Permit me to issue and control the money of the nation, and I care not who makes the laws.
~ Mayer Anselm Rothschild, Banker
I sincerely believe that banking establishments are more dangerous than standing armies, and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.
Where does money come from? - As best I can tell, money is literally created from debt. So when a bank is established, it makes a deposit into a Federal reserve bank. The amount they deposit determines how much money the bank can (initially) loan. So if a bank puts $10,000 into the Federal reserve, they can loan something like 10 times that, or $100,000. In other words, the act of depositing into Federal reserve gives them the right to loan $100,000. Where does the extra $90,000 come from?
That's the sleight of hand that no one talks about.
When you are approved by a bank for a loan of $100,000, the bank has the right to add a $100,000 balance into your account (assuming it's put the $10,000 into Fed reserve). Existing money isn't shifted from another account to your account. In fact, $90,000 of that money doesn't exist at all before the bank makes the deposit into your account. The $100,000 amount is simply entered or added to your account. It's like entering a number into a spreadsheet...but the bank has the right to do so as granted by (who? government? fed?).
So where we started with $10,000 deposit into a Federal reserve bank, we now have another $90,000 added to the money system.
But it doesn't end there. If the $100,000 is deposited into a bank, it can be used as the basis for ANOTHER loan. Technically, the next loan in the cycle can be made for about 90% of the deposit (in this case $90,000) which, if deposited, can be the basis for yet another loan of around $85,000, and so on. This cycle continues, transforming a $10,000 deposit into the Federal reserve into around a $1,000,000 in loans AND newly created money.
Again, with a $10,000 deposit into the Federal reserve, the banks gains the right to create around $1,000,000 in loans if the loan/deposit cycle is taken to it's conclusion.
This explains why banks can make a good return on low interest rates. The are lending money they do not hold, that they created literally from nothing more than a loan agreement from you.
This system is possible because we got rid of money representing an asset (like gold or silver). Instead, money is declared by law as legal tender with no promise that there is an asset behind it. In other words, today's money is not backed by any asset. If it were, banks would not be able to loan money the way they do. To loan the money, the government would have to have an asset behind the money. But that isn't required an longer. Hence bankers get very rich.
Something fuzzy about the legal tender/backed by asset stuff above, but doesn't negate the fact that money is created by debt.
- Money As Debt
- Excellent video animation that explains the Money as debt cycle, ultimately answering the question: Where does money comes from?
- Debt Money Truth - Debt Money is Borrowed Into Existence
- After the deluge
- Fairly good piece describing how the Fed cutting rates is BAD for wage earners (because it devalues the dollar)..."when the federal reserve devalues money (implicit in lowering the cost to obtain money), the value of any savings you have is immediately devalued. The purchasing power of your income is erroded. Every asset denominated in dollars will likely become more expensive, without some opposing market force at work. Loosening the availability of money and credit in the broader economy is one of the leading causes of inflation, the great decimator of the middle class."
Real estate values are high, which leads to high loan amounts. Loans essentially "create" more money in the system. More money for same assets defines inflation...So it seems a lot of this was predictable...
- European Central Banker Says Inflation Is Still Focus - New York Times
- Chycho.com - Analysis and discussion about the world we live in.
- Cognitive Labs: Monetary Intervention: Not New
- Wall Street appears poised to respond to future interest rate cuts, fueling additional borrowing and digital creation of more and more dollars.
- YouTube - The U.S. Economy is Unsustainable
- Excellent 60-minutes piece with the head of the U.S. Government Accountability Office (GAO) David Walker.
- U.S. GAO - David M. Walker Biography
- Saw an interview with Walker on 60 Minutes. Very impressive...and he has a terrifying story to tell regarding U.S. financial liabilities. To Walker's mind (and the GAO's numbers bear this to be true), as a country we are broke--worse than broke, we are under an increasing debt. Trillions of dollars are added to our debt each year. TRILLIONS. It amounts to a of $400,000.
Oddly, politicians are not disputing Walker's accusations. Instead, the ignore them, and Walker is pretty fired up about that. So he started something of a crusade recently, talking "to the people" about the financial condition of the U.S.
- YouTube - Glenn Beck - The Real Story, Touching the Third Rail
- Interview with David Walker, head of the U.S. Government Accountability Office (GAO).
|The Case Against the Fed |
by Murray N. Rothbard