First we have to understand that the banking system is the only creator of money and they create all their money as numbers in a checking account. Here is a good two part video series on how all money is created and destroyed. After you watch these two videos we’ll talk more in depth. The con game of the bankers is so simple the mind is repelled.
I think there is little disagreement in general on these forums, that banks with their practice of Fractional Reserve Banking are a major part of the inflation problem. Even the con game is nothing new.
Now, could you please explain, in simple terms, how your plan works? Since the banks are not very popular in this respect, you can simple leave them out of the equation if needed. We should be still able to judge its effects in terms of supply and demand - much like inflation.
OK, new money is created in our system by debt. So what? Central banking is just a variation on a very old theme (currency debasement, devaluation) and you are proposing that central banking itself is the problem, rather than the root problem of currency debasement for which central banking is merely the latest, most fashionable means. Worse, you are proposing that we just get rid of central banking and go back to old-fashioned, direct debasement. The correct solution is to not permit central bankers or governments or both to debase the currency and to not permit anyone to monopolize the issuance of currency so they can debase it.
But that would be too complicated, wouldn’t it? It wouldn’t permit your precious government to surreptitiously collect revenues above and beyond those which it collects through direct taxation. So, no, we can’t have sound money, we have to have political money.
And that’s not even true for all new money. Open market transactions by the Fed do not all result in the monetization of debt. The recent purchases by the Fed of Mortgage back securities and other toxic assets aimed to clean up the balance sheets of commercial banks illustrates this very well. Here you have hundreds of billions of dollars being injected into the system without monetizing any debt.
And that’s not even true for all new money. Open market transactions by the Fed do not all result in the monetization of debt. The recent purchases by the Fed of Mortgage back securities and other toxic assets aimed to clean up the balance sheets of commercial banks illustrates this very well. Here you have hundreds of billions of dollars being injected into the system without monetizing any debt.
DD5,
From what I understand all the money that is being created there is being rolled onto the government debt. What creditable source did you obtain your information?