THE Federal Reserve Thread pt 1 (merged)

[I_Like_Plants]

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!

A certain leader with some faults but the bright idea to kick out the Int'l bankers and start up a non-debt-based monetary system in Germany in the 1930s had the unpleasent experience of the International Bankers declaring war on him, and since the International Bankers own the media, we still believe now that he was the bad guy. He took his country from deep Depression and starvation/rioting in the streets to prosperity in a very few years, it was able to defend itself from the IB's attacks on all fronts and almost won.

Now I see us leading right back up to that kind of thing happening again, we're in the Weimar period now.

[I_Like_Plants]

Read Heinberg on this, we're in a grow-or-die system. Stasis means death, downscaling means death, it has to run at full speed, faster and faster, or it collapses.

[MonteQuest]

Tapas is spot on. Here's a monster thread on the issue from a bit ago.

Our Money System and Oil Depletion; Are they Compatible?
http://www.peakoil.com/fortopic3761.html

[Tapas]

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.

What you are describing here is a free market economy. This is a good thing. You increase efficiency. You lower the cost of your product. You gain more customers. By competition everyone gains. This should not be confused with Capitalism which is a different beast. The beast has to keep growing to survive. While free market helps everybody, the benefits of Capitalism are heavily skewed towards a few.

Here is a clear and concise explanation of the birth of Central Banks, lending money with interest and the Fractional Reserve System of banking.


I Want The Earth Plus 5%


There are some additional links at the end of the article.

[Tapas]

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!

You are absolutely correct. The International Bankers first gained their foothold in England when they succeeded in creating the Bank of England. Their fascinating role in the World Wars is illustrated by Monte's book Madmen at the Helm.

I would recommend everyone to request a copy from Monte. I was awake all night as I read through this 111 page research that covers the history of the New World Order, the Central Banks, the two World Wars, the Korean War, the Vietnam War, the Gulf War and 9/11. This book brings all the pieces of the puzzle together.

There is a common saying - nothing in politics happens by chance. There is always a reason. Monte's book reveals the invisible hand of the ruling elite.

[linlithgowoil]

A certain leader with some faults but the bright idea to kick out the Int'l bankers and start up a non-debt-based monetary system in Germany in the 1930s had the unpleasent experience of the International Bankers declaring war on him, and since the International Bankers own the media, we still believe now that he was the bad guy

You're talking about Hitler? If so are you really calling him a leader with 'some faults'? Yep, killing millions of people for no particular reason, that can be written off as a 'fault' can it? Unbelievable.

As for money being the root of all evil, yes it is. However, your average person loves money - absolutely loves it with all their heart and all their soul, and they'll do almost anything to get more of it.

I'm afraid you might as well ask people to give up drinking water.

[I_Like_Plants]

Linlith I'm not going to let the USA off the hook for refusing to take the Jewish refugees Hitler originally wanted to leave. USA was first and formost in refusing them shelter, and hardened the resolve of many other countries to refuse them shelter.

If shelter had been offered to them, Nazism may well have taken a different form, after all there were many very patriotic German Jews who'd fought with valor in WWI and agreed with the back-to-the-soil and anti capitalist ideas in Nazism. A lot would leave, some would stay, and the real enemy, the international bankers with their debt-based monetary system and compulsion to make everyone toil their life away in debt to them, a worthy scapegoat, may have ended up THE scapegoat.

I'm not letting my own country off the hook for how much it contributed to things turning out the way they did.

[CARVER]

...

I Want The Earth Plus 5%

'Check please!' When are we going to sort out this mess? And how?

[nero]

I'm sorry to say Tapas you're quite wrong.

Yes, the Federal Reserve is the Central Bank of the United States. It is privately owned. At this point the dollar is a 100% fiat currency. It is not backed by any tangible items like gold or silver. It does not cost anything for the owners to generate a million dollars except the cost of printing.

The Federal Reserve system is controlled by the federal government who is also the benefitial owner who receives the bulk of the profits. (yes because of the history of it's creation out of the previous reserve system the ownership of the Federal reserve is complicated but when you ask who controls it and who receives the profits it comes down to the government in both cases.)

The Federal Reserve was created with the Federal Reserve Act of 1913. By this single act passed by the gullible Congress, the bankers took complete control of the financial power of the US. The US Government relinquished its constitutional right to print its own money. The Feds lends the US Government money with interests.

Yes the Feds lend the government money with interest but then proceeds to give the vast bulk of the interest right back to the federal governement. In terms of the budget the Federal Reserve system is a nice little money earner for the federal government. But since the bulk of it's profits comes from the interest on the federal debt it holds it all balances out in the end.

Let's say you deposit $1,000 of your own money into BankABC. They can now turn around and loan that same $1,000 to me charging 10% interest while giving you back a 3% interest on your savings account. Seems fair? So far, yes. After 1 year, your savings account goes up to $1,030. I repay BankABC $1,000 plus $100 in interest for a total amount of $1,100. The bank makes a net profit of $70 with this single transaction, which goes to pay for its daily operation.

This is a bit off. The bankABC could only lend out $900 of the initial $1000 deposit because it needs to keep a 10% reserve. So adjusting the numbers, after one year the depositors savings account is $1030 and BankABC receives $990 for the loan plus interest. The Bank kept $100 in it reserves for the entire year in case the depositor wanted some of his money back. The bank makes a net profit of $60 which goes out in daily operation expenses and as dividends to the shareholders.

So far so good. Looks a fair business. But now comes the magic of Fractional Reserve. BankABC is allowed to inflate its assets by a factor of 10. Simply put, it means the moment you deposit $1000, BankABC can claim to have 10 x $1,000 = $10,000 in their holdings.

No it doesn't. (Read this carefully Tapas or go read your econ101 book again) The BankABC can lend out $900 if it has a deposit of $1000. The magic starts where the person who receives the loan proceeds to deposit it into HIS bank account at bankDEF. BankDEF can now make a new loan for $810 to another person who in turn deposits the money into another bank and the chain goes on and on.

Its gets very interesting from this point! BankABC can now loan out $1,000 to 10 individuals, each required to pay back the principal plus interest at 10%.

So by the end of the first year, the bank has made a whopping $11,000 from their initial assets of $1,000 and given you a pitiful $30 reward for your investment.

This is wrong, In the end the banking SYSTEM has made $1000 dollars in interest and has paid out $300 in interest to the various depositors.

It costs mere pennies to print a $1000 bill. We the citizens pay interest on the face value for this favor. Our federal debt is 7.8 Trillion dollars. We pay an annual interest of $330 billion on the borrowed capital.

The federal debt owed to the federal reserve system is a small fraction of the overall debt. The annual interest paid to the Federal Reserve is much less than that( and is anyway given right back in the treasury).

[agni]

Let's say you deposit $1,000 of your own money into BankABC. They can now turn around and loan that same $1,000 to me charging 10% interest while giving you back a 3% interest on your savings account. Seems fair? So far, yes. After 1 year, your savings account goes up to $1,030. I repay BankABC $1,000 plus $100 in interest for a total amount of $1,100. The bank makes a net profit of $70 with this single transaction, which goes to pay for its daily operation.

This is a bit off. The bankABC could only lend out $900 of the initial $1000 deposit because it needs to keep a 10% reserve. So adjusting the numbers, after one year the depositors savings account is $1030 and BankABC receives $990 for the loan plus interest. The Bank kept $100 in it reserves for the entire year in case the depositor wanted some of his money back. The bank makes a net profit of $60 which goes out in daily operation expenses and as dividends to the shareholders.

This is wrong. The grandparent poster is right. If you give $1000 to a bank and they are required to keep 10% reserve then they can go ahead and lend $10,000. Changing the amount that the bank has to keep in reserve can vastly the change the amount of money supply because of this multiplier effect. Also, this has been use for quite a long time. It wasn't the invention of the 20th century.

-A

[jaws]

Banks don't have regulated reserve requirements anymore. They can keep or lend as much money as suits them.

[MacG]

Banks don't have regulated reserve requirements anymore. They can keep or lend as much money as suits them.

Yep. Reserve requirements has been quietly abandoned for just about everything than checking accounts. Pretty scary. And very sad.

[I_Like_Plants]

Yeah fractional reserve banking I think goes back to the Rothschilds. That plus fiat currency = quite a mess.

[spot5050]

Imagine this:

You have a small community of 20 men, women and children living in harmony with nature in an isolated island. The adult males are spending their time farming, growing rice and corn, raising livestock, building huts and fishing in the rivers. The women are busy raising their children, cooking, weaving clothes, harvesting the crops while the children are helping the adults in growing, gathering, and building all the essential elements to community life and learning the secrets of survival.

In this primitive culture there is no concept of money. Barter is the method of exchanging goods and services. People are trading bushels of wheat for buckets of freshly caught fish. Women are trading bamboo furniture for hand woven quilts designed by others. It is a closed community based on mutual cooperation and sharing. Every individual is contributing their manual labor to enjoy a fair share of the sum total. Nobody is getting a free ride.

70 years goes by. The population doubles. There are now 40 men, women and children living in this island. Resources are plentiful. The barter system is serving them well. Individuals are still exchanging their goods and getting to enjoy a share of the total.

Then comes an individual with a very clever idea. He introduces the concept of money. He declares what a wonderful idea it would be if instead of trading 1 bag of wheat for 2 fishes, they decide to put a monetary value to all their goods. Just look at the convenience. If you price the bag of wheat for a dollar and the two fishes for a dollar, then it would be considered fair trade to get a bag of wheat if you had a dollar to pay for it, even though you may not have 2 fishes at the very moment.

Similarly, another person is free to get two fishes if he had a dollar in his possession, even though he may not have a bag of wheat to trade upfront.

It all seems like a brilliant idea does it not?

One little problem. Where will these initial dollars come from? The inventor of this plan proclaims he will print all the dollars, as much as necessary, and lend them out at a very low interest of 2%. Any individual is free to borrow as many dollars he wants so long he pays back the principle plus 2%.

The gullible members could not see the outright fraud hidden behind this simple plan. They agree to it. It serves their short term greed. They quickly discover how easy it is to get a bag of wheat just by borrowing a dollar without first having to take the trouble of catching two fishes. This dollar needs to be returned after one year with an additional 2 cents. Big deal they think. After all, they are planning for a large family. They would have additional helping hands to increase the family wealth.

An astute reader will at once note the sinister plan that lies hidden behind this concept.

1. The clever individual who thought of this scheme does not need to do any manual labor at all! He gets to live off the labor of others. He lives off the 2% interest for every dollar that people borrow from him. All he has to do is print these dollars.

2. The population of the community redoubles to 80. The total working potential of the community has increased by a factor of 2. Twice the number of working individuals are now borrowing dollars. As the borrowing amount increases, so does the total debt owed to the clever banker. The larger the population, the richer he gets!

3. All the banker is really doing is keeping log of the energy transfer within this growing community. He is not creating any energy himself. He is simply tracking the flow of energy through an intermediate medium called a dollar. The transfer of energy is real. The dollar is fake. The dollar is merely tracking how the energy is being shared, and used. For each unit of energy being transferred, he is getting a cut.

4. The true source of all energy is the sun. The earth is getting a free share each and every year from the sun. Nobody is paying a penny to the sun to enjoy this energy. It is truly a free gift. Every living creature is entitled to this free gift.

5. The plants are converting this solar energy into food by a process known as photosynthesis. The farmers in the community are harvesting the fields. The livestock are feeding on the plants. The people are raising the chickens, goats and cattle for their meat.
The sunlight is keeping the planktons alive in the oceans. The fishes are surviving eating the planktons. Humans are consuming fishes to feed themselves.

6. Notice, all of these basic life processes are happening without the input of a single fake dollar. Our monetary system is nothing but a superficial fake construct. However, the benefits of the free source of energy - the sun, is being radically skewed by the introduction of money. People with more dollars, get to enjoy more than their fair share of energy.

7. Notice another important thing. Fossil fuels are nothing but stored solar energy - a product of ancient photosynthesis. Individuals who are controlling the oil are getting instant access to a treasure trove of stored energy.

8. As the human population grew from 1 billion to 6.5 billion, not only did the potential for manual work increase 6.5 times, it actually increased by a factor of several hundred once you factor in the energy released from burning about 1 Trillion barrels of oil, coal and natural gas.

9. All this energy transfer has been tracked by a man-made entity called money. The more people expend energy, the more fiat dollars that need to be printed, and higher the debt load of the population that is owed to the central bankers.

10. Money, which should have been used as a convenience and issued by the government, now becomes a sinister tool to enslave the population making them life long debt slaves to the central bankers.

11. In the final end-game, the central bankers takes over every nation and controls the entire wealth of the planet.

12. The game is rigged from start. The concept of usury - I give you a dollar, you give me a dollar plus something is outright fraud and flies against all natural laws. You cannot get more than you give.

13. Ultimately this flawed system has to collapse. This Ponzi scheme is dependent on perpetual growth. The point at where our energy peaks - meaning no more growth, will also mark the beginning of the collapse of our monetary system.

Tapas - the uber-doomer.

Tapas, nothing lasts forever. No monetary system has lasted forever as far as I know!

Lets assume you are correct in everything you state, so what?

All you are saying is that we're at the beginning of the end of this monetary system. Boo hoo! You don't say how long you think it will last. Say it's another 300 years then we've done better than the Romans.

No dynasty lasts forever my friend. You are stating the obvious; very cleverly and with lots of big words, but still you are stating the obvious.

[I_Like_Plants]

Um, we're going to crash faster than the Romans did, the Romans weren't using paper fiat money.

Those are some good posts by Tapas.

[Tapas]

All you are saying is that we're at the beginning of the end of this monetary system. Boo hoo! You don't say how long you think it will last. Say it's another 300 years then we've done better than the Romans.

No dynasty lasts forever my friend. You are stating the obvious; very cleverly and with lots of big words, but still you are stating the obvious.

True. Nothing lasts forever. The crash is inevitable. Few doubt this fact. The question is when and how much time we have left.

There are two global events happening simultaneously.

One is a physical event. This is the rate at which our ever expanding human species is using up the available energy. This is real and involves tangible resources.

The second is an artificial human construct that was designed to keep track of the energy flow - money. The art of creation, multiplication, distribution and hoarding of money is the work of the devil - so to speak. It has been used to feed off the natural greed of humans to enslave the very men who lust after it.

Possession of money dictates how much energy one can commandeer, how much material goods one can consume.

The creation of money is based on consumption. The bigger your dreams, the bigger McMansions you want to build and the more you have to borrow. The greater the borrowing, the larger the loans issued by the banks and higher the energy thirst for nation states to suck up the resources at faster and faster rates.

There is only so much the earth can give.

While debts can be increased indefinitely in a bankers book, energy cannot.

Ultimately we have to realize that the Sun is the only thing in our Solar System creating the energy. No human, no animal, no plant, no bacteria is contributing anything. We are all parasites living off the generosity of the Sun.

You can think of the all the plants as parasites that suck up Solar energy to survive and grow. Animals in turn are parasites that live off the plants. Animals grow no food source of their own. They depend on plants, which act as food factories utilizing Solar energy.

Humans at the top of the food chain are parasites living off both plants and animals. How did we get to be at the top of the food pyramid. Simple. We were clever.

Similarly humans exploit other humans. The entire history of the human race can be summed up in one sentence - clever people exploiting foolish people. Nothing has changed in the last 1 million years of human evolution. So long there is a difference in intelligence amongst humans, this characteristic exploitation will continue.

Look back at all the social constructs that have been tried. Capitalism, Communism, Socialism, Dictatorships, Theocracies - they all follow the same underlying concept. It is always a tiny group of clever men who find ways to dominate and rule over the foolish. Sprinkle in a dash of religious fervor, nationalistic jingoism, patriotism, cultural hatred, ethnic rivalry, and you got yourself an arsenal of deadly tools to keep the sheeple divided, confused and exhausted with infighting.

The Central Bankers are nothing special. It is just a bunch of clever men who thought of this racket before anyone else. They are like parasites living off the work of other humans. If not them, certainly someone else would have come up with similar plans. It is all built into our genes. The clever survive. The foolish die.

Take a look at your typical hotshot entrepreneur. He borrows capital and sets up a glitzy store selling audio/video equipment. He sells them a few dollars cheaper than his competition and drives them away while his business booms. Even though he is not making much of a profit, he keeps hiring more employees at minimum wage and keeps opening more stores forming a chain across the nation. He calls himself the CEO. He enjoys a lavish lifestyle while keeping on borrowing more and more money. His national audio/video chain has driven several others out of business. Ultimately the debt load of the company can no longer be serviced. He sells off his company or files for bankruptcy while keeping a handsome cut for himself.

The rules of the trade are such that it favors the unscrupulous. Society bears the burden when a company declares bankruptcy. The workers lose their pension. The CEO transfers his funds to a Swiss bank and leaves the country.

This monetary system, which has been engineered by crooks, favors others with similar ideals. It is in the best interest of the Central Bankers to cozy up to corrupt power hungry politicians who would advance their cause. The clever few who understand the banking system love it for the quick riches it could bring.

Yes, we do have opposing political parties - Republicans, Democrats, but this is merely a side show for the masses. Whoever is selected operates within the strict guidelines laid by the global elites who are also in charge of making foreign policy. Foreign policy is just a fancy word for grabbing natural resources - usually oil. If democratically elected leaders have to be toppled and puppet dictators put in place - so be it.

The energy must flow. Else, the pyramid collapses.

Today we are at peak energy. The charade cannot be continued any longer. The magicians hoax is about to be exposed. How will the crowd react?

We will be living through interesting times over the next 50 years. No magic is going to save us from the reality of die-off as our human population is forced back to comply with the ecological carrying capacity of the planet. This means billions would have to die. Printing billions of dollars will amount to nothing when there is not enough energy to feed the population.

There may be a mad rush to grab and consume every last source of energy as the starving hordes begin scavenging the streets. People will dig up the asphalt from the roads to heat their homes, cut down all the trees for firewood, burn all the coal that remains, release the methane hydrates, pollute the atmosphere, accelerate global warming while trying to survive another day.

The survivors will be left to deal with a gutted environment, broken ecosystem, rampant desertification, low water tables, poisonous effluents, contaminated soils and a biosphere seriously lacking in biodiversity.

Perhaps then, when all is lost, a bulb with light up in the minds of the masses. They would realize their own follies. They would understand the consequences of unbridled growth and gluttony in a finite fragile world. Perhaps then, mankind will muster the courage and vision to unite and work collectively to rebuild this planet one brick, one garden at a time.

[agni]

Perhaps then, when all is lost, a bulb with light up in the minds of the masses. They would realize their own follies. They would understand the consequences of unbridled growth and gluttony in a finite fragile world. Perhaps then, mankind will muster the courage and vision to unite and work collectively to rebuild this planet one brick, one garden at a time.

Now let's all join our hands and sing happy songs together while bobbing our heads side to side ....



-A

[GD]

The money creation from nothing by commercial bankers has been calculated in the UK at least:

(UK election build up commentary from earlier this year)

… None of them [the political parties] addresses the fundamental flaws in the UK banking system which sees 97% of new money created by commercial banks as profit-making loans appearing by magic in bank accounts without deposits to back them up.

This system effectively provides a £20 billion subsidy to the banks according to the analysis presented by the respected economist James Robertson …

[ubercynicmeister]

Hi tapas. I agree with you, the "fractional reseve + fiat currency" grow-or-die system we have had foisted on us is a mess and is the primary reason for Peak Oil.

But one thing I disagree with:

Similarly humans exploit other humans. The entire history of the human race can be summed up in one sentence - clever people exploiting foolish people. Nothing has changed in the last 1 million years of human evolution. So long there is a difference in intelligence amongst humans, this characteristic exploitation will continue.

.

No - what has really happened is not that clever ones exploit stupid or foolish ones, it's that usually the clever ones ARE exploited.

Look at it this way - the only way that the usual CEO rises through the ranks is by ridding himself (or herself, increasingly) of all ethics, and betraying & destroying his (or her) competition. The nastier, the more of a bully, the more of a treacherous knave he (or, increasingly SHE) is, the better his (her) chances at getting to the top. Then, once AT the top, the shafting of the shareholders, the fiddling of the expense accounts, the lying and conniving to defraud the investors, the massive bonuses for watching as the company slides further into the red.

Blind ambition, Greed and lust-for-power is noted amongst both the clever and the stupid.

The clever have the disadvatage of having to think about things. Either before or after they do it.

The stupid, au contraire, are particularly gifted to suit today's society - they do not think about long-term consequences, because they cannot think.

Thus they use whatever excuse comes to hand to explain how such-and-such a scheme went horribly wrong, even if it sounds absurd at the time and the "crowd mentality" of all persons, including clever ones, will carry them through. Josef Goebels relied on this - "The Bigger The Lie, The More People Will Believe It". The average CEO seems to have that as their personal motto.

Think about the present President of the United States - he's a self-confessed 'C' grader.
In a society where everyone wants to be Fat, Dumb and happy-ish, he's the IDEAL GUY for the job. He, like the vast majority of westerners, not just those in the US, does not want someone or something that causes 'em to have to think.

Not just because it hurts so much, but also because of the sheer conceit of the underlying basis for this Society - if we think about "fractional reserve" and "fiat currency" too much it'll cause both to vanish in a puff of logic.

WE DON'T WANT THAT, NOW, DO WE?

Like I say - George Dubbya, far from being an awful man, is the ideal president for Today's Westernised Democracies, Australia, my own country INCLUDED.

Note well: I neither approve of or agree with anything George has done or said. But let's face it: y'don't get to be that "popular" by having nothing to offer.

Or - maybe you do....maybe nothing - no thinking, no troubles, no problems - was exactly what George was - and is offering.

After all, it's a whole lot less trouble in the short term if one does not think.

And isn't short-term thinking what all our modern "corporatised" Western world is all about?

[Tapas]

Blind ambition, Greed and lust-for-power is noted amongst both the clever and the stupid.

The clever have the disadvatage of having to think about things. Either before or after they do it.

The stupid, au contraire, are particularly gifted to suit today's society - they do not think about long-term consequences, because they cannot think.

You have nailed it ubercynicmeister!

Greed is the central force that got us into this mess. Greediness seems to be equally represented by the stupid and the clever. This whole monetary construct looks like the work of the devil, metaphorically speaking. The temptation of acquiring something before actually earning it is too strong for feeble humans to resist. Credit is the magic that lets a human enjoy more than what he rightfully deserves.

Why save your earnings for three years, when you can swipe that magic piece of plastic and enjoy that Plasma HDTV right away?

Money, in the form it is practiced today under Capitalism, has opened the doors for unbridled growth. The idea of being able to purchase a chunk of 'energy' on credit without actually working for it thanks to the magic of 'loan' money has made us into voracious consumers.

Under a strict barter system, where you had to produce something tangible first to get something else, such speculative spending and consumption would never have been possible. Even a currency system back by precious metals, would have had checks to prevent runaway growth.

I agree with you, the "fractional reserve + fiat currency" grow-or-die system we have had foisted on us is a mess and is the primary reason for Peak Oil.

Correct. Fiat currency plus Fractional Reserve as you mentioned has done us in for good.

Mankind will pay the price. It matters little what we end up owing to the bankers, a piece of paper, compared to the actual interest we have to pay to mother nature - real human lives that must be sacrificed in a die-off when she balances her check book.

Perhaps then we would agree to barter an ounce of greed for an ounce of wisdom.