November 2011
November 2010
The stimulus packages around the world are starting to run out. The IMF is now putting pressure on the worlds economies to reduce their debts and deficits. The only way they can attempt to do this is by taxing their people more or by spending less on government services. This of course will reduce the money supply and undermine any good the stimulus packages did in the first place.
In Europe, countries worst affected by the global recession are starting to go bankrupt. One by one they are starting to fall. Financial aid from the European Union and even the Monetary Fund is holding these countries from bankruptcy. Europe as a whole is now weakened even more by these individual nations. The dominoes are starting to tumble. America on the other hand is continuing to borrow more money to buy it's way out of the recession. They have no hope in paying this money back. It's only a matter of time before the obvious will happen, you can't keep borrowing money for ever.
The rest of the world is not much better. We are at the mercy of the banks. The world will continue to go bankrupt if the international bank's let it happen. One world currency is not far away. The world badly needs Social Credit, It is our only hope.
April 2010
What has changed since the last post?
Governments around the world have set up economic stimulus packages to help keep their economies going. While it is true that it has prevented the world economy from going into a depression it must be considered a temporary solution only. Why! These stimulus packages have come at a great cost.
This money has been borrowed and must be repaid back. The citizens of each country will have to face higher taxes to maintain the extra costs from these new stimulus loans. When this happens the money supply will reduce significtly (The money supply increased by these stimulus packages will run out unless further stimulus packages are received. Obviously we cannot keep going down this track.
| HOW THE BANKS CREATE MONEY |
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Fractional Reserve BankingA process that allows the banks to create money out of nothing.
(link below also explains this)
Central Banks apart from creating new money as debt control the ratio of deposits the Commercial banks can lend. This ratio is called fractional reserve banking. This practice allows banks to lend very large sums of money they do not have. Fractional reserve banking allows banks to keep only a fraction of deposits in reserve and lend out the remainder.
Excess ReservesExcess reserves are the amount of bank reserves over and above those that the Federal Reserve System requires a bank to keep. Excess reserves are what banks use to make loans, this is where the majority of all new money is created. If a bank has more excess reserves, then it can use them to create new money in the form of new loans. For example if the reserve was set to twenty percent, $800 of a $1,000 deposit could be used to lend out to borrowers. This $800 (excess reserve) lent out will then become a deposit in another bank. This other bank that receives this can lend out $640 of this $800 deposit as 20% is reserved.
This process will continue untill it reaches its maximum. The maximum amount of total deposits that can be created this way at 20 percent is $5,000 and the maximum increase in the money supply is $4,000. At this rate the banks have fraudulently created $4,000 out of thin air using a $1,000 deposit.
The graph below shows how much more the banks create from exces reserves when
the fractional reserve rates are lower
Over the years the ratio for fractional reserve banking has dropped, in most countries 3% or less is now the norm. This is a very deceitful and dangerous thing to do, as a run on the banks is very possible if large numbers of deposits are removed from banks. Although Central Banks can cover a certain number of withdrawals on behalf of some banks, it does however have a limit. A domino effect is a reality and can occur as banks do not have the money required because of very low fractional reserves. Banks will begin shutting down every where when this limit is passed.
Not many countries have a fractional reserve rate over 3%, interestingly the United States has 10%, China over 20%. What should alarm the population in Australia apart from the obvious fraud of money is that the fractional reserve rate for Australia is less than 3 percent! When the run on the banks start and it will sometime in the future, less than 3% of the money people have deposited there will remain! And guess who is going to guarantee this money? That’s right, the poor Australian tax payer! Yes, on behalf of all Australians, The Labour Party decided that Australian tax payers will guarantee the banks! This way the commercial banks will remain blissfully in operation to continue without risk to themselves to continue to deceive us and to keep us in debt.
This action is most definitely a fraudulent practice and governments all over the world including Australia allow it to happen. It should be called fictional reserve banking. It should be banned! and replaced with Social Credit.
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