Planck Foundation



How does money supply work? Where does money come from? In our current fractional banking system money comes from credit. From Credit? Yes, from Credit. Governments has installed bank legislation (a set of norms any bank must apply to). In the fractional banking based system you go to the bank and ask for credit. The bank researches your credit records (by credit without collateral/pledge) and/or coverage collaterals (by credit with coverage of collaterals/pledges) and approves your loan and than just puts the loan facility to your account. Was this money there earlier? No, it didn't exist till than. Will the money be there as you paid back the loan? No, than it stop to exist again. You've got your loan and you can spend it. So in the fractional banking based system, money supply (money creation) is done by loans by banks. You spend the loan, but not entire (or maybe totally not) by customers of the bank. Most banks have an account by each other, and if not (in case of the situation that the receiver has an account by a strange foreign bank) they know an other bank who has mutual accounts by each other. You pay interest to your bank, your bank pays interest to the bank where the money is transferred to. Banks each day balance all this interbanking accounts or by triangle transfers or by international banks like BIS (Bank of International Settlements). So the bank that issued you the loan created the money, but got in return a debt by the banks or the people you spend you're the loaned money, on which your bank must pay an interest if this amounts can be mutual balanced direct or anytime in the future. Of course the BIS wants every Central Bank in the world to join BIS. This because accounts to banks that are not by covered by a connected Central Bank must be settled always, real instead of virtual values flows out of the system (and out of the BIS transaction universe). Joins a Central Bank the BIS than the BIS decides when and who accounts are settled. The incidental/temperately eaters of not contractual allowed credit (as in: are forced to the IMF and its regime for balancing their accounts. The historical 'structural big eaters' of credit (as in: US) can no longer be forced to pay, or their credits are pushed/tempted to buy US governmental bonds for their account settlement request. The US has some severe attractive financial tools no empire ever had: 1) A currency where that has a huge place in international trade (dollar was the oil currency) in a growing global economy and whereby is a huge global demand and thereby continuous more money could be brought in circulation without very less negative effects. 2) A deal with some bankers (installation of the FED in 1913) that they would print the money (and gets in return the interest on), if they by trading keep the market and thereby the demand of US Treasuries alive (something a government could not do by themselves as it than will considered as monopolistic market influence under the anti trust laws), this cause inflation, but guarantees sale of any issued governmental bond. 3) A huge influence on the Central Bankers Bank (the BIS) so that accounting debts to foreign banks could be settled by pushing US Treasuries/Bonds as payment. Each empire taxes the world, the USA empire her taxation of the world is called dollar, US Treasury Bonds, the FED and the BIS. It's no coincident that the nations that want to abolish the dollar or doesn't want to loose their own policy in demanding settlements of accounting debts and therefore doesn't want to join the BIS regime are called the axes of evil: they undermine the financial roots of the empire as they undermine the role of the dollar and demand for daily payment of accounts and are not in the BIS 'honor for paper' culture. They are the leaks in the system. The Credit Crisis of the early 80ties was not solved by re-payments of the debts, but by the Arab world joining the BIS, making the first PetroDollar wealth of the Arab world (the bank account statements) more virtual. The owners of the FED and later-on also the BIS are the real rulers of the world, democratic political structures just may wash the car, but not drive him. For the real powers in the finance industry banks and currencies are not assets, but more production tools. Real values for them are in political seizing and currency valuating untouchable relatively easy movable assets mainly in over the world stored gold and a little in diamonds (the emergency 'cash' in a very small black velvet bag). The FED and the BIS are the big pushers of the dollar and US Treasuries, watering each currency and each balance sheet globally. Of course the bankers take their fee on each transaction. Of course the by them run (in some countries not owned) Central Banks donate a symbolic profit fee to the government that has chartered them, but the real profits are in the transactions (both voluminous and profitable) and foreknowledge (both voluminous and profitable and not in the operation. Foreknowledge is a huge income source of the BIS members: it gives them the opportunity to earn riskless lots of money of for example the decline of the dollar in August/September 2008 in a way nobody else could do. Just by the fact that only they knows and the world doesn't know yet the fact that the dollar would be supported by Euro en Yen sales of the Dollar. Demanding transparency of the Central Banks and the BIS administration is without purpose, as the profits made are in the deals. Demanding transparency of the Central Banks on meeting reports is without purpose as from then on the meetings doesn't cover the real issues any more, and the real issues will be set in an other location, time and setting. The Credit Crisis is more about the unwillingness of (foreign) banks to extend account levels to yet higher levels and the unwillingness of (foreign) banks to buy dollars of treasuries for these debts. This possibility was the reason that the US always has growth more than any other nation, they had 3 huge tailwinds, tailwinds that now are weakening. Foreign reserve currencies can adopt dollars and US Treasuries till 100%, but after that on that front the grow is not longer possible. Foreign banks can accept dollars and US Treasuries to only the level the can sell to their customers. The FED and the BIS where just one big oiled wholesale/distribution organization of US governmental/banking debt with the shareholders earning on each transaction. Any manufacturer and/or brandowner (even super distributor/brander Coca Cola) can only dream about such a well functioning product distribution system. This is the real reason behind the Credit Crisis. Therefore the Credit Crisis can only be solved where it has grown: in/by the US. A new president could both fix the Credit Crisis as break the fee engine of the banks and do that with causing chaos. The owners/runners of the Central banks are not the only people who can design financial engineering (financial intellect is common, not contained in boardrooms of banks). The (financial engineered) way out of the Credit Crisis without chaos is described in the proposal part below. We must avoid the chaos of a crash, as in crashes some value will be lost, but most of the values just will be transferred, robbing ordinary people of their assets, life savings and pension funds. Crashes do not effect wealth of real bankers (as they only own the banks as a device not as their wealth). Crashes makes the real rich substantial more richer as real assets outside money can be bought very cheap in times of crashes. One nice fact on this subject: Russia has paid its debt overnight and doesn't want to do anything with the BIS politics. An other nice fact: the importance of the dollar (future lower importance of trade) is under siege of the importance of energy (future growing importance of energy). Energy is the currency of the future, as international trade will be lowered severely (due to energy prices) and energy thereby become the most important international commodity (beside commodity food and equipment). Money will loose the battle with energy. The Credit Crisis is all about drying up of the foreign feed of wealth to the US (global GDP growth, dollar market share, reaching the plateau of new Central Bank connections to the BIS, maximal dollar levels in other currencies reserves, maximal dollar exposure of commercial banks and pension funds). The dollar will not be the currency of energy, robbing the US of one of its imperial taxes. For more on credit, the players, the cards and the rules: Perform your own research: Put some time in YouTube, Wikipedia and Google for researching history FED, history money, history credit, history currencies, history BIS, bank international settlements, etc. Indian women holds 13% of the worlds gold, for pension purposes: making them the riches middle class of the world in real, untouchable/ and easy moveable assets and/or purchase power. No fancy salesmen in fancy cars, no fancy offices, no fancy marketing, no fancy boards and no wrong investments eats out their pensions. Less down side risks and much upside gains. The real powers in the financial industry have interest in stimulating general economic wealth, as this increasing the transaction fee volume and the debt (and so: interest) volume. The real powers in the financial industry sees economic processes like the business cycle of their processes: grow/operational phases and decline/harvest phases: anticipating by foreknowledge based sales and profiting by foreknowledge based speculation and by cheap purchases due value collapsing. The whole gold standard discussion is not valid. A currency is all/only about trust in a) a government that issues the currency or b) a group of bankers that issues the currency. Mixture of both gives responsibility at all (shared responsibility is no actual responsibility at all). The gold standard discussion is only used in economic dire straits to seize public owned gold. The USA has done that in 1933 (everybody must turn-in their gold). Just forcing people to put their wealth full into local assets and local/foreign currencies (as in: into the by the financial industry orchestrated system). The history of the Central Banks is a research object on its own. In the US the history is: A bill initial drafted by the main bankers passed in Congress on Christmas Eve (when almost everybody was on Christmas Holiday) after Wilson already has agreed to sign the bill after that. A quote from one of the FED history pages on the Internet: "The Glass Bill (the House version of the final Federal Reserve Act) had passed the House on September 18, 1913 by 287 to 85. On December 19, 1913, the Senate passed their version by a vote of 54-34. More than forty important differences in the House and Senate versions remained to be settled, and the opponents of the bill in both houses of Congress were led to believe that many weeks would yet elapse before the Conference bill would be ready for consideration. The Congressmen prepared to leave Washington for the annual Christmas recess, assured that the Conference bill would not be brought up until the following year. Now the money creators prepared and executed the most brilliant stroke of their plan. In a single day, they ironed out all forty of the disputed passages in the bill and quickly brought it to a vote. On Monday, December 22, 1913, the bill was passed by the House 282-60 and the Senate 43-23." The bill transferred the right on money creation from the Government to the FED. Instead that the government could create money (and if they do that wisely -as in: don't finance expensive wars with it- could benefit the state and the economy), now the banks could create money. The largest customer of the banks where the national states. While the national states before the installation of Central Banks could create money by themselves for free and without interest, now they have to pay interest and must repay the 'loans'. The installation instrument of Revenue Tax (and later-on the Inheritance Tax) and the IRS as collecting agency in the months before the Federal Reserve Act was needed for this, as governments needs other types of income as the money creation was taken away from them. The Revenue Act was passed in Congress in 1909, and ratified (historical research shows that this ratification has had at least some errors: Kentucky voted against and was listed as in favor, and many states hasn't even vote, so the 75% of the states ratification demand is based on voting records never accomplished) in 1913, two months for the Federal Reserve Act, giving the Federal State the tool of income tax. Making the circle round: lending the State money and providing the State with interest payment and loan repayment capabilities. Very soon the governments spend almost the whole IRS income on paying interest and borrow the actual budget as extra loan. Making the FED the final destination of most of the taxpayers money. "Let me issue and control a nation's money and I care not who writes the laws." (Mayer Amschel Rothschild). The best illustration that the powers within the banking industry are more powerful than political powers are the Depression Year: The whole banking industry put their cards on Hitler Germany (a brutal, but active spending/lending/robbing government), leaving the rest of the world with shorten money circulation in depression. There is one power more powerful than the powers in the banking industry and that is intelligence (not in human intelligence, but in gathering information). Governments with well functioning secret services or secret services on their own who controls telecommunication tapping manufactures (only two countries has such an industry) are the real superpowers as the can confront and/or blackmail the powers in the banking industry with the decisions governments and/or the economy/public will not appreciate (as in: speculation based on foreknowledge). Everywhere power cooperate there a hierarchical structures. The two interesting questions concerning the financial/real power in the world for interested people and interested governments is: who is the boss of the bosses in the financial industry (as in: who is the financial czar of the world) and who are the ones that knows / has access to the communication of these bosses and their boss (as all real global policies are made in interaction between those two). Never less, it's time the FED will be seized, instead that the current owners taxes Americans for average the income of 4 of the 12 months of their work income each year and on top of that lowering the assets/savings of each American by money supply driven inflation. It's no surprise that consuming credit was an attractive option for American considering 4 months labor for the State each year plus the invisible taxation by inflation. Americans must go work again for themselves. Start to produce. Producing builds a nations and ensures the future of the children. Credit wrecks a nation and the future of its children. There is nothing Federal on the Federal Reserves and there are no Reserves by the Federal Reserve. Only a smart chosen name must give both emotions without the actual real coverage of both. The only governmental influence of the FED is the appointment of its president by the President and the fact that the FED pays its profit (artificial low calculated by increasing other factors) symbolic to the government. The FED appoints their own directors, makes their own policies, is owned by some banks. All other banks were or taken over or went broke short after the installation of the FED: a clean-up of competitors was the first set and achieved target. An other quote from the Internet: "Woodrow Wilson wrote in 1916, National Economy and the Banking System, Sen. Doc. No. 3, No. 223, 76th Congress, 1st session, 1939: "Our system of credit is concentrated (in the Federal Reserve System). The growth of the nation, therefore, and all our activities, are in the hands of a few men." The least the FED could do is publishing the stockholders on the 'About the FED' parts of its website. In Europe there are similar stories to tell about the BIS (Bank of International Settlements: the Central Bank for the Central Banks) and the EMI/ECB. The ownership of the BIS stocks are also not disclosed on the "About the BIS' part of the BIS website. Some Google, Wikipedia and YouTube gives a lot of information. Just research, select based on sources and draw your own analysis of the BIS/EMI/ECB. One of the stories is that Germany and France as initiators of the Euro has giving themselves a discount exchange value, something the small countries have paid. The importance of the BIS is everywhere underestimated. The rise of the dollar from $ 1.60 to $ 1.40 in one month time is designed by at the BIS (Europe and Japan have sold Euro's and Yens and purchased dollars in large amounts). The BIS is certainly a major global economic power, some say the biggest economic power ever. It's strange that we know so little of the facet that influence our life so much (money: capital/currency). This is certainly a huge shortcoming of the (economic) media. Certainly in times of a Credit Crisis, they must write less about sun/rain and more about the climate (researching/communicating driving factors and not only the developments of just today). The BIS is the bank above the Central Banks (owned by the Central Banks, who are in some countries -like the US- also are privately owned). The BIS is the winning competitor of the (more open, more democratic) WorldBank and it collecting agency IMF. Within the BIS the discrepancies created by the loan based money creating system are addressed. Banks that have to much debt by other banks must be steered in opposite directions or turn-in additional securities. The Euro is born within the BIS: Designed as a split-up that would make the BIS more focused on global monetary issues. To realize this the General Manager of the BIS Lamfalussy resigned in 1995 to become the General Manager of the EMI, which was the forerunner of the European Central Bank (ECB). If there will be a global currency proposal it will be certainly originated and/ore directed by the BIS. A lot of power for a closed non democratic controlled organization. The new banking norms (Basel II) are also written within the BIS. Basel I and Basel II are just guidelines as the 1/9 ratio has been made flexible by creative asset valuating on bank balance sheets all around the world. These guidelines are 100% facultative as long auditing is done by auditors that are paid by the party that must be audited. Independent auditing is a (science)fiction in this system. All bank balance sheets are fruitcakes and they are all 'audited' and signed by 'external' auditors. The real value of the bank assets is the real issue, not the theoretically 1/9 ration or other ratio's. In 2008 it's the hour of the truth for real values, as more and more banks has build huge debts by other banks (the basic cause of the Credit Crisis). Internal books can be cooked, but external balances and payment power tell the naked truth, despite fancy full of polished assets balance sheets. The real situation of which banks are health and which banks are broke is only know at BIS headquarters in Basel. The WorldBank and the IMF only play a marginal role in international finance and no role in international monetary policies. Privatizing profits and socializing debts. That's everybody's goal everywhere and anytime. Just research by YouTube, Wikipedia and Google for history fed, history money, history credit, history currencies etc. The FED is just a by legislation installed cartel, giving fore knowledge information and special conditions. A direct attack to a free/open/fair market. An independent, not democratic controlled huge economic power, that operates under Federal National Flag, but the Flag doesn't cover the operation. Governments and FED can blame each other for occurring problems. Two captains on one ship certainly will lead to not reaching the wanted destination (as there are two captains and thereby two agenda's/destinations). Governments and FED has facilitated each other, living in symbiosis with each other. The FED could be installed after several governmental failures in printing to much money. Research also by Google on quotes fed. A very impressive one: "The colonies would gladly have borne the little tax on tea and other matters had it not been that England took away from the colonies their money, which created unemployment and dissatisfaction. The inability of the colonists to get power to issue their own money permanently out of the hands of George III and the international bankers was the prime reason for the Revolutionary War." (Benjamin Franklin in his autobiography). The roots of the independency of the US from England lays in the freedom desire of the people of the US. The roots of the US are right. This is certainly a huge advance. Freedom and initiative make very good economic soil together. There are no many countries with such major freedom, initiative, work, invention forces in their genes combined in one population. Black and white of the USA has a history of all those 4. This is the huge promise (or better said: hidden power) of the USA. The roots/genes of the USA can be described in two words: freedom and initiative. The freedom is the huge assets of the US, the initiative drive of the US has been changed/mutated in expansion drive, this will be changed in local initiative, as expansion is no longer an option and energy becomes scare/expensive. The new currency/economy/politically independent never losing baseload values of the future are energy (as in: prosperity) and water (as in: food), will exist besides the old/proven ones: mainly in gold and a little (the emergency transportable 'cash') in diamonds.

Author: Gijs Graafland

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