Quote of the Day

“I sincerely believe ... that banking establishments are more dangerous than standing armies, and that the principle of spending money to be paid by posterity under the name of funding is but swindling futurity on a large scale.”

Thomas Jefferson, letter written 1816.


Jim said…
They are, too few people understand that. Too few people understand what money is, and that which gives it its value.

Of course you can never start with a fiat currency, you need to have a real money to start with, you can debase it over time. Can detail how that's done later.

That's where we are now, the Bank of England (BOE) prints some new tenners, out of nothing but paper and ink (thats all it is, there is no backing) then lends this new "money" to banks.

The banks then loan out this new "money", but under a fractional reserve banking system (FRB), this means for each new printed tenner in the banks vault, they may lend that exact same tenner to twenty different people at the same time, each one having an immediate claim on the same tenner. so now we see that though the BOE invested in paper and ink, the high street banks made it £200 out of nothing, but thin air, added figures in a computer, adding to twenty different bank accounts. Each loan of course must be paid with interest.

This system may seem to work, but of course, people do start to see through it, so the inevitable bank runs start. (People saving in banks also add to the tenners in the bank vault to be multiplied).

The creditor and all twenty debtors have the same claim to the same tenner at the same time.

In any other business this practice would be called fraud, but for some strange reason in banking its not only legal but is encouraged.

In other words that mortgage you are working to pay off, was never actually "money" lent to you, it was only ever figures entered into a PC. You could have withdrawn the lot in cash, well maybe, unless of course the other 19 debtors and the creditor chose to do that too.

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