Fractional Reserve and Money as Debt

[Warpnow]

Recently saw an animated documentary I thought was interesting, and informative.

http://video.google.com/videoplay?docid=-2550156453790090544#docid=5352106773770802849

Basically, it discusses how banks are able to reloan the same deposit multiple times, as such:

Person A deposits $100 into his account.
They loan is to person B, who deposits the $100 into his account.
They loan $90 of that to person C, who deposits it into his acccount.

And so on and so forth, allowing for the bank to loan out massive amounts of money from relatively small deposits.

Found it interesting. Thoughts?

[thatguruguy]

There are entire college courses taught on money and banking. It's a bit beyond one on-line essay or video. That being said, people who think that money needs to be supported by something hard (e.g., gold) have no actual understanding of how money works or what it is.

I can't see how this thread can go anywhere without devolving into a political discussion.

[Warpnow]

There are entire college courses taught on money and banking. It's a bit beyond one on-line essay or video. That being said, people who think that money needs to be supported by something hard (e.g., gold) have no actual understanding of how money works or what it is.

I can't see how this thread can go anywhere without devolving into a political discussion.

I know there are. I've taken them. Money & Banking, International Finance, Monetary Economics, ect.

Still, the video does a very good job of explaining how the system works in an interesting way. The solutions they offer in it are terrible, but it does set the issue up well, and the very existance of the idea of money creation will likely be foreign to even some rather educated people.

[PuddingKnife]

Warp,

Check out mises.org, I think you'll like it.

[blueshiftoverwatch]

people who think that money needs to be supported by something hard (e.g., gold) have no actual understanding of how money works or what it is.
Money is a commodity that evolves naturally out of barter.

[Warpnow]

Money is a commodity that evolves naturally out of barter.

Technically, money is any accepted means of exchange. It could be natural or unnatural, at least in theory. Money is really just a barter system with a centralized barter item. In some societies, it has been gold, pelts, ect, anything accepted a means of currency is "money".

[markbuntu]

Technically we are led to believe that money is a medium of exchange and that is true. What is not explained is how money is also a commodity in and of itself and that the control of money is a means to control all other economic activity.

That is a good video for explaining the basics of how money is created and controlled. It is very subversive, people are not supposed to understand this.

[rifak]

what i think is interesting, in the realm of money, is that it abstracts the real value of the item in which you are purchasing or selling. we no longer REALLY think about the labor, natural resources, and other things of that sort that go into making a dvd, or a house, or whatever.

also, it relinquishes our ability to evaluate what we actually want in life...why should i give up this book to get a movie if i can just accumulate more money and have both? i think by invoking a system of money trading, it allows for an accumulation "things" which then evolve into a surplus of "things"...and im saying this because i think this is where a lot of our problems in todays community reside. we no longer value the actual item and everything it took to produce that item, we just value the abstraction of said item.

[JDShu]

First off the its generally a good video and very educational.

However its analysis on whether "money as debt" is a problem is ideologically biased and not very in depth. I would urge people to study more than just that video.

[markbuntu]

There is some long and intersting debates about this subject here:

http://forums.philosophyforums.com/

[handy]

The fractional reserve system is a mind flogger!

When a person goes to the bank to get a loan, they have to meet certain criteria before being given that lone.

Having been given the loan, they are then given the benefit of having the exact amount of numbers typed via computer into their account. After which they are fortunate enough to have exactly that amount of debt, with whatever accruing interest rate for the life of that debt; 90% of which was created out of thin air.

Why can't I do that?

Why would I want to do that?

To you.

The perpetual accrual of interest on the money which has been, & is being created by those who have somehow manifested the ability to produce 90% of the worlds debt out of thin air, is the reason why inflation exists.

[markbuntu]

You can do it yourself, just become a bank. It is surprisingly easy to become a bank in many places.

Also, you may not even need any money to do it. Many banks are capitalized out of thin air. In a sleight of hand of simultaneous transactions that defy time the newly incorporated bank loans its investors the money to capitalize the bank with and holds the investors initial equity as security for the loans. Then the investors issue new stock to themselves so they can still own the bank and never have to repay the loan. The bank keeps the initial equity and adds it to their assets to balance the loans which it then writes off to remove them from its books. All this happens pretty much simultaneously and in secret so that when the bank opens it gives every appearance of being highly capitalized by a bunch of investors who have put up a lot of their own money.

Some places have caught on and require investors to capitalize new banks with at least some money from somewhere else but that does not mean you have to put up any money yourself, you can get the other investors to do that.

[handy]

You can do it yourself, just become a bank. It is surprisingly easy to become a bank in many places.

BS, you are absolutely full of the stuff that comes out of a bovines behind.

[Edit:] On a closely related side note:

My small (<5000 population) town environment, has had a coal mine, less than 10k's south of town (& perpetually getting closer).

We have been fighting the State government, in a variety of ways, some of them very tricky, in that the government wouldn't easily notice that we are fighting them. :)

Anyway, after years of this going on, we recently discovered that the State government has a booklet, which is laid out something like a magazine would be if its intention was to attract tourists.

This booklet, has all of the various mineral deposits in NSW laid out in a colour coded fashion on a map of NSW.

The booklet is just like a tourist pamphlet that is trying to attract tourists, except that in these circumstances it is trying to attract any company, from anywhere in the world, that happens to want whatever the mineral(s) are.



Reread what you said?

The "many places" fine print can't ever get you out of that one.

How dare you insult our intelligence with such a post.

I have no positive regard at all, for the words that you wrote following your less than banal statement quoted above. As they too were meaningless.

By the way, I'm not challenging you personally, or trying to instigate an ego battle of any kind. I am just thoroughly disappointed with your post.

You can think so much better than that.

[Tibuda]

The perpetual accrual of interest on the money which has been, & is being created by those who have somehow manifested the ability to produce 90% of the worlds debt out of thin air, is the reason why inflation exists.

Saying this is the only reason why inflation exists is as dumb as "become a bank"...

There are many reasons for inflation, the main ones being: excessive demand of goods over production capacity (demand inflation), rising production costs (cost inflation) and lags between different prices adjustments (inertial inflation).

[user1397]

Whats ridiculous is that I posted that video not too long ago and the thread was immediately closed... http://ubuntuforums.org/showthread.php?t=1348326

don't get how this one's any different, except that my title was money = debt and not money as debt...:popcorn:

i guess the equal sign is evil?

[PuddingKnife]

EDIT: just google "competing currencies" -- that would be a smart move to help put the economy on the right track.

[Maheriano]

Of course, where do you think inflation comes from? Money doesn't just lose value as time goes on, that's senseless. There has to be a reason for the decline in value of your money and I'll illustrate that for you:

Let's imagine one man owns the entire world's money supply of $10,000. He puts it into the bank. That bank is only required by law to have 10% of its holdings on hand at any given time which enables them to loan out 90% of it. Therefore Person B walks into the bank and gets a $9000 loan and keeping his $9000 in the same bank.

How much physical money exists in my hypothetical world? $10,000.
How much money does the bank have in all their accounts? $19,000.

Therefore they're increasing the amount of virtual money in the world, effectively decreasing the value of the physical money. By doing this banks can directly control the value of your currency.

Watch the Zeitgeist addendum, it'll outline all of this in much greater detail and it'll also show how this creation of physical money has backfired on banks in the past. There was a guy many many years ago that got a mortgage from the bank and couldn't pay the loan. The bank threatened to take his house since they had a binding contract that he would receive money in compensation for the bank buying him a house and had to pay that money back. If he didn't, the bank takes back their half of the deal which is the house. Sounds fair right? His lawyer argued that the guy put up something physical on the contract, his house. The bank didn't put up anything, they simply told him he had however many imaginary dollars for a mortgage but didn't provide him with any physical money. Since they failed to provide on their half of the contract, he won the case, kept his house and the bank was left with their thumbs up their *****. This is the same lawyer that got one of his clients off by saying his client was temporarily insane from the sugar high of eating too many Twinkies (as seen in the movie Trial & Error).

So this is why I will not use my debit card anywhere, I take enough money out of the bank for 2 weeks and carry it with me, paying cash for everything I bought. I paid my rent in cash, paid $2000 for surgery in cash once, everything is cash. By using plastic (debit/credit), you're contributing to the amount of virtual money in existence and effectively decreasing the value of the physical money you do have.

[Ro86]

Maheriano: you make some valid points. However, there are also positive aspects of virtual money.
Virtual money = capital !
Let's say you want to start a new company. You'll need some money right. Let's say you own a house. Now you can loan (virtual) money from a bank because you own something of value. This means you then have a house as well as the loan, the loan would be virtual money, but based on the value of the house. This enables you to use your house to create money to make investments. This makes for an efficient system to create economic growth. Many developing countries that are doing poorly do not have an efficient financial system. Those countries that did create an efficient financial system are doing extremely well (look at China for example).

However the weakness of this system is that there's much more debt than savings. If only a small percentage of people don't pay off their loans the system is in danger of collapse. The real solution to the economic problems therefore would be to encourage savings and discourage taking out loans. This could be done by raising interest rates (this would mean instant recession in the short term though).

But if you really want to understand how the economy works you have to keep in mind that's it all about production. The more you can produce with the same amount of labor the more affluent you'll be. All those products that are made in China and are exported to western countries could be consumed by the Chinese themselves. If they have the production they have the wealth and consequently they have political power.

[Xbehave]

Just because you whipper snappers are too young to remember a gold rush doesn't mean they didn't happen.

[Tibuda]

Of course, where do you think inflation comes from? Money doesn't just lose value as time goes on, that's senseless. There has to be a reason for the decline in value of your money and I'll illustrate that for you:

Let's imagine one man owns the entire world's money supply of $10,000. He puts it into the bank. That bank is only required by law to have 10% of its holdings on hand at any given time which enables them to loan out 90% of it. Therefore Person B walks into the bank and gets a $9000 loan and keeping his $9000 in the same bank.

How much physical money exists in my hypothetical world? $10,000.
How much money does the bank have in all their accounts? $19,000.

Therefore they're increasing the amount of virtual money in the world, effectively decreasing the value of the physical money. By doing this banks can directly control the value of your currency.

Watch the Zeitgeist addendum, it'll outline all of this in much greater detail and it'll also show how this creation of physical money has backfired on banks in the past. There was a guy many many years ago that got a mortgage from the bank and couldn't pay the loan. The bank threatened to take his house since they had a binding contract that he would receive money in compensation for the bank buying him a house and had to pay that money back. If he didn't, the bank takes back their half of the deal which is the house. Sounds fair right? His lawyer argued that the guy put up something physical on the contract, his house. The bank didn't put up anything, they simply told him he had however many imaginary dollars for a mortgage but didn't provide him with any physical money. Since they failed to provide on their half of the contract, he won the case, kept his house and the bank was left with their thumbs up their *****. This is the same lawyer that got one of his clients off by saying his client was temporarily insane from the sugar high of eating too many Twinkies (as seen in the movie Trial & Error).

So this is why I will not use my debit card anywhere, I take enough money out of the bank for 2 weeks and carry it with me, paying cash for everything I bought. I paid my rent in cash, paid $2000 for surgery in cash once, everything is cash. By using plastic (debit/credit), you're contributing to the amount of virtual money in existence and effectively decreasing the value of the physical money you do have.

so do you want banks to not lend money at all, and to get rid of the financial intermediation? prepare yourself for a recession.

[handy]

Saying this is the only reason why inflation exists is as dumb as "become a bank"...

There are many reasons for inflation, the main ones being: excessive demand of goods over production capacity (demand inflation), rising production costs (cost inflation) and lags between different prices adjustments (inertial inflation).

I totally disagree with you too. Inflation still comes down to interest on funds in the end.:)

[handy]

...
How much physical money exists in my hypothetical world? $10,000.
How much money does the bank have in all their accounts? $19,000.

Plus the ever inflationary effect of interest.

[user1397]

The sooner people understand this topic, the sooner they'll protest their governments and try to reform the banking system, and if all goes well, abolish the central banks.

I mean, just as a possible solution, why couldn't governments run banks as a not-for-profit service, just to do what it is intended to do, store your money safely in a vault, not make profit off of the storage of your money?

Just something to think about...oh and if you are in some management position at a bank, go to hell :guitar:

[thatguruguy]

I totally disagree with you too. Inflation still comes down to interest on funds in the end.:)

Please research this and get back to us. We know what your opinion is, but I'm pretty sure your opinion is dead wrong. The fact that you state it over and over again doesn't magically make it true.

[thatguruguy]

The sooner people understand this topic, the sooner they'll protest their governments and try to reform the banking system, and if all goes well, abolish the central banks.


I'm no banker, but I understand how money is created. And I do not want the central banks to be abolished.

I'm not a particular fan of anarchy. If you think the current economic slow down is bad, I can promise you that the fallout from abolishing the central banks would be worse.


I mean, just as a possible solution, why couldn't governments run banks as a not-for-profit service, just to do what it is intended to do, store your money safely in a vault, not make profit off of the storage of your money?

Just something to think about...oh and if you are in some management position at a bank, go to hell :guitar:
If you think that that's the purpose of banks, you are significantly uninformed.

[user1397]

Please research this and get back to us. We know what your opinion is, but I'm pretty sure your opinion is dead wrong. The fact that you state it over and over again doesn't magically make it true.have you watched the video the OP posted?

[user1397]

I'm no banker, but I understand how money is created. And I do not want the central banks to be abolished.

I'm not a particular fan of anarchy. If you think the current economic slow down is bad, I can promise you that the fallout from abolishing the central banks would be worse.I never said anything about anarchy, and just look at how the US was before the central banks, it worked just fine and did not suffer regular cyclical recessions.

Oh how the founding fathers, Andrew Jackson, Abe Lincoln, and a bunch of other luminaries would be ashamed of the US atm, all the work they put in to fight a central banking system...



If you think that that's the purpose of banks, you are significantly uninformed.tell me what the purpose is then?

what I said, was their original purpose, that is plain fact.

[thatguruguy]

No, I graduated college with a degree in Economics. I took money and banking in college. I then went on to a "Law & Economics" law school. I've also taught public finance.

I understand what was in the video. Banks are used to create money. That's what they're for. They are controlled, somewhat, by the Federal Reserve (at least in the U.S.).

"Money and banking" is a fairly complicated subject. Saying something like "We shoudl abollish teh centrl banks@!!!!" is not only simplistic, it is completely wrong.

[thatguruguy]

I never said anything about anarchy, and just look at how the US was before the central banks, it worked just fine and did not suffer regular cyclical recessions.

That is absolutely and profoundly incorrect. PLEASE DO SOME RESEARCH BEFORE EXPRESSING YOUR OPINIONS AS FACT.

[user1397]

umm you still havent really answered my questions, and IM NOT SHOUTING AT YOU

[thatguruguy]

I did answer your question of what banks are for. They exist to create money. They do so through issuing credit. That's why they exist.

[handy]

Please research this and get back to us. We know what your opinion is, but I'm pretty sure your opinion is dead wrong. The fact that you state it over and over again doesn't magically make it true.

& visa versa. :)

[JDShu]

Debt is not always bad. Real interest rates are not always positive. ;)

[handy]

...
Oh how the founding fathers, Andrew Jackson, Abe Lincoln, and a bunch of other luminaries would be ashamed of the US atm, all the work they put in to fight a central banking system...


According to Benjamin Franklin, one of the prime reasons for the war of independence, was due to the Bank of England not allowing the then very young colony that became the U.S. from having its own currency, & therefore being free of the Bank of England's financial control & continual costs in interest on the currency.

Unfortunately for the U.S., after multiple reasonably short lived attempts, a banking cartel eventually got control of the U.S. funds in 1913 & haven't let go since.

I'm sure that the Rothschild family business owns a good sized proportion of the FED business. J. P. Morgan, apparently presented as an extremely wealthy individual, though it came out after his death, that he was in fact a front man for the Rothschild organisation.

[rottentree]

"Money and banking" is a fairly complicated subject. Saying something like "We shoudl abollish teh centrl banks@!!!!" is not only simplistic, it is completely wrong.

Could you explain why 'it's simplistic and completely wrong' in a way regular people can understand it?

To be frank this is a really interesting topic but the 'you are stupid and wrong' comments aren't too interesting and don't lead to interesting discussions.

[user1397]

Could you explain why 'it's simplistic and completely wrong' in a way regular people can understand it?

To be frank this is a really interesting topic but the 'you are stupid and wrong' comments aren't too interesting and don't lead to interesting discussions.Indeed. It's also kindof funny how the people who agree with our current system the most are those with the Economics and Finance degrees, probably because after being bombarded with such 'education' they tend to think it is the only way things work.

[Tibuda]

If banks were not allowed to create money, interest rates would be higher, people would consume and invest less. With less consumption/investment, companies would not be able to pay all wages, so they would fire people, which would result in even less consumption. With less investment, the production capacity won't grow to satisfy the growing population needs.

The system is fragile, but it would be worse without intermediation.

[PuddingKnife]

I believe he is wrong.

Going back to the early days of the United States when King James outlawed the interest free money that the colonies were printing themselves. The US colonies were then forced to borrow money from the central Bank of England, at interest. Of course, this thrust the colonies into debt. As Handy said, Ben Franklin believed this to be the primary reason for the American Revolution.

A central bank is unwelcome IMO because it controls interest rates and inflation (which is the supply of money). But it doesnt just supply a government with funds, it loans it to the government at interest. This is where the US national debt is derived from.
It is through increasing and decreasing the money supply that the central bank (Federal Reserve) determines the value of the money.

SO: This all means that every dollar the central bank produces is the dollar PLUS a percentage of immediate debt based on that dollar. The Federal Reserve has a monopoly over the production of currency for the entire country -- this means that in order for the country to pay back the debt, the Federal Reserve must print more money. Which in turn means that the Federal Reserve must perpetually increase the money supply to cover the outstanding debt created which obviously, creates yet more debt.

Now, the Federal Reserve is a consortium of privately owned banks going back to old European money. By the 1900's the United States had already implemented and removed several central banks for the above reasons. When the Morgans, the Warburgs, and Rothschilds got together to plan the Federal Reserve system, I believe that this endless cycle of debt was exactly what they had in mind for the country.

Then there is the IRS..

EDIT: It really gets interesting when you think about the relationship between money and energy. For a crash course on this line of thought, see the documentary film about Michael C. Ruppert called 'Collapse'..

[user1397]

If banks were not allowed to create money, interest rates would be higher, people would consume and invest less. With less consumption/investment, companies would not be able to pay all wages, so they would fire people, which would result in even less consumption. With less investment, the production capacity won't grow to satisfy the growing population needs.

The system is fragile, but it would be worse without intermediation.The question is, why leave it up to the banks to create money? shouldn't the government be in control of the money supply and not privately-owned businesses?


I believe he is wrong.

Going back to the early days of the United States when King James outlawed the interest free money that the colonies were printing themselves. The US colonies were then forced to borrow money from the central Bank of England, at interest. Of course, this thrust the colonies into debt. As Handy said, Ben Franklin believed this to be the primary reason for the American Revolution.

A central bank is unwelcome IMO because it controls interest rates and inflation (which is the supply of money). But it doesnt just supply a government with funds, it loans it to the government at interest. This is where the US national debt is derived from.
It is through increasing and decreasing the money supply that the central bank (Federal Reserve) determines the value of the money.

SO: This all means that every dollar the central bank produces is the dollar PLUS a percentage of immediate debt based on that dollar. The Federal Reserve has a monopoly over the production of currency for the entire country -- this means that in order for the country to pay back the debt, the Federal Reserve must print more money. Which in turn means that the Federal Reserve must perpetually increase the money supply to cover the outstanding debt created which obviously, creates yet more debt.

Now, the Federal Reserve is a consortium of privately owned banks going back to old European money. By the 1900's the United States had already implemented and removed several central banks for the above reasons. When the Morgans, the Warburgs, and Rothschilds got together to plan the Federal Reserve system, I believe that this endless cycle of debt was exactly what they had in mind for the country.

Then there is the IRS..

EDIT: It really gets interesting when you think about the relationship between money and energy. For a crash course on this line of thought, see the documentary film about Michael C. Ruppert called 'Collapse'..agree with you 100%

[Tibuda]

The question is, why leave it up to the banks to create money? shouldn't the government be in control of the money supply and not privately-owned businesses?
Yes, but they already do. When banks create money, they don't say "hey let's create a thousand dollars", and done! They are restricted by monetary policy. That central banks role, regulate money creation. It can do so: fixing minimum reserves requirements, open-market operations (buying/selling treasury debt to add/remove money from the market) and printing money. This is monetary policy.

[user1397]

Yes, but they already do. When banks create money, they don't say "hey let's create a thousand dollars", and done! They are restricted by monetary policy. That central banks role, regulate money creation. It can do so: fixing minimum reserves requirements, open-market operations (buying/selling treasury debt to add/remove money from the market) and printing money. This is monetary policy.If by 'restricted by monetary policy' you mean 'completely unrestricted' because the fractional reserve system by definition is almost an 'unrestricted' system in that it is able to create money, and lots of it, out of thin air...

[thatguruguy]

For those who persist in believing that centralized banks are the reason for inflation, I will first note that the Federal Reserve System was created in 1914, and then present you with the following link: http://www.visualizingeconomics.com/2008/05/18/inflation-in-the-untied-states-1774-2007/

The graph is instructive not just for showing the frequent spikes in inflation, but also the frequent deflationary troughs.

For the record, deflation is worse than inflation. I know you folks will want to argue that point; I'll leave it to you guys to research why that is.

Do some research. Back up what you guys are writing. SRSLY.

[Tibuda]

If by 'restricted by monetary policy' you mean 'completely unrestricted' because the fractional reserve system by definition is almost an 'unrestricted' system in that it is able to create money, and lots of it, out of thin air...

no, there's a limit. the sum of infinite terms can be a finite number (http://en.wikipedia.org/wiki/Geometric_progression#Infinite_geometric_series).

if M is the printed money, 0 < R < 1 is the reserve requirement, then the maximum amount of "created money" is M / R > M.

See also: http://en.wikipedia.org/wiki/Money_multiplier

[thatguruguy]

Indeed. It's also kindof funny how the people who agree with our current system the most are those with the Economics and Finance degrees, probably because after being bombarded with such 'education' they tend to think it is the only way things work.

That's like arguing that only doctors think that it makes sense to take medicine when you're sick, because they've been "bombarded with such education."

[thatguruguy]

Oh how the founding fathers, Andrew Jackson, Abe Lincoln, and a bunch of other luminaries would be ashamed of the US atm, all the work they put in to fight a central banking system...


... and Andrew Jackson's policies directly led to one of the depressions prior to the Great Depression. Good example.

[jimwsea]

For those who persist in believing that centralized banks are the reason for inflation, I will first note that the Federal Reserve System was created in 1914, and then present you with the following link: http://www.visualizingeconomics.com/2008/05/18/inflation-in-the-untied-states-1774-2007/

One thing that pops into mind when looking at the inflation graph...

FDR and the Fed started to take us off the gold standard in the 1930s, and Nixon and the Fed completed taking us off the gold standard in 1971. That roughly matches with the inflection points in the graph...especially 1971.

Since 1971, without the stable gold that was held at about $35 per ounce, additional dollars put into circulation lowers the value of all the dollars in circulation, hence the inflation uptick.

Also, weren't there other central banks from time to time before the latest incarnation (the Fed)?

My 2 cents and I'll get back to setting up my-dual-boot system.

[Tibuda]

One thing that pops into mind when looking at the inflation graph...

FDR and the Fed started to take us off the gold standard in the 1930s, and Nixon and the Fed completed taking us off the gold standard in 1971. That roughly matches with the inflection points in the graph...especially 1971.

Since 1971, without the stable gold that was held at about $35 per ounce, additional dollars put into circulation lowers the value of all the dollars in circulation, hence the inflation uptick.

Also, weren't there other central banks from time to time before the latest incarnation (the Fed)?

My 2 cents and I'll get back to setting up my-dual-boot system.

1970 decade inflation was mainly a cost-inflation, due to OPEP rising petroleum prices.

[thatguruguy]

One thing that pops into mind when looking at the inflation graph...

FDR and the Fed started to take us off the gold standard in the 1930s, and Nixon and the Fed completed taking us off the gold standard in 1971. That roughly matches with the inflection points in the graph...especially 1971.

Since 1971, without the stable gold that was held at about $35 per ounce, additional dollars put into circulation lowers the value of all the dollars in circulation, hence the inflation uptick.

Also, weren't there other central banks from time to time before the latest incarnation (the Fed)?

My 2 cents and I'll get back to setting up my-dual-boot system.

If you're arguing that getting us off the gold standard got rid of deflationary spirals, I agree.

Gold is now > $1,000 an ounce. But I'm sure that we wouldn't have inflation at all of we were still on the gold standard.

[thatguruguy]

1970 decade inflation was mainly a cost-inflation, due to OPEP rising petroleum prices.

Bingo. Although I'm sure that some would argue that OPEC only raised petroleum prices because of interest rates, or something equally non-sensical.

[Tibuda]

Bingo. Although I'm sure that some would argue that OPEC only raised petroleum prices because of interest rates, or something equally non-sensical.
That damn petroleum crisis started an inertial-inflation proccess here at Brazil that only stopped at 1994. Since then our central bank is doing a great job controlling inflation. This is one of the reasons I can't stand this idea of getting rid of central banks.

[markbuntu]

The reason US went off gold in 1971 for that was oil was paid for in $ and the Saudis and others would trade those $ in for gold, of which the US was quickly running out, within months the US was going to run out of gold. So, they made a deal with OPEC. To insure that the value of their $ would remain strong all international oil payments were to be made in $. This put the EU and Japan in a very bad position, forced to trade with the US on often not so even terms to get the $ to pay for imported oil. This instigated the Euro.

If you want to find out about the US before central banking you can read "A Nation of Counterfeiters".

[Maheriano]

If you want to find out about the US before central banking you can read "A Nation of Counterfeiters".
I just read the reviews of this book on Amazon, I'm going to pick it up tonight and read it on my way out to the mountains tomorrow morning. Thanks.

[WinterMadness]

Warp,

Check out mises.org, I think you'll like it.

mises.org is nothing but an apology for modern capitalism. They never do anything to further their agenda,and make excuses as to why the ills of society happen. "Well this isnt what we want! So dont get mad at us" meanwhile, you really just continue the same system, because by their logic it must be better than social justice, right? Yeah, sure.

[bapoumba]

Closing the thread, we do not allow these discussions here. There are plenty of places on the Internets you can continue this thread.