In America, the US dollar is the state’s fiat currency. It all kicks off with the US Treasury who creates bonds which are government IOU’s that are paid back for a specific time period with attraction.
Within the industrial banking sector we now have what precisely I refer to as “magic money creation” which is truly called “Fractional Reserve Lending”. Here is an example of how fractional reserve lending works. Let’s say someone deposits $100. 00 into a bank account, the bank that received that deposit currently is legally allowed to remove $90. 00 or ninety percent of your deposit and re-lend it to someone else.
The entire system of creating money from nothing is a complete scam. It all starts along with the Federal Reserve and the YOU AND ME Treasury exchanging IOU’s. Your check is an IOU designed for cash and a relationship is an IOU to be reimbursed with interest at several later date. Cash comes into existence once the Fed difficulties someone a check.
The person who received your hard earned cash from the bank as a loan will use it to buy some thing such as a car. Then that individual will pay the car dealer while using the money he borrowed. Nowadays the car dealer will lodge this money into an individual’s own account at the bank. Now there is $190. 00 on deposit and the bank can legally steal Three months percent again or $81. 00 and lend that out.
Once again nothing backs a lot of these dollars except IOU’s. Furthermore, for the hard work just about every US citizen does to help you earn his or her salary, a percentage of it eventually ends up for the Treasury in the form of income taxes. Precisely what pays the principle and interest on the bond that the Fed bought with a check from nothing. US citizens happen to be forced into paying fees for the use of our current money supply system.
In so doing actually leaving your account with only $10. 00 or ten percent of your finish deposit. However your loan company statement will still show the entire $100. 00 pounds or one hundred percent of your bank, on deposit in your bank account.
The Treasury holds regular auctions to sell off a bonds to primary agents, who are the major mortgage lenders. Then the US Federal Save enters the game by getting all the bonds from the bankers through something called “open market operations”.
At last over time, there becomes too much bonds at the Fed and cash in the Treasury. The Treasury now takes this excess cash and build up it into the various twigs of government.
Once again that banks go back to the US Treasury auctions the next month investing in more bonds and selling them to the Federal Park. And every month this pattern of buying and selling keeps on getting repeated.
This can be the Ultimate Government backed and sponsored pyramid scheme, when only the banking elite who own the Federal and other central banks world wide, massively profit by stealing out of generations of innocent people.
Nonetheless it’s important to note, that when all the Fed writes and concerns a check, there is no revenue what so ever inside account to cover the amount of the fact that check. The account a lot of these checks are written coming from will always carry some zero balance. Therefore each dollar that exists, is normally borrowed and must be repaid.
The next person after that comes along, and borrows funds. Once the new borrower gives the seller for what they bought the money again is usually re-deposited into the bank and after this there is $271 dollars concerning deposit. This creation from money through deposits and loans (fractional reserve lending) keeps re-occurring to when at some point your original $100. 00 deposit has grown to help you $1000. 00 (ten times the amount of your original deposit) in fiat currency produced from the bank.
Which is then spend on wars, military, federal salaries, social programs, general public work projects and other shortfall spending that keeps at re-occurring. Next all those government employees and military staff take their salaries and deposit them into a variety of bank accounts throughout the country. This is how the fiat capital now enters the financial banking sector.