Questions about Money Creation, Monetization,

If the banks create money out of nothing, doesn't that mean they enslave everyone else?  Because they get to create money, which everyone else has to work for.  Isn't this more important than inflation? 

When the debt is monetized, does the federal reserve purchase bonds directly from the treasury? I've read sites that say they don't, while other sites seem to imply that they do.

For how long has the US or world been without full reserve banking?  Are there websites/books that for example can explain thoroughly how banking worked throughout US history?  Also, just how cumbersome would gold and silver coins be?  Any statistics or research or basis for saying that they are cumbersome?

Why should a bank or anyone get to create money out of nothing, which they did not have to work for?  Was the money in colonial times created out of thin air?  How far back into history has money been being created out of thin air?   This will make the money creators rulers, will it not? 

Isn't fractional reserve banking misnamed?  Because they are really creating the money, and then lending it. Doesn't "fractional reserve" imply they keep a fraction of a deposit in reserve and lend out the remainder, while in reality they keep all of the deposit and create what they loan out of thin air?  So why would they want to call it "fractional reserve"?  For how long has this term been around?  I guess it's a way to limit how much money is created; why limit that way?

Are a bank's "reserves" in the form of paper money? 

Does the federal reserve control the commercial banks?  How?

All money is borrowed into existence, according to the Money Masters Documentary, Money as Debt documentary, and the quote by Robert Hemphill.   Isn't the fact that all the money is borrowed into existence a great concern?  Doesn't that deserve to be more well known and talked about? 

I read the Edward Griffin's mandrake mechanism, which says a bank could pay someone to wax its floors, in which case the money that they pay the floor waxer with would not be created as a loan.  So do banks create "debt-free" money?  If they do, what percentage is debt free?  Is there anywhere in the world where money is not created as a loan?  Do silver and gold coins, or silver and gold backed currency circulate anywhere?

Is there a website with a thorough explanation of money creation somewhere?  All of the sites I've found all have the same simple explanation, e.g:  the central bank buys bonds, the money to purchase which is then deposited in commercial banks and used as basis for "fractional reserve" loans e.g. 1000*.9 = 900*.9...I mean, where are webpages that can give you a better idea of the big picture, possibly with real life statistics or possibly describing and giving an overview of all the actions that a bank might take in a day? By explaining it the above way, emphasis seems to be placed on the reserves, but in reality, do they just lend as much as they feel like, and then worry about the reserves?

Who decides what books colleges and public schools use?  Who decides what content is put into the books?  Is there an agency which screens and approves books?  Is there a way to check when a wikipedia page was last edited?

Thanks for your time, and your answers are also appreciated. 

With regard to the recent history of money, checkout What Has Government Done To Our Money? by Murray Rothbard

Interesting topic, but this has been brought up at least 3 times these past few weeks. It's a good idea to see if there are any threads on the topic before posting.

-Jon

 hi.  which posts?

If you search for "central bank", "Federal Reserve" or some other related keyword, using the top-right field, you should get plenty of stuff.

Those movies are good to motivate people, but there is better material in written form that better conveys the information. Mises provides a lot of books as free PDF downloads, and you can also use the store to order them cheaply. These topics are very beaten and is very exhausting to try to educate people over and over, so please do some research, and ping us with some harder questions, that we will pong you back.

With regard to inflation, being enslavement, I would say you could qualify it as a stealth tax. Whether you call it robbery or slavery depends on your view of taxes. I would say either applies.

 not inflation, being enslavement, the creaiton of money when other people have to work for it being enslavement

That's easy to prove. Inflation is by definition a stealth tax. Taxation is a form of retroactive slavery. Hence. inflation is a stealthy form of retroactive slavery. QED.

-Jon

The first question is not about inflation.  The first question is: banks create the money, which people have to work for.  Banks get to create money, while everyone else has to work for the money the banks create.  Doesn't that make the banks, the money creators, enslavers?

In and of itself? No. What makes it retroactive slavery (i.e. a tax) is that money creation is non-neutral. Now, this is fine provided the usage of the currency is voluntary; but this is precisely what is not the case in the US. It thus diminishes the purchasing power of its holders, much like a tax reduces the income of the taxed.

-Jon

redeyez:

not inflation, being enslavement, the creaiton of money when other people have to work for it being enslavement

Okay, so in static equilibrium (an imaginary state when the market forces are balanced), prices can be derived from the Equation of Exchange:

Price Level x Volume of Transactions = Quantity of Money x Velocity of Money

If more money is put into the economy, all things being equal, prices will raise. However, if the velocity of money (how fast money circulates) or the volume of transactions changes (more products being made and sold, or more people entering the country trading things), then you can increase the supply of money without affecting prices. The tendency of the price level is of course to fall, because there is always improvements in productivity (better divison of labor, like having Indians doing the support calls, releasing Americans to produce more stuff -- better capital: new computers, better education, etc).

Some economists argue that it is "good for the economy" to ensure some stability to consumer prices. Of course, we don't live in a static world, and some prices can raise when money is injected into the economy while the market adjusts. Central banks usually inject money into the economy as credit, for the purpose of investing (on businesses, housing, education, etc) and to pay off the government's debt.

Since government can't calculate, you'll either have the interest rates of the central bank either too low or too high -- and this is a bigger issue because if the central banks lowers its interest rates, it incentivates people to borrow money, and if there weren't enough savings in the economy to sustain that low level of the rates, then you'll have to raise them and you'll find out that a lot of that money was mal-invested -- or rather, people were counting to keep borrowing the cheap money to eventually manage to start making profits --, so, as you raise the interest rates to avoid inflation, you'll burst a lot of unsustained booms you created with the unsustained cheap money.

Inflation is an ambiguous word, but if we understand it in the coloquial term, of raising prices, then it obviously is a stealth tax. However, if the central bank increases the money supply in order to adjust the price level for the ammount of new products being produced, or people entering the economy, it's a hard call. They are appropriating of the new product capacity, but they are not really taking anything from you -- those variables were out of your reach anyway --, so I think slavery starts going too far here.

Anyway, there are a lot of ways the government enslaves us. People need to work a few months to just to pay all the tax burden that is put on us. Of course, a lot of services we'd need to pay anyway, but government is always more wasteful, for a lot of reasons (one of which is that it is a lot easier to give other people's money than when you have to work for it ;)). Taxes also produce a spilling effect (you need a legion of tax accountants, it introduces overhead per each employee so you hire less, etc), and together with heavy regulation, you'll have a lot of burden and the consumer will have to pay the bill. Also a lot of essential stuff, like food, is made expensive by government in purpose. They pay farmers not to develop their lands, they destroy a lot of the crops to reduce supply, and impose high tariffs on imported food. I wouldn't be surprised if a part-time job would afford you a comfortable living were not for all the burden.

 

You haven't said why it's not enslavement.  Everyone else has to work for money.  They get to create it out of thin air.  If a bank creates 100 dollars, and I work for 10 hours at 10 dollars per hour, then they can have me work for them for 10 hours, no? or in other words enslave me for 10 hours.  Other people have to work for money, they get to create it, and therefore have people work for them.  If you say getting to create money which pays for other people's labor is not enslavement, then can you give reasons why not?

No comercial bank on its own can enslave you as the bank takes a risk when it loans above its deposits.  Prior to the theft of the Federal Reserve, banks lived in a dog eat dog world of trying to keep reserves IN GOLD just high enough to entice depositors to use their services while at the same time trying to keep as much loans as possbile.  Some banks excelled at this Citi-Bank and JP Morgan are good examples.  After the Federal Reserve joined the picture the enslavement started.  Banks now have a lender of last resort so they can keep their reserves at the Federal Reserve allowed maximum.  This means that depositors have no choices in where to put their money as all banks logically operate at the allowed maximum as the Fed and FDIC and Congress will pay off depositors if the bank completely fails.

After the creation of the Federal Reserve new terms like "loan portfolio quality" and "percentage of performing loans" came into vogue instead of the old stalwarts of Reserve Rate and Percentage of Reserves in Gold or Specie vs Percentage of Reserves in Bills.

"You haven't said why it's not enslavement."

Enslavement it is NOT.  It doesn't even come close.  Look, the bank creates a liability along with the asset.  If you borrow $10 from a bank, the bank pays YOU.  It's you who get the money.  Are you enslaving yourself?

In return the bank wants you to repay the money, with interest.  If it is getting anything for nothing, it's that interest.

But it doesn't even get the interest for free.  The banks are competing to make these loans.  And the more deposits they have, the more loans they can make (look up Basel capital requirements).  You can even get a check account that pays interest.  You wouldn't get that if they weren't able to create money.   The upshot?  Banks make no more money than any other kind of business.  Buy some bank shares if you don't believe me.  You'll get a reasonable return over the long term, but nothing to brag about.

Fractional reserve banking causes bubbles and malinvestment.  But it does not create slaves.

How does forcing someone to hold a currency, then giving certain individuals priority use of this currency (reducing everyone else's purchasing power, much like a tax) not qualify?

-Jon

 

Jon, that is enslavement, but you guys are talking about a bunch of different things yet I don’t think any of you knows the the question, or knows the implication of someone getting to create money.

If I can create unlimited amounts of money, I can enslave everyone, because I will buy everything and pay for everyone’s labor, or lend out the created money, which also requires labor to repay. Would you doubt that this is enslavement? So why is it not slavery when a bank does that?

As the director of the bank of england in the 1920s, Josiah Stamp, says “If you want to continue to be the slaves of bankers and pay the cost of your own slavery, then let bankers continue to create money and control credit.”

Is this argument actually going anywhere, or are you just quibbling about verbiage? Slavery would imply that I force someone to work for me. Counterfeiting doesn't qualify as slavery, since it is still the choice of the person if he wishes to work for me or not. Yes, the banks print money, but that is not equivalent to forcing anyone to work for them.