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Thursday, 14 October 2010

Banking Crisis it is Just Money Money Created from Nothing Thats the Problem

Author Carl Hemmings
It is said by many people that they want to “hit the money men where it hurts”.
then they offer up measures to offset the effects of Government funding cuts which may temporarily be of benefit to some people. However, they have missed the crux of the matter by a mile, which is our debt-based economy.
So why did he not do what the bankers fear most and expose the corrupt Fractional Reserve System which causes all the nations’ debts?
The new Basel 111 regulations governing how much capital banks should have in reserve have been agreed to prevent another financial crisis. These measures, regardless of the new ratios agreed, will in the end fail to prevent another economic collapse.
This is because the banks are still allowed to create money out of thin air under the Fractional Reserve System, which is still the dominant and widely-accepted method of monetary creation.
Under this system, banks insert credit into the economy and charge the rest of us, including the Government, interest for the privilege of its use. The fact banks pay us interest on the tiny molehill of money that is in our bank accounts hides the reality that they collect a far greater bounty of interest from the mountain of bank credit that they create.
Here is another crucial point. All this credit pumped into the economy consists of principal (loan money) only but, like all debt, it has to be repaid with more money than was borrowed — as principal PLUS interest.
Clearly it is impossible to repay this debt from a pool of money that consists only of principal.
The only way in which the debt can be repaid without starving the economy of purchasing power is to borrow more bank credit to service previous debts, which results in an increasing spiral of un-repayable debt until the entire system comes crashing down under the weight of these debts and ends up in the type of recession which we are experiencing now.
It is this system which is the real cause of our problems. Under Fractional Reserve, if there is no debt then there is no money.
Money is debt. It’s no good tinkering around with it.
The only solution is a complete reform of the system to deliver us from this recession and to avoid future economic crashes. This will only happen when the Government claims back from the private banks the sole prerogative of monetary creation.

Carl Hemmings