Exploring Hydrocarbon Depletion
NEW! Members Only Forums!
Access more articles, news & discussion by becoming a PeakOil.com Member.
Contrary to what you've been told in economics 101, banks don't actually create money. They circulate money, pass it on from savers to borrowers. The 'money' you have in your checking account is not actually money, it is a debt the bank owes you. If you issue a check, then the bank has to call back some of its assets (loans made out) to redeem the check to the receiving party. Often this comes out of the bank's cash reserves, from where the concept of 'fractional reserve banking' comes from. Banks keep a fraction of deposits on reserve to meet their expected cash outflows.nznutter wrote:Jaws,
Central Banks dont create most money, private banks do that. Central Banks create M1, i.e. printed money that you use when you pay in hard cash. Most other money M2, M3 etc is created by your private bank i.e. citibank etc via the fractional reserve banking system out of thin air.
The fractional reserve banking system is the biggest fraud ever inflicted on human kind. Money is created out of a tiny reserve of savings on a 10 to 1 ratio and then interest charged on the money created.
Imagine if you gave me $10000 and I used it to create a $100000 loan to some poor smug and then charged him interest and only paid you interest for the $10000 deposit. You would call me a fraudster and that is exactly what bankers are!
Those who control the money supply control the economy. That is to much power to put in a politicians or bankers hands.
I am a hard money advocate i.e. silver and gold are true honest money with no shanagans! They cant just be printed into reality like the current USD!
That's absolutely false. Currency has a real intrinsic value, it is the easiest method to conduct exchanges. No other good makes it as simple to exchange wealth for goods and services or vice versa. You'll never get people to conduct their daily business in fish, because fish isn't a precise measure of value, depreciates rapidly thus is a poor store of value, and is big and not very valuable thus is a poor medium of exchange.Jenab wrote:Bankers don't lend fish. They lend currency. The value of currency is not intrinsic, it is symbolic. It is not fact, it is fiction. It serves the purpose of currency as long as people agree to behave as if the fiction were fact.
A Microsoft Windows compact disc represents much more value than you can get by eating, burning it, or that it takes to manufacture it. Its value is still extremely high and it took an immense amount of work to make it valuable.Currency represents, symbolically, much more value than you can get by eating it, or by burning it. More to the point, currency represents vastly more value than it cost to manufacture - so much more that it can be said that currency is not a good created by work.
jaws wrote:1) Lending money with interest isn't freeloading. The money you lend are your savings. You worked for them and saved them (or your parents did for you). The interest you collect compensates you for not enjoying the full extent of your wealth.
jaws wrote:2) Central banks aren't freeloading by providing nothing. They provide a very valuable and highly demanded good, money, an asset with extremely high liquidity providing a precise measure of value. People want money and need money to conduct transactions to enjoy the full productivity of their work. You try living using only barter. It's just not practical. Central banks answer that need by creating money.
jaws wrote:3) The profits made from money creation are always ultimately SPENT. That means that there is no such thing as "lending more of it out than it was possible to repay." The debtor is always in a position to postpone paying back the principal by trading the products of his work. The profits a central bank earns go back to its owners (usually a national government) and are spent (usually in public services).
And gold and silver have no intrinsic value other than the ability to shape them into ornaments to be worn by vain housewives. The reason they have traditionally been used as currency are the same as that of fiat currency, they are compact, liquid stores of value.nznutter wrote:Currency would have intrinsic value if currency was gold or silver or some other tangible commodity. Nowadays its just a paper note and a paper promise to pay. Paper has no intrinsic value other than the ability to burn it for heat like the germans did during the weimar republic days.
allenu wrote: In your explanation, is the Fed basically the guy issuing the money and charging interest?
And if your explanation is correct, then yes, that's extremely flawed, because if it's completely fiat money, and the producers are charging for the printing of more money, the only way to cancel the debt is to reduce the money supply.
allenu wrote: Can't an increase in efficient be considered growth as well? That is, if we go back to the notion of tying value to resources, at first, I could say that each fish I sell is worth one coupon. Later, as I improve in efficiency, each fish that I catch becomes marginally easier to catch. I realize I would like more coupons (hey, I'm greedy), and that fishing is easy enough that I decide to sell two fish for each coupon. My neighbour is still selling at one coupon per fish, so all his customers come to me instead.
I_Like_Plants wrote:And the correct term is "International Bankers" you know, the folks who set up the Federal Reserve here in the US then set up the working class in the US to fight with the working classes of England, France, Germany etc in WWI, because it was profitable!
Users browsing this forum: No registered users and 11 guests