By: Zeitgeist Addendum

Zeitgeist Addendum — Wed, 20 Apr 2011 06:13:15 +0000

You failed to address the most important aspect of what makes our monetary system so volatile. The federal reserve combined with bank loans has created the world’s largest ponzi scheme. A summary of how this works is as thus: the US government borrows say $10 million from the federal reserve. The federal reserve in turn buys $10 million in government bonds. The government then prints out the sum of $10 million in bonds and gives them to the fed. The fed then prints out $10 million in fait currency and gives it to the government. The government then deposits this sum into a bank account, thus, out of thin air, adding $10 million to the money supply. Of course this would happen electronically in reality. When the government does this it is promising to pay back the money to the fed with interest, essentially creating money out of debt. Now when this money is deposited into a bank, it becomes a part of the bank’s reserves. The reserve requirement against transactions is 10%. This means that $1 million is required as a reserve while the remaining $9 million is an excessive reserve and can be used in loans. It would seem logical to assume that the $9 million is subtracted from the $10 million when given away in loans, but this is not the case. From this the money supply is expanded by adding an additional $9 million to the $10 million (supposing it has now been given away in loans). This has again created money out of thin air. Now lets suppose that the individuals who have borrowed this $9 million have deposited this money into their bank accounts. The bank in this way has essentially expanded their money supply to $19 million from the original $10 million and can now loan out more money based on the 10% reserve requirement on the additional $9 million, which comes to $8.1 million. Again this money created out of thin air can be loaned out and deposited back into the bank the same way as it was above, thus creating an additional $7.29 million. This process can be replicated essentially creating an additional $90 million on top of the original $10 million. The only thing giving this “fake” money value is the current money supply. This is what creates inflation: “fake” money that waters down the value of the money that already exists. Considering that the government acquired their $10 million at the current value of the dollar before it was watered down by the subsequent inflation, inflation essentially is a hidden tax, which has devalued the dollar by 96% from 1913 to 2007, all caused by the federal reserve. What this means, considering that all this money was created out of nothing and thus is debt, is that the more debt there is, the more money there is. Money is debt and debt is money. But it gets worse. Now consider that interest must be paid on all money loaned. This concept is what makes it impossible to pay off the national debt, for there will never be enough money to pay back the original amount plus interest, because there simply would not be any money left over after paying back the original amount to cover the interest accumulated. And this is why the government must continually borrow more money, to pay off the interest of its debt, which causes more debt and more interest. Thus the ponzi scheme is born, and like all ponzi schemes, this one will eventually collapse. – Zeitgeist Addendum

By: tapestries

tapestries — Mon, 10 Jan 2011 23:16:23 +0000

It isn’t bankers’ bonuses that are the problem, it’s the fact that banks alone in society can make up legal tender that’s the real, barely understood, problem.

By: Breann Giannell

Breann Giannell — Sat, 02 Oct 2010 22:30:13 +0000

Nonetheless unsure what you’re making an attempt to say however I do get a bit little bit of it I think. Thanks.

By: Mutual Fund Advisor

Mutual Fund Advisor — Wed, 16 Jun 2010 08:52:26 +0000

If only I had a buck for each time I came here… Superb post!

By: Mable Kadner

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By: BernieR

BernieR — Fri, 26 Mar 2010 20:58:13 +0000

Hola, Super post, tienen que marcarlo en Digg Gracias BernieR

By: Johnsie Leonides

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