The Story of the Central Bank

Vocabulary and Grammar – a practical situation

Let’s study the vocabulary and grammar of politics and economics and government.
Let’s study a practical situation.
Let’s study the grammar in the context of one practical situation.
Look at these sentences and note the differences and similarities:


Link to conversation about economics and money in New York.

The Money

The central bank makes money.
The central bank prints money.

Money is made of paper.
Money is printed on paper.

Look at the relative clauses:

The money which the central bank prints is made of paper.
The money which the central bank prints is printed on paper.

The money which the central bank makes is made of paper.
The money which the central bank makes is printed on paper.

Actually it is printed on plastic now!

The Central Bank

Now let’s look at it from another angle. Let’s look at it from the angle of the central bank.

The central bank makes the money.
The central bank prints the money.

The bank which makes the money is the central bank.
The bank which prints the money is the central bank.

The central bank is not a government bank.
The central bank is a private bank.

The central bank is not a governmental bank.
The central bank is a private bank.

The central bank is not a government organ.
The central bank is a private organ.

The central bank is not a governmental organ.
The central bank is a private organ.

The central bank is not a government institution.
The central bank is a private institution.

The central bank is not a governmental institution.
The central bank is a private institution.

Did you notice the difference between “government” and “governmental“?

A Private Bank

Let’s look at it from the point of view of the bank. It is a private bank.

The central bank is a private bank.
It is a private bank.

It is not a government bank.
It is a private bank.

The bank which prints money is not a government bank.
The bank which prints money is a private bank.

The bank which prints money is not a state bank.
The bank which prints money is a private bank.

The Interest

There is interest on the money of course. Let’s have a look at it from that point of view.

The central bank prints money for the government.
The central bank prints money for the government at interest.

The government pays interest on the money.
The government pays interest on the money which is printed.

The government pays interest on the money which is printed by the central bank.
The government pays interest on the money which is printed by the central bank for the government.

The central bank charges interest.
The central bank charges interest on the money.

The central bank charges interest on the money which it prints.
The central bank charges interest on the money which it prints for the government.

There is interest on the money.
There is interest on the money which is printed.

Interest is charged on the money.
Interest is charged on the money which is printed.

There is interest on the money which is printed and the government pays the interest.
There is interest on the money which is printed and the government pays it.

The government pays it.
The government pays the interest on the money.

The government pays the interest on the money which is charged by the private bank.
The government pays the interest on the money which is charged by the private bank which prints the money.

The private bank which prints the money charges the government interest on it.
The private bank which prints the money charges the government interest on it and the government pays the interest.

Question Time

Why does the government pay interest to the private bank?
Why does the government pay interest to the private bank, which prints the money?
Why does the government pay interest to the private bank, which prints the money instead of printing its own money?
Why does the government not print its own money?

More Interest

There is a lot of interest of course so let’s look at it from the point of view of the interest again.

The private bank which prints the money charges the government interest on the money which it prints.
The private bank which prints the money charges the government interest on the money which it prints and the government pays.

The bank charges interest on its money.
The bank charges interest on its own money.

The bank charges interest on the money that it prints.
The bank charges interest on the money that it makes.

The bank charges interest.
The bank charges interest and the government pays interest.

Borrowing

The bank charges interest on the money that it prints and the government pays interest on the money that it borrows from the bank. Let’s look at it from the point of view of borrowing:

The government borrows money from the central bank.
The government borrows money from the central bank and that money has to be paid back.

The government borrows money from the bank.
The government borrows money from the bank and interest is charged on that money.

The government borrows money and the cost of borrowing is high.
The government borrows money.

Borrowing is an expensive business.
Borrowing is an expensive business for the government.

Borrowing is expensive because interest is charged.
Borrowing is expensive because interest is charged on the money which is borrowed.

Borrowing is expensive because interest is charged on the money which is borrowed from the bank.
Borrowing is expensive because interest is charged on the money which is borrowed from the bank by the government.

More Borrowing

There is a lot of borrowing. Let’s look at it from the point of borrowing in more detail:

The cost of borrowing is high.
It is really high.

The cost of borrowing is high and it accrues interest.
The cost of borrowing is high and it accrues a lot of interest.

The cost of borrowing is so high that it accrues a lot of interest.
The cost of borrowing is so high that it accrues a large amount of interest.

Amounts of Interest

Let’s look at it from the point of view of amounts of interest:

Interest is charged on the money.
Interest is charged on the money and there is a lot of it.

There is a large amount of interest.
There is a large amount of interest and it costs a lot to pay it off.

There is a large amount of interest on the money which is borrowed from the central bank.
There is a large amount of interest on the money which is borrowed from the central bank by the government.

There is an extremely large amount of interest on the money which is borrowed from the central bank.
There is an extremely large amount of interest on the money which is borrowed from the central bank which prints the money.

Question Time

Let’s pause for another brief question time.

Why doesn’t the government print its own money?
Why doesn’t the government which borrows the money print its own money?
why doesn’t the government which borrows the money from the central bank print its own money?
Why doesn’t the government which borrows the money from the central bank print its own money instead?

Why doesn’t it do that?
Why doesn’t it just do that?
Is the system corrupt?
Is the system totally corrupt?
Is it openly corrupt?

Write your answer in the comments section at the bottom of the page.

Review

Let’s review now:

The central bank, which is a private bank prints money and charges interest on that money.
The central bank which is a private bank prints money and charges interest on that money, which it lends to the government.

The central bank which is a private bank prints money and lends that money to the government.
The central bank which is a private bank prints money and charges interest on that money which it lends to the government.

The central bank which is a private bank prints money and lends that money to the government.
The central bank which is a private bank prints its own money and charges interest on its own money, which it lends to the government.

Large Amounts of Interest over a Long period of Time

There are really large amounts of interest over a long period of time so let’s look at that in more detail. Note the relative clauses.

Interest is charged.
interest is charged on the money.

Interest is charged on the money which is printed.
Interest is charged on the money which is printed by the bank.

Large amounts of interest are charged.
Large amounts on interest are charged on the money.

Large amounts of interest are charged on the money which is borrowed from the bank.
Large amounts of interest are charged on the money which is borrowed from the bank by the government.

Large amounts of interest are charged on the money which is borrowed from the central bank by the government.
Large amounts of interest are charged on the money which is borrowed from the central bank by the government and it has to be paid.

It has to be paid.
It has to be paid back.

The interest has to be paid.
The interest has to be paid back.

Bank Loans

The bank loans money to the government at interest.

The bank loans money to the government at interest.
The bank loans money to the government at interest and it has to be paid back.

The bank loans money to the government at interest and that interest has to be paid back.
The bank loans money to the government at interest and that interest which costs a lot has to be paid back.

The bank loans money to the government at interest and that interest which amounts to a lot has to be paid back.
The bank loans money to the government at interest and that interest which amounts to an awful lot has to be paid back.

Paper

Let’s look at it from the point of view of the paper which money is printed:

The bank loans the money to the government at interest.
The bank loans the money which is just paper to the government at interest.

The bank which prints the money, which is just paper, is not a government bank.
The bank which prints the money, which is just paper, is a private bank.

The paper which controls the government is printed by a private bank.
The contracts and agreements which control the government are printed on paper.

The Government

Let’s look at it from the point of view of the government:

A private bank controls the money supply.
A private bank controls the government.

A private bank tells the government what to do.

A private bank controls the government.
A private bank controls the government through the financial system.

A private bank collects interest on loans from the government just for the privilege of printing money.
A private bank charges interest on money every time money is printed.

The People

The people have to pay the interest.
The interest has to be paid by the people.

The interest has to be paid.
It has to be paid.
It has to be paid by the people.
The interest has to be paid by the people.

Taxes

The government raises money.
The government raises money to pay interest.
The government raises money to pay interest on money.

The government raises money to pay interest to a private bank.
The government raises money to pay interest to a private bank, which prints the money.

The government raises money to pay interest on the money.
The government raises money to pay interest on money which it borrowed from the central bank.
The government raises money to pay interest on money which it borrowed from the central bank, which is a private bank.


Link to conversation about economics and money in New York.

The government raises money to pay interest on the money which it borrowed by levying taxes.
The government raises money to pay interest on the money which it borrowed by levying taxes on the people.

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The Market Page


Link to conversation about economics and money in New York.

The Problem with Economics

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