Sunday, May 22, 2022

This is How the Private Banks have a License to Create Money out of thin air !!

This is How the Private Banks have a License to Create Money out of thin air !!

The Private Banks have The License to Create Money !! -- Economic Collapse -- Stock Market Crash 4K Private banks can basically create new money as they wish. That used to be the privilege of the mint of princes and governments. It's a privilege to create money and therefore profits out of nothing. This privilege has been in the hands of the financial industry for a long time, and in recent years, it's been unchecked. It is not the central banks but the private banks that generate most of the money. A process is also known as deposit money creation. Money is created when someone goes to a bank to take out a loan; the bank opens an account and issues the funds. It's then in a contract with the individual who's taken out the loan. The bank hopes that the person will pay it back someday. That means what the original impulse to create money comes from private banks. If someone has savings, their money is parked in a savings account. The advantage for the bank is that a person can't just take it out. When the bank issues a loan, it's created from nothing. These two processes really don't have anything to do with each other even though it looks that way, and even though that's what the textbooks say. This is how it works. A customer wants to take out a loan for ten thousand dollars; the bank has to deposit between one and three percent so at least a hundred dollars with the central bank. That's it! In return, the bank is allowed to transfer ten thousand dollars to the customer's account. At the push of a button, the bank generates ten thousand dollars of electronic money from a hundred dollars, and in return, it collects the interest. This creation of deposit money is a license to create money. The banks are happy, of course, that they can do this because that gives them a free rein they get to keep the profits the seigniorage . That's a few billion every year. Who'd want to miss out on that; definitely not them. 90% of all our money just numbers on a computer in a bank somewhere. The banks make this money. Welcome to Atlantis Report. Fractional reserve banking could catch a bank short in the self-perpetuating panic of a bank run. Many U.S. banks were forced to shut down during the Great Depression because too many customers attempted to withdraw assets at the same time. Nevertheless, fractional reserve banking is an accepted business practice that is in use at banks worldwide. During a "bank run," depositors all at once demand their money, which exceeds the amount of reserves on hand, leading to a potential bank failure. The Ponzi system that exists is such that organizations are just borrowing large amounts of money from each other. And then using that to make money by lending it to others. Who is using that to lend it to others. Which means that you have a system where ultimately no one really got the money that backs up all the money that's being lent out. Subsequently when that system comes crashing down, then it's a good night. In today’s modern economy, most money takes the form of deposits, but rather than being created by a group of savers entrusting the bank withholding their money. Deposits are actually created when banks extend credit (i.e., create new loans). As Joseph Schumpeter once wrote, “It is much more realistic to say that the banks 'create credit,' that is, that they create deposits in their act of lending than to say that they lend the deposits that have been entrusted to them.” When a bank makes a loan, there are two corresponding entries that are made on its balance sheet, one of the assets side and one on the liabilities side. The loan counts as an asset to the bank, and it is simultaneously offset by a newly created deposit, which is a liability of the bank to the depositor holder. Contrary to the story described above, loans actually create deposits. Now, this may seem a bit shocking since, if loans create deposits, private banks are creators of money. But you might be asking, "Isn’t the creation of money the central banks’ sole right and responsibility?" Well, if you believe that the reserve requirement is a binding constraint on banks’ ability to lend, then yes, in a certain way, banks cannot create money without the central bank either relaxing the reserve requirement or increasing the number of reserves in the banking system. The truth, however, is that the reserve requirement does not act as a binding constraint on banks’ ability to lend and, consequently, their ability to create money. The reality is that banks first extend loans and then look for the required reserves later. Perhaps a few statements from some notable sources will help to convince you of that fact. Alan Holmes, a former senior vice president of the New York Federal Reserve Bank, wrote in 1969, “in the real world banks extend credit, creating deposits in the process, and look for the reserves later.” Vítor Constâncio, Vice-President of the European Central Bank (ECB), in a speech given in December 2011, argued, “In reality, the sequence works more in the opposite direction with banks taking first their credit decisions and then looking for the necessary funding and reserves of central bank money.” Money and wealth have become more and more detached. Money is transitory and ephemeral, and it may soon be worthless if central bankers and politicians continue on their current path. But true wealth is permanent and tangible, and it has real value worldwide. Everyday citizens who save and invest have become guinea pigs in the central bankers’ laboratory. The world’s major financial players—national governments, big banks, multilateral institutions—will always muddle through by patching together new rules of the game. The real victims of the next crisis will be small investors who assumed that what worked for decades will keep working. Until 1971, the world was financially stable. Currencies were covered by gold; the real economy was an imbalance with the amount of money available. Then U.S. President Nixon needed money for the Vietnam War. He switched on the money printing machine, not least because OPEC had increased oil prices. This money then flooded the world. Banks came up with new investment models. They now wanted to make money not with goods but with money alone. This was the start of the financial industry of today. Credit cards and current accounts accelerated financial transactions. Former public responsibilities were privatized; pensions are a case in point; the private sector is better at everything than the state, so they said. New billions came into play. In the 1980s, Margaret Thatcher deregulated the banks in London. Bill Clinton did the same later on Wall Street. Money was to earn money and thereby create growth. The global casino was open for business. This path of liberalization was a mistake; it's also the wrong word - if you deregulate markets that need to be regulated, then you create chaos, you unleash an avalanche of money onto the world. You can call that liberalization, but it was a policy that benefited only a few people, namely the rich. It has caused a lot of problems for the world. The liberalization of deregulation allowed the deals of the banks to explode. They now acted internationally. Major banks have become investment establishments that fund huge deals. More and more money goes into speculation. That's where big money is made. This has less and less to do with the real economy. The money creation process also seems to be something of a mystery among academics and even in the banking boardrooms. The banks are silent for a reason; they would have to explain to their customers that these days, it's them creating the money and them benefiting hugely as a result. Money isn't neutral, after all. It's not the central banks, but private banks that generate most of this new money. A process is also known as deposit money creation. The money is created when someone goes to a bank to take out a loan. The bank opens an account and issues the funds. It's then in a contract with the individual who's taken out the loan. The bank hopes that the person will pay it back someday. That means that the original impulse to create money comes from private banks. Private banks basically create new money as they wish. That used to be the privilege of the mint of governments. It's a privilege to create money and, therefore, profits out of nothing. This privilege has been in the hands of the financial industry for a long time, and in recent years it's been unchecked. This financial system will keep growing and sprawling the prospects of big profits. The low-interest rates, the deluge of money, these elements make for an explosive mix. One thing is sure this sick financial system is going to cost us a lot of money. I don't think anyone will come out of this situation unscathed. We've been living on loans. There will be wealth destruction. Our current financial system is very likely to lead to the next disaster. We need a different system. But it would be enough if we just returned to what we had — highly regulated financial markets, and a banking sector under control and whose purpose was to serve. We want the creation of money to be state-controlled and not in the hands of private banks . Billions in interest payments would then flow into the public purse. The monetary system will fail because the debt-based system relies on continually expanding debt. But the more the debt expands, the lower the value of the currency unit. Eventually - the limit is reached. As debt goes exponential, the currency value goes to zero. No currency system ever survives. They all die the same way. With more money in circulation but the same quantity of goods, the pressure mounts for prices to rise. But This Money supply isn't finding it's way out of banks and into the hands of ordinary people in the form of wages, which explains why commodity/energy inflation is so flat despite market growth. The oxymoron of it all, as long as the household debt remains above 105% of income, the fed has to keep rates low to stabilize disposable income. The Fed, whether it knows it or not, is countering the effects of 40 years' failure of trickle-down, giving pointless tax incentives to the wealthy, while technology and Global free trade carve out considerable holes in domestic labor demand. 99.99% have no insight; None. But the herd knows something is not right. When the currency is created as debt, which it is, it REQUIRES an ever-expanding currency supply forever. Say they print a million bucks, and that’s the only money there is. At 2% interest, that million bucks requires $1,020,000 to be paid back. Where’s the extra $20 grand come from. It doesn’t exist, so it has to be printed too. And you can’t actually pay off the million, because then there’d be no money in circulation. So you have to reprint the million-plus 20 grand. Now, if you want the economy to grow, that million dollars has to grow too. Otherwise, you’d have 0% GDP growth. So 1 million becomes 2 million. Well, now you owe 40 grand in interest. This has been the way the siren works for over a century now. External debts and our currency and our economy are all linked. Now for the real kick in the nuts. If you want the economy to keep growing at the same rate, the debt must grow at an exponential rate. If society is used to the growth rate from 1 million to 2 million, you can’t just go to 3 million next time. From 1 to 2, it was 100%. From 2 to 3 would only be 50%. So you have to grow it from 2 to 4 million. Of course, then you owe 80 grand in interest. And the next printing has to go from 4 million to 8 million. And on and on it goes. Any attempted slowdown in the growth leads to economic contraction. That’s what the QT over the last year did. So now we see the economy slow. So they have to print more. And even if they save the economy again, next time they will just have to print even more. This is the real crux of it all. The debt is literally REQUIRED to grow not at a linear rate, but at an exponential one. The average human mind has trouble comprehending exponential growth, but we’ve reached the point where either we have the economy slow, or our debt goes full-on hockey stick at this point in the graph. Or, we get a new monetary system and currency and start over. Those are literally the only choices. This was The Atlantis Report. Please Like. Share. And Subscribe. Thank You.

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