The Truth Behind The Debt

An economic essay by David Bolwell

In today’s economic climate the government keeps our thoughts firmly fixed on the size of the deficit and our obligation to the country to suffer so this debt can be reduced, and the economy brought under control. What they don’t want us to do is ask why we have this debt and is it actually possible to reduce it? If we start to ask these questions we may uncover the uncomfortable truth which has been hidden in front of us all this time.

At present the UK deficit stands at around £150 billion. This is how much the government is borrowing each year and how much is added to the country’s debt. The current UK debt stands at a massive £950bn, which is 65% of the counties GDP. The debt is set to rise to about £1.1 trillion in 2011. Of course before we can reduce the debt there has to be no budget deficit, but is this achievable and what does it mean for the UK if it isn’t?

The problem with the economy isn’t as the government would have you believe, the welfare bill or winter fuel money. The problem is the way in which our economy has been constructed, as it is designed to cripple the country with debt. When the government needs more money, one of the options at its disposal is for it to ask the Bank of England (BOE) to print more. This sounds reasonable enough, but what most people don’t know is that the BOE then lends this money to the government at interest. So for every note printed we have to pay that back to the BOE with interest. From the start our money is printed out of debt. William Cobbet an M.P in 1810 said “There is something so consummately ridiculous in the idea of a nation’s getting money by paying interest to itself upon its own stock, that the mind of every rational man naturally rejects it. It is, really, something little short of madness to suppose, that a nation can increase its wealth; increase its means of paying others; that it can do this by paying interest to itself. When time is taken to reflect, no rational man will attempt to maintain a proposition so shockingly absurd”

Starting in 2009 as part of the Quantitative Easing measure, the BOE electronically created £200bn of new money out of thin air. With this money the bank bought up government gilts, despite most economists saying this is the worst possible way to spend the money. Gilts are one way the government can raise money. They are effectively an IOU, a promise to pay a fixed interest payment every six months until the maturity date, at which point the full value of the bond is repaid. The proceeds from a gilt sale are then spent by the government and the value of the gilt is added to our national debt. By purchasing these second hand gilts vast sums of money effectively left the UK and went to overseas bond markets. The bank could have purchased corporate bonds which would have allowed the money to go directly to companies which needed it. But it didn’t, and so the BOE became the main purchaser of government debt and now holds about 20% of government issued gilts.

By purchasing a vast amount of debt, the BOE effectively allowed the previous government to continue its spending addiction. The purchasing of gilts was not an effective way of injecting money into the economy, and there is no evidence that quantitative easing has worked. The main purpose was to keep the interest on gilts low so the previous government could borrow more money to feed its spending sprees. A very real side effect of the BOEs actions, could be a further devalued pound, inflation, and an economy that looks like a risky investment to foreign investors. Meaning that interest on gilts will increase, so the government will need to borrow more money to pay the inflated interest.

The BOE is believed to be a publicly owned institution, owned and controlled by the government and us the people. If this were true why would the government charge itself interest and cripple the nation with debt? Why also did the BOE help push the UK economy over the edge in 2008 by keeping interest rates at 5% for a whole year after the credit crisis started and the housing market had peaked? The Bank of England contributed to the current crisis by de-regulation of the banking sector that allowed banks to run wild, creating fictitious profits, knowing full well the liability was being placed on to us the tax payer. Were the BOE a government department run by us for us, then it could have averted the whole banking crisis. The bank cannot claim naivety as an excuse for it is an institution that was formed in 1694 and is over 300 years old. The only way the actions of the BOE can be perceived is that its main intention is to turn everyone including government in to debt slaves.

If we take a brief look at the history of the Bank of England we can see how this central bank effectively controls the nation’s economy and level of debt. What is harder to discover however is who is controlling the bank.

In 1844 the bank charter act gave the BOE monopoly on production of the sterling, and effectively control of Britain’s money supply. In 1946 the bank was nationalised by the labour government. The country was bankrupt after the war so it was agreed that instead of paying cash for the shares of the bank, shareholders would receive 3% treasury stake in HM Treasury and then operate the Bank as if it was really a nationalised Bank. All the banks shares were then transferred to the treasury solicitor where they still are to this day, and the bank remains a corporation not a government department.

In 1977 the BOE set up an obscure company called the Bank of England Nominees Ltd, company, no. 1307478. What this company does isn’t exactly known because it has never traded. The company has only 2 of its 100 shares issued. Who owns these shares isn’t know as the BOEN is protected by various government acts and was given an exemption by the Secretary of Trade, from the disclosure requirements under Section 27(9) of the Companies Act 1976 , because, “it was considered undesirable that the disclosure requirements should apply to certain categories of shareholders.” Add to that the fact the BOE is protected by its royal charter status and the official secrets act and you find you have an institution that is protected more than the MOD from the prying eyes of the public that supposedly owns it.

In 1998 Gordon Brown enacted the 1998 Bank of England act, which gave the banks directors complete independence with regards to the country’s monetary policy. In 2011 one of the first things the new coalition government did was to scale back the FSA and make it a formal subsidiary of the Bank of England. So now we have a central bank shrouded in secrecy that controls our countries money supply, has total monetary independence and now regulates itself!

If we as a country are ever to sort out the problems in the economy, then we must start at the beginning, and cut the Bank of England out of the equation. What we have seen in recent years is just how much power and control is in the hands of the central bank. Those who control the money control the country and when David Cameron tells us his current plans have been okayed by the BOE, then we know who is really running the show. Until the lid is blown off the Bank of England it is certain that the debt will grow, and we will continue to have recession after recession. In these dark times power is gradually slipping further and further in the hands of the world’s bankers.

The national debt creates a staggering £49bn of interest that has to be paid each year. So we all owe £1.1tn with £49bn of interest due. If everybody gave all their money to the banks and investors to pay off the countries debt there wouldn’t be enough money to do it, due to interest and banking charges. So what does this mean if there isn’t actually enough money to be debt free? It means we will always be in debt and CAN NEVER be free from the debt.

Cameron said last year that the decisions that led to the financial crisis represent “a policy crisis of historic proportions” and “in the United States, they have called on the federal reserve and it is time to call on the Bank of England”

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  • eddie

    1790: Mayer Amschel Rothschild states,

    “Let me issue and control a nation’s money and I care not who writes the laws.”

  • Conrad Jones (Cheam)

    The Bank of England’s main role is to keep inflation down to 2% . Inflation is running at over 3.2% (CPI) for June. RPI much higher, and all during a credit crunch where there is a supposed shortage of currency.

    The Bank of England has several subsiduary Companies listed below:
    1. The Securities Management Trust Ltd 1,000 ordinary shares of £1
    2. Houblon Nominees Ltd 2 ordinary shares of £1
    3. BE Museum Ltd 10,000 ordinary shares of £1
    4. BE Nominees Ltd 2 ordinary shares of £1
    5. BE Pension Fund Trustees Ltd 2 ordinary shares of £1
    6. Deposits Management (Edge) Ltd 1 ordinary share of £1

    Two of these Companies are “Nominee” Companies. The purpose of “Nominee” Companies is to provide it’s Clients with Anomynity or for tax evasion purposes.

    Why is the Bank of England Nominees Ltd company exempt from certain sections of the Freedom of Information act?

  • Bodge

    Why is our spineless government still bending over the whims of a systematicly corrup bank, with a built in super inflationary spiral of never ending debt and all it takes is one brave leader to tell them where to get off and we print our own money that wont have to have interest paid on it. Why? Who is it that needs to hide themselves, that their names can be given the veil of the secrecy act to protect it. Only someone who fears greatly that the people will learn the truth of their dishonesty and must hide their identity so they wont “be caught” and dealt with. Money it seems is the new authority, it can buy you anonymity from prosecution so long as government figures get their part of it and thats basically it.

  • Conrad Jones

    President Abraham Lincoln and President John F Kennedy both issued executive orders to print money directly – Greenbacks and United States Notes. The United States Notes differ from current US Currency as they did not have “Federal Reserve Note” printed at the top and therefore did not represent debt – and were free of debt. President Andrew Jackson also did not agree with Central Banks and understood where it would lead. To the situation we have today. President Andrew Jackson survived his assassination attempt as the assassins gun misfired.

  • KV

    maybe all banks should be allowed to print their currency and then people could choose which one they want to use. that would keep banks busy driving down inflation since inflation devaluates their product ; )

  • Paul Metcalfe

    For the Attention of David Bolwell.

    I was wondering if there was a copyright on your article. Would you have any objection if I printed off this article and read it to a group of friends ? I believe it would be in the British public’s interest.

    Yours sincerely

    Paul Metcalfe.

  • Ken

    “By their actions you shall know them”

    I found one part of your article fascinating:
    “Starting in 2009 as part of the Quantitative Easing measure, the BOE electronically created £200bn of new money out of thin air. With this money the bank bought up government gilts, despite most economists saying this is the worst possible way to spend the money. … The bank could have purchased corporate bonds which would have allowed the money to go directly to companies which needed it.”

    Another way of putting this is the government bought the BoEs created-out-of-thin-air-money by selling guilts, i.e. a form of “promise to pay back with interest” contract. With this money the UK government then lent it to private coorporations in trouble, taking all the risk on themselves. Now, if the BoE was truly a part of the UK Goverment, i.e. on the same team as the rest of us and interested in the financial health of the country FIRST, then, as you correctly point out, the BoE would have bailed out the coorporations directly. The difference is almost clear evidence that no matter what is written on Wikipaedia, they see themselves as a separate, and clearly self-interested organisation, even if that is to the detriment of the UK economy. This deal you just describe obivously, deliberately, puts all the risk on the UK gov, whilst completely protecting the Bank. In anycase, the Bank will make a profit at the UK govs expense (i.e. the taxpayer) from the interest.

    Add to this that the only banks bailed out were Alfa group banks e.g. Northern Rock, which are Rothschild Banks, and the fact that the Rothschilds are said to effectively own the BoE/BOEN perhaps with other major banking families, and you have a closed loop, where the only major loser, is the tax payer. In other words the whole financial crash scam, was deliberately designed to fleece the taxpayer, through the various existing financial mechanisms.

    The second part that I find alarming is this: as Conrad above mentions, “The Bank of England’s main role is to keep inflation down to 2%”, or the Bank’s main role is to ensure financial stability by controlling inflation to limits set by the goverment (CPI index etc.). NO MENTION OF AN AIM TO KEEP THE UK NATIONAL DEBT DOWN? Now you might say that’s not their department, but if they are part of the UK gov, they have as much interest in minimalising the national debt, and should be prime movers in this field as the country’s Bank. Why do they not see themselves as the goverment’s reserve of wealth, and why don’t they have an interest in keeping the amount of wealth maximised, as well as flowing healthily throughout the country’s financial system? Not a word of it. Their aims are only related to keeping the value of their own, issued out of thin air “credits” stable and valuable…. This is not really the action of a group that considers themselves part of the fabric of UK goverment, they are batting for themselves, by their own actions. OK, we may not be able to prove that the BoE is really just a front for private interests, or that the Rothchilds have a significant stake in this company, but we can see from the actions – they are a self interested organisation, and not acting for the benefit of the British Nation or UK taxpayers.

    Frankly the whole HM Treasury – BoE split is a scam, it allows the taxpayer to be fleeced, while both sides can clain innocence. .. And then there’e the bit about how they got rumbled and nationlised, and had to split out the BoE with BOEN to hide again….

  • screwbiedooo

    The news reports of the last four years have made no sense. Those enquiring enough to think about it can see a pack of whoppers is being told and yet are left in confusion by matters which are deliberately encrypted, whilst the majority believe all is in good hands and don’t worry.

    I have got as far as I can in inquiring of BOEN Ltd. One of the shareholders in Mr John Footman who is also Executive Director, Central Services and Secretary of the Bank of England.

    The court of directors are mostly from the private banking sector.We can see that the people running the show are involved in the private sector and hence a conflict of interests follows necessarily.

    The FOI act is powerless to glean more from them and no government will get involved, other than to hand over more power to them. Remember Woodrow Wilson:

    “There is a power so organized, so subtle, so watchful, so interlocked, so complete, so pervasive that prudent men better not speak above their breath when they speak in condemnation of it”

    I encourage people to pray.

    • Rob

      Is there a source for that Woodrow Wilson quote?

  • Dennis

    Like all truth, it all comes out in the end. Whilst a plan is being implemented, few are able to see the full picture, and, being fairly trusting, walk into the trap. The noose was large and loose, can you now feel it tightening? Most people do not believe that elected officials may not work in their best interests, and, once in office follow a different agenda. Whilst reserving my judgement on the authorship of the “protocols of zion” I am convinced of their authority, and, if any of you have not read them, do yourselves a favour and do so. The intentions are clearly stated, and the wolves have been let loose in the fold!
    Look up , for your redemption draweth nigh!