Dude, you're missing the crux of my argument.
Banks issue money out of nothing each time they extend a loan.
Not just Central Banks.
I would happily pay a monthly fee for these services:
- intermediation of payments,
- wire transfers,
- safe keeping of my cash.
If I knew for a fact banks were not also allowed to lend new money, out of nothing, at interest into circulation as interest bearing loans consisting
of electronic money not backed entirely by cash. But instead issued out their asses.
But that they would instead loan real cash that is theirs, the banks', not mine, to loan. Not their depositors' cash. Not Drawing Rights against their
depositors cash. Like it is now.
When banks extend loans what they're actually doing is loaning Cash Drawing Rights. There are stored, represented and communicated electronically.
They're what we've come to know as electronic money and what was once known as account money or ledger money.
And these Drawing Rights are issued against the depositors' money.
But the depositors' money is already spoken for. It's the depositors'. They were already issued Drawing Rights for the cash they deposited.
The bank issuing new Drawing Rights into circulation against the same cash that's already had Drawing Rights issued against it is tantamount to
Except it's legal when the banks do it.
It's like if you and I signed a lease contract for my car.
Except I leased my car to 10 different other people at the same time, each of whom privately thought they were the only lessee because that's what I
deliberately lead them to believe.
Except it's legal when banks do it with cash instead of cars and #.
Because the banks do this, legally, and we are all obliged and fooled into accepting their unbacked Drawing Rights as if they were the cash that
supposedly backs it (Drawing Rights of which only a tiny fraction can be redeemed at any one time for the cash that supposedly backs it, see the
This is basically legal counterfeiting of ledger or account money. Electronic money.
Or legal fraud.
Take your pick.
And this is the actual, real cause of inflation.
Inflation is a monetary phenomenon, you see.
And the mechanism by which banks fund their lending practice. They simply redistribute purchasing power from people who are farthest away from the
place new money enters the economy (Wall Street and high street banks) to the people nearest the money source.
People far away from the money tap suffer the brunt of inflation. Their fortunes grow slower than the money supply as a whole. They're actually losing
real wealth and purchasing power.
People nearest to the money tap see their financial fortunes rise way faster than the money supply as a whole.
While doing basically nothing of real value or use.
For example they borrow from the FED ad nearly 0% interest rate and use that money to buy government bonds, for a considerably higher rate.
Money for nothing, basically. Carry trade. Cause the gov. can't borrow directly from the fed.
When the gov. could simply print its own money and simply pay for the deficit this way. Not burrow at interest to pay for the deficit.
Furthermore, the gov. borrowed this way from the FED to fund the bailout.
So basically the banks were making interest off the money the government borrowed on their behalf from the fed, to bail them out.
In every economy there are at least two types of money.
Physical currency, which only the central bank may issue, and Drawing Rights against depositors money, which all commercial banks may issue, even if
it's against the national physical currencies of other nations. Both to the depositors and to third parties.
But as you can spend these Drawing Rights in lieu of actual cash (FED Res. notes) and they are valued exactly the same as cash and you can also
temporarily exchange these Drawing Rights for exactly the same amount in cash (so long as the banks' reserve last), they are functionally the same as
And issuing more of them is the same as if the Fed were printing more cash. Or if a counterfeiter of physical cash printed more cash.
Except +97% of the money supply is in the form of Drawing Rights.
This is why it is said that banks are too big to let fail.
If the banking system goes then +97% of the money supply goes with it. Unless you explicitly save their accounting and electronic ledgers separately
and prevent them from destroying it out of spite or as deterrent to doing away with them.
You starting to understand why I hate banks?
Is it starting to coalesce into a coherent and logical world view?
We're all basically slaves on the banking system's plantation. Serfs paying rent for the privilege of using their money that they themselves pull out
of thin air to loan to us at interest.
edit on 2013/10/15 by Pejeu because: (no reason given)