Posts Tagged ‘Fractional reserve banking’

For anyone not familiar with the work of Ann Pettifor – one of the few to correctly call the coming of the financial crisis a number of years prior to it arriving, and one of the main proponents of the Jubilee 2000 campaign which cancelled a portion of third world debt – please search for her various articles, lectures and opinions online.

Associated with Keynesian economics and the Labour party, her views may be dismissed by some, however upon closer inspection, I was interested in her view on the creation of money, and what this meant for resolving the debt and economic problems facing the developing world.

She is principally part of the PRIME think tank/research group, which has a number of papers on its site proving an alternative voice on economic issues

The above lecture at the LSE discusses her latest book, ‘The Production of Money: How to Break the Power of Bankers’, and gives an insight into her theories.

What I wish to highlight, are the following;

  • The issue of commodity money, and how scarce resources should not be used as a basis of any monetary system
  • The recognition that a fiat monetary system, can and should be used for the benefit of the population – outside the control of private banks, but in the knowledge that an entirely man-made system should be used to achieve a level of prosperity in all societies
  • There are certainly many socialist aspects to these beliefs, such as exerting capital controls and spending money into existence in terms of health, education and social expenditure thus increasing national debt, however interest ideally should not be necessary when such a system is implemented
  • There are some similarities with what Positive Money are advocating, but it seems there are specific differences, as this discussion points out…

 

 

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This past week, the London School of Economics, hosted an event on the Nature of Money, see details here.

One of the speakers was Dr Waltraud Schelkle, part of the LSE, an Associate Professor of Political Economy.

Please play the audio from time stamp 52.05 for a question put to the panel regarding the fraudulent aspects of the system. Dr Schelkle answers that she disagrees that the system is indeed based on deceit and she points to the ‘success’ of the Capitalist nations….

I think Susan Steed, another panellist, does an excellent job of refuting her shallow argument, without mentioning by name what I think is most key when understanding how the rich became rich…the Transatlantic Slave Trade…

I would also point the Dr to the numerous posts examining this on this blog, and will make an effort to highlight other key counterarguments in future

Fortuitously, this week I received a post from MoneyWeek entitled…”A 92bn Scam

It went on to state;

The $92 billion was income generated on the Federal Reserve’s portfolio of US government bonds. It bought vast numbers of these bonds by expanding its balance sheet and printing money. The government then paid interest on those bonds. That interest is the Federal Reserve’s return. That return is then passed back to the government as an important source of income.

To be clear, this is the state creating money from nothing… to lend to itself… to then pay interest on… and then use that interest as another source of revenue. That’s Deep State financial policy.

Misrepresenting transactions, making it seem as though the government is solvent when it is using a glorified Ponzi scheme…..that’s Fraud in my book.

Consider the following from MoneyWeek’s Bill Bonner;

…there is a financial institution of uncertain integrity, with an electronic balance sheet of uncertain accuracy, listing alleged financial claims and contracts of uncertain quality – and that you are one of the many thousands of entries on the debit side, with a claim to a certain number of dollars, which the institution may or may not have… each of uncertain value.

…Today, banks no longer have “money”. They have credits and debits. Your deposit is your bank’s liability and your asset. But look at the balance sheet. You don’t know how many of the claims on the left are right… or whether, when the other creditors get finished with it, any of the assets shown on the right are left.

….and to think some people have an issue with me believing in an unseen God !?

 

The extent of discussion around so called Helicopter Money is symptomatic of the wider issue that central bankers are truly at a loss around the issue of secular stagnation and the obsession to inject growth however possible.

Whilst the idea of money printing or quantitative easing is a reality for developed nations, no longer the preserve of failed states (or do we admit the first world is indeed a failed state?), the notion of money being made freely available to the pubic is still more fiction than fact.

However this article is worth a read, as it sets out how such a move could work and the considerations needed. I find it revealing in the workings of some aspects of monetary policy, however it does omit the amount of money creation performed by commercial banks, something which needs to be acknowledged on a wider scale

City AM – Helicopter Money

 

 

 

Freedom is indeed a misunderstood construct

Freedom is in the hands of the beholder (who has the power)

Consider this from MoneyWeek, regarding the upcoming meeting of the Federal Reserve to decide the direction of interest rates. Other parts of the ‘Free World’ also experience similar detailed focus of their communications…

And, perhaps more to the point, the Fed is meeting tonight, and everyone is worried that it’s getting closer to raising interest rates. It’s not that rates will rise tonight. It’s just that Wall Street expects the Fed will remove the word “patient” from its communication.

By the mysterious osmosis through which markets absorb information, that apparently means that the Fed will probably raise rates in June (September at the latest).

As I’ve said countless times in the past, it’s somewhat pathetic that the words of one individual sitting in a meeting room somewhere in the US can upset our ostensibly free markets more than any amount of economic data.

But there you go.

 

 

Ever wondered what it would be like if the issue of commercial banks creating money were to be discussed in the corridors of the highest power in the land? Well here you are…not a great turnout it seems.

If you want to appease the masses, listen to them. But not too much.

Positive Money have been campaigning to raise awareness of this issue with MPs across the country, here is a response I received from a local MP, with the Positive Money email question template included at the bottom. Visit the positive money site for full results of all the responses gathered to see how much our ‘leaders’ are aware of this long running debate.

MP Letter

Still struggling to undertand the nature of the global operating monetary system, what it is and how it works?

View this explanation using easy to understand graphics, part 4 of Mike Maloney’s  Hidden Secrets of Money, a series exploring these issues and their history;

View the whole series here;

Your true wealth is your time and freedom

Wealth is never destroyed, it is only transferred….