Banking and The Financial Markets Pt 4

So now we had  paper money that could not be redeemed into gold anymore and now central banks can produce any liquidity necessary to save the fractional reserve banking system in a recession and in a banking panic. However, there still remains a limit to inflation since not all central banks inflate in the same rhythm.

Some central banks inflate faster than others and when they do this, they inflate faster than others, there is an embarrassing devaluation or depreciation of the currency.  It can harm financial corporations, international corporations.  It is also a clear sign to the population that there is something wrong, that the currency has less value everyday and the population may want to adopt foreign currency.

So the different rhythms in inflation is a problem for central banks.  For example the German bank inflated to additionally less than other central banks such as that of France.  That is the reason why it was then brought under control through the ECB.  This is the logical end of the monetary interventionism in the financial system.  The central bank has an incredible amount of power.  It would be impossible to assume in a free society.  While communism collapsed in 1989-1990, the central piling still continues.  The Fed and the ECB exert total control on the monetary system.  They have the part to create money at their will.  And this is important because the welfare of the state depends on this, on this monopoly.  On money.

So now I would like to do another thought experiment with you.  Imagine that you have the power the federal reserve has.  You would be the only person that can produce money.  Let’s say you can just print it with your computer or more simply you can access your online bank account and you can put any number in it and everybody would have to accept the money you produce.  Then you would have a power that is comparable to the ring in Lord of the Rings.  Would you use this power?  You know the ring is almost irresistible.  Temptation is almost irresistible.  In fact Gandalf didn’t want the ring.

Actually you might want to do something good with it but the result of the setup always  would be a permanent flow of goods and services to you, your friends and your family.  And of course these would lead to a tendency for prices to increase.  For example, if you want to buy a BMW, you just produce new money.  If you had not produced the additional money so prices have built up.  Now you get the BMW, the other person doesn’t and then the dealer has more money and the dealer may want to buy a coat for his wife, bidding up prices of coats and the coat producer’s income is higher and then he starts spending and gradually, as I explained yesterday, the new money extends through the economy increasing prices and changing the stream of goods and services towards the first receivers of the new money.

So the power of the printing press is virtually irresistible but you have to be very careful not to overdo it for several reasons.  People might start to resist the scheme and try to destroy your power when they see that you just have to print money and you get rich and they get poorer all the time, they may revolt.  So before it gets to this point,  you may want to restrict your money production.  What can you do besides?  Well you can try to get important and powerful allies in the establishment.  So let establishments participate in the scheme by channelling some money into their pockets, make them dependent on the system and make them dependent on the continual increase in the money supply.  Then the establishment will always support you and the monetary system in itself, they will use that power and influence also in the media to support the system.

What can you do further?  Well there are other means of diluting the source of unrest and resistance so you could develop a strategy to consider the money creation and create diversions.  So you may transfer the new money through several steps in a very complicated system whose mechanisms are very hard to grasp.  You may also try to convince people that actually this scheme is good for them.  Yeah you may say what you are doing is actually you are stabilizing the price level or you are altruistically trying to spawn employment which by the way are the two official goals of the Federal Reserve – to stabilize the price level and to increase employment.  People may actually start to like you, claim that without you the financial system will collapse.  One point is that in your arguments, you should always concentrate on one effect of your monetary increase in the money supply that is lower interest rates at the reasonable level.

Banking and Financial Markets | Philipp Bagus

Banking and The Financial Markets

Banking Experts

Our next lecturer is Dr. Philipp Bagus and his lectures will be on banking and financial markets.

Hello again. Today I will first outline what the function of financial market is in a free society and then I will compare it with our system of financial planning. So financial markets in a free society work as intermediaries of savers and investors. So commercial banks, savings and loan banks, mutual funds, investment banks, they serve as intermediaries to connect savers and investors. Why do we need intermediaries? We’ll take a producer of tomatoes, maybe he knows very much, is very good in growing tomatoes but he’s not so good or does not have time to look for his customers to market his production. So financial institutions connect savers that offer present goods and investors that demand present goods. Why don’t they connect directly, lenders and borrowers for example.

I mean of course they do and they can and sometimes they do but again in most cases it’s just more convenient to have specialists doing the job. That is done by intermediaries. Intermediaries can also tailor to one’s needs. So banks for example can receive many small loans and give one big loan to a company. They can also divert risks. When I take all my savings and I give it to my friend then I am putting all eggs in one basket. When I lend to the bank and many other people lend to the bank and the bank gives many…grants many loans to different borrowers then the bank is not putting all the eggs in one basket. So what are the options to finance in financial markets?

One is equity financing that would play a much bigger role in a free market. Now equity financing is pushed aside by the artificially cheap credit. So if you take a balance sheet, equity financing looks like this. We have here the assets, the liabilities. And equity financing gets cash, for example $1,000 and you have here the equity $1,000. You can also finance yourselves by issuing bonds. Issue bond on your liabilities side of $1,000 and you get more cash $2,000. So in both cases private savings are channelled into investment and this is often done through intermediaries or also through investment funds. And another third possibility is to do it through savings and loan banks, commercial banks. So a bank for example. A bank has it’s earn sheet, and it receives a loan from customer A for $1,000 and it gets cash here. Let’s say the loan is 10 percent and then it receives on one hand and it grants a loan on the other hand. Then it grants a loan to company B of $1,000 and the cash goes to this company at 15 percent. So then there’s a profit for the bank. It has functioned as a true financial intermediary.

Another important institution in financial markets in a free society is banking for safekeeping. That is totally different. The most important reason why we hold money is the uncertainty of the future as I explained yesterday. Of course if I hold money I can react to opportunities or to problems that arise because I own the most liquid good that everyone wants to have. If I have money, I rule. Important service is through a bank safekeeping the money for me and that gives me additional services such as bookkeeping service or payment services. Safekeeping and deposit contracts also exist for other goods, other non specific goods such as oil or wheat. So for example for wheat, farmers put their wheat in one big silo instead of every farmer having one small silo.

So the wheat are mixed in this big silo because it’s cheaper to store it there. When you deposit your wheat and when you receive it, you may not receive or you will not receive the same grains or wheat but the same quantity and quality. The Latin word is tantondem. You receive a tantondem it’s the same quality and quantity of what you deposited. It’s the obligation of the depository, the owner of the silo to maintain the tantondem. The same quality and quantity of the goods deposited. Legally, it’s a misappropriation if the owner of the uses the wheat for his own ends. And what is true for wheat is also true for money. Imagine that I am a cashier at a big grocery store that closes over the weekend. On Friday night I was the last one that leaves the store, I switch off the lights and there is $1,000,000 in cash. I’m responsible, I’m safekeeping it for the weekend but I have an idea, why not take the money and have it work for me over the weekend? Have a little investment.

Banking and Financial Markets | Philipp Bagus

Banking: Service Or Scam???

Banking

Banking- the greatest scam on earth. Thomas Jefferson said, “I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, the banks will deprive all the people of all property until their children wake-up homeless on the continent their fathers conquered. Jefferson’s warning is already here. 40 million Americans are living on food stamps; millions are now homeless living in tents, all because of institution, the Federal Reserve System.

The Federal Reserve is a group is a group of private bankers who have stolen the money creation process from the American people. Most people still believe ‘the Fed’ is an agency of the government working in our best interest. It is not. There is no greater form of evil in the world today so let’s explore the banking scam. None of us have ever been taught anything about money. The reason is to prevent us from learning the truth that money is a trick and money is a trap. When solving any crime, there is a universal truth, follow the money; but with the banking scam, follow it backwards. Where does money come from? The world’s money supply is always growing.

Where does all the new money keep coming from? Money comes from the privately-controlled global banks like the Federal Reserve System; they create money every day which increases the world’s money supply. Because all banks are either owned or controlled by private bankers, the real question is how private bankers do create new money and the answer is they create it out of thin air. Bankers create money out of nothing. They make it up. It is a fiction. Wow god-like power to create something of value out of nothing. A stroke of a keyboard and money is created in fact; only 3% of the world’s money is even in the form of bills and coins which means 97% of all money in the world is just numbers typed on a computer screen. This is part 1 of the banking scam; money is created out of nothing. The 2n part of the scam is this phony money is often issued as debt.

What is debt exactly? Well, when you consider we work our whole lives to pay it off, you could say debt is slavery. But whose debt is this phony money? It’s our debt, all of it. It’s our debt when we use credit cards, we get money for student loans, borrow money for mortgages, all bank borrowing and it’s our debt again when the government borrows which is each and every day. In today’s world, money is debt and debt is money and don’t forget the interest charges. Money equals debt and debt equals slavery therefore, money equals slavery. Our monetary system is a carefully concealed system of slavery. Why? Because our government could create the same money for free with no interest charges, just like they used to as the founding fathers designed it inside the United States constitution for our protection against private bankers. The 3^rd part of the banking scam is very evil.

When bankers create money from nothing and issue it as debt, they only create the principal portion of the debt. They do not create the money for the future interest payments. There is not enough money in existence for all of us to make our interest payments. In fact, or money creation system is even mathematically impossible. Money issued by the bank, principal debt does not equal money demanded to the banks, principal plus interest. We are forced to play a game of musical chairs to see who can make their debt repayments. This guarantees a world of bankruptcy, competition and scarcity of money. For example, we go to the bank to borrow money for a house, let’s say a $100,000, the moment we sigh the loan document, the bank creates money out of thin air. A $100,000 debt gets registered for us and a $100,000 secured credit for them. Then one of two things happens, either we give the bank 30 years of labour making house payments totalling $ 300,000 for the original $100,000 we borrowed or the bank takes our house.

The bankers get either our labor for life or our house and often they get both. All out of money created out of thin air and issued as debt for money made out of nothing. This is why the bankers end up with all the assets. The 4^th part of the banking scam is inflation. People think that inflation is: prices and cost increase. A better answer might be the value of our money always goes down. Inflation is created every time the central bank prints money which is every day, where does all this new money get its value? The answer is it steals value from the existing money supply where our savings are. Our savings are disappearing because of the new money theyre printing. If the money creation was in balance with goods and services, there would be no inflation, prices would stay the same but the reality is banks always print money driving prices ever higher which steals the value of our savings, making them disappear. Since the private bankers created the private Federal Reserve in 1913, the United States dollar lost 97 cents in purchasing power.

An item that costs 100 dollars in 1913, in 2011 costs 2,230, a price increase of 2,130%. This is the banking scam, four parts: private bankers create money out of nothing and charge interest on it, there is no money created for the interest payments and inflation steals our savings every day. In order for the banking scam to be pulled over our eyes, the bankers need help from the likes of paid-for politicians and appointed civil servants, military industrial complex, mainstream media, multinational corporations and the banker’s good buddies. For example, what does our banker-controlled television networks say about criminal bankers? Oh, bankers are our saviour! Chairman is man of the year, he saved the world! Bankers really do deserve their bonuses!

They’re so smart. And what do our banker-owned G20 politicians say we need to do? “That we must save our banking system! Now we need austerity measures!” like increasing existing taxes and bringing in new taxes, cutting our social programs including education and health care, stealing from our pension plans, while increasing the retirement age, keeping us working for more years at lower wages, while placing our children and grandchildren in debt and servitude for their future lives. We are being lied to, that we must go deeper in debt for: bailouts, stimulus packages, quantitative easing, saving the ‘too big to fail’ banks, credit easing, currency interventions, and all names that mean the same thing, more debt to us! Is it not strange that the solution to too much debt is always more debt to us! And where is all this money going? It’s going to the banks and bankers; they’re stealing all our money right now. One tenth of 1 per cent of the world’s population owns two-thirds of the world’s wealth. This means that 99.99% of the world’s population own less than a third of the wealth, decreasing amount because this guys are stealing it. We desperately need to wake up to the banking scam, it is time for change.

To retake control of our money system, we must stop supporting the banking scam! Lincoln said, “the government should create all the currency and credit needed to satisfy the spending power of the government and the buying power of consumers, money will cease to be master and will then become servant of humanity. And Jefferson said, “the issuing power of money should be taken from the banks and restored to the people, to whom it properly belongs” it’s a pyramid scheme and we the people, are the bottom layers of the banking pyramid. Without our support, the banking scam collapses, we have to do it ourselves, wake-up, get active, wake others, remove our money from the banks, buy gold and silver coins, get out of debt, rip up your credit cards; these actions will bring down the banking scam, only vote for politicians who support debt-free money, or run for office yourself, turn off mainstream media to search for the truth while you still can and support every effort to end the federal reserve system, and all privately-owned central banks. Let’s bring these criminals to justice to get our money and countries back before it’s too late!