they make money out of nothing and charge us interest on it. Read/listen, excellent educational program: Wizards of money http://www.antiscia.com/wizardsofmoney/ http://www.robinupton.com/people/WizardsOfMoney/
I haven't read/watched the material you linked to, but I'll go out on a limb and guess that it's nutty conspiracy stuff from someone repeating the (unfortunately popular) myth that the Federal Reserve charges the government interest. Facts: 1. By law the Federal Reserve has a (very low) cap on the amount of profit it can make. and (this is really the most important one) 2. All interest paid by the government to the Federal Reserve is rebated back to the Treasury Department. I put that in bold because no matter how often it gets pointed out, someone always comes along every few weeks with the same idiotic conspiracy theories. Read a book or something about how the Federal Reserve and banking system works and stop getting your information from internet idiots. The aggravating thing is that there really are good arguments against our current banking system, but it's nearly impossible to discuss because of the huge number of people who fall for these nutty conspiracy theories.
The federal government. Period. Any attempt to argue otherwise is inevitably the result of ignorance.
It's not exactly super easy listening for a guy like me, so I did not go over it yet. However, the program doesn't focus on the fedaral reserve. It's focusing on how the whole world finances operate. Just read headlines before giving out a limb Please Register or Log in to view the hidden image! I really don't recall them discussing wether Federal government is charged interest or not. However, why does Federal Reserve need to charge ONLY FEDERAL government interest? Only BANKS with "license" can create money out of nothing. Federal Reserve gives out the "right to create $" to the banks by playing with so-called interest rates. If a capitalist comes to the bank to finance some project, money are NOT created for him for free. He is expected to pay more $ than is taken. That "profit" is charged down the ladder. To pay the interest back, a capitalist must make a profit. If "no NEW money are created" that profit must come solely from the redistribution/tranfer of the already created money within the system (usually, that means poor get poorer). Obviously, that cannot continue for too long. Thus, for system to work, money must be created continously=credits must be taken continuously=economy must grow continuously. Any more or less prolonged stumble of the growth, and glorious edifice is gonna go to the crapper. Usury laws are scrapped almost universally. Federal reserve doesn't give away credits to the capitalist public directly. He does it by proxy of the banks well connected to the folks in the charge of the Federal Reserve. There are not too many limits there, as I see it. Well, I'm not a financial guru. It seems you know more than internet idiots do. Could you, if you'll have time, a pull out a few specific points from the program and explain how stupid they are. Carpet bombing doesn't sound too convincing. That vaguelly reminded me a cartoon. Two bulls on a feedlot are "talking". The first bull say, "I've found out what the owner is going to do to us. One day, a big truck will come and take us to the place where we will be electroshocked, drained of the blood and cut into pieces." The second bull say, "those nutty conspiracy theories again." I'm amazed how branding something "conspiracy theory" can be a sufficient argument in itself. Just call something conspiracy and brains of the many people will be tuned against that something. "Branding" is a powerful tool in the arsenal of a big brother. No need for arguments. Do you really think that "conspiracies" never happened/are not happening right now?
Here's some info on how banks make money... "A bank raises funds by attracting deposits, borrowing money in the inter-bank market, or issuing financial instruments in the money market or a capital market. The bank then lends out most of these funds to borrowers. However, it would not be prudent for a bank to lend out all of its balance sheet. It must keep a certain proportion of its funds in reserve so that it can repay depositors who withdraw their deposits. Bank reserves are typically kept in the form of a deposit with a central bank. This behaviour is called fractional-reserve banking and it is a central issue of monetary policy. Some governments (or their central banks) restrict the proportion of a bank's balance sheet that can be lent out, and use this as a tool for controlling the money supply. Even where the reserve ratio is not controlled by the government, a minimum figure will still be set by regulatory authorities as part of bank regulation." http://en.wikipedia.org/wiki/Bank And here is something about central banks: "Functions of a central bank (not all functions carried out by all banks): monopoly on the issue of banknotes the Government's banker and the bankers' bank ("Lender of Last Resort") manages the country's foreign exchange and gold reserves and the Government's stock register; regulation and supervision of the banking industry: setting the official interest rate - used to manage both inflation and the country's exchange rate - and ensuring that this rate takes effect via a variety of policy mechanisms " http://en.wikipedia.org/wiki/Central_bank All thanks to the Great Depression! Please Register or Log in to view the hidden image! Btw, perplexity is right. Anything that we agree upon as having value is considered "money". Our monetary system is based on bartering, which was the original form of exchange of ownership- when such a concept was first conceived. "Money" just simplifies the whole process. Here's some info on all that... http://en.wikipedia.org/wiki/Money http://en.wikipedia.org/wiki/Barter And here's a more in-depth view on the process of creating and regulating money supply (may require some knowledge of economics for a good understanding)... http://en.wikipedia.org/wiki/Monetary_policy All hail to Wikipedia! Please Register or Log in to view the hidden image!
So what prevents a bank from giving more loans than it has money? Is there some goverment body regularily checking their accounts, and would said body CARE, realizing that the economy is greatly boosted the more "debt-money" there is out there? Even if every person pulled their savings and paychecks from their accounts, the industry would still have hundreds of billions virtual-money in investments and loans. It's not like industries haul around hundreds of millions to business deals. The risks alone assure this, but it would also slow everything down, and they'd still end up putting the money back to the bank they took it out of. (Or some other bank, whatever) As for the site linked, it seems more misinformation than genuine study. First of all it repeats over and over how "money is made virtually from thin air", but explains the mechanism only in few, incomprehensible words, before going off again about how "the enemy" manipulates everyone. It's smoke-and-mirrors for the simple-minded, even though it still propably holds important info (Even the lies are built on a bit of truth; No-one believes a complete non-fact, that has NO reality). And it's never that easy. It's not like there are some big-ass conspirators laughing their ass off and just magically making stuff happen. Real life conspiracies are just some people, who take on opportunies (and people who do not stop this when they see it, either in fear, doubt or faith).
Debt money doesn't necessarily boost an economy, but in most cases causes inflation. Due to the enormous amount of government expenditures (thanks to our executive branch) the Federal Reserve has raised interest rates something like 16 times consecutively to discourage lending.
Spending loaned money may lead to real growth, but it is by no means a definite thing. Growth being a rise in productive output, productive output measured conveniently in US dollars. Say a banana costs $1, so I borrow $10 and easily afford 10 bananas. In a free market, suppliers will respond to the new wealth level consumers have and the price of a banana will rise to $10, and once again I can only afford one banana. In no way does this inflation reflect the ability of banana growers to produce more bananas.
The other answer: the Federal Reserve determines how much money a bank must have in its vaults in proportion to how much it loans.
