious in practice and yet astonishingly absent from economic orthodoxy.
But here’s the deeper problem: proving that bankers create money doesn’t help us escape the fact that they are the gatekeepers of that creation. It just sharpens the picture of why the system is fragile and extractive—our entire economy depends on a small caste deciding which credit becomes real.
That’s exactly why Knowledge-Based Currency (KBC) matters. KBC removes the priesthood. In this system, everyone is their own banker. The unit of value isn’t debt, nor a ledger of IOUs, but verified knowledge. Instead of institutions minting money out of nothing, humans mint value out of what they know and can prove. The ledger is decentralized (the K-Chain), the network is open (the LightWeb), and growth comes not from leverage but from learning and sharing.
Where Werner shows how banks conjure money from thin air, KBC shows how we can conjure value from truth—without intermediaries, without debt, without collapse. In KBC, there are no bankers, because everybody is a banker.
Financially, there's not much we can do. The problem is that people want to fight where they control: money. They control money, and they think we can do anything about it? It's not in our hands; we have no power. What we can control is real investment: knowledge (books), land, energy self-sufficiency (solar), water and having our own crops. That's the real investment, not fiat currency, Bitcoin or even gold.
Yes, but if you think about it that way, there's no place on planet Earth where you'll own it 100% without any risk. That's a utopia. We have to do what we can, create a community and do our part
One day, I hope to meet you and we can collaborate on the creation of a new religious philosophy. Fixing the monetary system is incredibly important for fixing a wide variety of societal problems, because concentrating wealth always has negative consequences. The system I’ve been designing bans all banks, fiat currency, & credit, operating only with hard currency (gold, silver, etc.) It also employs a cultural traditions of inheritance, where wealth and housing is passed down through the generations to provide economic stability rather than “gdp growth” and consumerism.
Do it with me
What if the Bankers read Calhoun's Rat Utopia experiment, and understand that if money is just handed out to everyone, humanity will eventually collapse.
Also, societies like the Vikings were able to spend a significant chunk of their wealth on throwing huge feasts within the tribe, but weren't those wealth built on the misery of pillaging other tribes?
Great lecture.
Some refinement on your ideas:
1. Question: Why don’t they print infinite money?
Because money has to be backed by demand, created through the illusion that it is valuable. The population’s labor (= demand) backs the money they print. If they print more than labor can support, inflation devalues that money.
2. Poverty
Poverty is what the powerful do to you. That’s true in a sense. Because in our reality, wealth is Pareto-distributed — it flows into the hands of the most powerful and is extracted from the weak simply because they can.
3. Crisis
A crisis isn’t necessarily money destruction; it is money redistribution. The money supply is still constrained by the demand created by people’s work. Those people save money and invest it into the redistribution machine called the stock market. A crisis simply transfers those savings into the hands of the powerful and prepared — often the very ones who orchestrated it. Yes, money supply is destroyed, but first it changes hands, usually from the orchestrator into the hands of the "weak".
4. War
War sole purpose isn’t to create poverty but to funnel money into the hands of the powerful. Governments need excuses to pour money into the pockets of military contractors. These excuses are manufactured to drive popular demand for the redistribution of their own wealth. War also secures control over vital resources — oil, rare minerals, trade routes — all of which tie back into the same system of redistribution.
5. In the end
Everything is governed by supply and demand. But the powerful orchestrate the flows, manipulating crises, wars, and markets to extract from below while maintaining the illusion that money itself is valuable.
Hi Professor,
I’ve been really moved and inspired by your Predictive History lectures, and I’d love to help more people discover them. I’m a social media professional with experience editing short-form videos, and I’d be happy to volunteer my skills to create 1–3 minute cutdowns with captions (for YouTube Shorts, Instagram Reels, TikTok, etc.).
I want to be clear I’m not asking for money, special access, or control over your accounts. You would post the videos yourself. I just genuinely believe more people should see and engage with your work.
If you’re open to it, I’d love to do a demo to show what I can do. Either way, thank you for sharing your lectures — they’ve had a big impact on me. My email is bbriscomb@gmail.com
Professor, great topic and thanks for the insight. I would add that when a country does not have a private central bank or its public central bank can not be controlled via a puppet government, it is then prominenntly featured in Western main stream media as authoritarian regime, dictatorship, or worse. Think Russia, China, North Korea, Cuba and Venezuela. The myth of money and hijacking of real economy are sustainable only with constant propaganda and comprehensive brainwashing. The control of narrative is then also central to this system of financial serfdom. If and when the iron grip on narrative is not, the entire house of cards will come crashing down. The last line if its defense is the threat (and the real possibility) of taking down the human civilazation with it.
I do believe, however, there is a Plan B. You, and other clear thinkers, have identified the root cause of the problem We need to bank together as a global community to found alternative social, economic and technological systems with a new (and objective) framing of history and current affairs. Throughout history, there have never been a shortage of empires with global conquest ambitions, but human society continued to survived and flourished. I believe we will once again find a path without private banks and financialization of all things valuable.
The videos mentioned in this post are not available.Can anyone see this?
Isnt the Central Banking edified in the same way a mysterious ME state has been, via Balfour declaration, i.e. blackmail? On one side you have nucIe4r bI4ckm4il, on the other you have financial ruin bI4ckmaiI.
I have been following Professor Werner for 8 years now, he is probably the only one mainstream economist to have prostrated himself over the task of teaching people how money is created. I've watched your class and I saw your students struggling, it is a shock therapy for surez but maybe, while illustrating the concept of injecting fake money via loans(IOUs) into the market, you could've helped yourself with double-entry book-keeping. The balance sheet would have made it more clear for them, how the banks use their debts as credit to generate profit. It would solidify the incongruence of the proposal you have made. The counter-intuition in explaining banking alchemy is to invite people to accept a lie that is being explained as a lie to them, so is a double negative. To lie is easier than ask someone to accept being lied to, even harder when someone knows he is being lied to.
So felt Sisyphus as he rolled the boulder up the hill, this is the nature of trying to free slaves who do not know they are enslaved. Also important to mention, that some slaves are comfortable in their enslavement, and wish others to be captive as a twisted form of equality or justice.
I also take the opportunity to commend you for going back to China, and I hope you and your family can be finally safe and at home together, as it should be.
First of all, thank you for your brilliant work. The clarity of your analysis and the generosity of sharing it so openly are truly remarkable. I find myself waiting eagerly for the next one.
I would like to challenge two aspects of your latest Youtube video.
First, when you contrast the “ancient worldview” of polytheism with the modern individualist model, the dichotomy feels overstated. A monotheistic worldview can just as well produce the sense that human agency is fragile, subject to forces beyond control. In such a vision, wealth may vanish, triumph collapse, and joy turn to despair—not because of capricious gods, but because human beings are tested by realities greater than themselves. To equate this recognition of fragility with polytheism risks oversimplifying the intellectual landscape of the past.
Second, regarding the origins of money, individuality, and the nation-state: attributing these directly to monotheism seems historically questionable. The decisive acceleration of these concepts occurred much later, with the Renaissance and early modernity—when humanism, emerging financial capitalism, and the decline of religious authority placed man, not God, at the center. In fact, one might argue that these constructs flourished not as the fruits of monotheism, but precisely as it weakened under the weight of secular materialism.
Professor thanks so much for this. You have definitely sparked some deeper thinking on the topic.
I have to say though, I’m struggling with some of the more speculative arguments that you’ve made.
I tried to reframe it from a game theoretical perspective and many of your analogies (e.g. we could easily feed all humans) do add up.
What doesn’t add up to me is that where you assume malice coming from central banking, or that they indeed hold all the power.
Reframing from game theory: Many analogies add up, like how we could empirically feed/shelter everyone (per UN data), but scarcity emerges naturally from non-collaborative incentives… Not necessarily from inherent good/bad intentions.
Are you describing a game where non-elites are losers and elites collaborate? How does violence fit in. If I menace a central banker, doesn't coercion trump money's "illusion"?
So there is no solution then??
In some ways money is just a representation of wants and desires, and this symbolism is what grants it is infinite power. It is not an inherent flaw with money per se, but almost an inevitable thing... it's like numbers and arithmetic, the structure of things just necessarily lead to its existence and it being the way it is.
Even in the past where taxes were counted by bushels of grain, whoever controlled more of it (the king) would just directly have more power because he could barter it for whatever else he wanted (labour, treasure, game). The only difference is its a lot harder to print grain than paper bills.
Also I would have explained the whole scarcity thing a bit more in depth. Printing money causes inflation, and this is given as the reason why we can't print money infinitely. At the same time, inflation is precisely what causes cash to depreciate in value -- hence rich people don't get together and decide to screw poor people, it is more of an emergent feature of rich peoples' self interest. Because one thing I don't like about the whole "powerful people want to make you suffer" conspiracy is that... they're honestly pretty incompetent most of the time, and they certainly don't cooperate between one another. The only times they cooperate is when their thoughts align (not necessarily through collusion most of the time) to maximize their self interest.