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Do you know how money is created?

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    #92
    Iwasfrozen
    Registered Users Posts: 16,250 ✭✭✭✭Iwasfrozen


    pqdvdplayer wrote: »
    This is an easy way to see the flaw. Let's say that no money existed. The bank then decided to lend out 1 euro to one person. The person then had to pay back this 1 euro plus interest. This is impossible, right? Because only 1 euro existed in the first place. And even that one euro was created artificially by the banks. Therefore, it is easily proven by this that as long as our current system is in place, we will ALWAYS be in debt to the banks. It is physically impossible for us to not owe money to the banks. Even if we used all the money in existence to pay off all our national debts, we would still be in debt. Its stupid, yet all the governments continue to try to achieve an impossible thing, without ever questioning the fundamental flaw of the system.
    That ignores the fact that money is only really a bargaining chip for produce. For example if the bank lent me 1 euro worth of produce it's perfectly possible for me to return 1.1 euro worth of produce to the bank assuming 10% interest.


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    #93
    pqdvdplayer
    Registered Users Posts: 158 ✭✭pqdvdplayer


    131spanner wrote: »
    Like the whole catching Kony thing.


















    Ah wait a second...

    That's the polar opposite from what I am discussing. You are talking about some faraway criminal who bears no effect on our lives here. I'm talking about real issues that are going to hurt people badly in the next few years. We will be taxed through the roof just to pay back an impossible situation, and if people understand what is happening, they will find a way to stop it


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    #94
    Seaneh
    Banned (with Prison Access) Posts: 18,300 ✭✭✭✭Seaneh


    Knasher wrote: »
    It would be more accurate to say that they create capital when they make a loan, as the amount of money in existence remains the same.

    Nope, they create currency when they make loans.

    Read the link I posted a few pages back with a publication from the Bank of England which explains that somewhere between 92 and 98% of currency in existence is created by banks making loans.


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    #95
    pqdvdplayer
    Registered Users Posts: 158 ✭✭pqdvdplayer


    Iwasfrozen wrote: »
    That ignores the fact that money is only really a bargaining chip for produce. For example if the bank lent me 1 euro worth of produce it's perfectly possible for me to return 1.1 euro worth of produce to the bank assuming 10% interest.

    That was a simple example. But do you return 1.1 euro worth of produce to the banks? No... You return more debt-based money to the banks, creating an endless cycle of debt.


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    #96
    Iwasfrozen
    Registered Users Posts: 16,250 ✭✭✭✭Iwasfrozen


    pqdvdplayer wrote: »
    Wow, how can you save money that never existed.
    Because there is more money in existence then the money you borrowed.
    Nino Brown wrote: »
    I'm not sure you're getting this, there is more debt than there is money in existence, it cannot be paid off, ever.
    Lets pretend the bank has E100 in reserve, they loan out E1000 and charge 10% interest, now somebody owes E1100, they buy a car and the old owner puts that E1000 in his bank, now they have reserves, and they loan out E900, and the cycle continues.
    That original E100 has now become thousands in debt which can never be repaid, because the interest owed never existed.
    So the only way to keep the cycle going is for more debt to be created to pay the interest so they system doesn't collapse. Which is why in 2008 when people stopped borrowing, governments had to fill the gap, so now we have the sovereign debt bubble.
    Why are you making the assumption that the 1,100 euro can only ever be paid off through creating more debt? If the man who made the loan puts away 10% of his 3500 euro a month salary he would have the debt paid off in a little over three months with no new loans being created.


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    #97
    pqdvdplayer
    Registered Users Posts: 158 ✭✭pqdvdplayer


    I'd love to borrow a load of money from different banks and invest in gold, then leave the country with the gold? Gain back some wealth, eh?

    I'd have REAL wealth with the gold that I bought with my borrowed money. Is this a feasible idea? It's not really theft because the banks aren't bearing any burden from this whatsoever.


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    #98
    Amirani
    Moderators, Society & Culture Moderators Posts: 12,523 Mod ✭✭✭✭Amirani


    pqdvdplayer wrote: »
    Because it will keep causing economic collapses, with each one being worse than the previous.

    Economic collapses would happen anyway. The Dutch Tulip Bubble (and subsequent crash) and the South Sea bubble (and subsequent crash) occurred far before any fiat monetary system.

    Any other reasons?


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    #99
    pqdvdplayer
    Registered Users Posts: 158 ✭✭pqdvdplayer


    Iwasfrozen wrote: »
    Because there is more money in existence then the money you borrowed.


    Why are you making the assumption that the 1,100 euro can only ever be paid off through creating more debt? If the man who made the loan puts away 10% of his 3500 euro a month salary he would have the debt paid off in a little over three months with no new loans being created.

    You're missing the point. The money that he earns from his salary was borrowed at some stage. As was already mentioned, 98% of all money is debt based. Do you understand?


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    #100
    Nino Brown
    Closed Accounts Posts: 1,507 ✭✭✭Nino Brown


    Iwasfrozen wrote: »
    Why are you making the assumption that the 1,100 euro can only ever be paid off through creating more debt? If the man who made the loan puts away 10% of his 3500 euro a month salary he would have the debt paid off in a little over three months with no new loans being created.

    Because all money is debt, even his salary. Somebody else owes that E3500 a month he's getting, plus interest.


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    #101
    gctest50
    Registered Users Posts: 9,605 ✭✭✭gctest50


    pqdvdplayer wrote: »
    That's the polar opposite from what I am discussing. You are talking about some faraway criminal who bears no effect on our lives here. I'm talking about real issues that are going to hurt people badly in the next few years. We will be taxed through the roof just to pay back an impossible situation, and if people understand what is happening, they will find a way to stop it

    how ?

    Its just like yer shop
    - if you just stop the stock will go stale
    - they probably wouldn't have enough to pay for all the stock if it disappeared
    - they just give the illusion of never running out - keeps the little bunnies happy
    - if all the little bunnies came in at once - they wouldn't have near enough - you see this when there is a storm or powercut - this is not good - makes the little bunnies jumpy n stuff - not good for them

    - most of all you don't want the little bunnies getting ideas about growing their own carrots just in case - you give these ones mixamatosis so the other bunnies won't go near them

    basic stuff you should be able to figure out without anyone admitting anything and all that "OMG" stuff
    pqdvdplayer wrote: »
    You're missing the point. The money that he earns from his salary was borrowed at some stage. As was already mentioned, 98% of all money is debt based.

    no no no no ...... it just doesn't exist.

    as long as everyone thinks it does - its grand - it goes tits up every few decades because it has to

    Its like the gold you seem to be so fond of - its just "rock" more or less

    - find where it is - fire enough diesel+machinery+manpower+skill at it and you get gold - thats all it is

    .


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    #102
    Seaneh
    Banned (with Prison Access) Posts: 18,300 ✭✭✭✭Seaneh


    Iwasfrozen wrote: »
    Because there is more money in existence then the money you borrowed.

    But there is more debt in existence than there is money*. In fact money creation CAUSES debt, every time money is created, more debt is created.



    *we should be saying currency here, because it's definitely NOT money.


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    #103
    Iwasfrozen
    Registered Users Posts: 16,250 ✭✭✭✭Iwasfrozen


    pqdvdplayer wrote: »
    That was a simple example. But do you return 1.1 euro worth of produce to the banks? No... You return more debt-based money to the banks, creating an endless cycle of debt.
    I do no such thing. Say I'm a farmer and I borrow 1 euro worth of produce from the bank. I then invest that 1 euro in new farming equipment and set aside a % of my produce. Eventually I pay the bank back 1.1 euros worth of produce and no new debt was created.

    I used farmer to keep with the example but you could just as easily take the example of a plumber, accountant, IT guy etc. whose services are exchanged for money. In that case their produce is their service.


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    #104
    pqdvdplayer
    Registered Users Posts: 158 ✭✭pqdvdplayer


    Diego Simeone wrote: »
    Economic collapses would happen anyway. The Dutch Tulip Bubble (and subsequent crash) and the South Sea bubble (and subsequent crash) occurred far before any fiat monetary system.

    Any other reasons?

    That's a much deeper topic. The fact that wealth and power is being transferred to the 0.0001% is pretty bad.


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    #105
    YellowFeather
    Registered Users Posts: 2,294 ✭✭✭YellowFeather


    pqdvdplayer wrote: »
    Yes there is. We can inform more people about this because most people don't even have a clue that they are being robbed. You'll find that once the majority of a population are informed, justice will soon follow.

    How exactly would justice follow. I'm genuinely interested.


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    #106
    Iwasfrozen
    Registered Users Posts: 16,250 ✭✭✭✭Iwasfrozen


    Nino Brown wrote: »
    Because all money is debt, even his salary. Somebody else owes that E3500 a month he's getting, plus interest.
    No, his salary is the produce he created or the service he provided. Which of course is created debt free.


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    #107
    Seaneh
    Banned (with Prison Access) Posts: 18,300 ✭✭✭✭Seaneh


    Iwasfrozen wrote: »
    Eventually I pay the bank back 1.1 euros worth of produce and no new debt was created.

    New debt was created though, just not to you.


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    #108
    pqdvdplayer
    Registered Users Posts: 158 ✭✭pqdvdplayer


    YellowFeather wrote: »
    How exactly would justice follow. I'm genuinely interested.

    I don't "exactly" know how justice would follow. But enlightenment is the best way for it to happen.


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    #109
    Knasher
    Registered Users Posts: 2,370 ✭✭✭Knasher


    Seaneh wrote: »
    Nope, they create currency when they make loans.
    Currency is the physical money, and only the physical money (either notes or coins). So you are claiming that the bank fires up their printers and prints off a bunch of notes whenever you take out a loan? Obviously not, hence it is the creation of capital, not currency.


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    #110
    pqdvdplayer
    Registered Users Posts: 158 ✭✭pqdvdplayer


    Iwasfrozen wrote: »
    No, his salary is the produce he created or the service he provided. Which of course is created debt free.

    The money that he got for the produce originated from debt. We could keep going deeper and deeper with this! Just stop.


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    #111
    Iwasfrozen
    Registered Users Posts: 16,250 ✭✭✭✭Iwasfrozen


    pqdvdplayer wrote: »
    You're missing the point. The money that he earns from his salary was borrowed at some stage. As was already mentioned, 98% of all money is debt based. Do you understand?
    That's your theory and I disagree.


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    #112
    pqdvdplayer
    Registered Users Posts: 158 ✭✭pqdvdplayer


    Knasher wrote: »
    Currency is the physical money, and only the physical money (either notes or coins). So you are claiming that the bank fires up their printers and prints off a bunch of notes whenever you take out a loan? Obviously not, hence it is the creation of capital, not currency.

    Money is the physical money. Currency is the value of the money in any form. Get your information right before you make statements like this :rolleyes:


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    #113
    pqdvdplayer
    Registered Users Posts: 158 ✭✭pqdvdplayer


    Iwasfrozen wrote: »
    That's your theory and I disagree.

    That's like creationists disagreeing with the evolutionary theory. Why would you disagree when its a completely justified theory. Give me your theory on how the wealth is actually fairly created?


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    #114
    Nino Brown
    Closed Accounts Posts: 1,507 ✭✭✭Nino Brown


    pqdvdplayer wrote: »
    I don't "exactly" know how justice would follow. But enlightenment is the best way for it to happen.

    The truth is people don't want to know. How many people in this country lost there job in the financial crisis? How many of them know what a CDO or a MBS is? Very few. The information is out there, but people like to spend money, they like free healthcare, and social services. They just don't want the party to stop.

    Also debt is optional, yes the system is a ponzi scheme, but you don't have to take part if you don't want to.


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    #115
    Karl Stein
    Closed Accounts Posts: 7,689 ✭✭✭Karl Stein


    pqdvdplayer wrote: »
    Why are you trying to argue this?

    Are we arguing? I thought it was a discussion.
    Whatever, you can think all you like that money can be worthless..

    Paper money is intrinsically worthless except as paper. I'm not saying it has no value attributed to it. I'm quite aware that I could swap a piece of paper with a nice design on it for something with intrinsic worth like a fresh sandwich.


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    #116
    Iwasfrozen
    Registered Users Posts: 16,250 ✭✭✭✭Iwasfrozen


    pqdvdplayer wrote: »
    The money that he got for the produce originated from debt. We could keep going deeper and deeper with this! Just stop.
    Money is just a bargaining chip, the man sells his produce and receives a monetary payment for his produce. The mans own production was his means of paying off his debt without new debt being created. You're trying to say that debt cannot be paid off without creating new debt but that's just not true.


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    #117
    Knasher
    Registered Users Posts: 2,370 ✭✭✭Knasher


    pqdvdplayer wrote: »
    Money is the physical money. Currency is the value of the money in any form. Get your information right before you make statements like this :rolleyes:

    I looked it up, it says I'm correct.


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    #118
    pqdvdplayer
    Registered Users Posts: 158 ✭✭pqdvdplayer


    Iwasfrozen wrote: »
    Money is just a bargaining chip, the man sells his produce and receives a monetary payment for his produce. The mans own production was his means of paying off his debt without new debt being created. You're trying to say that debt cannot be paid off without creating new debt but that's just not true.

    But the monetary payment that he received was at some stage a form of debt...


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    #119
    YellowFeather
    Registered Users Posts: 2,294 ✭✭✭YellowFeather


    pqdvdplayer wrote: »
    I don't "exactly" know how justice would follow. But enlightenment is the best way for it to happen.

    Well you don't have to give us "exactly". A few pointers would be a good start.

    I understand what you're saying, but to argue against a workable and valid system without suggesting an alternative is just arguing for the point of it IMO.


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    #120
    Seaneh
    Banned (with Prison Access) Posts: 18,300 ✭✭✭✭Seaneh


    Knasher wrote: »
    Currency is the physical money, and only the physical money (either notes or coins). So you are claiming that the bank fires up their printers and prints off a bunch of notes whenever you take out a loan? Obviously not, hence it is the creation of capital, not currency.

    No, the makes make the loan, and then more currency it put into circulation. They don't print it, they create it.

    Honestly, you can ignore the reality for as long as you want but if you actually want to understand money creation read the publication from the BoE I posted several pages ago.
    Takes some reading to get your head around it, but the fairytail of fractional reserve you were told in secondary school is well wide of the mark.


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    #121
    Nino Brown
    Closed Accounts Posts: 1,507 ✭✭✭Nino Brown


    Knasher wrote: »
    Currency is the physical money, and only the physical money (either notes or coins). So you are claiming that the bank fires up their printers and prints off a bunch of notes whenever you take out a loan? Obviously not, hence it is the creation of capital, not currency.

    Lads just google fractional reserve banking, this isn't a conspiracy theory, it's not hidden, its how our banking system works.
    When you take out a loan, digital money is created in the system, not literally printed, but currency is created.


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