Quote from morganist:
That increase in money supply is from an increase in the velocity of money. No new money has been created it has just moved around faster. You say that money is created when banks 'monetize'. That money, which was invested is lent out. In short the money lent out is only the money saved. The reason the money supply increases is because the borrowers who receive the lent money spend the money faster because they have to pay for it and only borrow to spend. The lender who would otherwise not have spent the money as they have a surplus of money invested it to receive return.
In short what happened was the amount of money that was invested then lent out increased and the velocity of the money increased.
Then other way the money supply increases is through a reserve reduction. Meaning less money is held to cover withdrawals.
There is no new money creation. There is just an increase in velocity or a reduction in reserves.
no, incorrect when a loan is made total banking system deposits go up. money is not taken from any were or moved. The fed is quite cleal on this if you read there documents i posted
i highly doubt the treasury and fed are misinformed.Can you show me something from the fed that says that m0-m3 money supply states is some representation of money velocity.
this might help you.
How did we get over 57 trillion dollars in debt when all we have done for the last 250 years is create wealth by combining our ideas and our labor with the raw resources of the earth?
In search for the answer to that question, letters were written to the U.S. treasury and others. The answer received from Russell Munk, assistant general council for the U. S. treasury, was: âthe actual creation of money (ALWAYS) involves the extension of credit from private commercial banks.â This means interest bearing loans. Mr. Munk then went on to say âYou may want to know whether the bank is the one getting the benefit of the new money, since the bank owns the new money while the customer has merely borrowed the money. The bank does indeed get the benefit of the new moneyâ.
My next question was, If all money is created as interest-bear loans, how is the money created to pay interest on the loans? The answer received from Mr. Munk was, âthe money to pay the interest on loans comes from the same source as all other money.â In other words, it also has to be borrowed from a commercial bank. John M. Yetter, writing for the U. S. treasury stated: âThe money that one borrower uses to pay interest on a loan has been created somewhere else in the economy by another loanâ.
John B Henderson, Senior Specialist in Price Economics, Congressional Research Service, The Library of Congress stated: âMoney is created when loans are issued and debts incurred, money is extinguished when loans are repaidâ.
Quote: Robert H. Hemphill, credit manager of the Federal Reserve in Atlanta:
âIf all the bank loans were paid, no one would have a bank deposit and there would not be a dollar of coin or currency in circulationâ.
My next question was just what kind of credit do banks extend to us? I found the answer to that question in the Third Edition of the Federal Reserve System Purposes and functions page 6 âAll bank deposits are a form of credit. Basically, they represent amounts owed by banks to depositors. They come into existence by an exchange of bank promises to pay customers for the various assets which banks acquireâcurrency, promissory notes of business, consumer and other customers, mortgages on real estate, and Government and other securities.â
Our currency is a liability of the issuing Federal Reserve Bank and an obligation of the US Government Source personal letter form M.M. Schneider Acting Executive Assistant Bureau of Engraving and printing. âWhen individuals or businesses want currency or coins to spend, they write a check, exchanging one form of money (checkbook money) for another (cash) both are a liability of a bank.â Department of the Treasury Office of the Public Correspondence Fact Sheet OPC-5
The Bureau of Engraving and Printing produces the nationâs paper currency and sells it to the Federal Reserve System for 4.2 cents per note. âThe Bureau of Engraving and Printing is not authorized to print or issue United States paper currency for direct delivery to the public. Currency notes are placed into circulation by your local financial organization and can only be obtained from that sourceâ Linda W. Coleman Dept. of the Treasury
When, someone exchanges the checkbook money for the currency, the liability of a commercial bank is in effect shifted to a Federal Reserve Bank, Federal Reserve Notes move into circulation and checkbook money is removed from circulation. The net effect is the banking system creates and loans a promise to pay to the government and to the people and receives unto themselves as a profit the real physical wealth produced by the people.
The government then uses its power to tax the people to guarantee the banks promise to pay. The government receives nothing except what it first takes from the people. So the governmentâs guarantee of the currency is based on a mortgage on all the homes ands other property of the people. This fact is well articulated in the Congressional Record March 9, 1933, H. R. 1491, pg. 83 speaking about the Federal Reserve Act, âUnder the new law, the money is issued to the banks in return for government obligation, bills of exchange, drafts, notes, trade acceptances, and bankersâ acceptances. The money will be worth 100 cents on the dollar because it is backed by the credit of the nation. It will represent a mortgage on all homes and other property of all the people in the nationâ This is what mean by the statement the money is backed by the faith and credit of the U.S. government.
We must borrow the bankâs promise to pay and pay interest to have a medium-of-exchange. The banks owe, the government owes, and the people owe, nothing was loaned. Yet the banks and the government can go though the courts and force the people to give up all the real physical property to pay the loans. Up to this point no one as demanded that the banks pay. The debt is one of deception, just a trick played on the minds of the people. The long term effect is the people who actually produce the wealth lose their right to gain the full benefit of their production. The men running the banking system and the corporation that grow up around it gain control over everything.
http://www.wealthmoney.org/articles/our-flawed-monetary-system-2/
