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How money is created / Are you financially literate ?

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My Main point is:


BECAUSE OF ( Reserve Requirements, and Capital Requirements),


+ Banks cannot produce infinite growth in loans, unless they are generating enough profits from those loans to grow their capital (ie the restrictions will slow their growth, to something in line with the growrth in their capital)


+ If their customers are keen to repay loans, then money supply can actually shrink


Reserve requirements in the western system are not a restriction on loan growth, because the central bank will always supply sufficient reserves to prevent the published target rate from rising regardless of the demand for loans.


The central bankers know that loan growth is a function of the demand for money via the price of money and peoples appetite for debt


Many mainstream economists think that loan growth is limited by the amount of money in the economy, whereas it cannot be at moment X because the central bank will always supply an unlimited amount of money to prevent the published target rate from rising.

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OK, banks don't create 'money', they create 'credit'


Congressman McFadden on the Congressional House records of June 10, 1932 on page 12598 second column top paragraph began to explain that the Federal Reserve was running a monopoly by stealing the wealth of the people and give them Federal Reserve notes and place of gold and silver knowing that the Federal Reserve note was not money but a credit line. McFadden made this very clear on the floor Congress. McFadden also began to explain that it is your signature that is to collateral and not property are the merchandise. Mr. McFadden began to explain that if a Scottish distiller was to sell whiskey here in the United States to a bootlegger the bootlegger was only required to sign his name across the bill and then the Scottish distiller were turned it into the Federal Reserve bank thereby create Federal Reserve notes and leaving the United States obligated to pay the bill. Here is the proof that your signature page or bill mortgages and car loans and that your signature is what the court steals in order to In your birth certificate account in order to draw money out of your account.

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I've been knocking up a transcript. Here's what I've done so far. Not sure I'll do any more
Bankruptcy Fraud

A couple was forced into foreclosure in Cincinnati, ohio.
At bankruptcy court.
Rod Class went in to talk with the attorney before the case.

In 1933, the United States went bankrupt.
Title 12 - bank and banking laws
s.95, s.95a, s.95b, s.411 - shows and declares the state of emergency
There is no money, no gold, no silver.
It is the obligation of the United States and the federal reserve note ('FRN') is supposed to stay within the federal reserve system.
Rob laid out the entire bankruptcy of 1933 to the attorney.
Showed from Lindberg from 1917; addressed the bankruptcy of the Civil War
And McFadden in 1932 came on to the floor of Congress and stated that the FRN was not money but a mere promise to pay

This is not me saying it.
This is congressional records..
When we handed this out to the attorney, ........ the attorney turned around 3 days later, told his clients that I did not tell them anything that they (attorney and judges) did not already know about the bankruptcy.

So we brought in the proof of the fraud that all mortgages are securitised.
Roger brought in the securitisation from ..... the Security Exchange Commission
He did the background on it.

The system shows that whenever you sign your name on a mortgage note or a loan or a VISA card, that signature is securitised because the banks are not giving you any money.
They are giving you credit and they are securitising off of your signature
This is what McFadden was talking about in 1932.
This is where he has a whole list of congressional records - about 4 pages - where it shows about your signature being securitised.

Well, this is what Roger got into.
So when we put this before this lawyer in Cincinnati, Ohio; first thing he wanted to do was resign because he could not represent Carl and Vera in the courtroom.
Because if he was to come in and says, "Your honour, the clients have evidence of the bankruptcy of the 1933. The banks are not lending any money, they are lending credit.", he would be disbarred.
So when we got into court that day
Roger and I both showed up. We were not supposed to be there.
Our summons never came after us
Our subpeonas never came after us
They withheld them.
We showed up anyhow.

Q: How did you know to be there?

RC: We had contact with Carl and Vera
We told them that we would be there regardless.
I came as a private attorney general
I came as a PAG
I hold a position through the United States Congress.
All of you hold the ability as a private attorney general, through the United States Congress.
Congress passed a law in 1866.
They turned around and passed it again in 1979.
All you have to do is understand the rules and regulations and statutes and the code on their side as it's their procedures
Once you understand it, you can walk intio the court and you can debate them

So when we walked into court that day, I was all dressed up and I was ready to do my part as the PAG.
The attornys came in on the other side.
We all walked up to the judge.
They ... asked the judge, " Mr Class to help represent the defendants here."
She said, "Mr Class, are you a bar card holder?"
I said, "No. I have Congressional jurisdiction. Do you want to see my credentials?"
I laid my credentials out and I showed her where it says 'Stamped by the Judiciary Committee, House and Senate site'
You want to see the Federal law that says I can?
Their ??? dropped
And so did the attorneys because they thought I was bluffing.
They didn't realise I had commercial documentation.
And I reminded that judge.
"You see that sign that's sitting behind you?"
She says, "Yes."
I said, "You see where it says 'District Court of Ohio'?"
And she says, "Yes."
I said, "You are an Article 3 court, under the Judiciary Act of 1789, the statutes at large.
You're under revised statutes.
You are under the Judiciary Act of 1911.
And you are also under Title 28 which is the judiciary judicial procedures.
Your procedures say you're an Article 3 court."
She looked at me and said, "You're not the bar court attorney, are you?"
I said, "I'm not."
She said, "Well, they've already got an attorney. We're not going to allow you to represent them in here."
So we all sat back and the attorneys pop up.
"Mr Class is sitting with them in the bar"
She asked Rob if he'd like to have a few minutes with me.
Rob is the attorney for Carl and Vera.
He said, "I need Mr Class's assistance to get the point across on what my clients are trying to iterate on your case.
I cannot present their case. Mr Class can."
As a private attorney general.
I can ... and I have the credentials to do it.
She gave us 15 mins recess.
When we came back in, I was allowed across the bar.
I had a stake out in the site.
So Rob went up before the judge and he pleaded and he begged with the judge.
We've got it on transcripts.
Four times he sat here and explained to the judge, "Your Honor, I cannot represent my clients because if I represent them, it is in conflict with my rules of court and my oath to this court and my duties to this court.
I cannot represent them in the ways they want represented."
The judge looked at him and says, "Are you telling me that this is your choice or is this your clients'?"
He said, "I cannot represent them because they know if I do, I can be disbarred."
She said, "You will be disbarred at Rule 11."
She warned him twice.
Rule 11 is where the attorneys have to comply with the oath to the court, not to the client.
And if they sit here inviolate, they can be disbarred from practising law.
So we have an open record where the judge stripped him twice under Rule 11 of disbarment.
Because if he tried to bring in the bankruptcy of 1933, and bring in the proof of the securitisation of what the banks did on this, he would be disbarred.
So whenever he was done talking, the attorneys of the bank showed up and say, "Your Honor, because of the conflict we have with the claimants over here, with Carl and Vera and their knowledge, no lawyer will ever take their case.
They'll never get a law firm to represent them. Because of how they're proceeding with this, they can never be represented by lawyers."
So the judge threw me out, get rid of the attorney.
The bank said they can't be represented because they can't expose the truth.
So this is what we're running into.
This is how Roger and I
What Roger had done - I bring in the law.
I show where the Congressional laws are at.
Roger brings in the paperwork from the Securities Exchange Commission ('SEC')
And when he shows where Bank A sold it to Bank B, and Bank B sold it to Bank C and all the way down the line; how much money .....


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Did You Really get A Loan? Did you really get a loan when you contracted to borrow money from the bank to pay for your home?

Or was it just an exchange (your note for cash), but the bank called it a loan? Or did two loans occur?The banker says, repay the loan because the bank lent you money. We simply ask one question: Should the one who funded the loan be repaid the money? Whether they answer YES or NO, the bank must forgive the loan and zero out the debt. That is the one question that they do not want to answer because the borrower funded the loan as proven by the bank's own bookkeeping entries.Before an attorney can sue for foreclosure, he must show that the defending party (you) breached the agreement. The attorney needs a witness to give testimony that there is an agreement and that the agreement has been breached.If Rich (as an example) testifies in court that there was a loan when he knew that there was only an exchange of equal value, Rich would be giving false testimony and would be called a false witness."

== ==



You do realize that is Pure MISINFORMATION, do you not?


The guy writing this is clueless


"Or was it just an exchange (your note for cash), but the bank called it a loan?"

What the Hell is that suppose to mean?

Of course,

A borrower signs a Promissory Note, promising to repay the Money:

The Borrower gets Cash for his promise. So what?


The Borrower has the Cash,

The Bank has nothing from the Borrower until he/she starts repaying.


It is only "an equal exchange" if the Money is repaid at a "fair" rate of interest.


Be careful, there are are some Misinformation Artists operating in the Financial arena:


+ They are trying to scam people, taking money for Misinformation, or

+ To escape from lawfully contracted debts


Either way, I regard them as morally INFERIOR to honest bankers- and there are some.


Banks have committed many crimes and injustices, but this SCAMMING by people who pretend

to understand banking is atrocious

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"And when he shows where Bank A sold it to Bank B, and Bank B sold it to Bank C and all the way down the line; how much money ....."

- post #28


So what?


If the promise (to repay a loan) has any value, of course it can be resold (if the documentation so permits)

Just as a share, or a bond, or a note is resold


This explanation, frankly, is pure garbage !!!!!!!


I don't like contaminating a Truth-oriented website, with such nonsense



You are looking the wrong place for banker misdeeds.

There are many, so let's stick to facts, not fantasies, if you please.


Take some time to understand reality....

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It is Time to explode a New Ager Myth.

I want to talk about Money Creation.

Rarely has there been a topic so widely misunderstood, and especially on Youtube Videos.

Please put aside your prejudices and your received knowledge, and listen carefully.

One New Ager, asked me with passion: What gives banks the Right to create money?

I answered: well you can create money too, and you have probably done it this week.

"What, are you crazy?" - he responded.

I said: No, you create money when you write a check.

Somehow. That shut him up. Possibly because it confused him, but maybe because

that was exactly the last bit of information he needed to finally grasp this complex subject.

This video will work using this basic concept to show how banks Really Create Money.

== ==

Let's start with the Half-Truth you hear everywhere on the web:

"Banks Create Money from thin air."

Yes, this is true. But it is NOT the end of the story.

Here's a myth that is not true: Banks do NOT get Free money, when you sign a loan.

You hear this craziness all over the web.

People say things like:

"The banks got the money for free using my signature, so I do not need to pay them back."

This is pure nonsense:

Where's the pot of Gold, the banks access to turn that promise into ready cash?

The only possibility is that someone else believes THE BORROWER's promise, and

is willing to pay money for the Note, based on the notion the borrower will make good.

If the borrower does not honor his/her promise, and refuses to pay the Note, there

will be a real loser at the end of the chain, who "bought" his Note.

So the guy who refuses to honor his Note, because the bank that made the initial

loan against it has resold it, is forcing a loss on someone, though it may not be that

quick-selling first banker.

Such thinking can get people who use this logic into trouble, even into jail.

So please listen carefully...

And try to understand what REALLY happens when banks create money.

XX But First... XX

Banks have three big advantages that YOU and your government confer on them:


1. You accept checks drawn on them as money - in payment of goods and services

2. You give them your money very cheaply as deposits

3. You and your governments tend to bail them out, when they get into trouble.

Without these three advantages, banks would not have their special status

+ creating money is like writing a check



Some Bozos will not take the time to understand the simple realities that exist in the world...

Living in Cone of Silence

Then: Such people deserve the darkness and the hardships that descend around them,

because they have not taken a small amount of time to unravel the minor complexities

around them. The tragic thing is that these idiots are sitting within a cone of silence,

inside a veil of half truths, which surrounds them and those around them.

If they wind up poor, in jail, or begging for money and drugs on the beach,

as some XXXXers have - then I reckon they deserve every ounce of their hardship,

simply because they have refused to switch on their minds, and understand some

small truths. The ideas the reject are not really complicated, they just take a little time.

Once people see that such people exist, and want to borrow money, the only reaction

can be: Do not lend them anything. And be careful about even giving them money:

They will not be grateful, or appreciate your sacrifice or you charity: Because they are

arrogant and childish deadbeats, who think charity is theirs BY RIGHT, and they deserve

what people give them, simply because they are alive - Not because of anything they

do in return.

"The Universe has responded to my appeal"

No, dumbass, it was not "the Universe", it was someone who took the time to listen to

your story about how you are in need, and make some sacrifice to help. Someone

sacrificed, so YOU would be better off. How can you be so ungrateful ?

If instead they say: Why don't I find someone I can help, and maybe the will give

me food or shelter in return for my help, then they will be far better off:

Living in a world of honorable sovereign human beings who provide free exchange,

rather than pretending to be in need, or helplessly staying in need, to gain charity.

As for a Job, or a Task, NOT JUST MONEY

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Here's a related comment on Money Creation from Jean Haines' Blog:


G- L- says:

You, and many others, do not really understand how Money Creation works – it seems that you only “get” Half of it – and the web is full of half-truths, unfortunately.


If we are going to battle the banking beast, we need to be fully informed. Yes, banks do “create money from thin air”, when they make loans. But so do YOU, when you write a check! And just as you have to have real money in your account (collected “good” Fed funds), to honor the cheque when it hits your account – so do the banks need real money when the proceeds are paid out. The big advantage the banks have is that they pay very little for deposits, and can make a big “spread” being the difference between their cost of Funds, and the (higher) interest rates they charge. They also have the ability to choose whom the lend to, and at what rate. Thus, they can favor their “better” customers with lower interest rates, and larger loans, when money is tight. That is a great advantage for those who can still borrow when assets are cheap.



> http://jhaines6.wordpress.com/2014/07/16/did-the-other-shoe-just-drop-big-banks-hit-with-monster-250-billion-lawsuit-in-housing-crisis/#comment-284538

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Exposing the Money Creation Fantasy
I have been wanting to do a Video on money creation for a long time.
Now seems to be a good moment.

And I will pick up most of the content from a whistleblower website called Quatloos.com
There's a link in the notes, and this is based on a comment from a poster called Daily Planet,
with a few edits of my own - to make it more clear:

So I am going to read a Comment by Daily Planet dated July 26th from the QuatLoos website. I have already done some videos about Ron Van Dyke, so his name should be familiar to viewers of my channel -> AND HERE GOES... :

Ron Van Dyke is telling everybody, that the Current Financial system is a Fraud.
"It is based on Human ignorance" he says ...

With this in his mind, he's done a podcast this week saying he is

The VIDEO was dated July 23rd, 2014

He says the current banking system is a FRAUD...

And why does he thing this? He gives two main reasons:

+ First: "Fraud was the primary component of a Lending agreement"
(Hmm. Could he mean that he failed to read the fine print?)

+ Second, because lending arrangements are "based on the concept that the borrower giving the lender something of value

that the banks then turn around and capitalise on"
(What is heavens name is he talking about here?)

Perhaps he means, as one of the comments below his Video explained:
"The borrowers signature is the value that allows the bank to create the money to loan that value back to the borrower. not an equal value exchange. Banks do not loan their own money...the promise to pay allows them to create money electronically."
- that comes from one of Ron's posters

Okay. I have heard this thinking before. The problem is... there's flawed thinking here.

There is a common misconception by some New Agers - that banks somehow get access to Free Money by lending money, and a borrower's signature on a Loan agreement allows them to access a pot of free money somewhere. But they cannot tell you where and how that fantasy Free money system actually works.

The simple reality is that the Borrower gets the Money from the bank UPFRONT, usually on the day he signs the Loan agreement. So the bank has performed its end of the bargain. Performance by the borrower comes later. Loan money is handed over by the bank, usually in the form of a cheque in the name of, say, a Seller of a Home. In exchange for the money, the borrower gives a PROMISE TO REPAY. The bank performs on day one. The borrower may or may not perform later. The exchange of that vital promise is somehow forgotten by some New Agers. They also ignore the reality that the bank will suffer a real loss if the borrower fails to honor his/her promise to repay. (Sure, some will say: but the bank can securitise, or resell that promise-to-repay. Yes they can, but if they do that, then someone down the line who has bought that promise, will suffer the loss. The remoteness of the loss does not make the loss any less real, if the borrowed money is not repaid.)

In RVD's World of Unreal Economics, it is okay to be a deadbeat, because banks did not tell you that they might create the Loan first, when you sign the agreement, and then fund it a little later. And fund it they must, because the cheque they write per the borrowers instructions in the loan will eventually be returned to the bank for payment and at that moment the bank will have to payout good Fed Funds. And the funding of the loan, will need a deposit, a real deposit, which the bank will have to attract from someone. In other words, all loans need to be funded or resold. And there is no free money, not even for the bank. They still need a deposit to back the loan asset on their balance sheet. If they have resold the loan through securitization, the mortgage payments will go to someone else, the holder in due course, instead of the lending bank. There's no free lunch, no free money, and no fraud.

Maybe someone should drag Dear-Old-Ron off to a police station for a few hours so he can ponder for a while, until he understands that if you borrow money and break your promise to repay it, you have broken a promise, and defaulted on a lawful contract. When you signed the contract, you gave the lender recourse to whatever provisions are in the loan contract. In what sense is any of this a fraud? The lending process has always been like this, even though some like Ron may not have understood how it works. Why should it matter a syntilla, why and how the bank funded its loan? If you have a better source for the money than the bank, why not access it yourself. But I can assure you that there is no fantasy pot of gold, which is handing out free money to the bank when it lends you money.

Some weeks ago, Mr Van Dyke twisted his brain to try and put an possible adulterous relationship onto a high moral ground. His youtube channel friends were confused, and did not get his bizarre justifications. Now, he has twisted his brain up again to try to justify not repaying lawful debts. This is not a very good example for others on how to behave honorably. Yet some of his YouTube viewers seem to be applauding him for the mental gymnastics he is using in trying to wriggle out of his mortgage contract. Perhaps, they too have some debts that they wish to avoid repaying. Don't we all?

I am not against debt forgiveness. Indeed, I think some amount of debt forgiveness in our present time deserves thorough consideration. But it needs to be made around sounder principles, not using some half-baked, and half-understood idea about how money is created. Bad-mouthing banks for bad behavior such as buying politicians may be a normal thing these days. But bad-mouthing does not give anyone the automatic right to be a deadbeat. Honorable men and women do not behave that way.

WELL OKAY - That was from Daily Planet on QL- with a few edits of my own.
I agree with most of the comment. I like the fact that it has addressed the New Age fantasies surrounding Money Creation. I certainly agree with Daily Planet that banks do not get Free Money when they make a Loan. They have to fund the loans on their balance sheets. They are blessed they can do it very cheaply because of all the advantages that banks have. (And maybe THOSE advantages need to be withdrawn, or reduced. But that is another question for another day.) The Main Point here is about Money Creation and the lack of free money that banks do not have to repay. If you fail to pay a bank back, they will suffer a real loss. All the silly notions about Money creation you can hear on the web, do not absolve borrowers from honoring their promises and meeting the legal requirements they have to repay loans

There are many problems with the way that banking works. And I too, would like to see an End to the Fed. But let's focus on real issues, and a grown up understanding of Money Creation, not made up fantasies.

As always, respectful comments are welcome on my videos. Thanks for listening

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This is not accurate. Not in the long run. Not for more than a few hours, or a day or two.

Yes, They do "create money out of thin air" by making a loan, at Moment 0.

But they will still need real funding, to cover the Loan, when the proceeds of the loan are

paid out by the bank.


Let me explain more slowly...:


At moment 0, there's:

+ A Loan asset on the bank's balance sheet, and

+ The bank has simultaneously created a deposit in the borrower's account, so

+ The loan is funded by the deposit in the borrowers account

+ The borrower's signature (ie promise to repay) allowed both the Loan and the Deposit

to be created by the bank.

The EXCHANGE going on here is: A Loan has been made, in return for the borrowers

Promise to repay, That promise is reflected in the borrower's signature on the loan agreement.


You do the same thing, if you write a cheque to buy goods, let's say a Television,

which is beyond the balance in your account, in the morning (moment 0), and

then put more cash in your account in the afternoon to cover the cheque you wrote.


So at Moment 0, and maybe for a few hours, or perhaps a day or two, the Loan is self-funding.

But it will not stay that way. You do not borrow money, and pay interest on it, to keep the

loan proceeds sitting in the bank. You have a purpose for the loan, such as to buy a house.

So good funds will have to leave the bank eventually.


Moment 1:

The bank gives you a cheque, written to the name of the Seller of a home, and that cheque

is normally a "Cashiers cheque", which means the risk of encashment to the Home Seller is the

bank's credit risk, not credit risk on your individual account. You hand the cheque over

and get the keys to your new home. Now there's a loan, and the bank has to be ready to make

good on that cheque - ie payout good funds when it is presented. They will need a longer term

source of funding for the cheque they have handed over.


Moment 2:


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You are tending to over emphasise the hard money side of the equation while the 'truthers' are totally ignoring it.


The big banks have accounts with each other, so when the loan is paid out of the creating bank it is likely to only require that the creating bank pays interest. The banking system has still therefore created a loan without needing any money to do it other than the ability to be solvent where necessary, have sufficient capital, and for example have lines of credit to cover the eventuality it needs to borrow to fund the loan.


So if two banks decide to fund each others loans and only approve loans for each others customers who buy from the other bank - eg they allow those particular mortgages only, they are funded for these loans.


However at the end of the day a bank is just an ordinary business with no special powers that an individual would possess if there was no government to prevent ordinary indiviiduals running an honest business. Eg you could have a substantial farm say, almost no cash, be highly solvent as necessary and manage a loan business just like a bank. Banks of course have one way or another a vast amount of capital as none cash items - just like the farm.


The bank fraud saga is like the free energy saga. People are gullible and evidently people are wanting to believe they can change their lives if the system changes while meanwhile essentially wasting their lives dreaming.

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You have a point that we can agree with:


Money creation looks different, if you look at the system as a whole rather than an individual bank.


From the individual Lending bank's point of view, they will need to attract a Deposit to cover the Loan proceeds when they are sent out - so they have a requirement for real funding - and I suppose that is what you are calling "hard money."


But from the point of view of the banking system, that new money created with the loan represents a real new rise in the Money supply, for the banking system as a whole.


Fpr example:

If the Lending bank is also the bank for the House Seller, then the money may just go out of one account and into another within the same bank. So as long as it stays there, in the House sellers bank account, it can be used to fund the Loan. But the bank may have very little control over how long it will stay, so it had better have some real funding lined up.

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You have a point that we can agree with:


Money creation looks different, if you look at the system as a whole rather than an individual bank.


From the individual Lending bank's point of view, they will need to attract a Deposit to cover the Loan proceeds when they are sent out - so they have a requirement for real funding - and I suppose that is what you are calling "hard money."


But from the point of view of the banking system, that new money created with the loan represents a real new rise in the Money supply, for the banking system as a whole.


Fpr example:

If the Lending bank is also the bank for the House Seller, then the money may just go out of one account and into another within the same bank. So as long as it stays there, in the House sellers bank account, it can be used to fund the Loan. But the bank may have very little control over how long it will stay, so it had better have some real funding lined up.


The lending bank only requires prearranged lines of credit to be funded.


My point overall though is that bank lending is very little different to a person writing a cheque. One way or another you and the bank will need to be sure that you or they can handle whatever happens next.


We are probably saying the same thing? Some real funding though sounds like they absolutely need to have in their possession something real. They might do or they might not. The nature of banking is a network of relationships where banks have accounts with each other.


A bank loan is essentially a promise or at least this is how it begins life. All the bank needs is the promises of other banks. Plus it has the promise of the central bank.

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