--- title: "Meaning & Key Takeaway of: In fact this is precisely the logic on…" description: "\"“In fact this is precisely the logic on which the Bank of England—the first successful modern central bank—was originally founded. In 1694, a consortiu..." image: "https://sms4smile.com/quotes/i/eef/david-graeber-4667_banking_in-fact-this-is-precisely-the-logic-on-w_1956412.png" --- # In fact this is precisely the logic on which the Bank of… ![“In fact this is precisely the logic on which the Bank of England—the first successful modern central bank—was originally founded. In 1694, a consortium of English bankers made a loan of £1,200,000 to the king. In return they received a royal monopoly on the issuance of banknotes. What this meant…” quote by David Graeber](https://sms4smile.com/quotes/i/eef/david-graeber-4667_banking_in-fact-this-is-precisely-the-logic-on-w_1956412.png) [Download](https://sms4smile.com/quotes/i/eef/david-graeber-4667_banking_in-fact-this-is-precisely-the-logic-on-w_1956412.png) [Open image](https://sms4smile.com/quotes/i/eef/david-graeber-4667_banking_in-fact-this-is-precisely-the-logic-on-w_1956412.png) > ““In fact this is precisely the logic on which the Bank of England—the first successful modern central bank—was originally founded. In 1694, a consortium of English bankers made a loan of £1,200,000 to the king. In return they received a royal monopoly on the issuance of banknotes. What this meant in practice was they had the right to advance IOUs for a portion of the money the king now owed them to any inhabitant of the kingdom willing to borrow from them, or willing to deposit their own money in the bank—in effect, to circulate or "monetize" the newly created royal debt. This was a great deal for the bankers (they got to charge the king 8 percent annual interest for the original loan and simultaneously charge interest on the same money to the clients who borrowed it) , but it only worked as long as the original loan remained outstanding. To this day, this loan has never been paid back. It cannot be. If it ever were, the entire monetary system of Great Britain would cease to exist.”” [David Graeber](https://sms4smile.com/quotes/author/david-graeber/) ## About This Quote This interpretation was drafted with AI assistance. It is one reading of the quote, not the author's own explanation. The Bank of England was founded by issuing banknotes backed by a royal loan, creating a perpetual debt that underpins the monetary system. **In simple terms:** Bank notes originated from a royal loan that never got repaid. Key Takeaway Recognize how debt structures shape economies. Themes economics history finance Mood analytical critical thoughtful Type historical explanatory When to use this quote - policy analysis - financial education - economic research - public debate Key Concepts monetary policy public debt central banking Questions to Reflect On - What are the long‑term effects of perpetual debt? - How does this history influence current monetary policy? 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