Ron Paul 2002 Predictions Come True

Quote from PhucilliJerry : That's nothing, banks create money out of nothing every time they make a loan, then collect interest and principle on those loans or take the collateral such as a house if someone defaults. The whole monetary/financial system is a fraud.

and yet you use it....

So does that make you complicit while also criticizing the system you happen to use

Quote from Ryu-bom : and yet you use it.... So does that make you complicit while also criticizing the system you happen to use

Quote from PhucilliJerry : That's nothing, banks create money out of nothing every time they make a loan, then collect interest and principle on those loans or take the collateral such as a house if someone defaults. The whole monetary/financial system is a fraud.

That's not creating money out of nothing...that's creating money out of money...or in other words, making a dollar out of 15 cents.

If the bank started with nothing, then they would have no money to lend in the first place.

Quote from 403forbidden : That's not creating money out of nothing...that's creating money out of money...or in other words, making a dollar out of 15 cents. If the bank started with nothing, then they would have no money to lend in the first place.

correct me if I'm wrong... say the debt is 15 trillion and the debt ceiling is increased to just say 19 trillion...basically just zero's are added(paper money isn't always created) and the FED puts an interest on the 4 trillion...so basically money was just created out of thin air...how off am I.. maybe I'm missing something..

Quote from papitosabe : correct me if I'm wrong... say the debt is 15 trillion and the debt ceiling is increased to just say 19 trillion...basically just zero's are added(paper money isn't always created) and the FED puts an interest on the 4 trillion...so basically money was just created out of thin air...how off am I.. maybe I'm missing something..

No, money was not created out of thin air simply because an additional 4 trillion was added to the debt ceiling. The government would have to actually exercise it's power to borrow, and actually borrow the extra 4 trillion first, before interest can be applied. And thus, like I said before, that scenario is not creating money out of nothing, rather it is creating money out of money (creating interest from the 4 trillion principle).

Quote from 403forbidden : No, money was not created out of thin air simply because an additional 4 trillion was added to the debt ceiling. The government would have to actually exercise it's power to borrow, and actually borrow the extra 4 trillion first, before interest can be applied. And thus, like I said before, that scenario is not creating money out of nothing, rather it is creating money out of money (creating interest from the 4 trillion principle).

right, the debt ceiling is increased, meaning you just borrowed 4 trillion, and then there is an interest on that 4 trillion... and how is it creating money out of money if we're in debt? now, say we weren't in debt, and say we were in a trillion surplus, then the creating money out of money would make a little more sense...dunno, just trying to understand...

Quote from papitosabe : right, the debt ceiling is increased, meaning you just borrowed 4 trillion,

Wrong.

Increasing the debt ceiling simply means the government can borrow more than the original limit...if it chooses to. No lending transaction, or transfer of funds, has occurred simply because the debt ceiling is increased.

Quote from papitosabe : and then there is an interest on that 4 trillion... and how is it creating money out of money if we're in debt?

The LENDER is creating money out of money. They are creating interest out of leading the original principle. That is creating money out of money.

Quote from 403forbidden : Wrong. Increasing the debt ceiling simply means the government can borrow more than the original limit...if it chooses to. No lending transaction, or transfer of funds, has occurred simply because the debt ceiling is increased. The LENDER is creating money out of money. They are creating interest out of leading the original principle. That is creating money out of money.

ok so the debt ceiling is raised, then the transaction occurs and now, the gov't has an add'l 4 trillion...where did that 4 trillion come from? because basically the FED just added zero's.. still doesn't seem like money out of money, ... I'm just not understanding it then... I'll try and read up on it...

Quote from 403forbidden : The LENDER is creating money out of money. They are creating interest out of leading the original principle. That is creating money out of money.

thx for the info..couple more questions and I'll shut up..

oh, ok..so the FED is actually lending that 4 trillion??? hmmm...didn't know that...so whatever that interest is (dunno), they're getting pretty rich eh?

oh..and how does the FED get their money back, if we're already in debt? does the gov't use that 4 trillion they just borrowed to pay the interest? or who pays it and how? would love to know what the interest is, and see how much the FED has made...couldn't find it anywhere...

Quote from PhucilliJerry : That's nothing, banks create money out of nothing every time they make a loan, then collect interest and principle on those loans or take the collateral such as a house if someone defaults. The whole monetary/financial system is a fraud.

I am having difficulty following this. So please help.

You say :bankS" (which presumably includes non-fed banks such as BoA).

Ok, I vaguely recall claims that banks can lend more money than their assets -- something called fractional something? Ok, say a local bank has $1 M in assets and now wants to lend out $3M. Obviously they have to transfer that money out. So it cannot be that they can just fake the whole thing. So I am assuming this is where the feds come in picture. Banks can borrow money from the feds at a low interest rate. So this local bank borrow $2M form the feds at a low rate and lends it to people like you and me at a higher rate.

So now it is 30 years later and this mortgage is paid back completely. I am sure you do not pretend that the local bank does not have to pay back the money to the feds. If so, then the net profit for the bank is the difference in interest that the feds charged them and the interest that they changed on the mortgage. Right?

Now to the feds ... it seems some people here claim that the feds can print money like there is no tomorrow. I find that hard to believe. Is it possible that they print money and they buy the equivalent of that money from the government in treasuries? (I am really confused here.) If true, then I am again kinda sure that you do not claim that the feds in principle do not have not pay back that money, only that they would keep the difference in interest. Am I more or less correct?

I am not saying the above is not bad. I am saying that the above is not as bad as what I thought was being claimed here, that the fed can print money with no approval and keep it for themselves.

I am sure most of you opponents of the fed are not in principle against making money from lending your money out. It seems to me you are against fractional something and against the ability of the fed/gov to print money out of thin air. I cannot say I am not in agreement with you on that. I just do not understand this subject well.

Quote from TRNT : I am having difficulty following this. So please help. You say :bankS" (which presumably includes non-fed banks such as BoA). Ok, I vaguely recall claims that banks can lend more money than their assets -- something called fractional something? Ok, say a local bank has $1 M in assets and now wants to lend out $3M. Obviously they have to transfer that money out. So it cannot be that they can just fake the whole thing. So I am assuming this is where the feds come in picture. Banks can borrow money from the feds at a low interest rate. So this local bank borrow $2M form the feds at a low rate and lends it to people like you and me at a higher rate. So now it is 30 years later and this mortgage is paid back completely. I am sure you do not pretend that the local bank does not have to pay back the money to the feds. If so, then the net profit for the bank is the difference in interest that the feds charged them and the interest that they changed on the mortgage. Right? Now to the feds ... it seems some people here claim that the feds can print money like there is no tomorrow. I find that hard to believe. Is it possible that they print money and they buy the equivalent of that money from the government in treasuries? (I am really confused here.) If true, then I am again kinda sure that you do not claim that the feds in principle do not have not pay back that money, only that they would keep the difference in interest. Am I more or less correct? I am not saying the above is not bad. I am saying that the above is not as bad as what I thought was being claimed here, that the fed can print money with no approval and keep it for themselves. I am sure most of you opponents of the fed are not in principle against making money from lending your money out. It seems to me you are against fractional something and against the ability of the fed/gov to print money out of thin air. I cannot say I am not in agreement with you on that. I just do not understand this subject well.

http://www.amazon.com/Creature-Je...445&sr=8-1

Read this book and your confusions will be clarified. Also google fractional reserve lending.

***The money doesn't come from "The Feds"***** The money comes from the Federal Reserve, which are NOT NOT NOT NOT NOT "The Feds"! As said 1000 times in this thread, they are a private corporation with the unconstitutional Congressional permission to print ad infinitum the paper and worthless coin that we call "money".

When a local bank engages in fractional reserve lending (dangerous), they look to the Federal Reserve to create the money out of nothing to give to them at incredibly low rates (just about 0%) at the so-called "Fed Discount Window" ---- the three things fraudulent about this system are:

1) The money is not backed by anything finite that takes effort to find and gather and is easily divisible/quantifiable (e.g. gold, silver, etc.)

2) Tying in to problem #1, there is no limit to how much the Federal Reserve can print, leading to hidden taxation of the populace through inflation

3) Fractional reserve lending is in and of itself fraudulent, at least when the "Lender of Last Resort" is the Federal Reserve, which will bail out any large enough bank that loans out too much fictional money to too many irresponsible people ----- the bailout mechanism ends up actually being the American people through inflation, making fractional reserve lending a direct attack on the American economy, like a devious cancer

Quote from Ryu-bom : and yet you use it.... So does that make you complicit while also criticizing the system you happen to use

If I could find an employer to pay me in gold and silver or lead and brass or eggs and steak, I would take it. I'm as much out of the system right now as I can be to still function in our society.

Quote from 403forbidden : That's not creating money out of nothing...that's creating money out of money...or in other words, making a dollar out of 15 cents. If the bank started with nothing, then they would have no money to lend in the first place.

So you deposit $1000 in Bank A. Bank A makes a $900 loan to me which I use to buy something and the money gets deposited at Bank B. Bank B then loans out $810 to TRNT who buys something and the money goes to Bank C. Bank C then makes a loan to papitosabe who buys something and the money goes to Bank D.

I have $1000 in my account still.
Someone at Bank B has $900.
Someone at Bank C has $810.

There is now $2710 in the system when only $1000 actually exists (and this goes much much much further). You can "technically" argue that the first $900 was derived from the original $1000. But what happens in the next steps? Money is being created from "money" that does not actually exist. Banks create more money than the Fed in this country. And it is this method of loaning money into existence that makes our debts un-payable. The debt, either public or private, must always increase, otherwise we get deflation because the payment of debt extinguishes money from the system. And, because interest was NOT created when the loan was created, debts must increase faster than payments/defaults or there will NOT be enough money in the system to make those payments.

Quote from TRNT : I am having difficulty following this. So please help. You say :bankS" (which presumably includes non-fed banks such as BoA).

They both do it. When you or I go get a loan, the bank creates money. When the government goes to the Fed for a loan, they create money. It is a privilege of the banking cartel to create money.

Quote from TRNT : Ok, I vaguely recall claims that banks can lend more money than their assets -- something called fractional something? Ok, say a local bank has $1 M in assets and now wants to lend out $3M. Obviously they have to transfer that money out. So it cannot be that they can just fake the whole thing. So I am assuming this is where the feds come in picture. Banks can borrow money from the feds at a low interest rate. So this local bank borrow $2M form the feds at a low rate and lends it to people like you and me at a higher rate.

Claims? The NY Fed even "educates" people on this. Pages 8-10 speak directly about how banks create money:

https://www.newyorkfed.org/public..._Banks.pdf

The Feds aren't required, all that is required is that you deposit your money at the bank. And don't take it all out. Ryu's statement above has some merit, if enough people took their money out of the system it would collapse. The banks are only required to hold 10% reserves, so if you have $10k in the bank, they only have $1k of that on hand at any time. But if you went to close out your account you'd get it all back, if you were first in line, if you were in the middle of the pack, you'd have to wait for the FDIC or a bank holiday would be declared at which point who knows when you'd get anything.

Borrowing from the Fed is one way to do it, but they generally use that money to buy Treasuries and earn the interest spread that way.

Quote from TRNT : So now it is 30 years later and this mortgage is paid back completely. I am sure you do not pretend that the local bank does not have to pay back the money to the feds. If so, then the net profit for the bank is the difference in interest that the feds charged them and the interest that they changed on the mortgage. Right?

Well that's not really how it works as the NY Fed comic above shows. If you had a 30 year mortgage for $250,000, the bank was able to create that money for you to pay the other bank/person using only $25,000 on reserves, most likely from deposits of customers, not loaned money from the Fed. Now, after 30 years the bank gets paid $250,000 on which it only used $25,000 of capital on hand. But they didn't just get principal, you paid them interest too. So you paid interest to the bank for loaning you money that did not even exist.
Think about why a bank wouldn't just buy a house outright and then you pay them back monthly for 30 years? It is because the bank does not have the money and must create it as a loan. Yet, if you default, the bank gets the collateral, the house, for $25,000 minus any principal plus interest payments you already made. Money is created as debt. If I remember correctly, only coinage in this country is debt free.

Quote from TRNT : Now to the feds ... it seems some people here claim that the feds can print money like there is no tomorrow. I find that hard to believe. Is it possible that they print money and they buy the equivalent of that money from the government in treasuries? (I am really confused here.) If true, then I am again kinda sure that you do not claim that the feds in principle do not have not pay back that money, only that they would keep the difference in interest. Am I more or less correct?

Why? They control money supply. QE, Quantitative Easing is nothing more than a deceptive way to say printing money or inflating the money supply. Now they do buy financial assets with that money, but the banks aren't selling them quality assets for that money, they're selling worthless assets, usually at face value, so the Feds balance sheet is in all likelihood, a disaster.

Well they don't really print, they create credit money, 1's and 0's that the Treasury receives in return for interest bearing bills and bonds and notes. But the Fed has NOTHING to back those up with. Money that comes into existence from Treasury borrowing does not even have the 10% backing like bank loans do.

They're supposed to pay it back, but have you seen a loan repaid by the government? I haven't, they just borrow more, "roll" it over into new debt and keep paying interest on it. I think the Western world has $8 trillion dollars of debt that needs to be "rolled over" this year. It will be very interesting to see how that plays out, especially with Europe and Japan.
Essentially you are correct, when a loan is repaid, the principal is extinguished because it was created as debt, and the interest remains as pure profit for the lender.

Quote from TRNT : I am not saying the above is not bad. I am saying that the above is not as bad as what I thought was being claimed here, that the fed can print money with no approval and keep it for themselves.

What is the difference? It's not bad that banks can create a commodity, our method of exchange, out of nothing? No private entity should have that power.

Quote from TRNT : I am sure most of you opponents of the fed are not in principle against making money from lending your money out. It seems to me you are against fractional something and against the ability of the fed/gov to print money out of thin air. I cannot say I am not in agreement with you on that. I just do not understand this subject well.

Well, the thing is, those interest payments are never created. So lending under a debt based monetary system will always migrate all money/assets to the lenders, in our case, the banks.

Ask yourself, why were the banks bailed out? Why didn't the government help the people out and tell the banks to apply that money across all mortgages over a period of time, that TARP bailout probably could have paid everyone's mortgage for a couple of months. This didn't happen because the banks have to create more debt/money. If they had paid our debts, more money would have been extinguished from the system and the recession would have been worse. Now people are going to say that is why we need more stimulus, when what we really need is sound money. Money that is not created as debt.

Quote from saxman717 : ***The money doesn't come from "The Feds"***** The money comes from the Federal Reserve, which are NOT NOT NOT NOT NOT "The Feds"! As said 1000 times in this thread, they are a private corporation with the unconstitutional Congressional permission to print ad infinitum the paper and worthless coin that we call "money".

So you say the Federal Reserve is not "the Feds". Then who do you think/claim "the Feds" are?

Quote from saxman717 : When a local bank engages in fractional reserve lending (dangerous), they look to the Federal Reserve to create the money out of nothing to give to them at incredibly low rates (just about 0%) at the so-called "Fed Discount Window" ---- the three things fraudulent about this system are: 1) The money is not backed by anything finite that takes effort to find and gather and is easily divisible/quantifiable (e.g. gold, silver, etc.) 2) Tying in to problem #1, there is no limit to how much the Federal Reserve can print, leading to hidden taxation of the populace through inflation 3) Fractional reserve lending is in and of itself fraudulent, at least when the "Lender of Last Resort" is the Federal Reserve, which will bail out any large enough bank that loans out too much fictional money to too many irresponsible people ----- the bailout mechanism ends up actually being the American people through inflation, making fractional reserve lending a direct attack on the American economy, like a devious cancer

1. I do not see (understand?) what the problem with #1 is as long as the government backs the money.

2. When you say there is no limit, exactly what do you mean? Do they need approval from the government to print money? So do they at least need to inform the government that they printed new money?

3. I disagree with this, I think. Here is an example:

Local bank has deposits of $1M. According to you, they need 10% cash on hand. That means they can lend out $0.9M. Exactly, what is wrong with that?

Quote from TRNT : So you say the Federal Reserve is not "the Feds". Then who do you think/claim "the Feds" are? 1. I do not see (understand?) what the problem with #1 is as long as the government backs the money. >>Civics101 ---- the government is THE PEOPLE! *Faceslap*! Did I really need to clarify that for you? 2. When you say there is no limit, exactly what do you mean? Do they need approval from the government to print money? So do they at least need to inform the government that they printed new money? >>I mean there is no limit. It is as simple as that. They report money printed as "M2" money in circulation, I believe. 3. I disagree with this, I think. Here is an example: Local bank has deposits of $1M. According to you, they need 10% cash on hand. That means they can lend out $0.9M. Exactly, what is wrong with that?

>>It is not their asset to lend and subsequently treat the loans as an asset! From that 900K, 810K is loaned out to other folk at interested, then 10% of that, 10% of that etc. The original bank still owes someone 900K, the 2nd bank owes people 810K etc......but at the same time, other people and banks have just receive 900K and 810K and (on and on it goes)..... to work with! Just read the book I linked you to and start by googling fractional reserve lending. Try to wrap your head around it and when you do, you will be mad.