Forum Post: How The World Works
Posted 12 years ago on Oct. 4, 2011, 11:58 p.m. EST by gmb
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"This is a staggering thought. We are completely dependent, on the Commercial Banks. Someone has to borrow every dollar, we have in circulation, cash or credit. If the Banks create ample synthetic money, we are prosperous; if not, we starve. We are, absolutely, without a permanent money system. When one gets a complete grasp of the picture, the tragic absurdity, of our hopeless position, is almost incredible, but there it is. It is the most, important subject, intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse, unless it becomes widely understood, and the defects remedied very soon."--ROBERT H. HEMPHILL (Credit Manager of Federal Reserve Bank, Atlanta, Georgia 1938)
Banks don't loan money out. Banks increase the money supply at the request of the consumer. The reason why the total credit market debt or money supply has stopped growing is not because the banks have stopped lending...It's because consumers have slowed their requests for commercial banks to create money.
How money is created...
A consumer requests a commercial bank for a "loan"
There is no money to loan...it's credit.
The bank then creates a liability and an asset and attaches interest to it.
As the consumer pays off the "loan" (of their future income) the asset and liability shrink by the principle amount...or return back into thin air where it came from...and the banks keep the interest.
That's how commercial banking as you all know it has operated for over six centuries now.
On any given day in the year...over 3 Trillion dollars flows through New york...Globally it's easily close to 10 Trillion equivalent Dollars of volume a day.
The US money supply is around 52 Trillion Dollars...the global supply equivalent is close to 200 Trillion dollars.
It's all debt...owed ultimately to the top. Ultimately the money supply of the world is owned by the top and the bottom rents and the cost to pay the rent is hidden in the price of everything.
The minor amount of FED so called "money printing" doesn't even equal half of a typical average day's volume.
Yield rates are so low the top has been forced to make up the difference...
The yield game is over...top sucks from the bottom until the bottom is sucked dry...then poof.
All the strikes/revolutions and chaos are being unleashed to cover the revelation of the lower high that the top began engineering in 2008...after the G20 all the various authorities went back and implemented the greatest global Government economic intervention in history....massive record breaking deficit spending.
Then the top covered...
The top does all the buying and selling...the bottom just speculates.
The top is not the cause but in the chain leading back to the cause...the top is the cause...The Federal Reserve is the effect.
Last time around before they were in soup lines...they were crying that the fed was printing too much...after they were in the soup lines...they cried that the fed was not printing enough.
The FED "money printing" is an effect...Not the cause.
Food and Fuel supply has been carefully managed by the top so as to reduce the base of the derivatives markets.
The result is ultimately higher prices...
The money supply or total credit market debt has not increased at all in 3 years.
As far as I can tell all these increases are due to the cuts in supply in relation to demand.
The exports from China and various other consumer goods along with real estate has not significantly risen in price at all.
I ditched my last cathode ray tube last month...
The top lives off the yield from the bottom...In order to obtain the required yield within an environment of constantly dropping yields the past 30 years requires ever increasing volume.
The US consumer reached their maximum potential to sustain the volume in late 2007.
But the difference has to be made up somewhere...
You could begin engineering rates higher...but that will just cause the already insufficient volume to collapse further...tightening supplies of food and fuel won't hurt the ability of consumers to request commercial banks to increase the money supply.
Ultimately the top can obtain higher yields this way...
Increasing the cost of food and fuel increases the demand for money.
That's the trick that's been employed up to this point...It's been used in japan for 20 years...cheap slave labor electronic goodies...expensive food and fuel.
The FEDERAL RESERVE is facilitator.
One slight problem...unlike Japan...this trick can not be sustained very long...
All that's going to happen is commodity prices are going to keep rising until maximum potential and then there will be a collapse.
The various scapegoats are already out there.
asking peoplefor money to get out of debt with the bank due to the 252.22 of fees they charged because the IRS kept trying to make money I didn't have
Because I was literally put out of my home by corperate america and told by the only family shelter in NYC that me my wife and children had to sleep outside at 11pm because My daughters mom had somewhere to stay but not to include me... I started asking a million people for help in the form of one dollar.swallowing what pride I had to be asking mean people for help. saying "check out www.askamillion.com please" and have them spit at me because they worked on wall street
On whichever planet you came from, evidently you never had a loan. Unless loans were backed by at least SOME capital, any person could declare himself a bank and use the nothing he has in order to make money - that's fully ridiculous. My suggestion? Start reading, with 'Tip and Mitten'.
Put your money in a local bank or credit union.
"The world economy is doomed to spiral downwards until we do 2 things: outlaw government borrowing; 2. outlaw fractional reserve lending. Banks should only be allowed to lend out money they actually have and nations do not have to run up a "National Debt". Remember: It's not what backs the money, it's who controls its quantity."
-"The Secret of Oz", an amazing documentary on this topic
http://www.youtube.com/watch?v=swkq2E8mswI
in 2008 the world hit its limit- the end of growth. pumping money into the system, will just delay the crash. it appears it will be a very hard landing-
Idiot. People have been saying this for decades. Us businessmen and engineers will continue innovating while you all just ride on our coattails.
Innovate? Investors/Financial Institutes and Advisors do nothing more than ride the waves. They are not creative at all...just riding on someone else's coat tails!
You must know nothing about investing or finance. While daytraders may not innovate, institutional investors play central roles in governing corporations. Additionally, investors and finance specialists create immense value by developing methods for businesses and individuals to secure funding for asset purchases, working capital, etc.
Just look at the CFOs of major corporations. These are some of the most creative leaders you will ever meet. Without investors, bankers, and financial experts, all business would grind to a halt.
Then why does it when one specific market (say the housing market) collapses, it seems like the entire market falls with it? You make a great point about my lack of knowing how the overall market works. Honestly, it really hasn't done much for the 99% anyways. But judging by the recent stock market...their score card isn't much better than what I know either.
First, you might not realize it, but the fact that your are able to afford many of the items that you own is directly related to the success of the finance industry over the last couple decades. Much of processes that have allowed mass quantities of inexpensive goods to be produced were financed through corporations taking out debt. Additionally, most purchases of houses are financed by the big financial institutions, without which, many Americans would be unable to afford a permanent home.
Second, although the housing crisis did help cause our current economic woes, little of this can truly be blamed on the finance industry. It is true that mortgage-backed derivatives helped broaden the impact of the housing "bubble", but it wasn't the chief cause. In essence, consumers back in the late nineties and early '00s believed so strongly that real-estate prices would keep increasing, that they took out mortgages to purchase wildly overpriced homes. Consumers assumed that house prices would rise, and that if they had to sell their homes, that it would be easy and they would make a profit. Unfortunately the banks tended to agree, and combined with Clinton-era pressure to loan money to the poor, the banks were willing to give mortgages to people who were unlikely to ever pay off their debt.
Thus, while banks were involved in the collapse, the real cause of the current crisis was a realization by the American people that their real estate holdings were overvalued. Banks may have allowed people to go into debt, but the banks were also some of the most hard-hit victims of the collapse.
That's a great explanation you shared with me. Really appreciate that, cwb2547!
I understand your explanation of how finance industries and corporations help allow mass quantities of inexpensive goods to being available for the consumer. But out of my own curiousity, I have to ask this. Doesn't that also control the fate of new product development that may jeapordize an existing product with high volume investors?
For example, a company wants to develop an alternative fuel...let's say it's created off of algae...the fasting growing plant life with low refinery costs to make. However, this jeapodizes the oil stocks. Just about everyone's portfolio investment has oil on it because the supply and demand is often adjusted to keep it profitable. So doesn't that trigger a majority rule to prevent new developing products for the sake of losing billions in an obsolete one?
what are you, a corporate plant?
In a sense. I am a hardworking American who spent his formative years studying and working his ass off, and has been rewarded because of it. Rags to riches.
Every night, spend a few moments before you sleep thanking us businessmen and engineers for creating: air-conditioning, refrigeration, mass housing production, carpeting, roof shingles, automobiles, airplanes, electric power production (both green and fossil fuel based), cheap computers, clocks, lights, speakers, cell phones, body wash, deodorant, kindles, easily available and cheap food, widely distributed books, pens, credit cards, clothing, contact lenses, scientific equipment, healthcare, etc.