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Where does money come from?
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Tlaloc
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Hmm, the board ate my more detailed response. Suffice it to say this movie is grossly innaccruate and continently omits crucial concepts such as bank liability. Banks issue more money than they have based on their liability in the same way you spend more money than you have with credit cards. If they cant pay it when its due, they go bankrupt. They don't actually create any money, when you pay them back the only thing that happens is that their liability ceases to exist, no new money comes into exsitance without the government issuing it. Money and its precived value is still based very much on GDP, Assets, and foreign confidence.
No debt = No money is completely nuts. More accurately no debt = deflation, which I would say is a good thing, but is in itself a large topic.
Banks go bankrupt just as much as any other business, and just like any other business, someone usually buys up the liquidated assets so customers often don't even know it happened. My mother worked for First Interstate, it went bankrupt and got bought by Wells Fargo, which in turn got bought twice more in the last decade (though it didn't change names). My mom quit a couple years ago, and she was a JVP when she quit, so she knows the score. If banks could create money like this show says, they wouldn't be going bankrupt.
Mortgages are a good illustrative topic and very pertinent to the current situation in the States right now. Banks run you through the third degree when you go for a mortgage precisely because they can't create money and they are creating the mortgages based on their liability. If someone defaults on a mortgage and they cant get the money they loaned out of selling the house, the bank loses the money, and if that happens too much the bank goes under. If the bank goes under, everyone who trusted its liability loses their money. Usually defaulting on loans doesn't cause serious problems for banks because they make sure people can pay before they put their neck out for them, and usually housing prices increase so the bank is safe. This is why Mortgage interest is 1\4 or less raw credit interest, its a safer investment for the bank. But back in the Clinton administration in the U.S.A. law was passed making banks take liability for loans based on much lower criteria. The bank itself couldn't decide what a safe investment was, the Government did it for them. The Government did this based on the idea that everyone should be able to own a home, and it worked fine because even though defaulting on mortgages did go up, so did housing prices so banks where fine. But now you have a situation where many more people are defaulting on mortgages AND the housing market is slumping, so banks lose money in a big way. They still have staff to pay and bills like any other company, so this presents a real risk to banks in general. Banks being at risk makes their liability less trustworthy, which lowers confidence (an actual source of money stated above) and causes cascading problems.
This movie is a fantastic piece of scapegoating which would easily suck someone who didn't know better in. I don't like banks for other reasons, but they are nothing like as powerfull as this propaganda paints them to be.
No debt = No money is completely nuts. More accurately no debt = deflation, which I would say is a good thing, but is in itself a large topic.
Banks go bankrupt just as much as any other business, and just like any other business, someone usually buys up the liquidated assets so customers often don't even know it happened. My mother worked for First Interstate, it went bankrupt and got bought by Wells Fargo, which in turn got bought twice more in the last decade (though it didn't change names). My mom quit a couple years ago, and she was a JVP when she quit, so she knows the score. If banks could create money like this show says, they wouldn't be going bankrupt.
Mortgages are a good illustrative topic and very pertinent to the current situation in the States right now. Banks run you through the third degree when you go for a mortgage precisely because they can't create money and they are creating the mortgages based on their liability. If someone defaults on a mortgage and they cant get the money they loaned out of selling the house, the bank loses the money, and if that happens too much the bank goes under. If the bank goes under, everyone who trusted its liability loses their money. Usually defaulting on loans doesn't cause serious problems for banks because they make sure people can pay before they put their neck out for them, and usually housing prices increase so the bank is safe. This is why Mortgage interest is 1\4 or less raw credit interest, its a safer investment for the bank. But back in the Clinton administration in the U.S.A. law was passed making banks take liability for loans based on much lower criteria. The bank itself couldn't decide what a safe investment was, the Government did it for them. The Government did this based on the idea that everyone should be able to own a home, and it worked fine because even though defaulting on mortgages did go up, so did housing prices so banks where fine. But now you have a situation where many more people are defaulting on mortgages AND the housing market is slumping, so banks lose money in a big way. They still have staff to pay and bills like any other company, so this presents a real risk to banks in general. Banks being at risk makes their liability less trustworthy, which lowers confidence (an actual source of money stated above) and causes cascading problems.
This movie is a fantastic piece of scapegoating which would easily suck someone who didn't know better in. I don't like banks for other reasons, but they are nothing like as powerfull as this propaganda paints them to be.
Not when they're "too big to fail", Tlaloc. And ESPECIALLY NOT when they are a government-sponsored (and unconstitutional) monopoly! One who is licensed to print money can buy anything they need to continue to run the world's most lucrative business, including politicians.
Sorry if the movie offended you. It's not quite Austrian School, or The Creature from Jekyll Island, but on balance it was quite well done, and far better than what passes for "education" in the Publik Skool System. In other words, the real 'propaganda' is that our fiat "money" has anything to do with either honest free markets OR our Constitution.
Money IS brought into existence as debt. When interest is charged for that process, it is a mathematical certainty that such debt cannot be paid back within the closed system.* God had the right answer, when He specified that the "reset button" will be pushed every 50 years via the Jubilee. Otherwise, a simple check of an interest table will show that the system becomes unstable after about 70 years or so - as we are going to see demonstrated again very soon!
The problem, which the movie came close to observing, but fell just a bit short of, is that -- unlike debt -- gold and silver are assets, and not liabilities. Better still, they seem to be things that God has designed us to desire to use as money, and perhaps even provided for that purpose. (Note, for example, that the amount of gold in the world has grown at an average rate of around 2% throughout history. Much better regulation of the money supply than the Fed ever managed!) Even a cursory check of the Torah, much less the Book of Proverbs, will provide ample proof of the 'hatred' that God has for dishonest "weights and measures". The debtor is in fact slave to the lender.
Our "money", ever since 1913 at a minimum, and without question since 1971, has increasingly been based on a lie. Our economy, and ultimately much more, has now been destroyed because we have "rejected knowledge" -- both of the Bible and our own Law which was once based upon it.
Blessings in Him,
Mark
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* For those who have any doubt, DO go find G. Edward Griffin's book The Creature from Jekyll Island. He has several of the best illustrations of this truth that you will find.
Mark,
thanks for the pointer to The Creature from Jekyll Island.
Googling that title brought up the following link (among many others):
The Creature from Jekyll Island - A Second Look at the Federal Reserve by G Edward Griffin - 71 min
http://video.google.com/videoplay?docid ... 0371055528
Haven't had time to watch all of it, but it looks quite good.
thanks for the pointer to The Creature from Jekyll Island.
Googling that title brought up the following link (among many others):
The Creature from Jekyll Island - A Second Look at the Federal Reserve by G Edward Griffin - 71 min
http://video.google.com/videoplay?docid ... 0371055528
Haven't had time to watch all of it, but it looks quite good.
Thanks for the update on the video version, 
I've been heartily recommending the book for years as one of the most readable economics intros available (I'm a committed Austrian myself, and have been as a result talking about what is now unfolding for years. There are a number of well-known authors, like von Mises, Hayek, and Rothbard, who have published a number of good books explaining why dishonest money, government meddling, and the inevitable fraud and malinvestment that they produce ALWAYS results in collapse, but they are less "accessible" to most folks. Dr. Ron Paul is probably the most well-known current proponent and author on the topic that people will find does a good job explaining the topic.)
And, of course, there's the Book of Proverbs.
Blessings,
Mark
I've been heartily recommending the book for years as one of the most readable economics intros available (I'm a committed Austrian myself, and have been as a result talking about what is now unfolding for years. There are a number of well-known authors, like von Mises, Hayek, and Rothbard, who have published a number of good books explaining why dishonest money, government meddling, and the inevitable fraud and malinvestment that they produce ALWAYS results in collapse, but they are less "accessible" to most folks. Dr. Ron Paul is probably the most well-known current proponent and author on the topic that people will find does a good job explaining the topic.)
And, of course, there's the Book of Proverbs.
Blessings,
Mark
Tlaloc
Member
Sorry for the long delay in reply, I've been away for thanksgiving.
Firstly we agree that the system as it sits causes inflation that cannot be totally checked, thus the system is prone to problems and will run into them at intervals. Second, yes, jubilee would fix that problem entirely, but would also limit the acquisition of wealth for the extremely rich so they are bent to oppose it. Its the right thing to do but will be hard to implement.
Now, wherever you're talking about the US Federal Reserve count me out, I'm not American and Canada has no real direct equivalent. My knowledge of banking systems comes partially from my mother who was a JVP for Wells Fargo Bank, it's got nothing to do with public education. First off, no bank is too big to fail. Even our Bank of Canada which is government exclusive and backed by the whole Canadian economy can fail if abused. No government has unlimited resources to back any system. The U.S. bank bailouts that occurred since the first post are case in point, you're government will either have to shift the budget or raise revenues to cover the cost of the bailout. The banks themselves lose out because they lose share in their own company. It's bad news all around, and it too is proof that no one creates money out of raw debt, and no one is too big to fail.
You recognize gold and silver as tangible assets, but a much more important one to day is property and business assets. Banks can create funds for Mortgages based on the value of the land itself, it isn't 'out of nowhere'. Everything over and above that is against the banks property and assets, hence me talking about bank liability. Loans aren't in general backed in Gold and Silver, but they are backed by shares and property. Both business shares and property are tangible assets. The absurdity is that the only thing that isn't really tangible is the money itself.
The actual problem is just the opposite of what the movie said. Banks don't create money out of nothing, they make it out of their assets. If they didn't loan against their assets and all their deals went bad its too bad but they could start from scratch with no impact on the larger economy. As it sits they are vulnerable to bad loans and market fluctuations, and if things go wrong they can be totally obliterated which wipes out loans, jobs, contractor companies, and on. They arn't too strong, they're too weak.
Last two things to recognize. First, the bigger a bank is the more overhead it has, staff, contrasters, taxes, property, dividends ect... Bigger doesn't mean safer, it just means it supports more people. Banks constantly have to pay out just like they take in, so with banking, the bigger they are, the harder they fall. Second, in the long term every system has inflation, that makes it so there is no mathematical certainty of increasing debt. Sufficient inflation can make debts meaningless, but wreaks havoc in other economic areas.
I'm not supporting the system, but I am pointing out that banks are not the organizations that make the system what it is. Banks have to put assets on the line to do what they do. The only thing that isn't tangible in the whole equation is the money itself. If you want someone to blame, you blame each and every individual who uses and trades with it.
You, me, and the person who made the movie are all at the root of the problem. It's easy to blame a big, faceless entity, (thats the point of the corporation, individual profit without individual responsibility) but that's just a scapegoat, it comes down to you, me, and everyone else to support or destroy the system.
Firstly we agree that the system as it sits causes inflation that cannot be totally checked, thus the system is prone to problems and will run into them at intervals. Second, yes, jubilee would fix that problem entirely, but would also limit the acquisition of wealth for the extremely rich so they are bent to oppose it. Its the right thing to do but will be hard to implement.
Now, wherever you're talking about the US Federal Reserve count me out, I'm not American and Canada has no real direct equivalent. My knowledge of banking systems comes partially from my mother who was a JVP for Wells Fargo Bank, it's got nothing to do with public education. First off, no bank is too big to fail. Even our Bank of Canada which is government exclusive and backed by the whole Canadian economy can fail if abused. No government has unlimited resources to back any system. The U.S. bank bailouts that occurred since the first post are case in point, you're government will either have to shift the budget or raise revenues to cover the cost of the bailout. The banks themselves lose out because they lose share in their own company. It's bad news all around, and it too is proof that no one creates money out of raw debt, and no one is too big to fail.
You recognize gold and silver as tangible assets, but a much more important one to day is property and business assets. Banks can create funds for Mortgages based on the value of the land itself, it isn't 'out of nowhere'. Everything over and above that is against the banks property and assets, hence me talking about bank liability. Loans aren't in general backed in Gold and Silver, but they are backed by shares and property. Both business shares and property are tangible assets. The absurdity is that the only thing that isn't really tangible is the money itself.
The actual problem is just the opposite of what the movie said. Banks don't create money out of nothing, they make it out of their assets. If they didn't loan against their assets and all their deals went bad its too bad but they could start from scratch with no impact on the larger economy. As it sits they are vulnerable to bad loans and market fluctuations, and if things go wrong they can be totally obliterated which wipes out loans, jobs, contractor companies, and on. They arn't too strong, they're too weak.
Last two things to recognize. First, the bigger a bank is the more overhead it has, staff, contrasters, taxes, property, dividends ect... Bigger doesn't mean safer, it just means it supports more people. Banks constantly have to pay out just like they take in, so with banking, the bigger they are, the harder they fall. Second, in the long term every system has inflation, that makes it so there is no mathematical certainty of increasing debt. Sufficient inflation can make debts meaningless, but wreaks havoc in other economic areas.
I'm not supporting the system, but I am pointing out that banks are not the organizations that make the system what it is. Banks have to put assets on the line to do what they do. The only thing that isn't tangible in the whole equation is the money itself. If you want someone to blame, you blame each and every individual who uses and trades with it.
You, me, and the person who made the movie are all at the root of the problem. It's easy to blame a big, faceless entity, (thats the point of the corporation, individual profit without individual responsibility) but that's just a scapegoat, it comes down to you, me, and everyone else to support or destroy the system.