Reforming the creation of 'money'.

[notoc]

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Through no fault of our own the vast majority of us have an incorrect understanding, if we have any understanding at all, of what money actually represents ... this is because we have been lead to believe that money doesn't just represent a valuable commodity, such as a good or a service, but that money is itself a valuable commodity.

We have been taught this fallacy, both wittingly and unwittingly, from our earliest childhood. Like an urban myth it has passed from generation to generation.

To an extent this fallacy is required because any monetary system is founded on trust, a trust that the promise inherent in any unit of money will be made good, at some time in the future. Without this trust money cannot exist as a medium of exchange. Without this trust nobody would trade their day's labour for the money to buy their daily bread but would instead demand that their day's labour be directly exchanged for the bread itself.

Trade and tax collection isn't easy when the only thing the trader and taxpayer has is his bread from today's labour, saved goods he has exchanged for his past labour and his ability to work tomorrow, in other words his potential to exchange his savings and/or his labour for goods, at some time in the future.

The convenience of trustworthy money tokens to traders is obvious ... but the actual trust in the tokens is derived from the apparent willing acceptance of them in full payment of taxes ... and everybody's labour is taxable (this is something else we are taught from our earliest childhood); and this is why everybody can be convinced to trust money.

What appears to confuse the majority of us is that the money we have accepted in exchange for our existing goods or past efforts only represents everybody else's implied promise to exchange it for an equivalent amount of their own goods or effort, at some time in the future.

The vast majority of us have never been taught to have a factual understanding of the function time plays in the token value of money; never been taught to have a factual understanding that money itself is of absolutely no value until it is spent, at some time in the future.

... and if we don't understand this then we don't have a hope in hell of understanding how the creation of valueless money tokens can be, is being, used to rob us all of our past, present and future efforts and even less of a hope in understanding how it is being used to keep us all in perpetual debt, no matter how much money we think we have safely deposited in our bank accounts ... because bank accounts aren't cash deposits, they are what is known as 'Sight Deposits.'

This is beginning to sound like a conspiracy theory and it is certainly a conspiracy, but it is far from being a theory.

The banks have usurped, as a matter of fact and in collusion with our governments, the prerogative of creating our money. That is, the legal right to create and issue the total stock of currency necessitated by our total economy.

The total stock of currency corresponds to what is referred to as the monetary aggregate or the M1. The M1 consists of all of the coin, banknotes and sight deposits in circulation.

The physical coins and the paper are the cash, whereas the sight deposits are the non-cash, which is to say everything else ... current accounts, savings accounts, pension accounts, mortgage accounts, loan accounts - the lot. These are misleadingly referred to by the financial 'industry' as deposit accounts. They are all Sight Deposits.

Banks create the sight deposits – also called checking deposits or demand deposits or overnight deposits. They do it by granting loans and printing the amount of money involved into their own credit account as a claim on the customer, and into the accounts of their customers as a cash liability. That‘s the amazingly simple, 'weightless' way modern information-unit currency is created, from nothing - ex nihilo - out of thin air.

Printing sight deposits is the cheapest and most profitable way of 'earning a living' known to man  ... and it is the sole preserve of private banks when it should be the sole preserve of ourselves which we grant to our government on the proviso that every single ounce of profit is subtracted from our total tax bill.

Our currency is produced for one reason alone ... to facilitate trade within in our economy. A money system exists only to act as convenient alternative to a system of direct barter.

Let the government create the money on society's behalf, at cost, and then auction it into existence to the highest interested private bidder with a tangible asset to put up as collateral in case of default ... the private banker, with a plan to put his house up as collateral and bid to borrow into existence some new money from our government, our market, our economy at 4% interest with the intention of lending it out at 8% to somebody further down the food chain, can get in line and attend the auction alongside every other entrepreneurial member of society willing to work to make a profit on top of his daily bread.

It works in exactly the same way as it works at the moment ... except we as a society instruct our government to create the money tokens, which facilitate the trade, which is actually the market ... and the banks go to the market and put up their assets as guarantee and promise to repay the loan at some time in the future and meanwhile pay the market rate of interest.

And if they fail to make the repayments their assets are seized and the government, the market (society) will declared them bust ... but society will not let them starve and clutter the streets with their begging for charity, because while they weren't bust they would have been paying their insurance deductions alongside their taxes ... just like any other private individual within our society.

[vel]

 

Everything is "made up," sport. Absolutely everything.

Even the things you think aren't made up...those things are made up.

If and when you understand that you can save yourself a lot of unnecessary handwringing over your muddied thought.

[vel]

I have a lot of experience with groups and group dynamics, and what works and what doesn't work.

There are a lot of people who sell "systems" from lawyers selling buy sell agreements to late night infomercial salesmen and so on and so forth. I have also hired consultants from time to time to learn some system or another.

If I have learned anything it is that pretty much whatever I have done and whatever I have achieved comes down to at least 99% sheer force of will. I have been for the most part highly successful in getting what I have wanted.

If I have been disappointed in any way it is in the fact that a) between 80% and 90% of the people whom I have encountered are unsuccessful for mostly inexplicable reasons; and b) whenever I have tried to help these people become successful they invariably get mad at me.

Pretty much any system can work and pretty much any system can fail. Our current system of fiat money didn't just materialize. It was adopted for a lot of very good reasons and it has been incredibly effective. Doomers and gloomers are pretty much on par with the late night infomercial folk.

[ivanm]

"To an extent this fallacy is required because any monetary system is founded on trust, a trust that the promise inherent in any unit of money will be made good, at some time in the future. Without this trust money cannot exist as a medium of exchange. Without this trust nobody would trade their day's labour for the money to buy their daily bread but would instead demand that their day's labour be directly exchanged for the bread itself"

This being the case, then what is your problem?  Or are you merely making a rhetorical point? 
 
If we used gold coins for money you are still  faced with trusting that the coins somebody pays you are genuine and not shaved.  Shaving of silver coins in America was a factor in switching to clad metal coins.  People still accept the clad coins, and it would be foolish to use solid silver or gold coins for money because the metal in the coins is likely worth more than the denominated value of the coins.

Look at paper currency, what is it worth? It wouldn't even make good ass wipe, and yet we use it.

[vel]

It's just plain old, every day fear mongering.

[notoc]

Everything is "made up," sport. Absolutely everything.

Even the things you think aren't made up...those things are made up.

If and when you understand that you can save yourself a lot of unnecessary handwringing over your muddied thought.

I'm not interested in your misguided, misinformed opinion, sport.

If you find anything to dispute in my post, let's hear precisely what it is ... otherwise let's just go back to ignoring each other. It will save a repeat of the last debacle.

edit:

You no longer have the ability to abuse your authority here, 'Vel' ... your days of living out your megalomania as an administrator of newsrake were ended when the owner cut you off at your kneecaps.

So it's a level playing field ... you don't get to edit, delete or move my posts. You don't get to do anything but put-up or shut-up.

[vel]

I'm not interested in your misguided, misinformed opinion, sport.

If you find anything to dispute in my post, let's hear precisely what it is ... otherwise let's just go back to ignoring each other. It will save a repeat of the last debarcle.

You premised your entire New Age financial conspiracy theory on the fact that fiat money (which is a wordy phrase that simply means "money") is just "made up." I just told you that everything, absolutely everything, is "made up". You're relying on a distinction without a difference, and Ivan told you the same thing.

You can't get more specific than that, sport.

I'm sorry that I'm so succinct and thus not in tune with a New Age fear monger like you, but that's the way it goes.

[notoc]

"To an extent this fallacy is required because any monetary system is founded on trust, a trust that the promise inherent in any unit of money will be made good, at some time in the future. Without this trust money cannot exist as a medium of exchange. Without this trust nobody would trade their day's labour for the money to buy their daily bread but would instead demand that their day's labour be directly exchanged for the bread itself"

This being the case, then what is your problem?  Or are you merely making a rhetorical point? 
 
If we used gold coins for money you are still  faced with trusting that the coins somebody pays you are genuine and not shaved.  Shaving of silver coins in America was a factor in switching to clad metal coins.  People still accept the clad coins, and it would be foolish to use solid silver or gold coins for money because the metal in the coins is likely worth more than the denominated value of the coins.

Look at paper currency, what is it worth? It wouldn't even make good ass wipe, and yet we use it.

I understand that you understand the mechanics of fiat money, ivan ... but to anyone who didn't the actual point of my post would be meaningless.

So what are your thoughts on who we (as taxpaying members of society) should entrust with. and profit from, the actual control of our money supply?

If there is any financial benefit to be had in loaning money tokens into existence, who should profit from it?

[vel]

. . .  the actual point of my post would be meaningless.

True.

[notoc]

You premised your entire new age financial conspiracy theory on the fact that fiat money (which is a wordy phrase that simply means "money") is just "made up." I just told you that everything, absolutely everything, is "made up". You're relying on a distinction without a difference, and Ivan told you the same thing.

You can't get more specific than that, sport.

I'm sorry that I'm so succinct and thus not in tune with a New Age fear monger like you, but that's the way it goes.

Like I said, I'm not interested in your misguided, misinformed opinion, sport.

If you find anything to dispute in my post, let's hear precisely what it is ... otherwise let's just go back to ignoring each other. It will save a repeat of the last debacle.

[lucy]

7.7 trillion dollars in hidden loans given out by the Federal Reserve to banks and other entities...but added to the US debt. There is nothing new age about this. It is wrong. Period.

A lot of missing funds as well.

This is not something that has been "made up."

[vel]

Like I said, I'm not interested in your misguided, misinformed opinion, sport.

If you find anything to dispute in my post, let's hear precisely what it is ... otherwise let's just go back to ignoring each other. It will save a repeat of the last debacle.

Who cares what you're interested in? You're just sore because I successfully demolished your wacky theory with just a few words.

[vel]

7.7 trillion dollars in hidden loans given out by the Federal Reserve to banks and other entities...but added to the US debt. There is nothing new age about this. It is wrong. Period.

A lot of missing funds as well.

This is not something that has been "made up."

 

[lucy]

Another point.

What countries had independent  central banking systems in the year 2000?
What countries had independent central  banking systems in the year 2009?
What countries have independent central banking systems currently as of December 2011?

Should you research this, it is interesting.

[vel]

7.7 trillion dollars in hidden loans given out by the Federal Reserve to banks and other entities...but added to the US debt. There is nothing new age about this. It is wrong. Period.

A lot of missing funds as well.

This is not something that has been "made up."

Look, I'm not a big fan of the banksters either. The real problem right now is that the "banks" are 40% of our economy and they're attracting the best and the brightest because that's where the money is.

We need to figure out a way to reverse that.