An Understanding of Banking
The following is an explanation for the current way banking is carried relating to mortgages based on my understanding. I do not say its absolutely correct and if anyone wants to make a suggestion please do so but try to be constructive in your comments. We’re all here to learn.
Several thousand years ago money as such did not exist barter was the only means of doing business, this was a haphazard way for doing business if one party did not have what the other wanted a trade did not take place. Moving on someone came up with the plan to use a valued metal such as gold as a means of exchange. This was a better means of doing business and trade began to flourish over time. There were however two problems, gold was heavy if carried in any kind of amount and there was a problem with robbery. So the goldsmith who minted the coins offered to store them in a safe for security and issue receipts in lieu of them. This system was successful beyond the goldsmiths wildest dreams. The gold in the goldsmith’s safe was hardly ever moved save for some 10 % which typically moved year in and out.
It occurred to the goldsmith that he could issue receipts not backed by gold and he would be paid back principal and interest and no one would be the wiser, he was not too greedy at first but through the years and human nature being what it is his successors began to ‘loan’ ever growing amounts of receipts not backed by anything. Time went by and the goldsmith’s business became banking and the receipts became currency, the amount of gold backing the currency became less and less and so we are faced with the situation today where most paper based currency is not backed by gold.
When a person wants to get a mortgage for a house they must comply with a banks requirements of being able to pay the loan back etc. The person signs the mortgage documents this brings the loan into existence by being willing to work for 20 to 30 years of labour to pay back the money which is given value by their labour. This ‘money’ was printed off by the central bank it is backed by nothing but the labour of the people who will make the repayments.
Currently we are now faced with what is a depression and banks are seeking to take control of houses as everyone knows. A person may ask a bank for an invoice for the amount they the bank lost through the loan not being paid but of course the bank was not at a loss at all as the money was just printed off.
Playing devil’s advocate for a moment it might be argued that the customer got the loan to buy the house they paid the house owner for the house, took possession of it and surely there is a duty to pay the loan or vacate the house. On the surface that would appear to be the case but as mentioned the bank produced the money from nothing so there was no loss to the bank therefore they cannot reclaim the house.
Another important thing about the central banks of the world is that 90 % are privately owned contrary to popular opinion, the Irish central bank act was passed in 1942 while Sean T O’kelly was Minister for finace. The bill was passed when only a few members of the Dail were present. The setting up of the Federal Reserve – the US central bank happened in 1913 when there were only a few members of congress present – it was Christmas time. So basically the money is produced out of thin air ‘loaned to people and the people’s labour is what gives it value these loans are repaid to the central bank with full value. As mentioned 90 % of the central banks of the world are hybrids having the outward appearance of being public entities but are actually privately owned. Usually the guy at the top of the pyramid ie the central bank knows of the scam as he needs to in order to fulfill the deception. The owners of the central banks are the international banksters the Rothchilds, the Rockefellers, Kuhn & Loeb, Lazard brothers the Warburgs, the Oppenheimer etc.
The interest payment on the loans given by the central banks are paid for by your income tax.
You get the idea ? – enslavement.
Originally posted by Brian of the Family Whelan on Tír na Saor @: http://freemanireland.ning.com/forum/topics/an-understanding-of-banking
You’re understanding is not complete, central banks do not just print money, it is not created out of thin air. You make no attempt to show how this would occur.
In reality if a central bank prints money (which in some cases does happen) the currency is then devalued. Think of it this way, a country has a total worth of 1billion, it needs more money so it increases the money supply by printing currency, say 200 million, The paper currency available is now 1.2billion however the worth of the country has not changed, so now 1.2billion only buys what 1billion did before, this causes inflation in the enconomy (see germany after the war)
What more often happens is that a country needs money so the central bank draws up a bond, say for 200million like before, this bond is a promise to pay the 200million plus interest, the interest often decided by the bond market. This bond is then sold, so there is no more money in circulation, a bond holder has exchanged currency it is holding for a government bond, and the value of the currency remains the same.
spreading the myth that money is created from thin air is unhelpful and untrue.
It appears mpjwall’s understanding is incomplete. Central banks do print money out of thin air, in that the currency they issue is not backed by anything of substance that they stand to lose in case of default. If you belive this to be incorrect, then please tell me when was the last time you took a 10 pound sterling note and exchanged it for the same quantity of silver?
This money they issue is given value ONLY by the willingness of your government to impose it on you by fiat as so-called legal-tender and your willingness to pay taxes to meet the interest payments. Of course, repeated governments will lie to you, claiming that your taxes go to pay for “services”, but the reality is the majority of taxation goes to pay interest on this fraudulently-issued money.
Because the money issued by these private, for-profit central banks is issued at interest, the money supply MUST be expanded or the net amount of money in circulation contracts. This is because either the interest payments must be met from the existing monetary supply, causing it to shrink, or they must be met by entering a bond and requesting the issue of new money with which to pay the interest.
The whole setup is farcical. As Thomas Edison rightly said, any government that issues a dollar bond can issue a dollar bill. So we don’t need privately-run, for-profit central banks sucking the wealth from our nations, but we are lumbered with them anyway, primarily because the majority of people are ignorant of the slavery this fraudulent monetary system represents. Henry Ford summed this up nicely when he said “It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”
Describing this as a myth is at best ignorant of the reality and at worst downright misleading.