Value of the Dollar

Lets recap our money is created by banks when someone borrows it.

The Federal government borrows enormous sums to fund its wasteful activities it then pays back these enormous sums with interest to the people who typed it into existence.

Every day the banks become steadily richer, the value of the dollar steadily declines and our buying power is reduced and our debt increased.

People are content to complain about prices when actually the real cause is monetary inflation reducing the value of our dollar. When the real reason is pointed out and who the people are that are the real beneficiaries of this system i.e. the banks and politicians. No one cares or desires to discuss it.

Its like complaining about your fever and runny nose and being told it is caused by the AIDS virus you have and you saying 'I don't want to talk about or learn about AIDS, and by the way did I mention my vomiting and diarrhea'.
 
Nate,

You're doing a great job of explaining this. It's much easier for people to say that prices go up because anyone who is selling anything is greedy. It is much more difficult to wrap ones mind around the idea that their money is continuously loosing value due to simple fact that a central bank can keep authoritizing the printing of more.
 
It is much more difficult to wrap ones mind around the idea that their money is continuously loosing value due to simple fact that a central bank can keep authoritizing the printing of more.
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I know exactly what you mean, ever since I started this thread I've been learning more and more about the subject. I don't pretend to know all the answers or have an easy solution, but I think an important first step is awareness. Thats something else we need to consider, how is it that we never hear about or have learned about the private nature of the Fed and the way they create money?
How could something this important and crucial to our economic health not be discussed in schools and on radio and television programs?

You see the salient point in it all to me is the interest that these private banks collect on the money they type into existence.

It is so simple its mind boggling, the money the government borrows or individuals for that matter does not exist, until they borrow it and once its paid back it no longer exists.

Money=Debt(+ interest)

At the Fed there is no wizard behind the curtain and the Emperor has no clothes. There is only a banker with a pen or nowadays more likely a keyboard typing money into existence and then reaping the interest.

"Banking was conceived in iniquity and was born in sin. The bankers own the earth. Take it away from them but leave them in power to create deposits, and with the flick of the pen they create enough deposits to buy it back again. However, take it away from them, and all the great fortunes like mine will disappear, and they ought to disappear, for this would be a happier and better world to live in. But, if you wish to remain the slaves of bankers and pay the cost of your own slavery, let them continue to create deposits."-Sir Josiah Stamp, President of the Bank of England in the 1920s, and the second richest man in Britain at the time
 
Look at how money is supposedly divided by the colour of the Treasury stamp on the right side of the bill:

Blue means the bill is backed by silver.
Red means the bill is backed by gold.
Green means the bill is backed by the countries imagination.
 
This thread has turned worse than my 520 econ of banking class. Terrible.
Look at the trade deficits. China is losing ground with us now. We are gaining ground on Europe. If you think the devaluation is an accident or is going to be reversed you are a fool. It is on purpose to bring US companies back into competition.
 
If you think the devaluation is an accident or is going to be reversed you are a fool. It is on purpose
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I agree it will not be reversed and it is on purpose. Of course I realize you are speaking of some current supposed bit of world market manipulation by the geniuses at the Fed, but I'm talking about the big overall historical picture. The one in which the periodic withdrawal of currency through interest payments to the bankers will inexorably transfer all wealth in the nation to the receivers of interest.


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Since the Fed was created in 1913 rising debt and a falling dollar.
 
for more reading...

Nate, or anyone else, if you really want to read more about this, get the book "The Creature From Jekyle Island" by G Edward Griffen. Very in depth about the Federal Reserve and central banking. It's kinda long, almost 600 pages, but one of the most interesting books you'll ever read. He included extensive foot notes, so anyone who thinks it's just a bunch tinfoil conspiracy theory stuff can verify his sources.
 
The Creature From Jekyle Island
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Yes that is very a very informative book I lifted the following from Chapter 10.

Money would vanish without debt.

It is difficult for Americans to come to grips with the fact that their total money-supply is backed by nothing but debt, and it is even more mind boggling to visualize that, if everyone paid back all that was borrowed, there would be no money left in existence.

That's right, there would not be one penny in circulation -- all coins and all paper currency would be returned to bank vaults -- and there would be not one dollar in any one's checking account. In short, all money would disappear.

Marriner Eccles was the Governor of the Federal Reserve System in 1941. On September 30 of that year, Eccles was asked to give testimony before the House Committee on Banking and Currency. The purpose of the hearing was to obtain information regarding the role of the Federal Reserve in creating conditions that led to the depression of the 1930s.

Congressman Wright Patman, who was Chairman of that committee, asked how the Fed got the money to purchase two billion dollars worth of government bonds in 1933.

This is the exchange that followed.

Eccles: We created it.
Patman: Out of what?
Eccles: Out of the right to issue credit money.
Patman: And there is nothing behind it, is there, except our government's credit?
Eccles: That is what our money system is. If there were no debts in our money system, there wouldn't be any money.

It must be realized that, while money may represent an asset to selected individuals, when it is considered as an aggregate of the total money supply, it is not an asset at all. A man who borrows $1,000 may think that he has increased his financial position by that amount but he has not. His $1,000 cash asset is offset by his $1,000 loan liability, and his net position is zero. Bank accounts are exactly the same on a larger scale. Add up all the bank accounts in the nation, and it would be easy to assume that all that money represents a gigantic pool of assets which support the economy. Yet, every bit of this money is owed by someone. Some will owe nothing. Others will owe many times what they possess. All added together, the national balance is zero. What we think is money is but a grand illusion. The reality is debt.
 
"if everyone paid back all that was borrowed, there would be no money left in existence."

You mean if the folks who owe me money paid me the few thousand they owe then the money would disappear? I don't get it.

What about the gold and silver I'm hoarding? Would all of that disappear too? There really is magic?

"The reality is debt."

I owe almost a hundred bucks on my Visa card - that's my total debt - because I just ordered some fat .50 ammo cans. Other than that I'm debt free.

I'm trying to figure out why anyone would think reality is debt. That's just sad. Reality is being debt free and owning tangible assets.

I don't do econ books. One class was enough to show me they don't know much about reality.

Yes, I know too many folks owe way too much. Okay, I only know it because I read it in the paper. The folks I know are solvent.

John
 
Ummm... No.

Oh, and incidentally the reason Gold makes a good standard isn't it's appearance or industrial applications, but it's scarcity. Supply and demand, ya know?
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Lots of stuff is rare and worthless. If nobody wants it, it's not worth anything, regardless of how much of it there is.

The point I was making is a demand-side point. The vast majority of the demand for gold is based on what the holder can sell it to someone else for, because it's gold, and everyone thinks it's valuable. This amount is far in excess of what the actual uses for the stuff could possibly support. In other words, it's purely psychological.

Nobody has yet explained how this is any different between the value of a "fiat" dollar and the price of high-quality paper.

Gold isn't magic pixie dust. It's worth what it's worth because the buyer and seller agree that it is. It's all a creation of human minds. So why is one creation of human minds intrinsically better than another creation of human minds? Just because it's older? How does that work?

--Shannon
 
umm...ya.

throughout history everybody has kept the value of gold constant. If you truly believe that it's merely two people who determine the value of a form of currency, explain to me why the confederate dollar is worthless and the dollar is now worth $0.04.
 
I'm trying to figure out why anyone would think reality is debt. That's just sad. Reality is being debt free and owning tangible assets.
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Even if we borrow little ourselves from the bankers, the local, state, and federal governments borrow billions in our name, squander it, then confiscate our earnings from us and pay it to the bankers with interest.

The combined total of principal and interest that is currently owed to the bankers is more than the assessed value of all the assets in the United States.
 
Our economy has been held hostage by speculators in the stock market too long. Oil has not helped any but our problems go back to commodity and over printing of money before our government made us beholden to arab influence.
 
When you have to dig gold, or copper or whatever from the ground and stamp it into money, you have limits. We all know that. So now we have this great system that can make money whenever needed. OK sounds good to me, there has to be credit issued to keep the economy going.

But...Whoever gets to issue that money, basically gets to create value from nothing. I'm not sure how you can spin that any other way. Dollars exist today that didn't exist yesterday. What gets written in the account ledger?

Doesn't have to be an evil cabal, but I smell a very lucrative arrangement there.

Common sense tells me, if they had such an arrangement, A, it would be very profitable, and B, theres nothing to gain by handing the public a rundown of how it works.

So here's my questions.........

When the Fed issues money, is that credit money, or do they do it out of the kindness of their little ol' heart?

Credit means debt, to be collected with interest. So, who owes whom, and how much, when a dollar is printed?

Somebody please clear up my primitive country boy understanding of this.
 
Credit means debt, to be collected with interest. So, who owes whom, and how much, when a dollar is printed?

Somebody please clear up my primitive country boy understanding of this.
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The cost of printing is small perhaps
20 or 30 dollars per thousand bills, but printed bills and coins only account for about 5% of the total money supply.

All money in existence is based on debt.

The place where the private banks of the Fed get the initial debt that make up the 'reserves' is the monetized(converted into money) debt of the Federal Government. The Government prints Treasury bills and the private banks of the Fed buy them by typing the money into existence in the Governments account. It used to be monetized gold, but now due to the continuous inflation our system requires, it is 100% monetized debt. The Fed loans money to other banks that is backed by Government debt to them or other debt to them. Holding the debt paper bond makes the money they spent buying it have value, just as the loans other banks make create the value behind them. As a result, the total money supply grows by no other means than by loaning it out, at interest.

The people who own the banks are the ones who collect the interest.

So in short everyone owes the banks interest. Whether you personally owe any money or not you pay by taxes and the reduction of your savings caused by monetary inflation.

The way the Fed converts debt into money may seem complicated at first, but it is simple if one remembers that the process is not intended to be logical but to confuse and deceive.
 
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We use to hear about every 10-12 months that "congress voted to raise the national debt."

When was the last time that was announced?? Something must have been 'fixed'.
 
We use to hear about every 10-12 months that "congress voted to raise the national debt."

When was the last time that was announced?? Something must have been 'fixed'.
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They don't want to pay off the national debt , they can't pay off the national debt and even if they could they will not. Since our money supply, at present at least, is tied to the national debt, to pay off that debt would cause money to disappear. Even to seriously reduce it would cripple the economy. Therefore, as long as the Federal Reserve exists, America will be, must be, in debt.
 
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The people who own the banks are the ones who collect the interest.
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Ownership of the three largest US banks:
Citigroup
% of Shares Held by Institutional & Mutual Fund Owners: 65%
Largest shareholder: Barclays Global Investors UK Holdings Ltd, 4.23%
JPMorgan-Chase
% of Shares Held by Institutional & Mutual Fund Owners: 71%
Largest shareholder: Barclays Global Investors UK Holdings Ltd, 4.53%
Bank of America
% of Shares Held by Institutional & Mutual Fund Owners: 62%
Largest shareholder: Barclays Global Investors UK Holdings Ltd, 4.09%

Oh my gosh, it must be a conspiracy; that Barclays Global Investors company is the largest shareholder in all three of the largest banks in the US.

Well, not quite...

Barclays Global Investors is an investment management subsidiary of U.K.–based Barclays Bank. It is the largest corporate money manager in the world. It invented the first passive index investing strategy for major institutional investors.

Oh shucks, that Barclays company just buys stocks and puts them in stock index mutual funds - you know, like the S&P 500 Index Mutual Fund.

So the short answer to who owns the banks is (drumroll, please) - us.
 
I'm not an economist nor do I play one on TV but I read an essay recently that compared a silver dollar to gasoline.

When the silver dollar was worth $1.00, gasoline was worth about $.20 (+/-) so you could buy about five gallons of gas for a buck. Today, that same slver dollar is worth about $20, depending on which mint made it, and gasoline is worth $4.15 (+/-) so you can buy about 5 gallons of it for the price of that silver dollar.

Evidently, silver and gasoline are holding their relative value pretty well. The currency we use to evaluate each of those is in serious trouble though.
 
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