"That's as good as money, sir. Those are I.O.U.'s. Go ahead and add it up, every cent's accounted for."
Posted on 03/19/2014 3:14:31 PM PDT by Lorianne
The Bank of England's dose of honesty throws the theoretical basis for austerity out the window ___ Back in the 1930s, Henry Ford is supposed to have remarked that it was a good thing that most Americans didn't know how banking really works, because if they did, "there'd be a revolution before tomorrow morning".
Last week, something remarkable happened. The Bank of England let the cat out of the bag. In a paper called "Money Creation in the Modern Economy", co-authored by three economists from the Bank's Monetary Analysis Directorate, they stated outright that most common assumptions of how banking works are simply wrong, and that the kind of populist, heterodox positions more ordinarily associated with groups such as Occupy Wall Street are correct. In doing so, they have effectively thrown the entire theoretical basis for austerity out of the window.
To get a sense of how radical the Bank's new position is, consider the conventional view, which continues to be the basis of all respectable debate on public policy. People put their money in banks. Banks then lend that money out at interest – either to consumers, or to entrepreneurs willing to invest it in some profitable enterprise. True, the fractional reserve system does allow banks to lend out considerably more than they hold in reserve, and true, if savings don't suffice, private banks can seek to borrow more from the central bank.
(Excerpt) Read more at theguardian.com ...
Meanwhile in the US, the same situation reigns. We no longer have defined dollars, but “Federal Reserve Notes.”
... and people diss bitcoin.
"That's as good as money, sir. Those are I.O.U.'s. Go ahead and add it up, every cent's accounted for."
When it boils down to it, and it will, the only things that will matter are those you can eat, drink, smoke and shoot.
Fiat currency is debt. Gold is money. Silver is currency. 5000 years of history cannot be denied.
Silver and gold will also have their uses. Utah and Indiana monetized silver and gold in the recent past as a statement of their faith in the Federal Reserve promissory notes people carry around in their wallets.
Bitcoin has no intrinsic value and can disappear into the ethernet in one keystroke.
Right/s
—Utah and Indiana monetized silver and gold
In practice, in Utah, individuals will be able to use gold and silver bullion in the same way as they would cash for transactions but also for currency exchanges. Individuals with the metal will be able to get fair market value in a trade for cash, or may start depositing or paying with it. The state will also be offering a one-time tax credit to offset any capital gains taxes accrued for individuals who choose to trade metal for paper.
The tax credit essentially ensures that the exchange works like any other currency exchange, say if someone went to Europe and needed to get Euros around that trip. It will also eliminate a shadow market for the metal as those with metal to exchange would normally call around for transaction prices in order to offset fees and taxes.
Federal reserve notes are no longer even an IOU as there is nothing they owe you.
Federal reserve notes are 100% fiat currency based on nothing with nothing backing them.
How are the $20s in my wallet debt?
The Fed owns over $4 trillion in guaranteed bonds.
Bonds are nothing but more promises to pay. They, too, are rarely backed by anything.
—They, too, are rarely backed by anything.
Other than the full Faith and Honor of the
Entity that Created the Bonds
Whatever that is worth.
Where is von Mises when you need him?
“Bonds paying nearly $100 billion a year in interest. Not too shabby compared to your original claim. “
My original claim sands. FRNs are backed by nothing but more FRNs. They are backed by nothing.
My original claim sands. FRNs are backed by nothing but more FRNs. They are backed by nothing.
Yes. As long as you ignore more than $4 trillion in bonds and the $100 billion in annual interest they earn, FRNs are backed by nothing. Don't forget to ignore the over $300 billion in gold as well.
Thanks. Did any of that show how my $20s are debt?
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