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?