Money Creation

[PerryChase]

Good video on money creation. It’s simplified but pretty much sums it up.

http://video.google.com/videoplay?docid=-9050474362583451279

” Paul Grignon’s 47-minute animated presentation of “Money as Debt” tells in very simple and effective graphic terms what money is and how it … all » is being created. It is an entertaining way to get the message out. The Cowichan Citizens Coalition and its “Duncan Initiative” received high praise from those who previewed it. I recommend it as a painless but hard-hitting educational tool and encourage the widest distribution and use by all groups concerned with the present unsustainable monetary system in Canada and the United States.”

[Ash Housewares]

Thanks for the link PC. That video makes it easy for the layman to understand what’s going on (I even got it!). I forwarded the link to a bunch of others…

[Ash Housewares]

Thanks for the link PC. That video makes it easy for the layman to understand what’s going on (I even got it!). I forwarded the link to a bunch of others…

[wantobuy]

can some one knowledgeable enough to tell if what said in the video is right, that the money is created by private banks out of nothing? The video looks to be very creditable with many quotes from famous bankers. does any one catch any obvious errors in the video? It’s really astounding. Thanks!

[wantobuy]

can some one knowledgeable enough to tell if what said in the video is right, that the money is created by private banks out of nothing? The video looks to be very creditable with many quotes from famous bankers. does any one catch any obvious errors in the video? It’s really astounding. Thanks!

[bsrsharma]

Sadly, after the removal of Gold Standard in early ’70s by Nixon administration to prevent a run on the gold due to depreciating $, $ has become essentially “fiat” money. i.e. it is worth whatever Federal Reserve wants it to be. Normally, out of fear of inflation, Fed has an interest in being careful in guarding the value of $ and hence control money creation. But if there is a greater catastrophe (than runaway inflation), that restraint will fall by the wayside. This has happened all over the world in history. e.g. our own Continental Dollar

http://en.wikipedia.org/wiki/Continental_dollar

[bsrsharma]

Sadly, after the removal of Gold Standard in early ’70s by Nixon administration to prevent a run on the gold due to depreciating $, $ has become essentially “fiat” money. i.e. it is worth whatever Federal Reserve wants it to be. Normally, out of fear of inflation, Fed has an interest in being careful in guarding the value of $ and hence control money creation. But if there is a greater catastrophe (than runaway inflation), that restraint will fall by the wayside. This has happened all over the world in history. e.g. our own Continental Dollar

http://en.wikipedia.org/wiki/Continental_dollar

[4plexowner]

bsrsharma – there’s no ‘essentially’ about it – the US Dollar is pure fiat – it is absolutely worthless but US law requires that we honor it as though it had value

International players honor the fiat US dollar unless they want to host our military in their country for awhile

it doesn’t get any more ‘fiat’ than that

~

I’m curious about your handle – any connection to Bhaghwan Shree Rajneesh?

[4plexowner]

bsrsharma – there’s no ‘essentially’ about it – the US Dollar is pure fiat – it is absolutely worthless but US law requires that we honor it as though it had value

International players honor the fiat US dollar unless they want to host our military in their country for awhile

it doesn’t get any more ‘fiat’ than that

~

I’m curious about your handle – any connection to Bhaghwan Shree Rajneesh?

[PerryChase]

I posted the video link because I thought it was interesting. While the video has a conspiracy theory bias to it, it’s pretty accurate.

However, private wealth creation is the very feature of Capitalism. When wealth is created, we need a way to monetize it, so we can’t have the government controlling the money supply.

Say the money was restricted by the government, and you wanted to sell your house at a $250k profit. Where is that “new” money going to come from? Without the ability to monetize wealth, we’d soon find an alternative like the house for $200k (finite money) plus a herd of sheep.

As imperfect the system we have, it’s the best anyone has been able to come up with.

I believe there are 3 mains issues:

1) Fiat money.

2) Legal tender laws that force us to accept the fiat money.

3) Money/wealth creation. Without money creation, we wouldn’t have a stock market. Like love, money is whatever you think it is. And no money, no honey. 😉

[PerryChase]

I posted the video link because I thought it was interesting. While the video has a conspiracy theory bias to it, it’s pretty accurate.

However, private wealth creation is the very feature of Capitalism. When wealth is created, we need a way to monetize it, so we can’t have the government controlling the money supply.

Say the money was restricted by the government, and you wanted to sell your house at a $250k profit. Where is that “new” money going to come from? Without the ability to monetize wealth, we’d soon find an alternative like the house for $200k (finite money) plus a herd of sheep.

As imperfect the system we have, it’s the best anyone has been able to come up with.

I believe there are 3 mains issues:

1) Fiat money.

2) Legal tender laws that force us to accept the fiat money.

3) Money/wealth creation. Without money creation, we wouldn’t have a stock market. Like love, money is whatever you think it is. And no money, no honey. 😉

[drunkle]

i think wealth is a factor of population. if gold were the standard, look at the extremes:

you are the last man on earth and you have a trillion tons of gold. but since you cant buy anything with it, it’s worthless.

conversely, there are a 100 billion people and only a pound of gold. you can’t cut the gold up into small enough chunks with which to buy stuff. so again, the gold is worthless.

printing money allows you to keep pace with the population and doesnt tie you to a physical resource. if you don’t print enough, money inflates and assets deflate. if you print too much, money deflates and assets inflate. but since money doesnt instantly inflate or deflate, the people who control and create the money are in the position of making the most from it. the people at the farthest end of the stream are at the mercy of every single person up the food chain. the ultimate handmedown system, the “trickle down theory” which works very well for those people at the top.

[drunkle]

i think wealth is a factor of population. if gold were the standard, look at the extremes:

you are the last man on earth and you have a trillion tons of gold. but since you cant buy anything with it, it’s worthless.

conversely, there are a 100 billion people and only a pound of gold. you can’t cut the gold up into small enough chunks with which to buy stuff. so again, the gold is worthless.

printing money allows you to keep pace with the population and doesnt tie you to a physical resource. if you don’t print enough, money inflates and assets deflate. if you print too much, money deflates and assets inflate. but since money doesnt instantly inflate or deflate, the people who control and create the money are in the position of making the most from it. the people at the farthest end of the stream are at the mercy of every single person up the food chain. the ultimate handmedown system, the “trickle down theory” which works very well for those people at the top.

[poorgradstudent]

They teach money creation in Freshman Macroeconomics. It’s actually a good thing, at least in controlled moderation. (I can hear the GoldBugs gasping now).

Banks are required to keep a certain percentage of their net deposits in liquid cash. This limits the ultimate potential of money creation. It’s based off these numbers that the government creates money.

Ultimately, money is a reflection of wealth, and money creation has nothing to do with creating wealth. Still, end of the day all it really does is modify the denomenator of the equation.

[poorgradstudent]

They teach money creation in Freshman Macroeconomics. It’s actually a good thing, at least in controlled moderation. (I can hear the GoldBugs gasping now).

Banks are required to keep a certain percentage of their net deposits in liquid cash. This limits the ultimate potential of money creation. It’s based off these numbers that the government creates money.

Ultimately, money is a reflection of wealth, and money creation has nothing to do with creating wealth. Still, end of the day all it really does is modify the denomenator of the equation.

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