Creating Money

Originally posted by Kaone
I dont know much about banking, but lets say my country has $10 million and I split that between all the citizens for work they do, food production, housing, transportation and all.

So now there is $10 mill in circulation, people can either trade or use the legal tender. I do not understand why that amount would increase over time.

Simple answer: bank credit.

And also in the real world the central bank doesn't just create a set amount and say that's that. They keep on creating new money... forever basically, that's their overall plan.

here are some relavent quotes from another pdf. worth reading ...
how i clobbered every bereaucratic cash-confisatory agency known to man

The actual process of money creation takes place primarily in banks ... bankers discovered that they could make loans merely by giving their promise to pay, or bank notes, to borrowers. In this way banks began to create money. Transaction deposits are the modern counterpart of bank notes. It was a small step from printing notes to making book entries crediting deposits of borrowers, which the borrowers in turn could ‘spend’ by writing checks, thereby ‘printing’ their own money. – Modern Money Mechanics, Federal Reserve Bank of Chicago

All problems, depressions, wars, disasters, assassinations – ALL of them were planned, caused, instigated, and implemented by the International Banksters and their attempt to establish a central bank in every country in the world, which they have now done, thanks to corrupt politicians who have been bought and paid for. This is all you need to know about the history of the world. John Fitzgerald Kennedy, who issued silver certificates, and Abraham Lincoln, who issued treasury notes (greenbacks), were the only men who actively intended to stop them. Both were assassinated by the Banksters. Garfield and McKinley talked about stopping them. Both were assassinated by the Banksters.

I have unwittingly ruined my country. – W. Wilson, upon passage of Federal Reserve Act, 1913

When Albert Einstein was asked what was the most fantastic thing he ever realized in all his studies, he responded, “Compound interest.”

Every effort has been made by the Federal Reserve Board to conceal its powers, but the truth is ... the Fed (Federal Reserve System) has usurped the government.  It controls everything here (congress) and it controls all our foreign relations.  It makes and breaks governments at will. – Louis McFadden, ex- Chairman of the House Committee on Banking and Currency

You are the one actually living in fantasy land. Justify it with all the technical babble you want, it wont change the facts. We are done here.

I haven't said anything technical, It's all been stated in plain English. Your lack of a coherent counter-argument only makes my case all the stronger.

As I stated earlier, banks make money in dozens of different ways. They have their hands in every facet of the economy: from student loans, to mortgages, to equipment financing, to sophisticated treasury fees for international wire transfers in foreign currencies, to credit card processing and consumer credit cards, to fees earned from managing 401k plans, and on and on.

Banks have many, many multiple streams of income. They earn income on nearly every credit transaction in the country, and that revenue is then reinvested in the bank's core business: lending. Banks earn fee income and interest income from a wide variety of banking products and services tied to our economy.

Use a credit card? Have a car loan? Pay a mortgage? Paying for college with a student loan? Have a pension plan? If you do any of these things, I can guarantee that there is a bank somewhere that is earning fee income from you.

To suggest that banks operate in a vacuum, or that they somehow magically "create money out of thin air" flies in the face of reality. Banks are businesses. Period. They are some of the most ruthless businesspeople on the planet, and they touch practically every part of our economic life.

Every effort has been made by the Federal Reserve Board to conceal its powers,

Let's clear up some confusion. There is a massive difference between the Federal Reserve and a privately or publicly-held retail bank. There is also a huge difference between a retail bank, such as Comerica, and an investment bank, like Goldman Sachs. Let's not lump everyone together.

Fractional Reserve banking creates dollars but destroys wealth for everyone but the bankers.

A $1,000 deposit gets turned into $9,000 of loans on which the bankers get paid interest, thus they double their money every couple of years while the consumer loses that same wealth.

$1,000 deposit - $1,000 in consumer assets
$1,000 deposit = $9,000 loans To make it simple -@ 5% interest let's say with interest only for 10 years then full loan due

After year 1

$1,000 deposit
-$450of interest paid annually
$550 of net consumer wealth.

$100 of Consumer wealth after year 2
-$350 of consumer wealth after Year 3
-$800 of consumer wealth after Year 4
-$1250 of consumer wealth after Year 5
-$1700 of consumer wealth after Year 6
-$2150 of consumer wealth after Year 7
-$2600 of consumer wealth after Year 8
-$3050 of consumer wealth after Year 9
-$3500 of net consumer wealth after Year 10

So after 10 years $1,000 of net consumer wealth turned into $3500 of net negative consumer wealth all taken by the bank with money they created rather than earned.

Deposit a $ in the bank and you will cost your fellow citizens $4.50.

I know its not that simple but it isn't far off. Fractional reserve banking destroys those who need to borrow.

I think we get rid of the debt based money system and fractional reserve banking and let the government create the money they spend which will create the increasing money supply a growing economy needs. It also means the end of income taxes or at the least, a large reduction in them.

Originally posted by tinfoilman
reply to post by Semicollegiate

 

The market does have an influence but our current system was set up with the idea that there should be some central control for certain situations. Like when the market crashes and so forth. Then they can try fix it by lowering interest rates and so forth. Like they're doing now.

I know your opinion is the opposite. But not everyone shares that opinion.

Central controls were set up so that they could control the booms and busts, not to protect us.

Originally posted by ChaoticOrder
reply to post by macaronicaesar

 

Well what he/she is saying about businesses lending to each other is generally true. However, that poster clearly doesn't understand that banks are different, because they operate under fractional reserve laws, meaning they can loan out much more money than what they actually have - no other company can do that. Fractional reserve banking is only accepted and practiced because if they didn't do it, it would be extremely hard to get a loan. The easy credit helps new businesses get started, but it's also completely unfair if the banks can do that.

The easy credit encourages malinvestment. The person you are conversing with has no concept of fractional reserve banking at all.