Never before has there been as much money as there is today and rarely has money been so cheap and yet the central banks continue to pump money into the world.
We are being flooded by trillions of dollars and euros. 00:00:14
It can't go on forever.
It's a ticking time: it's never been easier for investors to get their hands on cheap money.
Running up debts is practically free of charge.
Organizations are just borrowing large amounts of money from each other and then using that to make money by lending it to others who are using that to lend it to others.
A snowball system that lets the rich become even richer. 00:00:43
Savers, on the other hand, are losing billions every year, thanks to low interest rates. 00:00:48
If you just open a savings account, it's almost like burning money. 00:00:55
This deluge of money has created deals worth billions.
Companies are bought and sold for vast sums, because loans are cheap.
The employees become the pawns of the the speculators is where's.
All this money going we're in bud bordendorf in western germany.
This couple faces the same dilemma as many others: what to do with their savings in this world of low interest rates, carl heinz a recently retired court bailiff, knows all about money and debts.
His life insurance policy is due to pay out soon. 00:02:02
How should he invest the money in a house? They've already got one there's a lot at stake for the cycling enthusiast.
He and his wife want security in old age as well as a good time. 00:02:17
I was hoping that after the payout i'd be able to invest the money again and earn interest which could be added to a pension, but that plan isn't going to work out. 00:02:32
Carl heinz has always led a modest life.
He always stayed away from investments that paid high returns but were risky.
He never thought it would come to this.
He doesn't know what to do with interest rates this low, and nor do his friends some have told me they won't keep their money in a bank.
Account anymore, , it's fairly worth going to the bank interest on savings is almost zero at just 0.
01 percent. 00:03:20
That means that he gets one cent for every 100 euros per year.
What's happening with his money.
people are worried, says the director of the local branch of folks bank elmar schmitz, although there hasn't been a run on the safe deposit boxes.
Yet there have been more requests to keep money in cash or gold. 00:03:52
We've seen a continuing fall in interest rates over the past eight years. 00:04:07
I need a crystal ball to tell you whether it'll stay like this for long. 00:04:12
I think we'll have this situation for another two or three years after that things will change again, but we won't have the interest rates we had 10 or 20 years ago. 00:04:23
Since transgender magazine, the manager knows who he blames for these low interest rates. 00:04:32
The european central bank, the remit of the ecb, is clear price stability.
It uses the base rate as its tool to deliver that and it's been lowering the base rate steadily ever since the financial crisis down to zero savers are left by the wayside, but countries with high levels of debt, such as greece, are able to get their hands On cheap money, so too can ailing banks in southern europe. 00:05:04
The cheap money is supposed to fuel growth.
By buying government bonds, the ecb has pumped additional trillions of euros into the markets, otherwise the system would face potential collapse. 00:05:17
The price of all this is a deluge of money.
The money has to go somewhere into shares and real estate, which continue to rise in price.
The result is a massive concentration of wealth right at the top bill gates.
The world's richest man has a fortune of 65 billion euros. 00:05:39
That's the market value of his shares to compare the total value of all of the world's cash is less than 100 times that amount 5 trillion euros.
The value of all goods and services created every year around the world is 75 trillion euros.
That's the real economy.
The world's debts are far higher than that states, businesses and private individuals all have debts a world living on credit.
That's the value of all derivatives.
The speculative financial bets on the future they've got almost nothing to do with real goods anymore. 00:06:23
To recap: this is the fortune of bill gates.
What happens when there's too much money in the world economist max otter, says this deluge of cheap money? Isn't just flooding the big banks.
He sees low interest rates as the symptom of a massive sickness in the global financial system.
What's more cheap money endangers the entire economy and promotes increasing levels of debt? He says those who believe that, with the financial crisis of 2008 receding, things are now better again are much mistaken.
This influx of money is extremely dangerous.
It's slow but at some point the dam will burst and then we'll be in a huge crisis. 00:07:19
The biggest danger is that this flood of cheap money will split our society. 00:07:25
It moves money from the bottom upwards.
He says a gigantic redistribution machine, , low interest rates are demanded by many economists.
They mean that states can borrow on the cheap states can take on more debt. 00:07:44
It also means the rich can do the same and often without any liability if they default.
If i, as one of the super rich buyer business, then i'm only liable to the extent of my holding not with the rest of my wealth, that's a blatant injustice compared to middle class families and regular people with home construction laws.
This flood of money doesn't just save states and banks, it also favors the rich, who use this cheap money to buy shares companies and real estate with rapidly rising values.
While the financial investments of ordinary people lose value, the middle classes have savings and insurance policies, and these investments are the losers in a low interest rate.
World common, poorer citizens suffer because real estate prices are going up and therefore rents too london.
The world's largest financial center, illustrates very clearly the effect of this monetary deluge. 00:08:51
Trillions are traded here.
300 000 employees in the financial sector are trying to turn money into even more money.
London's own real estate prices are skyrocketing. 00:09:03
All the major banks have offices here.
This is where the money of the world's rich is invested. 00:09:09
Roman borisovic knows the scene.
Well, there are neighborhoods where millionaires are being pushed out by billionaires. 00:09:21
Borisovich is fighting against a sell-off of the city of london to speculators.
Together with colleagues, he has researched the anonymous owners of several properties, as a former banker he's familiar with price developments. 00:09:36
Well, these are used houses and again, depending on the size, it's difficult to say how deep they are, but uh anywhere between three uh to five - maybe five to seven million on this on this pitch in this particular area, five to seven million pounds. 00:10:09
Now, if you think about muse houses, this is a family place, just think about what kind of family can afford to buy a house for three to five for, even for five to seven million pounds, the expensive houses are all speculative objects and empty.
London belongs to investors, who don't live in the city. 00:10:20
Roman borisovic discovered that this townhouse was sold to a ukrainian billionaire for 66 million pounds, on paper.
The mansion is owned by a shell company, right now.
There is an excess of 40 000 properties in london that are owned by anonymous offshore corporations, meaning that we don't know who the owners are.
It could be decent people, they could be mafia.
There are four: we suspect that a lot of this money that came through london, that exploded prices here is actually of dirty origin. 00:11:04
There's construction underway everywhere, speculating with real estate is the big game in town trillions of euros from russians.
Germans, chinese and indians have poured into london from social economic perspective.
It is not sustainable. 00:11:25
You cannot have a city where residents and workers cannot cannot live.
You know this: this is a uh.
This is the problem with bubbles.
Is that nobody knows when they're gon na burst, but london doesn't have a monopoly on real estate bubbles. 00:11:41
They now exist in cities around the world.
If a real estate bubble were to burst sure, it would hit the wealthy who are invested there, but they have a diverse investment portfolio.
They seize opportunities around the world.
If the real estate bubble in munich were to burst, they'll be in rio or tokyo, they can act globally, but the middle class can't, as seen in the financial crisis of 2008, the middle class is hit while the rich get richer in times of boom and bust. 00:12:16
Not much has changed.
The minor regulations introduced into the financial sector aren't very tangible here in london, the speculators are looking for new ways to make more money in the world's number one financial center.
Many transactions are now taking place in the shadow banking system.
The bonuses for lucrative deals are as plentiful as ever and brexit will see the regulations relaxed even further. 00:17:50
The show must go on, alf townsend has lived through it.
All he's been driving a taxi for 54 years, chauffeuring bankers and brokers around the city.
Dealing in the world's trillions has become the trump card of the british economy.
He says optimistically: it's beneficial to london.
I think it's uh there's people who invest wherever whatever part of the world they come from if they want to invest their money in the city, that's good for uh being a british economy economy yeah. 00:13:20
He too has profited, but in exchange alf has to live far outside the city center, a million pounds for a single room apartment. 00:14:13
No ordinary local can afford that.
There's not many londoners.
Apart from us old people who still live in london, most of them are have sold their houses.
As i was saying earlier, bought their houses off the council made a fat profit, sold it and moved out to a suburban um, hideaway yeah.
Some leave the city entirely and forever. 00:13:57
Garand anderson was one of london's financial stars. 00:14:06
He now lives in wales.
He paid the same for his farm as he would have to pay for a tiny single room apartment in downtown london, but that's not the only reason why he came here. 00:14:17
He's had enough of the financial excesses.
The city is full of greedy ruthless, clever people and if they put bit more regulation a little bit more compliance some restrictions, these guys work out how to game the system to make sure that it benefits them. 00:14:37
Today he writes novels and screenplays about the financial world. 00:14:44
He used to earn a few hundred thousand pounds a year. 00:14:48
He didn't care who the trades hurt.
That's a few years ago now, but nothing has changed, says anderson.
The system rewards those who make fat deals at the expense of others, [, Music.
I make lots of strange gambles incredible reckless decisions, but they come good.
Then i make huge amounts of money if they go bad.
Maybe i lose my job, but that's the only downside, so this is what is called an asymmetrical risk.
It encourages short-term gambling. 00:15:25
Anderson is certain that the financial system will keep growing and sprawling the prospects of big profits.
The low interest rates the deluge of money, the former financial insider, believes these elements make for an explosive mix. 00:15:47
The ponzi system that exists is such that organizations are just borrowing large amounts of money from each other and then using that to make money by lending it to others who are using that to lend it to others, which means that you have a system where, ultimately, No one's really got the money that backs up all the money, that's being lent out subsequently um.
When that system comes crashing down, then it's good night attacks on speculative financial transactions could slow this merry-go-round.
However, this financial transactions tax would need to be introduced globally, but even the small-scale version, with just 10 eu states failed after years of negotiations, even though german finance minister wolfgang scheubler personally pushed for this tax.
But britain was against it and will be even more against it in the future.
London as a financial center would suffer.
That's most regrettable because this tax would be the necessary surgery for the sick financial system, the ecb and other central banks.
Flooding the world with cheap money, isn't a cure, it's just pain relief and in the long run it has serious side effects.
The entire setup is a system that keeps saving itself temporarily, but at some point it will inevitably fall apart until then, it exacerbates the enormous injustice that already exists. 00:17:34
Those who have benefit a handful of super-rich individuals own as much as the poorer half of the world's population combined this flood of money is increasing the gap between rich and poor. 00:17:47
Even further, people like these are struggling at the hands of low interest rates. 00:17:55
Karl heinz aish and his friends are worried in the past, the world was a veritable paradise for savers, the economy was booming and interest rates were high, even if inflation was too.
Nevertheless, successive generations lived by the motto: those who save get more out of life. 00:18:15
In the past, you could rely on a certain interest rate for your savings account you could live with for a short while we got 11 percent has an appointment with his financial advisor at the bank. 00:18:46
What should he do with his money? We have this account, and next year a life insurance policy will mature. 00:19:00
What can we do with this money? The advisor wants to know about her clients.
Readiness to take risks, he's actually more risk averse and wants to invest his insurance money as broadly as possible.
Every day it sits in the savings account, it loses purchasing power and he knows that since you're getting almost no interest, we have to see where we can generate a return and that investing more in property bonds and shares.
That's what his bank advises.
What else can he do in times like these? I don't feel uneasy or really comfortable with the idea, although i've generally had positive experiences to date, shares property bonds higher risk, whether he likes it or not. 00:20:09
Carl heinz aish has to participate in the game of the big financial world. 00:20:13
It's an industry in party mood.
Big companies are buying up competitors thanks to low interest rates, thereby increasing their share value. 00:20:23
Only shareholders benefit from this strategy and they tend to be affluent german.
Chemical giant buyer bought american seed supplier monsanto, for example, for 65 billion euros, , the world's largest brewery anheuser-busch inbev swallowed the number two sab miller for the equivalent of over a hundred billion euros and software giant.
Microsoft bought professional networking site linkedin for 26 billion companies as the playthings of international financial interests, , a less prominent case.
Wmf has been based in geislingen in south west germany, since the mid 19th century.
It's a brand with a world-class reputation, wmf manufactures cutlery and coffee makers.
It used to be in the hands of german owners and shareholders.
Its operations meant security for thousands of families. 00:21:35
Then the financial gamblers set their sights on wmf. 00:21:39
The company has changed owners three times in the past 11 years. 00:21:47
Every time it's sold, the price goes up enormously.
At the same time, wages and working conditions have worsened. 00:21:56
There were massive protests: when the company was taken over by french group, seb, martin porsche hoped things would finally get better again he's on his way to a wmf works meeting on behalf of the ig metal labor union. 00:22:15
He thinks it's symptomatic of today's age.
How easily a deal worth billions is made.
The investors at the big banks can get their hands on cheap money, no problem the new owner paid 1.
6 billion euros.
It's so easy for investors to buy and sell businesses and achieve huge profits.
You'd never achieve that through a company's day-to-day operations.
The question for me is to what extent is it harmful when jobs become a works meeting during unsettling times at wmf? What are the prospects with the new owner? The staff have had bad experiences in the past, we've been looked like a cow bled dry. 00:23:13
When there's nothing left to get out we're sold off. 00:23:17
It's been that way for years, everyone lines their pockets. 00:23:23
We can only hope.
The company survives and that car is restored. 00:23:26
At least the employees are told today that the new buyers do not intend to cannibalize wmf further before selling it on, but union representative martin porschka knows the only way such deals can be paid for is through extremely low interest rates on loans. 00:23:46
The deal at wmf went as follows: new york-based equity, firm kkr bought wmf for around 660 million euros via a subsidiary, located in a tax haven, kkr used 100 million of their own capital and borrowed 560 million from banks. 00:24:13
Four years later, kkr sold wmf to french household equipment maker seb for 1.
6 billion, a deal supported by very low interest rates.
Kkr made a profit of 940 million euros after repaying the loan and investing just 100 million of its own capital. 00:24:38
That's a return of more than 800 per a lucrative deal, but only for kkr shareholders.
That's possible because at the moment there's enough money on the global market.
Other investors are able to pay such prices.
If the money weren't there, they wouldn't be able to shift such volumes loans for almost nothing.
That's the flip side of the money deluge financial investors do deals with huge sums that would have been unthinkable in the past in a regulated financial system.
Today many wish for a return to those times.
The deregulation of the financial world has a long history, [, Music ].
Until 1971, the world was financially stable.
Currencies were covered by gold.
The real economy was in balance with the amount of money available. 00:37:42
s president nixon needed money for the vietnam war. 00:25:48
He switched on the money printing machine, not least because opec had increased oil prices.
This money, then flooded.
The world banks came up with new investment models. 00:26:01
They now wanted to make money, not with goods, but with money alone.
This was the start of the financial industry of today, credit cards and current accounts accelerated financial transactions.
Former public responsibilities were privatized, pensions are a case in point.
The private sector is better at everything than the state, so they said, new billions came into play in the 1980s margaret thatcher deregulated, the banks in london bill clinton did the same later on wall street chancellor gerhart schroeder in germany then also bought into the deregulation philosophy.
Money was to earn money and thereby create growth. 00:26:53
The global casino was open for business.
The path of liberalization was a mistake.
It's the wrong word too.
If you deregulate markets that need to be regulated, then you create chaos.
You unleash an avalanche of money onto the world, you can call that liberalization, but it was a policy that benefited only a few people, namely the rich.
It has caused a lot of problems for the world. 00:27:20
The liberalization or deregulation allowed the deals of the banks to explode.
They now acted internationally.
Major banks have become investment establishments that fund huge deals.
More and more money goes into speculation.
That's where the big money is made.
This has less and less to do with the real economy.
Are the central banks alone responsible for this influx of money, or where does it all come from economic students in zigan, germany are investigating just that. 00:27:58
What do people know about the origin of money? That's what they want to find out we're from the university of zegen we're doing a research project about money. 00:28:07
What does money mean to you? You can't do anything without money.
Where does the money come from? Not from me, that's for sure how is money made through work, of course, i'm not sure in banks. 00:28:27
It was really varied.
A lot of people had no response at all some said the bank or that it's just printed and some mention manipulation for years.
Financial expert, helga poikat, has been annoyed that money plays almost no role in economics. 00:29:00
Many consider it just a neutral means of exchange.
It's strange that it's not just the public who are in the dark. 00:29:12
The students street survey demonstrated that well enough, but the money creation process also seems to be something of a mystery among academics and even in the banking boardrooms, the banks are silent for a reason they would have to explain to their customers that these days, it's them.
Creating the money and them benefiting hugely as a result, as poicat explains money isn't neutral. 00:29:39
After all, it's not the central banks, but private banks that generate most of this new money, a process also known as deposit money creation. 00:29:50
The bank opens an account and issues the funds.
It's then in a contract with the individual who's taken. 00:30:05
That means the original impulse to create money comes from private banks, that's new to most people. 00:30:23
A loan works like this.
Savers, take money to the bank and the bank loans, this money to a customer such as someone buying a house or running a business, but that's not the case.
If someone has savings, their money is parked in a savings account. 00:30:46
The advantage for the bank is that person can't just take it out when the bank issues a loan, it's created from nothing. 00:30:53
These two processes really don't have anything to do with each other, even though it looks that way, and even though that's what the textbooks say, this is how it works.
A customer wants to take out a loan for 10 000 euros.
The bank has to deposit between one and three percent, so at least a hundred euros with the central bank. 00:31:15
That's it in return.
The bank is allowed to transfer 10 000 euros to the customer's account. 00:31:20
At the push of a button, the bank generates 10 000 euros of electronic money from 100 euros and in return it collects the interest. 00:31:30
This creation of deposit money is a license to make money. 00:31:35
The banks are happy, of course, that they can do this, because that gives them a free reign.
They get to keep the profits.
The senurage that's a few billion every year.
Who'd want to miss out on that. 00:31:49
Definitely not them.
Private banks basically create new money as they wish, and that used to be the privilege of the mint of princes and governments. 00:31:58
It's a privilege to create money and therefore profits out of nothing.
This privilege has been in the hands of the financial industry for a long time, and in recent years it's been unchecked. 00:32:11
Is that really such a good idea? [, Music ], the big banks in particular, have massively increased the money deluge in this way as a way of imposing more controls on the financial system.
Again, private banks could be deprived of the privilege of creating money. 00:32:32
Developments are already underfoot in switzerland. 00:32:40
Zurich is a popular location with banks, there's an initiative here that advocates reining in the swiss banks.
In future, it says only the national bank should be allowed to create money, not private banks anymore.
The initiative is fighting for fully backed money and an end to the privilege of big banks to generate electronic money at the push of a button. 00:33:04 00:31:23
It was then he understood that we can't carry on with limitless loans and debts. 00:33:20
90 of all, our money is just numbers on a computer in a bank somewhere the banks make this money, that's what we find worrying and that's what we want to change. 00:33:34
Great things have small beginnings, but members of the initiative are striking a cord with many passers-by. 00:33:44
They distrust the financial system.
I can't say that with pride anymore, they're, casinos, now the manipulation happens everywhere. 00:34:12
We in the future generation are being robbed at the moment.
It's primarily the big banks who are pocketing the profits of this money-making enterprise. 00:34:27
The swiss initiative wants these billions to benefit the country's citizens by only allowing the national bank to create money.
We want to take away the right of banks to create money, but we're not taking away a line of business.
They'll still be allowed to lend money and manage assets and oversee financial transactions.
The banks get to keep all of that. 00:34:52
They want their national bank to play a key role in the future. 00:34:56
Private banks would only be allowed to issue loans if they have the money.
In their vaults 100, secure private banks would not be allowed to create deposit money anymore, and the profits from this privilege would also benefit the national bank. 00:35:24 00:35:19
The general public are the winners.
The national bank is obligated to look after their well-being.
The group want the creation of money to be state controlled and not in the hands of private banks. 00:35:40
Billions in interest payments would then flow into the public purse. 00:35:46
I support these various initiatives.
Banks wouldn't be able to create new money.
They'd have to work with the money they have and deposits. 00:35:58
That's a good first step, it's not enough, but it's an important step on the path towards a fair financial system of the big system. 00:36:09
It appears absurd.
On the one hand, the world is flooded with cheap money, but at the same time, some places have none the places that don't offer big profits right away, but that in the long term, would benefit the future of our society. 00:36:27
We're at the impact hub in munich.
An office space for startups, a space for companies that have innovative ideas for the future new technologies, sustainable solutions for our problems, but there's no money here, laureen hahn and his team are working on a car for the future. 00:36:58
For example, their baby goes by the name.
Xeon, a small electric car that generates some of its own electricity. 00:37:13 00:37:06
The city runaround, is designed to access electricity from the well-protected solar cells on the car body. 00:37:16
It will also source electricity from a battery.
It's an inexpensive and highly eco-friendly electric car. 00:37:26
Developing the xeon costs money and no bank wants to stump up this money says laureen han startups, like his don't stand a chance of getting a loan from a bank. 00:37:39
Even though there's more than enough money available, banks are out of the question.
We're too risky banks prefer to invest in infrastructure or the like something that's long term and safe, where the loan is secured. 00:37:55
If our company goes bankrupt, they have virtually nothing, they could recoup laureen han had to collect money from private donors, online venture capital, no loans for their projects.
That's the central issue for young entrepreneurs. 00:38:17
They can't get their hands on any of this cheap money. 00:38:20
At the end of the day, it's not about money but about creating opportunities so that people who want to do something can do something. 00:38:32
If you don't invest in that or the startups can't access money easily and can't develop easily, then they'll move country. 00:38:41
There are lots of entrepreneurs here who want to push forward sustainable products and services, products where the consequences for people and the environment are taken into account from the word go products designed to create value for society.
I think it's a scandal that companies like this struggle so much to access funding from banks or major investors, carl heinz eye shinbar bordendorf, invests in the traditional fashion, he's received the money from his insurance policy and he's made a decision he's looking at his house with A painter and decorator he wants to invest some of the money in renovations, a fixed asset investment, a strategy to circumvent the low interest rates. 00:39:33
Carl heinz has realized in recent months how important it is to pay attention to money matters the times when we could hand over our responsibility at the cashier's desk are over.
Maybe he'll be fortunate, but one thing is certain: the sick financial system is going to cost us a lot of money. 00:40:00
I don't think anyone will come out of this situation.
We've been living on loans, there will be wealth destruction. 00:40:10
The current financial system is very likely to lead to the next disaster. 00:40:13
We need a different system, but it would be enough if we just returned to what we had highly regulated financial markets and a banking sector under control and whose purpose was to serve. 00:40:25
We have to reign in the world's financial system, but exactly the opposite is happening in the united states under donald trump to make the system safer for people. 00:40:40
A system like that envisaged by the swiss initiative could be one building block in particular, states have to reduce their massive debts.
It's the only way we can curb this deluge of money and break through the spiral of loans. 00:40:54
That's also why we need international debt conferences where states mutually waive their debts. 00:41:00
It's us the people who foot the bill, big banks - must cover their loans with more of their own capital than they do today.
[, Music ].
There needs to be a global tax on financial transactions, and money needs to go to places where it benefits society for our futures sake. 00:41:30
The interests of the financial industry have determined developments in politics and society for far too long.
Trump and brexit mustn't be allowed to fuel that even further money is far too important to be left to the banks alone. 00:41:52
, you .