Fractional Rerserve bank lending 101

[williamta20012]

Ok its time to educate people about how money works because the older geration are just completely in the dark on every issue.

Before I explain this scam Ill just make sure you understand a few points.

1. Nobody invented money it was common sense! Orange farmers dont want chairs as payment for oranges bought by the chair maker ALL THE TIME. Thus people used something of value that every body WANTS to trade products instead of bartering the raw goods.

2. People have usually choosen something of stable value like whisky, tabacco and gold and silver. This depends on the current market circumstaces.

3. People would often leave their gold in a saftey deposit box and have reciepts for one ounces of gold. Those recipts where then used as money as people knew that they could always take that recipt back to the depository and redeem their ounces of gold. So people would use the recipts as money.

4. Before 1971 you could take your one dollar note to a US bank and redeem it for a 1 ounce fine gold coin because the US DOLLAR WAS THE WORLD RESERVE CURRENCEY AFTER WW2. However in 1971 Nixon confiscated the gold held in the depository. But by that time the people were so dumb that they thought the dollar notes were it self money. They didn't even notice.

That is right people, is it not embarrasing that you think the paper reciept in your had is actually money it self!! It is pretty disgusting. Old people should truly be ashamed of them selves. Its actually called slavery if you are smart enough to extrapolate.

So how does it work today?

Well each new paper note that is printed into existence is now a debt instrument that is lent to some one. Usually to a special bank who then lends it to the government by buying government bonds.

The banks make a profit on the interest rate difference. So if they can borrow a a paper debt reciept for .001% and can lend it to the govt for .003 pecent then they will make .002 percent profit on how ever many billions they borrow. Remember rates are artificially low. If this free money mechanism was taken away WHO WOULD BE BUYING BONDS???????? Nobody, idiots, interest rates would spike and the party would be over! The banks are buying over 90% of government debt, remember that.

Now for the most important point!!!!!!!!!!!!

All money is lent into existence, and ALL MONEY MUST BE PAID BACK!

BUT it must be paid back WITH INTEREST.

do you understand? that is impossibe. If all money needs to be paid back then where is the money going to come from to pay the interest????

Borrow it? yup thats what they are doing!

Its a game of musical chairs. Some one MUST go bankrupt, and judging every I meet, It looks like it will be you!

[Soutpeel]

so whats your point ?

[tolsti]

What on earth are you on about?

[metisdead]

Moved to the banking, business, investments etc. forum

[StreetCowboy]

Moved to the banking, business, investments etc. forum

Probably more appropriate in the Pub, or the mental health subforum

[williamta20012]

I know it belongs here but I think this should have been left in general, cause people who dont understand money need to be warned. interest rates cant stay at historical lows for much longer. Especially with china and the US butting heads all the times... and when bkk shut downs occurer, u will see banking holidays , these problems will be obvious then...

[Naam]

Moved to the banking, business, investments etc. forum

Probably more appropriate in the Pub, or the mental health subforum

there's dire need for a smart-ass subforum

[Soutpeel]

I know it belongs here but I think this should have been left in general, cause people who dont understand money need to be warned. interest rates cant stay at historical lows for much longer. Especially with china and the US butting heads all the times... and when bkk shut downs occurer, u will see banking holidays , these problems will be obvious then...

Naah...this is perfect here, although I do like SC's suggestion of the mental health sub-forum also

[Naam]

I know it belongs here but I think this should have been left in general, cause people who dont understand money need to be warned. interest rates cant stay at historical lows for much longer. Especially with china and the US butting heads all the times... and when bkk shut downs occurer, u will see banking holidays , these problems will be obvious then...

when BKK shuts down the skies will fall!

[Soutpeel]

Moved to the banking, business, investments etc. forum

Probably more appropriate in the Pub, or the mental health subforum

there's dire need for a smart-ass subforum

[bpaiduay]

Now I am even more confused !

[Soutpeel]

Now I am even more confused !

Oh stay with the plot please

The Orange farmers went out to drink whisky, got p*ssed and bought a chair and played musical chairs

and while all this was going on, some chappie called Nixon stole the orange farmers gold and silver they had hidden in a safety deposit box

got it ?...

[tolsti]

Soutpeel.... sorry but you're wrong meneer.... it's the people with one grey hand!

[bpaiduay]

I know about the man with a red right hand , but the grey one ?

Nick Cave in reference to Johnny Cash I believe .

Oh , Bugger now I have a reference to Cash , where will it end .

Whisky infused oranges would cut out one middle man I think .

[StreetCowboy]

Soutpeel.... sorry but you're wrong meneer.... it's the people with one grey hand!

Just 'cos he's only got one arm, doesn't mean he's a bandit

SC

[bpaiduay]

The drummer from Def Leopard only had one arm , but he had a chair to sit on .

I am sure it had some musical connections though ,

Is this making some sense , am I getting the understanding now ?

[StreetCowboy]

I think the first bloke was a bit off-topic, but we seem to be straightened out now.

[Soutpeel]

I think the first bloke was a bit off-topic, but we seem to be straightened out now.

Of course...this Macro-economic sh*t aint difficult, the OP was trying to make it harder to understand than it really is..

[williamta20012]

I think the first bloke was a bit off-topic, but we seem to be straightened out now.

Of course...this Macro-economic sh*t aint difficult, the OP was trying to make it harder to understand than it really is..

I thought it was clear what i was pointing out, complete and utter fraud and theft. i also told you what is the ending result is, I'm just wondering why no one is discussing that at all...

the fed is talking about tapering when the banks are funding the government at these low interest rates!!!! its its unbelievable, don't you see it?

They have to know this, the people at the banks are not stupid, you just have to read the emails over libor, they knew EXACTLY what was going on

or u just have to read the emails at the banks about the CDO's being issued to the public!! they are laughing at you people, and its all a made up game.

[Soutpeel]

I think the first bloke was a bit off-topic, but we seem to be straightened out now.

Of course...this Macro-economic sh*t aint difficult, the OP was trying to make it harder to understand than it really is..

I thought it was clear what i was pointing out, complete and utter fraud and theft. i also told you what is the ending result is, I'm just wondering why no one is discussing that at all...

the fed is talking about tapering when the banks are funding the government at these low interest rates!!!! its its unbelievable, don't you see it?

They have to know this, the people at the banks are not stupid, you just have to read the emails over libor, they knew EXACTLY what was going on

or u just have to read the emails at the banks about the CDO's being issued to the public!! they are laughing at you people, and its all a made up game.

ah I get it now....your saying the farmers got their oranges stolen while they were playing musical chairs ?

[williamta20012]

I think the first bloke was a bit off-topic, but we seem to be straightened out now.

Of course...this Macro-economic sh*t aint difficult, the OP was trying to make it harder to understand than it really is..

I thought it was clear what i was pointing out, complete and utter fraud and theft. i also told you what is the ending result is, I'm just wondering why no one is discussing that at all...

the fed is talking about tapering when the banks are funding the government at these low interest rates!!!! its its unbelievable, don't you see it?

They have to know this, the people at the banks are not stupid, you just have to read the emails over libor, they knew EXACTLY what was going on

or u just have to read the emails at the banks about the CDO's being issued to the public!! they are laughing at you people, and its all a made up game.

ah I get it now....your saying the farmers got their oranges stolen while they were playing musical chairs ?

I have friends in banking and farming. my banker friend worked 1 hour this month and is so ultra rich its not funny, but Issan farming friends are pretty poor... and yet you look at the food bins in Australia empty, they ran a food production deficit last year! top that off with the average world age of farmers at 56. The farmers already are sitting in their chairs.... Its the peasants that don't have any chairs, and a banking crisis ignited by the bond market will make that obvious.

[bpaiduay]

Now I am starting to understand , I had to re-read a few posts ,

Lucky the OP came back to clear it up , thanks Willy .

[Soutpeel]

Now I am starting to understand , I had to re-read a few posts ,

Lucky the OP came back to clear it up , thanks Willy .

but I am still a bit uncertain how the The drummer from Def Leopard fits into all of this.? is he an orange farmer as well as playing in the band ?..

[Asiantravel]

I think the first bloke was a bit off-topic, but we seem to be straightened out now.

Of course...this Macro-economic sh*t aint difficult, the OP was trying to make it harder to understand than it really is..

I thought it was clear what i was pointing out, complete and utter fraud and theft. i also told you what is the ending result is, I'm just wondering why no one is discussing that at all...

the fed is talking about tapering when the banks are funding the government at these low interest rates!!!! its its unbelievable, don't you see it?

They have to know this, the people at the banks are not stupid, you just have to read the emails over libor, they knew EXACTLY what was going on

or u just have to read the emails at the banks about the CDO's being issued to the public!! they are laughing at you people, and its all a made up game.

[bpaiduay]

Soutpeel.... sorry but you're wrong meneer.... it's the people with one grey hand!

Just 'cos he's only got one arm, doesn't mean he's a bandit

SC

StreetCowboy brought it to my attention ,

The association between music and one arm brought me to the concusion , sorry conclusion ,

I had suffered with the former on more than one occasion though .

I do remember him coming from upstate , Orange County , maybe I am wrong .

[Loptr]

You want a primer on the Central Banking system? Here's a good one that is targeted at the average Joe.

http://www.youtube.com/watch?v=iFDe5kUUyT0

There a 5 videos in this series. This one is number 4 and is focused on the Central Banking system. For a clearer picture into the world of Fiat currencies and money, you really need to watch the entire series. Well worth the time.

Edited January 12, 2014 by Loptr

[Wrong Turn]

Thanks for the OP and also the video on fractional banking.

[StreetCowboy]

Now I am starting to understand , I had to re-read a few posts ,

Lucky the OP came back to clear it up , thanks Willy .

but I am still a bit uncertain how the The drummer from Def Leopard fits into all of this.? is he an orange farmer as well as playing in the band ?..

I don't think we should be bringing religion into this.

[SheungWan]

I think the first bloke was a bit off-topic, but we seem to be straightened out now.

Of course...this Macro-economic sh*t aint difficult, the OP was trying to make it harder to understand than it really is..

I thought it was clear what i was pointing out, complete and utter fraud and theft. i also told you what is the ending result is, I'm just wondering why no one is discussing that at all...

the fed is talking about tapering when the banks are funding the government at these low interest rates!!!! its its unbelievable, don't you see it?

They have to know this, the people at the banks are not stupid, you just have to read the emails over libor, they knew EXACTLY what was going on

or u just have to read the emails at the banks about the CDO's being issued to the public!! they are laughing at you people, and its all a made up game.

Are you selling Bitcoins?

[rakman]

One point in error is #4, from 1873 to 1968, a US "Silver Certificate" would get you the face denomination ($1,$5,or $10) in silver coin or later silver granules of bullion. http://en.wikipedia.org/wiki/Silver_Certificate

Coins, especially the Silver Dollar, was 1 oz of silver. But as silver increased in price, and the need to make coins cheaper to make, the new fiat dollar currency was required.

With decoupling the standard price of gold from USD$32 per oz to market price, the dollar moved from a "metal" based currency to a fiat currency that is backed by the GDP of the US. Lately, people have moved from taking dollars to buying US Treasury bonds based on the "faith" of the US to pay it's bond debt, now at USD$ 17 Trillion and probably headed to 22 Trillion by 2016.

As long as people have "faith" in the dollar, and the ability of the US to pay its interest on the bonds people hold, the world economy is relatively stable.

The real problem is the US has to keep interest rates low otherwise they won't be able to pay the interest on the bonds. Each 1% increase (from 2% to 3% for example, not 2% to 2.02%) currently raises the interest payments by US$660 Billion dollars. As the US National Debt rises, the interest payment will also rise in addition to the interest rate rise. There isn't anytime on the horizon where the US annual deficit will turn to surplus, so the National Debt will continue to grow at unsustainable rates.

One difference between the US and Greece (remember the necessary "hair cut" that was required in their bonds and savings accounts) is the US is a huge manufacturing and production machine with a GDP of around 15 Trillion where Greece had basically tourism, olive products and shipping.

As with the housing crisis, the lesson not learned was "housing prices always go up". Since the US has enjoyed a long term growth span and only some regional areas had short recessions, the young economists and financial professionals used the "housing prices always go up" to justify the housing bubble.

The problem is, once people lose "faith" in the dollar, as indicated by China more and more directly trading with other currencies, the possibility of an even bigger whole world economic crash increases.