How banks create money out of thin air part 1 of 2

How do banks create money out of thin air?

http://www.wealthmoney.org

The Minnesota Transportation Act.
house version
https://www.revisor.leg.state.mn.us/bin/bldbill.php?bill=H0888.0.html&ses...
Senate version
https://www.revisor.leg.state.mn.us/bin/bldbill.php?bill=S0705.0.html&ses...

Category:

Education

Tags:

• Byron
• Dale
• thin
• air
• money

[gogolando]

Ok, but if the borrower doesn't pay and the bank finds that its collateral falls short of the principle owed what happens? Nothing? I dont think so. And what about the goverment? Doesn't it creat money that stays in the sytem when it sells T-bonds. Government, sells them to banks, spend the money and then the Fed buys the T-bonds from the banks by printing.

[TheByronDaleChannel]

@gogolando The banks simply take all the pledge collateral (real wealth) when they only loan a promise to pay (banks do not loan any tangable assett).

The government creates no money at all and the money that is created by the banking system when the government goes into debt gets extinguished the moment someone uses it to make a principle payment on that debt.

You have to remember that the government has to borrow before it can spend (when talking about T-bonds).

[tadaa11]

@TheByronDaleChannel You nailed it on the head. Its funny that I came across this. You know how they get out of this scenario. Government spending adds money into the system for the interest. The fed Issuing bank credit is a dumb system. Or the business just borrows more money until everyone is over leveraged and the system becomes insolvent. Like today

[TheByronDaleChannel]

@tadaa11 Except the government has to borrow at interest as well. It's not really an issue of businesses getting overleveraged, it's simply a monetary system that is purely based on interest bearing indebtiness.

[TheByronDaleChannel]

@gogolando If you would like to discuss this more in depth please visit our website at wealthmoney dot o r g and visit our forums. We are in the process of upgrading the website at the moment as well.

[buzzz121]

Now I get it. The Bankers are Evil!

With this type of Ponzi Scheme in place how is it the banks are in trouble?

[TheByronDaleChannel]

Watch Byron's speech from the Kansas City CNC and that may help to answer that question.

-Tommy

[tadaa11]

@TheByronDaleChannel I was thinking of just creating and spending into the economy. Its an interesting concept, we need to try something different for sure.

[CosmosPrivateer]

The only way this can be fixed is that all debt public and private must be removed.

The banks and government screwed use out of our labor anyway.

Then we can just start over.

[tchujdenetza]

@buzzz121 Do you really believe that banks are in trouble my friend? With the bailouts they are getting trillions of dollars free of charge that they are never going to return. This is even better than this Ponzi Scheme! If I was a banker I would have claimed I'm in trouble all the time. And the corrupt media that are owned by the banks would repeat the same like a parrot.

[20Proff]

I am more than happy to pay any financial obligation you believe I may owe you once you provide me with

Validation of the debt. Can you please provide me with actual accounting as to where you substantiated a loss and had a risk in the investment. Or, even just an invoice signed by the branch manager

Verification of your claim against me (a sworn affidavit, or again, just a signed invoice

A copy of the contract binding both parties

I'll pay anything once you provide me with these 3 things. END

[rxlm89]

Basically, there's no incentive for our gov't to pay off its debt. It would break the entire system.

[TheMEK3]

Seems like a never ending cycle to me

[hamobu]

@BRINK00

I was talking about fractional reserve banking. Banks need say $100 deposit to loan out $80 and keep $20 in banks own bank account with federal reserve. $80 loan becomes another deposit and then 64 is loaned out while $16 is left with Fed, and so on. Eventually $100 becomes $500 in loans and this is the multiplier effect.

And how could regular people invest in other people's car loans and home mortgages without banks as an intermediary?

[BRINK00]

@zefvor

True Inflation is not price inflation - it's Monetary Inflation = inflation of the money supply. The "inflation" of wages and prices (after all, wages are just a price of labor) of goods, are in fact a direct result of this Monetary (re true) Inflation. The true fight would be about the level of money supply the economy needs to sustain and grow with the growth of the country (ie population). Of course this would lead to a non-market decision - leading us to our current problem.