Your Money
So what is money? Sure you’ll say that’s a no-brainier, it’s what’s in my wallet.
But that’s not the real definition of what money actually is’
Don’t take this so lightly, because we spend most of our life’s earning what we think is money, but we are actually deceived. And I will prove it here!
The Definition of Money
Money has to have these qualities or properties.
- Portable, If must be Portable easy to carry
- Durable, able to take day to day wear and tear
- Divisible, able to made into divisible units
- Fungible, interchangeable
- Store of Value able to carry value into the future
So as you can see real money has specific qualities’
We shall examine here weather what you are calling money actually is, or is it an impostor a deceiver?
The Federal Reserve is a Central Bank
The Federal Reserve Bank is the Central Bank of the United States. In school you were probably taught that banks were good members of the community, since they loan people money for all kinds of things.
Well that not exactly how it works. Our typical view of the bank is usually as follows. The bank with its financial expertise invest your money wisely and earns enough to pay you a percentage and make a little for the bank as well.
Neighbors helping neighbors right?
Not exactly banks are actually private institutions who are businesses. And all all business need to make a profit. Most of the senior people in your life probably believe that banks are a part of the government, since that the impression they were given long ago.
The Money you have is actually a Loan
What most do not know is that most of the money created these days is actually created on the basis of a loan. The idea of a bank being a local community service those days are long gone.
Banks today put their money into complicated investment schemes, like investing in products created by Wall-street.
The Federal Reserve System
The Federal Reserve isn’t federal nor does it hold any reserves. It is actually a private institution owned by private bankers. These bankers make loans and expect to get paid back with interest. That’s the National debt that you may see expressed in the news and by the politicians.
The Federal Reserve Bank receives a bond issued by the treasury of the United States an I.O.U. of sorts, and this gives the government the authority to print the money.
What made all of this possible was the Federal Reserve Act of 1913. This act was signed into law by President Woodrow Wilson. Under our constitution only the government can actually print money. But it dosen’t say that the government can’t borrow it.
The Federal Reserve serves as the mother bank to all the banks around the country. In other words those smaller banks can go to the Federal Reserve and get money to loan out. These smaller banks get the money at a discounted rate, then loan this money out to you and me at a higher rate and they keep the difference.
Can you begin to see how all this works. So the money is created when you or I sign for a loan.
Fractional Reserve Lending
For those of you who are all ready confused, don’t worry it gets even better when you understand Fractional Reserve Lending.
This is where most of the currency we have in existence gets created.
You see what the banks do here is, they retain a percentage of deposits on hand in case you come to withdraw some of it. Then they are allowed to loan out at least nine times what the have in actual deposits. This is how the monetary supply grows. It’s all based on these loans.
Any Problems?
Can you begin to see any problem with this kind of system?
Well let me enlighten you’ what if people stop making loans. Even better what if they pay those loans off. Well don’t get to worried, then the Central Bank just goes into overdrive and buys more bonds and pumps up the money supply that way.
And I haven’t even mention interest rates which they use to control all of this. Reminds me the Jugglers you see at a carnival, soon they will have more bowling pins in air than they can handle. So they have what are called tools to deal with these issues, so they say.
I can’t cover everything on this in the brief article, so you’ll just need to follow up and do some research for yourself, I recommend that you do!
Hope this gives you a starting point’ To learn more go here! Modern Money Mechanics
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