Did you know Banks create money out of thin air?

by TerryWalstrom 72 Replies latest jw friends

  • _Morpheus

    With respect, who you married is irrelevant with regard to the origin of the anti banking/anti jew conspiracy theory's. They center on the world being run by jews via banks.

  • RubaDub

    With all due respects, as a person with a financial / banking background, I actually find that information to be quite entertaining.

    But it is about as relevant as trying to prove that Obama was born in Kenya, 9/11 was an inside job, the moon landing was faked, or that aliens landed in Roswell, New Mexico.

    Rub a Dub

  • pepperheart

    what caused the 2008 crash was bankers not having any common sense You dont loan money to people who cant pay you back and no matter how big your company is if you dont balance the books you are in trouble

  • Simon

    The Iraq war caused the banking crash ... all todo with flattening bond yields, unpopularity of war-bonds, need to generate returns etc... because wars have to be paid for somehow.

    Plus the stupidity of politicians willing to provide bailouts to banks to cover them, but not the customers. Of course they bailout the banks from having losses, not the borrowers who lose their homes. Those fools give them votes anyway, so they get no consideration ...

  • LoveUniHateExams

    I have £30 in my current account and owe my landlady £268 rent this month.

    I get housing benefit of £248 per month but it's late coming this month.

    I wish my bank could create money out of thin air ...

  • Tenacious

    Two words.

    Greed and Power.

  • truthseeker

    Say you go to a dealership and buy a car for $20,000.

    You sit down with the finance manager and they run your details through the computer.

    Wells Fargo pops up. They can loan you the money less downpayment of $1,000 to the dealer.

    You agree to the terms, make the downpayment and off you drive home in your new car with your title and registration.

    The dealership sold you a car, the bank created a credit entry of -$19,000. You have to pay that money back to the bank with interest but where did the bank get the $19k from to pay the dealer?

    Other than your downpayment, no physical money changed hands.

    If that isn't creating money out of thin air I don't know what is.

  • TerryWalstrom

    All week long I've been reading about the history of banks in the U.S
    The idea of doing business without using, touching, or carrying actual gold or silver came about this way:
    At a certain point in history, trading and barter became very burdensome. Coining valuable metal into portable currency seemed a better alternative. Not ideal, but better than barter. Local lending institutions with trusted operators became necessary. Poor people did NOT trust a National Bank over a Local Bank for a long time. Why? Because they were run by strangers and the opportunity for locals to keep an eye on the bankers was not possible or to judge their character.

    Local banks were run by people they knew.

    The eventual solution? FREE BANKING ERA.

    Local Banks could do as they pleased as long as funds were backed by an equal amount of gold on hand and on demand. Free banking spread rapidly to other states, and from 1840 to 1863 all banking business was done by state-chartered institutions.

    The legitimacy of any bank was solely determined by the LAWS passed locally or nationally to monitor and control operations.

    “Wildcat” banking appeared because local laws could be “relaxed” by local politicians, cronies, and double-dipping investors!

    NOTE: Banknotes were issued against little or no security, and credit was over-expanded. The borrower couldn’t pay back the loan and the local economy became depressed (the payback funds were necessary for the Bank to make new loans).

    What remedy was possible?
    Federal Laws were enacted to examine and regulate all banks and bring currencies in use into harmony.
    THE NATIONAL BANK ACT radically changed how banks operated.
    Local banks which refused to abide were taxed until they came in line and agreed.
    To compete with National Banks, State Banks created a new invention: the Checking Account. Customers could pay their bills and buy goods WITHOUT DEMANDING GOLD from the local bank’s on hand reserves.
    During the Civil War, the Federal need for funds to fight the war led to the selling of Government Bonds (I.O.U.’s + interest) citizens purchased on promise of repayment and profit.
    As the Age of Industry began, banks began investing in commercial enterprises by lending money to entrepreneurs for startup, equipment, etc. The interest charged added to the bank reserves on hand.

    The whole idea of using paper money, Bonds, IOU's, promissory notes made "cashless" transaction possible as more and more people began to TRUST that somewhere somebody had gold or silver on hand to back up the transactions.

    Human beings are not trustworthy when they get the chance to steal or gain advantage.
    So, after banks failed, the Federal Government stepped in and guaranteed local banks up to a certain amount. This was to instill trust (even when trust was illusory)
    The big financial meltdown in 2008 came because untrustworthy people did untrustworthy things such as selling houses to customers without enough collateral.
    Why would Lenders do that?
    2 reasons
    1. An act of Congress made them do it
    2. Banks could sell the "bad paper" to Wall Street
    Who went to prison for any of this?
    I don't know--you tell me? Nobody is what I'd say.
    Why nobody? Because Congress made it possible and Congress jumped in and supported the Too Big To Fail stop gap financing. TRUST was purchased. CONFIDENCE was purchased. With what money and from where? From future taxpayers.

    That's right. People who aren't yet born.
    Money from nothing.

    Who do we owe all those TRILLIONS to? Each other.
    We pay taxes. The government spends tax money not yet collected by borrowing.
    Banks, the Treasury, the Fed all participate in a mostly illusory leveraging of the future to pay for the present.

    Those who get angry fall into two categories.
    1. Those who see nothing wrong with this and say it will all be okay, so shut the hell up.
    2. Those who become convinced a vast conspiracy is involved.

    What do I think? I think no conspiracy is necessary when most of what happens is made
    legal by politicians acting in public (getting voter approval) who are paid to grease the wheels of fiat money and future leveraging.

    The so-called 1% is enabled by voters, if you come right down to it.
    If regular civilians could spend like crazy and not pay their bills--(Big Brother will step in and pay) almost everybody would. But hey--a great many citizens live beyond their means using credit to purchase goods and services--all on a PROMISE to PAY.
    In other words: we all do it--"money for nothing and the chicks are free."

  • Nathan Natas
    Nathan Natas

    LoveUniIHateExams, I'm going to take a wild guess here... you are not an economics major, are you?

  • Simon
    The dealership sold you a car, the bank created a credit entry of -$19,000. You have to pay that money back to the bank with interest but where did the bank get the $19k from to pay the dealer?
    Other than your downpayment, no physical money changed hands.

    For real? You think no money changed hands ... what, because there wasn't a cheque or a wad of cash?

    The car dealership gets paid for the car they bought. That's what "financing" means. The bank gave them the money. The dealership pays the car manufacturer. The bank uses funds they already have or borrows the money at a lower rate of interest from someone else.

    Anytime you invest money to earn money, you're lending it to someone. That's where this money comes from.

    Yes, there isn't always physical cash changing hands - the dealerships payment to the manufacturer will probably be settled monthly based on what inventory they have ordered vs sold instead of having payments going back and forth because it's more efficient but an electronic settlement is still money. If you don't believe that to be the case then I'm happy for you to make an EFT transfer from your bank to mine to prove the concept.

    If you miss the money you can always invent more and see how that works out.

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