Money As Debt Page #3

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the ultimate effect would be exactly the same

as if the whole process took place within one bank.

That is, the bank's initial central bank reserve

of a little over eleven hundred dollars

allows it to ultimately collect interest on

up to $100,000 the bank never had.

If that sounds ridiculous, try this.

In recent decades, as a result of steady lobbying by the banks,

the requirements to make a reserve deposit

at the nation's central bank have all but disappeared in some countries

and actual reserve ratios can be much higher than 9:1.

For some types of accounts, twenty to one

and thirty to one ratios are common.

And even more recently, by using loan fees to raise the required reserve

from the borrower,

banks have now found a way to circumvent

reserve requirement limitations entirely.

Sowhile the rules are complex

the common sense reality is actually quite simple.

Banks can create as much money as we can borrow.

"Everyone sub-consciously knows

banks do not lend money.

When you draw on your savings account,

the bank doesn't tell you you can't do this

because it hast lent the money to somebody else."

~Mark Mansfield, economist and author

Despite the endlessly presented mint footage, government-created money

typically accounts for less than 5% of the money in circulation.

More than 95% of all money in existence today was created

by someone signing a pledge of indebtedness to a bank.

What's more, this bank credit money is being created and destroyed

in huge amounts every day,

as new loans are made and old ones repaid.

"I am afraid the the ordinary citizen will not like

to be told that banks can and do create money.

...And they who control the credit of a nation

direct the policy of Governments

and hold in the hollow of their hand the destiny of the people."

~Reginald McKenna, past Chairman of the Board, Midlans Bank of England

Banks can only practice this money system

with the active cooperation of government.

First, governments pass legal tender laws

to make us use the national fiat currency.

Secondly, governments allow private bank credit

to be paid out in this government currency.

Thrirdly, government courts enforce debts.

And lastly, governments pass regulations

to protect the money system's functionality and credibility with the public

while doing nothing to inform the public

about where money really comes from.

[The Simple Truth]

The simple truth is that

when we sign on the dotted line

for a so-called loan or mortgage,

our signed pledge of payment,

backed by the assets we pledge to forfeit should we fail to pay,

is the only thing of real value

involved in the transaction.

To anyone who believes we will honour our pledge,

that loan agreement or mortgage is now a portable,

exchangeable,

and saleable piece of paper.

It is an IOU.

It represents value

and is therefore a form of money.

This money the borrower exchanges

for the bank's so-called loan.

Now... A loan in the natural world means that the lender

must have something to lend.

If you need a hammer, my loaning you a promise to provide a hammer

I don't have won't be of much help.

But in the artificial world of money,

a bank's promise to pay money it doesn't have,

is allowed to be passed off as money

and we accept it as such.

"Thus, our national circulating medium

is now at the mercy of loan transactions of banks,

which lend, not money, but promises to supply money they do not possess."

-Irving Fisher economist and author

Once the borrower signs the pledge of debt,

the bank then balances the transaction by creating,

with a few keystrokes on a computer,

a matching debt of the bank to the borrower.

From the borrower's point of view this becomes

"loan money" in his or her account,

and because the government allows

this debt of the bank to the borrower

to be converted to government fiat currency,

everyone has to accept it as money.

Again the basic truth is very simple.

Without the document the borrower signed,

the banker would have nothing to lend

Have you ever wondered how everyone...

governments, corporations, small businesses, families

can all be in debt at the same time

and for such astronomical amounts?

Have you ever questioned how there

can be that much money out there to lend?

Now you know.

There isn't.

Banks do not lend money.

They simply create it from debt.

And, as debt is potentially unlimited,

so is the supply of money.

And, as it turns out

[NO DEBT NO MONEY]

the opposite situation is also true.

Isn't it astounding, that despite

the incredible wealth of resources,

innovation and productivity that surrounds us,

almost all of us,

from governments to companies to individuals,

are heavily in debt to bankers!

If only people would stop and think - How can that be?

How can it be that the people who actually produce all

of the real wealth in the world

are in debt to those who merely lend out

the money that represents the wealth?

Even more amazing is that once we realize

that money really is DEBT,

we realize that if there were no debt

there would be no money

"That is what our money system is.

If there were no debts in our money system,

there wouldn't be any money."

~Marriner S. Eccles, Chairman and Governor of the Federal Reserve Board

If this is news to you,

you are not alone.

Most people imagine that if all debts were paid off,

the state of the economy would improve.

It's certainly true on an individual level.

Just as we have more money to spend

when our loan payments are finished,

we think that if everyone were out of debt,

there would be more money to spend in general.

But the truth is the exact opposite.

There would be no money at all

There it is... We are totally dependent on continually

renewed bank credit for there to be any money in existence.

No loans, no money - which is what happened

during the Great Depression,

the money supply shrank drastically

as the supply of loans dried up.

"This is a staggering thought.

We are completely dependent on the Commercial Banks.

Someone has to borrow every dollar

we have in circulation, cash or credit.

If the Banks create ample synthetic money,

we are prosperous; if not, we starve.

We are, absolutely,

without a permanent money system.

When one gets a complete grasp of the picture,

the tragic absurdity of our hopeless position

is almost incredible, but there it is."

~Robert H. Hemphill, Credit Manager of Federal Reserve Bank,

Atlanta, Georgia

[PERPETUAL DEBT]

That's not all. Banks create

only the amount of the Principal.

They no not create the money

to pay the Interest.

Where is that supposed to come from?

The only place borrowers can go to obtain

the money to pay the Interest

is the general economy's

overall money supply.

But almost all of that overall money supply

has been created exactly the same way

-as bank credit that has to be paid back

with more than was created.

So everywhere,

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