HomeLatest ThreadsGreatest ThreadsForums & GroupsMy SubscriptionsMy Posts
DU Home » Latest Threads » Forums & Groups » Main » Video & Multimedia (Forum) » Money As Debt - Parts 1, ...

Sun Apr 29, 2012, 11:00 AM

 

Money As Debt - Parts 1, 2, and 3 (animated films by Canadian Paul Grignon about the banking system)








http://www.moneyasdebt.net/

Where does Money Come From?

The simple answer to the title question is DEBT. Whether paper cash or numbers on a computer screen, all money (except coins) is “evidence of debt”.What is "cash” and where does it come from? Cash can be the familiar paper stuff, or it can be credit at the national central bank which banks use to settle accounts between banks. “Credit cash” at the central bank is always convertible to “paper cash” upon demand. So, where does cash come from? Is it just printed by the government as we are shown on TV? NO. Cash is created out of thin air by the central bank of the country (which is often privately owned). The central bank can just have it printed for the cost of printing, by the government or privately. The central bank then uses this cash it creates out of thin air to buy interest-bearing public debt in the form of government bonds.

Government debt is perpetual and thus interest paid on it is perpetual. Therefore a good definition of cash might be: evidence of public debt on which taxpayers will be paying interest forever. So what is credit? Everything else that isn’t cash. Take for example your bank account. Your bank account tells you how much cash the bank OWES you if you demand it. It isn’t cash itself. All those numbers in bank accounts are just “promises to pay cash”, nothing more than IOUs created by banks. However, we typically think of these bank IOUs, or “checkbook money” as “money”. Little wonder. This checkbook money, especially in electronic form, is much more convenient and secure than paper money. Therefore we can transact all of our business with these promises to pay cash instead of cash itself.

So… are there more promises to pay cash than there is cash to fulfill them? You bet. That is because banks usually make what they call “LOANS” by promising, rather than providing, cash. With a base of “cash” usually much less than 8% of the total they will “loan”, banks create their so-called "loans" as “promises”. How? It is astonishingly simple. You, the so-called borrower, sign a document that promises to pay the bank X amount of money over time plus interest on the outstanding balance. Your promise is backed by the collateral you agree to forfeit and the effort you will expend to earn the money. Your promise to the bank is an ASSET to the bank. To balance its books, the bank creates a matching LIABILITY. The bank promises the borrower X amount of “cash” on demand.

The “loan money” that the bank puts in the borrower’s account is not “cash”. It is an IOU. It need never be cash unless the borrower demands cash. And, because we accept these IOUs as money itself, and do almost all of our business trading these convenient and secure IOUs instead of inconvenient and risky cash, banks can safely issue many more IOU’s than there is cash to back them up. Perhaps the simplest and most "magical" feature of this system is "net" transactions. Only the net differences of transactions between banks need to be paid in cash. In theory, if all the banks are getting as much bank credit coming in as is being withdrawn, all the IOUs balance each other out at the end of the day leaving a net difference of zero. No cash required at all, from anyone! In practice, banks are competing. Winners can demand losers pay in cash. But that amount is still only a small proportion of the whole amount of credit issued.

The exception to all this is coins. They don't begin as debt. The government Mint stamps them and the government sells them at face value to the banks, no returns. But coins are an insignificantly small part of today's money supply. The significant thing about coins is that most people’s understanding of money has not yet developed much beyond the idea of coins, simple POSITIVE tokens of value. They fail to see how we have been ensnared by a money system based on NEGATIVE shackles of debt. The current system pretends to be “money” but is, in truth, a financial black hole sucking us all in to seemingly inescapable control by our so-called “creditors. The truth we need to see is that WE are the real creditors, because it is WE who produce the real value in the world, not the banks.


snip

6 replies, 1664 views

Reply to this thread

Back to top Alert abuse

Always highlight: 10 newest replies | Replies posted after I mark a forum
Replies to this discussion thread
Arrow 6 replies Author Time Post
Reply Money As Debt - Parts 1, 2, and 3 (animated films by Canadian Paul Grignon about the banking system) (Original post)
stockholmer Apr 2012 OP
xtraxritical Apr 2012 #1
TiberiusB Apr 2012 #2
webDude Apr 2012 #3
stockholmer Apr 2012 #5
Amonester Apr 2012 #4
miamipilot May 2012 #6

Response to stockholmer (Original post)

Sun Apr 29, 2012, 11:36 AM

1. The Central Bank loans to banks

 

so that the banks can maintain reserves to back-stop loan portfolios. This is how money is created, by real growth in the economy represented by banks lending to create businesses. The Central Bank in turn tries to keep enough currency in circulation to match this economic growth. The Central Bank does not just create cash and put it into circulation as is the common rant on these blogs. I would much rather have the professional economists at the Federal Reserve Managing the money supply than the dilettantes ranting in the blogosphere.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to xtraxritical (Reply #1)

Mon Apr 30, 2012, 12:11 AM

2. You're kidding, right?

"The Central Bank does not just create cash and put it into circulation..."

Except when it does just that, to the tune of 24-29 TRILLION dollars in nearly interest free "loans" to domestic and foreign banks(since when is that okay) dished out after the 2008 crisis. I'm not going to get into the merits, or lack thereof, in these types of videos, but to claim that the FED is some sort of dispassionate economic moderator carefully tuning the money supply to the benefit of business and citizenry alike is patently absurd.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to xtraxritical (Reply #1)

Mon Apr 30, 2012, 01:42 AM

3. Allow me be the second to cry "bullshit". You STILL have not answered where money comes from, by...

 

...saying it comes from real growth in the economy. This is like saying babies come from the Stork. Tell the truth, "money" is "created" by the Federal Reserve Bank, which is neither Federal or has reserve or is a bank, by tapping a few keystrokes in and voila', there is money in your account. It is not even backed by gold, anymore. You really talk like you are part of "Operation Mockingbird"(Google it). While you're at it, look up "fractional reserve banking", that's where the real inflation comes from. Basically, when you deposit $1,000 into the bank, they can lend out $10,000. No, that's not a typo, check it out. They can do this on a 10 to 1 basis, and in some cases, 33 to 1.

Here's another charmer, when you take out a mortgage, the bank LOANS you the money, and you pay them back with interest, right? WRONG!! You sign the promissary note, they take it, endorse it on the back, like you would a check, they send it to the Federal Reserve, the Federal Reserve gives them the "money". So, they have the money in a few weeks, all of it. They them make you pay them the principal with interest, thus, they are double-dipping. There are many more charmers, if you will only look.

Normal secrets they have to be hush-hush, the more fantastic secrets are so surreal that not many people believe them.
Look into this, do your homework, you will be amazed. Follow the money.-

Reply to this post

Back to top Alert abuse Link here Permalink


Response to xtraxritical (Reply #1)

Mon Apr 30, 2012, 06:54 AM

5. Debunking Money Creation

 

Damon Vrabel ran a short-term blog for around 9 months, and appeared on many televison networks and shows (including Current TV, CNBC, Press TV and Max Keiser), before becoming frustrated and shutting it down.


his blog:
Council on Renewal

http://csper.wordpress.com /

his website

http://www.csper.org /

-------------------------------------


Debunking Money Series - Parts 1 to 5

part 1

part 2

part 3

part 4

part 5
---------------------------------------------------

Renaissance 2.0 Series

http://csper.org/renaissance-20.html

-----------------------------------------------------------
Lesson 1
Revisiting American History

Documents the conversion of the US into a monolithic financial empire as the Federal Reserve Act created a monopolized cartel of private interests, "Wall Street," that controls all money in the system.



-------------------------------------------------------
Lesson 2
Revisiting Economics 101 - Debt

Discusses the power of debt-based money, embodied in the bond market, and its ability to exert total top-down power and control over the empire. Our system is not a free market.




--------------------------------------------------

Lesson 3
Revisiting Civics 101 - Ownership

Describes how the media projects a false picture in terms of who controls the US. This lesson illustrates the real power structure, which is modeled after the corporate governance system.



------------------------------------------------
Lesson 4.1

Part 1 - The Culture of Empire

Addresses our wealth illusion, freedom illusion, exponential growth, inflation/deflation, and bankruptcies.



-----------------------------------------------

Lesson 4.2

Part 2 - The Culture of Empire

Focuses on the issue of scale. As the debt-based empire grows, the scale of our system grows causing all sorts of problems related to the loss of meaning, community, freedom, and agency.



-----------------------------------------------------

Lesson 4.3

Part 3 - The Culture of Empire

The velocity of money is a standard economic concept, but economists ignore the issue of human velocity caused by the system, which results in the loss of rest, joy, delight, and deeper issues



-----------------------------------------------

Lesson 4.4

Part 4 - The Culture of Empire

Focuses on the rise of narcissism, increasing pathology and oppression, and how the financial empire eventually replaces government



-------------------------------------------------

Lesson 5.1

Part 1 - The Emerging Global Empire

Explains the strategic global transition we're in as the financial institutions take us through a global restructuring, similar to how the individual states were restructured into the financial empire in lesson 1.



----------------------------------------------

Lesson 5.2

Part 2 - The Emerging Global Empire

More on the restructuring process and the single, integrated, corporate government the elite is trying to create.



-------------------------------------------

Lesson 6.1

Brightening the Future

Discusses the powerful monetary vortex that governs our lives day to day; explains the truth about inflation, leverage, and derivatives; and introduces the solution to the vortex.



----------------------------------------------------

Lesson 6.2

Part 2 - Brightening the Future

Discusses how the left vs. right political framework is not the place to find solutions to the vortex because it only fuels the vortex further. Explains what fascism really is.




----------------------------------------------------

Lesson 6.3


Part 3 - Brightening the Future

Discusses how to fix the problem and help launch the next Enlightenment to ensure humanity moves into Renaissance 2.0 vs. the next Dark Ages.


Reply to this post

Back to top Alert abuse Link here Permalink


Response to stockholmer (Original post)

Mon Apr 30, 2012, 02:21 AM

4. So, in a twisted (but real) way, we're all kind of...

lemmings heading to the edge of the cliff...

That's where this system leads to: un-sustainable perpetual growth.

Talk about a ball-and-chain situation.

Unless asteroid mining becomes profitable (and even feasable to begin with), we're screwn (or our Grandchildren will be).

If not, who will change this system?

Reply to this post

Back to top Alert abuse Link here Permalink


Response to stockholmer (Original post)

Tue May 1, 2012, 10:47 PM

6. I Watched Every Bit of It....

As a former Wall Street Financier and investment expert, I cannot express or convey enough about the true validity of this information. It is first class, and for those who want a laymen's explanation (as if these presentations didn't do a good enough job) I suggest you read Robert Kiyosaki's Conspiracy of the Rich - The 8 New Rules of Money.

Reply to this post

Back to top Alert abuse Link here Permalink

Reply to this thread