Sunday, November 25, 2007

Financial Terrorism Against Humanity

Not one in a thousand understands why the existing monetary system is the ultimate terror against humanity. In order to investigate the causes of wars, violence, poverty, prostitution, and unemployment, one has to analyze the origin and source of money & banking.
Today's money is only "property" which is a set of legal rights. That property is the claim, it is not the thing; example, you have property in the land, in a five dollars bill. Property is money only if it reliably can be exchanged for most other property or for labor (medium of exchange).
Ownership of a central bank note is money. The note itself is not money (it is ink on paper). Like all property, money is not physical, it can be traded without actually changing hands. Money is a form of property that reliably can be traded for other property or for labor (services). Historical examples of money :ownership of tobacco & gold.
At present, money comes in two forms : (a) ownership of central bank notes and (b) debts of banks (i.e. credits). It has no intrinsic value, it is a means of measurement to gauge real wealth (goods & sevices) an individual controls. Its primary function is to activate production and facilitate the purchase and sale of goods & sevices, and to provide a means to store wealth in a form other than real property.
Are all debts money ? No. A person IOU is not money.
Are all IOU's worthless ? No. Banks'IOUs are widely accepted; e.g. the balance in your checking account.
Banks'credit is money, your credit is not.
Banks do not lend out ownership of central bank notes. Instead, banks issue new IOUs and lend them out. The IOUs are technically a form of money called "debt", but most usually, such money is called "credit". Thus, banks lend out debts of the bank, IOUs of the bank.
On examining the anatomy of a bank loan, it is a temporary swap of debt that is NOT money (i.e. the borrower's debt) for debt that IS money (i.e. the bank's debt). Therefore, all the loans are trade : when you borrow money, you are trading your debt for the bank's debt for a certain fee : interest rate. In reality, you traded for a debt that nobody trust (not money) for a debt that everybody trust (is money). Ultimately, interest is the money paid in exchange for the temporary use of the bank's credibility. "Credit" comes from the latin "credo" meaning "I believe", and "credible" comes from the latin "credibilis" meaning "worthy of belief". Bank lends not money but an IOU, which is not backed by any monies. They create as much as we can borrow, worse yet, they create only the principal not the interest.
All national circulating medium of exchange are now at the mercy of loan transactions of banks which lend not money but promises to supply money they do not poessess. Without the borrower's document to sign (promise to pay) the banks have nothing to lend.

Money is the NOTHING you get for SOMETHING before you can get ANYTHING. Those nothing, something and anything of this definition refer to things of real value in themselves, usually termed goods & services i.e. wealth.
From the poimt of view of the owner or possessor of it, money is the credit he has established in his favour with the community in which it passes current or is "legal tender", by having given up in the past valuable goods & sevcies for nothing, so as to obtain at his own convenience, in the future, equivalent value in turn for nothing. The owner of money is the creditor and the issuer of it is the debtor.
Thus, Money is a legal claim to wealth over and above the wealth in existence, all of which in an individualistic society is already in the ownership of others independently of this claim. The owners of money possess claims to what they have given up, but what they have given up does not actually exist.
From the point of view of the issuer, money is a right of action against the community to supply goods & services, or what is the same thing, to discharge the debt incurred through obtaining them from the seller, so that a right of action against a bank to supply money on demand is a right of action against the community to supply goods & services on demand.
The owner of money is the creditor and the issuer of it is the debtor, for the owner of money gives up goods and services to the issuer. This is the origin of modern money as nothing for something on the part of the legitimate user, as something for nothing on the part of the issuer.

Almost all money in existence in the economy represents debt. Checkbook money exists only as a bookkeeping entry on the ledgers of banks and is created every time a bank makes a loan or an investment. Banking is the only business where all the inventory is created as it is needed at no cost and essentially without labor. There are no purchases made and no effort expended other than that made by the employee who entered the new numbers (merchandise) - the checkbook money.
Depositing into the borrower's checking account an amount equal to the amount of the loan is the way banks generally extend credit at the same time create new money. The monumental problem comes because only the principal is created and lent - not the interest. Still the interest must be repaid along with the principal to the money creators, obviously a physical and mathematical impossibility.
What gives value to money ? its exchange value depends simply on the amount of wealth (goods & services) people voluntarily prefer to go without rather than to possess; and that is the same as the amount of credit they retain as money.

Finally, we all should ask three questions, I have yet to find the answers :
1- Why do governments choose to borrow money from private banks at interest when governments could create all the interest-free money they need, themselves?
2- Why create money as debt, why not create money that circulated permanently ?
3- How can a money system dependent on perpetually accelerating growth be used to build a sustainable economy ?

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