Conspirator
Prince
- Joined
- Apr 29, 2009
- Messages
- 388
What do you guys know about fractional reserve banking and the 'multiplier effect' which is used by all modern banks when making loans? Effectively when someone wants a loan, the loan is created out of thin air, it is not someone's deposit they loan.
If you were to deposit £100 into a bank, the bank is obliged only to reserve £10 of that £100 in the Bank of England, and is now allowed to loan out £90. The only thing is that rather than loaning out the £90 it has its vault, what the bank does it 'create' £90 out of thin air, because when you sign the piece of paper saying you will pay back that £90, that very promissory note is worth £90. So the bank actually has £190 in its balance sheet.
If the person who loaned £90 spent it on some clothes and the clothes store manager deposited £90 into the same bank that loaned it out, that bank is now allowed to loan out £81 of new money. This can continue until the bank has created £1000 out of £100.
This is called fractional reserve banking and it is how modern banking functions. Banks are allowed to create money out of thin air, and charge interest on that money. The weird thing is that because banks don't produce the interest, i.e. when they loan out the £900 out of £100 they don't also loan out the interest to pay that back, there is always going to be a shortfall of currency in the economy, therefore someone will always be in debt, so more debt needs to be created to pay the interest on that £900 of newly created money. Which simply makes more interest payable. Basically we're all in a massive debt cycle - we won't ever be out of debt because when all national, business and private debt is payed off there won't be a single pound in the economy!
Apparently Abraham Lincoln decided to abolish this system because he was offered ridiculous interest charges on loans to fight the confederate south, so what he did was simply print his own debt-free money. This was very easy to do, and can be done right now. Instead of the government borrowing money from private banks - who create the money out of thin air - the american government gave itself an interest free loan. This is what the London Times had to say about this:
"if that mischievous financial policy, which had its origin in the North American Republic, should become indurated down to a fixture, then that Government will furnish its own money without cost. It will pay off debts and be without a debt. It will have all the money necessary to carry on its commerce. It will become prosperous beyond precedent in th history of the civilized governments of the world. The brains and the wealth of all countries will go to North America. That government must be destroyed, or it will destroy every monarchy on the globe."
There are many people advocating monetary reform at current, and what they mean by monetary reform is a change to this damaging system of perpetual debt creation which simply serves to prolong our destruction of the planet (new debt needs to be created to pay off old debt, so more and more resources need to be plundered).
Here are some of the propositions of the monetary reformers:
1. A return to the gold standard (or silver standard or bimetallism).
2. The issuance of interest-free credit from a government-controlled and fully owned central bank. These interest free but repayable loans would be used for public infrastructure and productive private investment. This proposal seeks to overcome the charge that debt-free money would cause inflation.
3.The issuance of social credit - "debt-free" money issued directly from the Treasury - rather than the sourcing of fresh money from a central bank in the form of interest-bearing bonds. These direct cash payments would be made to "replenish" or compensate the populace for the net losses some monetary reformers believe the populace suffers in a fractional reserve-based monetary system.[11][12]
4.The enforcement of full reserve banking for the privately-owned banking system. (i.e. banks can only loan what they physically have in their vaults)
Here is a link to a documentary that explains how this all came about:
http://video.google.co.uk/videoplay?docid=-2550156453790090544#
For those who don't want to watch it:
Banking began when goldsmiths started storing other people's golds in their vaults for safe keeping, and in return the goldsmith would give a receipt, or a note, for the amount deposited. Over time the goldsmith started loaning out his own gold, but what he found was that instead of asking for the gold, the borrowers would ask for a receipt. Over time these receipts were used instead of gold in the local city because everyone had faith that the goldsmith backed up the receipts with gold in his vaults.
Eventually the goldsmith realised that people never came in to collect the gold, and instead just traded with the receipts. As more and more people started asking for loans, he decided to do a crafty thing. He wrote receipts out for gold that he did not possess. This is fractional reserve banking. And it is what banks do to this day. Banks don't make 6% interest on the loan, they make 100% on the principle, as well as 6% interest.
What are your thoughts on this phenomenon of the modern financial system? Do you think it's right that private banks should have the right to create money and charge interest on it? Why do we borrow money nationally from banks when the government has the power to issue its own interest free loans, rather than bonds? Is it possible that Abraham Lincoln was assassinated because he went against the international banking elites and created his own debt free money?
If you were to deposit £100 into a bank, the bank is obliged only to reserve £10 of that £100 in the Bank of England, and is now allowed to loan out £90. The only thing is that rather than loaning out the £90 it has its vault, what the bank does it 'create' £90 out of thin air, because when you sign the piece of paper saying you will pay back that £90, that very promissory note is worth £90. So the bank actually has £190 in its balance sheet.
If the person who loaned £90 spent it on some clothes and the clothes store manager deposited £90 into the same bank that loaned it out, that bank is now allowed to loan out £81 of new money. This can continue until the bank has created £1000 out of £100.
This is called fractional reserve banking and it is how modern banking functions. Banks are allowed to create money out of thin air, and charge interest on that money. The weird thing is that because banks don't produce the interest, i.e. when they loan out the £900 out of £100 they don't also loan out the interest to pay that back, there is always going to be a shortfall of currency in the economy, therefore someone will always be in debt, so more debt needs to be created to pay the interest on that £900 of newly created money. Which simply makes more interest payable. Basically we're all in a massive debt cycle - we won't ever be out of debt because when all national, business and private debt is payed off there won't be a single pound in the economy!
Apparently Abraham Lincoln decided to abolish this system because he was offered ridiculous interest charges on loans to fight the confederate south, so what he did was simply print his own debt-free money. This was very easy to do, and can be done right now. Instead of the government borrowing money from private banks - who create the money out of thin air - the american government gave itself an interest free loan. This is what the London Times had to say about this:
"if that mischievous financial policy, which had its origin in the North American Republic, should become indurated down to a fixture, then that Government will furnish its own money without cost. It will pay off debts and be without a debt. It will have all the money necessary to carry on its commerce. It will become prosperous beyond precedent in th history of the civilized governments of the world. The brains and the wealth of all countries will go to North America. That government must be destroyed, or it will destroy every monarchy on the globe."
There are many people advocating monetary reform at current, and what they mean by monetary reform is a change to this damaging system of perpetual debt creation which simply serves to prolong our destruction of the planet (new debt needs to be created to pay off old debt, so more and more resources need to be plundered).
Here are some of the propositions of the monetary reformers:
1. A return to the gold standard (or silver standard or bimetallism).
2. The issuance of interest-free credit from a government-controlled and fully owned central bank. These interest free but repayable loans would be used for public infrastructure and productive private investment. This proposal seeks to overcome the charge that debt-free money would cause inflation.
3.The issuance of social credit - "debt-free" money issued directly from the Treasury - rather than the sourcing of fresh money from a central bank in the form of interest-bearing bonds. These direct cash payments would be made to "replenish" or compensate the populace for the net losses some monetary reformers believe the populace suffers in a fractional reserve-based monetary system.[11][12]
4.The enforcement of full reserve banking for the privately-owned banking system. (i.e. banks can only loan what they physically have in their vaults)
Here is a link to a documentary that explains how this all came about:
http://video.google.co.uk/videoplay?docid=-2550156453790090544#
For those who don't want to watch it:
Banking began when goldsmiths started storing other people's golds in their vaults for safe keeping, and in return the goldsmith would give a receipt, or a note, for the amount deposited. Over time the goldsmith started loaning out his own gold, but what he found was that instead of asking for the gold, the borrowers would ask for a receipt. Over time these receipts were used instead of gold in the local city because everyone had faith that the goldsmith backed up the receipts with gold in his vaults.
Eventually the goldsmith realised that people never came in to collect the gold, and instead just traded with the receipts. As more and more people started asking for loans, he decided to do a crafty thing. He wrote receipts out for gold that he did not possess. This is fractional reserve banking. And it is what banks do to this day. Banks don't make 6% interest on the loan, they make 100% on the principle, as well as 6% interest.
What are your thoughts on this phenomenon of the modern financial system? Do you think it's right that private banks should have the right to create money and charge interest on it? Why do we borrow money nationally from banks when the government has the power to issue its own interest free loans, rather than bonds? Is it possible that Abraham Lincoln was assassinated because he went against the international banking elites and created his own debt free money?
