I was watching some videos by Adrian Salbuchi

http://www.youtube.com/user/arsalbuchi

in this video

http://www.youtube.com/watch?v=UlDNMB6wY....

he claims (among other things) than banks ensure that there is not enough money in the world for the needs of commerce. This forces people and business to take out loans that they would not otherwise take out.

Can someone explain to me how this works in a language I can understand. It is clear that if this could be done, it would be a benefit to the banks. What is really going on though? When I have money, I put it in the bank. If I wish to buy a big ticket item, I write a check. What am I missing?

In short, all money is LENT into existence by the banking system. And then it finds its way to you thru commerce.

But the interest that is due to be repaid ON TOP of that loan principal, is not ever really created.

The interest is created and is called into being by more debt money loaned into existence. It is the vicious banking cycle of getting as many as possible in as much debt as possible for as long as possible at as high a cost as possible.

In the fractional banking system we have, all money is debt. All money does get lent into the system. The interest on this debt must also come into existence by the same mechanism. This is why the money supply always grows, "growth" only comes with credit expansion and why the sustem is completely unsustainable. To sustain the fraud, there must always be ever greater amounts of debt created and the debt junkies must always be borrowing more to keep the game alive.

On the contrary - bankers want there to be ***too much*** money (and always) because the truth of money is this - money has no value. YOU hold the value. YOU get paid in DOLLARS which constantly depreciate. Bankers get paid in PEOPLE who must constantly work to make up for their depreciating $$$.

If there were too little money, the bankers would lose as one's $$$ would appreciate negating the need for more loans and their entire stranglehold on the system would vanish. I suppose they'd find a way to turn any situation to their advantage however.

Also...money is a means of siphoning off the wealth and labor of the populace (for redistribution of course).

You can't tax an axe...

Without a fractional banking system the producers/wealth generators (those who mine/grow/fish/manufacture) keep all their gains. Permanently.

Right now the banks always get the best return in the long run as it is impossible to gain more than those who conjure the money into existence and loan it out at interest.

Some people can be sharper than the average bear or just plain lucky but, on average, Joe Six Pack loses their accumulated wealth (relative to the banks) in the long run.

Does anyone ever wonder why the real workings of our money creation system aren't taught in schools. The average person has no clue.

If the Fed is really going to buy 600 Billion of treasuries then a lot of fees will be slid down the blood funnels of the primary dealers. Why, when it's all just a big circle jerk anyhow?

The FED acts like a private bank for it's member bank's benefits.

Mike-

Because they have ONE goal and one goal only - preserve the status quo - the system that keeps them on top and most others on the bottom.

Put yourself in their shoes - they OWN the system. The Federal Reserve System is controlled by corporations (look at Board of Directors at all the member banks). Those corporations essentially control the money supply, the labor of the sheeple and of course, the government. The justification is obvious - their prosperity keeps everyone eating roast beef. Another justification is competitiveness. Should we confront the corporations and disband the Federal Reserve system, other nations would have the opportunity to outgrow us via their Central Banks.

If you think of it all sans money, it all starts to make a lot more sense.

Quote:

The FED acts like a private bank for it's member bank's benefits.

Words like "Democracy" and "Freedom" are simply cover for the truth - America is essentially a corporation and run like one (aka for profit). When the corporation prospers, the workers are given a little taste. When the corporation is weakening however....look out. That's when people themselves become useless. And the corporation's owners really don't give two craps about letting them eat themselves.

Imo, if need be, they will do whatever they can to maintain ownership of it all - even if that means taking it all down. Inflation/deflation really is a wasteful argument when you have a complacent "sheepulace" waiting and willing to be sheared.

I do not believe we need fiat money to have issue with the quantity.
Here is a section from Adam Smith that I never understood

http://www.econlib.org/library/Smith/smW....

II.2.78

That the industry of Scotland languished for want of money to employ it was the opinion of the famous Mr. Law. By establishing a bank of a particular kind, which he seems to have imagined might issue paper to the amount of the whole value of all the lands in the country, he proposed to remedy this want of money.

Well custodial - it makes sense. In a metal-backed, deflationary environment, people cling to money and both velocity and credit creation tend to be restricted. Typically, governments would debase the currency by backing dollars with less and less gold/silver etc. to get velocity going. It's no different than what's going on with QE except that the money is backed by metal and future labor vs. fiat (labor but no metal).

I think the thinking is justification for fiat currency and constant credit creation.

As for the assertion that 'the interest on money can not be repaid'

KD has asserted that this is not true due to 'the velocity of money' numerous times. I never understood what he was saying till I saw this Steve Keen video where he demonstrates that this is not true in a simple model that I can follow (and shows there are infinite solutions to the equations which will also give stability to his system)

http://www.debtdeflation.com/blogs/wp-co....


Watch at about minute 14

His full model is very interesting and you may wish to see him develop the whole thing.

Money is nothing but an agreed upon medium of exchange.

Money can be created by government, banks with government approval

In a money as debt system, money can be plentiful or scarce depending upon the amount of lending. Great lending will increase the money supply, contraction of lending or the calling in of loans, will decrease the money supply

That is the basic mechanics of a money as debt system

In your Scotland example there indeed could be a dearth of money if loans are not made and/or called in. That in effect reduces the money supply so that lending based "growth" stalls or contracts

This is all academic really because it is all fraudulent. It is conjuring money into existence via debt. Yes, it made things boom for some time however the natue of debt as money is a compounding function...over enough time, debt goes parabolic (like now) and becomes unsustainable due to interest. That is why you see huge money printing operations doing nothing for the real economy

It is all interesting but understand the main point...money is debt. Debt carries interest. Interest compounds. Interest requires more money via debt creation. An endless cycle that grows larger and larger over time until it cannot be sustained.

The interest on money can certainly be "repaid" but...it has to be repaid with money that does not exist at the time of the loan...how? By more debt creation via more debt...that is the rub and why the system is unsustainable...has nothing to do with velocity

Don't get caught up in the jargon...

It's not static. Money supply is cycled through overabundance and then scarcity. Loans are given out like candy when the money supply is abundant, and when it shrinks through manipulation, velocity, etc, banks foreclose, repossess collateral, and when they decide to make money easy again, they can buy up assets at pennies on the dollar since they are the first to have use of the newly created money.

Not exactly...money supply grows because of lending like candy not the other way around

How Money is Created

http://www.tradingstocks.net/html/banks_....

Exactly! You either crash the system "reset" and begin the same lie all over or it implodes under its own weight at some point

Note the solution at the end..





Ponzi Scheme Called The Banking System

When banks give out loans, they do not give out money that they already have. They simply give the loan which is a promise to pay the actual money which they never really have to do. In the economy, 95% of the money is in the form of bank credit. There is no real currency backing it.

Whenever we borrow money, the bank creates new money. This process constantly (almost) expands the money supply. This dilutes the value of the existing money. This is because total debt has to keep expanding in order for people to be able to pay back what they owe, otherwise there simply won’t be enough money to earn to pay back what we owe. When that happens, we declare bankruptcy, there are foreclosures, unemployment and so on which causes the vicious cycle of deflation.

Money is in the form of credit

Current credit based monetary system is a game of musical chairs. As long as the music keeps playing (as long as total debt keeps increasing), system keeps running. The moment debt expansion stops (credit expansion stops), then money creation stops and it becomes impossible to pay existing debt (principal + interest) with the existing credit expanded (~existing money), thus some of us are guaranteed to go bankrupt (standing when the music stops). This is because there simply is not enough money in existence to pay the existing debt principal + interest. An interest free monetary system may be the fix.

Note too that you will never hear an "economist" "banker" "broker" or "politician" ever speak of this. Why not?

This woman explains what I've been saying all along...she proves that the system is a fraud, unsustainable, compounding, parabolic, exponential and dooomed to fail.

http://www.youtube.com/watch?v=QU0XiklHP....

The only addendum I'd add is if your economy can draw in wealth from the outside through a favorable trade surplus (or steal it).

Photoguy wrote..

The interest on money can certainly be "repaid" but...it has to be repaid with money that does not exist at the time of the loan...how? By more debt creation via more debt...that is the rub and why the system is unsustainable.

It is sustainable if debt is only employed in productive enterprise, in other words to create more real wealth. This new real wealth created can then become the basis for new debt-money when it is pledged as collateral.

It becomes unsustainable if debt is used for consumption or speculation, because neither of these create actual new wealth. Speculation may appear to create new wealth, but this is only an illusion.

-Uwe-

What Ellen Brown is saying is that the ponzi eventually hits a wall when you run out of credit worthy borrowers. You then turn to sub prime until you they're all used up.

At the point where most of the borrowers are saturated with debt the Oligarchy is faced with quite the dilema. What to do, what to do...

Depression, recessions and bankruptcy are the cure that removes the bad debt from the system. We can't have any of that though as it might disrupt the status quo. No self respecting Oligarch will hear of such things.

The logical thing to do (for an Oligarch) is send in your point men and loot the treasury. Failure and rule of law are only meant to keep the serfs in their place. The grandest delusion we live under is that were all created equal and the same rules apply across the board, they don't.