The Money As Debt Video

[nedflanders]

i watched the money as debt video as linked to on another thread on thaivisa

it totally surprised me but i dont follow one thing about the money creation process through fractional reserve banking. if banks can create new money purely from the borrowers promise to repay the loan, how is it a problem when they default? i mean if money can be created like this how does it have any real value? of course the bank loses the interest payments which will be bad for profits.

but if the money didnt really exist in the first place, apart from the 1/9 that was in the central bank. if the bank loses it by the borrower defaulting whats the problem? for the bank and the wider system. no physical losses were incured

just trying to get my head around it. not saying its ok for people to not pay their way

[unomi]

ron paul addressing the problem with the Fed.

[Kf6vci]

i watched the money as debt video as linked to on another thread on thaivisa

it totally surprised me but i dont follow one thing about the money creation process through fractional reserve banking. if banks can create new money purely from the borrowers promise to repay the loan, how is it a problem when they default? i mean if money can be created like this how does it have any real value? of course the bank loses the interest payments which will be bad for profits.

but if the money didnt really exist in the first place, apart from the 1/9 that was in the central bank. if the bank loses it by the borrower defaulting whats the problem? for the bank and the wider system. no physical losses were incured

just trying to get my head around it. not saying its ok for people to not pay their way

Not sure I understand what you are asking. The "created" money is real enough, like aperson's debt is real enough. A bank might forclose upon a house or repo a car etc. Trust me, banks are not known for being lenient. At least, in case you file for Chapter 7 or chapter 13 bankruptcy in the U.S. you are committing business suicide. for years, forget all hopes of getting another loan.

For you, you better take 100% of that generated money seriously.

[teatree]

i watched the money as debt video as linked to on another thread on thaivisa

it totally surprised me but i dont follow one thing about the money creation process through fractional reserve banking. if banks can create new money purely from the borrowers promise to repay the loan, how is it a problem when they default? i mean if money can be created like this how does it have any real value? of course the bank loses the interest payments which will be bad for profits.

but if the money didnt really exist in the first place, apart from the 1/9 that was in the central bank. if the bank loses it by the borrower defaulting whats the problem? for the bank and the wider system. no physical losses were incured

just trying to get my head around it. not saying its ok for people to not pay their way

The debt based money system is the reason why the dollar is worth something like 5 cents of the dollar of less than a hundred years ago. Inflation is a form of tax.

[nedflanders]

i take the money seriously, if society says it has value and has laws to punish bad debtors tthen it becomes real. thats not my question. not from my personal point of view but from the point of view of banks and financial system

what i was asking is in the example of say lehman bros who went bankrupt. if a bank created brand new money from the borrowers intent to repay. then the borrower defaults. if the money was created by the bank, how is the bank any worse off due to the non payments? the money didnt exist until the loan was issued

[whatsoever]

i watched the money as debt video as linked to on another thread on thaivisa

it totally surprised me but i dont follow one thing about the money creation process through fractional reserve banking. if banks can create new money purely from the borrowers promise to repay the loan, how is it a problem when they default? i mean if money can be created like this how does it have any real value? of course the bank loses the interest payments which will be bad for profits.

but if the money didnt really exist in the first place, apart from the 1/9 that was in the central bank. if the bank loses it by the borrower defaulting whats the problem? for the bank and the wider system. no physical losses were incured

just trying to get my head around it. not saying its ok for people to not pay their way

As you understand, when a bank takes a deposit of say $100 then it can make loans to the tune of $900 eg.( its a bit more complex - but lets keep it simple) However, it must then pay the central bank, the bank to bank set interest rate on the value of the loans. Therefore if these loans default the bank cannot pay the central bank its interest - also it can't trade the loan gaurantees as securites. If it had for eg. 9 x $100 mortgages, which are debt with the promise to pay interest, then these are the banks assets which it can trade. If they default then the system doesn't work. In actual fact the banks can actually end up loaning up to 60 times the original $100 deposit.

In a nutshell the banks dont lose what they had, they lose what they hoped to get! Infact they can't lose -ever - because when a mortgagee defaults the bank can take the property - so it now owns property for free. Win, win, win

[12DrinkMore]

i take the money seriously, if society says it has value and has laws to punish bad debtors tthen it becomes real. thats not my question. not from my personal point of view but from the point of view of banks and financial system

what i was asking is in the example of say lehman bros who went bankrupt. if a bank created brand new money from the borrowers intent to repay. then the borrower defaults. if the money was created by the bank, how is the bank any worse off due to the non payments? the money didnt exist until the loan was issued

Here is my explanation. Maybe it helps?

To simplify the whole thing say we have a banking system consisting of bank B and three customers C1, C2 and C3.

There are two sorts of money, "central bank money" created by the central bank, and "commercial bank money" created by the commercial banks.

Bank L starts operation with deposits of THB 50 of central bank money and THB 50 from customer C3. using fractional reserve banking and a regulatory authority saying that 10% of the bank's liabilities have to be covered by these deposits, the bank can now lend out up to THB 900, creating up to THB 900 of "commercial bank money".

If B lends this THB 900 to customer C1, then customer C1 has a debt of THB 900 and assets of THB 900. If C1 does nothing with this money, then it will usually stay in the bank B in C1's account. So even if C1 disappeared, B's accounting is balanced as the outstanding loan is covered by the balance of C1's account. The commercial money simply disappears again (This is the situation you are considering)

However normally C1 will want to do something with this money, like earn more money with it. Along he goes to customer C2 and spends the THB 900 on an asset 'TW' which he hopes will increase in value and maybe provide an income. C2 takes the THB 900 and puts it into his account at B.

So B is happy, its assets/liabilities balance out. C1 is sitting on TW, which is appreciating in value and C2 and C3 are happy because they have cash "securely" on deposit at B.

Now the shit hits the fan and suddenly the asset TW spells out "Toxic Waste" and is worth zilch. C1 has no assets and no income to service the debt. B1 forecloses the loan and finds that there is nothing in the kitty. So now B's balance sheet is a disaster, the bank has liabilities of deposits THB 900 to customer C2, THB 50 to the central bank and THB 50 to customer C3 and assets of only the initial THB 100.

The bank goes insolvent and the depositors only receive 10% of their "secure" deposits and the bank's shareholders receive nothing.

Edited November 2, 2008 by 12DrinkMore

[unomi]

nice vid

[nedflanders]

thanks i get it now, cash gets spent and passed around to others

[teatree]

thanks i get it now, cash gets spent and passed around to others

or rather, money is created out of nothing by the banks and then passed around to others.

[Mattchu9999]

Who killed Lincoln? Kennedy?

Focusing on the US, there have been 3 central banks owned by the Rothschilds.

The first was called "Bank of the United States" and was completely controlled by the Rothschilds, this bank's charter was defeated by President Andrew Jackson in 1832.

President Jackson was so celebrated for this achievement that on his tombstone is engraved the words:

"I killed the bank"

The second central bank was again named "Bank of the United States" and was chartered during President Buchanan’s presidency as he was a southern state supporter.

The southern states seceded as their cotton crop was intimately tied to England’s cotton industry and thus was the gateway for the Rothschild’s to assert their influence over America.

Shortly thereafter, to the Rothschild’s disdain, Abraham Lincoln was elected president. He needed funding for the war between the north and south and approached the "Bank of the United States" for a loan.

The bank offer d their loans to President Lincoln…at 24% to 35% interest, making it impossible for him to repay or borrow for that matter.

So Lincoln authorized and printed constitutionally authorized interest free money and ordered it to be considered as legal tender. Over $400,000,000.00 of this currency was issued.

Lincoln was successful in ending the charter of the "Bank of the United States" with the help of Russian Czar Alexander the second, whom was at the time the only other major country to resist the Rothschild’s banking influence. He believed in defeating their efforts so much that he sent some of his warships to dock in New York’s harbor and stated any attack by the south would result in his country fighting for the North of the United States.

Shortly thereafter, Mr. Booth killed Mr. Lincoln.

Fast forward to 1913

President Woodrow Wilson enacted the Federal Reserve Banking act, establishing the current version of the Rothschild’s international banking controlled empire.

(If you need any more proof of Wilsons connection to the Rothschild’s, why not see who is the most recent dean of the Woodrow Wilson school of public and international affairs: wws.princeton.edu...)

Fast forward to June 4th 1963,

President John F. Kennedy signed presidential Executive order 11110 which was designed to strip the Federal Reserve of its power to loan money to the United States Government with interest.

Over $4 Billion in $2 and $5 denomination notes were put into circulation from the now newly authorized power given to the US Treasury department whom was issuing these notes backed by US Silver. The notes almost looked like the Federal Reserve (Rothschild) notes, but the Fed note says “Federal Reserve Note” and the US note says “United States Note” (And we’re nicknamed Kennedy bills). The Federal Reserve note has a green seal and serial number and the US notes had red seals and red serial numbers.

Just 5 months later, President Kennedy is assassinated (November 22, 1963)

The first action as newly sworn in President Lyndon B. Johnson was the removal of Kennedy notes from circulation and the vetoing of executive order 11110.

TODAY

Having their power increased century by century, the Rothschild Empire which includes such intermarried families as the Rockefellers, Warburgs etc… have maintained complete control over the international political and financial scene.

The current financial crisis is a carefully engineered scheme to consolidate into a more easily controllable conglomerate the varied financial institutions under one “roof”

JP Morgan (a Rothschild bank) is acquiring Washington Mutual among other banks….

Goldman Sachs…well: Helen Sachs (Grandaughter of Goldman Sachs co-founder Joseph Sachs) married Nathan Straus Jr. (Grandson of Lazarus Straus who headed R.H. Macy & Co.)...Nathan Straus Jr.'s first cousin (also grandson of Lazarus Straus) Roger William Straus Married Gladys Guggenheim (Grandson of Meyer Guggenheim)...Meyer Guggenheim's daughter is Cora Guggenheim.Cora Guggenheim married Louis F. Rothschild...

So you have the Rothschild-Guggenheim-Straus-Sachs connection.

You see…we are but mere pawns in a game that was started before our great grandfather’s time.

There is no “control” by any government but that which is allowed by those that control the money.

The golden rule: He who controls the gold makes the rules.

To quote Mayer Rothschild: “Give me control of a nation's money and I care not who makes the laws.”

To quote his wife Gutle Rothschild: “If my sons did not want wars, there would be none”

Thanks for reading....