# Money Is Infinite—So Why Are People Still Poor? | Prof. Jiang Xueqin

**Channel:** Prof Jiang Media
**Source:** https://www.youtube.com/watch?v=Y0O6ZjdRAy0
**Transcript page:** https://www.withtranscript.ai/video/Y0O6ZjdRAy0

## Chapters

- 0:00 — Early merchant banking and origin of receipts
- 1:56 — Bank lending and money creation
- 3:18 — Historical uses and trust in early money
- 5:17 — Counterfeiting risks and bank run dangers
- 7:26 — Sovereign lending risk and central banking
- 10:27 — The poverty paradox and scarcity illusion
- 14:56 — Crises, wars and deliberate wealth destruction
- 16:48 — Illusion of money and real work value

## Transcript

**[0:00] Speaker A:** So in the beginning, it was merchants who engaged in finance because merchants needed money in order to facilitate trade. And some merchants became extremely wealthy. And when they became very wealthy, they started banks in order to support trade and other merchants, okay, so these banks trade it in gold because that was the primary source and supply of money back then. Okay, so what happened is you would come and you would put your money, your gold in the bank for safekeeping, and the bank would give you a contract, right? A contract is just saying, thank you for giving me your gold.

**[0:54] Speaker A:** I promise to give back your gold at any time that you want it. And this is what we call a receipt, right?

**[1:02] Speaker B:** Professor Zhang is setting the stage. This simple receipt for gold is the ancestor of modern paper money, a promise that's easier to trade than the physical gold itself.

**[1:14] Speaker A:** And this would allow for better and easier trade. Because now I can take this contract and I can go to England, okay, maybe I'm based in Italy, but now I can go to England and say, listen, I need to buy cotton or bananas from you. And the person is like, well, what are you gonna give me? I'm gonna give you gold, right? So I take the receipt and I give it to you, right?

**[1:45] Speaker A:** And why do we do this? Because it's a lot easier than giving gold to other people. And so this system would facilitate trade throughout the world.

**[1:56] Speaker A:** Does it make sense? Now, I'm the bank.

**[2:00] Speaker A:** I have all this gold, and I want to make money with it, so I want to give it to other people. So other merchants will come to me and say, listen, I need gold. You lend me out gold, right? But I say to him, yeah, but if I give you out the gold, you have a security issue. It's inconvenient for you, so why don't I give you a receipt, a contract instead?

**[2:31] Speaker A:** Does that make sense? Because all I need is a contract. All I need is the receipt in order to go and do trade elsewhere, right? So, so by doing this, what I've done is I've doubled the gold in my bank, right? I've created money out of nothing.

**[2:54] Speaker A:** So the gold is still 5 million. That hasn't changed. But the receipt is now 5 million plus 5 million. So theoretically, I now have 10 million in the bank.

**[3:09] Speaker A:** All right? So that's how money and finance works.

**[3:18] Speaker A:** Now there's a problem with the system. What's the problem with the system?

**[3:23] Speaker A:** What do you mean?

**[3:30] Speaker C:** Why would the other people say that we see it as gold?

**[3:34] Speaker A:** Okay, that's a good question. Okay? Why is it that people believe in me, okay? The answer is very simple. The answer is because for most of human history, people didn't need money. If you were just a normal person, what were you doing? Were you in a village growing crops? If you wanted to get new stuff, what would you do? You would trade with someone else, right?

**[3:56] Speaker A:** Maybe you have a goat that I want. Well, then I would trade you a cow for it. So we didn't actually need money. So for most of human history, no one had any need for money. It was only in certain circumstances that you would want money.

**[4:12] Speaker B:** This is a key insight. The trust in banks worked because for most people, money wasn't for daily life. It was for social contracts, while merchants used it for trade within their own trusted circles.

**[4:22] Speaker A:** For example, marriage. Right.

**[4:24] Speaker A:** Okay. So throughout most of human history, money represented debt that could be unpaid. Oh, sorry. Debt that could never be repaid. So, for example, a very common thing is maybe you and I fight and I kill you.

**[4:49] Speaker A:** Well, in theory, your family should not come and kill me. But obviously, that would create a lot of problems, Right? So the way to settle the dispute is I would give your family money because money was symbolically meant to say, I'm sorry I killed you. This is a debt that can never be repaid. That's what money was used for.

**[5:11] Speaker A:** In most circumstances throughout human history, there was no actually real use for money.

**[5:17] Speaker A:** It was symbolic. But with the rise of trade with merchants, they needed money in order to facilitate the trade. But these merchants all knew each other, so they trusted each other anyway. So money was a mechanism for them to trade easier.

**[5:36] Speaker B:** Okay.

**[5:37] Speaker A:** Does that make sense? All right. Okay, so let's go back to the question. This system looks great.

**[5:45] Speaker A:** I can print money out of nothing. But there's a problem with this system. What is the problem?

**[5:52] Speaker A:** There's a problem here.

**[6:01] Speaker A:** Okay, that's actually a great question. Okay, so. Yeah. Is it possible to forge the contract? Okay, so that's a really good point.

**[6:10] Speaker A:** The problem is. So the, The, The. The answer is that they all knew each other anyway. Okay. Because it's a very small circle. Again, we have not reached the modern period, where it's a lot of people using money. If that's the case, then fortune becomes a problem.

**[6:28] Speaker B:** We'll.

**[6:28] Speaker A:** We'll discuss this in future classes. Okay. Counterfeiting. But at this point in history, forgery is actually not a big issue. There's actually a bigger issue, and it's a huge issue. What's the issue? I have $5 million of gold, right?

**[6:42] Speaker A:** There's about $10 million of gold out there in receipts. What's the problem with that?

**[6:52] Speaker A:** The problem is that if everyone wants to go at the same time, I go bankrupt, right? Because I lose my reputation. The contract says that at any time you want the gold, I must give it to you. But if I have, like, if there's $100 million in gold contracts, but I only have $10 million in gold, only if 15 million wants the gold back, then I'm screwed. This is what we call a bank run, okay?

**[7:26] Speaker A:** A bank run. And this is a huge problem for merchants, okay? There's also another problem with the system. And the problem is this.

**[7:40] Speaker A:** Who do I usually lend my money to? Do you guys know if I'm a bank, if I'm a merchant, who do I usually lend my money to?

**[7:48] Speaker A:** Okay, guys, today we lend the money to entrepreneurs. But back then, they. There really weren't entrepreneurs. There were kings and noble people. And what did they do all the time? Why do they need money to fight wars, okay? That's why there's a demand for gold. Because if I'm a king, I need to fight a war, usually against my brother or someone else to control this territory, right? Now, the problem with this is I could get killed, in which case, oops. But also, what's much more common is the king would be like, screw you, bank.

**[8:25] Speaker A:** I don't need to pay you back, okay? So there's actually a lot of risks with this system. So over time, develop a system to mitigate or reduce this risk, okay? What would they do? What they would do is they would create cartels.

**[8:44] Speaker A:** Cartels are just partnerships. So maybe this bank works with another bank, works with another bank throughout Europe. They. And the way they establish these cartels is usually through intermarriage, right? They would marry each other, they would combine together.

**[8:59] Speaker A:** And that way, let's say. Let's say 15 million of receipts wants back the gold, but there's only 10 million. Well, guess what? You just go to another bank, okay? And let's just say a king decides, I'm not gonna pay you back, bank.

**[9:18] Speaker A:** Well, your bank works with other banks to establish a new enemy to kill the king to get the money back. You understand? And this system is what we call today central banking.

**[9:31] Speaker B:** The professor is making a massive connection here. He's arguing that these early banker cartels, created to manage risk and enforce debts against powerful entities like kings, were the direct blueprint for modern central banking.

**[9:47] Speaker A:** And what you will learn in this class is central banking controls the world today. Okay?

**[9:57] Speaker A:** Now, what's really important about this system is that it's based on power.

**[10:07] Speaker A:** And what power is? It can turn nothing, money, the contract, into everything. That's what money is.

**[10:21] Speaker A:** Okay? So we live in a world in which banks can print out money, right?

**[10:27] Speaker A:** So now let's ask ourselves a question. Wait a minute here. If the banks can print as much money as possible, why do we have poverty?

**[10:41] Speaker B:** This is the central question of the lecture. If money is just a social construct, why does real world poverty exist? What are your thoughts? Drop them in the comments below.

**[10:52] Speaker A:** Right, because we can just give money to poor people and they wouldn't be poor anymore.

**[11:00] Speaker A:** Why do you have poverty?

**[11:03] Speaker A:** If there's all the food in the world that we want, why are people starving still?

**[11:10] Speaker A:** Why?

**[11:11] Speaker C:** Because we don't have limited resources.

**[11:15] Speaker A:** Okay? So we don't have limited resources. We have scarcity. Okay? Right? So that is the common answer. Scarcity. We have poverty because of scarcity.

**[11:27] Speaker A:** But I already told you this. They can print money out of nothing. So money is infinite. Money is an infinite resource. So why are we. Why do we have poor people then?

**[11:39] Speaker A:** That's kind of strange.

**[11:46] Speaker C:** For trade. They still have limited resources and the actual need, like the actual.

**[11:56] Speaker A:** You see, what's happening is this. You all believe money is scarce, okay? I just spent the past 10, 20 minutes explaining to you it's not scarce. It's infinite. It's just a number. We can at any time print out as much money as we need. Okay? So that's how power works.

**[12:12] Speaker A:** Power has brainwashed you into thinking something that is not true. You've been taught from the first day that money is scarce. But it's not scarce. It's infinite. And no matter what I say to you, you still believe this, okay?

**[12:32] Speaker A:** So you have to get that out of your head. Money is not scarce. It is infinite. So let's work with the question, why is there poverty in this world? Why do people starve?

**[12:43] Speaker A:** Why is there inequality in this world? Why are there poor people? Why are there. Why are there rich people? What's the answer?

**[12:52] Speaker C:** Because they don't print infinite money, okay?

**[12:56] Speaker A:** Because it's scarce. So guys, this is amazing, okay? You guys can't get out of your head. You think money is scarce.

**[13:03] Speaker A:** You think it is not possible to print infinite money when I already told you it is possible to print infinite money because they do this all the time. Yeah,

**[13:13] Speaker C:** the one who has the power don't want everyone to share the same.

**[13:21] Speaker A:** Yeah, because we don't want people to all have money. The powerful people don't want that. That's the answer. And why because otherwise no one would work. Do you understand?

**[13:38] Speaker A:** The point of putting money is not to give you money. The point of putting money is to create the illusion that money is valuable, and therefore you work hard in order to obtain it. But in order for me to make you want to get money, I need to create artificial misery. You understand, right? If there weren't poor people, you wouldn't want to be rich.

**[14:11] Speaker A:** It's only because you see people suffer that you would want to go make money for yourself. What do your parents tell you? Your parents tell you, work hard in school, make a lot of money. Otherwise you're going to end up like a poor person, right? Well, guess what? If there are no poor people, your parents couldn't say that to you, and you wouldn't want to work hard in school, right? That's why we have poverty. Because poverty creates the illusion that money is valuable.

**[14:39] Speaker B:** This is the professor's core thesis. He's arguing that poverty is not an accident, but a necessary feature of the economic system designed to motivate the workforce by making an infinite resource, money, appear scarce.

**[14:56] Speaker A:** In other words, poverty isn't what you do to yourself, it is what the powerful do to you.

**[15:05] Speaker A:** Now let me ask you another question. You guys have studied some economics. Why do you have, like, crises? Crises? For example, there's a stock market crash, or for example, the economy goes down and people lose their jobs. Why do you have crises?

**[15:25] Speaker A:** Exactly. You're not taught this in economics class. That's kind of weird, right? The point of crises is to destroy money. Why do we need to destroy money?

**[15:34] Speaker A:** Because if there's too much money in the system, people don't have to work. So you have to destroy this money in order to make people feel money is scarce.

**[15:46] Speaker A:** Okay? Does that make sense? So why do we have wars? Right? Why are there wars in the world then?

**[15:55] Speaker A:** Because they're fighting over scarce resources, right? I already told you, scarcity is a lie. The real reason is war is meant to destroy wealth in order to make you think money is valuable. Do you understand?

**[16:12] Speaker A:** You guys play War of Warcraft or these games, right? Guess what, guys? World of Warcraft. In our world, there's absolutely no difference. You just went around pointlessly working hard to obtain credits in order to buy stuff. If credit just flew out of the sky. Because they could do that, right? They could actually program the engine to just print money out of nothing. You wouldn't do nothing every day. You wouldn't play the game, okay? It's only because you believe there's scarcity in the world and that you must work hard to obtain wealth, that you do any work.

**[16:48] Speaker A:** Do you understand this? Okay. So this world that we live in, it's a complete illusion created by central banking in order to make us work as hard as possible. Because the real value is not money. The real value is the work we do that.