Crash Course: Chapter 7 - Money Creation by Chris Martenson

[jaeknyc]

The easiest way to understand this is say u let the bank borrow 1000$ and they let someone else borrow 900$. If u went to the bank and withdrew that 1000$ would the bank tell u u have to wait until they got the 900$ back?

[johanrwerner]

One thing I wonder about this... When a bank puts the $900 into an account it would directly be able to loan out another $810 and put it into the same account. This would make the entire thing instantaneous and a client will be able to take out a verry large sum from the original $1000. Then he could put that money into another bank and they could expand it again. Is this correct or am I missing something?

[tothemax01]

@johanrwerner This video has a misleading explanation of banking. In reality, banks simply issue loans by creating new accounts (deposits) in their books. When people receive loans from the bank, they do not typically withdraw the physical money. Rather, they simply use the account itself. E.g. when someone buys a house, they don't carry a suitcase of cash - they simply transfer the loaned funds to the old home owner as payment.

[johanrwerner]

@tothemax01 That dont address my question. I know most money never actually leave the banks. So after the account is created they fill it up with $900. Then another $810 and so on. Then you transfer the money to a new bank were the previous owner has an account. Then that bank will be able to run the same system but with a much larger seed. Or am I missing something?

[tothemax01]

@johanrwerner Picture it this way, suppose a bank starts up with $100 cash in the vault. Suppose Jim shows up and says 'I want a loan of $20'. The bank then records two debts in its records - Jim's $20 chequing/transaction/whatever account ($20 owed to Jim by the bank, due on demand), and Jim's debt owed to the bank ($20, due in say, 1 year). The bank is limited in this process by peoples demand for loans, and demand for cash settlement (withdrawals).

[tothemax01]

@johanrwerner Regarding the $900, $810... example, this is simply not how it works. The video uses a popular but inaccurate explanation that would only apply: if a fresh $1000 amount of cash was deposited into a bank, and the bank immediately lent out (cash is withdrawn) 90% of that amount as a rule, that cash fraction is then deposited again, and the cycle continues. In reality this does not happen, the bank simply creates new deposit accounts to the total value of 10x the cash.

[bytelinenews]

From Tacistus, 2 months ago, "LOL you're really going to point to the gold bubble, commodity prices, and oil? Oil, the resource we get from an increasingly unstable Middle East?

When are you fools going to learn? Gold is not magic. There's nothing more real about the imagined value of pretty lumps of shit and the imagined value of stacks of paper."

Are you feeling the stupid yet, or are you on drugs? Speculative bubbles or not, the prices are real. You make no sense whatsoever.

[AngeliqueEU]

93% off all money does not really exist .... )-

[tacticalmastermind]

Money is not created. It is simply circulated at a higher rate. When you place your money in a bank, unless it is in a savers account, your money is lent out to other people without telling you. (they only keep the reserves). Its the same money, it is simply the circulation in the economy which has increased. The higher the circulation the more goods and services are bought per day (and so it feels like there is more money in the system).

[tacticalmastermind]

@tacticalmastermind So is this bad? No and Yes. FRB allows the economy to benefit by increasing circulation which increases demand in goods and services. This helps the economy. The problem is that most modern nations have become completely dependent on consumer spending to have a stable economy, so this process must continue. Because increasing the circulation increases demand, the prices also go up and thus devalues the currency into worthlessness until people save.

[tacticalmastermind]

Because we are dependent on consumer spending, when people start saving we go into recession. So essentially, for America, there is no way out unless it rapidly creates an economy based on manufacturing and exports...which will not happen. So pick your economic catastrophe: complete devaluation of the dollar (what is occurring now) or a great depression. You could make an argument that increasing FBR only prolongs the inevitable and makes it worse. In the end you will have both America :)

[chelonia1663]

We have a mathematically proven terminal monetary system. The issue — and the only distinguishing process even — was and is "interest."

[Adriaan1950]

Dear all,

Why not take advantage of the system and create Money out of nothing for ourselves? Check how in the video:

MONEY for FREE (1.) The Secret that Bankers don't want you to know. and:

MONEY for FREE (2.) The Secret that Bankers don't want you to know.

Let's get together and start our own bank. It's easy enough.

With kind regards, Adriaan Koreman

[r7n7]

These videos should have millions of views...

[SuperDickweed]

I made a big stool this morning, Thumbs up if you did too!! 

[iansummerell]

I understand this but the bank use some of the money to bet on hedge funds and they have been loosing IT! The government loan the banks MY tax money. How does this work?

[PositiveMoneyUK]

A biggest public campaign has started to abolish fractional reserve system. Visit POSITIVE MONEY website and support the campaign.

[shiningc323]

I always thought my high school AP Economics was illogical somehow. And I always thought what would happen if multiple people want to take out their savings from the bank? Now I know why the class didn't talk about this part!

[RainbowManification]

Money is loaned by the fed. Our entire monetary system is owned by a private enterprise

[wastedwasted3]

why does the 900 loan not just come from the existing 1000? why is new money created?

[Huttate1]

@wastedwasted3 Because the $1000 depositer has his $1000 available AND the bank uses the fact that it has $1000 on deposit to allow it to loan out $900 dollars to another customer. The customers have $1000 and $900 dollars available each. So long as they do not want it all out at once - that is what a run on the bank means. This can be hard to understand but it is one of the most important things that you can ever learn. It is what caused the financial crisis that we are now in.

[treefittyfive]

@wastedwasted3 Pretend Joe puts $1000 in Bank A. Frank wants to take out a loan for 900. He gets it at Bank A. Bank A gives Frank $900, but Joe still has $1000 in his account (otherwise Frank would be stealing Joe's money). So Bank A now only has $100 of Joe's deposit, but Joe has $1000 in his account. If Joe tries to withdraw his $1000 the bank is ruined, because it only has $100 of it left (Frank has the rest, in the form of his loan). If Frank can't pay back the $900, boom. Collapse.

[pcgamesolution]

QUESTION: where goes the money the loaner pays back to the bank ? (because it says that when you pay back the loan that money dissapears (WHERE?))

[Huttate1]

@pcgamesolution Because the money loaned is a debt. When it is paid back the debt disappears. In reality the bank simply loans it out again to someone else. You need to have it clear in your mind that the banks are creating this money from nowhere. It simply exists as a loan note against the customer account.

[Hendo1974]

Good Presentation!

[SilentNoMorePubs]

WHY WE ARE IN SO MUCH DEBT is another good video. It provides one of the simplest, clearest explanations yet. Highly recommended.

[enemdy]

Quran already stated that precious metal is the only real money (dinar -gold, dirham - silver) and earth resources eg wheat, salt, sugar, rice etc. Quran stated, usury is forbidden but the paper money system (Dajjal System) is opposite of what have been told! Now we pay the price!

[Paulwhoisvegan]

I only have 10 dollars, and It's not in the bank! 8D I use CHASE BANK!

[professornuclearbomb]

Also, banks can just write in their books the principle of a loan, just because you signed a loan. With a 10% reserve requirement, a bank can write in its books an additional $9000 on that $1000 dollar deposit.

[FriendsBuyHousesCom]

One slight correction, the original $1000 remains in the bank as the ENTIRE reserve amount, the bank loans out about $9000 that never existed in the first place, thus money CREATION. It is illegal for the bank to lend any of their depositors so-called physical assets. Since the 1930's our system when from physical currency, to a system of bank credit and debit. By executive order, debt can no longer be paid, only discharged.

[MrMick73]

@FriendsBuyHousesCom Thankyou for your reply, i do udnerstand sovereign Bonds and international debt but why do countries borrow money from other countries if they have different currencies. This would mean they need to ask permission from foreign entities to print their own currency denomination.

[MrMick73]

@FriendsBuyHousesCom No I do not believe that Birth certificates are Bonds nor would a prison be traded as a Bond. Do you have any evidence that links An Australian Birth certificate to a stock market. My Birth certificate has no market link. I believe that is religous nonsense but your welcome to prove me worng.

[exotic1406]

@FriendsBuyHousesCom

yeah i suspected that and i looked for a comment with the same view.

thump up for the correction.

[MrMick73]

does anyone know how countrires lend money if they haev different currency ???

[FriendsBuyHousesCom]

@MrMick73 all the monetary transactions between countries are done with bonds. Virtually everything is bonded and traded on international markets. Your birth certificate for example is a bond, that is traded internationally. Every person in prison has a "bond' attached to them, which is traded and monetized, it goes on and on.

[clockmonster786]

But if I innovate and create wealth with the money I borrowed won't I have the money to pay back principal and interest?

Isn't that the reason why we couldn't have a gold standard because money represents wealth and if wealth increases over the long run the money backed by a gold standard would be subjected to constant deflationary pressure.

[juanleiden]

the money creation part is nothing but marx

simply marx, that's all the truth

[prayfortruejustice]

Owners v. Workers

P+I > P = slavery

Time for interest free sovereign money -- this is Freedom's Vision.

Join the swarm today. The American Party PAC. w w w SwarmUSA com

[zonsb]

After a "borrower" signs a promissory note(PN) the "lender" bank sells the PN. The PN is a trust deposit and must be returned unaltered to the "borrower" when the loan is paid in full. As a borrower would you not want your IOU returned to you? That never happens because the "borrower" never expresses the trust. Plus, the bank was already repaid when it sold the PN. It has no lawful or legal valid claim against the "borrower."

[PistolPackingPatriot]

Excellent!

Brevity is the soul of wit.

[jtully79]

Why is there no mention of Capital Adequacy Ratios, Risk-Weighted Assets or Loans backed by collateral such as a residential morgage?

[kikrlbs]

@jtully79 This is a concentrated form of the presentation, the actual presentation is over like 35 hours long, they may mention something about your question in the longer version

[Chuichupachichi]

Ultimately this system requires continual growth. For the more it grows, more is there required to feed the monster... "exponentially". But continual growth can be sustained continually, only if resources were infinite. However, they're not. Thus, within our finite, entropic universe, there must come a day when the bottom will drop out

That day is upon us! The price for not living harmoniously with the natural order of God's creation. Ultimately, it all comes down to natural resources

[Chuichupachichi]

For when this current system was first concocted, it was within agrarian civilizations & agricultural product was bartered. But all men were created equal. Thus no man has the right to charge another man exorbitant interest for his portion of the resources. Usury!

[Chuichupachichi]

Correction - with the advent of agrarian civilizations, the settlement of populations spawned the creation of currency & this system. But agricultural product & livestock was the valued substance represented by the currency. The proprietorship of land & its product & resources of which all men rightfully have equal claim to

Otherwise, you have Loserferians who's attitude is that they are proprietors of the earth & all of it's inhabitants. Sounds like Marxism? Because Marxism is Loserferianism

[MarkProffitt]

There is a problem even before interest. If anyone one of the people tries to take their money out its a bank run and the bank is bankrupt.

In fact if the person that borrows the money buys something and that person tries to cash the check it would be a run on the bank. The check would bounce.

The bank and the borrower have committed fraud against the person being paid with that check.

[thereduxchannel]

Never mind the banks, guess what? YOU all create money every time you buy on credit or run an overdraft. You can do this, but you have to pay interest. You really think your government should be allowed to do this for free. You want politicians printing even more money for pork?

Paradoxically the Fed is allowing the printing of money for virtually nothing as it is in order to support the mis-created froth of the past decade, and this is a big mistake. As we're about to see.

[TacticusPrime]

@thereduxchannel So where's the inflation buddy?

[bytelinenews]

@TacticusPrime Dear Tacitus, I'd say pretty much everywhere. Have you not checked the CRB, or the price of gold, or oil, etc since I posted this a year ago...? Everything we own, like real estate & stocks, goes down in value at the same time that everything we spend on goes up in price.

[TacticusPrime]

@bytelinenews LOL you're really going to point to the gold bubble, commodity prices, and oil? Oil, the resource we get from an increasingly unstable Middle East?

When are you fools going to learn? Gold is not magic. There's nothing more real about the imagined value of pretty lumps of shit and the imagined value of stacks of paper.

[rvborgh]

Correct me if i am wrong here, but i thought there are no longer any required reserves except 10% on transaction accounts - and even those are swept into savings sub accounts via deposit reclassification - which reduces the reserves on those. If a reserve exists, then can't banks just borrow funds from a different bank to meet the required reserve ratio to make the new loan?

[SrRulao]

Unless I am mistaken, newyorkfed org is an official fed website, and operate under the same rules.

There, it states banks can create money through the Fractional Reserve System. They actually use an example of 100$ to 1000$.

How would that not be making money? You can now lend money you did not have and collect interest from it.

So far I'd have to agree with Martenson.

I used this page as a source: newyorkfed org/aboutthefed/fedpoint/fed45 html

[PanzerDivisionBOM]

This one is a lie. A has 100 dollars. A deposits 100 dollars in bank. Bank has 100 dollars, A has 0 dollars. Bank loans 90 dollars to B. B has 90 dollars, bank has 10 dollars. B deposits 90 dollars in bank. Bank has 100 dollars. A and B have 0 dollars. Bank loans 90 dollars to C. Bank has 10 dollars, C has 90 dollars, A and B each have zero dollars. C deposits 90 dollars in bank. Bank has 100 dollars. A, B and C have 0 dollars. This can go on virtually ad-infinitum. No new money is created.

[SrRulao]

I believe you forgot about the Fractional Reserve part.

[PanzerDivisionBOM]

Actually, no. The fractional reserve is what prevents the bank from lending out the last ten dollars at any given time.

I think what Mr. Martenson isn't grasping, is that while each new iteration of the loan does indeed create new assets, (i.e. another person with money in their bank account), it also creates new liabilities equal to those assets plus interests (i.e. another person who owes the bank that much more money). -

[PanzerDivisionBOM]

There's this perception of a bank as a vault, which holds your money for you until you come to retrieve it. That view is not supported by reality. Rather, the bank continually moves money through it, keeping only some spare change at hand to cover small exchanges, like a convenience store.

I feel a little dirty inside for having defended the Fed just now, but fair is fair. There are plenty of REAL reasons to oppose state action in the creation and maintenance of money, as with all other things.

[planksaster]

lol PanzerDivisionBOM youre overlooking that only idiots would loan money from a bank ( in form of a credit ) and then give it back to the bank by depositing it on their bank account. That would be plain stupid.

The credit most likely has a higher interest than a standard bank account.

Instead person B would spend his money on whatever he wanted the credit for.

X, who recieved the money then takes it back to the bank.

Bank now has 10$ + B's credit (= 90$ + Interest) + 90$ from X = ~190$

[PanzerDivisionBOM]

Alright, fair enough. So let's look at this exchange.

Bank has 100 dollars, A and B has 0 dollars.

Bank loans 90 dollars to B.

Bank has 10 dollars, B has 90 dollars.

B gives 90 dollars to X in exchange for one widget.

Bank has 10 dollars, A and B have 0 dollars, X has 90 dollars.

X deposits 90 dollars in bank.

Bank has 100 dollars, A, B and X each have 0 dollars.

If we look at the assets and liabilities for the bank on the final line, we find this:

(to be continued shortly)

[PanzerDivisionBOM]

Assets of bank:

100 dollars "cash"(i.e. the money that is currently in the bank's possession),

+ is owed 90 dollars by B,

= 190 dollars

Liabilities of bank:

Owes A 100 dollars,

+ owes X 90 dollars,

= 190 dollars

You point to the interest as a source of profit. But in economics, the interest is not considered profit, but merely the growth of money over time, or a direct expression of time preference.

[LDRinbrampton]

Sorry dude, you got it all wrong. Right off the bat too.

i don't want to use A & B tho cuz it confused me a bit, i'll use Z,X,Y for people, and B for Bank, and assume all people put money in same Bank (B), cuz it doesn't really matter.

Z has $100, puts it in Bank(B)

Now BOTH Z and B have $100. Z does not lose money by putting it in the bank, the bank is holding the money for Z. B now has the right to loan 90% of the money it has ($100) which equals $90

[LDRinbrampton]

So B now loans that allowable $90 to Y.

Y spends $90 to buy a car from X.

X now takes his $90 and puts it in B

Now B can lend 90% of the $90 (can lend out $81)

Make sense? In this situation, at this point, Z has 100 in the bank, Y has a car, and X has 90 in the bank, meaning the B now has $190 in deposits from both X and Z.

Make sense? That's why if both X and Z go to B to get their money out, the bank cannot pay them, because it really only has the original $100 from Z.

[PanzerDivisionBOM]

There's a critical flaw in your analysis.

You say that, when Z puts his money in the bank, he keeps his money. This is false. He does retain the rights to his money when he loans it to the bank. However, it does leave his possession. Strictly speaking, Z does no longer own money, but rather a claim to money.

Most people tend to equate claims to money with the money itself. And in this sense, the bank is indeed inflationary, as it creates the perception of more money.

(to be continued)

[PanzerDivisionBOM]

However, in real terms, no new money is created. To prove it, I'll run through the example you gave, and offer explanation where necessary.

Z deposits 100$ in B.

(In effect, Z makes a loan to B, that is repayable upon demand. The money leaves Z's possession, but he retains a moral claim, to retrieve it at a time of his choosing.)

Z has nothing, B has 100$.

(The assets and liabilities here are:

B: +100$ cash

-100$ debt;

Z: 0 cash,

+100$ claim to bank's money)

(To be continued)

[PanzerDivisionBOM]

B loans 90$ to Y.

B has 10$ cash, 90$ claim to Y's money, and a 100$ debt to Z.

(If Z attempts to reclaim his money here, then the bank cannot repay it. That's what's called a "bank run". Of course in the US, there's a lender of last resort, that will step in upon demand to settle the final 90$ of Z's claim by printing more money.)

Y gives 90$ to X in return for one car.

X deposits 90$ in B.

B now has 100$, plus a 90$ claim to Y, minus a 100$ claim from Z, minus a 90$ claim from X.

[LDRinbrampton]

Doesn't the term "bank run" alone indicate that the bank does not have the money it claims it does?

It seems that there are more claims by the people than there are actual money in the bank. That seems to be a problem. Are you arguing that no new physical money is created? It seems that new bank credits are definitely created. Again leading to the problem of the "bank run".

Sorry if i can't get the words out right, i'm no Econ major.

[PanzerDivisionBOM]

I think I've a pretty good grasp of how it works, but I'm certainly open to correction.

Fractional banking creates claims to greater sums of money than the bank has at its disposal. It creates the risk of a bank run, but it also allows the bank to give more loans, thus potentially giving better returns on savings.

It's not good or bad, so long as customers are allowed to decide for themselves whether they want it or not. The real problem is the Fed's virtual monopoly on currency provision.

[itrainsinoctober]

Or you can file for bankruptcy, chapter 11, and then get a secured credit card or pay cash. And yes, your credit rating will be screwed but you'll be out of debt(except for school loans which can't be written off).

[kingofthepaupers]

Jct: I'm not the first to point out that Graham Towers explained that banks lend out new money. So how does Chris explain that his network of piggy banks create new money by lending out the old?

See my video "how banks create money" at my kingofthepaupers channel to watch the real flows. Other than this error, his videos explaining exponential growth are pretty good.

[frenchy137]

Each and every time a bank makes a loan (or purchases securities), new bank credit is created — new deposits — brand new money. (pp. 113 and 238)

Broadly speaking, all new money comes out of a Bank in the form of loans.

As loans are debts, then under the present system all money is debt. (p. 459)

[frenchy137]

From Graham Towers (Central Bank of Canada (from 1934 to 1955)

Q. But there is no question about it that banks create the medium of exchange?

Mr. Towers: That is right. That is what they are for... That is the Banking business, just in the same way that a steel plant makes steel. (p. 287)

The manufacturing process consists of making a pen-and-ink or typewriter entry on a card in a book. That is all. (pp. 76 and 238)

[MillionthUsername]

@ 3:15, "When the loans are paid back, the money disappears..." No, it doesn't.

This stuff gets confusing, but from what I know the loan balance goes to zero but the bank has increased its reserves. It just lends the money out again. What was an asset on the books as a loan is now in the reserve pool.

The money has to leave the banking system in order to "disappear". That's why bank runs are deflationary. Only so many can get their money. The rest are stuck with empty claims.

[MillionthUsername]

So then the Fed, the "lender of last resort", will re-inflate in order to cover the claims.

Banks are inherently insolvent. Bank runs reveal this fact. The excess money created does vanish when deposits are withdrawn and kept as cash since reserves govern the amount of money creation, and people draw down reserves in a run. FDIC covers manageable runs.

The system always needs to be propped up because they issue multiple claims for the same money which can't all be honored at the same time.

[00dfm00]

That's a really good point! Money was made out of thin air, but paying back doesn't mean destruction - just revenue! It permanently stays in the system!

Which would be alright if all loans were for productive assets that never depreciated/ammortized/deplete­d, as 1 dollar would still represent same % of pie - but assets do depreciate, etc!! Hmmm....

[managarm1349]

good presentation, thanks alot

[exposingcrooks2009]

This guy is a CROOK. He is NOT an economist or investment professional. He is a laid-off lab technician and he is using this economic collapse as a way to MAKE MONEY from you. He is charging for his stupid seminars. Stay away from this crook. He has no idea what he is talking about. He has dozens of shills who have been brainwashed with this "Yes We Can" hype, who troll the internet promoting him. This is the truth.

Martenson, GET A JOB AND STOP EXTORTING MONEY FROM DESPERATE FOOLS.

[Kimit420]

again your an idiot

[milanstoyanov]

we need RESOURCE BASED ECONOMY

[Vorlos]

@milanstoyanov

...and it will look HOW exactly, when put into practice???

[milanstoyanov]

@Vorlos look for thezeitgeistmovement and thevenusproject in the net

[formerutuber]

@milanstoyanov problem is resources are finite, so resource based-economy will collapse too.

[milanstoyanov]

@formerutuber resource based economy dont mean the resources are infinite,it mean the smart use of the worlds resources.

[ExquisiteDoom]

@milanstoyanov ..... you can't have a resource based economy. Value is SUBJECTIVE, not OBJECTIVE. Needs are SUBJECTIVE, therefore you need a CONSENSUS to fulfill SUBJECTIVE needs. Markets and money offer this consensus. The Venus project people really piss me off when they don't understand the basics, just because they saw STATE fractional banking doesn't mean it's a destructive thing, it just means adding STATE to FRACTIONAL BANKING = Destructive. Don't generalize please.

[MultiAbundant]

@milanstoyanov I Agree 100%

[ExquisiteDoom]

@milanstoyanov no we don't Mao and lenin tried calculation based economics and dozens of millions of people died.

[HoGraz]

@milanstoyanov I think we need a manufacturing base.

[andrishco]

So, What happens if people all over the world keep their money at home and deals with other people in cash without using a Bank?

No money is created? Is it better for the economy?

[spitius]

what the fuck.....invalid arguments....what the fuck is this, censorship.....what about freedom of expression and the right to be wrong? WTF

[delatroy]

explain..

[Dengatube]

If i give 10$ to a A and he gives it to B and he gives it to C than its just the same 10$.

But if I choose a representation like the maker of this video than it would be like this:

Me = 10 $ -> A = 10$ -> B = 10$ -> C=10$

and suggest that the10$ has become 40$.

But the 10$ wander.

The right representation is:

Me = 10$

Me = 0$ -> A=10$

Me = 0$, A = 0$, B = 10$

Me = 0$, A = 0$, B = 0, C=10$

[seb538835]

In your example, they give the money. They don't lend it to each other. If the bank has 10$, it can lend 100$, that's just how the law of fractional reserve works. They create another ten dollars to give, and A keeps the original in their account.

[Dengatube]

Thats not the point.

If the bank lends 90$ to A and keeps 10$ (10% reserve) and someone brings this 90$ to the bank, the bank can lend 81$ to B and has to keep 9. But the money which is in the game is still only 100$. Its not 90$ + 81$. The moment the bank gave the 90$ away it didn't have it any longer. I just had a claim. You can't count a claim as money, because it isn't money. You will see it, when somebody doesn't pay the money back and you only have the claim but not the money.

[seb538835]

I see what you mean now. The claim is credit, then, and can't be paid off with real money, seeing as if that scenario was all the moeny in existence, there wouldn't be enough to pay it off.

[Dengatube]

Not exactly. My point of view is not right only because there wouldn't be enough money to pay the depts back. That wouldn't be an argument against it. My point is, that a claim is ABOUT money, but it IS NOT money. You can't count claims like money. If I lend you 10$ and you lend 5$ of it to someone else the money in game is still only 10$, not 15$ which is only the amount of claims noticed in our books. It's a demand, but it's not money.

[ThirdWorldHorn]

You don't understand the concept. When you put money in the bank, you aren't loaning it - if you went to get cash and they didn't have it, you would be furious.

In your example, if you wanted your $10 back, and I hadn't gotten the $5 that I loaned, then I would be -5.00 total (-5 to loan, -10 to you).  That means $15.00 dollars has been generated out of $10.00. See the difference? So it's not just $10.00...

[Dengatube]

You're right. It's just a concept.

In reality You still have $5 and the other guy has $5. $10 in the game.

Don't confuse money with claims. The latter is only a "note in a book" that someone ows an amount of money to someone else.

If I lend you $10 and you lend it to B and B to C and so on, the amount of claims "noted in the books" can be infinite. Still the money in the game is only $10.

No money has been generated.

[ClassicalRay]

Eye opening and sobering.

Wake up America

[spinnerZulu]

I think you are talking nonsense here.

You claim, quoting Galbraith, that 10000 dollars comes from 1000 dollars because several people loans aech other money. Well, when you lent 100 dollars that you loaned tyou don't have 100 anymore!! You loaned it to someone else. Ergo, absolutely NO new money has been created.

Do I heed to say that I have never been a fan of Galbraith.

Milton Friedman is ten times as intellegent :)

[tattat44]

Uh, yes it has. The bank that the 1000 dollars was loaned to still tells you you have 1000 in your account, even though some other joe schmoe has 900. Money out of thin air. It only works because so many people have so much money in the banks.

[FortNikitaBullion]

@tattat44 The real root problem is that people treat bank deposits as money, even though it's a debt. Imagine if your friend gives you a person IOU and you try to go to the store and buy something with it. How hard do you think the cashier would laugh at you?

[survivalpodcasting]

@tattat44 - actualy you are missing the point! It doesn't work because so many have money in the bank it works because when a loan is made new money is created out of THINK AIR. No, the bank doesn't loan 90% of your money, it creates a NEW 90% when the loan is made, simply with a journal entry in a computer.

[tattat44]

@survivalpodcasting

I was just pointing out that if there were only six bucks and some loose change rattling around in a banking system, people would be more liable to notice this, but since we deal in millions, billions, and trillions of dollars every second it complicates things.

[FranceParisian]

Just in case you miss the point or perhaps I have missed the point, the presentation with reference to Galbraith is for the purpose of illustrating the money creation. Of course the author could choose to quote other or all of the experts however this will drag the presentation too much. I am in the impression that perhaps a second viewing of the WHOLE presentation is needed for a much better perspective that is already there

Peace

[ufewl]

This is a bit of a con because if everyone can withdraw their money if the bank withdraws it's loans. The maximum loss if someone cannot repay is the original 1000. And ofcourse the loas will be secued on a houe for example, which will be insured.

[Shaddicus]

How does a bank "withdraw it's loans"? Don't people who borrow money typically spend it on something, and therefore no longer have it to give back.

The maximum loss is $9000 of money that the bank owes depositors which it has since risked on loans.

The assumption that the security was valued accurately and that it's value won't go down is part of what gives banks the confidence to keep doing this, but look at the housing market

Finally regarding the debt being insured: see AIG.

[Chromatype]

I think all of you need to realize something. Chris is selling month subscriptions for $30.00. If he scares 500,000 people into wanting to "support his cause"...he will generate 15 million dollars for himself.

That is way more that any one needs to take care of website server costs. This guy is out to make a LOT OF MONEY REAL FAST.

[Shaddicus]

Good point.

Though I doubt he has half a million members, and the fact that he wants to make alot of money real fast doesn't undermine his basic facts.

[FranceParisian]

Fair point! People are gullible and FEAR made religion power!

However your comment in my opinion is very misleading. Why so? Because the subscription is not forced on people. It is by choose. Of course, the author which in this case is an expert and I happen to agree to most of his facts needs to make a living too out of his expertise. That's precisely the fundamentals of economic and survival. In the words of Shaddicus below and I happen to agree too that it does not "undermine his basic facts.

[poweroftheglory]

What's wrong with him making money?

[SATANSbankers]

Making money is fine, stealing it by Usury (Interest) and Creating Money from No-thing, is a sin.

[meninagorda]

embezzlement as well i beleive, banks just rephrased it to sound legal

[liberalbias100]

Thank You Chris, Very Much.

I would have loved to see the faces of some of the people who attended your presentations, surely that must have been interesting.

[nmbypmby34]

Ponzi scheme......

[UnderseaCaveman]

Ah ... the inifnite series of money growth thru FRB