In America, the US dollar is the state’s fiat currency. It all starts with the US Treasury exactly who creates bonds which are united states government IOU’s that are paid back on the specific time period with attraction.
Within the store-bought banking sector we now have what I refer to as “magic money creation” which is actually 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 who received that deposit has become legally allowed to remove $90. 00 or ninety percent of your deposit and re-lend it to someone else.
The Treasury holds each month auctions to sell off its bonds to primary agents, who are the major banks. Then the US Federal Preserve enters the game by investing in all the bonds from the loan companies through something called “open market operations”.
The entire system of getting money from nothing is an entire scam. It all starts while using the Federal Reserve and the YOU AND ME Treasury exchanging IOU’s. Some check is an IOU for cash and a link is an IOU to be repaid with interest at a lot of later date. Cash comes into existence once the Fed concerns someone a check.
The next person after that comes along, and borrows funds. Once the new borrower gives the seller for what they will bought the money again is usually re-deposited into the bank and after this there is $271 dollars with deposit. This creation in money through deposits and loans (fractional reserve lending) keeps re-occurring to when at some point your original $100. 00 deposit has grown to $1000. 00 (ten times the amount of your original deposit) in fiat currency made out of the bank.
At last over time, there becomes surplus bonds at the Fed and cash in the Treasury. That Treasury now takes this excess cash and deposits it into the various twigs of government.
This can be the Ultimate Government backed and sponsored pyramid scheme, when only the banking top dogs who own the Fed and other central banks around the world, massively profit by stealing coming from generations of innocent locals.
Nevertheless it’s important to note, that when that Fed writes and problems a check, there is no capital what so ever inside account to cover the amount of which usually check. The account those checks are written out of will always carry a good zero balance. Therefore each dollar that exists, is in fact borrowed and must be refunded.
The person who received your money from the bank as a loan will use it to buy something such as a car. Then see your face will pay the car dealer with the money he borrowed. Nowadays the car dealer will bank this money into his own account at the bank. Now there is $190. 00 on deposit and the loan provider can legally steal Three months percent again or $81. 00 and lend the idea out.
Once again nothing backs those 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 in the Treasury in the form of income taxes. Precisely what pays the principle and interest on the bond that Fed bought with a examine from nothing. US citizens are actually forced into paying income taxes for the use of our recent money supply system.
Which is in that case spend on wars, military, governing administration salaries, social programs, open public work projects and other debts spending that keeps on re-occurring. Next all those government employees and military staff take their salaries and deposit them into various bank accounts throughout the nation. This is how the fiat capital now enters the financial banking sector.
Once again any banks go back to the US Treasury auctions the next month obtaining more bonds and selling them to the Federal Reserve. And every month this bike of buying and selling keeps on getting repeated.
In that way actually leaving your profile with only $10. 00 or ten percent of your total deposit. However your loan provider statement will still show the entire $100. 00 pounds or one hundred percent of your deposit, on deposit in your bank account.