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The Money System

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I'm interested in the monetary system, but there seems to be a load of sketchy information around, so it's hard to know what to believe.

 

I've watched Zeitgeist 1+2 and Money is Debt cartoons, but people have warned me off these sources. For a more rigorous perspective I got hold of a copy of Macroeconomics by Mankiw, which does have a chapter on Fiat Money and Inflation, and explains its existence as being for convenience, and for Seigniorage. Also that inflation helps labor markets. Obviously it doesn't go into theories about the origin of the Fed, or Rothchild/Illuminati type stuff, or central banks enslaving humanity, so how far can this really be believed?

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I'm interested in the monetary system, but there seems to be a load of sketchy information around, so it's hard to know what to believe.

 

I've watched Zeitgeist 1+2 and Money is Debt cartoons, but people have warned me off these sources. For a more rigorous perspective I got hold of a copy of Macroeconomics by Mankiw, which does have a chapter on Fiat Money and Inflation, and explains its existence as being for convenience, and for Seigniorage. Also that inflation helps labor markets. Obviously it doesn't go into theories about the origin of the Fed, or Rothchild/Illuminati type stuff, or central banks enslaving humanity, so how far can this really be believed?

 

Modern Money Mechanics (Federal Reserve Bank of Chicago)

http://www.rayservers.com/images/ModernMoneyMechanics.pdf

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Modern Money Mechanics (Federal Reserve Bank of Chicago)

http://www.rayservers.com/images/ModernMoneyMechanics.pdf

 

The original is easier to read in parts i think and has some of the smaller type other versions dont have.

 

http://upload.wikimedia.org/wikipedia/comm...y_Mechanics.pdf

 

The video Money is debt is misleading, but Zeitgeist undoubtely reflects a fact of life about our world.

 

The main problem with modern banking is lack of regulation as it applies to bank leverage where rich and poor have demanded more regardless of the longer term costs.

 

Many of the poor are for example really believing that the video money is debt is all true and they could have this same machine for their own benefit along the lines of social credit and so forth. But fundamentally all private banks are margin banks which produce money via a process for their customers use where principally they are monetizing customer property to produce privately created money for savers and buyers use where the privately created money forms most of the money in the economy but where this created money is only for each banks customers use.

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Maybe have a look at Bill Still's work including Money Masters and the Secret of Oz - well worth a watch and Bill is sometimes on these boards so you can ask him any questions you may have.

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Maybe have a look at Bill Still's work including Money Masters and the Secret of Oz - well worth a watch and Bill is sometimes on these boards so you can ask him any questions you may have.

 

I had a look at the money masters site:

 

http://www.themoneymasters.com/

 

end the unjust practice of private banks creating money as loans (i.e., fractional reserve banking).

 

That is just the same baloney produced by the producers of the video 'money as debt'.

 

Even a child can create just private money using sweets as the asset backing the money and then create further private money using the security of any other asset to back the money where this money has value and can be used to buy things in the classroom. Why must banks be prevented from doing what a child can justly do??

 

These guys have lost the plot!

 

The Monetary Reform Act authored by Patrick Carmack in 1996 and available on this website is a model for such monetary reform, which includes the related solution of paying off the existing US National Debt of over $12 trillion dollars while ending bank money creation by raising the reserve ratio banks are required to maintain from 10% to 100%, thereby absorbing the otherwise inflationary $12 trillion. Yes, we can pay off the National Debt without inflation.

 

Haha! End inflation and send gold back to about 5 dollars an ounze.

 

 

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I'm interested in the monetary system, but there seems to be a load of sketchy information around, so it's hard to know what to believe.

 

I've watched Zeitgeist 1+2 and Money is Debt cartoons, but people have warned me off these sources. For a more rigorous perspective I got hold of a copy of Macroeconomics by Mankiw, which does have a chapter on Fiat Money and Inflation, and explains its existence as being for convenience, and for Seigniorage. Also that inflation helps labor markets. Obviously it doesn't go into theories about the origin of the Fed, or Rothchild/Illuminati type stuff, or central banks enslaving humanity, so how far can this really be believed?

 

http://mises.org/Books/mysteryofbanking.pdf

 

fractional reserve banking - rothbard

 

the origin of money and its value

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I had a look at the money masters site:

 

end the unjust practice of private banks creating money as loans (i.e., fractional reserve banking).

 

That is just the same baloney produced by the producers of the video 'money as debt'.

 

Even a child can create just private money using sweets as the asset backing the money and then create further private money using the security of any other asset to back the money where this money has value and can be used to buy things in the classroom. Why must banks be prevented from doing what a child can justly do??

 

The Money Masters video is actually a very good introduction to the US monetary system and its history. Yes Bill does have his own agenda and bias and it's important to be aware of that but if you are trying to get a good overview of how the system developed, the key players, the key events i.e. Amercian civil war/Jekyll island/US fed creation then it's a great recap and well presented.

 

As for preventing banks from doing what a child can i would have thought that's obvious. A child and their friends can of course agree to use sweets as barter for good and services... a government and related central banks can do exactly the same, call it legal tender, force you to use it (i.e to pay taxes) and then fundamentally change the nature of the underlying asset without your knowledge or awareness.

 

To a child a sweet is still a sweet, if it changes it's size/shape/color or sweetness the kids would immediately know and might reject it i.e. 'but that sweet is half the size of the one i gave you last week'. A dollar is not so easy to identify, as its purchasing power, and therefore relative value, can be changed in many ways without any impact on the note in your pocket or the numbers in your bank account.

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The Money Masters video is actually a very good introduction to the US monetary system and its history. Yes Bill does have his own agenda and bias and it's important to be aware of that but if you are trying to get a good overview of how the system developed, the key players, the key events i.e. Amercian civil war/Jekyll island/US fed creation then it's a great recap and well presented.

 

As for preventing banks from doing what a child can i would have thought that's obvious. A child and their friends can of course agree to use sweets as barter for good and services... a government and related central banks can do exactly the same, call it legal tender, force you to use it (i.e to pay taxes) and then fundamentally change the nature of the underlying asset without your knowledge or awareness.

 

To a child a sweet is still a sweet, if it changes it's size/shape/color or sweetness the kids would immediately know and might reject it i.e. 'but that sweet is half the size of the one i gave you last week'. A dollar is not so easy to identify, as its purchasing power, and therefore relative value, can be changed in many ways without any impact on the note in your pocket or the numbers in your bank account.

 

You either obfuscating or failing to understand me. The claim was of unjust fractional reserve banking that has to be ended by requiring banks to end FRB and instead become islamic banks where there are no true islamic banks anywhere in the world!!

 

Gold backed money using FRB would be like sweets. Is that automatically unjust??

 

The moneymasters people are either nuts or have some agenda. The following is insane:

 

solution of paying off the existing US National Debt of over $12 trillion dollars while ending bank money creation by raising the reserve ratio banks are required to maintain from 10% to 100%, thereby absorbing the otherwise inflationary $12 trillion. Yes, we can pay off the National Debt without inflation.

 

These guys are talking about the mother of all deflations to take gold back to about one dollar an ounze. It is insane and lacking any comprehension of modern realities

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You either obfuscating or failing to understand me. The claim was of unjust fractional reserve banking that has to be ended by requiring banks to end FRB and instead become islamic banks where there are no true islamic banks anywhere in the world!!

 

Gold backed money using FRB would be like sweets. Is that automatically unjust??

 

The moneymasters people are either nuts or have some agenda. The following is insane:

 

solution of paying off the existing US National Debt of over $12 trillion dollars while ending bank money creation by raising the reserve ratio banks are required to maintain from 10% to 100%, thereby absorbing the otherwise inflationary $12 trillion. Yes, we can pay off the National Debt without inflation.

 

These guys are talking about the mother of all deflations to take gold back to about one dollar an ounze. It is insane and lacking any comprehension of modern realities

 

I don't agree with the 'plan' as proposed on the site. But that doesn't stop the video from being worthwhile.

 

The plan as described is:

 

The Two Step Plan to

National Economic Reform and Recovery

1. Directs the Treasury Department to issue U.S. Notes (like Lincoln’s Greenbacks; can also be in electronic deposit format) to pay off the National debt.

 

2. Increases the reserve ratio private banks are required to maintain from 10% to 100%, thereby terminating their ability to create money, while simultaneously absorbing the funds created to retire the national debt.

 

These two relatively simple steps, which Congress has the power to enact, would extinguish the national debt, without inflation or deflation, and end the unjust practice of private banks creating money as loans (i.e., fractional reserve banking). Paying off the national debt would wipe out the $400+ billion annual interest payments and thereby balance the budget. This Act would stabilize the economy and end the boom-bust economic cycles caused by fractional reserve banking.

 

Now i understand the intention here, which is to put a cap on the ability of banks to debase currency through overlending during credit expansion phases and limit banking risk through removing credit ratio's that undermined much of the investment banking sector who were trading at 40/50 to 1 or more in terms of positions to assets.

 

And it's quite right that this would reduce the level of impact of economic cycles in the current model substantially, FRB does have fundamentally inherrent risks and allows the banks to be able to make vast profits based on legalised fictional accounting.

 

Fundamentally i don't think it's right or the way to go, but don't judge a 2hr video on a few summary statements from the website. You might not agree with it but the OP asked about the 'money system' not about what we are goign to do to fix it and imho the video is still worth watching.

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I'm interested in the monetary system, but there seems to be a load of sketchy information around, so it's hard to know what to believe.

 

I've watched Zeitgeist 1+2 and Money is Debt cartoons, but people have warned me off these sources. For a more rigorous perspective I got hold of a copy of Macroeconomics by Mankiw, which does have a chapter on Fiat Money and Inflation, and explains its existence as being for convenience, and for Seigniorage. Also that inflation helps labor markets. Obviously it doesn't go into theories about the origin of the Fed, or Rothchild/Illuminati type stuff, or central banks enslaving humanity, so how far can this really be believed?

A lot of talk about the "monetary system" tends to be overly theoretical. It proceeds from the idea of an abstract economy, and then how that economy would be best optimized with which system of money, and then with money often only conceived of as means of exchange. Yet I think this is a completely wrong approach. Questions about the monetary system should always proceed from practical concrete considerations [a bit like politics] because money primarily performs a function, or a set of functions. And then rather than an abstract model of an economy in mind, we'd be thinking about how money could actually work within an international setting involving a myriad of economies. Thought would be tied down to realities... rather than flying away like the statues of Daedalus.

 

Though I don't think there is such a thing as natural money [with money being essentially a social institution], I do think that governments will ultimately be constrained to go back to some kind of gold standard... gold being the strongest symbol of money and cutting across all cultures. The power of science is not that it is true... but that it works. The same kind of practical logic should apply to the monetary sphere imo. Mathematicians, models, and money don't mix too well.

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I don't agree with the 'plan' as proposed on the site. But that doesn't stop the video from being worthwhile.

 

The plan as described is:

 

 

 

Now i understand the intention here, which is to put a cap on the ability of banks to debase currency through overlending during credit expansion phases and limit banking risk through removing credit ratio's that undermined much of the investment banking sector who were trading at 40/50 to 1 or more in terms of positions to assets.

 

And it's quite right that this would reduce the level of impact of economic cycles in the current model substantially, FRB does have fundamentally inherrent risks and allows the banks to be able to make vast profits based on legalised fictional accounting.

 

Fundamentally i don't think it's right or the way to go, but don't judge a 2hr video on a few summary statements from the website. You might not agree with it but the OP asked about the 'money system' not about what we are goign to do to fix it and imho the video is still worth watching.

 

The governments debt is in US dollar denominated assets where upon maturity the US has to provide US dollars to the holder. Their 'solution' is to debase US dollars by printing the national debt amount of 12 T while demanding the private banks unwind all of their loans and end the privately held savings that are not held as US dollars.

 

To achieve this all the US has to do is default and issue a 12 trillion dollar note and hand it to the various foreigners who can all wonder at its amazing value.

 

The private banks money owned by their savers is in the banks private bank money and unrelated to the governments US dollars.

 

They cannot possibly be serious. It has to be a wind up of some kind.

 

 

 

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A lot of talk about the "monetary system" tends to be overly theoretical. It proceeds from the idea of an abstract economy, and then how money should be optimized as a means of exchange. Yet I think this is a completely wrong approach. Questions about the monetary system should always proceed from practical concrete considerations [a bit like politics] because money primarily performs a function, or a set of functions. And then rather than an abstract model of an economy in mind, we'd be thinking about how money could actually work within an international setting involving a myriad of economies. Thought would be tied down to realities... rather than flying away like the statues of Daedalus.

 

Though I don't think there is such a thing as natural money [with money being essentially a social institution], I do think that governments will ultimately be constrained to go back to some kind of gold standard... gold being the strongest symbol of money and cutting across all cultures. The power of science is not that it is true... but that it works. The same kind of practical logic should apply to the monetary sphere imo.

 

Gold ratios can be endlessly messed with and suspended.

 

Money is a human abstraction and will forever remain so. It is therefore by its nature a politically alterable beast. Anybody who really worries about such things can easily have assets rather than this politically controllable money. You cannot apply science to human beings to require them to be like machines. Once again you get stuck in the virtues of the 'correctness' of logic, where what is true simply exists regardless of whatever humanly observable logic might appear to exist. You might as well reason that communism is to going to end poverty using the same kind of humanly created logic as fact.

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More BS to ramp commodity based money where a fractional reserve bank is forbidden by law to operate and where only islamic banking is allowed.

 

Apparently if an unemployed man gets overdraft deposits for himself from an ATM at 6% interest and lends the money to his friends at 7% in return for taking collateral on saleable items of value, or he borrows from his friends at 5% who have stuff to sell to the rest of his friends he is being unnatural. After all we are led to believe borrowing money and not repaying it is an entirely natural act!

 

No wonder there is a crisis.

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Gold ratios can be endlessly messed with and suspended.

 

Money is a human abstraction and will forever remain so. It is therefore by its nature a politically alterable beast. Anybody who really worries about such things can easily have assets rather than this politically controllable money. You cannot apply science to human beings to require them to be like machines. Once again you get stuck in the virtues of the 'correctness' of logic, where what is true simply exists regardless of whatever humanly observable logic might appear to exist. You might as well reason that communism is to going to end poverty using the same kind of humanly created logic as fact.

For an economy to work, you need a monetary system that works.

 

If everyone decided to buy real assets rather keep some of their wealth in money [save], the economy would grind to a halt.

 

Equally, if everyone decided to save all their money [liquidity trap] the economy would grind to a halt.

 

Therefore, there has to be a balance of sorts in money, of people's perception towards money. Hence it has to have an element of "store of value" [considered valuable in itself, and worth keeping for a later date] besides being a means of exchange.

 

This balance is relatively easy to achieve on gold because gold is considered valuable in itself... and then, being money and a mere means to an end, will be swapped for real goods [or representative currencies will] when it suits. However, in our present system, this balance is increasingly looking unstable and on a knife-edge, with hyper-inflation on the one side and a deflationary liquidity trap on the other.

 

Savers and investors are spending under duress [inflation expectation] in an environment with very real deflationary risk. I think the likeliest outcome here is continued volatility/ instability, which obviously harms the economy. In the end, I reckon they will sacrifice growth for stability [it was only hyper and unsustainable anyway], and go back on gold.

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For an economy to work, you need a monetary system that works.

 

If everyone decided to buy real assets rather keep some of their wealth in money [save], the system would grind to a halt.

 

You might as well argue that the world would be in trouble if the sun stopped saving energy for future use.

 

The fact is not everybody wants to consume today and some do like the idea of an income from money that is unused by them.

 

But if saving creates a problem then a government requires a method to spend anyway. And one way to do that is to lower interest rates and devalue money.

 

Gold money is the deflationists wet dream. Until of course it is confiscated or ratios are altered.

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But if saving creates a problem then a government requires a method to spend anyway. And one way to do that is to lower interest rates and devalue money.

That's the theory. Let's see how it works out in practice. Lowered interest rates are having the effect of getting savers to spend their deposits on property. Fiscal measures have got investors worried, and out spending their money on stuff. But I think it's still too soon to tell whether it will be successful in devaluing the currencies. With all the deflationary risk hanging over the market [the sword of D :) ] it wouldn't take much for a deflation scare and then back to square one... perhaps worse.

 

I suspect the plan [if their is one] is to wipe out a lot of wealth, and rake a lot of money of the table.

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So you steal my words and force your own upon me.

 

And it seems you want to impose your insane government of Von Mises loonies upon me too.

 

:D

 

 

you can do what you want I want to impose nothing on you

 

in return dont impose anything by force on me thanks

 

collectivism fails in the long run - a fact that we are in the process of proving yet again

 

 

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That's the theory. Let's see how it works out in practice. Lowered interest rates are having the effect of getting savers to spend their deposits on property. Fiscal measures have got investors worried, and out spending their money on stuff. But I think it's still too soon to tell whether it will be successful in devaluing the currencies. With all the deflationary risk hanging over the market [the sword of D :) ] it wouldn't take much for a deflation scare and then back to square one... perhaps worse.

 

There is undoubtedly one hell of a mess and so far both deflation and hyperinflation have turned out to be exstremist theories and i would guess that many people are really annoyed their own pet ideas have not so far panned out quite as planned. On the other hand if anybody sold their houses and put half a million quid into gold i imagine they will not be too depressed!

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you can do what you want I want to impose nothing on you

 

in return dont impose anything by force on me thanks

 

collectivism fails in the long run - a fact that we are in the process of proving yet again

 

You stole my words to suit your own purposes. Now you want to pretend you impose nothing upon me.

 

All i have asked you to consider is the unnaturalness of what you are claiming is natural.

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You stole my words to suit your own purposes. Now you want to pretend you impose nothing upon me.

 

All i have asked you to consider is the unnaturalness of what you are claiming is natural.

I didnt say those were your words - i stole nothing

 

I am saying forcing people to use any currency is unfair and it allows a certain group of people to benefit at the expense of everybody else

 

LINK

 

Within the boundaries of a state, the legal order usually has an influence on the money-character of commodities which, though small, cannot be denied. The origin of money (as distinct from coin, which is only one variety of money) is, as we have seen, entirely natural and thus displays legislative influence only in the rarest instances. Money is not an invention of the state. It is not the product of a legislative act. Even the sanction of political authority is not necessary for its existence. Certain commodities came to be money quite naturally, as the result of economic relationships that were independent of the power of the state.

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I didnt say those were your words - i stole nothing

 

I am saying forcing people to use any currency is unfair and it allows a certain group of people to benefit at the expense of everybody else

 

LINK

 

You replaced my words with your own

 

You might as well say you are not stealing my home if you replace me with yourself.

 

And for more idiot logic you want to tell me it is unnatural to have fractional reserve banking because you want to be able to profit as a saver and to hell with everybody else.

 

And then you want to ramble on about the failure of the collective while promoting the collective that is the von mises institute.

 

And it seems it all boils down to you and your other individuals who think that life is unfair and you are not getting what everybody else is getting.

 

 

 

 

 

 

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