Money/Creation
Money/Creation | |
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Interest of | • Bronson Cutting • Benjamin Franklin • G. Edward Griffin • Hang The Bankers • Pierre Jovanovic • Nikolai Mushegian • Brandon Smith |
Much of the unfairness to the non-bank public of the money creating process – creating money out of thin air – really comes about because the general public has no input into decisions about money creation. |
The following is a summary of a series of articles written by an anonymous investment banker. In it's own words "The Wizards of Money will take a critical look at the mechanics of the capital and debt markets, who makes the critical decisions that drive them, and how these markets then effect everybody’s lives.
Contents
Exactly How Does Money Get Created?
High Powered Money
Government Securities are IOU's, promises to payback the principal + interest at a given time, auctioned at the open market.
Formaly speaking the FED has added securities to its assets, which it has paid for by creating a liability on itself in the form of bank reserve balances or Federal Reserve Notes. Bank reserve balances (FED accounts for public banks) and Federal Reserve Notes together form 'high powered money'.
The Federal Open Market Committee (FOMC)
- Full article: The Federal Open Market Committee
- Full article: The Federal Open Market Committee
The most important function of the Federal Open Market Committee (FOMC) is to increase or decrease the money supply. It does this by the deliberate and judicious buying and selling of securities on behalf of the twelve Federal Reserve banks.
The F.O.M.C. can, without informing the government, the public, or the banks (its meetings are held in secret), increase or decrease the reserves of the banks.
For example, if it wants the money supply to increase, it will buy government securities. If it wants the money supply to decrease, it will sell securities.
The Federal Reserve banks can buy an unlimited amount of securities because they do not have to pay for the securities with anything. They pay for the securities by making bookkeeping entries in the member banks' reserve accounts.
It is reasonable to conclude that the Federal Reserve System through the operations of the F.O.M.C. is in a position to control, to a large extent, the economic conditions of the country.
An Example
In May 1975 the government paid out a rebate check of up to $200 to each individual who paid 1974 U.S. income taxes. And in June 1975, the government paid $50 to every recipient of Social Security Insurance, Supplemental Security Income or Railroad Retirement annuity or pension payments.
The government officials paid out that money in order to increase the money supply in circulation with the hope that these actions would increase the buying and selling of goods and services and thus create more jobs. One side effect of that action was that the government officials had to incur additional interest-bearing debts in order to make those payments. But what happened?
About July 1, 1975, the prime interest rates began to increase. Between July 1 and August 8, 1975, the prime interest rates increased about one percent, from 6 & 3/4% on July 1 to 7 & 3/4% on August 8.
The F.O.M.C. buys and sells securities in secret. It does not tell the public the amount of securities it buys and sells until weeks later. However, the people who understand what makes the interest rates go up or down can deduce what actions the F.O.M.C. has taken.
When the interest rates increased in July 1975, we could conclude that the F.O.M.C. offered for sale on the open market enough securities to cause the price of the securities to decline. That act caused the interest rates to rise.
We thus witnessed a situation in which government officials incurred an extra interest-bearing debt to increase the money supply in circulation and at almost the same time the F.O.M.C. took action to decrease the money supply.
Bank Credit
For What Purposes Money Is Created
The Zero Sum Game
An example
Page name | Description |
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Petrodollar | The selling of the world's oil in U.S. dollars has been the backbone of U.S. dollar hegemony since the U.S. unilaterally terminated the rights of foreign central banks to convert dollars to gold in 1971. |
Related Quotations
Page | Quote | Author | Date |
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Bronson Cutting | “The fight against the abolition of the credit power of private banks will be a savage one, for their power as a unit is without equal in the country. Knowing this is why I think back to the events of March 4, 1933, with a sick heart. For then, with even the bankers thinking the whole economic system had crashed to ruin, the nationalization of banks by President Roosevelt could have been accomplished without a word of protest. It was President Roosevelt’s great mistake. Now the bankers will make a mighty struggle.” | Bronson Cutting | |
Mervyn King | “Of all the many ways of organizing banking, the worst is the one we have today. Change is, I believe, inevitable. The question is only whether we can think our way through to a better outcome before the next generation is damaged by a future and bigger crisis.” | Mervyn King | |
Money | “To say that a state cannot pursue its aims, because there is no money, is like saying that an engineer cannot build roads, because there are no kilometers.” | Ezra Pound | |
J. P. Morgan | “... [credit] is an evidence of banking, but it [credit] is not the money itself. Money is gold, and nothing else.” | J.P. Morgan & Co. J. P. Morgan | |
Petrodollar | “Money supply and debt have exploded in the absence of gold convertibility [...] Today's money is not backed by gold. It is now backed by nothing at all, except our trust in the monetary system.” | Smithy | 2003 |
Social change | “Until the control of the issue of currency and credit is restored to government and recognized as its most conspicuous and sacred responsibility, all talk of the sovereignty of Parliament and of democracy is idle and futile.” | William Lyon Mackenzie King | 1935 |
Related Documents
Title | Type | Publication date | Author(s) | Description |
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Document:The Occult Technology of Power | letter | June 1974 | Anonymous | A letter and lecture transcripts addressed to a mature son from his father. Their purpose is to prepare the son for his taking the reins of a financial business empire. |
File:The Federal Reserve conspiracy by Antony C Sutton.pdf | book | Antony Sutton | Historical perspectives on the money trust including critique of Karl Marx |