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$1.46 Trillion in circulation, but commercial banks have $11 trillion total deposits?

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posted on Jul, 6 2016 @ 12:52 PM
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a reply to: ScepticScot

It has everything to do with vanishing. It's akin to matter and anti-matter. When matter and anti-matter meet. They destroy/cancel each other out. Fiat money and debt is created at the same time, when the two meet (someone pays their debt in full) they cancel each other out.




posted on Jul, 6 2016 @ 01:01 PM
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Anybody that is worried about an economic collapse should keep just enough in their checking account to keep their lives going and keep the rest in their possession meaning spend it on survival supplies that can be passed on to their children, tools weapons, food ,water purifiers, the absolute necessities to make sure you and your family have your basic NEEDS taken care of. The government is not going to show up at your house to demand that you give your supplies to them as they already have their stockpiles. We are in an every man for himself SCENARIO not to say that you shouldn't help anyone else, but do what you have to do to take care of your own, between me, my brother and my cousin we can effectively take care of all of our families needs without having to look outside of our family, the only thing I still need is a trailer to tow all of my own personal supplies behind my Jeep, which is going to be my next purchase.



posted on Jul, 6 2016 @ 01:21 PM
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a reply to: EternalShadow

ONE MINUTE FRACTIONAL RESERVE LENDING VIDEO You take a 10000 loan ad


This system reeks of failure, if a bunch of people want their money from the bank, UT OH. Big UT OH.

If I get this fractional lending banks are the gas, interest rates are the brakes (and gas sometimes)? And we need to have constant growth, like a shark needs to constantly be moving or it suffocates?



posted on Jul, 6 2016 @ 01:47 PM
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originally posted by: TheBandit795
a reply to: ScepticScot

It has everything to do with vanishing. It's akin to matter and anti-matter. When matter and anti-matter meet. They destroy/cancel each other out. Fiat money and debt is created at the same time, when the two meet (someone pays their debt in full) they cancel each other out.


I thought we were discussing fractional reserve banking not fiat money? With fractional reserve banking yes credit money is created and removed continually from the system. There seems a believe that this is inherently a bad thing without any one justifying why?



posted on Jul, 6 2016 @ 02:06 PM
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a reply to: ScepticScot

Because it's fraud. If I want to lend someone money, I better have the full amount and be the owner of that full amount of money to lend to that person. Or else it's prison time for me.



posted on Jul, 6 2016 @ 03:15 PM
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a reply to: ScepticScot

If even a something happens in the world and scares a large group of people, and they want there money the bank doesn't have it. It is already gone multiple times over.

Even see It's A Wonderful Life? It would not be so wonderful.



posted on Jul, 6 2016 @ 03:55 PM
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OK, I didn't read all the replies but, the banking system is a fractional reserve system. But it actually is a reverse reserve, because instead of keeping say 5% of the deposits in reserve and loaning out the rest, they loan out 9.5 times the deposit amounts. This new money is created by the signature of the borrower. This is how the Federal Reserve system works. With fiat money (money not based on hard assets like gold or silver), money is created out of thin air. This is how the system steals your labor without having to pay for it. Create money out of thin air, and then take the money from the borrower who can only get money by labor (or trades with real assets). If is one of the most evil things ever devised.
edit on 6-7-2016 by craterman because: (no reason given)

edit on 6-7-2016 by craterman because: (no reason given)



posted on Jul, 6 2016 @ 03:57 PM
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why do you think gold keeps getting pushed so high?



posted on Jul, 6 2016 @ 04:14 PM
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originally posted by: TheBandit795
a reply to: ScepticScot

Because it's fraud. If I want to lend someone money, I better have the full amount and be the owner of that full amount of money to lend to that person. Or else it's prison time for me.


Actually you can write an IOU for more than you have any time, and as long as you are not misrepresenting your assets then there is no fraud.

Banks are actually far more heavily regulated about what they can and can't do than you are (party because their IOUs are seen as money). However it is still an IOU, banks don't create base money when they make loans.
edit on 6-7-2016 by ScepticScot because: (no reason given)



posted on Jul, 6 2016 @ 04:26 PM
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a reply to: craterman

You are right that we don't have a true fraction reserve banking system as reserves are not strictly required.

However you seem to be e confusing fiat central banking and fractional reserve banking by private banks. They are not the same and either can exist with our without the other.

Niether is evil. (Although some banker as certainly are).



posted on Jul, 6 2016 @ 05:19 PM
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a reply to: ScepticScot

Yes they do create money as you can see in the simple videos above. In fact, they create much more than the central banks do. Legalized fraud. They should be fully reserved when lending.



posted on Jul, 6 2016 @ 06:39 PM
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originally posted by: TheBandit795
a reply to: ScepticScot

Because when the loans are paid back, because of the fact that the money is created at the same time the loan is created the money and the loan cancel out themselves, leaving nothing more than interest. So there is interest to be paid, but no money in existence to pay it. That's how it is generally.

It's explained more in detail in this video (also in the "money as debt" videos):


Didn't watch the video, but I remember the image for it, I've watched it before. If you remove all positive credit in circulation (which doesn't mean removing the currency, because no one collects and burns currency when debt is erased), what you're left with is debt representing value. That debt now has value as a currency. Paying off debt is one of the worst things a nation can do, because the ownership of debt becomes faith in that currency and strengthens it.

In a nation where no one is holding our debt, no one has an incentive to care about the value of our currency.



posted on Jul, 6 2016 @ 07:10 PM
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a reply to: Kuroodo

This is a good example of a fiat currency. I believe something like 60% of all US dollars are is in virtual format and the other 40% is in actual physical dollars. Compound the situation when the dollars have no physical backing with a resource or commodity. We back our dollars with thin air and promises!

The truth is Monopoly money has more backing from Hasbro than the US dollar has backing from the federal reserve. Hasbro will replace money with money of the EXACT denomination if something happens.

The federal reserve will replace your dollar with 3 pennies if something happens.



posted on Jul, 6 2016 @ 07:51 PM
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originally posted by: JAY1980
a reply to: Kuroodo

This is a good example of a fiat currency. I believe something like 60% of all US dollars are is in virtual format and the other 40% is in actual physical dollars.


Less, only about 1% of currency in circulation is actually printed. Not that it matters, what's the difference between a piece of paper and a few bytes in a computer?


Compound the situation when the dollars have no physical backing with a resource or commodity. We back our dollars with thin air and promises!


Actually, we back our dollar with three things. The first is foreign debt. The second is our own debt. The third is it's ability to trade for oil. All three of these things are very real. By owning other nations debt, we are saying that our currency holds the combined weight of all the other currencies in the world, it is an asset that our currency could always be exchanged from our debt holdings for something else of value. With our own debt, other nations are making the same declaration of faith in our currency, as are our citizens. It's a statement of belief that the debt will not default.



posted on Jul, 6 2016 @ 08:13 PM
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a reply to: ScepticScot

There IS a great accumulation of unplayable debt resulting from interest. That is the problem, the inherent evil, of our money system.

Money is created when a lending institution makes a loan. The interest portion of the loan isn't created. All of the collective money in the system would dry up before the collective interest on the loans could be paid. Essentially we have a system of perpetual refinancing. The compounding interest guarantees eventual collapse like every system except a gold backed currency.

I think a Bitcoin influenced currency will be the future. It will take a collapse of the current system first.



posted on Jul, 6 2016 @ 08:43 PM
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a reply to: Aazadan
Our currency isn't backed by anything other than our own indebtedness. The other things like belief it won't default or the fact that oil is traded in dollars give it value, but they don't back the currency.

Trading debt for something of value costs more in the long run. That can be fine for certain situations, but not for backing a currency.



posted on Jul, 6 2016 @ 11:45 PM
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originally posted by: SouthernForkway26
Trading debt for something of value costs more in the long run. That can be fine for certain situations, but not for backing a currency.


It works fine for currency. Bitcoin is built on debt. I've build a few economic systems myself (if you don't pay attention to my posts I'm a software engineer/game developer, one of my hobbies is tinkering with MMO style games and creating economic systems). Debt works fine as long as people collect it rather than cash it in. Let me give you an example:

Aaron, Bobby, Corey, and Dwayne need some work done for each other, but they're all broke save for a $5 bill Aaron has.

Aaron pays Bobby to paint his fence, but rather than give the $5 gives an IOU for 5
Aaron pays Corey to wash his car and also gives a $5 IOU based on that 5.

At this point it looks like Aaron is cheating, but he's not.

Dwayne later goes to mow Corey's lawn, he is paid in that $5 IOU, because it's as good as $5. So he accepts

There is currently $15 in this system based on debt. Each of those notes are worth what they can be redeemed for, but as long as no one redeems them the system has $15 in it. If you redeem them you'll have one person with $5, and the other note holder with nothing. This is why paying off debt is dangerous. It collapses the money supply.



posted on Jul, 7 2016 @ 01:00 AM
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originally posted by: SouthernForkway26
a reply to: ScepticScot

There IS a great accumulation of unplayable debt resulting from interest. That is the problem, the inherent evil, of our money system.

Money is created when a lending institution makes a loan. The interest portion of the loan isn't created. All of the collective money in the system would dry up before the collective interest on the loans could be paid. Essentially we have a system of perpetual refinancing. The compounding interest guarantees eventual collapse like every system except a gold backed currency.

I think a Bitcoin influenced currency will be the future. It will take a collapse of the current system first.


The credit money that backs create is created and destroyed continually as loans are made and paid back. This is not the he same as money created by a central bank. It is important to understand that private banks do not create base money. The interest paid on loans is a redistribution of base money amongst banks. This money isn't removed from the system by the process as it is paid back in via the banks costs and profits.

Gold standard money is far more at risk from a run on banks than fiat money as it limits the ability of government to protect deposits.

Bitcoin as a currency (as opposed to a payment method) really is a legalised Ponzi scheme. It's asset value relies entirely on the greater fool theory.


edit on 7-7-2016 by ScepticScot because: (no reason given)



posted on Jul, 7 2016 @ 02:24 AM
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originally posted by: Aazadan

originally posted by: JAY1980
a reply to: Kuroodo

This is a good example of a fiat currency. I believe something like 60% of all US dollars are is in virtual format and the other 40% is in actual physical dollars.


Less, only about 1% of currency in circulation is actually printed. Not that it matters, what's the difference between a piece of paper and a few bytes in a computer?


Compound the situation when the dollars have no physical backing with a resource or commodity. We back our dollars with thin air and promises!


Actually, we back our dollar with three things. The first is foreign debt. The second is our own debt. The third is it's ability to trade for oil. All three of these things are very real. By owning other nations debt, we are saying that our currency holds the combined weight of all the other currencies in the world, it is an asset that our currency could always be exchanged from our debt holdings for something else of value. With our own debt, other nations are making the same declaration of faith in our currency, as are our citizens. It's a statement of belief that the debt will not default.


Exactly right about overseas debt. There is a lot of ill thought disaster scenarios about overseas debt which seem to completely miss the point that the countries can only sell debt to people who want to buy it. It is fundamentally a vote of confidence in the future performance of the economy.



posted on Jul, 7 2016 @ 11:59 AM
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a reply to: Aazadan
What you are describing is a fractional-reserve currency. That isn't the same as a debt-backed currency.

Bitcoin is backed by the blockchain. Huge multi-million dollar mining computers with a few years of running the algorithm has value. Not even gold can match the security the blockchain gives Bitcoin.

The scenario you made is similar to the way the gold standard worked. Everybody trusts their IOU from Aaron is good because they know he has $5 gold piece backing the IOUs and they can redeem them for the real McCoy $5 whenever they want. As he keeps writing IOUs, Bob Corey and Dwayne catch on that the stack of $5 IOUs they're running their economy on wont be covered if they tried to redeem them. Aaron is now in a pickle.

Let's say Aaron eventually wrote $20 IOUs to each friends for various work, putting $60 of IOUs out there. All the friends net wealth is tied up in Aaron's IOUs that he can't pay. Here's where Aaron decides to turn evil. Dwayne needs his yard mowed. The price for yard mowing is a little higher because the IOUs supply is higher. Aaron says hold onto your IOUs, I'll LOAN you another $9 so you can pay Corey to mow your yard and you still have your IOUs. You just have to pay $1 per day over 10 days. After Dwayne has paid the loan there is only $59 left in the economy. This is Aaron's new model for the economy. In fact, the original real McCoy $5 is so irrelevant now Aaron says the IOUs are money for the economy, and even sells the real McCoy $5 on the open market for a lot more than $5. Aaron has now fully transformed the monetary system from a fractional-reserve to a completely debt-backed system.

Eventually the economy is collapsing from Aaron's interest on his loans sucking the IOUmoney out. The friends say we need more money to grease the wheels so Aaron obliges, loans them all $15 dollars with the agreement to repay $1 for 20 days, temporarily injecting much needed IOUs but ultimately it sucks out another $5 apiece. After 15 days the injection money is paid back to Aaron but the economy is stuck again. This time the friends are $5 in debt to Aaron on the still outstanding loans. Painting and mowing are in demand but nobody can afford it. Aaron loans $20 apiece to get everything moving again, $5 to close out the previous loan and another $15 juice the economy. This second, larger loan comes with an extra interest payment. The next time they refinance they have to borrow $6 to close out the second outstanding loan.

The new system is good for Aaron because the perpetual refinancing causes debts owed to him to grow larger than the sum of IOUs in the economy. As long as Aaron can keep the friends from bailing on the system they become perpetually indebted to him with no way to get ahead. It's just a matter of time before the compounding interest cannot be paid and Aaron comes in and forecloses on the friends stuff.



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