.. it infuriated me that banks were creating money out of thin air
and charging interest on it. When the government pays a soldier...or keeps grandma from starving with Social Security checks...or buys a car, that money increases the amount of money in circulation in the economy. Money which you and I receive in our private sector paychecks.
We will always have the money....we create it out of thin air. Again, the only worry we have is whether it will cause inflation and at a time when our biggest risk is deflation due to everyone trying to cut back their spending at the same time, the answer to whether it would cause inflation is NO!
So, the basic claim that the private banks create money is true: as long as we overlook this distinction between broad and base money.
Interesting news announced yesterday, Christmas Eve: Switzerland is to have a referendum on stripping the private banks of their power to create money. All money would be created only by the Central Bank.
Another way that we distinguish is between money and credit: it’s the banking system that creates credit, the central bank that creates money. So it’s also entirely possible to look at this the other way around: the banking system creates credit, not money. The problem we have today is that taxes are imbalanced and spending goes to too many of the wrong people, resulting in the worst income inequality since the Great Depression.
Anyone who has played the board game Monopoly knows that someone will always end up winning due to the roll of the dice. Life is not that much different. The simple truth is: Concentrated Wealth Destroys Democracy."
A lot of people are complaining about the National Debt, about government spending too much money. The problem isn't that they're spending too much money, it's that they're BORROWING IT !"
To give the economic background here. Generally when we talk about money we distinguish between base money, also known as M0, and broad money, of which M4 is an exemplar. Base money is the cash and coin, that sort of thing, created by the central bank. Broad money is that plus all the credit, bank accounts, loans and so on floating around the economy. That latter is of course very much larger than the former and is very largely (90-95%) created by the banking system itself, not by the central bank.
Switzerland will hold a referendum
Switzerland will hold a referendum to decide whether to ban commercial banks from creating money.
The Swiss federal government confirmed on Thursday that it would hold the plebiscite, after more than 110,000 people signed a petition calling for the central bank to be given sole power to create money in the financial system.
The campaign – led by the Swiss Sovereign Money movement and known as the Vollgeld initiative – is designed to limit financial speculation by requiring private banks to hold 100pc reserves against their deposits.
“Banks won’t be able to create money for themselves any more, they’ll only be able to lend money that they have from savers or other banks,” said the campaign group.
It is true that the FED is privately owned ...
but the big catch that I somehow missed is that the FED returns 97% of the interest it makes by the government supposedly "borrowing" from the FED. I do have big problems with the FED but the interest on the national "debt" is not one of them. One huge problem I have with them is how they are able to loan trillions to their banking buddies at near zero percent interest rates. We need sovereign Money now!!