Money as debt

I first watched this brilliant explanation of what is going wrong in the world of finance back in March but it keeps coming back to me and I thought others might appreciate it in the current circumstances.

Comments

[richard collins]

Thanks Euan for the reminder. This is a great piece of work on a topic of utmost importance.

Despite the apparent hopelessness, two avenues remain open to all: try to reduce debt, and try to tell others what we are not told in school or on the news.

[Shawn Callahan]

Hi Euan, what I don't get is how a bank can create money out of thin air (via a loan) and then it materialises as real money when you take what's lent to pay for whatever you are going to buy. Did you get this bit? Love to hear how you understand it.

[richard collins]

here's my 2p: the thing that enables, allows, or permits the bank to advance you the money is your signed agreement to repay (over time, plus interest).
No signature, no creation of money! The 'trick' is that in most cases the money does not actually materialize, but is only 'transferred' to another account.

[Tasos]

Hi, nice to see this video again. Even if it states some things that are quite unknown to the most of teh people and have doublechecked that are right, it does not convince me 100% and I have questions. One of teh reason of course is that is left wing oriented and as the capitalist they have their own way to understand and interpret things. I would like to read or see any other information, book paper, article etc. that support and explain this opinion of the film. Regards

[Privatos]

@Tasos

My friend, that's how things work. It is not a left or right wing opinion. Of course, you can make your own research on the issue and tell us the outcome.

I saw the film 3 days ago and I am still amazed. I am not an economist, I'm just a computer scientist. It is frustrating that we are not taught these concepts at school. And as the film mentions somewhere, I believe that most people are unaware of monetary policy.

[Bean]

This cartoon offers some really good insight into centeral banking. However, if a private bank owes it's charter and existance to government. Doesn't that also mean the government is the primary partner in the extortion commited against its own people? Honestly, the only rightful place for the government to interfer with money is in the case of counterfiting. Give anyone the power to will "debt money" into existance (counterfit) and you can bet plunder will commence.

Money should circulate like everything else does in the market place... Which is why gold will not be a viable solution - most of the gold supply is housed by private Centeral Banks. Silver, copper, nickel... anything but paper and NO FRACTIONALIZATION!

"Power corrupts and absolute power corrupts absolutly" ~Lord Acton

[Rob]

This is not left or right wing, it is the banking system. And we can see...eventually the debt monster will catch up, ending up in depression.

The people running the show don't mind however, as the truly rich won't be hurting in any way regular people do.

But it is a good message to their underlings who are rich, but expendable and not rich enough. You'll be culled after we at the bottom are...;)

To everyone ruin and devastation! Cheers to the end!

[Grant]

I think the video is down. I can't see if from my browser.

[Euan]

Still playing OK from here Grant.

[Andre]

Google MODERN MONEY MECHANICS! The Federal Reserve bank tells you themselves that this is how almost 100% of our nations money comes into existence.

If you still dont beleive it also google Federal Reserve Purpose and Functions. It will outline in great detail how the banks introduce money into the system. Both Purpose and functions along with Modern money mechanics are publications by the federal reserve bank of the U.S.

[Andre]

If you would like either, I have both in electronic format (PDF). You can read it for yourself online also.

Andre'

[Euan]

Thanks Andre - and I guess this applies to my nation too! ;-)

[Andre]

In fact her is an excerpt from Modern Money Mechanics Pg #1:

Who Creates Money?
Changes in the quantity of money may originate with actions of the Federal Reserve System (the central bank), depository institutions (principally commercial banks), or the public. The major control, however, rests with the central bank.
The actual process of money creation takes place primarily in banks.(1) As noted earlier, checkable liabilities of banks are money. These liabilities are customers' accounts. They increase when customers deposit currency and checks and when the proceeds of loans made by the banks are credited to borrowers' accounts.
In the absence of legal reserve requirements, banks can build up deposits by increasing loans and investments so long as they keep enough currency on hand to redeem whatever amounts the holders of deposits want to convert into currency. This unique attribute of the banking business was discovered many centuries ago.
It started with goldsmiths. As early bankers, they initially provided safekeeping services, making a profit from vault storage fees for gold and coins deposited with them. People would redeem their "deposit receipts" whenever they needed gold or coins to purchase something, and physically take the gold or coins to the seller who, in turn, would deposit them for safekeeping, often with the same banker. Everyone soon found that it was a lot easier simply to use the deposit receipts directly as a means of payment. These receipts, which became known as notes, were acceptable as money since whoever held them could go to the banker and exchange them for metallic money.
Then, bankers discovered that they could make loans merely by giving their promises to pay, or bank notes, to borrowers. In this way, banks began to create money. More notes could be issued than the gold and coin on hand because only a portion of the notes outstanding would be presented for payment at any one time. Enough metallic money had to be kept on hand, of course, to redeem whatever volume of notes was presented for payment.
Transaction deposits are the modern counterpart of bank notes. It was a small step from printing notes to making book entries crediting deposits of borrowers, which the borrowers in turn could "spend" by writing checks, thereby "printing" their own money.

Hope this helps!

Andre'

[Andre]

Euan,
It applies to almost every Nation that has its own Central banking system with a few exceptions. Those countries that do not follow suit are usually forced to comply by other nations. I once heard a banker say "Commerce has no conscious"!

Andre'

[Andre]

Here is Congress Ron Paul talking about it to the Fedederal Reserve Chairman Bernake:
http://www.youtube.com/watch?v=8pEiLHnjAiw&feature=related

Here is an accountant talking about it in a seminar:
http://www.youtube.com/watch?v=ZDun7uNo138&feature=related

Hope this helps!

Andre'