http://maxkeiser.com/2011/08/11/max-keiser-ww Max Keiser is a colourful US economic commentator who has a regular segment on Russia Today.Max gives us lucid insights into how the really powerful financial institutions on this planet use worthless derivatives to attack the economies of small countries.

eg. The US sold toxic derivatives to French banks and are now using them to extract their wealth.Max suggests that credit rating agencies and Wall St act in collusion by using hedge funds, credit default swaps to effect wild market girations.The credit rating agencies downgrade a country or institutions' credit status,causing a sell off of stock,and the vultures of Wall St come in and buy up under valued assets.These institutions have assets far bigger than small countries like Greece,Portugal or even Spain.The worthless dervivative market is expanding because the US Federal Reserve continues to keep interest rates at zero thus feeding the expansion of the bubble.

In some countries they have negative interest rates thus charging people for having money in a bank account.How much more insane can it get?

Notice how our market collapsed and came back quickly.Those who have enormous wealth can inflate or deflate small markets like ours on a whim,for their gain.Our financial system has been taken hostage by a few elites and the results will be catastrophic if we do not become aware.

max predicted 2008
cause thats what he used to do
he knows what he is talking about..and does it fearlessly with a laugh

That's an intriguing claim, Arjay.

>>These institutions have assets far bigger than small countries like Greece,Portugal or even Spain.<<

Which institutions are you referring to?

Arjay

1.
"The US sold toxic derivatives".

Why were they toxic? What made them toxic? Do you mean they overvalued or undervalued the risk in the underlying contract? How do you know?

2.
What makes you think that your preferred policy solution to the contemporary problem of money and credit - a central bank with power to inflate the money supply at the rate of growth of productivity, correct me if I'm wrong - would not do the same thing as is causing the problem?

3.
If the central bank was not independent of politicians, what would stop it from inflating all the time?
And if the central bank was independent of politicians,
a) doesn't that contradict the central tenet of democracy, that the politicians are the people's elected representatives,
b) what would stop it from inflating all the time, or above the rate of growth of productivity?

Peter Hume Q1 The derivatives are toxic because that are not based on real productivty or assets.They have no value and many are linked to bad debts created by the GFC.

Q2 Central Private banks creating money from nothing to equal our individual productivity means that they own it and our govts have to tax us to pay for debt on our own productivity + inflation,This means that the more growth we have,the more debt we incur.

Q3.yes it has happened in the past that Govts who do create money via their Govt owned banks do create inflation but not at the price of paying it back as debt to a few private elites.A proper constitution can limit Govt from creating too much money.

Has the private US Federal Res and the Bank of International Settlements done a great job of fiscal responsibility? They are an absolute disaster.Our Govts for a long time have been controlled by this Central Banking system.This is why they are impotent,broke and cannot nation build.

Which would you prefer? Spain now has a GST of 23% to service debt to private banks who create this debt from nothing and it still not enough.The USA has a debt of almost $15 trillion and they cannot even afford the interest.Would it not be better that the US govt create this money from nothing and the tax payer suffer a depreciation in their currency but not have debt to private banksters? This system is totally insane.Why would anyone let a separate body like Central Banks ,own their productivity and loan it back to them in the form of debt?

Pericles the US Federal Reserve under normal conditions, creates almost one $ trillion pa from nothing an loans it to the US Govt at interest.In the last few yrs they have created many times this an loaned it out to countries/institutions all around the planet.

Goldman Sachs and all the Feds' other cronies are worth $ trillions far more than the GDP of many countries.

1 "The derivatives are toxic because that are not based on real productivty or assets."
Then what is the underlying contract?

"They have no value and many are linked to bad debts created by the GFC."

If they have no value why do people buy them?

Q2 So with your solution, the central banks would be able to inflate at will, it's just that instead of the people being enslaved to banks licensed by the government, they'd be enslaved to a central government bank?

Q3.
" A proper constitution can limit Govt from creating too much money."

Define "proper" constitution. The US constitution makes it illegal more than three times over. Didn't work, did it? I suppose that's not a proper constitution? Well what makes you think *any* constitution can restrain governments from abusing the power to print money, lower interest rates, or put future generations into debt?

"They are an absolute disaster."

Completely agree. But you still want to leave them the power to inflate the money supply at will.

"Our Govts for a long time have been controlled by this Central Banking system."

Well what do you expect when you support a system in which the Central Bank has a licence to print money, which is central to government finance?

"Which would you prefer?"

I would prefer the abolition of government's monopoly control of the money supply, and open competition in the supply of money and credit subject to the law against fraud.

Please consider that there is NO WAY a monopoly power to print money can be entrusted to anyone without being abused.

"Would it not be better that the US govt create this money from nothing and the tax payer suffer a depreciation in their currency but not have debt to private banksters?"

Not really.
a) the banks would still be able to fleece the people just as much, it’s just that instead of being a government-licensed private bank, it would be a … government licensed government bank – big deal!
b) The important point is that the people are being forced or deceived into INVOLUNTARILY paying their toil to parasitic unwanted overlords; paying one group involuntarily rather than another is scarcely an improvement, is it? That’s all your scheme has to offer.
c) It’s the government that’s licensing the private banks anyway, so if you argue that government is more representative of the people well.. .there’s your representation for you!
d) most importantly, the power of inflation to distort the whole structure of production, to suck capital out of productive activities and expend it in capital consumption, producing economic crises and social injustice, would be no less, and the *moral* effects - of robbing workers and savers and self-funded retirees to pay for debtors and consumerism and speculators and the priviligentsia would be no different.

It would leave the main problem untouched.

Furthermore I have already refuted your argument that the money supply should grow in step with productivity (example of farmer increasing his productivity by more economical ploughing of his field). There is NO REASON why everyone else should be able to claim a share in his increased productivity, and no reason why everyone should suffer a politically orchestrated depreciation (stealing) of their money, taken via a sneak attack on the economy's central nervous system, the money supply.

So you have justified your criticism of the whole system, but you haven’t justified your solution, which is only a very similar version of more of the same.

Peter Hume you are obfuscating.Q2 I did not say that at all.You did not even address the reality of my reply.Private Central Banks inflate at will which we are witnessing now.

You are trying to pervert my perceptions with your spin.

The reality is this,private central banks have no right to express our productivity as debt via their counterfeiting of our currencies.

"There is no way monopoly power of printing money won't be abused." This exactly what the US Federal Reserve has Peter Hume.It is unfetted power and is printing $ trillions of it and devaluing the currencies of the planet.Only sovereign elected Govts should have the power to create new currency.

If you have a constitution that states the creation of new money be equal to GDP,then inflation will not exist.The banking system has to create inflation because we are constantly bleeding money to OS Central banks.Has the penny dropped yet Peter?

Our banks and Govt are paying OS central banks interest on money that is really ours.It represents our productivity.

Arjay, can you leave out the personal argument. I'm not obfuscating, perverting, etc.

I have addressed the reality of your proposals, and if I don't understand it, please explain it, not my supposed psychology.

The point is, correct me if I'm wrong, that under the present system, government-licensed private banks, being the Federal Reserve, can print money at will, and the taxpayers have to foot the bill.

But under your proposal, the only difference will be that a government central bank will have exactly the same powers to inflate the money supply.

You have not addressed the reality of my points:
- the government will still be able to inflate at will, only instead of a goverment-licensed bank, it will be a... government-licensed bank
- inflation will still wreak economic destruction and social injustice
- the people will still be forced to pay involuntarily for the privileges of their government-licensed overlords

"private central banks have no right to express our productivity as debt via their counterfeiting of our currencies"

Why not? The government grants them that "right". If it's not right for them, it's not right for the government to do it either. But if the government represents the people, and there's nothing wrong *in principle* with inflating the currency, then there's no reason why government can't license a private person outside the government to do it, as well as a private person inside the government.

Besides, it's you who are in favour of the counterfeiting of currency to express productivity. Aren't you? You think the government central bank should have a license to counterfeit money in step with the rise in productivity. But you have given no reason why everyone else is entitled to a share in one's productivity.

Your solution would not make any substantial difference, has not justified a governmental power to inflate (counterfeit), cannot show how abuse would be prevented, has not justified stealing a share in other people's productivity.

So intead of falling back to childish ad hominem, why don't you RE-THINK your claims and try to UNDERSTAND the arguments?

Let's go back to the basic for you Peter.Why is it necessary to create new money?

Ans.For increases in population and productivity.Those who create this new money to equal it then own it.Is this not correct?

Why should private central banks Peter own your productivity and loan it back to you as debt? If your Govt creates this new money to equal your productivity Peter,this will mean you pay less tax.Why? This means that your Govt won't have to tax you to pay for debt to private banks.Banks will still make profits by loaning out money that already exists but they won't be able to create it from nothing.

There is another insidious side to this Peter.The private banking system is also allowed to create the money to equal our inflation.Inflation depreciates the value of our currency,thus the value of our work.So they are taking wealth from us via inflation and loaning it back to us as debt.

It is like you stealing from your neighbour and loaning this stolen money back as a debt contract.It is theft pure and simple.

"Why is it necessary to create new money? Ans.For increases in population and productivity."

Why do increases in population and productivity make it necessary to create new money?

Money is the *medium* of exchange. It establishes the exchange *ratio* of goods being exchanged. This means that it's the *relative*, not the *absolute* amount of money that's important. There is always enough of the money stuff to perform the function of money.

Similarly, to take my example, suppose a farmer figures out how to plough his field more economically, and this gives rise to an increase in his productivity. When he goes to sell his crop, why does his increased productivity give rise to a need for the creation of extra money?

If the derivatives had no value, why did people buy them?

You will get no argument from me about the evils of the Federal Reserve system.

But under your proposal, will not the central bank have the power to inflate the money supply by lowering interest rates below the rate they would be on the unhampered market?
My objections are
a) you haven't shown why it is necessary or desirable to increase the supply of money or credit in line with the general increase in productivity
b) you still haven't justified inflation taking people's earnings away whether they are forced to pay private banks, or the governmen
c) the power to inflate the currency has the effect of distorting the entire production structure, thus leading to economic crises and social injustice - any such monopoly should be abolished
d) what makes you think the power, once granted, would be used as you would like it to be? What would stop the central bank from doing what it wants, especially if it were independent of government, as both the Fed and the RBA are?

The idea that we would pay less tax if we weren't paying the debt to private banks shows a touching naivety about government.

Peter have you noticed the Private US Federal Resrve has created $ trillions and loaned it out all around the planet.That money should have went into the real US economy.Instead much of went into the derivative market.The derivative market is really a casino that expands on its'own expectation.They make bets on shares and markets falling .They bundle up bad depts like mortgages and sell them off to your super funds as prime safe investments.It was these same credit agencies that are now downgrading institutions/countries to create market volitility for their profit.The derivative market is said to be worth $ 150 trillion and the assets don't exist to equal its value.
Those who know how the play the game make $ billions.No one knows how they are tied up in sound investments.Taht is why we need a Glass Stegal Act to triage the derivatives.

Max Keiser has revealed that the banks in France are not disclosing their exposure them.Our banks are said to have 20% exposure.They have been bailed out by the Federal Res.Our RBA should have performed that role.

Yes money is the medium of exchange but the new money represents the increases in our productivty.Should your productivity Peter be expressed as debt by OS private banks or as a tax credit by our sovereign Govts? The more grwoth we have the more debt we incur because our growth gets expressed as debt.China provides 80% of its' new money debt free or as a tax credit or as infrastructure.It continues to grow at 9% while we languish in debt.

The entire planet is in an absolute mess because we let private central banks to create money from nothing to equal inflation + increases in our productivity.You cannot escape that reality Peter.

I agree with you as to the evils of the status quo of money, credit and banking,- I've done as much as anyone to criticise it in here. (In fact I've done more than you to criticise it, because I condemn the root of the evil, which you don't, namely the license to print money itself).

However you're not explaining how it would be any better if
a) government were directly creating the trillions itself, or
b) what would stop it from handing it out as they see fit,
rather than if government were just licensing the Fed to do it, as now.

"Should your productivity Peter be expressed as debt by OS private banks or as a tax credit by our sovereign Govts?"

Neither! Why should it be expressed as either? The idea that it must be one or the other only comes from the belief that government must have a monopoly power of the money supply. Why? It can't be because it's so extraordinarily moral, or it wouldn't have licensed the Fed to do what it did. It can't be because it's so extraordinarily good at managing the macro-economy, because it's been a complete disaster.

So your argument is stuck in a fork. If you say we need the government to have a monopoly control of the money supply because it's so selfless and wise and good at what it's doing,
a) not even you agree with that
b) it's exercising its presumptive wisdom already by licensing the Fed's existence and operations.

But if you say we don't need the government to have a monopoly control of the money supply, then there's no reason why you should be proposing a central bank with a license to print money.

So let's strike to the root. Why do you think money needs to be created in line with population or productivity? What would happen if it wasn't? - (and please don't say 'There wouldn't be enough money'!)

What would it take for you to change your mind on that point?

The Bankers Manifesto of 1892
"We (the bankers) must proceed with caution
and guard every move made,

http://whatreallyhappened.com/WRHARTICLES/wtc7.html

the actual sound track
http://whatreallyhappened.com/IMAGES/WTC7explosionfilter.mp3

for the lower order of people
are already showing signs of restless commotion.
http://whatreallyhappened.com/

Prudence will therefore show a policy
of apparently yielding to the popular will

http://www.mybudget360.com/new-gilded-age-massive-market-volatility-sign-of-financial-weak-economy-stock-market-volatility-surges-2008-onward/

http://knucklz.com/2011/08/13/criminalizing-poverty-during-economic-crisis-new-laws-crack-down-on-americas-poor-homeless.aspx
http://dailybail.com/home/dennis-kucinich-its-a-fake-crisis-social-security-did-not-cr.html
http://mycatbirdseat.com/2011/08/81-house-members-enjoy-hiatus-in-israel/
http://desertpeace.wordpress.com/2011/08/14/misleading-news-reports-about-gaza/
http://www.washingtonpost.com/wp-dyn/content/article/2007/10/15/AR2007101501857.html

until our plans are so far consummated
that we can declare our designs without fear of any organized resistance.
http://theintelhub.com/2011/08/14/liberty-must-survive-at-all-cost/
http://www.zerohedge.com/news/media-admits-ignoring-ron-paul

we must take immediate steps
to control these organizations in our interest or disrupt them

http://video.google.com/videoplay?docid=4747043279458267117

http://dailybail.com/home/marcy-kaptur-wall-street-greed-and-endless-wars-are-to-blame.html
http://dailybail.com/home/wake-up-america-the-real-us-budget-problem-defense-war-spend.html

I have been reading this discussion between Arjay and Peter Hume with
a mixture of confusion and amusement.
My question is exactly how does money come into existance ?
Is it when the RBA generates pixel money and passes it to a bank ?
Does that bank by receiving that money accept it as a loan from the
RBA and pay the RBA interest ?
If so does the bank operate as an agent for the RBA by lending out
that money to customers.

If that is the way it works, then the government is on a good thing.
However the relationship to GDP must be very tenuous.
GDP is the sum of all transactions, both buyer and seller, so has
little relationship to productivity except perhaps to be the result
of some sort of multiplier of produced goods value.

The extra money needed because of growth will be a fraction of GDP.
Anyway as we will soon have zero growth that will no longer a factor.
Will then the RBA start buying back money and burning it ?
If not all that extra money sloshing about will cause inflation.

I think many are as confused by the system as I am.
How will Arjay's proposal handle contraction ?

BTW loan is a nown and the verb is lend !

bazz quote..""My question is
exactly how does money come into existance?""

if you google 'the secret bankers manual PDF'
all will be explained

""Is it when the RBA generates pixel money""
no..[thats the clever trick
see the fed controls the note printing branch
so it rents the notes to the bank

see..*who signs the 'money'
money is a check[bank-note]

and who controls the check
controls the value of fiat/paper
they charge intrest as much as they chose
they issue too much paper/credit..that deflates the value of the note

basocly bankers collect the notes
pay the rent by returning the notes back to the fed
who burns them

if the banks run out
they rent more...[all notes 'deposited with the fed allows the bankls a credit line [alows then to write checks too..cause who-ever gets the check..must send it back to the fed...for the credit to be honoured]

its a clever trick really
think of it as your hair only is legal tender
all debts must be paid in your hair..my hair has no value

so you hold the franchise..for your hair
just like other bankers hold their own franchise over their own fed reserves./mints/treasuries..etc

""and passes it to a bank?""

often via a house of settlements
also owned by the bankers

""Does that bank by receiving that money
accept it as a loan from the
RBA and pay the RBA interest?""

yes
but think of it like your cash holds a share in it
you put money [their fiat paper'..into the bank
and earn [have acces to 98% more of it]
but to earn more of it someone MUST lend it..[and pay the rent on it]

and only they control who gets any of it
[read the creature from jeckle island]

""If so does the bank operate
as an agent for the RBA by lending out
that money to customers.""

yes
also a few are allowed to sit on the board
[but not told all the secrets]

""the relationship to GDP must be very tenuous.""

yes..its as important*
as YOU proving..*you got a job

no job..[in-come!]..
no loan

REDUCE YOUR GDP
you pay MORE intrest

its just too clever..!
""GDP is the sum of all transactions,""

and taxes ensure govt collects at least a quater of it
[figure out how much tax your paying]

""The extra money needed
because of growth will be a fraction of GDP.""

bazz..think
every penny needs more pennies to pay the intrest
but its only got..with a promise of paying back MORE

we can never have enough to pay all the intrest
only by promising ever more..can you get it

EVERY cent is lent
WITH INTREST

thus for you to pay your debts
with my money..i need to default paying mine back
[thats the only way you can get their notes]

only money there is
WAS lent at intrest into egsistance

""zero growth that will no longer a factor.""
intrst keps growing
till someone goes broke
ie italy ireland spain italy uk australia.etc etc
WE ARE ALL PAYING INTRST*

""Will then the RBA start buying back money and burning it?"

they allready do

""If not all that extra money sloshing about will cause inflation.""

yes think about WHERE THE NEXT BATCH OF MONEY CAN COME FROM
someone must lend it
then pay back MORE than they lent

Bazz,"Where dose new money come from?" It is mostly created by private central banks in their computers as debt.I heard one figure that the US Federal Reserve has created $20 trillion from nothing and loaned it out to institutions and Govts around the planet.This they call "quantitative easing" but in reality depreciates our money making us poorer and the elites richer.

If you want a really simple explanation get on youtube and see Paul Grignons' 'Money as Debt' It does it in cartoon form and looks at the history of money. While you are there,down load 'The secret of Oz' by Bill Still,it won the Biff International Award in 2010 for best documentary.

Once you study it and really understand the proper function of money in our society,it all becomes very clear.

Our RBA at the very least should be creating alll the new money to equal our inflation rate of 3%.This is $ 32 billion per year but we let off shore banks do it for us.That inflationary money depreciates your wages.That value actually belongs to you.

It is like you doing overtime and the boss says,"Tell you what Bazz,I'll do you a favour.I'll loan the money to you for that overtime you did and you can pay it back at interest." This is how insane the system is.We used to have 4 State Govt banks and the Commonwealth that created some of the money for infrastructure debt free.We now have to borrow all of our new money as debt from private banks.The RBA paid our Govt in 2008 a dividend of $500 million when the new money added to our economy as debt was 140 times this amount.

The basic question is,who should own the increases in your productivity? Private banks or our Govts who can give us a tax credit.We are all being taxed to the hilt to pay for debt to private OS banks.In 1976 total debt both public and private to OS banks was 3% of GDP.Now it is 53% of GDP or $750 billion plus Gillards debt.

"The basic question is,who should own the increases in your productivity? Private banks or our Govts who can give us a tax credit..."

Why shouldn't *you* own the increases in your productivity? Why do you assume it should be siphoned off into the pockets of some unwanted elite?

You still haven't given any reason why money needs to be created in line with increases in productivity or population.

And just because governments "can" give you a tax credit, having been given the power to siphon off your increases in productivity for their own benefit, what makes you think they *will*, rather than pocket the difference as they usually do with their revenue increases?

Govts will do the right thing by us Peter if we have a proper Constitution that limits their excesses.As Ron Paul says,a constitution is there to protect the people from their Govts.

We don't have a Constitution that represents the will of the people.There needs to be a Bill of rights/reponsibilities that makes Govt accountable,the finance system and our legal system.The last time someone really thought about it was the formulation of the US Constitution and before that the Magna Carta.The US Constitution has been dismantled firstly in 1913 with the introduction of the private US federal Reserve,and now with Bush/Obama via the Patriot Act and Preventative Dentention.

Under Howards' Sedition Laws anyone of us can be gaoled without trial indefinetly on the mere suspicion of being a terrorist or attempting to bring down a Govt.Very broad definitions that can quickly cause a society to close down and self censor.

"Govts will do the right thing by us Peter if we have a proper Constitution that limits their excesses"

The problem is Arjay that those written Constitutions don't work. For example, the US Constitution makes the Fed illegal in 3 ways:
1. firstly it says the only powers of the federal government are limited to those set out in the relevant section, and controlling interest rates is not among them
2. secondly it says that government shall make nothing but gold coin a tender in payment of debts, which rules out paper money, and
3. the tenth amendment, which is in the bill of rights, says any power not granted to the feds is retained by the states and the people. This makes the Fed illegal. All the Presidents who presided over it should have been impeached.

Similar things have happened with the Australian Constitution - the High Court has interpreted it so expansively as to trash it. Basically they say it means 'The government can do what it wants'.

The problem is that all the checks and balances that are supposed to keep it within the explicit limits it provides - are all comprised of *government agencies*.

So there's no evidence that that a properly written Constitution will be able to stop the government from abusing a power to print money - because it's not true.

You know, don't you, that the originator of the idea that the money supply should be increased in line with productivity was Milton Friedman, the dean of the Chicago School during the Reagan years? He wrestled with this problem - how to set up a government authority to inflate the currency, but not too much. The best he could come up with is a constitutional amendment to confer power to inflate within a stated range, but not even he thought that was satisfactory. And so it isn't!

Considering the enormous damage that inflation does, not just to the whole structure of the economy, and to social justice, but also to society's *moral* values of honesty, and work, and savings, and prudence, we have to ask, what is the original problem that is so bad, that a govt power to inflate is the solution?

Well? What is it? What would be so bad if the money supply was not inflated in line with productivity?

peter..quote..""what is the original problem..that is so bad,that a govt power..to inflate is the solution?""

the inflation of money supply?
or deflation of value?

but the question
of what problem could be so bad
it was people draining the coin cash/gold silver copper
out of country...

[it was this very fact
that saw our earlier govt import spanish 40,000 money..[punching a hole in the middle and making that very expensive collectable..'holey dollars and dumps..[the bit punched out]

of which less than 275 survive

they are so rare
the catologs actually name..where each one now is

and the huge british cartwheel/pennies
selling today..for between $50 to 600[each]

""What would be so bad
if the money supply..was not inflated in line with productivity?""

inflating the money supply too much
devalues the worth of the money actually held
as arjay has repeatedly said

allowing bankers..[via the fed]
to do it at whim is clearly insane

we should be voting on who has that power..!
not some for proffit bankers deciding it at whim

[if only to raise the govt borrowing rate..
its still we the people getting scammed to repay govt odious debt]

the banks have PROVED..they are abusing 'the system'
audit the fed..teach the truth in schools
take back the PRIVLEDGE to mint coin
restore the true values back into the coin face value

deflation has now made it to the absurd point
where there is more cost of metal to mINT
a one cent piece/2 cent piece/5 cent piece
[thus all the coin under 50 cent]
so as to give them a higher scrap value

this is what the flood of paper CREATED
by the fed reserve has brought us to

the measure of values
underpinning it has been stolen

add back in two..'0's
to represent the silver values STOLEN
lest we forget..the bankers STOLE our silver gold and copper

NOW they plan to STEAL our nickle
its two different purposes

noting that the AU/constitution
repeats that no state..''make anything but giold/silver coin..a legal tender for the payment of debt'[chap 5[115]

paper 'money'
falls underpart 5 51..[xvi][xii]

ARjay said;
It is mostly created by private central banks in their computers as debt

A quick response without reading everything, if the bank creates a debt
by granting a loan they have to be doing that against deposits of
customers or their own borrowings.
When someone comes in with a cheque drawn on that loan then cash may
have to be paid out. The banks do not have printing presses so they
would have to obtain cash and/or credit from the RBA.

I realise that they can generate loans that exceed their deposits and
this does seem to be a general practice.
However the books ultimately have to balance.
So does the RBA lend money to the bank ?
Of course the bank may have borrowed US dollars and could use those
funds to honor the incoming cheques. It could then avoid the RBA.

bazz..quote..""if the bank creates a debt
by granting a loan..they have to be doing that
against deposits of
customers""

correct
to create a bank.you need to lodge a cash deposit
with the fed..this underpins the fraction..that greates your credit limit

""or their own borrowings.""

had you read it all
you would know that is not on
[your required to be able to keep your money
sepperate from your business..]

allthough the fraud of which you speak
is how many banks were created..[often with empty promises
ie paying back the loan with your credit abtained by fraud

but to bankers...scum...any mean fair or foul to take YOUR money
look at the bank failures through time[every bank ever made has failed]
but we get so despirit to borrow..a new one opens
[and that was fine as long as govt controled coin/fiat paper money
but now banks are effectivly broke[but the fed can print any ammount of paper..to 'bail them out]

so the question is WHY DID GOVT BAIL THEM OUT?
[to add in a fresh cash fractional deposit with the fed..to create more credit out of thin air]

""When someone comes in with a cheque drawn on that loan then cash may
have to be paid out""

ahh chyecks an interesting topic
do you know...when you sign the check
you assume full responsability for the debt if its not honoured.

that bit of insurance..[a co signer]..is why you need to sign
the back of the check in cashing it in..[the co signer accepts full liability...this creates a security they can rate AAA+]

""The banks do not have printing presses so they
would have to obtain cash and/or credit from the RBA.""

yes egsactly
plus pay them rent..on any cash they hold
plus 'buy' the notes per note..yet repay it by face

read the bankers manuel

""I realise that they can generate loans
that exceed their deposits and
this does seem to be a general practice.""

see UNDER FRACTIONAL RESERVE
they only need 2% of actual value
cash held by the fed
to lend out 98%
in 'credit'

too darn clever by half

its our SIGNED* loan application[creates a 'security'
that underwrites the security value
of the credit..we borrow
through the banks
from the fed

its all by book entry
you give me a dollar
i give you a credit for $50

you loan out more
you need to deposit more cash with me
[see how easy it would be to scam more?

""However the books ultimately have to balance""

yes you lend..it goes into the books
you pay off..it leaves the books

cleverr aint it?

""So does the RBA lend money to the bank?""

no the bank is agent
it gets a commision

the rba lends credit
rents them bwankers,..the notes

""Of course the bank may have borrowed US dollars
and could use those
funds to honor the incoming cheques.""

only in us dollars[thats another fed]

""It could then avoid the RBA.""

yes maybe avoid lending from OURS
but is then lending from the other feds

this scam runs GLOBALLY
thery play with exchange rates as well

the thieves stole our gold silver and copper
jesus upturned their tables

wakeup folks
real and present danger

AUDIT THE FED
if they dont hold the gold silver WE KNOW we had
they stole it...!

thus they ned to underwrite the true value being restored to all coin

thus the nicle coins..will be worth their weight in silver
the gold coins will be worth their weight in gold

its only fair
bring back the coin-age
[see many previous posts]

Peter Hume,"what would be bad if the money supply was not inflated with the productivity?" If the money supply is not increased with commensurate productivity increases,then this means that the real producers won't be fully compensated as the value of everyone elses' currency increases since the supply will be static in a growing economy.Money that equals real productivity is not inflationary money.

GDP is a very arbitary thing.Just because we sell of resources to China cheaply,it does not really equal real productive capacity.The real wealth of China is in its' creativity in inventing new usable products and making products that we consume.

Once our resources run out,our economy is stuffed.We should be more innovative and get into manufacturing.Manufacturing is not a dinosaur activity.There is enormous room for creativity and innovation.

Just think how insane the US Fed and Govt relationship is.The US Govt creates a bond which is a promise to repay a loan;the Federal Res then creates money from nothing as debt and loans it to the Govt as debt.The Fed has $ trillions in off sheet balance transactions in which it creates US $ to loan out to other financial institutions/Govts.This is depreciating the US $ and they cannot be audited on where and whom the money has be loaned.

Private Central Banks should not own our productivity without accountability.In fact we do not need them.

There is no question that the whole Fed thing is a giant scam.

The issue is whether all the same problems would not still inhere in a system, such as you favour, in which the government granted its own bank, rather than someone else's, a license to print money;
or whether such a monopoly privilege to print money should be illegal for the government as well as for everyone else, as I maintain.

"If the money supply is not increased with commensurate productivity increases… is not inflationary money."

Okay I get that.

But that is still three steps from proving what you need to prove:
1. whether increased productivity makes necessary or desirable a commensurate increase in the money supply
2. if it does, whether the economic downside of that problem outweighs the upside of the solution
3. if it does, whether the political downside does, i.e. whether the power to create money could ever be kept safe from gross abuses worse than the original problem.

As fo4 1, suppose a farmer has a flock of sheep. The lambing rate is 100%. Then because of his skill as a farmer, he manages to increase the lambing rate to 110% - more twins.

Now there has been an increase in productivity, but no increase in the money supply.

He sells his lambs. Why can't be be "fully compensated" for his extra productivity just by selling them at the market rate? What's wrong with that?

"the value of everyone elses' currency increases since the supply will be static in a growing economy."

(We assume here that all other things are equal.) Yet he is part of that "everyone else". He participates equally with them in the increased value of the currency. But we are concerned here only with his increase in productivity.

Why does the general rise in the value of the currency, have the result of depriving him of full compensation for his increased productivity if he sells the extra lambs at the market rate? He is 10% more productive, and gets 10% per income. What's wrong with that?

peter quote..""you need..to prove:

1...whether increased productivity
makes necessary..or desirable..a commensurate increase
in the money supply""

sadly this is enforced by the invention
called inflation of values
that deflates the value..of the medium of exchange

much as out lined here
http://www.onlineopinion.com.au/view.asp?article=12482

to quote..""Surveying..the past 40 years,it is..*not clear
that fiat/money..has fostered price stability..
or lower unemployment,in Australia or anywhere else...''

''Fiat currencies serve as a medium of exchange
and unit of account,..two of the core requirements of money,
but they are a woeful store of value,..the third.''

""Australian prices,..for instance,
have increased
over 800% since 1971....*..""

get that?
thats why,they PRINTED the extra $$$$$'s

inflation is theft of value...we used to buy
a coke for 3 cents[3 pennies]..then get a cent BACK..for the bottle

but..the bankers STOLE the pennies
then gave us..cents

or rather TOOK
9.45 grams of copper
then gave back 2.59 grams

BEFORE DECIDING TO STEAL ALL THE COPPER*
just like they stole..the gold and the silver

when they exchanged a bob..[1 shillings weight of silver
and gave us nickle 10 cent]...then sold the silver
like they sold the gold

but back/to the link

""Along with Nixon,we were all Keynesian now:
expert bureaucrats..would guide the money supply,""..lol

now hold on there
the bankers..who run the fed arnt beurocrats
[thats another lie]

""xpert bureaucrats would guide..the money supply,
interest rates and government budgets.""

bankers arnt beurocrats..!

""national practitioners..of the dismal science
would tame..inflation and unemployment..It was a new dawn.""

theft..then selling the..*real assets..em-ploy-ed thieves

we do need beurocrats
to HOLD stable exchange rates
and we did..till cheating keating..killed our exchange rate

""and,far from guiding wisely,
central banks..in the United States
and Europe fanned the financial crisis.""..+..OZzzz

""2.if it does,whether the economic downside
of that problem..outweighs the upside of the solution""

just think if we KNEW a cow
was ALLWAYS equal to 30 grams of silver.!

not 800$..VIA inflation..!

i say the problem outweighs..any possable upside
of letting the darn bankers..do it ALL OVER..*AGAIN

with their govt/cash bailout
leveraged..into ever bigger debt

""3/..if it does,whether..the political downside does
i.e.whether the power..to create money
could ever be kept safe..

from gross abuses
worse than..the original problem.""

think on it..like this
the treasury honours the govt bonds

bankers lend..from the fed..via REAL/assured asset values

[where did all the treasure in the treasury go]
and who owns it
and who holds it
on trust

AUDIT the fed/the mint..the note printing branch

the farmer has a sheep
how difficult is it to price the true cost of a 'sheep]
its sick..so not worth much

it
as a male so its worth more than a sick one
its femail..thus will give a new sheep every year

and by selling the worthless males..and
keeping the valuable females
you increase
your wealth

not the bwankers bonus

govt gives money to its poor
and disadvantaged and public servants
there is the extra money..if neded

if you cant pay your debt..you serve off your debt with work
or give value that equals the debt...[just like we do when somone goes bankrupt]..ie learn to save for a rainy day

not live on credit
so those who take your cash can repay
back the bank intrest on their debt

""What's wrong with that?""

lets quote the link

"Artificially low real interest rates
subsidised asset bubbles, emboldened bloated banks
and distorted the economy toward debt-fuelled consumption.""

""People put their life savings in shares to escape the inexorable inflation, only to chain their confidence to what used to be the remote gyrations of the bourse.""

then clever bankers said we can LEVERAGE your cash
ie leave us a deposit...and if your shares go UP
you get EXTRA CREDIT..to buy more

and if it goes down
you HAVE TO GIVE US EXTRA CASH

so it EVENTUALLY went down
and we ned to SELLL quickly..to get the cash

when by a better way
you could SELL to govt at set values
and they MAKE the CREDIT..to cover your debt bet

lets let the link have the last word

""It was a false dawn;
economists forgot about politics.

As George Bernard Shaw put it,

if "you have to choose between trusting
the natural stability of gold and..""

ie coin..!
hard cold coin..!

"".the honesty and intelligence
of [bureaucrats and politicians]""

OR BANKERS
OR MONEY GRUBBING MONEY CHANGERS
on commision's

your putting your faithy in faulse PROMISES
trusting the value of the money falls faster
than your debt

inflation is for thieves to steal your last cent
AUDIT THE FED
take back the mint
bring back the coin-age.!

Yes UOG, We need another Ron Paul here in Australia.

Maybe a new party like ASP could straighten up our mess.

As I have studied their policies they surely could do the job.

http://www.sovereigntyparty.info

No response, Arjay? Does that mean you concede what I was contending for, namely, that an increase in population or productivity does not, of itself, justify a commensurate increase in the money supply?

Let us just assume so for the sake of argument. Then it follows that there is no justification for government to have a monopoly license to print money.

All the righteous indignation focuses on the banks. But there is almost no recognition that the banks are only able to do this because government grants them immunity from what would otherwise be illegal. In an unhampered market, any bank who did all this jiggery-pokery would *go broke* and that is as it should be, because *it's against the common law of fraud*.

What induces governments to protect them is
a) governments have had their hands in the till, in terms of debasing the currency, since Adam was a boy
b) clipping coins is old hat; your modern seigneural scamster does it by way of *banking*;
c) governments do it for a share of the loot; they can't do it on their own, and they can't do it through a private bank operating under market discipline of profit and loss subject to the law against fraud.
Therefore governments must grant banks a license to do what would otherwise be illegal. You're not against that.

Thus there is a symbiosis between governments and banks; and a parasitic relationship between them on the one hand, and the rest of the population on the other.

So I entirely agree with your analysis as concerns the Federal Reserve.

But it is no more justified to trust government with a licese to print money, than it is the Federal Reserve. The Feds license is granted by government for gossake.

All the excuses given to justify having such a monopoly license are self-interested nonsense. It does *not*
- prevent recessions, it causes them
- stabilise the economy, it ruins it
- promote full employment, it promotes bankruptcies and high unemployment
- do social justice, it does social injustice.

The downside is obvious.

What's the upside?

Oh Dear, everyone including those on here think that we are in for more
business as usual and the same old economic rules whether by whatever
is your favourite ancient economist's theory.

They were all more or less right in their own time but, wakey wakey the
rules have changed !
Finance is now irrelevant. It is just that finance people have not realised it yet !

Now the rule is, production is tied to energy.
More energy, more production.
Energy Growth = Economy Growth.
Energy zero growth = Zero Economy Growth.
Energy Depletion = Economy Contraction.

These rules apply to the world or to countries.

Live with it !