Doug Casey On The Destruction Of The Dollar

Authored by Doug Casey via InternationalMan.com,

“Inflation” occurs when the creation of currency outruns the creation of real wealth it can bid for... It isn’t caused by price increases; rather, it causes price increases.

Inflation is not caused by the butcher, the baker, or the auto maker, although they usually get blamed. On the contrary, by producing real wealth, they fight the effects of inflation. Inflation is the work of government alone, since government alone controls the creation of currency.

In a true free-market society, the only way a person or organization can legitimately obtain wealth is through production. “Making money” is no different from “creating wealth,” and money is nothing but a certificate of production. In our world, however, the government can create currency at trivial cost, and spend it at full value in the marketplace. If taxation is the expropriation of wealth by force, then inflation is its expropriation by fraud.

To inflate, a government needs complete control of a country’s legal money. This has the widest possible implications, since money is much more than just a medium of exchange. Money is the means by which all other material goods are valued. It represents, in an objective way, the hours of one’s life spent in acquiring it. And if enough money allows one to live life as one wishes, it represents freedom as well. It represents all the good things one hopes to have, do, and provide for others. Money is life concentrated.

As the state becomes more powerful and is expected to provide more resources to selected groups, its demand for funds escalates. Government naturally prefers to avoid imposing more taxes as people become less able (or willing) to pay them. It runs greater budget deficits, choosing to borrow what it needs. As the market becomes less able (or willing) to lend it money, it turns to inflation, selling ever greater amounts of its debt to its central bank, which pays for the debt by printing more money.

As the supply of currency rises, it loses value relative to other things, and prices rise. The process is vastly more destructive than taxation, which merely dissipates wealth. Inflation undermines and destroys the basis for valuing all goods relative to others and the basis for allocating resources intelligently. It creates the business cycle and causes the resulting misallocations and distortions in the economy.

We know the old saw “The rich get richer, and the poor get poorer.” No one ever said life had to be fair, but usually there is no a priori reason why the rich must get richer. In a free-market society the sayings “Shirtsleeves to shirtsleeves in three generations” and “A fool and his money are soon parted” might be better descriptions of reality. We do not live in a free-market society, however.

The rich and the poor do have a tendency to draw apart as a society becomes more bureaucratic, but not because of any cosmic law. It’s a consequence of any highly politicized system. Government, to paraphrase Willie Sutton, is where the money is. The bigger government becomes, the more effort the rich, and those who want to get that way, will put into making the government do things their way.

Only the rich can afford the legal counsel it takes to weave and dodge through the laws that restrict the masses.

The rich can afford the accountants to chart a path through loopholes in the tax laws. The rich have the credit to borrow and thereby profit from inflation. The rich can pay to influence how the government distorts the economy, so that the distortions are profitable to them.

The point is not that rich people are bad guys (the political hacks who cater to them are a different question). It is just that in a heavily regulated, highly taxed, and inflationary society, there’s a strong tendency for the rich to get richer at the expense of the poor, who are hurt by the same actions of the government.

Always, and without exception, the most socialistic, or centrally planned, economies have the most unequal distribution of wealth. In those societies the unprincipled become rich, and the rich stay that way, through political power. In free societies, the rich can get richer only by providing goods and services others want at a price they can afford.

As inflation gets worse, there will be a growing public outcry for government to do something, anything, about it.

People will join political action committees, lobbying groups, and political parties in hopes of gaining leverage to impose their will on the country at large, ostensibly for its own good.

Possible government “solutions” will include wage and price controls, credit controls, restrictions on changing jobs, controls on withdrawing money from bank accounts, import and export restrictions, restrictions on the use of cash to prevent tax evasion, nationalization, even martial law—almost anything is possible. None of these “solutions” addresses the root cause—state intervention in the economy. Each will just make things worse rather than better.

What these solutions all share is their political nature; in order to work they require that some people be forced to obey the orders of others.

Whether you or I or a taxi driver on the street thinks a particular solution is good or not is irrelevant. All of the problems that are just beginning to crash down around society’s head (e.g., a bankrupt Social Security system, federally protected banks that are bankrupt, a monetary system gone haywire) used to be solutions, and they must have seemed “good” at the time, otherwise they’d never have been adopted.

The real problem is not what is done but rather how it is done: that is, through the political process or through the free market. The difference is that between coercion and voluntarism. It’s also the difference between getting excited, frustrated, and beating your head against a wall and taking positive action to improve your own standard of living, to live life the way you like it, and, by your own example, to influence society in the direction that you’d like to see it take—but without asking the government to hold a gun to anyone’s head.

Political action can change things. Russians in the ’20s, Germans in the ’30s, Chinese in the ’40s, Cubans in the ’50s, Congolese in the ’60s, South Vietnamese and Cambodians in the ’70s, then Rhodesians, Bosnians, Rwandans, and Venezuelans today are among those who certainly discovered it can. It’s just that the changes usually aren’t very constructive.

That’s the nature of government; it doesn’t create wealth, it only allocates what others have created. More typically, it either dissipates wealth or misallocates it, because it acts in ways that are politically productive (i.e., that gratify and enhance the power of politicians) rather than economically productive (i.e., that allow individuals to satisfy their desires in the ways they prefer).

It’s irresponsible to base your own life on what hundreds of millions of other people and their rulers may or may not do. The essence of being a free person is to be causative over your own actions and destiny, not to be the effect of others. You can’t control what others will do, but you can control yourself.

If you’re counting on other people, or political solutions of some type, most likely it will make you unwary and complacent, secure in the hope that “they” know what they’re doing and you needn’t get yourself all flustered with worries about the collapse of the economy.

*  *  *

Really, there’s no need to get worried or flustered. But you do need to act… now. We think there’s a strong chance widespread economic collapse is just around the corner. That’s why we’ve put together a timely special report, our Guide to Surviving and Thriving During an Economic Collapse. Click here to download your free PDF copy now.

Comments

Manthong wisehiney Sat, 11/11/2017 - 16:33 Permalink

/* Style Definitions */
table.MsoNormalTable
{mso-style-name:"Table Normal";
mso-tstyle-rowband-size:0;
mso-tstyle-colband-size:0;
mso-style-noshow:yes;
mso-style-priority:99;
mso-style-parent:"";
mso-padding-alt:0in 5.4pt 0in 5.4pt;
mso-para-margin-top:0in;
mso-para-margin-right:0in;
mso-para-margin-bottom:10.0pt;
mso-para-margin-left:0in;
line-height:115%;
mso-pagination:widow-orphan;
font-size:11.0pt;
font-family:"Calibri","sans-serif";
mso-ascii-font-family:Calibri;
mso-ascii-theme-font:minor-latin;
mso-hansi-font-family:Calibri;
mso-hansi-theme-font:minor-latin;
mso-bidi-font-family:"Times New Roman";
mso-bidi-theme-font:minor-bidi;}
  I believe in keeping some dozens of pounds of shiny stuff stored in a tightly sealed tube that fell out of a boat into the lake……..    maybe as good magnetometer  would be needed to find it……   …..but the buck won’t be going away anytime soon…… Too many interests in too many countries will make it float better than a heavy PVC tube.  

In reply to by wisehiney

Caloot wisehiney Sat, 11/11/2017 - 17:17 Permalink

This article explains the article on the sauds.   The thing ksa can't trust is the dollar and the tbills to park their wealth.  The melt up in wallstreet is just the beginning.   The next up will come in oil.   Then commodities.   Then bread.   And finally, when Americans are starving, wages.  Then collapse.  Then a gold backed yuan.     Imf will attempt a reset, but will be checkmated by the Asian continent.  

In reply to by wisehiney

J S Bach God Emperor Sat, 11/11/2017 - 18:04 Permalink

Inflation is the insidious hidden taxation upon a naive population by usurers who counterfeit currency as debt.  The ever-dilluting effects of the massively growing "money" makes everyone's dollars worth less and less with each passing day.  This is why "nutty gold bugs" advocate for partial savings of one's personal wealth to be in the form of gold and silver - or any other physical material assets outside the paper constructs of stocks and bonds.  (((They))) cannot print the two rare metals, thus their intrinsic value remains relatively stable through any man-made crises.

In reply to by God Emperor

chestergimli J S Bach Sat, 11/11/2017 - 19:23 Permalink

IT seems to me that when money is created to cover costs, that there is no inflation. To me it seems that money created to boost financial schemes, ie. Wall Street, derivatives, credit default swaps, etc ad nauseam, that there is where inflation really comes from. Programs that we the people are paying for such as TARP where money is just created out of thin air and does not go toward the production or distribution of goods and services creates inflation, not money created to fix roads or other infrastructure.

In reply to by J S Bach

Itinerant chestergimli Sat, 11/11/2017 - 22:08 Permalink

Yes, it has to do with difference between investing for productive purposes and squandering money on consumption or speculation. The way national accounts are now kept, these differences are invisible, as if speculative earnings are the same as real production.Casey's statement that wealth skew in socialist countries is the greatest -- is flat out wrong.The notion that the government can create nothing of value is also completey wrong -- public assets (including education) and infrastructure are a fourth factor of production (next to capital, land, and labor). This is what marks prosperous countries as opposed to underdeveloped ones. If this were not true, society would have gotten rid of government by now.Casey's portrayal of a free society ideal without a government is all purely theoretical and has never existed. Power has always resulted in laws that justify those who have conquered by force, and has always been on the side of monopolies and rent extraction for basically doing nothing other than "owning".

In reply to by chestergimli

HRClinton MagicHandPuppet Sat, 11/11/2017 - 21:09 Permalink

Casey: " If taxation is the expropriation of wealth by force, then inflation is its expropriation by fraud."And gold price oppression is Stealth Theft of Money itself.If you lost your Precious in a boating accident, I hope you got diving gear and GPS coordinates.If you bought it when it was priced $1300-1800 the last 5 years, then it's "under water", where your diving gear won't help. Sorry, you listened to the wrong people. Like ANY asset under the sun, there is a time to Buy, to Hold, or to Sell. Anyone who says otherwise, is an idiot or a fraud. 

In reply to by MagicHandPuppet

silverer Sat, 11/11/2017 - 15:57 Permalink

Doug, would you like to go into the wallpaper business with me? I've got a supply of really durable, washable material with beautiful, fancy artwork...

MEFOBILLS Sat, 11/11/2017 - 16:18 Permalink

“Inflation” occurs when the creation of currency outruns the creation of real wealth it can bid for... It isn’t caused by price increases; rather, it causes price increases._________All hyperinflations in the modern era arise from exchange rate pressures.  The exception is Rhodesia/Zimbabwe.  Blacks took over the country, killed off the white farmers, and printed money.  It was a twofer, loss of production and increase of money stock.In the case of Weimar Germany, it was PRIVATE BANKERS that caused the inflation.  The central bank was privatized under the Dawes plan.  Germany was trying to put Deutchmarks onto the exchange market for two things:  1) Dollars/Pounds/Franks purchases.  2) FoodDollars/Pounds/Franks had to be bought to pay for debts.  Versaille Debts.  There was a triangular flow, where Germany would try to sell their goods for hard currency, or Germany would borrow from Wall Street.  Since Germany was disallowed from exporting goods to the U.S., they had trouble getting dollars.  Wall Street creation of debt made dollars, this then went to Germany especially in the form of municiple loans, and from there it went on to pay into the triangular flow, and ultimately landed on U.S. Treasury's balance sheet.Bear raiders (people like Soros) sniffed out that Germany was under exchange rate pressure.  They then BET AGAINST THE MARK.  They shorted the mark.  A bear raid is when you use foreign currency, like the dollar, to hypothecate new Marks at private banks.  There was so much "mark" creation, that new private banks had to be given the ok to print marks.So, it was private creation of debt dollars at the U.S. level, going after German shorts, which created more marks at the German private bank level.  This created a unwanted positive feedback mechanism, more shorts, more marks, more making money on peoples misery.  More inflation.  Go Free Market! So, NO Doug Casey, the rate of private bank creation can be completely out of alignment with goods production.  Without looking at debt formation, then you have an incomplete picture.   A faulty worldview.Debt payments can also suck away the money supply, since bank money disappears when it pays down principle.  So, you can get these bust boom cycles, that are function of the money supply.  A credit/debt money suppy always has a sawtooth shape, with rapid collapse into depressions being the cutting edge of tooth.Private Banks are a free market creation are they not? edit,.... the German Central Bank had to be returned to Sovereign Control to fix the inflation problem.

True Blue MEFOBILLS Sat, 11/11/2017 - 16:50 Permalink

Private Banks are a free market creation are they not?Private "Banks" are a free market creation, yes. However, allowing an entity to create 'money' (so-called 'legal tender') at will is the very antithesis of a 'free market' unless that 'money' is something of 1:1 intrinsic value in and of itself. And an entity that can 'create' money is not by definition a 'bank' but rather a 'mint.'Which is why Article 1, Section 10 of the US Constitution was very specific that "No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts."Because the founders had already experienced the disastrous results of fiat currency with the 'Continental' dollar, which ended up "not worth a Continental" (yes, that link is straight to International Man i.e. Doug Casey) and which Washington himself complained it took more than a wagon load of paper to buy a wagon load of supplies.

In reply to by MEFOBILLS

MEFOBILLS True Blue Sat, 11/11/2017 - 18:10 Permalink

Because the founders had already experienced the disastrous results of fiat currency with the 'Continental' dollar, which ended up "not worth a Continental"Doug Casey has already proven himself as monetarily illiterate.The Continentals were COUNTERFEITED at a high rate by the British.  Even then, it didn't collapse.  Thomas Payne noted, "Let it be known the Continental was the cornerstone of our success."Without the Continental, there would be no U.S. 

In reply to by True Blue

Dwain Dibley True Blue Wed, 11/15/2017 - 09:21 Permalink

Neither the Fed or the banks possess the legal authority to create money of any type, and they sure as hell do not create 'legal tender'.Article 1, Section 10 of the US Constitution applies to the states, not the Federal Government.The 'Continental' dollar was counterfeited into worthlessness by the British.The vast majority of economic activity is conducted in bank debt, not legal tender.There is a total of $1.53-Trillion in U.S. legal tender (fiat) in circulation around the globe.  Of that, $280-Billion is in circulation within the U.S.  Of that, $72-Billion is held in bank vaults.That $72-Billion in bank vaults backs the $1.9-Trillion in credited demand deposit accounts.  It also backs the $9.3-Trillion in credited savings accounts.  It also backs the $100s of billions in bank administered credited transactions, from Main Street to Wall Street and all points between and beyond, that occur on a daily basis.  It also backs all government expenditures.And that, is the stark reality of fractional reserve banking within the U.S. The Fed and the banking system do not create money (no legal authority), they create debt, which most people get to experience for a brief moment in time as a bank-administered line of credit.  Not Money.When you use a debit card, you are using bank debt administered as a line of credit. This is because all deposit accounts are merely a record of legal claims held by depositors against the money (checkable deposits) that is supposed to be in the bank's vault. All deposit accounts are bank debt. That's why depositors are listed as the 'creditors' and the banks are listed as the 'debtors' in all deposit contracts.When a bank generates credit as a deposit, it is creating a legal claim against itself, a legal obligation to pay the account holder in legal tender dollars upon their demand. Luckily for the banks, hardly anyone bothers to make that demand. (it's so much easier to use a debit card.)MONEY

In reply to by True Blue

shovelhead MEFOBILLS Sat, 11/11/2017 - 16:43 Permalink

Private banks are a free market creation but only Congress could give power to create a central bank Like the Fed.It's a parasitic symbiosis. The govt. wanted unlimited access to money without immediate taxing and sold the citizens out by granting money creation power to 12 regional private banks via Fractional reserve lending. Every loan created ends up in the Feds debit column and those addition dollars now reduce the value of existing dollars to the point that a 1913 dollar has lost 98 cents of it's purchase power today.Blaming the Fed is like blaming a thief. The thief is just doing his job. It's the Govt. that's the real culprit by unlocking the door and letting them in to steal.Who wouldn't print money if you could get away with it by granting a kickback? It's a pretty good gig if you can get it.

In reply to by MEFOBILLS

SunRise MEFOBILLS Sat, 11/11/2017 - 17:04 Permalink

"Money disappears when it pays down principle",  ONLY with fiat.  If I owe you a goat and pay it off,  the goat (capital) simply transfers from me to you! With a non-fiat system (i.e. a non-leveraged/rehypothecated system), the debt is all that disappears when it's repaid.  With a rehypothecated-fiat-system, my loan is extinguished, but capital has disappeared.  Where did the goat go?  Fiat systems wreck havoc with capital.   In a fiat system, I must be working for both party's production needs instead of just mine - carrying a freeloader up Productivity Mountain on my back.  Your analysis is painfully impaling on this major point.

In reply to by MEFOBILLS

Dwain Dibley SunRise Sat, 11/11/2017 - 17:54 Permalink

"Money disappears when it pays down principle", "ONLY with fiat"Not true at all.  If I owe you a fiat dollar and pay it off, the dollar (capital) simply transfers from me to you.  In a Fed and bankster debt/credit system, when you use debt/credit to pay back an accounting entry pseudo-loan, the debt/credit disappears. The problem with your assertions is that you've miseducated/brainwashed into holding notions that are flagrantly and provably wrong and run counter to your best interest.The Fed and the banks do not create 'fiat, they have no legal authority to create any type of money, period.

In reply to by SunRise

Dwain Dibley kochevnik Sun, 11/12/2017 - 13:40 Permalink

You've been indoctrinated into holding beliefs that run counter to your best interests.Legal tender dollars are not loaned into circulation by the Fed or the banks.  Anyone with a deposit account can withdraw their legal tender money at any time, interest-free.  Legal tender FRNs are the official currency of the United States, it what the U.S.G. owes in final payment of its debts and it is what the banks owe, by law, to every deposit account holder upon their demand.LEGAL TENDERPayment of obligations and interest on the public debtIt's your money....

In reply to by kochevnik

Dwain Dibley libertyanyday Sun, 11/12/2017 - 14:20 Permalink

No she can't.It is illegal for the Fed to use the legal tender (fiat) for any purpose other than supplying demand, which is driven by banks supplying the demand from depositors.How Currency Gets into CirculationThe Fed's "Open Market Operations" has absolutely nothing to do with the legal tender money supply.Banks obtain the legal tender notes from the Fed by purchasing them at face value from the Fed with their reserve assets held at the Fed.  The Fed obtains the notes from the Treasury by first paying for their production then posting collateral of equal value to the notes received.  That collateral is the assets the banks used to purchase the notes from the Fed.  The Fed is allowed to hold a small amount of uncollateralized notes to meet any unanticipated rise in depositor demand.Fed and bank generated private debt/credit, fraudulently referred to as 'money' is not 'fiat', it's not your 'money', it is bank debt.

In reply to by libertyanyday

Dwain Dibley iadr Sun, 11/12/2017 - 17:30 Permalink

It's all a matter of perspective, I'm standing on the top of a hill looking down on the forest, accurately describing it while being challenged by those standing in the forest with limited vision who can't see it.  They see their clump of trees and refuse to entertain the notion that maybe the forest isn't what they've been led to believe.

In reply to by iadr

iadr Dwain Dibley Sun, 11/12/2017 - 14:40 Permalink

No, I think it is you who are missing the point.When forces (government or market) make the interest rates plunge, then debt is encouraged. Why- b/c it's a closed loop.If you want to argue how many "points are on the loop" (or even what "order" they are in), fine.  But nearly pointless.What we should AGREE on is that when those forces hit the market (eg QE ) then:- all points in the market (matrix, loop, whatever word you want to use for "rising tide lifts all boats", but in this case in a bad way) are influenced... and by influenced, I mean revalued. So yes, for the newbies, the central bank causes the "cost of money" to change.Are we really arguing if that changes debt levels? Really?

In reply to by Dwain Dibley

MEFOBILLS SunRise Sat, 11/11/2017 - 18:04 Permalink

During 2000 years of coin history, it was fiat money.  As soon as it got the King's stamp, it became fiat.  The true nature of money is law, as first explained by Aristotle.The nature of debt created money, first came into being in 1694 with bank of england.  There was some playing around with double entry ledgers is Italy before that.  The Jews got wind of it, and took it to extremes, especially with their insertion into England via orange king revolution.Talley Sticks also did not diappear and they were fiat.  They were issued by the King and circulated, and were taken up in taxes.  This type of money was low friction and low cost, and could not be counterfeited and melted down.The word fiat is being abused.  It is better to call it private bank credit.  Today at least 95% of the U.S. money supply is private bank credit.During the Sovereign bank period in Canada 1938-74, they issued both debt free money and bank credit.  Bank credit was limited in scope and under control of BOC.MOF (ministry of finance) owned all bank shares, so Bank of Canada was a crown bank.  BOC was instructed to spend debt free on the commons.  This system worked very well, and was not a gold system.http://qualicuminstitute.ca/wp-content/uploads/2011/12/fedebt1.pngNote no big debt problems with the Canadian Sovereign System?Capital is also many things:  Money, Plant and Equipment, Human Capital (ability), Natural wealth...A forum like this does not allow me to write a book.Yes, the money supply is created by private banks when YOU take out a loan.  The FED has a keyboard for making money when they swap for a new TBill.Here is Bank of England white paper explaining the mechanism.http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin…

In reply to by SunRise

MEFOBILLS SunRise Sat, 11/11/2017 - 18:12 Permalink

Very good.A sovereign system works like you want.It is an investment, wealth creation, more investment virtuous cycle system.A debt system is bank creation, usury, harvesting wealth, negative cycle.  It transfers wealth, especially during depressions, when you trade your real wealth for eliminating debt.www.sovereignmoney.euCanada's bank system from 38 to 74 was quasi sovereign.  See above link.

In reply to by SunRise

HRClinton MEFOBILLS Sat, 11/11/2017 - 21:31 Permalink

You're on to something there, Mefo.In our society -- even and perhaps especially in the libertarian sub-culture -- we are taught, nay, brainwashed that "the Government is the root of all evil and the Private sector alone is the socio-economic Messiah". Pretty much. It's a nice story, to comfort the simple, the poor and the uninformed. But reality is more complicated than that.If the Private sector alone were the Magic Bullet, the Cure-all pill, then Private Bankers would have made only responsible loans to everyone -- especially the Government. If these private cartels of Central Banking were so GD virtuous, then (a) they would not have schemed to take over a nation's Money Supply, and (b) would have behaved differently and more virtuously.As it is, it is not "the Government" per se, that is "the root problem". It is the CARTEL OF PRIVATE GLOBALIST/GLOBAL-LUST BANKERS that is the ROOT Problem. Queue the idiots, the naive, the uninformed and the shills and trolls, to redirect away from (((Global-lust Banksters))), and toward anyone and everyone else. 

In reply to by MEFOBILLS

MEFOBILLS HRClinton Sat, 11/11/2017 - 21:47 Permalink

The idiots, naive, uninformed, shills and trolls.... many have been hypnotized from birth.  The Teeevee, Hollywood, publik skools - they all teach a narrative at odds with reality.Usury flows out of private banking can buy a lot of hypnotism.  People that are hypnotized will not let go of their programming easily.  They will have to admit to themselves that they were duped.  It is hard to look in the mirror and realize that you were taken for a ride, and went along with it, even supported the con.It is easier to take the blue pill, and go back to the matrix.  Mmmm that steak tastes good.

In reply to by HRClinton

squid HRClinton Sun, 11/12/2017 - 01:17 Permalink

Private bankers?Where? If a private banker fuck's up, he goes broke and is out on his ass.ALL banks in the USA fucked up in 2008, how many bank bankruptcies were there? So it's not private, is it. It's socialised full stop, and the state is in there up to itsd eyeballs. Casey is correct, you're just nit picking. Squids 

In reply to by HRClinton

Unknown User Sat, 11/11/2017 - 16:30 Permalink

Government puts people to work while banksters collect interest on human endeavors. Fractional reserve banking (a counterfeiting scam) results in inflation.

any_mouse Unknown User Sat, 11/11/2017 - 16:44 Permalink

Government should not be what "puts people to work".

One of the problems currently, is too many people are dependent on a check from the government.

Another is a major allocation of resources to War and Finance.

A fair government would interfere least in day to day affairs of individuals, would not favor corporations over the People, and would jail financial criminals, instead of individual drug users.

If the CEO of HSBC had gone to prison over the money laundering for Mexican drug cartels, that would do more in a "War on Drugs" than arresting any dealers or smugglers. Cut off the money supply.

As the article pointed out money represents life, therefore money must be protected as life itself.

The FED must be destroyed. It's private owners brought to justice. Their illicit wealth seized.

In reply to by Unknown User

Dwain Dibley Sat, 11/11/2017 - 16:47 Permalink

There is absolutely no evidence that supports the assertion that the U.S. fiat money is the root cause of inflation, none.There is a total of $1.53-Trillion in U.S. legal tender (fiat) in circulation around the globe.  Of that, $280-Billion is in circulation within the U.S.  Of that, $72-Billion is held in bank vaults.That $72-Billion in bank vaults backs the $1.9-Trillion in credited demand deposit accounts.  It also backs the $9.3-Trillion in credited savings accounts.  It also backs the $100s of billions in bank administered credited transactions, from Main Street to Wall Street and all points between and beyond, that occur on a daily basis.  It also backs all government expenditures.And that, is the stark reality of fractional reserve banking within the U.S. The Fed and the banking system do not create money (no legal authority), they create debt, which most people get to experience for a brief moment in time as a bank-administered line of credit.  Not Money.When you use a debit card, you are using bank debt administered as a line of credit. This is because all deposit accounts are merely a record of legal claims held by depositors against the money (checkable deposits) that is supposed to be in the bank's vault. All deposit accounts are bank debt. That's why depositors are listed as the 'creditors' and the banks are listed as the 'debtors' in all deposit contracts.When a bank generates credit as a deposit, it is creating a legal claim against itself, a legal obligation to pay the account holder in legal tender dollars upon their demand. Luckily for the banks, hardly anyone bothers to make that demand. (it's so much easier to use a debit card.)MONEY

MEFOBILLS Dwain Dibley Sat, 11/11/2017 - 18:20 Permalink

When a bank hypothecates YOU with a new loan, a new debt instrument is created.  Said debt instrument is attached to the Asset Column of Bankers Double Entry Ledger.The banker then creates BANK CREDIT, and attaches it to his liability column.  At the same time he "credits' your Asset Column.  It is not money, but evidence of debt.This new credit is a liability to the banker and an asset to you.  When you ask where you money is, the banker replies your credit is available in your account.  It is bookeeping entries.Your double entry ledger has bank credit as an asset, and the debt intrument as a liability.  The bank's is a mirror image, debt instrument as asset, and bank credit as liability.Below is Werner who tracked loan creation from beginning to end.  I also posted BOE white paper earlier.  Those of you who are confused on modern money mechanics need to get with the program. Werner is the first time a scientific study has been done, so all of the arguments are now put to bed.Banks create credit upon hypothecation, they do not intermediate existing money.  In the old days, yes, there were Gyro banks, and Savings and Loans that did intermediate.http://www.sciencedirect.com/science/article/pii/S1057521914001070

In reply to by Dwain Dibley