The united states, the US dollar is the nation’s fiat currency. It all begins with the US Treasury who creates bonds which are federal IOU’s that are paid back using a specific time period with attraction.
Within the industrial banking sector we now have what I refer to as “magic money creation” which is definitely called “Fractional Reserve Lending”. Here is an example of how fractional reserve lending works. Let’s pretend someone deposits $100. 00 into a bank account, the bank the fact that received that deposit is right now legally allowed to remove $90. 00 or ninety percent of your deposit and re-lend it to someone else.
The next person consequently comes along, and borrows money. Once the new borrower pays off the seller for what they will bought the money again is re-deposited into the bank now there is $271 dollars at deposit. This creation of money through deposits and loans (fractional reserve lending) keeps re-occurring to where 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 made out of the bank.
The entire system of making money from nothing is a complete scam. It all starts with the Federal Reserve and the YOU Treasury exchanging IOU’s. A good check is an IOU meant for cash and a relationship is an IOU to be paid back with interest at a lot of later date. Cash comes into existence once the Fed issues someone a check.
Once again nothing backs these kind of dollars except IOU’s. Furthermore, for the hard work each 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. This is exactly what pays the principle and interest on the bond that your Fed bought with a check from nothing. US citizens happen to be forced into paying income taxes for the use of our recent money supply system.
This can be the Ultimate Government backed and sponsored pyramid scheme, the place only the banking top dogs who own the Federal and other central banks all over, massively profit by stealing out of generations of innocent locals.
Which is in that case spend on wars, military, united states government salaries, social programs, general public work projects and other shortfall spending that keeps with re-occurring. Next all those united states government employees and military personnel take their salaries and deposit them into a variety of bank accounts throughout the nation. This is how the fiat capital now enters the industrial banking sector.
Once again all the banks go back to the US Treasury auctions the next month investing in more bonds and selling them to the Federal Reserve. And every month this pattern of buying and selling preserves on getting repeated.
The person who received your hard earned dollars from the bank as a loan will use it to buy something such as a car. Then that individual will pay the car dealer while using the money he borrowed. Nowadays the car dealer will pay in this money into your partner’s own account at the lender. Now there is $190. 00 on deposit and the loan company can legally steal Eighty percent again or $81. 00 and lend this out.
The Treasury holds regular auctions to sell off it’s bonds to primary merchants, who are the major loan companies. Then the US Federal Park enters the game by purchasing all the bonds from the mortgage lenders through something called “open market operations”.
In so doing actually leaving your profile with only $10. 00 or ten percent of your total deposit. However your loan company statement will still exhibit the entire $100. 00 greenbacks or one hundred percent of your money, on deposit in your bank account.
However, it’s important to note, that when any Fed writes and problems a check, there is no money what so ever inside account to cover the amount of who check. The account these kind of checks are written with will always carry a good zero balance. Therefore every single dollar that exists, is normally borrowed and must be refunded.
Finally over time, there becomes surplus bonds at the Fed and cash in the Treasury. That Treasury now takes that excess cash and deposits it into the various branches of government.