Forum Post: Our money is debt
Posted 13 years ago on Oct. 8, 2011, 12:11 a.m. EST by joewp
(21)
from Morganville, NJ
This content is user submitted and not an official statement
You guys are really on the right track, but you're missing the source of the problem, the Fed and the practice of fractional reserve banking which allows banks and the Fed to create money every time they lend it. This is from the Dallas Fed website: "How Banks Create Money Banks actually create money when they lend it. Here's how it works: Most of a bank's loans are made to its own customers and are deposited in their checking accounts. Because the loan becomes a new deposit, just like a paycheck does, the bank once again holds a small percentage of that new amount in reserve and again lends the remainder to someone else, repeating the money-creation process many times."
What happens is that when you deposit $1000 into a bank account, the banks lends $900 out, which becomes another deposit and that bank or another lends $810, which becomes another deposit and loan for $720 and so on, ultimately allowing the banking system to create up to $10,000 from the initial deposit of $1000. This is why banks are so rich. They create money which the lender has to pay back plus interest.
This is the reason banks have so much power and influence over the government. The best source to understand the implications of this practice and several stories which are similar to today's bailouts (like the S&L crisis in the 1980s or the Chrysler bailout) is "The Creature from Jekyll Island" by G. Edward Griffin or Money As Debt http://video.google.com/videoplay?docid=-2550156453790090544
We need to end the real cause of these problems and fight against the Fed and the commercial bankers. Lord Acton, the 19th century British historian who said "Power corrupts, and absolute power corrupts absolutely." also said "The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks."
Sooner is better than later.
True, and although I'm all in favor of taking down today's ineffective and inefficient Top 10% Management Group of Business & Government, there's only one way to do it – by fighting bankers as bankers ourselves. Consequently, I have posted a 1-page Summary of the Strategic Legal Policies, Organizational Operating Structures, and Tactical Investment Procedures necessary to do this at:
http://getsatisfaction.com/americanselect/topics/on_strategic_legal_policy_organizational_operational_structures_tactical_investment_procedures
Join
http://finance.groups.yahoo.com/group/StrategicInternationalSystems/
if you want to support a Presidential Candidate Committee at AmericansElect.org in support of the above bank-focused platform.
Who has an education! Keysenian economics result in the boom bust cycle!
http://occupywallst.org/forum/imagine-a-revolution-imagine-liberty/#comment-58925
I agree with you on power corrupting, but here is what I think the problem is. There has been a massive "wealth redistribution" that has gone on for the last 30 years. The top 1% now control 42% of all of the nation's wealth and the top 10% now control 70% of our entire nation's wealth. The bottom 50% control a mere 2% of all of our nation's wealth. The middle class is the economic engine of our economy. The middle class spends their wealth on goods/services and the corporations make a profit from the spending. Corporations have redistributed the middle class wealth by paying the vast majority of their profits all out to the executives and shareholders.
Middle class wages have stagnated for 30 years while executive wages have gone up 256% in since 1980. Even last year executive compensation went up another 11%. All of our nation's wealth has been redistributed into the hands of the few.
How did this happen right under our noses? The middle class was roped into replacing wages with easy credit/loans. So instead of paying people living wages, corporations fooled us into thinking we were doing well and could afford things by giving us easy credit instead of wages. Instead of having wages to buy t.v.'s, furniture, etc. we were given easy loans. So the middle class became a debtor class.
There used to be a tax disincentive to paying out all of corporate profits at the top because in the 1950's income was taxed at 90% over a certain amount money and now that tax disincentive has disappeared. In 1950's the highest marginal tax rate was 90%. In 1960-1970's it was 70%. In 1980's it dropped to 49%. In 1990's dropped to 39%. Under George Bush it dropped to a mere 36%. We have had over 30 years of massive tax cuts for the wealthy.
There is now no tax disincentive to paying out all of the corporate wealth at the top. And there is no employee bargaining power because now less than 12% of all of our jobs are unionized. Corporate profits are at an all time high, healthcare company profits are at an all time high, and oil profits are at an all time high. We have a profit-taking crisis at the expense of the people that no politician will doing anything about. Healthcare and oil companies have enjoyed a decade of record profits while we have had a decade of massive premiums for little coverage and a decade of outrageous gas prices.
The problems are: 1) deregulation of the banks by the Republican-controlled congress in 1999; 2) hedge funds are exempt from regulation; 3) tax system no longer has a disincentive against paying outrageous executive salaries (highest marginal tax rate has dropped from 90% to 36%); 4) commodities market is exempt from regulation (Republican-controlled Congress exempted it in the Commodities Future Modernization act of 2000); 5) the Supreme Court has ruled that corporations can spend unlimited funds in campaign elections (thus politicians on both sides favor the wealthy/corporations) and 6) the rise of corporate/billionaire propaganda media "news." Because of the need to raise massive sums in politics today, we no longer have a party that represents the people. The Democrats have to chase the corporate and big money donors too.
What can we do about this: 1) re-instate Glass-Steagall Act regulating the banks; 2) regulate hedge funds and the commodities market (because the commodities market is not regulated speculation has caused prices for commodities to go through the roof); 3) get rid of the money in politics (have federally funded elections with clear limits on spending and no outside groups allowed to have ads); 4) get rid of 1980's laws stating that corporations' only duty is to maximize shareholder profits; and 5) regulate "news" channels and newspapers (no more "slanted opinion news" masquerading as hard news) and reinstitute the fairness doctrine across all news outlets to ensure that both sides get equal time.
Corporations should have duties to society and to their workers too. They should have to balance their duties to maximize shareholder profits against their reinstated duties to their employees and to society. The laws saying that corporations' only duty is to maximize shareholder profits have led to the destruction of long-term business plans and care for their workers and have created short-term profit monsters at the expense of workers and society.
All your plans are just window dressing if you allow fractional reserve banking to continue. As long as bankers can poof money into existence and charge interest on it, we'll always have these bubbles that burst. The Fed was charged with making the money system stable. Instead they've caused a boom and bust cycle.
We need SOVEREIGN RULE of the economy by the people and an elimination of money from public office and campaigns
End the Federal Reserve and Establish the Third Bank of the United States.
I don't get the point! Banks are so rich, that is good or bad? In 1929 they were so poor that many of them went under and the country was pushed into Great Depression. In 2008 Lehman Brothers went bankrupt and US was pushed onto sever recession. The power and influence over the Government come from the critical role that Banks have in the economic life of the society! If your bank goes under you are going to lose your money, if the bank of your employer goes bankrupt you are going to lose your job! That's why banks have to be under strong control by the Government! To make sure that there won't be need for another bailout!
Just like anything else, there are varieties of banks. Smaller banks go under and are taken over by medium banks, which go under and are taken over by large banks. The large banks get bigger, and when they get into trouble the taxpayers bail them out. The banks inserted themselves into that "critical role" by corrupting our government. That "critical role" is actually the role of fat leeches sucking the wealth from the working man.
You need to understand that there will always be a need for another bailout because fractional reserve banking is inherently unstable. It's the ultimate ponzi scheme. This isn't the first bailout of the big Wall Street banks and it won't be the last. Don't worship an industry that practices legalized fraud.
What if smaller bank goes under and no other bank wants to buy it? All the clients will lose their money? No! FDIC aka Government will step in and protect people's and companies savings. That is what to going to be with the big banks as well! If they are not well capitalized then make them do it. If they take too much risk, ban them from that type of activity. That is exactly what Dodd and Frank act will do. That is true that Big Banks want to be able to take investment risk aka gamble and to make huge profits and bonuses if it works and if it will not, tax payer to bail them out! That is why THEY - Big Banks want Small Government, and We the tax payers should want Big Government to protect our money from crazy bankers.
As yourself why these banks "go under". They go under because fractional reserve banking is unstable and unsustainable. That's why the small banks get eaten and the large banks get bailed out.
By the way, it's not "your money". It's a Federal Reserve Note, which means it's a bank loan and has to be paid back with interest.
That all is true but that is not the reason why after 60 years relatively peaceful economical development, productivity of the US labor is one of the highest in the world and the poverty level is all time high as well, unemployment is all time high and US corporations profits are all time high! Don't blame banks because Mortgage interest rates are all time low!
Why just protest the government? Is there a barter/communal economy developing at the site?
So? Do we need to close the Banks? Where are we going to keep our savings?
Not close them, just return them to their proper function as warehouses of money for a fee.
http://www.youtube.com/watch?v=JXt1cayx0hs&feature=colike
Yep, that's a good one too, Gargamel. "The Money Masters" is long, but excellent if you want to know the history of money in the US.
you are 100% correct! I loved the Creature from Jekyll Island and for those who don't read can watch it on Youtube. Or the movie Zeitgeist will do too.
Ok - now y'all may remember George Wallace. He was a huge fan of civil rights. He woulda LOVED you guys anywho... The wing nut who wrote the above article was a speech writer for Curtis LeMay , Wallaces Veep running mate.. Nice guy.
What "wingnut"? Are you referring to my article? I was about 16 when Wallace ran. I doubt I wrote many speeches for LeMay.
Are you disputing that banks create money when they lend it? Cause you're going about it the wrong way. Try presenting facts instead of spouting uninformed insults.
and no who in there right mind would have a problem with money multipliers?
I am talking about the author you refer to Edward Griffin.. Sorry for the confusion. Perhaps you should look him up
Fine, start a thread on his faults somewhere else. He wrote an informative and accurate book that tells the story of fractional reserve banking and how the bankers corrupted our government into giving them the power to create our currency as debt. Who cares if he is or was segregationist? What does that have to do with the fact that banks create money as debt? What does that have to do with the extreme damage the leaching banks do the entire world?
http://gene-callahan.blogspot.com/2009/05/immorality-of-fractional-reserve.html
your argument is rubbish. read something. read it all the way through and learn something.
I read that all the way through, including the comments which ripped apart his analogies. What you don't seem to realize is that at the start of fractional reserve banking goldsmiths loaned out more gold than they had in their vaults, a fraudulent act. The same fraud as banks lending money they don't have and corrupting our government to legalize that fraud.
you must have read different comments or just focused on one side of the argument.
I get it "end the fed". Vote for Ron Paul.
Good Luck.
It won't solve all our problems, but it's a start.
I'm not a hero worshiper and Ron Paul has his faults, but at least he's telling the truth about the money system. More people need to know the system is set up for the enrichment of banks at the expense of the people.
BOOM! Knew that is where you were going with that. It is arrogant close minded people like you that make me want to take my donation back.
wingo-dingo - wing nut. Just make sure you bring your warm body to vote. And I hope that you are able to vote in a primary that matters or is that part of the problem too?
Close minded? Please show some good evidence that fractional reserve banking does something other than enrich bankers and I'll consider your point, whatever it is.
http://en.wikipedia.org/wiki/John_Birch_Society
YAY! It ain't a party until some one is kind enough to bring the nuts.
Then it's good of you to show up.
If you can't address the points in what I wrote, kindly refrain from name calling.
wait a minute.. speech writer for a terribly pro segregationist ticket and I am the asshole..
Who the heck are you talking about?
Again, stop being confused and address the issue. Do you dispute that banks create the money they lend from thin air, or what?
fractional banking is not a parlor trick. Would you like to return to a currency that is backed by a basket of precious metals? There will be zero elasticity in the currency.
I just did. I didn't think your 10th grade econ primer on how a bank has traditionally made money needed to be addressed.
You disputed what the Dallas Fed says? Where was that?
You're starting to sound like a plant to confuse the issue.
Where is your evidence to dispute the words of the Dallas Fed? You never heard of the money multiplier?
i mentioned the money mutliplier. You are all over the map
I am not calling you a name perhaps you should look into who wrote your precious book.
Or am I confused on that as well?
Yeah, you are. I don't need Griffin's book at all to prove that the Fed and banks create money as debt. Watch Money As Debt or the Money Masters, neither of which involved Griffin.
I'm still waiting for your source that say that banks don't create money from thin air when they lend it, thanks...
I meant "which the borrower has to pack back plus interest", not the lender. Sorry for the error.
Obamas' 2012 Re-election Finance Director is the son of BANK OF AMERICAS former CEO.... the guy who got us in this mess!!! Keeping it all in the Family
I think most of us are already for nationalizing the fed.
Nationalizing it won't help at all. The root problem is fractional reserve banking. Money should be created to represent assets (the government creates $100 million interest free to build a road, for instance) not debt.
Point of fact - The Bank of England was nationalized in 1946 and nothing changed because fractional reserve banking was still permitted.
What? The Fed is already under Congressional oversight. You can just pass a law if you want to change something. But they're doing an alright job as it is. I wouldn't bother.
You need to read up on the Fed a little. Greenspan himself stated that the Fed is immune from control of the government. http://www.youtube.com/watch?v=3QkmLnNEvdU
Negatory, compadre. He's not saying that the Fed is immune from government control, he's saying that it is doesn't have another agency overseeing it. In fact, he even says that he'll just keep doing what he's doing unless Congress tells him not to.
Obviously the executive branch doesn't have direct control over the Fed, but Congress passes the laws that create the Fed and its mandate.
Listen carefully, muchacho, "First of all the Federal Reserve is an independent agency. And that means basically that there is no other agency of government that can overrule actions that we take. So long as that is in place, and there is no evidence that the administration, the Congress or anybody else is requesting that we do things other than what we think is the appropriate thing...
No other agency can overrule them.... as long as THAT is in place... Except when Congress or "somebody else"(Yeah, like who???) requests????
What don't you get there?
Ha. Still respectfully disagree, hombre. Also, apologies if I came off as snarky - it's a little late here.
So, to break down the interview quote a little more, he's correct in saying no other agency of government has control. Congress isn't exactly a government agency - it's the legislative branch. The Fed's overbearing father, so to speak. They can request the Federal Reserve do something different, and the Fed is obliged to comply. I think the point he's getting at in the interview is that the Fed doesn't have to ask permission from Congress every time it does something. That doesn't preclude Congress from stepping in if they think it's doing something wrong.
To delve a little deeper into the legal specifics, the Fed was created via the Federal Reserve Act of 1913. It was given a specific charter, a mandate from Congress, to follow. Since then, the act, and thus the Fed's mandate, has been amended some 200 times. It's not a big deal to change the Fed, you just have to pass a law. Thus, the problem rests in the legislature, not the banking system.
The problem is the bankers own the politicians. Check out opensecrets,org to see how the banks "support" both sides, so no matter who wins, they win.
Sure, I agree, but I'd argue that it's more a problem of lobbying and political contributions than banks. Just my 2 cents.