The great banker myth of "the just print to much money".

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The great banker myth of "the just print to much money".

The bankers always pump the propoganda at us from all directions, lets fire some back.

The only place interest bearing debt can come from is the process that is used to move, whatever is used for money, into circulation.

There is clearly something wrong with the way today's money is moved into circulation.

This is a scary chart showing 4 decade trands of america's total debt vs. growth of the economy.

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There is clearly something wrong when people living in, what is called, the wealthiest nation in the world don't have enough money to start new ventures, expand on exsisting business, buy or build a house or buy a car unless we go to the banking system and borrow money at interest.

Something is wrong when no matter how much we collectively borrow from the banking system it never runs our of money to loan.

It seems very hard to save doesn't it?

Statistics show people are saving less yet the banking system, claiming they are loaning someone's savings ["With your saving dollars, we have been able to make agricultural laons, home loans, consumer loans, and business loans,." Donald R. Halverson President St. Ansgar State Bank.] are making more and more laons and never seem to run out of money to lend.

Strange isn't it?

It is time the peopel begin to really start thinking asnd ask the question, where does the banking system get its endless supply of money?

There is something wrong when we are told that the problem is that the government just prints to much money, the the government and the people are always short of money and have to borrow to have the things that they want and need.

There is something wrong when stores have to advertise no money down, no payments and no interest for six months to a year in order to sell their merchandise to people who have to much money.  That does not sound like they think they are trying to sell to people with to much money.  Why, are people who have too much money always looking for sales and price discounts?

There is something wrong when we line in a nation of productive and innovative people with so many natural resources to work and yet the debt that grows as fast our does.  In 1998 the debt was around 26 trillion dollars, in 2005 it was around 40 trillion, by march of 2007 it was 48 trillion, by 2008 it had grown to over 53 trillion.  It is clear it grows faster with each passing year.

The news reported in 1996, 1997, 1998, and in 1999 we had between 90-95% employement, which should mean 90-95% of all able bodied working age people have a job producing a product or providing a service and are earning a paycheck for their effort.  With 90-95% of all able bodied working age people working and getting paid for producing products as wealth assests or providing services that enhance wealth why are we as a nation collectively going keep into debt with each passing year.

There is something wrong wehn we suffer under all this debt when all we have produced is so much wealth!

There is something wrong when so many people, who think they have saved enough for their retirement, find that the seldom talked about costs of interst and taxes have so eroded the purchasing power of their saving that it will only buy a fraction of what they thought it was going to.  Because the purchasing power of their saving has been stolen by interest and higher taxes many elderly are driven from their homes.

 

Lets star to focus on how our money goes into circulation and what are the consequences of how it works that way.

Would you rather be forced to borrow 100% of your money into circulation or have it spent into circulation, free of debt, free from interest, which could be used to destroy both the principle plus the interest in our system and thereby returning the purchasing power of the dollar?

It's all about wealth money -vs- debt money.....Honesty -vs- fraud.......I own -vs- I owe.

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Re: The great banker myth of "the just print to much money".

I was tired when I wrote the title, it should be "they just print to much money".

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Re: The great banker myth of "the just print to much money".

Thomas,

It is good to see you so passonate about this.

What I find interesting is that you consistantly point out problems and ask questions of posters who debate with you but never seem to offer a solution. Let me reprahse that, you offer a seemingly unworkable solution.

Example

This has been pointed out to you by some of the heavy hitters on this site, yet you still make no effort to supply real answers.

We are not going to overthrow the USGov, Fed, or any other form of power over the money system anytime soon if ever. Let's not go there.

You come across as a teacher to us other posters, yet I am not getting it. If you have a real solution, let us know.

I'm not trying to get into a sparring match, I just want to cut to the chase here.

Best,

Rog

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Re: The great banker myth of "the just print to much money".

Ready,

How is putting money into circulation, free from debt and without taxation, money that can be used to pay the principle plus the interest not a workable solution?

Read my signature at the end of my post.  I offer a solution in every posting I make.

If you don't understand the principles of wealth money vs debt money I'll clarify that for you if you want.

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Re: The great banker myth of "the just print to much money".
Thomas Hedin wrote:

Ready,

How is putting money into circulation, free from debt and without taxation, money that can be used to pay the principle plus the interest not a workable solution?

Read my signature at the end of my post.  I offer a solution in every posting I make.

If you don't understand the principles of wealth money vs debt money I'll clarify that for you if you want.

Simple, this is a desired state, not a plan.

You simply cannot do what you propose. Therefore, it is not a plan.

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Re: The great banker myth of "the just print to much money".

Ready,

 

Please tell me what you believe the root cause of the problem is with our monetary system?

 

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Re: The great banker myth of "the just print to much money".

Thomas,

Don't you understand? We are done playing 20 questions here.

If you have something to say, say it.

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Re: The great banker myth of "the just print to much money".

ready,

He is almost there with an answer but he never really makes the point.

 

There is something wrong when so many people, who think they have saved enough for their retirement, find that the seldom talked about costs of interst and taxes have so eroded the purchasing power of their saving that it will only buy a fraction of what they thought it was going to.  Because the purchasing power of their saving has been stolen by interest and higher taxes many elderly are driven from their homes.

The statement is the problem. The question is, "What caused the problem?"

This is the ground of the debate. The cause of the above "pain".

I must reduce things to the ridiculous. I can tell you how your body works and why, but I can't understand the banking system. So please bear with me, this is how I see it work:

To me debt is debt. I can either "buy" things when I have the money or go into debt and have it now. The government is nothing more than a huge household. If I make $1000/week and spend $1500/week, that other $500 has to come from somewhere. So I "borrow" it (with interest). now I must have $1600 next week to support everything I was doing plus $100 to "service" the debt. This week I need to borrow $600 and it goes on and on in a never ending spiral.

We as a nation have become so hobbled "servicing" our debt, that we can no longer enjoy that which we were working for in the first place. The Fed really was the downfall of our country.

We have the power to "write-off" the "debt". Why, unlike me, the government has the ability to tell the fed to go pack sand. Shock, crying and gnashing of teeth? Yes. Lots and lots of pain? Yes. Freedom isn't free as the saying goes. I am afraid, our current government lacks the will, guts, and power to make that happen.

I just don't think it has to be more complex than that. Write off the "bogus" debt, let the banksters know they are out of business and take the country back from them. Unfortunately, what has happened is this, we don't just "owe ourselves". We borrowed from someone else's cookie jar and need to repay them. (China et. al.) humm, let me think about that, how about we send them back all that "crap" we have been buying from them for the last decade or so as payment on that debt?

 

Debt is the problem. I don't care where the "money" comes from, it is the "debt" that is created and what crippling effects it's "servicing" has on us.

 

Jefferson was right.

 

 

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Re: The great banker myth of "the just print to much money".

Ready & RNcarl,

I think that the answer/solution is fairly simple and fast.  The most important thing is that government issue it's own money. 

If government issues the money it needs, free from debt and interest, then there is no national debt.  When the national debt goes, so does federal income tax as it is no longer needed to serve our national debt.  Think about what that would do for your personal wealth.

Government, instead of the federal reserve, could lend the banks money to lend to the people.  The banks operate off a spread, in this case it would be the rate that they charge their customers minus what they borrow at.  This would eliminate the need for unfair fractional lending while providing a revenue stream for the government to pay for itself.

This also enables us to solve the famous exponential growth problem (Crash Course) since the government is able to directly inject "spend" money into the economy to fund the existing private interest charges.

It has worked extremely well over and over through-out history.  Give me a few historical examples of an economy that allowed private bankers to issue and control their money without booms, busts, depressions and inflation.  The math simply doesn't work regardless of what you select as your preferred currency flavor.

How well can it work?  We owe the federal reserve bank around $4.8 trillion.  We have the sovereign power to issue $4.8 trillion dollars which would extinguish 100% of that debt instantly.  The money would cease to exist.

This our way out our current dilemma and the reason why the international bankers are fighting tooth and nail to keep us enslaved under perpetual debt.

Larry 

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Re: The great banker myth of "the just print to much money".

Larry,

2 clarifying questions to your plan before I respond to your post.

1.)   Please define National Debt in paragraph 2. This means different things to different people. $80T + , $11T, $4.8T?

2.)   I understand that the US does not incur debt to create $, but does the US Treasury issue $ to the banks at interest, or not.

Thanks,

Rog

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Re: The great banker myth of "the just print to much money".

Larry,

Currently, the Federal Reserve keeps just 6% of their profits.  All Federal Reserve banks have to contribute 6% of their capital/equity upon creation (and adjust thereafter to maintain the 6%) to the Federal Reserve in order to "join".  That's why they keep 6% of all profits - to pay to themselves and their member banks  The rest they have to pay to the Treasury.  Six percent more than we are already receiving does not sound like a big difference, unless there is something about the Federal Reserve Act that I am not understanding.  It is a long and complicated document, so I may be mistaken, but the legislation governing the handling of profits seems pretty clear to me.  Please explain.

Patrick

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Re: The great banker myth of "the just print to much money".

Here's my problem with the 'let's let the gov't directly print money' theory:

First off, the fact that debt is the mechanism for money creation is a blessing and a curse.  A blessing that it keeps hyperinflation from destroying the system in a short period of time.  A curse because it forces debt defaulting to destroy the system eventually.  Just because we're at the 'destroy the system due to debt defaulting' stage doesn't mean that the last 30 or so years wouldn't have been much worse if they weren't limited by a debt mechanism. 

More importantly than that, your proposal doesn't address the root problem: the FED is working closely with its gov't buddies to keep the system working to support their buddies in the banking 'industry'. If you cut the FED out of it, you'd still have the gov't printing money to help their rich, well connected buddies, at the expess of everyone else. 

This is the same flaw of the communist arguments in The Jungle.  In that book, the characters are rightfully angry that the big businesses are so powerful that the gov't does nothing to stop their evil ways.  But the solution they propose (communism) is to make the leaders of gov't and the leaders of big business the SAME people, instead of just different people that work toward each others advantage. 

Abuse of power can't be solved by further consolidating power.  When power is being abused, that power must be eliminated (which is often not possible) or counter-balanced through transparency and acountability (basically power to remove a person or group from a particular power). 

The abuse of money creation is actually a problem that has an 'elimination' solution.  Go back to a [insert favorite commodity here] standard.  As long as [commodity] is in a finite amount and something that does not degrade if kept properly, you've just eliminated the power to 'create' money.  (well, unless alchemy becomes true). 

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Re: The great banker myth of "the just print to much money".

I think I'll jump onto this thread since I'm currently bored and things are a little slow up here in AK while I wait for people to wake up...

The root of the money problem is that money is merely a token that can be exchanged for goods and services.

Goods have a finite market value based on the currency, and intrinsic worth to the producer and consumer

Services have a finite market value based on the currency and intrinsic worth to the consumer, and is a lien on the producers time.

By definition all "money" is finite, since there is a finite quantity of goods and a finite quantity of time that producers can provide services,  Printing money is trying to adjust the abstraction of these concepts, which ultimately will fail since the underlying collateral is finite (resources and time). It will merely devalue the currency and increase the amount of currency you need to supply for goods and services.

Maybe this is a little naive, or idealistic but in reality its a fact. Adjusting the Axes on a graph until you get the curve or crossover you're looking for does not affect the underlying data, and unfortunately all I hear in the discussion is how to affect the axes not the underlying data.

YMMV

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Re: The great banker myth of "the just print to much money".

Ready said:

1.)   Please define National Debt in paragraph 2. This means different things to different people. $80T + , $11T, $4.8T?

The $4.8 trillion is the approximate portion of our national debt held by the private federal reserve.  Think about this, they bought that debt with money that they created out of thin air and then charge us interest.  This is almost as crazy as the bail-out - in the bail-out, we borrowed money to lend to the banks so that they could lend it back to us with interest.

Here's another question we need to ask ourselves.  If the banks can create money for free, why did they need to borrow money from us to bail them out? 

Ready said:

2.)   I understand that the US does not incur debt to create $, but does the US Treasury issue $ to the banks at interest, or not.

Good question.  Most people think the U.S. issues it's own money - it doesn't.  Every new dollar is created with debt to the private bankers.  The government must pay interest on almost all that it spends.

Patrick said: 

Currently, the Federal Reserve keeps just 6% of their profits.  All Federal Reserve banks have to contribute 6% of their capital/equity upon creation (and adjust thereafter to maintain the 6%) to the Federal Reserve in order to "join".  That's why they keep 6% of all profits - to pay to themselves and their member banks  The rest they have to pay to the Treasury.

First, I don't think we can accurately say how much profit the private Fed makes since they are never FULLY audited.  Plus, they now collect interest from taxpayers on their reserves.  But the real money is not made by the Fed, it is made by the member banks who are allowed to create money for free and then charge interest on loans.

And, according to Ellen Brown and Murray Rothbard, 30% of the money created by banks with accounting entries is invested in their own accounts.  The Federal Reserve Statistical Release (H.*) details the assets and liabilities of domestic banks, the ratio of loans to investments is usually around 7-3.  This means they are investing an average of 30% of the money they create.

affert said: 

First off, the fact that debt is the mechanism for money creation is a blessing and a curse.  A blessing that it keeps hyperinflation from destroying the system in a short period of time.

I can't think of one instance where a government issued currency became "hyper inflated" without massive counterfeiting and or predatory currency shorting by other banks.  For example, the Wiemar republic hyperinflation was caused by their private banking cartel lending too much and their currency was attacked by foreign banks shorting their currency on a massive scale.  Debt based money is the biggest cause of inflation/hyperinflation.

affert said:

Abuse of power can't be solved by further consolidating power.  When power is being abused, that power must be eliminated (which is often not possible) or counter-balanced through transparency and accountability (basically power to remove a person or group from a particular power).

First of all, our government is free to spend as much as they want under the current system, that's the carrot.  To make things worse, we pay interest on almost every penny they spend.

The centralization issue exists now.  The New York Fed runs the whole system and they are controlled by the international central banking cartel to which they belong.

In changing the system, I like the idea of giving states more power.  The way it is now, states have to beg washington and when they do get money, there are strings attached.  There are at least two models for this and one already exists with wonderful results (North Dakota).  The other model, which has much more potential, is Byron Dale's MTA (Thomas Hedin works closely with Mr. Dale, he can give more details if anyone is interested).

With our current system, if we paid off the national debt we would have no money.  It is impossible for us to balance our budget without destroying the system from contraction.  With a "wealth based" currency it is possible to balance the budget. 

If you're still concerned, I don't blame you.  We may need to install some "brakes."  One way would be to not allow the federal government to borrow any money.  Another way might be to require the federal government to balance their budget just as states do now.  You raise a valid concern, wish I had a better answer.

Gungnir said: 

By definition all "money" is finite, since there is a finite quantity of goods and a finite quantity of time that producers can provide services,  Printing money is trying to adjust the abstraction of these concepts, which ultimately will fail since the underlying collateral is finite (resources and time). It will merely devalue the currency and increase the amount of currency you need to supply for goods and services.

I agree that there should be a relationship between money and the value it represents.  In response, I think we need to have at least full collateral backing up every loan.  Speculative borrowing is damaging our economy - we need to reinstate some safeguards including down-payments on mortgages, mortgage insurance, etc.

Larry

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Re: The great banker myth of "the just print to much money".
DrKrbyLuv wrote:

Ready said:

2.)   I understand that the US does not incur debt to create $, but does the US Treasury issue $ to the banks at interest, or not.

Good question.  Most people think the U.S. issues it's own money - it doesn't.  Every new dollar is created with debt to the private bankers.  The government must pay interest on almost all that it spends.

Larry, I was referring to your plan, not as it happens now. I understand how the Fed works.

Rog

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Re: The great banker myth of "the just print to much money".

Ready,

Woops...sorry, I misunderstood.  Yes, the government would charge interest to the banks on money they borrow.  The government would stay out of the banks business by not setting rates and allowing the banks to determine their own amount of risk/reward.

Larry

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Re: The great banker myth of "the just print to much money".
Quote:

Yes, the government would charge interest to the banks on money they borrow.  The government would stay out of the banks business by not setting rates and allowing the banks to determine their own amount of risk/reward.

By charging an arbitrary interest rate to the banks, the government would be establishing a floor on interest rates.  You cannot then say the government would stay out of banks business by allowing them to set their own rates.  Obviously, the banks will have a minimum cost of money - the rate the gov sets.  How does the government decide what interest rate to set rates at?

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Re: The great banker myth of "the just print to much money".

Larry,

Just when it is getting good, I have to leave. I live kinda a dual life, one during the week at my company, and one on the weekends at my farm. I gotta sign off now, but I promise to come back to this thread first on Monday, because I think we have a lot to discuss. I'll leave you with one parting thought, how does paying off $4.8 T get rid of the need to fund the USGov with income taxes? My math is not adding up on this end...

Appreciate the conversation,

Rog

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Re: The great banker myth of "the just print to much money".

Patrick said: 

By charging an arbitrary interest rate to the banks, the government would be establishing a floor on interest rates...Obviously, the banks will have a minimum cost of money - the rate the gov sets.  How does the government decide what interest rate to set rates at?

Patrick, I don't know the answer to that question but let me give an opinion.  First, many who have spent a long time looking at the problem think that government should provide private banks with money at 0% and let them take analyze the risk/reward of the borrower to independently determine the appropriate interest rate.  The idea is to support productive growth as a nation is able.

I lean towards government (U.S.) taking a small cut, perhaps 0.5-2% on all money lent to private banks.  Through 2008, Shadow Stats suggest that the money supply (M3) grew from around $10 to $15.8 trillion dollars.  Typically, banks expand the money supply by a factor of 9:1.  So, the banks lent around $5.2 trillion - if the federal government charged 1% of every loan, then it would have collected around $52 billion.

I'm not sure how government should how to provide the market with new money at an acceptable interest rate.  Maybe you have some ideas?

Larry

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Re: The great banker myth of "the just print to much money".

Hi Larry,

Interest is not the only problem.  There is also the question of supply.  In a normal market, supply is determined by demand and price, but when a good, in this case money, is artificially created, there is no constrain on supply.  What keeps a bank from going back to the till for more money so that it can make more loans and increase profits?  Also, if the cost of money to the banks is zero or close to zero, why would they have any interest in analyzing the risk/reward of the borrower?  The risk is zero, since the money is free.  The reward is infinite because there is no downside.  Sign me up for a bank charter please!  Sorry, I just am not seeing how this could possibly work. 

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Re: The great banker myth of "the just print to much money".

DrKrbyLuv wrote:

In changing the system, I like the idea of giving states more power. 

I would rephrase that: "In changing the system I like the idea of taking power away from the federal gov't and giving it to states." 

That would be a big step in the right direction.  States are far more susceptible to the power of the people.  It would be even better if we could get most powers down to local gov'ts.  Spreading out the power is far better than getting it into fewer people's hands.

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Re: The great banker myth of "the just print to much money".

 

Some argue that Letting the Government Print the money is just as bad as having a Central Bank, but remember we can  VOTE our members on Congress not Members of the Central Banking Cartel.

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Re: The great banker myth of "the just print to much money".

OOOOppps VOTE OUT not vote our  sorry

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Re: The great banker myth of "the just print to much money".

Patrick said:  There is also the question of supply.  In a normal market, supply is determined by demand and price, but when a good, in this case money, is artificially created, there is no constrain on supply.  What keeps a bank from going back to the till for more money so that it can make more loans and increase profits?  Also, if the cost of money to the banks is zero or close to zero, why would they have any interest in analyzing the risk/reward of the borrower?  The risk is zero, since the money is free.  The reward is infinite because there is no downside.  Sign me up for a bank charter please!

Hello Patrick,

If you get a bank charter, please remember your old friends.

The big banks are doing something very similar right now.  They create money for free.  And, they may borrow from the Federal Reserve at around 0% interest. 

If the banks had to borrow all new money from "we the people" it would have to be repaid in order to extinguish the debt.  That is added risk that the banks are not taking now.  If they were loaning money that they had to repay, I think they would analyze the risk with more scrutiny.

affert said:  "In changing the system I like the idea of taking power away from the federal gov't and giving it to states." 

That would be a big step in the right direction.  States are far more susceptible to the power of the people.  It would be even better if we could get most powers down to local gov'ts.  Spreading out the power is far better than getting it into fewer people's hands.

I agree 100%!  Washington has turned into a financial black hole.  Power should start with the individual first, then work up through local and state.

JK121 said: Some argue that Letting the Government Print the money is just as bad as having a Central Bank, but remember we can VOTE our members on Congress not Members of the Central Banking Cartel.

Yup, you're right.  One bad thing now is that there is no accountability.  Our economy is operated by the omnipotent and highly secretive Federal Reserve.  Government should be making these decisions out in the open, with everything documented.  The Fed and the big banks do whatever they want.  How can we claim that we are a sovereign nation while we are totally dependent on a private monopoly to run our economy?

Thanks for the discussion!

Larry

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Re: The great banker myth of "the just print to much money".

Larry,

I think there is something in here that might improve things, but it sounds like there would be challenges as well. You guys have made some salient points.

Moving the power to print from the Fed to the USGov doesn't mean problem solved, in fact it just gets rid of some of the interest.  I cannot say if the reporting and transparency would increase over the 0% we get with the Fed, since any reporting done by USGov would likely be as fuzzy and misleading, if not downright fraudulent, based on past behaviors. After all, is being told lies better than silence?

Interest free money doesn't seem to make a full argument either. Patrick fleshed that out nicely, and I cannot argue his points, therefore it would seem that interest will need to be a component of any money system that we utilize.

Fractional Reserve does not really have evil at it's core, it is simply a system like many others. You can argue small points, but if used with morality, it is a useful system.

So, we are sort of back to square one where we pay income taxes, and the money system is not backed by any limiting factor like gold. Since all fiat money systems eventually die, and we are limited by the size of the planet, I believe that the exponential growth can only be limited if the money supply is backed by gold or some other mechanism. If the Fed or USGov can only generate money to the level allowed for by their metal reserves, there is a limit to the damage that they can do to the economy, and limits to all around growth. After all, growth is not prosperity, growth for the sake of growth can best be equated to cancer cells.

Do you agree we need to get back to the gold standard?

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Re: The great banker myth of "the just print to much money".

Ready,

I believe 100% with the principles of gold/silver (it was a representation of the peoples production all based on wealth with no debt and no taxation as long as we are talking about the 1792 free coinage act that is).

The 1900-1933/1934 "gold standard" was a clever deception by the banking system.  The banks always loaned out at least 6 times as many reciepts as there was gold, and at one point in time 80 receipts as there was gold.  What most people have failed to realize is that the quality of money has switched from an evidence of wealth(the people mined the gold, and had it freely monetized with the 1792 coinage act) to the gold standard (all money had to be held at parity with gold reserves) where the people had to borrow at interest (debt money).  The part of the act where the notes had to be held at parity was never enforced, because fractional reserve banking operates under the principles to expand the loans in both volume and value beyond the reserve base.

The quality of the money had switched from an evidence of the peoples production(wealth) to an evidence of the what the people owe at the bank.

 

History has proven to us that gold notes where never held at parity with the gold reserves making it impossible for the bulk of the people to claim the gold with the note that they had to borrow at interest.

 

BUT

The biggest question of all with reguards to going to gold is (remember I support the priniciples of gold and silver 100%)

Where is the gold going to come from?

How much are you going to need to make it a general medium of exchange?

How is it going to be put into circulation?

 

A lot of people say you can just increase the value of the gold, but if we truely went to a gold standard we would just be using the gold so its value will be set by the public.  It's like cars though, if there is 10 cars and 10 people then there is enough cars to go around, but if there is 20 people and 10 cars, it doesn't matter what the value of the cars is there just isn't enough to go around.

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Ready
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Re: The great banker myth of "the just print to much money".
Thomas Hedin wrote:

A lot of people say you can just increase the value of the gold, but if we truely went to a gold standard we would just be using the gold so its value will be set by the public.  It's like cars though, if there is 10 cars and 10 people then there is enough cars to go around, but if there is 20 people and 10 cars, it doesn't matter what the value of the cars is there just isn't enough to go around.

As evil as this sounds, the planet has limits. We need to make a system that does not either require growth to exist, nor does it let unfettered growth go unpunished.

I may be wrong, but it seems to me what we have done as humans is unsustainable once the cheap oil is gone. Maybe we shouldn't have had 20 people if the Earth can only support 10 cars in the first place. I realize this goes way beyond the scope of money creation and systems, but seems to me that a lack of understanding and incorporation of this very truth into the money system will doom it from the beginning.

 

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jneo
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Re: The great banker myth of "the just print to much money".

 

How about We have 2 Central banks.  The Fed will print principal and charge interest like it currently does.  Currently there is never ever enough money to cover interest because the Fed just prints Principal.  

The role of the second bank would be to create the amount needed to pay back the interest and put it into the economy, which fundamentally would be more principal but this currency would not have interest attached to it.  

Hope this makes sense, Had a few Johnnie Walkers when I came up with this. 

 

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Ready
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Re: The great banker myth of "the just print to much money".

Initial thoughts:

How would the 2nd bank know how much interest cash to create (and destroy) and when,

and wouldn't this additional cash in the system be inflationary.

 

Take a 30 yr fixed loan on a house. You pay $100K in principal and $200K in interest if you stay there all 30 yrs and make monthly payments. CB1 indirectly creates the loan for the $100K, and the CB2 creates the $200K and puts it somewhere in the money supply (where exactly I don't know). Then the homeowner moves year 2 and has only needed $5K if the interest. Sells the house and pays off mortgage principal with proceeds, goes and gets a new loan. Now we have $395K floating around in the money supply (somewhere).

I'd need to see some more details to understand how this might work.

Cheers,

Rog

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Thomas Hedin
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Re: The great banker myth of "the just print to much money".

What would you think about getting rid of the debt all together and moving money into circulation free of debt and just letting the people own the property outright?

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jneo
Status: Platinum Member (Offline)
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Re: The great banker myth of "the just print to much money".

 

Not sure if it would work.  It probably would be inflationary.  I would imagine through economic instruments the banks would calculate how much money CB2 would need to create.  

This country should just go back to being a CONSTITUTIONAL REPUBLIC and NOT A DEMOCRACY + Oligarchy (the fed).

*Gold Standard * low Taxes * small government.

 

"AND TO THE REPUBLIC FOR WHICH IT STANDS"       DOWN WITH DEMOCRACY. 

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