Of course the money exists, wobbles.

>>Pericles, the money you "create" doesn't actually exist yet<<

As proof, I can use borrowed money to buy a house. Many people do. It is not unusual. The fact that I eventually have to repay it does not diminish it purchasing power, I can assure you.

I am not in any way arguing against the fact that too much borrowing has taken place, secured by too few or too overpriced assets. That, plus the derived debt instruments that the Banks used to mask the underlying asset values, has been the major cause of our present woes.

I am simply trying to counter some of the more fanciful ideas floated here about what money is, and is not.

And to point out that the cure that Arjay seems to favour is far worse than the disease

Pericles' definition of money seems to the only authority on the planet.Money was supposed to be a primarily a medium of exchange,and a store of wealth.By my definition it also represents human potential.Both the banking system and the share market have turned it into a commodity.In reality they are trading in human potential,thus perverting it's real productive course.

It is the banks through their fractional reserve priviledges that create enormous amounts of inflation,thus enabling the share market to feed off itself and detaching from the real productive economy.

The system is now in total meltdown.They will not save it by creating more monopoly debt money.The bad assets must be liquidated and the market must be allowed to determine what is of value.

Luckily we in Australia own our currency via the RBA.In the USA it is private group of 12 banks called the Ferderal Reserve.The unfortunate side is our own Govts borrow from this letcherous banking system.

We do not need to go into debt to these Global Banksters.We can back our currency with the resources and skills of our population and isssue all the currency needed to fund infrastructure and productivity.

Germany was sent broke by the Global banksters in paying reparation for WW1.In 1933 Hitler broke away and created his own Greenbacks just like Abraham Lincoln did to fund the Civil War, thus enabling Germany to become an extremely powerful nation.Germany was on the verge of inventing the atomic bomb and nearly won the war.

It was the greedy Global banks of that time who sent Germany broke thus enabling the the rise of Hitler.

Thank you Arjay.

I can now remove myself from this thread with a clear conscience

Away from your uninformed fear of perfectly normal, everyday issues.

Your convoluted misunderstanding of basic monetary theory.

And your unconstrained ravings against imaginary enemies...

>>Germany was sent broke by the Global banksters in paying reparation for WW1.In 1933 Hitler broke away and created his own Greenbacks just like Abraham Lincoln did to fund the Civil War<<

I hereby invoke Godwin's Law.

Actually Pericles (if you're still there), you didn't borrow money, you created debt.

What is being spent by the former owner is money that you haven't earned yet and only up to a tenth of it really existed as a deposit before it was transferred.

That's what the term fractional means in the Fractional Banking system.

Only when the debt is finally repaid does the money become "real" and until then, the only real thing that exists is the house itself.

Like many others, you see money as a hard cash commodity like shells or beans but that ended back in the thirties when the gold standard was abandoned.

The governments no longer print "promise to pay the bearer" on their banknotes because they are not backed up by anything.

Look at what's printed on a US dollar, It's a Federal Reserve Note because they created it.

Money is debt and debt is money. Only a small percentage of money exists as hard currency.

If you're right, then there must be trillions stashed away in warehouses waiting for the crisis to end but it's gone back to where it came from - nowhere.

"If there were no debts in our money system, there wouldn't be any money"
Marriner Stoddard Eccles
(1890-1977) US banker, economist, and Chairman of the Federal Reserve (1934-48)

Agreed Wobbles.Pericles like many others are driven by an agenda who want to see the return of the share market bubble financed by bankster counterfeiting of our currency.Easy sleasy money at the cost of poverty for the rest of society.

Kevin Rudd like many others think that they can cure a problem by creating more debt.They are only delaying the inevitable.Our Govt has gone from a surplus of $20 billion to a deficit of $58 billion with in a few months.

By 2014 Kevin predicts a deficit of $300 billion or $36 000.00 for every working person plus interest.Add another $76,000.00 to the family mortage of a working couple.Then add to that our balanace of payments deficit due again to borrowings of $700 billion and we have a total of $ 1 trillion or a debt of $100,000.00 per working person.

They are borrowing from the very same banking system who create money in a computer not based on productivity.We have over inflated property/share values and Govts who are broke.

It is called debt slavery.What do you think will be the result?

I'm still here wobbles, it is only Arjay who is the Godwin's Law casualty.

>>you didn't borrow money, you created debt<<

I did both.

I used the money, to buy the house. I could, if I had wanted to, asked the Bank to give me my loan in hundred dollar bills

(Interestingly, if I had done so, I would have also expected a knock on my door from Mr Plod, asking me about my drug dealing...)

I will continue to hold a debt, which is in the form of a written agreement between me and my Bank, until such time as I discharge it.

So, as you see, I have borrowed (created) money, used it, and created a debt for myself.

>>That's what the term fractional means in the Fractional Banking system.<<

wobbles, I do understand Capital Adequacy...

www.rba.gov.au/PublicationsAndResearch/Bulletin/bu_dec94/bu_1294_4.pdf

If a Bank's capital is a million bucks, they can create ten million in the form of assets (loans).

>>The governments no longer print "promise to pay the bearer" on their banknotes because they are not backed up by anything<<

But the concept - that the piece of paper is merely a unit of information - remains the same, and was the point I was making. Not the promise, which never really meant anything anyway, when you think about it.

>>If you're right, then there must be trillions stashed away in warehouses waiting for the crisis to end but it's gone back to where it came from - nowhere.<<

Except for the physical nature of the warehouse, spot on.

New money was envisioned when the various governments announced their various bail-out plans. At that point, the dollars themselves didn't exist anywhere, except in newspaper reports of the governments' plans.

Over time, the money will actually come into existence when the Banks that need them borrow the actual cash. Documents will be exchanged, money will have come into existence, backed by nothing more than a "promise to pay".

If this last step is not needed, the money itself will never have existed.

Except in newspaper reports.

Hope that makes things clearer.