The secret of oz [documentary]

[hawks5999]

Before clicking... is this another inflation.us infomercial?

[1715179894]

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[hugolp]

And again the government debt that the Federal Reserve holds does not reperesent an expense for the government because the Fed returns its benefits to the same government (weekly). The government does not pay interest to the bank.

These kind of manipulations is why I say that the guy is a nutjob and dishonest. And he will hate Bitcoin because he wants the government to force a monopolly on money onto the people, because its the only way to have a inflationary currency.

Anyway, I am done for today with my humanitarian task of trying to warn people of the charlatans that are trying to fool them. Do your research and decide.

Hey Hugolp, we understand you are the hardest working moderator on this forum, keeping trolls in control and also educating people, but dont throw the towel with your humanitarian task!!   Seriously I am learning a lot in this thread.

Hey, you say that the whole process of money creation does not mean government pay debt on created money. Thanks for clarifying this, I had that exact doubt. Now consider this, as banks create the money, does this mean that PEOPLE, not governments have to pay interest for "the privilege" of having money in the economy? In other words, the whole society has to pay banks just to have money circulating, because we have to borrow money for it to exist? Is as we had to pay banks to have blood circulating through our bodies, instead of creating our own blood? Maybe that was the meaning of the movie.

Your thoughs?

Tomorrow more. I have to write an article about the end of QE2 and the posibility of QE3 due today.

[kwhcoin]

Currently our government has to spend money to pay interest on our debt because we don't just owe the Fed.

I dont understand what you mean.

In that sentence was just pointing out that our government currently has debt/interest burdens (i.e. we have non-Fed debts) which is different from the movie because the movie advocated the government create money to eliminate debt/interest burdens.

Anyway, I think I see where you are coming from with the Fed already having the ability to create money to pay off all our government debts except for the debt to the Fed, but the debt to the Fed wouldn't really matter because the Fed could refund the government any interest payments the government had to pay the Fed. This isn't the exact "no debt and no interest" solution advocated by the movie, but I now see how the net result could effectively be the same.

[andes]

Your thoughs?

Tomorrow more. I have to write an article about the end of QE2 and the posibility of QE3 due today.

Esperando tu opinion!  

[hugolp]

Hey Hugolp, we understand you are the hardest working moderator on this forum, keeping trolls in control and also educating people, but dont throw the towel with your humanitarian task!!   Seriously I am learning a lot in this thread.

Hey, you say that the whole process of money creation does not mean government pay debt on created money. Thanks for clarifying this, I had that exact doubt. Now consider this, as banks create the money, does this mean that PEOPLE, not governments have to pay interest for "the privilege" of having money in the economy? In other words, the whole society has to pay banks just to have money circulating, because we have to borrow money for it to exist? Is as we had to pay banks to have blood circulating through our bodies, instead of creating our own blood? Maybe that was the meaning of the movie.

Your thoughs?

Yes, there is something like that to the system, but there are important things to take into consideration.

First, debt is not inherenlty bad. If you work and get money it is completely legitimate that you lend that money to someone because you believe in his project. And the same way you get some money when you rent your house or your car  or whatever, you get some moeney whe you rent your money. You are refusing to use your money for a while in exchange to getting some more in the future. This way people that have a good idea but not the resources can still devlop their project and become more productive. The problem is when you are not lending your savings (that you worked to get), but when you are charging interest for something you created out of thin air. And apart from charging interest from nothing you are competing unfairly with the people that is working and saving. Also they create all types of distortions on the economy because now everybody thinks there are a lot more resources because they see more money (bubbles).

Answering to your questions, yes. Basically the present system is designed to benefit banks and politicians at our expense. Banks can lend out much more money thatn they could without a central bank, because they know that if they go too far with the reserve ratio there can not be a bank run because the central bank will cover them. So they loan out all they can and earn interest on that. And the politicians get a lot more money than they would with direct taxes only. The central bank monetizes the government debt, lowering the interest rates, and basically giving fre emoney to the politicians. Because people has a hard time asociating the rising prices with this actions because they take even years to develop politicians get awya with it, when they would not get away with rising taxes.

And obviously, we are the suckers here because we pay all this with higher prices. And specially the poor and middle clases. Because the people who is closer to the money source (bankers, politicians and their corporate budies) get to spend the money when it has not yet circulated and the prices have not yet rised. The ones at the end of the chain (basically wage earners) get screwed because prices rise when their wages have not yet actuallized. Basically the further away from the money source (the central bank) you are, the more screwed you are.

In that sentence was just pointing out that our government currently has debt/interest burdens (i.e. we have non-Fed debts) which is different from the movie because the movie advocated the government create money to eliminate debt/interest burdens.

Anyway, I think I see where you are coming from with the Fed already having the ability to create money to pay off all our government debts except for the debt to the Fed, but the debt to the Fed wouldn't really matter because the Fed could refund the government any interest payments the government had to pay the Fed. This isn't the exact "no debt and no interest" solution advocated by the movie, but I now see how the net result could effectively be the same.

Exactly.

The government still demands credit from other sources than the central bank because the limitation of printing money is rising prices. If you print too much it will get to a point when even the dumbest person will realize what is up and will revolt. In fact, there are numerous revolutions and government collapses that are preceded by rising prices due to the government trying to print its way out of whatever mess they created. In a sense, its kind of what every government is trying to do right now.

[amincd]

And obviously, we are the suckers here because we pay all this with higher prices. And specially the poor and middle clases. Because the people who is closer to the money source (bankers, politicians and their corporate budies) get to spend the money when it has not yet circulated and the prices have not yet rised. The ones at the end of the chain (basically wage earners) get screwed because prices rise when their wages have not yet actuallized. Basically the further away from the money source (the central bank) you are, the more screwed you are.

I believe the reason inflationary monetary policy hurts the poor and middle class is that the newly created money is controlled by government, and access to political power is inherently concentrated. If you have power, it's easier to manipulate 500 members of Congress to give your company a government contract than to convince 300 million consumers to buy your company's products.

The Fed also has control over newly created money, in its decisions on who to bail out, what assets to accept as collateral, how much to pay for said assets, etc, so inflationary monetary policy also favors powerful interests close to the Fed.

[BkkCoins]

Inflationary policy would be more bearable to the poor if they had inflationary wages. The rub is that people in positions of power are able to ensure their incomes are indexed to inflation when people much lower on the ladder cannot. This ever widens the gap.

Hugolp,
When you say that the government doesn't pay interest on debt I don't follow you. I was under the impression that the government continually issued debt to many holders including foreign institutions. I don't think they get away with not paying the interest on those bonds. I understood that to be the largest portion of government debt and transactions between the fed and government not as significant.

[hugolp]

Inflationary policy would be more bearable to the poor if they had inflationary wages. The rub is that people in positions of power are able to ensure their incomes are indexed to inflation when people much lower on the ladder cannot. This ever widens the gap.

Indeed. The people with better job position get higher wage increases every year, probably equivalent to the real rate of price inflation, while the rest get their wages actualized by the offical government price inflation rate.

Hugolp,
When you say that the government doesn't pay interest on debt I don't follow you. I was under the impression that the government continually issued debt to many holders including foreign institutions. I don't think they get away with not paying the interest on those bonds. I understood that to be the largest portion of government debt and transactions between the fed and government not as significant.

I never said that they dont pay interest in the bonds that they sell to the general population. The government does not pay interest (or more accurately gets the interest payment back) from the debt monetized by the central bank.

[andes]

Hugolp, thanks for clear answer. It was very well written.

I still have two unresolved issues in my mind though. Would appreciate if you could comment on them.

1) Fractional reserve banking
 
You have said before that fractional reserve banking is not the problem, the problem are central banks. I understand your point, because escencially central banks are designed to give banks a free pass to abuse the issuing of currency, because then banks dont have to fear bank runs. So I agree with you that we would be better without central banks for this reason.

But fracional reserve banking is still bugging me, and I will tell you why. The following example has fictional numbers to make math simple. Suppose all banks own 1 million dollar in reserves total, in other words their own hard earned money. With fractional reserve banking (10%), they could create and loan up to 10 million dollars (my math is wrong but it is just an example). If they loan at an interest rate of 4% montly (credit card), they are essentially making 40% monthly interest on their reserves. This looks like usury to me.  In other words, it seems like an abuse coming from organizations that monopolize the money creation.

Whats your point of view on this issue?

2) Money out of debt

As money is created via loans (via the multiplication effect of fractional reserve banking), the whole system seems unstable to me. What I mean by that, society as a whole needs debt to have most part of the monetary supply in the system. As long as society pays debt at large, money supply shrinks. The point is, as society we have no choice to live debt free. We are forced to borrow to the banks, or our economy would collapse. Seems like a perverse system to me, and not very "free".

Do you agree on this? Are we forced to live on debt to the banks as a society because of the fractional reserve banking? Would a massive payment of debt mean a collapse of most of the money supply?

Those are my unresolved issues so far.

[BubbleBoy]

Suppose all banks own 1 million dollar in reserves total, in other words their own hard earned money. With fractional reserve banking (10%), they could create and loan up to 10 million dollars (my math is wrong but it is just an example). If they loan at an interest rate of 4% montly (credit card), they are essentially making 40% monthly interest on their reserves.

The 1 million $ goes straight into the central bank's account as minimal reserve. The private bank has no money to lend out. In order to reach it's 9 mil $ allowance, the private bank must attract 9 million $ of deposits. For these money they must pay interest to the depositors. Only then can they start borrowing out money. Their actual profit is the spread between the deposit and credit interests, probably 10-15% with your figures. They need to pay staff, cover the risk of non-payment, cover the costs of the deposit insurance scheme (FDIC) etc.

A private bank cannot create more money directly, they are bound by accounting laws just like a regular business. The banking system as a whole creates deposit money, but banks still have to compete among each other to attract depositors.

[BkkCoins]

A private bank cannot create more money directly, they are bound by accounting laws just like a regular business. The banking system as a whole creates deposit money, but banks still have to compete among each other to attract depositors.

That's just plain wrong. Banks issue debt which is itself an act of creating money. I thik maybe you should research this more - start with Wikipedia.

[shady financier]

And obviously, we are the suckers here because we pay all this with higher prices. And specially the poor and middle clases. Because the people who is closer to the money source (bankers, politicians and their corporate budies) get to spend the money when it has not yet circulated and the prices have not yet rised. The ones at the end of the chain (basically wage earners) get screwed because prices rise when their wages have not yet actuallized. Basically the further away from the money source (the central bank) you are, the more screwed you are.

I believe the reason inflationary monetary policy hurts the poor and middle class is that the newly created money is controlled by government, and access to political power is inherently concentrated. If you have power, it's easier to manipulate 500 members of Congress to give your company a government contract than to convince 300 million consumers to buy your company's products.

The Fed also has control over newly created money, in its decisions on who to bail out, what assets to accept as collateral, how much to pay for said assets, etc, so inflationary monetary policy also favors powerful interests close to the Fed.

You might find the Steve Keen interview in the second half of this interesting:
http://rt.com/programs/keiser-report/episode-158-imf-downgrades-keen/

[shady financier]

A private bank cannot create more money directly, they are bound by accounting laws just like a regular business. The banking system as a whole creates deposit money, but banks still have to compete among each other to attract depositors.

That's just plain wrong. Banks issue debt which is itself an act of creating money. I thik maybe you should research this more - start with Wikipedia.

He's right, banks can issue debt in accordance with reserve requirements.

[amincd]

You might find the Steve Keen interview in the second half of this interesting:
http://rt.com/programs/keiser-report/episode-158-imf-downgrades-keen/

Thanks for the link, but the guy is a Keynesian, which I strongly disagree with.

[Litt]

The whole point of this is for the viewer to start thinking for yourself and actually follow the yellow brick road of history. You will then see the real truth. This is the moral of both the documentary and the story of Oz. The problem today is that people are being ignorant to the past and the history is repeating itself on a continuous loop at this point.

Monetary system such as fed and our current central banking has existed for over two centuries eating away at our livelihood. The history of banking extends much further than this and is a fantastic way to see world history in a new light based on true incentives. Do your own research into history and realize the truth first. Then understand that our current system is nothing more than a replacement of feudalism masked to appear to give choice to the people. When, in fact, only a very few control the economic well being of almost the entire world now.

[andes]

Suppose all banks own 1 million dollar in reserves total, in other words their own hard earned money. With fractional reserve banking (10%), they could create and loan up to 10 million dollars (my math is wrong but it is just an example). If they loan at an interest rate of 4% montly (credit card), they are essentially making 40% monthly interest on their reserves.

A private bank cannot create more money directly, they are bound by accounting laws just like a regular business. The banking system as a whole creates deposit money, but banks still have to compete among each other to attract depositors.

BubbleBoy, in my example I was talking about the banking system as a whole, not a single bank. Thats why I wrote "all banks own ... in total". Maybe my writing was not clear enough, thats why I clarify that here.

What I care about is not the inner workings of a single bank, but the net result of the whole financial system for society. From my understanding (I am not an expert), each time people get loans, the financial system as a whole creates that money via the fractional reserve banking system, which does not seem right to me. Worst, the system can only create money into existence through debt.

I ask people in this thread to adopt a whole financial system point of view, because that is what we are discussing here. And that is the focus of the documentary (no matter if it is flawed or not). Focus on the macroeconomic perspective (whole society, all banks and central bank), instead of the microeconomic perspective (single user, single bank).

[finnthecelt]

The movie is very misleading, has big errors, just like the previous one from the same guy.

Yes its not perfect but I use that documentary because its pretty much the only one which says that the power to print money should be returned to the us treasury. Most of the other documentaries basically say we should use gold and silver which for our modern digital/global economy is not suitable.

And how would you answer me if I said that gold can be divided up just like BTC can? If you had a GoldMoney account I could right now pay you $3.50. Digitally, instantly. There may well be a future like that awaiting us.

The next great currency event (upon us) will have people flocking to gold and silver moreso than to BTC. Doesn't mean BTC will go away and it may thrive as digital money will become familiar....  But people will want what they know and understand.

This will all happen in stages.

[UPENtXF]

A lot to consider in this documentary, even if some of it is debatable. It's unfortunate that most people don't even know that much about money.
It's no more misleading than a lot of us here are about Bitcoin, when they call it "fully-decentralized", "instantaneous payment", "virtually free payment", "not fiat-based", "anonymous", "impossible to stop or regulate", and so on.

I think saying that the system Bill Still advocates is "roughly", "more or less" what exists today, "except for the fractional reserve" is like saying that a submarine is roughly more or less an airplane, except that it doesn't have wings. 
No other entity is allowed to crank out  a monopolized commodity, such as money, out of nothing the way that the commercial banks can.

[Hailo]

Similar documentary WITH facts and references for every claim made. This changed my point of view of the world when I watched it a couple of years ago. Probably piqued my interest in bit coins somewhat. Guess many of you will find this interesting.

http://www.thrivemovement.com/the_movie