The Biggest Scam In The History Of Mankind - Hidden Secrets of Money

[theonewhowaskazu]

I watched all 4 episodes and it sums up things pretty nicely, but I thought two claims in the 4th episode didn't make too much sense. He claims that Fed buying bonds from banks via check (from account of balance 0) is essentially money popping into existence. Then he goes on to say that the govt's debt can only get higher because they always have to borrow more to pay off debt because money can't be created. Isn't that a bit contradictory?

Um, no.

The government =/= the Fed. So the debt can only go higher, and that debt is constantly to the Fed.

In addition, the gov't can in fact balance the budget to start having profit in order to start paying off the principle on the debt. Suppose the govt shut down all together and continued to collect same amount of taxes, the debt would be paid off in 7-8 years right?

The debt wouldn't be paid off because there isn't enough M0 in existence to do so. The only way inwhich the government could pay off its debts in the form of taxes is by passing that same amount of debt to the citizens.

You don't seem to understand how the system actually works.

[1715111808]

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[1715111808]

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[mirelo]

It's not the system that's wrong, it's the people trying to achieve personal gains with it.

Debt-based money is unsustainable because it requires an exponential growth of the money supply: when money is debt, paying interest on this debt requires creating more money, hence more debt.

The thing is, the system didn't have to be debt-based in the way it is now. That's one of the things he actually explains in the video.

He believes gold can be money without eventually producing a debt-based monetary system: his being aware of how history repeats itself should make him know better.

[mrkent]

In addition, the gov't can in fact balance the budget to start having profit in order to start paying off the principle on the debt. Suppose the govt shut down all together and continued to collect same amount of taxes, the debt would be paid off in 7-8 years right?

The debt wouldn't be paid off because there isn't enough M0 in existence to do so. The only way inwhich the government could pay off its debts in the form of taxes is by passing that same amount of debt to the citizens.

You don't seem to understand how the system actually works.

Actually after you say M0, it makes more sense. So basically if the debt was still below M0, we'd still have hope, but now, there's no turning back?

[theonewhowaskazu]

In addition, the gov't can in fact balance the budget to start having profit in order to start paying off the principle on the debt. Suppose the govt shut down all together and continued to collect same amount of taxes, the debt would be paid off in 7-8 years right?

The debt wouldn't be paid off because there isn't enough M0 in existence to do so. The only way inwhich the government could pay off its debts in the form of taxes is by passing that same amount of debt to the citizens.

You don't seem to understand how the system actually works.

Actually after you say M0, it makes more sense. So basically if the debt was still below M0, we'd still have hope, but now, there's no turning back?

Exactly. Only, since the moment we started debasing the $ only the Federal Reserve was authorized to control the money supply. Since they're in it for profit, they'll obviously never make enough money for the USG to get out of debt.

[Zarathustra]

It's not the system that's wrong, it's the people trying to achieve personal gains with it.

Debt-based money is unsustainable because it requires an exponential growth of the money supply: when money is debt, paying interest on this debt requires creating more money, hence more debt.

Money was debt-based from the beginning. When the tax debt to the state mafia was payable in barley, then barley was money. When it was payable in a specific metal, than this specific metal was money. The interest rates in ancient mesopotamia were much higher then today.

[johnyj]

Suppose you deposit $1,000.00 into your bank. Before loaned by the bank, the money belongs to you (unless you consider your act of depositing it as a donation to the bank). When the bank loans it, the money goes into the borrower's account without living yours. Then, both of you can spend it, regardless of whether at the same time or not, and whether by withdrawing it from the bank or not, which is precisely why the money supply increases (to simplify things, imagine the borrower has an account in the same bank as you and after the loan is credited in his account both of you simultaneously spend that money merely by transferring it to other two accounts in the same bank).

The moment you deposit your $1000 into your bank, they are not yours anymore, you are only left with a certificate that they belong to you.  (your account statements). What really happened is that you loaned these money to the bank, and now bank take over the ownership, leave you with an IOU statement. If the bank shut down the second day, you lose all your money, but that risk fall upon you as soon as you put your money in the bank, not when bank shutdown (comparing this with depositing your money to MTGOX  )

And then banks loaned those money to another people. When you try to spend your money, they will provide you with corresponding base money to spend

Since they always have a base money buffer with millions of dollars to deal with the daily transaction, so you might have an impression that both of you can spend the same money at the same time (In fact both of you are just spending a small part of a large base money pool that grows and shrinks with each custom withdraw/deposit). Since banks usually put a daily withdraw limit on each account, this pool will handle the daily variation very well. Normally 500 customers will make this pool very stable

But if all those 500 customers spend at the same time, things will be different. In financial crisis, people were panic selling assets and billions of money are requested to be withdrew from a certain bank, and they just don't have enough base money to deal with it

So, FRB is like insurance, as long as majority of people feel confident with their money in bank, there is no problem, but if there is a panic and all the people start to withdraw at the same time, they will find out there is only 10% of their account deposit in the bank that can be withdrew

Of course banks are pushing all-electronic banking so that all the money never left this large base money pool. I'm still studying the possible consequence of this move

[marcus_of_augustus]

Dealer:

The ones playing it smart (the banks) are open and quite transparent about it, people just don't understand it. I repeat, it's sneaky, under-the-belt and mean, but not a lie.

No, this wrong. This is like saying Bernie Madoff's scheme was sneaky, smart but not a lie.

The system is a fraud and the levels of deception that are employed to hide it from the people are disgusting. They use the full weight of their lackeys in the mainstream media to obfuscate and sometimes the weight of the paid off justice system to keep the level of fraud out of criminal courts by paying token fines (using their very same funny monies).

It is one huge fucking fraud, up and down the river, no matter which way you look at it ... you apologists (mostly economists and academics) for such a massive scam are more part of the problem than the solution, you have been there in one form or another since 1913 egging it on and apologising for it while poor people are getting ripped off and their savings eroded and while driftless shysters and Wall St. banks who do no work for millions get away scot free.

You cannot stand before your creator and claim ... it is not a lie, IT CLEARLY IS A GIANT LIE AND A FRAUD PERPETRATED AGAINST ALL WHO USE IT ... and most of them are coerced to use through threat of violent force of the State.

Take your medicine and fess up, you have been willing accomplices in ripping of huge swathes of the populace from their hard earned savings. You are part of the evil until you denounce it.

[Erdogan]

He says:

Gold is good money because it has intrinsic value: No, that is at best a reason for it to start to have a value in ancient times.

Fiat has value because the actors agree upon it: No, it has value due to reservation demand.

The system is unsustainable because of the interest: No, it is unsustainable due to  government overconsumption that is paid by sucking the guts out of the money system by printing and credit expansion.

But it is hard to get everything right, (especially when I define what is right  ), overall a nice video.

[mirelo]

The moment you deposit your $1000 into your bank, they are not yours anymore, you are only left with a certificate that they belong to you.

You must make up your mind: either the money I deposited into the bank still belongs to me or it no longer does: it cannot be both.

[mirelo]

Dealer:

The ones playing it smart (the banks) are open and quite transparent about it, people just don't understand it. I repeat, it's sneaky, under-the-belt and mean, but not a lie.

No, this wrong. This is like saying Bernie Madoff's scheme was sneaky, smart but not a lie.

The system is a fraud and the levels of deception that are employed to hide it from the people are disgusting. They use the full weight of their lackeys in the mainstream media to obfuscate and sometimes the weight of the paid off justice system to keep the level of fraud out of criminal courts by paying token fines (using their very same funny monies).

It is one huge fucking fraud, up and down the river, no matter which way you look at it ... you apologists (mostly economists and academics) for such a massive scam are more part of the problem than the solution, you have been there in one form or another since 1913 egging it on and apologising for it while poor people are getting ripped off and their savings eroded and while driftless shysters and Wall St. banks who do no work for millions get away scot free.

You cannot stand before your creator and claim ... it is not a lie, IT CLEARLY IS A GIANT LIE AND A FRAUD PERPETRATED AGAINST ALL WHO USE IT ... and most of them are coerced to use through threat of violent force of the State.

Take your medicine and fess up, you have been willing accomplices in ripping of huge swathes of the populace from their hard earned savings. You are part of the evil until you denounce it.

+1

However, I would like to point out that any fraud only takes advantage of a mistake people already make before the fraud is devised. In this case, the mistake is the confusion between monetary value and its representation inherent in any commodity-based form of money.

[johnyj]

The moment you deposit your $1000 into your bank, they are not yours anymore, you are only left with a certificate that they belong to you.

You must make up your mind: either the money I deposited into the bank still belongs to me or it no longer does: it cannot be both.

It depends on how do you define the word "ownership"

You loaned your money to the bank, legally you still have the ownership, because anytime you can request a withdraw and bank have to pay you

But as soon as you deposited your cash into the bank, you have physically lost the control (physical ownership) of those money and there is a risk of default on bank's side. If the banks default, you can go to a court and sue them, but it is not a guarantee that you can get your money back. (That's the reason there is a FDIC to further protect savers) This is the same as sending your money to exchange and that exchange were hacked and shutdown

[mirelo]

You loaned your money to the bank, legally you still have the ownership, because anytime you can request a withdraw and bank have to pay you

This is precisely why the money loaned from a bank account into another is "duplicated": "anytime" both depositors can "request a withdraw and the bank has to pay" them, simply because "legally" they still "have ownership" of their money.

Put more simply: the bank does not withdraw money from any of its accounts to loan part of its balance.

[johnyj]

You loaned your money to the bank, legally you still have the ownership, because anytime you can request a withdraw and bank have to pay you

This is precisely why the money loaned from a bank account into another is "duplicated": "anytime" both depositors can "request a withdraw and the bank has to pay" them, simply because "legally" they still "have ownership" of their money.

Put more simply: the bank does not withdraw money from any of its accounts to loan part of its balance.

Of course they don't, each account statement is kept intact. But what happened behind the scene is: Money from all the accounts are added together, there is no label on their money saying that this is Alice's money and this is Bob's money, they are all bank's money and they are all moved into a single large account, and bank constantly withdraw from this account to deal with each customer's withdraw request and loan out to other customers

A similar example is an exchange: There are many people deposit money into the exchange, but they all deposit to the same bank account. The exchange never separate those money they received, they just show corresponding balance (a number) on your account, so that you can start to trade using their platform. When you withdraw, they send corresponding money from their account to your bank account and reduce the number (account balance) that you see on your account

[samo]

Ty knight, and also another great great old school vid that will shed some light into your eyes on the fed and its roots is money masters-

http://www.youtube.com/watch?v=HfpO-WBz_mw

http://www.intellectualtakeout.org/sites/www.intellectualtakeout.org/files/value_dollar_value_chart.png

[theonewhowaskazu]

Ty knight, and also another great great old school vid that will shed some light into your eyes on the fed and its roots is money masters-

http://www.youtube.com/watch?v=HfpO-WBz_mw

Wow, its surprising how much a dollar's worth varied before the Federal Reserve was created. 

[justusranvier]

Wow, its surprising how much a dollar's worth varied before the Federal Reserve was created. 

They did add a lot of stability. The continual loss of value has been extremely stable ever since they have been in charge.

[theonewhowaskazu]

Wow, its surprising how much a dollar's worth varied before the Federal Reserve was created. 

They did add a lot of stability. The continual loss of value has been extremely stable ever since they have been in charge.

I know but what the heck. What even caused it to go down that much before the federal reserve. Was that 40% loss of value really just due to fractional reserve? Shouldn't that add additional demand as well to compensate for the additional supply, at least in the long term?

[Zarathustra]

Dealer:

The ones playing it smart (the banks) are open and quite transparent about it, people just don't understand it. I repeat, it's sneaky, under-the-belt and mean, but not a lie.

No, this wrong. This is like saying Bernie Madoff's scheme was sneaky, smart but not a lie.

The system is a fraud and the levels of deception that are employed to hide it from the people are disgusting. They use the full weight of their lackeys in the mainstream media to obfuscate and sometimes the weight of the paid off justice system to keep the level of fraud out of criminal courts by paying token fines (using their very same funny monies).

It is one huge fucking fraud, up and down the river, no matter which way you look at it ... you apologists (mostly economists and academics) for such a massive scam are more part of the problem than the solution, you have been there in one form or another since 1913 egging it on and apologising for it while poor people are getting ripped off and their savings eroded and while driftless shysters and Wall St. banks who do no work for millions get away scot free.

The worst and most fatal system apologists and therefore more part of the problem than a solution are those people who postulate that the one huge fucking fraud began one hundred years ago.
The truth is: The fraud began with systemic Organized Violence, which was installed around 10'000 years ago, as the non-patriarchal, self-sufficient communities have been collectivized, patriarchized, patronized, subjugated and destroyed. The Society is no more the humankind; the civilist (homo oeconomicus) is not a human. Central Banks are only inherent symptoms in the system: the Society.

[mirelo]

You loaned your money to the bank, legally you still have the ownership, because anytime you can request a withdraw and bank have to pay you

This is precisely why the money loaned from a bank account into another is "duplicated": "anytime" both depositors can "request a withdraw and the bank has to pay" them, simply because "legally" they still "have ownership" of their money.

Put more simply: the bank does not withdraw money from any of its accounts to loan part of its balance.

Of course they don't, each account statement is kept intact. But what happened behind the scene is: Money from all the accounts are added together, there is no label on their money saying that this is Alice's money and this is Bob's money, they are all bank's money and they are all moved into a single large account, and bank constantly withdraw from this account to deal with each customer's withdraw request and loan out to other customers

A similar example is an exchange: There are many people deposit money into the exchange, but they all deposit to the same bank account. The exchange never separate those money they received, they just show corresponding balance (a number) on your account, so that you can start to trade using their platform. When you withdraw, they send corresponding money from their account to your bank account and reduce the number (account balance) that you see on your account

If "each account statement is kept intact," then what happens "behind the scene" is irrelevant: it is only relevant that a fraction of the same bank deposit remains legally mine while also legally belonging to its borrower: we both have the same money, and we both can and usually do spend it at the same time.

[johnyj]

If "each account statement is kept intact," then what happens "behind the scene" is irrelevant: it is only relevant that a fraction of the same bank deposit remains legally mine while also legally belonging to its borrower: we both have the same money, and we both can and usually do spend it at the same time.

You both have the same money on the bank's checkbook, but you can't both spend it at the same time, since base money which is spendable never get duplicated

1. Alice deposit $100 into her account
Alice account balance: $100
Bob account balance: $0
Bank money pool: $100 (This money comes from Alice but now belongs to bank)

2. Bank loan out $90 to Bob:
Alice account balance: $100
Bob account balance: $90 (there is another record saying he owe banks $90)
Bank money pool: $90 (Bank take out $100, deposite $10 at FED due to 10% reserve requirement, and loan the rest to Bob. These $90 return to the bank money pool since Bob's account is in the same bank)

3. Both Alice and Bob withdraw $50 at the same time:
Alice account balance: $50
Bob account balance: $40
Bank money pool: -$10
A negative value means now the bank went broke

Notice that bank's money pool get smaller and smaller after each loan action, because of the reserve requirement

When number of accounts in the bank increases, bank's money pool will increase to $1000 or $1,000,000, both Alice and Bob can fully withdraw their balance without causing a bank run, but that just mean some of the other accounts lose the ability to withdraw at the same time

In fact, even banks have millions of users, they could all come to bank requesting withdraw during a crisis, and bank will have to borrow money from other banks to deal with it, that is why LIBOR rate (short term lending rate between banks) usually spike up during such time