MONEY MECHANICS

Society today is composed of a string of institution from political, legal, religious, social class, familiar values and occupational specialization. These institutions have a seminal significance in determining our perspective. Yet of all the institutions we are born into, directed upon and conditioned there seems to be no other system as grossly misunderstood and taken for granted as the monetary system. How money is created? What policies administrate it? And how it truly affects us is unfamiliar to a majority fragment of society. With 1% of population controlling 40% of wealth and 50% of population leaving at less than $2 a day one thing is sure there is something wrong with the system.

Understanding the system is like understanding why our life is what it is. What is money and how is it created? Gone are the days when gold was reserved in exchange of money circulated. Today money is piece of paper, circulated by federal reserves of different nations, carrying different domination. These pieces of paper are passed on to government in return of treasury bonds. The government hands it to banks and other financial institutes where they become legal money carrying value. And thus money is created.

Treasury bonds are by design instruments of debt. When fed receives them they create money out of thin air. In other words money is not coming out of the assets of the bank. The bank is simply inventing it. Perhaps except them only God can create something of value out of nothing. The government actually promises to buy back the bonds and takes money as a loan. Thus money itself is created out of loan.

Now the banks pass this money to people, charging them interest on it. This interest multiplies the actual sum many folds over the future. Suppose for eg the bank sanctions a loan of 1 lakh at an interest rate of 10%. So ten years down the line this money is compounded into 2.59 lakhs, and it keeps on increasing. Thus this 1 lakh of real money adds 1.59 lakh of virtual value. In fact in U.S. only 3% of money is in physical form rest is the compounded interest and treasury bonds.

Now see it like this when bank passes money to market it passes principal. But when it asks for the Amount one needs to pay principal + Interest. But from where comes the money to cover the interest that is charged. Nowhere, it doesn’t exist. The only basis of money creation is credit loan so if all the persons are able to pay back all the loans and debt there will be no money in the market. In fact if there were no debts in our money system there wouldn’t be any money.

What it also means is that mathematically default and bankruptcy are literally built in the system as there always will be deprived receptacle of society that gets the short end of the stick. Physical slavery necessitates people to be housed and fed but economic slavery requires people to house and feed themselves. It is the biggest scam ever done and is an imperceptible war against the population. Debt is the weapon of bank and interest is its prime ammunition.