Yes ,many of us are asking why Keating sold off the CBA and the State Govts did likewise with their banks.The logic behind Kevin's brainstorm is to create his own credit,however under the present banking rules and bank must have real deposits before the fractional reserve system allows them to create $9.00 for every $1.00 in deposits.

It will take decades for such a bank to eventuate and will it survive?First of all,such a bank should be completely independant of Govt and owned by the people.No Govt should be allowed to create it's own credit.It should be totally corporatised with no public servant unions involved with no one having job security.Then it will have half a chance.

The Credit Unions are getting a bit nervous since they see Kevin invading their territory.

I have a suggestion for Kevin.Why not let the Credit Unions create money in their computers like the banks do? They would not have to then borrow from the banks and Kevin could then borrow from the people's Credit Union Banks.The big four banks would then have some serious competition.

Swan has again knocked the idea in the head. There will be no government bank. Just as well, seeing what Rudd has done to the Australian economy, with his stupid Keynesian attitudes.

*I have a suggestion for Kevin.Why not let the Credit Unions create money in their computers like the banks do? *

They already can Arjay, for it is the same money going around and
around, which I don't think you understand. Banks simply come
under more scrutiny then credit unions and have to have fixed reserves, as specified by the reserve bank. So to lend you
100$, the bank has to find 110$, if their reserves are specified
at 10% for instance.

keating didnt want to sell the common wealth..[he got told he had to]

there was a need for govt to borrow arround 12 billion...no worries saif the commonwealth..[peoples bank]...we will lend it at 3.3/4 percent

no said the world bank...you will lend it from us..at 13. 3/4 %..and by the way..you will privatise the peoples common-wealth bank...so he did

its funny i suggested the concept of a peoples bank to krudd...so im sort of taking the liberal rejection of the concept personal...seeing as turnbull into votes ..being a banker with that leighman/sax fraudsters...and costello going off to join his world bank cronies

all we need now is the traitor..[turncoat-[bull,into votes..to rollover on the new leighman/sax cabon trading scam...set up by obama/gore.. pre him becoming president...let the revolution begin...this is yet more tax without representation...

but worse..because its designed to give the tax ..direct to big business..[who have massivly colluded treasons even greater that stealing the fed and the peoples bank...may they rot in hell

Yabby seems to be glossing over the reality."They already can,it is from the same money going around and around." I cannot find anything on the web that says the Credit Unions can create credit from a loan to deposit ratio of 9:1.The banks can certainly do this which gives them a huge advantage over the Credit Unions.

Perhaps Yabby can give a reference that indicates that the Credit Unions are actually allowed to practise fractional reserve banking.The money going around and around does not create a level playing field and the real advantage is at the point of it's creation Yabby,so don't try to fudge the stats.

Arjay, banks by law have to keep a % of their total loan book as
liquid reserves, like cash, deposits with the Reserve bank whatever,
so if customers want their money back, they can pay it. If their
reserves were required to be 100%, they could loan no money out, only
their own money. Fractional reserve banking means that they only
have to hold a fraction of that 100% as liquid, so the same money
circulates around. You make a deposit, somebody else borrows that
money, etc. Every time that money becomes another loan, the money
supply is increased.

Take a look at an annual concise financial report of one of the big banks.
I have one here in front of me, from 2003. They received
9.9 billion $ in interest payments and paid out 5.7 billion $
in interest payments.

It seems to me that you think that banks can pay interest on 1$
of deposits and charge interest on 9$ worth of loans. Not so.

Please don't open one here in qld cause anty anna will just sell it off.

your delusion/of lending out the non-fraction..is revealed FRAUD..gabbies numbers..5.7 billion[intrest]..the bank pays OUT..on the money IT BORROWED...were it lending out..its own..BANKED funds...no intrest would be due...

The 1st Gov of the Bank of England.."The Bank hath benefit of the Interest..of whatever credit..it issues out of nothing"

...The Federal Reserve System relies upon in.....credit created..(money)..out of thin/air...The Bankers want the public to think that Deposits are lent..&..they....the Banks make a margin(profit).

this myth of margin..has been exposed/..by many a noted Banker.

Why even the former Governor..of Reserve Bank of Australia said in the..E.S.& A..Bank Research Address..at Queensland university on 15..the September 1954.."Any given piece of expenditure can be financed from one of 4 sources:..1,2,3,&4...money borrowed from a bank...[fed reserve]

This last source differs from the 1st three..because when the money is lent by a bank..it passes..into the hands of the person who borrows it..without anybody having less.

Whenever a bank lends money..there is,..therefore..,an increase an increase..in the total amount of money available"

R G Hawtrey,of the British Treasury,..in the "Art of Control Banking,"says:..When a bank lends,it creates credit...Against advance..which it enters amongst its assets,..there is a deposit/..entered in its liabilities.

Even Sir Josiah Stamp,Director of the Bank of England,1928-41, said......."..The modern banking system../manufacturers money out of nothing...The process is perhaps the most astounding piece of sleight of hand ever created...Banking was conceived an iniquity & born in sin...Bankers own the earth....

We don't think he was telling lies....he was speaking from a position of power & knowledge...maybe some things are bypassed..&..not the done thing..in universities..when it comes to banking,..it to appears students have to follow the dogma..required to pass....albeit not the reality....but..the line of thinking..to perpetuate the blinkered thought patterns..required to keep the Wizards of Oz alive & in power.

The Banks maybe..lends the deposits of the depositors....may as well....but please note..Government statistic bureaus..have shown that in Australia.......1 year banks lent out 78 times..their deposits..another year 48 times their deposits
http://www.google.com/search?ie=UTF-8&oe=UTF-8&sourceid=gd&q=where+do+banks+bank+their+money&hl=en-GB&rls=MEDA,MEDA:2008-36,MEDA:en-GB

Ok UOG, now we officially know that you are too stupid to debate
this topic :)

You seem to not understand the difference, between the powers of
a Reserve Bank and a commercial savings banks. They are quite
different in what they can and cannot do.

*1 year banks lent out 78 times..their deposits..another year 48 times their deposits*

So let me work this out, based on the figures in yesterdays Financial
Review. Among the big 5 banks, household deposits stood at 429
billion $, on top of that we had business deposits, then overseas
deposits, which are another 50% of their loans.

Lets just take household deposits and your claim. Multiply 429 billion
$ by 78 and you have 33 trillion$ of loans in Australia!

Hehe UOG, you should not keep smoking that weed, it makes you
delusional you know.

Yabby ,we only have to look at the inflation stats to know that the banks are creating too much money and it way above their reserve deposits.Our currencies have lost 96% of their value since 1913 with the instigation of the US Federal Reserve.This means that 96 times the numerical value of our currencies above real productivity and population growth have been added to our economies.

No one else but banks are allowed to create money.The details of which banks and how they do it is a carefully guarded secret.The reality is there for all to see,and it does not matter which bit of accounting creativity they use to hide their machinations,the inflation statistics and the depreciation of our currencies are there for all to see.

Would you kindly refrain from trying to insult and degrade other posters

There is one insight that no one has mentioned in the media,ie the fact that Kevin Rudd has floated an idea of a new people's bank without any research or due diligence.This shows that he is clutching at straws in the light of a national debt that will crush us economically.

The reality is that they have no solutions and that is not very inpsiring.

good destraction gabby... I NOTE SILENCE ON ALL THE OTHER QUOTES...lol..it arnt half obvious bro...

what you cant rebut is what people..[who would know]..aRE SAYING AND HAVE SAID...REBUT WHAT THOSE IN THE KNOW..HAVE REVEALED..if you can..

you cant so play the ridicule the extreem numbers quoted game...ignoring all the other quotes...and seeking...only..to rebut...what you see...as/..the weak link...lol

bankers are lending...as much..as their...on hand reserve../allows for...in the two numbers...78% and 48%....obviously...the two/best..[worse]...years...

when not many reserve-funds/deposits..were withdrawn..allowing bigger lending...lol..based on the fractional reserve..inhand..of deposits.../reserve fractions,...the equivelent of 78 percent of deposits for one year...

and 48 percent of deposits the second best year...

[a huge difference...but we are talking about two extreem cases...not your...this..worst year....numbers...when govt needs to boost...the reserve fractions...to cover over even worse extreem lending of the non reserved fractions

quote...<<Arjay,..banks by law have to keep a % of their total loan book as liquid reserves,..like cash,..deposits with the Reserve bank whatever,>>>..the key word..deposits...they are the fractional..'reserve'

it is on and off the books..[but most of us provide a constant weekly in-flow...ourflow..that would be a representative..'fraction...the bank holds..as..'its'..reserve deposit...lol[others call it turnover]...but not bankers/slime

gabby quote..<<If their.reserves were required to be 100%,>>..by your figures 429 billion..<<they could loan no money out,..>>

<<Fractional reserve banking means..that they only...have to hold a fraction of that 100%[deposits]..as liquid,>>...ok so lets use their/your numbers...how much of a fraction of the 429 billion you think they hold..[in reserve]

those are the two worst numbers...other years the lent less clearly...but allways more than the deposits...[or to the max...the fractional reserve funds[deposits]..on hand ....allow...lol

i note your not touching on bankfees or the absurd excessive bank charges
http://www.walletpop.com/blog/2009/07/02/join-us-on-our-bank-anger-tour-across-the-blogosphere/?icid=main|main|dl8|link5|http%3A%2F%2Fwww.walletpop.com%2Fblog%2F2009%2F07%2F02%2Fjoin-us-on-our-bank-anger-tour-across-the-blogosphere%2F

or credit cards
http://www.huffingtonpost.com/2009/07/09/tarp-recipients-fighting_n_228682.html
[or lack of any intrest payments on the small deposit's holders]
http://revolutionarypolitics.com/?p=1490

or how cap and trade is going to be a huge income stream[1.4 trillion a year from the EXTRA tax
http://thedoomsdayreport.blogspot.com/2009/07/whats-behind-cap-trade-it-aint-pretty.html

http://finance.yahoo.com/news/Banks-plan-to-refuse-apf-1135048135.html?x=0&.v=4&.pf=banking-budgeting&mod=pf-banking-budgeting
http://www.globalresearch.ca/index.php?context=viewArticle&code=BRO20090708&articleId=14270
or that audit the fed issue
http://bytestyle.tv/content/did-you-miss-todays-freedom-watch-22-watch-here
or the wall street insider trading[gold-man-sex]
http://www.dailykos.com/storyonly/2009/7/7/750786/-Incredibly-Shrinking-Liquidity-as-Goldman-Flushed-Quant-Trading
http://apps.nyse.com/commdata/PubInfoMemos.nsf/AllPublishedInfoMemosNyseCom/85256FCB005E19E8852575DF006D4F66/
or the pope
http://news.yahoo.com/s/nm/20090707/ts_nm/us_pope_encyclical

mate little wonder you resort to insult

*No one else but banks are allowed to create money.The details of which banks and how they do it is a carefully guarded secret.*

Wrong Arjay. Credit unions do what banks do. They take money from
depositors and lend it out once again. The same money circulating
increases the money supply, or "creates money" as you call it.

No carefully guarded secrets either, its all public information.

UOG, frankly you post so much rubbish, that I just pick one of
your many claims and show it to be rubbish. I can't be bothered dealing with all of them.

Banks hold tier 1 capital (shareholder capital) to the tune of
about 8% of their loan book.

Arjay,

Your reference to lack of research and due diligence is a very important point further underlining most politican's - and certainly Rudd's - total lack of business acumen.

Government's can put up ideas in two ways: as a political initiative (which is just a vote-catching promise), or as an evidence-based proposal which has been carefully researched and proven to be necessary and viable.

Everything Rudd has come up with, including the 'stimulus' packages and the fast broad band idea are merely 'political initiatives': all spin and no substance. A bank would be just the same.

If Rudd were to be asked for a business plan for any of his extremely costly (to taxpayers)rabbit-out-of-the hat ideas, he wouldn't know what it meant. Too long in the public service.

Yabby,"Wrong Arjay,credit unions do what banks do.The same circulating money increases the suply and lend it out once again.The same circulating money increases the supply or 'creates money' as you called it."

Now Yabby,how does a closed system self propergate?Is it having sex with itself? On this dilemma,I well may ask the same question of yourself. How can a static system create an expandable supply of money? This is economic double speak.As far as I'm able to assertain,credit unions can only loan out money equal to the deposits of their shareholders and what they borrow from the banks.The banks have an edge that no other institution on the planet has,ie they can create credit many times greater than their deposits.This is undisputed.Even Ben Bernanke has talked of "leverage" of 30 times real deposits which even he thought was excessive.

Leigh,Kevin Rudd will prove to be the most shallow PM in our history.Julia Jillard will probably be our first woman PM.
Just before the last election I wrote a ditty,
"The Cliche kid is tough and strong,
The cliche kid just can't go wrong
The cliche kid,eats me too bars
And that is the sum of his song."

Hence Tony Abbott and others now refer to Kevin as the "Milky Bar Kid".The election before that,I did a rip snorter cartoon that the Coalition used to lambast Labor and they still do know who created it.

*Even Ben Bernanke has talked of "leverage" of 30 times real deposits which even he thought was excessive*

Arjay, Bernanke would have been referring to 30 times of equity,
which certainly was the case with US investment banks, which in
the traditional sense, are not really banks (as in savings banks)
They are not regulated by the Fed, so can literally do as they
please. Those banks which went broke, Lehman, Merryl, etc, were
all investment banks.

Savings banks, ie real banks, have to comply to strict criteria,
carry adequate reserves (around 8% of tier one capital) and
are inspected regularly. Not so with all other money lenders.

If savings banks could just create money as you call it, pay nobody
any interest and charge Pericles and others 10% for his business
loans, rest assured I would be rushing to buy lots more bank
shares! For the balance sheet would show huge interest income
and hardly any interest payments, which is or course not the case.
Only Federal Reserve banks can do that.

Our banks would have no need to go cap in hand to overseas lenders,
they could simply push their computer buttons! Again that is not
the case.

But yes, the money supply is increased, every time another loan is
signed, so in that sense, more money is created. If I had 1000$
and put it in a bank for safe guarding and they were not allowed to
lend it out, only I could spend that money at my choosing. It would
be in the bank vault waiting for me. So there is 1000$ in the economy
so to speak. You would have to do without credit to build your house
or whatever. Pay cash or go without.

But banks have the right to lend you that money, so for all intensive
purposes, I can still draw out my money at any time, but you also
have 1000$ in your pocket from the loan they gave you. There is
now twice as much money in the economy, my 1000$ and your 1000$.

Perhaps Yabby ,you could give us a link on the WEB that gives us some detail of which banks create credit and how the whole process works.

The investment banks in the US and here must have some regulation on the amount of credit they can create otherwise there would be complete anarchy.

Arjay, in Australia it is APRA, which regulates so called
ADIs or authorised deposit taking institutions. That includes
banks, building societies, credit unions, super funds and insurance
companies.

http://www.apra.gov.au/aboutapra/

AFAIK they don't regulate merchant banks or investment banks, for
they are not really banks in the true sense of word. They don't do
retail deposits etc, its all about corportate lending, takeovers,
capital equity raisings, deals etc. Thats no different to what
you could do, ie you could borrow money, then lend it to a friend,
if you wished.

Will someone please buy Kruddy some good sleeping tablets, or find him a nice young mistress.

Every time he has another sleepless night, we get another couple of damn fool new policies.

If we can't get him to sleep nights, we will, like the wahoo bird, end up chasing our tails all over creation, & back.

Ok Arjay, I did a bit of homework for you, so that you can try to
understand it all. So I dug deep into the online bowels of the
Westpace financial report, to find the figures:

http://info.westpac.com.au/Sites/1/pdf/WBC08AR_Financials.xls

Its a Microsoft Excel file, so I hope that you can open it. Look
along the bottom and go to "Fin Data"

Its shows you interest received at 29 billion, interest paid at
21.8 billion. Banks work on a spread of around 2%, ie if money
costs them 4%, they lend it out at 6%. Years ago, before deregulation, it used to be twice as much, but competition has
halved it.

Now if all this "magic money" was available to them, as some on OLO
seem to think, then clearly there would be no need to pay out
so much interest, in relation to interest received!

So yes, banks create money in the way I explained with my 1000$
example, but not in the way which you seem to think, ie the
computer button. Only reserve banks can do that.

ok here we go gabby
so the banks paid intrest to the fed...[of 21 billion using your egsample]

so i googled [who owns the fed
http://www.google.com/search?ie=UTF-8&oe=UTF-8&sourceid=gd&q=who+owns+the+fed&hl=en-GB&rls=MEDA,MEDA:2008-36,MEDA:en-GB

went to the reserve bank..[spin site]
quote<<..the Reserve Banks issue shares of stock to member banks.

However,owning Reserve Bank stock is quite different from owning stock in a private company.

The Reserve Banks are not operated for profit,and ownership of a certain amount of stock is,..by law,..a condition of membership in the System....>>ie the boys club

<<The stock may not be sold,traded,or pledged as security for a loan; dividends are,..by law,..6 percent per year.>>>..ok so the 6 percent of the dividend...[the fed creates from a fiction...goes to member banks..and 'others'..WHO OWN THE FED reserve stock...

govt gets it pitance as you previously revealed...it should be getting the 21 billion

world wide its a hell of a lot more..[where your 21 billion come from]?

lets just audit the fed and find who is getting the loans and the ursury..[that sure as heck isnt going to govt..[thats why we need to pay tax...

while the owners of the fed/banks.. get our bailouts..[and create any ammount of credit they like...giving it to who ever..they chose

Yabby.We seem to have a conflict of opinions here.See Ellen Brown http://www.webofdebt.com/articles/dollar-deception.php
Robert Anderson was the Secretary of the US Treasury in 1959.said,"When a bank makes a loan it simply adds to the borrowers depsoit acccount in the bankby the amount of the loan.The money is not taken from anyone else's deposits,it was not previously paid into the bankby anyone.It is new money ,created by the bank fro the use of the borrower."

Ellen Brown also goes on to say that banks include in their reserves the loan money sitting in accounts waiting to be used by the borrower.So here we have the mulitiplier effect,of credit being created on the basis of existing credit sitting in accounts.

With the knowledege that investment banks even have greater leverage in creating new money,the whole system needs a drastic overhaul.It is totally obscene.

Arjay, in accounting terms, yes the money is created, as it again
vanishes, when the loan is paid back. The bank's money after all
comes from all sorts of sources. There is no bookeeping entry
showing a transfer from Mrs Jones deposit account to Mr Arjay's
loan account!

Check out Apra and Basel 2, to see what kind of reserves banks must
carry. Tier 1 Capital is basically shareholder capital. Now just
recently Australian banks, to boost their reserves, turned to shareholders for another 16 billion $.

The point is, banks still need to borrow their money and cannot
just add numbers to a computer. As you can see from the
Westpac data, right here in Australia, they pay out one hell
of a lot of interest. Now even you would have to accept that
Westpac would not pay out 21 billion$ in interest, if they
did not have to borrow money.

The alternate to the fractional reserve system, is of course
that banks would simply store your money as a place of safe
keeping and not lend it out, as the original goldsmiths did.
They would charge you a fee to store it and there would be no
credit. Only the rich with cash could afford houses etc,
workers would simply have to do without.

UOG, as usual you muddle up and confuse everything :) For a start,
separate the Australian and American systems please, they are not
the same.

Yes, all American banks have to be members of the Fed. They are
paid 6% on money they have deposited with the Fed, not 6% on
money which the Fed owns, big difference. Profits from the Fed,
are paid back to the US treasury.

Yes yabby,the principal that is repaid enters oblivion,ie does not circulate in the economy,but the seller of the property[the recipient of the loan money] now has this new money,then either re-invests it or puts it in a bank.This new money then acts as a reserve which banks can then create more money to loan.

Thus we have the expodential growth if inflation especially since 1974 when we went off the gold standard.We also have the depreciation of our currencies.

I am very interested in the debate between Arjay and Yabby here and I have to admit I probably am as ignorant of these matters as OUG or Hasbeen although I worked in a bank in Australia and London and saw the big profits we made just on the difference between selling and buying currency, back in the days when wool sold for " a pound -a pound" and 2% copped by the bank on each letter of credit transaction.I worked in Real Estate with Keith Campbell whose report to the Government delegulated the Banks.It proves to me that the bloke in the street knows virtually nothing about how Banks operate.If you don't want them to lend your money to others you can put it in a Safe Deposit Box, but if the bank is robbed as the one I worked in,- was in London, you may lose the lot! Being mortal, most of the population would say "It's only Money!"

thanks for the compliment diplowman...lol..i dont care what bankers or former bankers think of me or my posts...lol...who can believe them ..their just born liers

i use links to say things i cant..[read the links]...rebut the links[play the links..[ball not the man]messenger just passing on info

anyhow

if we recall kevin...gave many..money to spend...its worth an ignorant like me pointing out..that for every dollar we didnt spend...has increased ..via fractional reserve..leverage...the banks now have more credit/money to lend..thanks to the poor

not that they need..fractional reserve..to create money...but just thought i would make the point..that our banked funds..provided more fractions...but that we dont get the advantage..nor extra credit..our money created...

nor do our pennies get any intrest..[aint it grand how bankers get the lot...[and we just get extra bankfees..

.any idiot can see banks dont care about us..[the suckers]...lets just audit the fed...and while were at it tell krudd to tell the banks to refund all our bankfees..

Yabby and others - For your information - a correction:
"But banks have the right to lend you that money, so for all intensive
purposes," Now, I don't comment on the rights of the Banks, because they have all the rights. Even to take your deposit, and say it is no longer there, for whatever reason. What I comment upon is the last phrase:
It is "for all intents and purposes" , not "for all intensive purposes".
So much of the English language is being destroyed these days, that I feel the need to inform everyone, so this type of error is not purpetuated.
While I am at it: You media types who say 'Those people that', it is 'Those people who', and 'There's six people' should be 'There are six people', or 'There're six people'.
Oh, and about the banks - perhaps we should follow the trail, from the sub-prime mortgages, and see where all that money went. I note on a Colonial State advert, they are saying it has been 'lost'.
Well that is not entirely true. There are a few different types of money which circulate in the economy. When a part of that economy removes a large amount - bam! There is a recession. A large amount has been removed via the thimbles and pea trick. How about we look at getting it back, as it was not legitimately transferred in the first place. It has not disappeared. It is currently being used to line the nests of criminals going by the name of financiers. As it filters back into the economy - bam! We are back on track.

Oh, look, I am not perfect: I did correct it, from 'purpetuated' to 'perpetuated'. Let's hope I have not PERPETUATED the problem. Come on, smile! Life is too short to do otherwise.

Sometimes when I correct an error in the preview, it does not seem to come through in the final post. Probably something I need to do more carefully. By the way, great discussion all. Love this site.

gabby...from your link
http://en.wikipedia.org/wiki/Federal_Reserve_System

<<the fed claims to hold assets to the value of..2,198,613,[MILLION][whats that about two trillion?.>>

..but look at the value of gold on the asset sheet...

[im presuming this is it..<<Gold certificate account 11,037 [MILLION]>>..is that 11 billion...

now look at their clever accounting trick

from the same..your..fed reserve link gabby

<<The Fed has over $11 billion in gold which is a holdover from the days the government used to back US Notes and Federal Reserve Notes with gold.

The value reported here is based on a statutory valuation of $42 2/9 per fine troy ounce.

As of March 2009, the market value of that gold is around $247.8 billion>>...its real value is 247 BILLION..[its no doudt a very conservative number]...who really knows [right]

but its on the books as 11 billion..[neat trick eh]...but by their own fact sheet worth 10 fold that its declared

ITS TIME TO AUDIT THE FED TO FIND OUT WHAT OTHER CLEVER ACCOUNTING...its stealing..by playing games with the peoples assets

but lets take it further...11 billion...at...42 dollars an ounce...but an ounce is near 1000 per oz...or 22 times under value...

they are so clever these money lender's...noting they dont mention the silver they stole as well..when our coin went from real silver to nickle coin-age...what value these virtual numbers when the fed holds the real gold...why dont the treasury sell it?

i recall you quoted a dividend...you claim the fed paid to the govt in a recent post..[COULD YOU PLEASE RESTATE..THAT FIGURE...

id like to do some more math on the numbers...sort of do my own audit..so to speak...seeing as how govt members..in the pay of the moneylenders..wont ever be passing the audit the fed bill...smells like treason to me

The creation of money/credit is the most important issue confronting us all at the moment.We have an elite group called banks that have depreciated our currencies by 96% in 96 yrs.This is the main process by which wealth is transferred from the masses to the few.

When banks create money from nothing they are diluting the value everyone elses money,thus even this depreciated currency upon which they make interest,still puts them at an enormous advantage that no Govt or corporate institiution can avail themselves of.

Since real wealth eminates from the working population including both managerial and labour,it should be they who primarily benefit from the creation of new money.The equitable distribution of wealth could be done through credit unions and banks that operate as mutual societies ie no shareholders.The profits go back to the depositors.

We are fast approaching a feudal middle ages system whereby the Corporates with the aid of our Govts are creating masses of poor who have no way of climbing out of destitution.Govts with the best of intentions of social equity will not reduce poverty.The bureaucracy of social security absorbs most of the tax and the recipients will not help themselves.

When your neighbour is poor,so more likely are you.Poor people also more likely have poverty of the mind,and that ultimately will reduce all our living standards and expectations.Too much wealth in too few hands will bring about anarchy and war.

Arjay, its simplistic to think that just an increase in the money
supply, is responsible for inflation. For there are no perfect
markets.

What is acknowledged is that globalisation has had a massive
effect on reducing inflation in the last twenty years or so,
especially in Australia, as we dropped our tariff barriers.

You forget what spiked global inflation in the 70s, ie the first
oil shock, when the price of oil went through the roof and
the Arabs nationalised their oil fields etc.

In those days there was far less money and credit available in
Australia, but a dire lack of competition. Companies could
simply increase their prices at will, workers could claim even
more, everything was passed on. Globalisation put a stop to
that.

In countries which had open market competition, inflation was
alot less. Switzerland, one place where money sloshes around
and should make you concerned, used to have a currency, in
the early 70s worth 4 sFr to the Australian dollar. Today its
1 sFr to the Australian $, as they never had our inflation.

Why on earth would we want to go back to the gold standard?

Lady Aussie alone, you'd make a great school mam :) Yup,
our spelling gets a bit slack. I see the bright side,
mine is better then UOG or Antonious :) I guess in these
discussions I am more interested in thinking about the substance,
then thinking about the spelling.

UOG, is it mentioned anywhere, that an ounce of gold is missing
from the Fed? Their profits change every year, as does the
profit of our Reserve bank. You would have to go googling to find
out how much they pay the treasury for every single year. You are
good at that, I don't need to to it for you.

gabby..as i suspected your afraid your quoted numbers wont stand up in light of other numbers you been tossing arround

re the gold ,see my previous links...no one knows if the gold is there or not[and it isnt]...workers report the gold held at fort knox is rusting..BUT GOLD DONT RUST...i think we should fully audit the fed,.....[see my previous link..you know the ones you never read...chosing rather to rebut only..what i said...the links say it better than i..

i re read a lot of your posts they all pretty much parrot the same stuff over and over...you rarely post links...and the few you have dont mention the dividend to govt..from the fed...when govts true dividend..should be on the govt bonds the fed holds and the peoples gold..the fed claims to hold..[intrest free]

instead of american money having on it in god we trust...it should be in the lies of the fed..we went bust...or is it the fed you trust, or the fed turned our gold.silver into dust...the tissue of lies will not be sustained...those who stall the audit of the fed are serving treason

*as i suspected your afraid your quoted numbers wont stand up in light of other numbers you been tossing arround*

OUG, You are of course wrong as usual, so I will explain to you
why.

From memory, that figure was 31 billion $ and came from Wickipedia,
which tells you all about the Fed and how it functions.

The real reason is that for posters like yourself, I refuse to
do any homework. Now if it was a wise poster like Pericles, it
would be a different story, for I respect his opinions, even
if at times we agree to disagree.

You are what I call a flooder. You post huge numbers of links,
then expect people to spend their days going on a wild goose
chase, to disprove the huge amount of rubbish on those links.

Fact is the net not only has good stuff, but also heaps of rubbish,
lots of people making money selling books to the gullible etc.
If you want to believe every word, well good luck to you lol,
I am not that stupid and won't waste my time on it.

IMHO you are simply delusional. Perhaps you smoked too much
weed in your life lol, I know similar characters, they live with
the fairies. Sorry OUG, but I had to say it as I see it.

gabby quote<<Westpace financial report, to find the figures:

http://info.westpac.com.au/Sites/1/pdf/WBC08AR_Financials.xls

Its shows..interest paid at 21.8 billion.>>ok there we go gabby

ONE BANK[westpac]...pays 21 billion to the fed [or some fed]...one smallish bank in the global sceme of things

again quoting your own numbers..in response to how much the usa fed paid out as dividend to usa treasury,,,your reply,,..<<From memory, that figure was 31 billion $ and came from Wickipedia,
which tells you all about the Fed and how it functions.>>yes it does [i thought it was 79 bil but will trust your memory of the facts

so the aussie fed..from one bank..[westpac]..got 21 billion...say just for the 'big4' round it off at 100 billion..PLUS...minus running costs

we see that just in the aussie fed franchise the govt is losing 100 billion

you dont have the aussie fed dividend payment??..they gave govt do you[because the fed..[as you have now admitted simply creates the book entry..ie creates the money from thin air...and some how gives only pennies of it back...as well as keeping the gold reserves...

in fact they lost the gold long ago...sold it to their mates..[but you didnt read that link did you]

you should up..your download..to two meg..[your one meg download limit isnt serving you to get the facts bro]..i love you bro...but you really should read the links...i had to read them...maybe if you read them you would stop defending thieves and liars..they are stealing from you too

*ONE BANK[westpac]...pays 21 billion to the fed [or some fed]...one smallish bank in the global sceme of things*

You see OUG, this is where you go all delusional. Nobody has claimed
that Westpac paid 21 billion to any fed. They source their money
from various people. Mums and dads make deposits, they are paid
interest, companies make deposits, they are paid interest. Anyone
from whom Westpac borrows, is paid interest.

Now if Westpac want to borrow from the Reserve Bank, or park their
Reserves money there, they do so and are paid interest or pay
interest. Reserve Banks act as bankers banks.

If you check out the Australian Reserve Bank website, it will
tell you how much it has paid each year, back to the Australian
treasury. Sometimes the Reserve bank pays very little, as they
might have lost on their forex holdings etc, it depends on how
currencies change in value.

Yabby," Arjay it is simplistic to think that an increase in money supply is responsible for inflation.There are no perfect markets."

Yabby the real free market has not been allowed to operate.The reserve banks of the world and their hangers on ,Wall Street, have perverted the free market for over 100 yrs.There is no level playing fields since the banking fraternity have the unfair advantage of taking wealth from the real producers in society by the creation of inflationary money and loaning it back at a profit.That is the reality which you and others refuse to acknowledge.Wall St feeds off the banks and thus the banks feed off ordinary people.

We now have a situation in which there are too many parasites and Obama backed by the Fed is sacrificing the real productive economy to bail out non productive parasites.It is unsustainable.

*Yabby the real free market has not been allowed to operate.The reserve banks of the world and their hangers on ,Wall Street, have perverted the free market for over 100 yrs*

Quite correct Arjay, but I don't blame the banks, I blame politicians.
For they need to win the next elections.

For instance, lets look at housing prices. In my humble opinion,
houses are far too expensive in Australia.

Now if you look at housing prices in Australia, they have hardly
dropped, especially at the low end. Why? Huge Govt payments to
first home owners of course, a purely political decision. All those
new first home owners are driving up the market.

Secondly interest rates. If you are a home owner, you pay maybe
5.7% interest, if you are a business, you pay around 9.8%.

Why? Political pressure. There are no votes in keeping interest
rates low to business, but the banks have been told what to charge
home buyers. Yet if interest rates were higher, housing prices
would in fact drop.

Right now, banks use cheap money raised locally to finance houses,
expensive money raised overseas to finance business. Why the
dispcrepancy? Political pressure.

Free markets do not exist because of politics, not because of
banks.

This is the same old, same old.

Arjay, opening another thread each time you run into resistance to your weird notions about the financial system won't ever change the facts.

I won't bother going through the entire lather, rinse, repeat cycle on the fractional banking system, or the Bankers' conspiracy to debauch our currency. There are enough corrections to your wild notions on other threads to last several lifetimes.

But I will point out just one thing, to illustrate the delusions you seem to jealously entertain, despite a constant tide of countervailing reality.

Let's start at the beginning.

>>Why not let the Credit Unions create money in their computers like the banks do? They would not have to then borrow from the banks and Kevin could then borrow from the people's Credit Union Banks<<

Arjay, it is an absolute, concrete, verifiable fact that Credit Unions operate precisely the same system as "normal" Banks.

The only difference is that they do not have shareholders, just members.

All the other capabilities and restrictions, reserve requirements included, apply to them. Since they don't have shareholder equity on their balance sheet, this is one form of reserve that is denied them, but the quality of their other assets form the same base from which to calculate a prudent lending ceiling. Which is, in fact, the entire point of having a mandated reserve amount in the first place.

Which, I note, Yabby has been patiently trying to explain to you, despite your constant refusal to listen.

Here are the formal Notes that attach to the balance sheet of a typical Credit Union.

http://www.savingsloans.com.au/AnnualReport2008/Financials.aspx?p=781

Notice that it borrows money that it uses to lend (note 22: Wholesale Funding; Securitised Funding; Wholesale Deposits), alongside the deposits it holds for its members.

Not to put too fine a point on it, Arjay, the basis of this entire thread was a crock, is a crock, and will remain a crock.

let'use some irrefutable facts.Since 1913 the US dollar has lost 96% of its value.The inflation rate over this period has been 2500%.This means that the banks the only creators of currency have inflated the money supply on average of 26% pa over GDP and pop increase,yet we have Govts berating Unions over wage inflation?

The Aust dollar over this time has even lost more value since in the 70's it took $1.12 US to buy $1.00 Aus.

Those who counterfeit money are stealing wealth from the rest of scoiety,the banks on average over the last 96 yrs are taking 26% pa of the wealth via inflation for no real productive imput.Is it any wonder that ordinary folk in this environment are worse off than 40 yrs ago?

Consider this,a computer does the work of many people,we now have both parteners working in a family,fuel is marginally expensive than 40 yrs ago,but ordinary folk now are poorer in terms of income and free time.Who is making all the profit?

Arjay, your concept of "lost value" is confusing you.

>>let'use some irrefutable facts.Since 1913 the US dollar has lost 96% of its value<<

The only useful measure, surely, is its value when compared with other currencies.

If a US dollar in 1900 bought (say) one Australian dollar, and now can only buy $0.04c, I would have to agree with you. That would be a genuine, measurable, certain loss of value.

But the reality is that the fluctuations in the exchange rate between the two currencies since 1900 has been between -39% and +54% (Source: "Triumph of the optimists" Elroy Dimson, Paul R. Marsh and Mike Staunton. p.98)

Inflation causes currencies to devalue internally, within a country. When two countries experience the same amount of inflation, their exchange rates - without other factors coming into play - will remain constant.

That's why you see terms such as "purchasing power parity" bandied around, to expose the real impact of exchange rates, since inflation affects wages and salaries as well as supermarket prices.

>>The inflation rate over this period has been 2500%<<

I assume you mean that "Product X now 'costs' 25 times the number of dollars compared to 1900".

You are aware, I guess, that this equates almost exactly to an inflation rate of 3% p.a?

So in your terms, if your schooner of New costs you $4 today, in a year's time it will cost you an extra twelve cents. And if you are pulling in $25 an hour today, you'll need an extra $0.75 an hour to keep pace.

Inflation is not great. Anyone who lived through the seventies and can remember inflation hitting the high teens knows this. Once inflation came under control (due to tightening belts all round, including money supply), the productivity that had been built into the system through necessity, unleashed a period of sustained economic growth that benefited everyone.

>>the banks on average over the last 96 yrs are taking 26% pa of the wealth via inflation for no real productive imput<<

Didn't understand the arithmetic on this - 26% of what wealth?.

Pericles,check your arithmetic.2500% divided by 96yrs is 26% not 3.5% that you said was the average inflation rate.You are fudging the figures again.Who is creating all this new money?

before 1966 we had pounds...these pounds were exchangable[a promises to pay]one pound of sterling silver]

thus one pound meant one pound of SILVER...last time i checked one pound of sterling silver preice in yanki dollars it was arround 300 a pound

before 1945 our shillings were pure silver...after they were a reduced grade of silver...checking numistic catalogues the price difference becomes clear

our constitution states only coinage is legal tender..v 116..[there is no mention of bonds or other paper or plastic 'instruments' being legal tender]...as the dollar coin is not silver..and in fact cupra nickle[a relitivlty[to silver and gold] ..valueless metal...we clearly have been defrauded

we got conned to turn in our valuable silver for their..[the feds]valueless nickle...in usa the same sceme was underdone with gold when gold underwent the same theft..in fact it was gold that was stolen here as well before they stole the silver[and in time the copper coin]

by the time they stole the copper coins..they contained 5 cents of copper in a one cent piece...i also recall..bying yaki because the exchange rate valued our money abouve the yanki dollar...

further noting the dollar...like the pound is a unit of weight..thus even the yanki dollar was woth its weight in silver...how much silver would be parity with the famed silver dollar...that might equate to a quater pound[of silver]..as i recall one brit sterling slilver pound equating to 4 yanki dollars

this is quite aside from arjays point..[that has seen the quantity of dollars[etc]..inflate in ammount only..via fed issueing more of them[thus by decreasing their value..when valued in what they can buy]

Arjay: << Pericles,check your arithmetic.2500% divided by 96yrs is 26% not 3.5% that you said was the average inflation rate.You are fudging the figures again >>

Arjay, have you ever heard of compound interest? Run a business, do you?

*we got conned to turn in our valuable silver for their..[the feds]valueless nickle...*

Rubbish OUG, you were not conned, the changes were made for
quite logical reasons. For when the global price of silver rose,
countries which had silver coins, suddenly found them vanishing,
as people melted them down for sale as silver bars. Have
you ever seen an economy function with no coins in
circulation? It doesent work. Everything stops.

Yet you go on about this over and over, failing to concede
why silver coins went out of circulation.

26% inflation hey Arjay? Every year? Now tell me in which year
we actually had 26% inflation.

gabby nails it..yet didnt even know it..lol<<..For when the global price of silver rose,countries which had silver coins,..suddenly found them vanishing,as people melted them down for sale>> thats the key right there..brother/sister

see mate..a great influx of fed/fiat/paper..saturates the market place..[some one..[fed/bwankers]..got greedy...and pumped TOO MUCH fed/FIAT paper...and the..paper/..''money''..sought a..safe haven..in silver...GET IT?

but the proffit keeps revealing..<<Have...you ever seen an economy function with no coins in..circulation?>>>..oh like how were SOON GOING TO GET CYBER CREDIT/debit?

<<It doesent work...Everything stops....>>..well we will soon see eh

Yet you go on about this over and over,..failing to concede silver coins went out of circulation....BECAUSE TOO MUCH PAPER WAS BEING ISSUED...

too much fiat paper..ONLY allowed to be issued via the fed money changers...[changing OUR silver/gold..into paper..they issue to any anmmount..[thus setting ists worth[rerad zimbabwe..[or germania,or finland...

and soon the yanki dollar..[bet you never read that link..advising the us embassies to convert their dollar holdings into local currency..one needs not wonder why...lol

watch as we next enter..the times...like was egsistant...when they stole our silver...because they/fed bwankers..got greedy with their issuing of fiat paper..[yet again]..

this time they will have a run on nickle and other commodities..[post...the recent..'injection'..of fiat...bringing ...lol.. hyper inflation]...while govts strive for stagflation...in the end we get dee-flation

and SOON all get converted to digetal..into virtual paper...notes only cost 7 cents each to print...but virtual cost near nothing..its real worth...lol

and the real gold they still OWN..well that..belongs to who ever has shares in the fiat paper franchise..loosly called the fed cartel

OUG, it sounds like according to you, the size of the economy should
be goverened, by the size of the silver and gold mines, which
mine the stuff. If more is not mined, the economy can't grow.
Really logical stuff here.

The problem is in how you see money. You want something to store
under the bed, something that you can admire every day

So its your mindframe that is the problem here. Start seeing
it as a convenient unit of exchange, just another commodity,
and you would not have so many sleepless nights :)

FWIW we could use turkeys rather then $. You could go to the
supermarket with 6 turkeys under your arm, to pay for your
groceries. But its just not so convenient lol.

If you are worried about you assets losing value, so store your
silver bars under your bed. I can't see the point, but each to
his own. I'd much rather have my assets in an oil well or two,
or some good farm land.

This is heading towards the surreal.

Arjay, for shame.

>>Pericles,check your arithmetic.2500% divided by 96yrs is 26% not 3.5% that you said was the average<<

CJ and Yabby have both pointed out the existence of compound interest. I'd just like to add that you can't even identify basic numbers.

I wrote:

>>this equates almost exactly to an inflation rate of 3% p.a<<

Interestingly, at 3.5% inflation instead of 3%, your 1900 dollar would now be worth $42.51, as opposed to $25.08

Learning sums is important when you're dealing with numbers, Arjay.

The gold standard is now part of mythology, oug, as is the silver standard, the carbon standard and any other "standard" you'd like to name.

For a start, there is insufficient gold on earth (even as yet unearthed) to support the US economy, even if they wanted to.

Think about it. Douglas Adams did.

"How can you have money," demanded Ford, "if none of you actually produces anything? It doesn't grow on trees you know."

"If you would allow me to continue ..."

Ford nodded dejectedly.

"Thank you. Since we decided a few weeks ago to adopt the leaf as legal tender, we have, of course, all become immensely rich."

Ford stared in disbelief at the crowd who were murmuring appreciatively at this and greedily fingering the wads of leaves with which their track suits were stuffed.

"But we have also," continued the Management Consultant, "run into a small inflation problem on account of the high level of leaf availability, which means that, I gather, the current going rate has something like three deciduous forests buying one ship's peanut."

Murmurs of alarm came from the crowd. The Management Consultant waved them down.

"So in order to obviate this problem," he continued, "and effectively revaluate the leaf, we are about to embark on a massive defoliation campaign, and ... er, burn down all the forests. I think you'll all agree that's a sensible move under the circumstances."

(Restaurant at the End of the Universe)

And xkcd understand.

http://imgs.xkcd.com/comics/alternate_currency.png

Currency is always a means to an end. Not the end itself.

IM NOT ADVOCATING RETURNING TO ANY GOLD..SILVER STANDARD..so stop distracting from the case in point...devalueing a set measure of exchange..ie fiat money

im explaining..what happend...to confirm where..the value of our money went...

you lot are talking like..a dolar then is like a dollar today..IT ISNT because gold.silver..[under pinning value]..was stolen..[THATS WHERE THE WEALTH WENT]

your house is still worth the same..in silver or gold..as it was then[or now]..but the increase of your homes..dollar price..indicates just how much VALUE..has been stolen

you can compound the delusions of compound intrest all you like...the only sdure thing is our monety will buy less tomorrow...and bankers WHO ARE COLLUDING THIS..cant even assure us our dollar banked today will buy what it can buy today..when tomorrow comes...

worse they are deliberatly creating ever more..FIAT PAPER..DEBT...for..thus those who know../buy assets..

while those who dont know..work for ever less..that is..now is pennies in the dollar...

its those do nothing specualtors creating the artificial/shortage...and those bankers giving them credit enabling it..true inflation is/has been runing at 7 percent...

any not getting 7 percent wage increase..[or intrest on savings are being stolen from and dont know it..thanks to appoligist's like you two..and our ignorant media

It is very difficult, oug, to work out exactly what you are advocating.

>>IM NOT ADVOCATING RETURNING TO ANY GOLD..SILVER STANDARD..so stop distracting from the case in point<<

Perhaps you are simply letting off the steam of frustration from the kettle of disappointment, brought to the boil by the fire of perceived injustice.

But you really should check your facts along the way.

>>before 1966 we had pounds...these pounds were exchangable[a promises to pay]one pound of sterling silver]<<

That is entirely fictitious.

There has never been a "silver standard" i.e. convertibility into silver, in Australia.

Ever.

The original pound was indeed a pound weight of 100% silver, but that was back in King Offa's time in the eighth century. It was downgraded to sterling (92.5%) silver in 1158, and then again when the pound itself was reset at 12 ounces, and debased completely in the sixteenth century when coins were produced that were only a third silver. This meant there were now 60 actual shillings to the "pound" of silver, while at the same time they switched to the gold standard via the guinea.

Due to the fluctuations of both the gold and silver prices, silver fled to the continent, and practically disappeared. (There's a lesson there somewhere, I think). But it was OK, because by the end of the seventeenth century, the Bank of England started issuing paper money, and the metals began their collective journeys into fiscal oblivion.

>>before 1945 our shillings were pure silver<<

But unless you wanted to melt them down, what was the point?

Back to the topic, though.

If gold/silver standards are not on your agenda... what exactly is?

peri.cruelear..please do not talk cccrap
try educating your self

The 1945 issue was the last to contain sterling silver. .... The usual going rate was one pound for every 17 shillings worth of pre-1946 coins smuggled in .... Each was overprinted as an 'AUSTRALIAN NOTE' with a promise to pay in gold. ...

http://www.australianstamp.com/coin-web/aust/cwealth.htm

here is an image of aussie note with a promise to pay in gold
http://cgi.ebay.com.sg/ws/eBayISAPI.dll?ViewItem&item=260264294400#ebayphotohosting

i suggest you learn about promise to pay
http://www.google.com/search?hl=en&rls=MEDA,MEDA:2008-36,MEDA:en-GB&q=promissory+note&revid=1705233981&ei=WUpfSvxm2IKRBfvgnagK&sa=X&oi=revisions_inline&resnum=0&ct=broad-revision&cd=2

or the promise to pay bearor
http://www.google.com/search?hl=en&rls=MEDA,MEDA:2008-36,MEDA:en-GB&ei=8EpfStOTBIva6gPgy4CTCQ&sa=X&oi=spell&resnum=0&ct=result&cd=1&q=promise+to+pay+bearer+one+pound+sterling+silver&spell=1

one pound was equal to 12 troy oz of 92.5 percent PURE SILVER
a shillings weight was 5.7 gr...two shiling was 11 gr
http://www.google.com/search?hl=en&rls=MEDA%2CMEDA%3A2008-36%2CMEDA%3Aen-GB&q=australia+promise+to+pay+one+popund+sterling+silver&btnG=Search&aq=f&oq=&aqi=

http://www.google.com/search?hl=en&rls=MEDA%2CMEDA%3A2008-36%2CMEDA%3Aen-GB&q=shilling+weight&btnG=Search&aq=f&oq=&aqi=
http://www.woodlands-junior.kent.sch.uk/customs/questions/moneyold.htm

my point is that theft and deception continues till today..even by such educated ignorants such as yourself

that govt should demand the fed return the issue of aussie money back to govt...
and that the bankers stop charging fees on money our loans actually create...its our promise to pay that creates the money...govt has surrendered the right to issue its own money to a banking cartel..

[who have cleverly twisted things so our coin is now basemetal..[keeping the gold and the silver,by removing the promise of redeeming paper for silver and gold coin]

lest we forget it was bankers who created the shortage[stealing and hoarding legal tender that sent the worlds govt's broke...collusion/treason must not be rewarded ...you cannot be as ignorant as you are attempting to appear

Pericles .I'm talking about the volume of money needed to create that inflation.Do the sums yourself 2500% divided by 96yrs is a average volume of money increase of 26% pa.CJ Morgan was right,we have compund interest thus with compound inflation created by the banks of even 3% pa the results are devestating on the value of our currencies.$ 1.00 now will ony buy 4 cents did 96 yrs ago.

It would be interesting to see the detail how the ABS calculates inflation in a given year,since there is an anomaly here in the depreciation of currency and the inflation rate.

Good news.Ron Paul now has 271 Congressmen supporting his bill to Audit the Federal Reserve.This is 62% of Congress.He only needs another 4% and the audit must happen.

Spot the differences oug

First you said..

>>before 1945 our shillings were pure silver<<

now...

>>The 1945 issue was the last to contain sterling silver<<

Pure silver, oug?

Given that you are numismatically inclined, I presume you know the difference between pure and sterling?

>>before 1966 we had pounds...these pounds were exchangable[a promises to pay]one pound of sterling silver]<<

and...

>>here is an image of aussie note with a promise to pay in gold<<

There is a difference between silver and gold, you may have heard.

You can't possibly believe, surely that the "pound" that they promised on the note you provided as an example indicated weight?

And as I mentioned before, you'd have to go back to the twelfth century to find anyone willing to give you 240 pure silver pennies for a pound.

Money is an instrument, not a metal any more. Live with it.

Arjay, this simply won't do.

>>I'm talking about the volume of money needed to create that inflation.Do the sums yourself 2500% divided by 96yrs is a average volume of money increase of 26% pa<<

I'm afraid that if you are unable to understand how percentages work on a per annum basis, or how a balance sheet works, or how double-entry bookkeeping works, it is highly improbable that you can come to grips with a subject as complex as banking.

>>with compound inflation created by the banks...<<

You are making the assumption that it is the banks who "create" inflation.

Here's a scenario. A real one.

You are an oil-exporting country in the 1970s.

The price of oil increases, creating a massive money inflow into your country.

You are in a situation where your supply of money has increased faster than the supply of goods and services - i.e., you have more money, chasing scarce goods - which, of course, you are able to afford.

If you can understand how this scenario has "inflation" written all over it, you will be on your way to understanding just a little bit more about the world we live in.

Pericles,let's go back to basic arithmetic.All things being equal,to halve the value of your money,you double the money supply.Correct? To diminish the value of $1.00 to 4 cents you have to increase the money supply by 25 times or 2500%, correct? Over 96 yrs{ divide 2500% by 96] this represents and annual increase in money supply of 26%.This means that for every $1.00 in a given yr the banks are creating an additional 26 cents,which depreciates the value of our currency.

Using the average yearly inflation figure of 3% does not reflect the reality since the inflation is compounded.Multiply 3% by 96 and we get 288% The $1.00 did not depreciate by 3 times,it depreciated 25 times or 2500% it's orininal value.Because of the compounding effect of inflation,there is expodential depreciation of currency
.

To achieve this compounding effect banks are increasing the money supply by 26% pa.Is there some other way that I can explain it so you can understand?

All your blustering and carrying on,will not deny that reality.Just admit that you are wrong or prove me wrong using the same logic.

You still haven't grasped it Arjay.

It is so simple, I feel you might just be pretending not to know, for some reason that amuses you.

>>Over 96 yrs{ divide 2500% by 96] this represents and annual increase in money supply of 26%<<

You are focussing on a volume average, not percentages per annum.

If you have a dollar in 1900, and $2,500 in 2009, the average increase per year is $22.93. That does not mean that in 1901 you have $23.93. Just that if you had a pile of "extra" dollars and divided them equally between the number of years, you'd have an extra $22.93 each year.

While it is a statistic, it is not a measure we use.

If you were to do what most people do, and work on a year-on-year basis, the inflation number is 3%.

>>the average yearly inflation figure of 3% does not reflect the reality since the inflation is compounded<<

Wrong, it does reflect reality. Each year differs from the previous year by 3%

>>Multiply 3% by 96 and we get 288% <<

Multiplying a percentage in this fashion is meaningless, because a percentage doesn't mean anything without another number to work with. So it's always a percentage of "something".

Your 2500% is a percentage of the position in 1900.

My 3% is the percentage change from the immediately preceding year, so multiplying it by 96 loses its relevance.

>>To achieve this compounding effect banks are increasing the money supply by 26% pa.Is there some other way that I can explain it so you can understand?<<

I doubt whether you can, since you are so clearly wrong.

To demonstrate this, take any number you like, from 1900 to today, and increase it by 26%. You will find that your new number has no significance whatsoever, in the context of inflation.

>>All your blustering and carrying on,will not deny that reality.Just admit that you are wrong or prove me wrong using the same logic.<<

Using your version of logic is what led you down this blind alley in the first place.