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The Concept Of Money And The Money Illusion
Submitted by Koos Jansen via BullionStar.com,
Awareness about the concept of money is making a comeback. Gone are the decades in which the global citizenry was fooled to leave this subject to economists, governments and banks – a setup that has proven to end in disaster. The crisis in 2008 has spawned debate about what money is, where it comes from and where it should come from. These developments inspired me to write a post on the concept of money and the money illusion. (All examples in this post are simplified.)
The Concept Of Money
Money is a collective human invention
First, let us have a look at the fundamentals of money. How did Money evolve? Thousand and thousands of years ago before any trade occurred homo sapiens use to be self-sufficient; families or small communities grew that their own crops, fished the seas, raised cattle and made their own tools.
When barter emerged the necessity to be self-sufficient ceased to exist. A farmer that grew tomatoes and carrots could exchange some of his production output for bananas or oranges if he wished to do so. There was no necessity for the farmer to grow all crops he wished to consume, when there was an option to trade.
Farmers participating in a barter economy were incentivized to specialize in production, because they could escalate their wealth (gain more goods) by producing fewer crops on a greater scale. Through trade increased productivity (efficiency of production) could be converted into wealth, as the more efficient commodities were produced, the higher the exchange value of the labor put in to produce them. Consequently, barter economized production among its participants.
By exchanging, human beings discovered ‘the division of labor’, the specialization of efforts and talents for mutual gain… Exchange is to cultural evolution as sex is to biological evolution.
From Matt Ridley.
Direct exchange (barter) was a severely limited form of trade because it relied on the mutual coincidence of demand. An orange farmer in demand for potatoes had to find a potato farmer in demand for oranges in order to trade. If he could find a potato farmer in demand for oranges and agree on the exchange rate (price) a transaction occurred. But, often there was no mutual coincidence of demand. When all potato farmers were not in demand for oranges the orange farmer could not exchange his product for potatoes. In this case there was no trade, no one could escalate his or her wealth.
This is how money came into existence: the orange farmer decided to exchange his product for a highly marketable commodity. A bag of salt, for example, could be preserved longer than oranges and was divisible in small parts. He could offer it to a potato farmer, who in turn could store the salt for future trade or consumption. If no potato farmer was in demand for oranges, surely one was to accept salt in exchange. Eventually, the orange farmer succeeded via salt to indirectly exchange his product for potatoes. The medium used for indirect exchange is referred to as money.
In the early stages of indirect exchange there were several forms of money. When economies developed the best marketable commodity surfaced as the sole medium of exchange. A single type of money has the advantage that the value of all goods and services in an economy can be measured in one unit, all prices are denominated in one currency - whereas in barter the exchange rate of every commodity is denominated in an array of other commodities. One set of prices makes trade more efficient, transparent and liquid. Often precious metals, like gold or silver, were used as money as precious metals are scarce (great amounts of value can be transported in small weights), indestructible (gold doesn’t tarnish or corrode) and divisible (gold can be split or merged).
Money is supposed to serve three main purposes:
1) a medium of exchange,
2) a store of value,
3) a unit of account.
Indirect exchange is not restricted by mutual coincidence of demand; every participant in the economy offers and accepts the same medium of exchange, which enormously eases trade. The boost money has given to global wealth is beyond comprehension, the concept of money has been an indispensable discovery of civilisation.
We must realize the subject of money is always a matter of trust, because money in itself has no use-value for us humans. An orange, car, shoebox, t-shirt or house does have use-value. Money does not have use-value as it’s not the end goal of a participant in the economy, the end goal is goods and services. Therefor, what we use as money is a social contract to be used in trade and to store value, always based on trust.
Commodity money (like precious metals) does have some use-value, which it derives from its industrial applications. The majority of commodity money’s exchange value is based on its monetary applications, the residual is based on its industrial applications (use-value). If a commodity is abandoned from being used as money, the monetary value leaves and what is left is the use-value. The exchange value of money equals the amount of goods and services it can be traded for at any given moment, popularly called its purchasing power.
After commodity money came fiat money. The nature of the latter is fundamentally different. From Wikipedia:
Fiat money is currency which derives its value from government regulation or law. The term derives from the Latin fiat (“let it be done”, “it shall be”).
Fiat money is what nowadays is used all around the globe. Instead of being picked by all participants in a free market as the best marketable commodity, it’s created by central banks and it can exist in paper, coin or digital form. Out of thin air and without limitation it can be brought into existence by printing paper bills or typing in digits into a computer. When fiat money is created it’s exchanged for assets a central bank puts on its balance sheet, after the first exchange the money can start circulating in the economy. A central bank can buy any asset, but usually it will be government bonds. Whereas commodity money has its value anchored in the free market economy, the value of fiat money is simply determined by the board of governors of a central bank. Throughout history central banks have been able to control the value of fiat money for relatively short periods, over longer periods the value of fiat money is wiped out inevitably.
The value of commodity money is anchored to the value of all goods and services in a free market, because it requires capital and labor to produce commodity money. This is how the anchor mechanism works (in our example gold is the sole medium of exchange: a simplified gold standard). Say, gold mines increase production output in order to literally make more money. The amount of gold circulating in the economy starts to grow faster than the amount of goods and services it can be traded for. The value of gold will decline relative to goods and services, as there is an oversupply of gold. In this price inflationary scenario it would be more profitable for economic agents to produce other goods than gold, as gold’s purchasing power is falling. When gold miners shift to alternate businesses and mines are closed the amount of gold in circulation starts to grow slower than the amount of goods and services it can be traded for, as a result the value of gold will increase relative to goods and services. In this price deflationary scenario gold’s purchasing power increases, which eventually incentivizes entrepreneurs to start mining gold again, until there is an oversupply of gold, etcetera. Gold used as money on a gold standard is not exclusively subjected to this mechanism. Simply put, in any economy entrepreneurs will grow potatoes when they are expensive and stop growing them when they are cheap. A free market economy in theory stabilizes the value of gold. In reality, for several reasons, gold’s exchange value is not exactly constant, but over longer periods gold’s purchasing power is impressive and more constant than any fiat currency.
Courtesy Sharelynx.
In the above chart we can see the green line resembling the index price of goods and services in the United Kingdom since the sixteenth century. The blue line resembles the index price of gold. Both are denominated in pounds sterling on a logarithmic scale. When the index price of gold overshoots the index price of goods and services gold’s purchasing power – the red line – will rise and vice versa. If your savings had been in fiat money since 1950, your purchasing power would have declined by 94 % as the index price of goods and services rose from 400 to 7,000. If your savings had been in gold since 1950, your purchasing power would have been fairly constant (actually would have increased). The green line takes off at the same time when the gold standard was abandoned from which point in time the currency was no longer tied to gold and became fiat.
Fractional Reserve Banking And The Money Illusion
Both commodity money and fiat money can be used for fractional reserve banking. The roots of banking go back many centuries to fraudulent practices by blacksmiths. When people used to own gold coins and bring it to a blacksmith for safekeeping they got a receipt that stated a claim on gold in the vault. These receipts began circulating as money substitutes, instead of having to carry gold coins or bars it was more convenient to make payment with lightweight receipts – this is how paper money was born. Blacksmiths noticed few receipts were redeemed for metal. The gold backing those receipts was just lying idle in their vaults or so they thought. Subsequently, they began issuing more receipts than they could back with gold. Covertly lending out money at an attractive interest rate appeared to be profitable. Naturally, the risk was that when customers found out and simultaneously redeemed their receipts, the blacksmiths went bankrupt. More importantly, not all customers holding a receipt got their gold.
Essentially, modern day banking works in a similar fashion although the scheme has been refined. In 1848 a Supreme Court in the United Kingdom ruled:
Money, when paid into a bank, ceases altogether to be the money of the principal; it is then the money of the banker, who is bound to an equivalent by paying a similar sum to that deposited with him when he is asked for it. … The money placed in the custody of a banker is, to all intents and purposes, the money of the banker, to do with it as he pleases; he is guilty of no breach of trust in employing it; he is not answerable to the principal if he puts it into jeopardy, if he engages in a hazardous speculation; he is not bound to keep it or deal with it as the property of his principal; but he is, of course, answerable for the amount, because he has contracted, having received that money, to repay to the principal, when demanded, a sum equivalent to that paid into his hands.
Guess what. Your money at the bank is not your money. A bank deposit is a loan to the bank, which should justify the fact banks only have a fraction of outstanding liabilities (receipts) in reserve. Let us examine this modern day practice of banking and the creation of what I call illusionary money. In our simplified example there is only book entry money, nowadays digital.
The process begins with the European Central Bank (ECB) that creates 10,000 euros, by the stroke of a keyboard, to buy bonds. The seller of these bonds is Paul who receives the 10,000 euros and deposits these funds at bank A. The ECB’s policy is that commercial banks are required to hold 10 % of all deposits in reserve. Meaning, bank A can lend 90 % of Paul’s money to John who needs money to buy a boat. When John borrows these 9,000 euros and receives the funds in his bank account, something remarkable has taken place. John now has 9,000 euros at his disposal, but Paul still owns 10,000 euros. Miraculously 9,000 euros has been created out of thin air! Before bank A had lend 9,000 euros to John there was only 10,000 euros in existence created by the ECB. After the loan there is 19,000 euros “in existence”, John’s 9,000 euros on top of Paul’s 10,000 euros. Bank A has created 9,000 euros through fractional reserve banking.
And it doesn’t end there. When John buys a 9,000 euro sailing yacht from Bob, Bob deposits these funds at bank B. For this bank the same rules apply, it’s only required to hold 10 % of the 9,000 euros in reserve, so it lends 8,100 euros to Michael. Another 8,100 euros is created out of thin air, now there is 27,100 euros in existence! Needless to say, Michael’s money will be deposited at a bank and multiplied by 90 % as well, and the new money will multiplied by 90 % as well – you get the picture. Eventually, out of the initial 10,000 euros created by the ECB a fresh 90,000 euros can be created by commercial banks at a required reserve ratio of 10 %.
The degree to which commercial banks can procreate money from central bank money is referred to as the money multiplier (MM), which is the inverse of the reserve requirement ratio (RRR). A smaller RRR will result in a higher MM, and vice versa, as the smaller a bank’s reserves, the more it can lend (create). Money created by a central bank is called base money and money created by commercial banks is called credit (note, on a gold standard, the gold was base money). If banks make loans they create credit and the total money supply in the economy expands, if these loans are repaid (or default) the money supply shrinks. In the next chart we can see how 10,000 units of base money procreate 90,000 units of credit through 50 stages of fractional reserve banking (RRR = 10 %).
Note, the total money supply in the economy nowadays is compounded of less than 10 % base money and more than 90 % credit! For the sake of simplicity I’ve used a reserve requirement ratio of 10 %.
The essence of fractional reserve banking is exactly the same as what the blacksmiths did. When all customers run to a bank to get their money out, the bank has to admit it doesn’t have all the money. Banking thrives on the presumption not all money will be withdrawn from a bank at once. That is, until that happens. Millions of banks have gone bust in the past and many will in the future. The question is not if a bank can go bust, but when, as banks are by definition insolvent in holding a fraction of deposits in reserve. After the bankruptcy of investment bank Lehman Brothers in 2008 an economic depression was triggered and governments globally bailed out banks whose insolvent nature was exposed.
The fact banks are by definition insolvent is “strangely” accepted throughout society. People know banks go belly up when everybody rushes to get their money out, though they’re less aware of alternatives to storing money at the bank. This situation can be explained by the fact people are fooled by how banks operate. In high school and university students are taught banks simply facilitate in lending out money from depositors, striking a profit on the difference in interest rates. While actually banks create money to lend out, whereby a fraction of the initial deposit is held in reserve and the insolvent state is conceived. Most people that work at banks are not even aware about the fine details of credit creation. Henry Ford once said:
It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.
The bait for fractional reserve banking is of course interest. Why do you receive interest on a bank deposit? Basically, because you lend your money to the bank and receive interest for the risk of losing it – the golden rule is: no risk no return. Banks have to offer interest or no one would hand over their money. Then banks charge borrowers a higher interest rate than they pay on deposits and the wheel of credit starts turning round. Until the expansion of credit sends up asset bubbles that eventually pop and the house of cards comes tumbling down. The real problem starts to surface when the money supply shrinks prices and incomes decline. This makes it harder for everyone to repay debt to banks, pushing bank bankruptcies. Deflation is a huge threat for the fractional reserve system.
The most intriguing fact is that credit simply doesn’t exist. Credit is created through an accounting trick. If more than a fraction of all bank customers want to withdraw their “money”, it’s just not there. Credit only exists as book entries and in our minds. If customers have 1,000,000 euros deposited at a bank in total, they think they truly own that money, whereas in reality there is only a fraction of the 1,000,000 euros held by the bank in reserves. Yet every financial decision they make is based upon the amount of money they think they own. The lion share of their money only exists in their minds. This is what I call the money illusion, in which most of us on this planet are submerged. Will we ever awaken from this dream and will the real value of money and credit be exposed?
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money or currency?
For the love of money
(greatest bassline ever?)
https://m.youtube.com/watch?v=Ll3uipTO-4A
BREAKING: 16 Tons of silver stolen from Montreal Canada port.
"Sorry you couldn't take physical delivery because....?"
http://www.cbc.ca/news/canada/montreal/silver-heist-montreal-shipping-co...
Economics are dead simple: If Joe wants a new roof made by John, John makes the roof and Joe writes him an IOU (worth of a new roof). So next time John want something done he knows Joe is good at, John can use this IOU to trade for Joe's work.
When it becomes ridiculous is when Joe can't write this IOU, but only James has the power to write IOU's. Now Joe has to lend an IOU (worth of a roof) from James who writes this IOU with his magic pen. So now Joe uses the IOU to pay John.
What happened?
Joe is in debt with James (who has done no work) equal to the worth of a roof + interest
John has a IOU equal to the worth of a roof.
Joe has to work for James to repay the IOU (worth one roof + interest)
So John has worked hard to provide Joe with a new roof, Joe is breaking his back doing work for James.
And James is best of, doing no work at all but getting Joe to work for him with a strike from his magical IOU pen.
One could say 2 slaves and one master were created, with the power of writing IOU's
Now James can control the economy of their little community, since only he can write IOU's. If he wants a economic boom, he will write IOU's easily without questioning. But if he wants to create a crisis, he refuses to write a single IOU, without these IOU's Joe and John can't trade, so all activity stops..
As usual just a LIIIITTLE bit off to keep the dumb slaves confused
It doesn't matter if the money is 'backed' by some stupid commodity, it matters that you take control of it away from the banks and manage it as a utility you morons.
https://youtu.be/0bFhLcXVhts
Printing money to fund jobs directly is the key.
USURY is redistribution from the 99.99999% to the .000000000001%...........
viva la francis_sawyer
fuck debt-money
the future cannot repay todays debts......trav7777
January 3rd, 2009 was the day taht money was reinvented
Money is cool. It let's me buy Hormel Chili at Costco. The Costco people don't take gold. That's why I need money. I love chili.
This article is not wholely truthful. It disguises an important part of the puzzle. The first graph should also show what your savings would be in purchasing power with savings acct interest compounded and added in. It would show your purchasing power with a bank savings acct vastly exceeding gold for the same period. And of course that would last until the bubble bursts. When the bubble bursts the only winner is commodity money. Fiat would be a total loss.
"If your savings had been in fiat money since 1950, your purchasing power would have declined by 94 % as the index price of goods and services rose from 400 to 7,000." This is not true if your savings had been at a savings acct at the bank. I haven't calculated the number because I don't know the pass book savings rate over the last 65 years, but rudimentary calculations indicate the passbook savings would be ahead by quite a bit.
You gotta know when to get out though, or you lose it all.
This article is disingenuous -- it's all dogmatics lacking any empirical foundations:
The article is not without any merits in throwing up some questions about fraud and misguided credulity, but rehashes all the studied myths of how things might have developed on their way to our society ignoring virtually all the details pain-stakingly traced by scholars of history, anthropology, archeology, ancient texts and inscriptions, etc.
Who determines how much they get funded? The employees? Then they are not being guided by the market, but a subsidy which automatically leads to lower production, less incentive. It also becomes a mind set and cult of personality, businesses that operate on profit cannot afford objectives other than the company's bottom line.
Bullshit, and absolutely par for the course for a Bitcoin propagandist. Money itself has to be a commodity, and it has to be quantifiable at all times or the underlying system is dishonest. When I am PAID I want to be paid in full with something valuable, not some nebulous promise of purchasing power. Bitcon is as ethereal as it gets. An interesting concept for sure, but like Bill Still's tally sticks with a shiny new wrapper, just another way for people to rip off people. If it cannot be weighed and measured, and valued in its own right, it is not money but rather the latest attempt to distract the masses from money.
Some people say a man is made outta mud
A poor man's made outta muscle and blood
Muscle and blood and skin and bones
A mind that's a-weak and a back that's strong
You load sixteen tons, what do you get
Another day older and deeper in debt
Saint Peter don't you call me 'cause I can't go
I owe my soul to the company store
I was born one mornin' when the sun didn't shine
I picked up my shovel and I walked to the mine
I loaded sixteen tons of number nine coal
And the straw boss said "Well, a-bless my soul"
You load sixteen tons, what do you get
Another day older and deeper in debt
Saint Peter don't you call me 'cause I can't go
I owe my soul to the company store
-Tennessee Ernie Ford
Mmmkay, who is the candy-assed maggot who junked Tennessee Ernie Ford? It's Saturday night, this is Fight Club, we are lubed and ready to go. Bring it, cymbal monkey!!!
I prefer the Johnny Cash version.
Although, since we're nearing the end, this song is just as relevant.
Merle Travis wrote the song and deserves the gold!no more downvotes!
And FYI that silver that was just jacked from Montreal would equal something like 46,000,000 paper silver ounces!
Should've added more zeros, but +1 anyway.
Was going with 100-to-1 ratio but who knows what it really is?
Greatest bassline ever?
I'd say Pink Floyd's "Money."
Great hook but ridiculously low level of difficulty. Think Chris Squire for under appreciated basslines.
working man rush
under oath, a banking scoundrel once admitted gold is money, everything else is credit.
then, about 100 years later another banker, also under oath, was asked if gold was money. he said it was not.
these bankers have the hubris to think they can declare what is of value and what is not, but as they and the entire world will soon learn:
Mr Market will always determine what is of value no matter how badly one tries to neuter him. He is dogged, determined and impossible to kill. and He will always have the last say.
Yes, the whole concept of money explained on this page. Too bad nobody at the Fed will ever read this.
I would just take the exception that by accounting rules, the bank may hold 10% of their outstanding loan balances in physical cash, the remainder of a loan is either backed by collateral or the bank's own assets. Lending, other than credit cards, is supposed to be secured, supposed to be.
But you can guess that in reality they do operate solely on fractional reserve lending just as the author outlined above. Perhaps they utilize derivatives as an accounting trick to secure the remaining 90% of their oustanding loan liabilities. Which of course is all fiction.
I could recommend many resources on money, especially by the Austrian School, however, I can summarize money in one word:
Nothing.
Money is nothing, as it is only an intermediary in trade between what you have and what you want.
By extension, the printing and fencing of fiat-currency by the banksters is just them printing false claims upon others' production--plunder.
In an uncorrupted economy, one not being plundered by the fiat grift of the banksters, trades between people involving money can take place far in the future. As it is now, these trades must take place rather quickly to forestall the loss of value in one's trades due to the banksters' fiat grift.
Zion is a scheme, not an ethnicity.
Didn't junk you ... but real money (i.e., gold and silver) isn't "nothing." As Mike Maloney explains, real money is a store of economic energy.
Fiat currency is an intermediary.
Should be required reading.
Forget the smoke in mirrors its all about exploiting labor and getting the masses to work,they dont peddle money they peddle public perception,the only reason a Benjamin is worth a Benjamin is because people believe it to be so,every currency,market,bourse and trading floor in the world is just an extension of this base concept...when the people realize the Emperor has no clothes we will invent a new system subject to the usual formalities and it will be the same bastards in charge once again.
Yawn.
Another Gold Finger commercial and not a fucking word about the Central Bank manipulation of Comex Gold futures suppressing physical gold prices.
We want Pussy Galore, a cocktail and an intelligent discussion on how we are going to twist the fucking Comex into a pretzel...
Otherwise, fuck off with your inept attempt to sell your anti-fiat meme and raise gold prices through a ZH post.
We get it already.
Love,
Alexa
us indices price of gold purchasing power > chart [was enlightening]
Probably the best, reasonably short read (107 large type pages or 3-hour audio) on this topic is Murray Rothbard's "What Has Government Done To Our Money", available free at http://pure-liberty.org/Money.html
Thanks Mike. Wow.
LMFAO!
"In the economy. A central bank can buy any asset, but usually it will be government bonds. Whereas commodity money has its value anchored in the free market economy, the value of fiat money is simply determined by the board of governors of a central bank."
"Throughout history central banks have been able to control the value of [fiaharts? ] fiats ;sic, & liquidity{money} for relatively short periods, over longer periods the value of fiat money is wiped out inevitably."
Who wrote these exerpts?
Throw me any chart, and I'll read it, as long as it isn't tainted.
Although lots of people like the over-simplified view that "money evolved from bartering," that is WRONG, as demonstrated by David Graeber, an anthropologist, in his book "Debt, the first 5,000 years."
https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years
Idealized "money" has four functions, to act as a medium, a measure, a standard, and a store. However, real money is measurement backed by murder. (Commodity money is the measurement of those commodities, backed by murder.)
While an article like the one above is superficially correct regarding how the currently existing systems are based upon governments ENFORCING FRAUDS by privately controlled banks, the initial presentation was too superficial. The deeper problems are due to how the biggest bullies' bullshit world views almost totally dominated civilization, through both the dominate natural languages, as well as the dominate philosophy of science, so that has resulted in creating Wonderland Matrix Bizarro Worlds, which deliberately misunderstanding everything (including money) in as absurdly backward ways as those could possibly become. Of course, the vast majority of people do NOT know that the banks actually "own" their money, after being deposited in those banks. Similarly:
Private property is based on backing up claims with coercions. Money is merely the most abstract form of that, because money is measurement backed by murder, since the debt controls are backed by the death controls. There is no private property outside of some system of public violence. Similarly, there is no money other than as human symbols which are given meaning by human behaviors, which manifest in the most extreme form as the human murder systems, through combined money/murder systems.
The ONLY definition of "money" that reconciles all of the social facts is that money is measurement backed by murder. Of course, since the existing systems have developed to be operated by the best available professional liars and immaculate hypocrites, that view is not approved of by those people. Rather, the existing social situation can be summarized by multiplying these two statements: the first comes from Sun Tzu, that "success in war depends upon deceits," while the second may be attributed to Mark Twain, that "the best liars believe their own lies."
Civilization was built by the history of warfare, with political economy developing inside of that overall history. Therefore, "money" became based on lies, while for generation after generation the situations developed that those spouting those lies came more and more to believe in their own lies. At the present time, the public "money" supplies are primarily based upon governments ENFORCING FRAUDS by privately controlled banks. Within that context, those who most believe in those frauds are those who are most able to take advantage of those frauds.
The intellectual problems with guesses about the future are primarily due to the nature of the exponential growth of the strip-mining of the planet's natural resources, driven by the debt engine treadmills, where the ways that governments ENFORCE FRAUDS by privately controlled banks required that the vast majority of people be conditioned to be able to deliberately ignore the principle of the conservation of energy, as well as deliberately misunderstand the concept of entropy in the most absurdly backward ways possible.
Professor Al Barlett stated:
"The greatest shortcoming of the human race is our inability to understand the exponential function."
http://www.albartlett.org/
I believe that inability to understand the exponential function was related to the debt slavery systems NOT WANTING people to be able to understand that the inherent structure of those systems would drive the generation of numbers which would become debt insanities, since those debts would have to keep on doubling down, in order to keep that system going. In order for the basic social systems to be governments ENFORCING FRAUDS by private banks, the vast majority of people have to be given fake educations, as well as seriously misinformed, so that they would not understand, and moreover, NOT WANT to understand that "money" was being made out of nothing as debts in order to "pay" for strip-mining the planet, in ways which, of course, actually "paid" for nothing, other than inasmuch as ENFORCING FRAUDS "pays" for anything.
Beyond that SOURCE OF DELIBERATE IGNORANCE, there are the issues that one can barely imagine the end game of exponential growth. One may intellectually comprehend that it is absolutely impossible for endless exponential growth to continue. However, civilization as it currently operates is based upon doing its best to continue to drive through the exponential strip-mining of the planet's natural resources, while that continues to be deliberately misunderstood in the maximum possible ways, because it is not understood, and NOT WANTED to be understood as being based on ENFORCING FRAUDS.
Since Neolithic Civilizations have been based on being able to back up lies with violence for thousands of years, while the world's dominate empires for the last few Centuries were based on being financed through ENFORCING FRAUDS, the basic problem that backing up lies with violence never stops those from still being false was able to be deliberately ignored by that kind of civilization, and therefore, it continued to rush as fast as possible through strip-mining the planet's natural resources, and that is still happening NOW.
The established sociopolitical systems were based upon small minorities of people who specialized in being dishonest, and backing that up with violence, while larger majorities of people adapted to live inside those systems. That resulted in civilization being directed by evil people dominating stupid people, while there was only a small minority of people left who were neither too evil nor too stupid. They could not stop the established systems from continuing to be based on vicious spirals of evil stupidity. Rather, the political economy continued to be based upon ENFORCING FRAUDS, in ways which deliberately ignored the conservation of energy, and deliberately misunderstood the concept of entropy, and therefore continued to rush as fast as possible through strip-mining the planet's natural resources.
The established political economy is set up in every possible way to continue to ENFORCE FRAUDS, which drive that to continue to happen via vicious spirals. THEREFORE, I predict relatively rapid reaching of the tipping points over the Seneca Cliffs. In my view, people who fail to more fully face the facts that civilization is operating according to the principles and methods of organized crime, then also do not fully face the facts that civilization is becoming runaway criminal insanities, due to the excessive social successfulness of ENFORCING FRAUDS automatically becoming more psychotically out of touch with relatively more objective physical realities ...
Many other general energy systems have become better understood, through progress in physical science. However, what has actually happened instead of progress in political science is that the biggest bullies' bullshit has more effectively forced the philosophy of science to compromise with it, than that the progress in physical science has enabled changes in the ways that the biggest bullies' bullshit world views have dominated civilization.
At the present time, the biggest bullies are primarily the banksters. Their total bullshit view about what "money" is, or should be, tends to dominate their controlled opposition groups, which is what the article above ends up looking like to me. Therefore, the article above was typical of the ways that Zero Hedge articles are superficially correct, while at the same time profoundly wrong.
It takes a series of intellectual scientific revolutions, which change the paradigms through which we perceive politics, in order to begin to develop better theories regarding what "money" really is, and then, within that more realistic view, how that "money" could be improved. There is nothing less that could cope with the current situation that there now exist globalized electronic monkey money frauds, backed by the threat of force from apes with atomic bombs.
While the international bankers originally made and maintained the systems of paper money, backed by gunpowder weapons, and then developed the current systems of electronic frauds, backed by the force of atomic bombs, nobody, including those banksters, fully understand that anymore, nor can anybody fully control that ... There is nothing in human history which compares to electronic frauds, backed by atomic bombs. The only events in the known history of the evolution of life that are comparable were the development of photosynthesis. Indeed, metaphorically speaking, asking human beings today what it means that money has become electronic frauds, backed by atomic bombs, seems like asking a bacterium what it meant that photosynthesis had been developed.
Dang...
Long but worth the read.
Can't help but wonder, does marijuana make you smart? Or maybe it just reveals the nature of things.
"O Sacred, Wise, and Wisdom-giving Plant,
Mother of Science, Now I feel thy Power [ 680 ]
Within me cleere, not onely to discerne
Things in thir Causes, but to trace the wayes
Of highest Agents, deemd however wise."
—John Milton, "Paradise Lost" Book IX 679–683
Damn/ They're scared!!!
If violence can be employed to enforce strictures against fraud just as easily as it can be employed to enforce fraud -- and it would have to be explained to me why one is not as simple to accomplish as the other, then the violence is not the issue but the legitimacy of the violence. If I take your life in the middle of your attempt to take mine in order to loot my goods, it isn't murder, it's self defense.
It has tended to be that "the best defense is a strong offense," while "self-defense" was developed to justify doing that. The most extreme forms of that were the false flag attacks common throughout history, in order to start wars based on deceits.
A deeper problem is that successfully enforcing frauds is way more profitable than successfully defending against being defrauded. We have already reached the point where there are runaway vicious spirals of the profits from frauds being reinvested in more frauds, while those systems of debt slavery are backed by wars based on deceits. Most of those wars based on deceits were started by various sorts of false flag attacks, that tricked enough people to believe that they were acting in self-defense, BUT, they did not know who their real enemies were!
The "war on drugs" also demonstrated that, especially since that was about 75% the "war on marijuana." Those drugs, and especially marijuana, were NEVER "America's Public Enemy Number 1." But nevertheless, those drugs wars went on and on, decade after decade, mostly being presented as somehow being based on defending the public from those drugs.
That hemp, the single best plant on the people for food, fiber, fun and medicine, could be transformed into "marijuana, which is almost as bad as murder," is merely the single simplest symbol of the ways that the concepts of "self-defense" can be misappropriated by bankster controlled governments, in order to trick most people into mistaking who their enemies really are, and therefore, wage wars based on deceits that they are doomed to lose, while the banksters continue to laugh all the way to their banks, since they skim the cream off of the illegal drug profits, as well as have abundant excuses to build up the fascist police state that protects their fascist plutocracy.
It seems obvious to me that "one man's self defense tends to be another man's aggression." Therefore, I find it intellectually incorrect to assert that there is some magical difference between the two. Rather, my view is that it is ALL basically organized lies operating robberies. Meanwhile, those who have already robbed then tend to promote their view that they have some right to continue that robbery. Instead, I regard the de jure justifications as always being bullshit, while the de facto is all that actually exists.
There is never any legitimacy to violence, there is only the existence of violence, which is self-justifying by working as systems of organized lies operating robberies. What political processes should do is develop the dynamic equilibria between the different systems of organized lies operating robberies. However, what actually has happened is that the dominate systems have become extremely unbalanced, in the form of governments ENFORCING FRAUDS by privately controlled banks, which is so socially successful that those basic social facts are not recognized by the vast majority of people, because they have been conditioned to not want to recognize those central social facts.
I do NOT believe in "non-violence." I think that is an impossible ideal that actually backfires badly in the real world, and causes the opposite to happen. I think that demanding politics without violence is as absurd as demanding physics without force. Rather, I promote the view of better balanced rates of social robberies. However, at the present time, the existing systems have become extremely unbalanced, due to the core groups of the most triumphant organized crimes, i.e., bankster controlled governments, have been able to surround themselves with controlled opposition groups, that stay within the frames of reference based on dualities, expressed as false fundamental dichotomies, and the related impossible ideals.
Instead, I recommend using unitary mechanisms, which then can discuss how and why governments have become the biggest forms of organized crime, controlled by the best organized gangsters, the banksters, and the corporations that have grown up around those banks being able to issue the public "money" supplies out of nothing, as debts for everyone else.
As long as we continue to think in terms of "governments versus organized crime" instead of governments as necessarily the biggest form of organized crime, then we must continue to promote bogus "solutions" whose mechanisms are backwards, and so, will backfire badly. Similarly, using "self-defense" to rationalize behaviors tends to open the doors for professional liars and immaculate hypocrites to justify their aggression in the name of "defense."
It was not a coincidence that, as the government of the USA became more and more dominated by the banksters, the name of the Department of War was changed to the Department of Defense:
https://en.wikipedia.org/wiki/United_States_Department_of_War
That change in language was related to the overall transformations towards more and more psychotic manifestations of "national security," which is one of the most important forms of state religion that now dominate America. Of course, runaway American exceptionalism more and more tends to use inside job, false flag attacks, in order to start wars based on deceits, which advance the overall agenda of debt slavery. National "self-defense" is used by professional liars and immaculate hypocrites to attack others preemptively (which may well have been a strategy that made sense during the history of militarism, but not so much now, after the development of weapons of mass destruction.)
In my view, individuals who indulge in the notions that they are acting in "self-defense" are behaving similarly. They tend to ignore that whatever they claim are "their goods" are only theirs due to a long history of backing up claims with coercions. Private property does not exist outside of some system of public violence.
I repeat that I am NOT suggesting that there should not be any such violence. Rather, I am asserting that anyone who claims to own anything only does so due to some previous history of violence, which they then usually tend to take for granted. Therefore, when they protect "their goods" that is actually taking place within a continuous history of violence, and necessarily had to be so.
I also repeat that is the general context in which money is measurement backed by murder. Of course, the established systems are set up in ways which try to deliberately ignore that, and deliberately divorce one from the other, as much as possible. Everything regarding how economics actually works is presented inside of Wonderland Matrix Bizarro Worlds, which are as absurdly backwards as possible, because of the ways that the biggest bullies get away with promoting social stories that they are not bullies. Similarly the banksters get away with promoting public stories that they are not operating through FRAUDS ENFORCED by governments.
Of course, the degree to which that core of organized crime is socially successful includes the degrees to which they control the apparent opposition. Hence, their "opposition" stays within the same bullshit world view, base upon dualities, false fundamental dichotomies and the related impossible ideals. The notions that there are some magical thresholds which can be crossed to make violence justified, due to becoming "self-defense" is one of those ways that our civilization rationalizes being violent.
Although I do NOT think we could stop violence, nor that we should try to accomplish such an impossible goal, I DO think that we could understand that violence better, and thereby be able to develop better dynamic equilibria between the different forms of violence. In that context, the political problems we now face are primarily due to the excessive successes of the biggest and best organized gangs of criminals being able to convince other people that is not the case, as well as being able to control their opposition to suggest that should not be the case.
My view is that it MUST be the case, and therefore, the genuine resolutions to those real problems should be implemented through more realistic unitary mechanisms, regarding how human beings and civilization actually operate as entropic pumps of environmental energy flows. However, at the present time, that appears politically impossible, since there now exists nothing which is publicly significant than the core groups of organized crime, surrounded by controlled opposition groups, that both promote basically the same bullshit views.
As soon as we define human beings as separate from their environment, then they necessarily live as robbers. Any talk about "self-defense" in that context is automatically bullshit, because everyone is basically a robber, and always was, and always will be. (Of course, that is ONLY "true" to the degree that the original definitions that separated people from their environment were "true.")
I see in your view of "governments as necessarily the biggest form of organized crime" the rationale which allowed Pablo Escobar to believe he could become the president of Colombia based strictly on his enormous wealth and his reliable source of a "positive balance of trade" due to the insatiable demand for his products provided by the cokeheads of the U.S.A. He had the murder thing pretty well covered as well. Could he really have been much worse than the regime he wished to replace?
One Thing Colombia and Canada Have in Common
Successful organized crime gangs appear to diversify over time, as well as work through series of alliances with others. Given that there has been thousands of years of the mostly hidden history of organized crime, it is extremely difficult to sort through the tautological "survival of the fittest" with respect to those.
One of the aspects are the degree to which intermarrying families have played a role, which interweaves biological and cultural factors in hyper-complicated ways. I recommend the following video as an attempt to paint that picture. The first parts are more about how that worked during American history, then the last half hour is an attempt to assess the history of the dominate organized crime gangs in Europe, which then tended to be the ones that spread out with the European invasions of the rest of the world:
http://www.youtube.com/watch?v=yzdomBX8U0w
UROKO
https://m.youtube.com/watch?v=e-IfKXHWw70
Best media I have found that gives details to how the Federal Reserve has created this debt paradigm.
By Mike Maloney : Hidden Secrets of Money, episode 4
Gene Rosen
Yes, Absolute Truth,
I already added that:
http://hiddensecretsofmoney.com/videos/episode-4
in a list of Excellent Videos on Money Systems
Thanks RM, Sometimes it is nice to read non linear perspectives, it requires much more thought and considered analysis!
i will ask for a point of order though Mr Speaker, in that your tone suggests that there is an inherent march towards incresing psychopathy and increasing brutalisation to the money backed by murder concept. this is in itself demonstrating a linearity type of thinking and incorrect in a dynamic non linear system. Of course manipulation and corruption will remain no matter what system ends up in place, but the study of history demonstrates that this is cyclical with peaks and troughs for all aspects of these components. It is the elite who decide to go to war, but the people who chose peace.
The zeitgist we are currently experiencing is becoming overt with endemic corruption in all juristictions, manipulation and graft in most endeavours and very little trust remaining in interpersonal interactions. this will only continue until we get mightily sick of it and collectively say enough. We are not there yet, not by a long way. Still long bread and circuses. Bring on the xenophobia and popcorn, this show has a long way to run. Generally it starts with with border protection, next will be tarrifs and misdirected anger at foreigners rather than the political class, then sabre rattling, conflict, war, decimation and privation. only then will there be the resetting of the human psyche to freedom, trade and inclusion.
As for not understanding the exponential function, this is a something that we live day by day. in a sigle linear relationship, it is incompatible with life, but in a non linear system, we produce tipping points and state changes. These happen ALL THE TIME. in fact there are often clusters of them within different cycles and in different areas of understanding. We just happen to be experiencing a few of these concurrently.
Ineresting times indeed.
I agreed with your view, Ctrl_P.
A worthwhile book that discusses the history of the theories of biological evolution, which provides comparisons for the possible future of political science, is Darwin's Blind Spot by Frank Ryan.
I like to imagine some political science fiction in which enough people understood the monetary and taxations systems enough to radically change those. However, at the present time, that appears to be merely a political fantasy, since, as you wrote, we are "still long bread and circuses."
The Malthusian Primitive Tribalist Forager Manifesto.
10,000 years ago, ALL humans were tribalist foragers. They made their living by going into the forest, killing something, and eating it. Sometimes, they killed and ate a tribalist forager from another tribe.
Bucolic. Sincere. Honest. Communal, In touch with nature. No bankers. No fraud. No market manipulation.
Also, violent, warlike, predadory, unpredictable, impoverished, subsistence existence.
This was the ORIGINAL human ethos.
"Life was nasty, brutish, and short". And the human population of earth was a few hundred thousand, because as the Malthusians feared, it was limited by the available food supply.
Then, some primitive homonid had a brain mutation, noticed that bees and squirrels were actually DEFERRING consumption and saving food for FUTURE consumption, and tried doing the same.
The FIRST CAPITALIST came into being. He saved food, he saved animals instead of eating them, he MULTIPLIED his resources. He created WEALTH!
His tribalist forager neighbors, following their primitive foraging instincts, tried to poach the FIRST CAPITALIST'S fields and herds, and were hit in the head with a stone axe by the FIRST CAPITALIST, and his numerous, multiplying progeny.
Violent. Yes. "Selfish". Yes.
But the FIRST CAPITALIST solved the problem of limited food supply that so frightened the Malthusians and drove them to tribal warfare and cannibalism.
Was the Maltlhusian Tribalish Forager mad that he couldn't forage in the nicest places, like the FIRST CAPITALIST's fields and pastures? Yes.
But the FIRST CAPITALIST made it possible for BILLIONS of people to have prosperous lives.
Whereas, the Malthusian Tribalist Forager just wanted to kill and eat things ( and people) and have everything for himself.
"The FIRST CAPITALIST made it possible for BILLIONS of people to have prosperous lives" only to the degree that the FIRST SCIENTIST enabled technological progress that could be applied to fresh planet.
The deeper problem with all of that "prosperity" was that it was based on developing the technological abilities which became based upon strip-mining the planet's natural resources. Ideally, what should be done is develop some better creative syntheses of the relatively steady-state balance of prehistorical human beings with the emerging powers provided by advancing technology. However, we are a long, long, long way from being able to do that, since instead we appear to be headed from the biggest BOOM to the biggest BUST, in terms of the total of human activities and population based on having been able to strip-mine a fresh planet, which systems are just now running into apparent global limits of diminishing returns with respect to be able to continue doing that.
Generally speaking, I think that "CAPITALISM" should be reconciled with human beings and civilizations operating as entropic pumps of environmental energy flows. I believe that the ideals of "FREE MARKET CAPITALISM" are the best ideals that could be reworked to become more consistent with perceiving human activities as general energy systems. However, actually doing that has to pass through the bottleneck of recognizing how and why the principles and methods of organized crime tended to become the basic operating systems.
I recommend that the progress made in physical science has to loop around and around to become progress in political science. IF that was possible, then we may be able to develop better balanced systems, that integrate human, industrial and natural ecologies. However, it is painfully obvious at the present time that so-called "CAPITALISM" has become FAKE, while all the "MARKETS" are more and more totally rigged, because we are using fundamentally fraudulent financial accounting systems, that operate in ways which the vast majority of people do not understand, because they do not want to understand.
I repudiate describing the existing systems as being "capitalist," no matter what the adjectives are used to qualify that, e.g., crony capitalism, vulture capitalism, and so on ... In a sense, what has happened is that "capitalism" has become excessively successful, and thus, become so far out of balance that it is no longer "capitalism."
It is arguable that Neolithic Civilizations have pushed "totalitarian agriculture" to become "totalitarian economics." Trends which were not important at the beginning of human civilization, when there was still a fresh planet to develop, have become more and more important as that planet was developed, and the natural resources that had made that possible were strip-mined. In those ways, those kinds of developments have high-graded themselves to hell.
In my view, the basic source of the apparently increasing problems with the global economy are due to the emergence of limits to being able to exponentially increase the strip-mining of the planet, which issues are showing up first and foremost through the fundamentally fraudulent financial accounting systems which had previously been facilitating that to happen. To the degree that there are still enough resources left to strip-mine, it is possible to still "kick the can down the road," by keeping the fundamentally fraudulent financial accounting systems going.
However, increasingly, the creation of the public "money" supply out of nothing as debts was actually the creation of anti-capital, like anti-matter, which combined to more and more annihilate "capitalism." In my view, it is impossible to fully imagine how demented and distorted the political economy has become due to having more and more been based upon governments ENFORCING FRAUDS by privately controlled banks, due to those banksters being able to capture control over the political processes and all related sociopolitical institutions, such as from the schools to the mass media. The vicious spirals that have been created by POLITICAL FUNDING appear to be spinning out of control, while more and more people are beginning to be forced to face those facts. (Although, in my opinion, while those are still being understood in superficial ways, those issues are surely getting harder and harder to simply continue to just ignore.)
As numerous articles on Zero Hedge have been discussing, the future series of financial crises are probably going to be orders of magnitude worse than the previous crises. I believe that the future history of human civilization will become much more like playing Russian Roulette on a Roller Coaster, than was previously the case, in the sense that the prehistory and history that you described, thebigunit, was more like the long ride up the first big hill of that Roller Coaster ride.
In my view, we are just reaching the tipping point at the top of that big ride UP, based on being able to strip-mine the natural resources of the planet with the technologies provided by the series of industrial revolutions. If so, then we are set to go through some future series of DOWNS & UPS & DOWNS ??? (While, at the same time, that Roller Coaster is loaded with people that have weapons of mass destruction pointed at each other.)
In that context, it is extremely difficult to imagine how there might eventually be some surviving systems emerge out of that history, which have developed ways to maintain better balances between the human, industrial and natural ecologies. Indeed, at the present time, the almost total triumphant dominance of ENFORCED FRAUDS, operating through vicious feedback loops through POLITICAL FUNDING, make it appear to be politically impossible.
Rather, the situation regarding that Roller Coaster Ride seems more like that presented in the cartoon featured in this previous article:
http://www.zerohedge.com/news/2015-08-27/its-just-correction
"It's Just A Correction!"
So, this is what people think about when they sit around all day and smoke marijuana.
I have no idea what to do with your analysis, except maybe, sit on a rock and light up a joint.
Way more interesting than sitting around talking bout their dicks.
Assertions about tribal beginnings from a non-tribalist. The value of material things was well understood by individual tribal members. The day prior to a trade session with whites the value of an axe head, a trap in terms of the number of skins needed to purchase was worked out by the chiefs and the traders but the values changed year to year but this constituted a market. And the Americans were known to be not as reliable as say the French. There was no murder that defined the value of a skin. And wealth was not accumulated for the sake of wealth since prestige in the tribe was more defined by the amount one gave away. An assertion by an anthropologist is hogwash.
Marijuana makes me sleepy, but for this guy it causes verbal diarrhea.
Think of it as "Modern Art" where you take a bucket of diarrhea and throw it against a canvas. It can mean anything you want it to mean. Or it could mean nothing at all.
Right Now, i'm studying the concept of beer....
TL/DR Good Concept!
https://vimeo.com/23278902
Another ape trying to save the world, eh? :-D
Which chump tanked this article 1-star? I was second to vote, so I know.
I did, as explained in my comment.
+1 to both your posts. And thanks for the step-up and reasoning why you voted down. Your view is widely understood as one digs into the core causes. I view this article as the polite (and accurate) intro version for newer ZH members; whereas, your post is the 'meaty' version. Please post more often. You have a solid view to express.
Thanks, holdbuysell!
I agree that the superficially correct presentations of the problems may enable the newer ZH members to consider those points of view. (As many others have commented before, I have yet to find any overall better Web site that covers these kinds of topics than Zero Hedge.)
As a new member I do appreciate your views. You present new approaches and phrases that deserve to be slept on and organized in dreams. A blunt communication of powerful ideas. As a retired firefighter I know "zero" about the world you guys operate in. And I always imagined it to be boring. Wish I had corrected that falsehood half a century ago.
Thanks, o r c k!
An entertaining way to learn about these kinds of issues is to watch various free videos. Many of those have been featured on Zero Hedge in previous articles. I have colllected links to my favourites here: Excellent Videos on Money Systems
o r c k:
He's really kind of dumb.
He's like a bad poet who strings together gibberish phrases and imagines he's saying something deep and profound. It's still just gibberish.
Good article, but more convoluted than necessary. Bitcoin has pulled the 'value' cover off of the definition of money and made it very clear: Anything used in a 'pass-through' transaction is money. In other words, from the list given in the article above, only Medium Of Exchange is necessary to define money. Bitcoin has no inherent value and is used as a unit of account only because it is a medium of exchange, so subservient to that function.
Bitcoin is not the only way that the Internet has thrown modern economics theory on its head. How, for instance, can you have a free market when everything is digital and so can all be regulated/manipulated? Or, for that matter, have an open exchange when those doing it must act under total surveillance for taxation and regulation purposes?
TheDailyBell.com is running a great serial right now that explores this subject. I suggest everyone reading this post skip over to take a look it. It you can't find the link, just Google Thieves Emporium which is the book from which the serial is taken.
It was my fault Sam.
I imbibed.
Cryptocurrencies are merely tiny parasites on top of bigger parasites. What makes the banksters' fiat money valuable is that people are forced by governments to pay their taxes with that form of money. However, it is ridiculously FALSE to assert that "only Medium Of Exchange is necessary to define money."
Voluntary contracts actually exist within the dynamic equilibria of involuntary contracts. The fundamental concepts are SUBTRACTION, from which follows ROBBERY. Anything that could be traded could be robbed instead. Politics should be the development of better dynamic equilibria between the forces of robberies. However, the double bind paradox with any Republic was that "Nobody guards the guardians."
Human beings and civilizations necessarily operate as entropic pumps of environment energy flows, which phenomena most closely match the principles and methods of organized crime. Therefore, what actually exists are that governments are the biggest forms of organized crime, controlled by the best organized gangs of criminals. I.e., the currently existing public "money" supply is based upon governments enforcing frauds by privately controlled banks.
Those who wish to develop alternative currencies tend to deliberately ignore the ways that money is necessarily measurement backed by murder. In that sense, cryptocurrencies are piggy-backing on top of the established systems that prevent fraud and robbery, while those cryptocurrencies tend to not be paying for those systems which endeavour to prevent fraud and robbery. Of course, those doing that tend to justify it by their perceptions that the governments which were supposed to enforce such a rule of law have instead become the enforcers for the worse examples of frauds and robberies, as manifestations of legalized lies, backed by legalized violence.
Generally speaking, the most commonly accepted views of "money" are drowning in the biggest bullies' bullshit world views, based upon the dualities of false fundamental dichotomies, and the related impossible ideals. However, the actual situation should be understood through using unitary mechanisms, such as those which recognize that governments are necessarily the biggest forms of organized crime, controlled by the best organized gang of criminals. In that context, any possible cryptocurrency is at most a complementary currency, which is necessarily some alternative form of organized crime, through which may be organized lies operating robberies. Those who promote their favourite, idealized versions of what "money" should be tend to not be interested in reconciling that with physical realities. Indeed, it is not an accident that the banksters do that more than anyone else.
Any Medium Of Exchange exists as some human artificial selection system within natural selection systems. Those who promote the potential virtues of such an idealized form of "money" as a
Medium Of Exchange tend to deliberately ignore the background of natural selection pressures. However, there are actually unitary mechanisms that blend from robbery to trading, while it is the robbery which is fundamental, while the trading is but a possible dynamic equilibrium between the robberies.
robberies. Couldn't have said it better my self. ;-0
First sentence killed your ideas.
Debt-money's value is the imputed compounding interest accruing to the creator and owner of the debt-money and its proxies at an effective infinite term.
All of "our money" is owned by the top 0.001% who own controling interest in the TBTE banks who lend private debt-money into existence, as well as the private central bank that prints the reserves against the TBTE's banks private lending/deposits.
Therefore, "our money" is "their money" . . . in perpetuity or until the system implodes. The bottom 99%+ own nothing but, instead, borrow debt-money at compounding interest at an infinite term and circulate it for subsistence, if we're lucky.
All "property" is based on the imputed value of the inflated debt-money supply and its attendent compounding interest in perpetuity.
One example is "real" estate. Half or more of the "market" value is the imputed compouding interest of the monetized land value in perpetuity. This "rentier tax" or "land-resource rent" is parasitc and non-productive, resulting in increasing the value of land without the corresponding increase in productivity for the community/society.
Now well over half of "real" estate mortgages ("dead pledges") are gauranteed by the federal gov't, implying that the state is encouraging, enforcing, and protecting the unproductive, costly "rentier tax" and "land resource rent".
The US is in dire need of "land reform" and a radical change in the tax code from taxing labor, production, savings, and productive capital accumulation to taxing away "rentier taxes" and "land resource rents" from rentier speculation and the perpetual monopoly control by private banks of debt-money and the monetization of scarce land values.
See Henry George.
Money is a trick played on sheeple. May I suggest that 7 billion people take the control over money away from bankers and banking families and as above mentioned turn it into a public utility.
Probably not a wise choice since the bankers took control of the US military and Federal government but maybe during WWIII the war to take control over banksters.
Bitcoin $242 Thar she goes.
If you didn't like this article "BIGFOOT" in British Columbia is on Coast to Coast AM in an hour.
That Filthy Lucre in your Wallet doesn't Even Belong to You anyways... It is just On Loan from The Federal Reserve!
How's That for an Illusion? Sneaky Bastards!
Well, you could be resposible like my brother who paid off his house loan so he should be clear of debt. The bank seems to have "lost" the note by the way. It went missing. Now he told me today that his inurance outfit raised his rate on the house because his credit rating dropped. He called the morons and asked why. They said your credit rating is dropping because you don't have any revolving credit. My credit rating used to be good but I also have no debt so I guessing I am in the same boat. I did have a credit card outfit CITI cancel one of my cards because I didn't use it.
So I guess the moral of the story is that you are supposed to be in perpetual debt. You are not worth anything if you don't have debt. You really can not be more fucked up than that. Holy fuck, my bro paid his debts off and so did I. Now we are the assholes? WHAT? I did things a little differently than my brother did. I only own cars and motorcycles with title. How about I buy a 100K worth of physical gold and a boat and then not pay anything? Will that raise my credit rating?
We owe you fuckers nothing save for a 30 cal at 3000 fps.
Feel ya! I was just denied a car loan by 'Chr^sler Financial' with a blended credit score of 840... Guessing I must be risky!!!
Really? What were you trying to buy? Yeah, I want a Hyundai Genesis with the V-8 too but that does not make sense for me to do. As for the Jesus Fucking Chryslers your best bet is an earlier 2000 to 2007 model Town and Country. I have had a couple of those(still have one) and they are solid vehicles that can do a lot for you. You will probably get around 22 mpg. They made a shitload of those vans so parts are easy to come by. They made those vans the right way and they are heavy. The Dodge Caravan is the same chassis but with less options. Very solid vehicles. You can pick a decent one up for a couple grand. You might have to fix on it a little but I am impressed and I am not easily impressed.
I look at things differently. I say go ahead and trash my credit rating. That way I am even less inclined to borrow. Best yet, it keeps me from getting all those credit card offers in the mail. Anything I may buy in the future I will do with cash or equivalent money du jour.
+1 Just remember that YOU will become a credit risk for not having any debt and having stacks and not stocks. You will get a bad mark on your report card that says "Does not play well with others."
There's nothing inevitable about it. They wipe it out themselves by slowly expanding the money supply year on year; their 2% inflation target is legalized counterfeiting.
Great read. Thanks Koos Jansen
Reasoning with most gold bugs about banking is like reasoning with anarchists about government. If you believe there are no legitimate functions for government, then there is no basis for arguing about government corruption. It's not a matter of corruption if government is illegitimate by its very existence. Okay, well, whatever. Good luck with that one.
Likewise banking.
Banking, in its simplest form as a safe repository for wealth, was an innovation. Imagine being deployed as an officer to Afghanistan, but you've got to take all your moveable wealth with you in a treasure chest because there is no place safe to leave it back home in Kansas. And then hope against hope that it doesn't vanish somehow when you're on patrol or if you get wounded. That was exactly what Ottoman commanders had to do when on campaign versus Venitian commanders, who had no such worries because they were able to leave their wealth in a bank vault at home on an account that could be drawn upon by no one but themselves. It made for a lot of fun, however, looting the Ottoman's tents.
Fractional reserve banking was likewise an innovation, one that allowed economies to break out of their medieval class structures and develop a middle class.
There is no magical connection between the amount of an arbitrary yellow metal that can be pulled out of the ground, and the production possibilities of a given economy's available labor and natural resources. None whatsoever. So the question was, how do you fund those possibilities? And the answer was fractional reserve banking.
To say that fiat money or gold-backed money -- either one -- lent on a fractional reserve basis produces money that is "created out of thin air" and "backed by nothing" is worse than a canard. It is a lie.
Do you have a mortgage? If so, guess what. The money the bank loaned you came from someone else's deposit, minus the reserve. So that original deposit is counted as money, and so is the money you paid to the seller, also on deposit at a bank. Viola! The money you paid the seller has been "created." But is that original money now backed by "nothing"? Oh no, hell no, because the bank just so happens to have a lien against your home. Quit paying, and they will foreclose on you and sell it to cover their liability to the original depositer.
All fiat money, along with that portion of commodity-backed money that is lent on a fractional basis, is asset backed. All of it. Once that is established, then we've got a basis for a discussion about the corruption of banking which, as was clearly seen during the housing bubble, revolves around the artificial pumping up of assets.
Short of that, we've got no basis of discussion at all. If you want to go back to the Middle Ages, where the lords got the specie and the serfs got the work, have fun.
If you believe there are no legitimate functions for government, then there is no basis for arguing about government corruption.
So far every form of government has been tried and failed for about the same reason - their power over property, money and commerce. Take those away and there is a chance of something better coming out of it. Otherwise, future generations will be making the same mistake again. Wash. Rinse. Repeat.
In an ideal world, men are angels. But since they are not, there is no monetary standard that can change them. That includes a gold standard or any other commodity money. I don't know how this will turn out. But I know what I will be looking for.
You want to leave property, money and commerce naked to the whims of internal criminals and deadbeats and external invaders? Eegads. Read the history of the Pilgrims. The first winter after they had tried to live according to the book of Acts, with "all things common" based on "good will," they starved. As a theory of government, as the twentieth century illustrated beyond all doubt, that's even worse.
Fractional reserve banking was likewise an innovation, one that allowed economies to break out of their medieval class structures and develop a middle class.
Fractional reserve banking has one mortal flaw: it produces multiple claims on the same money. It's a fraud! On the surface, it works until loan losses exceed the bank's available cash. That's what sets up bank runs and why monetary authorities want to eliminate cash.
There is no fraud when banks specialize in either savings or loans. Savers would pay to have their money stored for safekeeping. Loan banks profit from a premium over the market interest rate. That would eliminate the fraud of loaning depositors' savings to third parties.
There is no system that can prevent bankers from defrauding their clients. But at least by separating savings from loans, it eliminates an easy temptation.
In an honest system there are not multiple claims on the same money, because every dollar of cash is backed by an asset. The only way a bank's loan losses can exceed its deposits is if the value of the assets backing its loans falls below the amount owed to them. Which is exactly why the crash in house values in '08-'09 caused a banking crisis.
So yes, the system isn't invunerable, especially when economies show an historic tendency for sudden asset devaluations economy-wide instead of just locally.
The system that came out of the Great Depression was governed by Glass Steagall, which by law fenced off depository and savings funds into assets that were as money-good as possible and earned interest in line with the growth of the overall economy. After the final nail in the coffin of that act was hammered in, during Clinton, not only were banksters free to play all kinds of monkey business, the Fed lost its ability to distinguish what money capital actually existed in the economy. M1, M2, M3 became obsolete. So after scaring savers starving for yield, due to the Fed's artificial lowering of interest rates on savings, into who-knows-what-quality assets -- to keep the pump going -- now they rely on "data points."
Erk. Uncle Milt never forsaw that, I guarantee you. This isn't going to end well, and the Tech Wreck and Housing Bubble were only hints of what's to come.
As a philosophical point, I believe it is a mistake to demand perfection of human institutions. Especially when history shows that those claiming that they can usher in perfection end up being skilled mostly at erecting guillotines and fencing off gulags.
Close is going to have to be good enough.
BTW, nowadays the PTB's temptation is to inflate an economy with too much money to buttress their bogus claims of being the authors of the economy's success. But there have been times in the past when previous PTBs fell to the temptation to strangle off the money supply.
Case in point, was Great Britain dealing with its North American colonies. It starved them of specie for the express purpose of preventing the colonists being able to accumulate enough capital to compete with the vested interests back in the metropolis. We're on the dollar and not the pound because the money capital accumulated during colonial days was traded for by the Yankees in the Caribbean.
"Do you have a mortgage? If so, guess what. The money the bank loaned you came from someone else's deposit, minus the reserve."
Wrong, liquidity requirements and reserve ratios don’t limit bank lending and money creation : http://positivemoney.org/how-money-works/banking-101-video-course/how-mu...
Great video, thanks for posting.
I’m not arguing that sound banking practices haven’t been corrupted, or more accurately abandoned. Obviously, they have. I’m arguing not to throw out the baby with the bath water.
@ 7:28, the evidence is presented in a way that leads to a wrong conclusion: “Collectively, the banks can increase the money supply almost indefinitely without being constrained by central bank reserves.” True enough. But that doesn’t mean that they aren’t constrained. Because when it comes to “the ratio between bank-created money in the hands of the public” reaching “80;1” against central bank reserves, the key takeaway is in the previous phrase. That ratio existed “before the financial crisis,” which the narrator evidently intends to be a throwaway line. It is anything but.
What constrains banksters who are granted incentives to increase their wealth via their increasing their loan portfolios "indefinitely," are the financial crises that such practices guarantee. BTW, continuing those incentives by resorting to the so-called Basil requirements represents nothing more than a transparent attempt by the banksters to continue to be allowed to make liar loans. Which the politicos have fallen for because they are not only blind, they are stupid.
The way I see it -- and I am open to persuasion otherwise -- the solution is not to do away the fractional reserve banking, but to return the system to sound banking practices. Practices like requiring real reserves and meaningful downpayments for borrowers -- such as 20% down on mortgages.
Calling the system "insane," where banks act as intermediaries between savers and investors whereby both profit, is all well and good. ZIRP, liar loans, zero down, zero reserves, and zero opportunities for savers to earn a safe yield are insane. But they have nothing to do with sound banking. They are a violation of it.
So what are we going to replace traditional banking with that doesn't choke off the economy's potential for producing prosperity? Is that in the next installment of the series? I guess a system where every individual acts as his own police force and army would fit well with one in which everyone has to be her own bank too.
BTW, as far as all you "stackers" out there go, I hope you haven't let your brother-in-law know what you've got in your safe. If you have, like I've talked about before here, don't be surprised during the zombie apocolypse if the voice behind the hood of the individual beating you on the bottom of your feet with a truncheon to extract your combination sounds suspiciously like his.
It'll be a rude awakening for you, I'm here to say, on the civilizational benefits of an honest bank.
Barter by direct exchange is another myth.
Read David Graeber "Debt the first five thousand years" to see the sophisticated systems used before money.
Human Beings before us had the same brain capacity (5000 years ago) but more lmited technology, they were a resourceful bunch.
Infact the whole thing is totally wrong.
Central Banks have no real control over the money supply as the reserves required are so small.
When you pay a fee for a mortgage the fee contains the reserve allowing the bank to create the whole mortgage out of nothing.
Central Banks have no control over this.
They can make credit more expensive, so as to try and limit its creation by banks.
But now Western Governments have such massive debts, to raise interest rates to control credit, bankrupts Governments, i.e. the system has failed.
If you want to understand modern money here is the BoE to explain:
http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q1prereleasemoneyintro.pdf
http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q1prereleasemoneycreation.pdf
The only book that explains it correctly is "Where does money come from?" now available on Amazon.
Debt always over-whelms societies and has done for millenia.
They used to have debt jubilees in ancient times and more recently we had recessions and bankruptcy to remove bad debt from the system.
The current idea of all debt being paid makes a mockery of 5,000 years of experience.
The idea that lenders and borrowers behave rationally is laughable:
Bankers don't understand their product, debt, so how can they act rationally?
“What is wrong with lending more money into the Chinese stock market?” Chinese banker before last month
“What is wrong with lending more money into real estate?” Chinese banker last year
"What is wrong with lending more money to Greece?" European banker pre-2010
"What is wrong with a NINA (no income no asset) mortgage?" US banker pre-2008
“What is wrong with lending more money into real estate?” US banker pre-2008
"What is wrong with lending more money into real estate?" Irish banker pre-2008
"What is wrong with lending more money into real estate?" Spanish banker pre-2008
"What is wrong with lending more money into real estate?" Japanese banker pre-1989
"What is wrong with lending more money into real estate?" UK banker pre-1989
“What is wrong with lending more money into the US stock market?” US banker pre-1929
All the author is implying is the simple fact that barter must have preceeded money, because one is a simpler system that naturally leads to the other. Nothing was said about how long or in what manner either persisted.
Central banks exert a lot of control over the money supply with dictates about what reserve ratio their partners in banking crimes must hold.
A better book on this topic is a reasonably short read (107 large type pages or 3-hour audio), Murray Rothbard's "What Has Government Done To Our Money", available free at http://pure-liberty.org/Money.html
The reserve ratio now is as close to zero as makes no difference.
Granted, it now makes no difference, because the implosion of the US dollar is already set in motion as all that money formerly used as global reserve currency finds its way home to roost.
Fiat currencies are not the property of the citizen.
Their exchange value can be changed by the minority that controls them.
They are the expression of the power of a few of many.
Are the denial of economic and social freedom.
At the global level are an expression of power relations geopolitical and military.
The fiat currencies are dictatorship of a minority over the peoples.
Basically money functions as a voucher system and as such is a contract, not a commodity. It is a medium, like blood in the body. Now with either blood or vouchers, you want just about enough to make the system function, yet since we think of it as a material property, everyone wants as much as possible and the system is thus incentivized to create and store far in excess of what is necessary, which corrupts the whole process.
Most people save money for various predictable reasons, such as housing, food, education, child and elder care, etc. So if a community were to direct its excess wealth into producing those services, or encouraging the community to produce them organically, then it would have much less need to store all this notational wealth in a banking system, from which the government managing this medium can siphon it off.
In the long run, it's a small planet and we are not going anywhere else. Store wealth in the environment and the community.
Paper money originally was a warehouse receipt or voucher for a stored commodity that has value either for its use as a commodity, or as a medium of transaction determined by the market in that society. Printing more vouchers than those which represent the actual stored goods was originally considered fraud. When the criminals who call themselves government legalized this fraud, so that they and their friends could profit from it, the perpetration of fraudulent vouchers exploded, along with the losses stolen from society. Originally, those who stole in this manner feared the people they were defrauding. The root cause of the scale of the problem today is the criminal gang called central government that has coveyed a veneer of "legality" on this crime, along with a very long list of other crimes against society. Today all we have are fraudulent vouchers that represent nothing more than faith in a criminal gang to force others to assept it as legal tender. This is quite different than a contract, because both parties did not originally agree in writing to this voucher system which the criminals who call themselves government have imposed upon society to facilitate massive theft. All such fraudulent voucher systems (aka fiat money) ultimately become worthless.
Everyone has the right to do as they see fit with their stored items that represent the history of their life's labors and accumulations, so long as they don't aggress against anyone elses person, property or voluntary interactions. Some will chose as you do, and others won't. The vast majority with excess accumulation will loan it out in some fashion for others to use, in return for some expected increase in the overall value, as they perceive it. That's why the hoarding concern doesn't actually exist as a practical matter in a free economy and doesn't represent any kind of an economic corruption. The real corruption arises when the criminal gang who call themselves government decide to try and impose their will upon our freedom of choice, steal our property, or as in the case of modern banking, legalize criminal behavior.
Whatever amount exists in a society will be enough of that has been selected by the free market to be used as a medium of exchange. The prices in terms of that commodity will simply adjust to accomodate its use.
All of this is explained far better than I can in Murray Rothbard's "For A New Liberty", available free at
http://pure-liberty.org/Visions.html
Money as Debt http://www.moneyasdebt.net/
Money as Debt http://www.moneyasdebt.net/
Money is a promise to complete a trade. And until delivery, the trader's promise is obviously his debt. If he fails to deliver, his default must be recovered by immediate like interest collections. If that isn't done, he has counterfeited ... and that causes inflation of the money itself (i.e. devalues all other in-process trading promises).
Governments never deliver (they just roll over their trading promises), and their defaults are not recovered with like interest collections. Thus they are counterfeiters. They do it openly claiming 2% is the right level of inflation, and delivering on average 4% since 1913.
It's time the counterfeiters were taken out of the game.
I think ZH crowd is much more sophisticated to read author's kindergarten level expose about the money that could be given at some of those banking association meetings.
Here is more adult version of the story of the money. The money that ruling elite shoved down our throats.
https://contrarianopinion.wordpress.com/2015/04/14/plutus-and-the-myth-o...
From the starters author forgot that money is just a tool of the financial system imposed by the ruling elite or state on their people for a sole purpose of more efficient extracting value from economic activity of the population in a form of taxes, fees or rents.
And as far as the true illusion of money is concerned, here is an excerpt from above linked post:
Agree. In the old days of barter you would have to pay your taxes in goats or bags of wheat. Not very convenient to collect or store. So the king invents money so that YOU have to do the nasty job of converting your fish into money in order to pay him his taxes. The king then gets to store his money without having to feed it, clean up after it, or keep the rats from getting it. Wait now.... has anything changed?? That sounds like the Fed's view of the Economy too!
.. money in itself is an illusion, creation of those who rule us to efficiently extract or steal our hard labor under the propaganda of equivalency of material items we need or are conditioned to want and a mere symbol of vague and unverifiable commitment of a ruling power.
Wrong.
Money is "a certified promise to complete a trade". It is created by traders. It is destroyed by traders on delivery. There is "no" illusion.
The disconnect comes with one class of trader in particular. That is the "government class". They make trading promises but never deliver. They just roll them over ... and that's default. Further, those defaults are not recovered by like interest collections so they result in inflation (devaluing all other in-process trading promises).
Know the problem before you propose a solution.
Several posts channel David Graeber, but most of his historic basis for debt is based on the concept of a king or emperor or local warlord claiming ownership over land, and you as lowly farmer having to pay debts to that ruler. So in many ways, it was closer to a 'tax' in the pre-money days, and you had to pay this 'tax debt' in food, products, or labor because you had no money. Graeber is not a fan of barter, but logically that is not just informal or infrequent groups trading. You might help your neighbor pick his apples and he would give you some in exchange for labor. You might then barter half your apples for some cheese from another neighbor. None of this gets recorded in the history books, but how do you argue that this type of barter did not exist? If you were a fisherman, did you eat nothing but fish? Or did you not barter some fish in exchange for flour?
But history is just that. What you need to consider is what YOU are going to barter with after the collapse. Right now you might barter your work skills in exchange for fiat, but what will happen when your job goes away and fiat is not worth the paper it is printed on? Will you eat nothing but deer meat? Or will you barter some extra meat for ammo, whiskey, vitamins, canned fruit, etc?
Im currenly teading the lords of finance
Before and after WW1
All nations were on the Gold standard
It didnt help. Because all currencies had to be pegged to an ounce of Gold
Once England pegged to pre WW1 values , despite the debt of WW1, the system broke down.
Being pegged to Gold doesnt change human nature.
Greed , debt, inflation, wars, all happen. Because the pegs are manipulated.
It would be nice if Gold could change human nature but it cant.
"Being pegged to Gold doesnt change human nature."
You stated the fundamental problem PERFECTLY - humans must be changed, not just the monetary system, to attain stability.
The root problem is the existence of government issued money. Without government money, which is simply a means of theft for the criminals who call themselves government, there would be no problem with money, aside from the occasional random fraud. Without central governments and their central banks to coordinate the fraud, it will be a small problem and the perpetrators will have a lot of incentive (tar, feathers, hanging, drawn and quartered, etc) to not engage in this practice.
Human nature is precisely why central governments should not be allowed to exist, nor their levers of control over society and means of massive theft, like central government issued money. The worst elements of society seek control over others. These levers as the means to make it easier for them should not be allowed to exist.
All of this is explained far better than I can in Murray Rothbard's "For A New Liberty", available free at
http://pure-liberty.org/Visions.html
I agree that a gold standard is not a viable and sustainable option. However, a FREELY traded gold and silver market, as independent currencies (and not the BS paper PM ponzi corrently in place) would be all that is needed. The market price of gold and silver would likely soar to levels that would ultimately cover again all outstanding debts - creating a similar thing as in a gold standard but via market forces. My hunch is that something like that is going to happen. How and when, I'm not so sure. China seems to be forcing this avenue... Time will tell.
However, a FREELY traded gold and silver market, as independent currencies (and not the BS paper PM ponzi corrently in place) would be all that is needed.
Nonsense. There is only 1oz of gold per person on Earth. And the total value of silver is just 1/5th the total value of the gold.
The market price of gold and silver would likely soar to levels that would ultimately cover again all outstanding debts - creating a similar thing as in a gold standard but via market forces.
Miners and refiners are now very happy to create new gold from dirt or grinding up computers for $2,000 per ounce. If the price of gold soars that will just turn more normally productive people into people wasting their time and efforts mining and refining. That's unbelievably wasteful just to enhance simple barter exchange with money. What you have just written is absolute lunacy and more people see it your way than any other.
As Lincoln said, "you can fool all the people some of the time".
All true BUT
1. You humans are going to live under ONLY the fiat + fractional-banking monetary system for the rest of your lives unless you overthrow ALL the major political regimes GLOBALLY and implement some new non-fiat, non-fractional-banking monetary system GLOBALLY
2. You are NOT EVER going to overthrow ANY political regimes just by exchanging your fiat for gold - political regimes can be overthrown ONLY the traditional way, ie FORCE of arms, especially in this era when MAJORITIES of the populations of ALL developed countries are living extensively off entitlement programs and therefore TOTALLY dependent upon their political regime and its fiat + fractional-banking monetary system.
So while these historical regurgitations and discussions on monetary systems are intellectually interesting, they are totally worthless in practical terms because none of you will ever live under any other kind of system, no matter how much you stack.
Overthrowing central governments is unnecessary, and actually counter-productive, because they still have enough strength to prevail in a contest of force (instead of ideas). We only need to wait for central governments to collapse in financial and moral bankruptcy, while disseminating a few very important ideas shared below.
Indeed, the inevitable self destruction of central governments will be extremely difficult, because of what central governments have done to destroy the intrinsic value of what people use as a medium of exchange, money. If commodity backed non-government money doesn't re-emerge quickly (very unlikely), economic exchanges will be severely hindered after the self-destruction by the return to barter for the most part. Supply chains will collapse, and then a large majority of the populations of people whose survival depend entirely on the supply chains will perish in a few months. What remains of local societies will decide upon their preferred medium(s) of exchange, with no need for a central government to be involved. Odds are good that silver and gold will ultimately emerge as the new money, based on all the historical evidence.
When, not if, the central governments self-destruct, we need as many people as possible to remember these few simple facts:
All of the societal pain will be because of what central governments did to consume the resources of society and destroy its money, while enslaving the majority to dependence upon it's stolen and counterfeit money. The pain will NOT be because of the absence of central governments. The return of the state will only assure that future generations will experience this pain again.
...Life, Liberty and the Persuit of Happiness. To secure "these rights", governments are instituted AMONG men, not over them. No form of "government" beyond, possibly, the most local level is needed to secure "these rights". Anything more, will only serve to violate "these rights". Central government is unnecessary and only serves to violate these most basic rights.
For those of us who survive the pending calamity, and all future generations, we must do everything in our power to prevent the return of central governments after they soon self-destruct. No other lesson for the future of mankind is more important.
To learn more about the many advantages of a stateless society, start with Murray Rothbard's "For A New Liberty", available free at
http://pure-liberty.org/Visions.html
"We only need to wait for central governments to collapse in financial and moral bankruptcy"
ALL governments that are not direct democracies have been morally bankrupt since inception.
You repeat the fantasy and delusion of so many dreamers, ie that "wait for central governments to collapse in .. financial bankruptcy" - you are waiting for Godot and will die still waiting.
ALL governments that are not direct democracies have been morally bankrupt since inception.
Democracy doesn't prevent corruption ... it enables it. By my ongoing poll, only 7% of the voters know that WTC7 fell down. Propaganda and restrictions on information are simple tools for corruption of democracies. Polls are a measure of the effectiveness of these tools. When polls show they have performed their intended purpose, only then is the vote taken.
You obviously do not know the HUGE difference between
DIRECT democracy = what does not exist ANYWHERE
and
representative democracy - what most developed countries have, except Russia and China
Try reading up on this topic and spending less time on your fanatical obssesion with this WTC7 issue as the indicator and measure of everything social and political.
Try reading up on this topic and spending less time on your fanatical obssesion with this WTC7 issue as the indicator and measure of everything social and political.
Always another reading assignment from those who can memorize but can't think.
Re representative democracy: At the Federal level, I and 500,000 other people have the same representative. He doesn't know me and I don't know him. Even at the local level we don't know our representatives and they don't know us. And how do we learn enough about them to select them? Why, through propaganda of course.
Re WTC7: That is the litmus test. It proves two things. "All" the people can be fooled. And people (including you by your comment) don't care when they are being fooled. Knowing that, there is only one way out. Break into ever smaller and smaller groups. Let discrimination ring as is its natural want to do.
Amazing!!!
If commodity backed non-government money doesn't re-emerge quickly (very unlikely), economic exchanges will be severely hindered after the self-destruction by the return to barter for the most part.
Commodity backed money is obviously flawed on its face. It just forces the trader to not only know the value of the universally accepted money ... but he must also know how that value is being distorted by the changing value of the "backing" commodity. It's just plain stupid and serves no purpose whatever.
Holy **** this article is retarded.
People are printing fiat with Ziggy Stardust's mug on it and exchanging it for goods and services with absolutely no government backing. Fiat HAS NOTHING TO DO WITH GOVERNMENT or banks. People must exchange their capacities and abilities somehow. They agree to some medium of exchange. What they exchange is FIAT. It is a fungible proxy for their productivity.
The last thing I want to do is walk around armed to the teeth carrying scales and "precious metals" to exchange for things I need. The idea of doing something like that in 2015 is completely retarded.
Solution: Bitgold!.
Money is control and power and those that have those capabilities will hold on to them at all costs; but that is not to say they may NEVER lose them....
"If banks make loans they create credit ..."
Aren't they actually creating indebtedness for the bank - to the original depositor? Isn't it the initial depositor that allows the credit through his creation of something valuable to society?
Here we go again. In 1940 there was published "Magnificent Delusion" by Fred Clark. Seems ever so often folks have to rehash and figure out this stuff all over again. Needs to be done since folks just don't learn from the past.
Lots of words ... and still leaves the reader clueless about what money is.
Here's the whole story about what money is, always has been, and always will be.
Money is "a promise to complete a trade". This is obvious from examining trade: Trade is a three step process: (1) Negotiation; (2) Promise to Deliver; (3) Delivery. In simple barter, (2) and (3) happen simultaneously, on the spot. Money allows (2) and (3) to happen over time and space. Thus it is obviously "a promise to complete a trade".
Traders "create" money by making trading promises and getting them certified. These certificates then circulate in the marketplace as the most valued object of virtually all simple barter trades ... and all trades are reduced to simple barter transactions. The certificates are accepted everywhere. Their value never changes. They are in free supply. On "delivery", the trader returns the certificates as promised and they are destroyed. If he defaults, the amount of default is recovered with like interest collections and destroyed.
The operative relation is: INFLATION = DEFAULT - INTEREST = zero
This guarantees:
Before the money enhanced trading promise, no money related to the trade exists. After completion (or default) of the trading promise, no money related to the trade exists.
Everyone who has ever purchased something on time (i.e. made a trade over time and space) knows first hand about the process.
It's exactly that simple folks.
Wonder why we have allowed manipulation and control of money by capitalists? So do I. It gives them the power to prevent us from knowing and treating money for what it really is:
Once the capitalists get control of the money it's all but impossible to wrest that control away from them. It is enormously profitable to them; it is riskless; and it is all but effortless. As Rothschild is reported to have said: "Give me control of the money and I care not who makes the laws".
It doesn't take too many words does it. Perfectly objective isn't it. Anyone describing it as something else is obfuscating. They are part of the problem. Ask yourrself ... why do they want to be part of the problem? Follow the money for the answer.
http://insidebitcoins.com/news/overstocks-to-platform-is-reinventing-wal...
I am empathetic with what I believe is the author's intent in writing this article, so I am in principal reluctant to be too critical of it.
However, if we ever expect the public to trust that what is published in ZH more than the tripe we get from the MSM, we have to be careful not to mischaracterize the truth in our efforts to attack banking abuses.
The author states:
“The question is not if a bank can go bust, but when, as banks are by definition insolvent in holding a fraction of deposits in reserve.”
Which is not true, unless the fortunes of the bank deteriorate for other reasons from mismanagement or corruption (which is what he should really be objecting to).
Insolvency is define by most accounting and financial definitions to exist when an entity’s liabilities (amounts it owes creditors, depositors) exceed its assets (typically for a bank, the securities it owns and loans made to others at interest) – driving what is known as its net worth negative. A 10% reserve requirement implies that the bank may only loan to others 90% of the funds at its disposal, retaining 10% as a reserve against bad debts.
Fractional reserve banking does not imply per se that any bank is insolvent, as the author states. In his example (which is admittedly simplified for illustrative purposes), the 10% of reserves (of the total 100% of funds available to it) that it must maintain would typically consist of the bank’s owners’ equity and reserves that it is not entitled to lend. However, all of the loans it makes to borrowers and any securities it purchases that do not qualify as reserves with the remaining 90% represent assets (obligations of others to the bank) on its balance sheet, so in reality its assets are NOT less than it liabilities simply because of fractional reserve banking. The 10% reserve is also usually invested in either cash or other safe assets that contribute to the bank’s meeting its reserve requirement, which brings the total asset side of the balance sheet up to 100% of the total in the author’s example. At the starting point in the example the author uses, his model bank would therefore have 10% equity in reserve (100% in assets - 90% liabilities excluding owner’s equity), so it would not be insolvent.
The problems arise when the banks make loans that are unlikely to be repaid, which then lose their value, driving the lending portion of the asset side of the balance sheet (originally the 90%) down – which could potentially cause insolvency once the 10 % reserve is depleted, (i.e. in this simplified example, when the lending-related assets drop to less than 80% in value of the original pool of capital).
Other problems can arise when corrupt bankers misstate the quantity or character of the assets on their balance sheets, with or without collusion with outsiders.
Other problems can arise when corrupt bankers only lend to their cronies for purposes of speculation, driving up asset prices, but doing nothing to actually support the productive economy.
These are the abuses that we should be attacking, not the inherent nature of the fractional reserve banking system.
All banks, if they engage in lending at all (which is the valuable function they should be serving in society) are by definition fractional reserve. The purpose of the reserve is to protect against collapse of the system when a certain (hopefully small) portion of the loans inevitably go bad based on normal business risks absorbed by the bank in exchange for return on its invested capital.
I applaud the author’s skepticism of our current corrupt cabalist controlled banking system, but in order to have credibility fighting the cabal, we need to keep it real.
Things aren't bad enough for people to act. There aren't enough hungry people yet.
Revolutions are fought by starving soldiers.
Disagree, with extreme prejudice. Let’s see..........we have a system that began as a fraud, is leveraged at least 9 to 1 or greater, assuming that its balance sheet itself is not a lie, and depends for its solvency the ethereal assumption that there is no systemic risk. The putative buttress for this system, aka the FDIC, is itself another lie. Compounding this fraud is the insolvency of the ‘mother ship’ - the Fed Reserve, which is currently operating with a cap rate of .....not 10%, but a stinkin’1.26%! A mere overnight blip in ‘real’ valuation of assets technically bankrupts the entire banking universe.
My great-grandfather was a merchant who extended credit to farmers in his community - all wiped out by the failure of this system in the ‘30's. History has already written its verdict, and no patchwork of phony reforms constructed by criminal politicians and faux regulators has changed the fundamental facts. It is a highly unstable system constantly seeking its ground state.
So, tell me again exactly what the author mis-characterized?
western people can no longer sense danger. they're still living well above their means and drugged up by tv and consumerism
only after all these distractions will dissapear they will grasp the reality
and then everybody will go insane
Maybe insanity will be a good thing at that point. //shrug//
ZH types or sheeple or banker or warrior;
regardless,
You're all morons.
As long as you or somebody else gets to determine what money is, it will not be money, for its value, by definition, will not be the same for everyone.
Money's nature must be established independently of human will lest it become a tool of extortion and/or deception.
We don't know why silver and gold are money and that is precisely why they are money. Silver and gold slay the illusion that we humans determine the economic aspect of our existence.
We don't know WHY silver and gold are money. We only know that they ARE money.
Just like we don't know WHY sugar is sweet or a certain wavelength of electromagnetic quantum event is blue...
When was the last time YOU decided to think what you thought?...
Moron.
Both the sheeple and the bankers are pieces of shit.
Because they both think they KNOW.
Morons.
Money is whatever the "mafia of the day" will accept in return for not killing, or imprisoning you.
Fear as money is a really bad way to go.
Money should have an actual measurable value. All the rest of this is pure BS. Then and only then can honest people get paid properly for their labor. Duh!
I really like a coin with a fixed value measured in joules of energy. Combine that with the ability to generate energy as an independant person gives all of us control of the value paid for our labor.
Thats how shit is supposed to work in the real world.
Gold is barter. Thus setting a true value of money. Coming off the gold/barter standard the coin will imediatly start correcting its value to match its true fiat value of a big fat 0.
What say you?
Please note that there is scientific evidence that the fractional reserve theory of banking and the financial intermediation theory of banking is nonsense.
http://www.sciencedirect.com/science/article/pii/S1057521914001070
Thank you very much!
It was a scam from day one.
Here is how the basic idea of an energy backed coin works. Its value is under the control of the producers. Thats us. We can produce energy all by our little selves. So we can either do something to get paid for in an energy backed coin or we can produce the actual energy. Either way we get paid the true value of our labor.
We CAN store energy very well long term. Fischer/Tropsch wax in a can will store for a very long time. Its energy value will not change when properly canned for decades. That is the fixed value needed to make it work right.
Its fair to producers and does not violate the laws of nature or physics.
Tyler forgot to mention that paper is made of wood. Wood floats on water, so in a boat wreck all fiat is recoverable.
Like all excretions of economists, this story is a completely bogus description of all monetary systems prior to the origins of the Bank of England.
Please read David Graeber's Debt, the First Five Thousand Years for explosion of the barter system as the primal economy. Graeber is an anthropologist and much better versed in both historical economics and non-Western culture than ANY practicing (or more properly, THEORIZING) economist. He conclusively demonstrates that the origin of money lies not in barter, but in debt, and that gold only began to be used as money and returns to such use when organized civilizations (capable of recording and enforcing debt) break down and a quick-and-easy form of readily acceptable, non-government-issue cash is needed by warlords and their victims. I will add from personal knowledge that the original intrinsic value of gold and silver lay in their use for religious offerings, and their use as credit security goes back to the ability of pagan temples to borrow coin against the value of their gold and silver statuary and artworks. Oh, and it wasn't blacksmiths who originated the modern system of credit against gold and silver. It was GOLDSMITHS, you idiot. Who always had a stash of working materials on hand, and therefore the security to protect such materials.
The description of modern money is basically accurate, but the following points are completely missing:
1) Gold and silver have little intrinsic value now that they aren't used to bribe the Gods into nice behavior. The Gods miss the sparklies they used to get as presents, and have decamped in a huff, which is why the world gets more graceless and unpleasant every year.
2)The issuance of money is and always has been a fundamental duty of Government. Whether by keeping records of how many pints of wheat berries Peter owed Paul in Egypt, or guaranteeing the weight and purity of copper ingots in Babylon, or demanding that taxes imposed by the government be paid in the otherwise valueless bronze coins the government issued in China, or insisting that a piece of paper with some green printing on it is "legal tender for all debts public and private", money, as opposed to gold and silver specie, is issued by Governments. Goldsmiths stocked gold, and gold was used to MAKE gold coins, but gold plate and official gold coins are not the same thing and never were.
3) Past performance is no guarantee of future workability. The economy of ancient Rome managed to work on bronze nummi of no appreciable value for centuries until the government broke down. The Gold Standard nearly choked the world economy to its death between WWI and WWII; although the standard claim is that Germany's economic meltdown was caused by reparations, it was just as much caused by reparations together with refusal to devalue the Mark.
4) Money is necessary. Banks, however, are quite the modern invention and humanity has done perfectly well without them throughout most of history and across the vast majority of human cultures. Every culture prior to ours which has indulged in lending at interest has ended up having to either declare repeated debt amnesties, or has fallen apart after the bankers accumulated so much of society's wealth that they strangled the "real" economy -- because ultimately, bankers neither create nor produce real wealth, and their absorption of resources has the same effect on economies as that well-known waste of economic value, War.