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[bob ford <bobford79 AT yahoo.com>]

What you are describing sounds good, but it isn't the way money works in 
modern economies.  'All" money in this economy was created from debt.  
Without debt, in our economy, there is no money.

I'm going to brrow someone elses explanation, here (with a link to the 
populist party from which it came).  This is a critique of the best short 
video on money, I have ever seen.  Click on the link, I provided below their 
explanation, and you can watch the video for free.  It is called "Money As 
Debt".  You are right; your way would be better.  It is simply not the system 
we now have....bobford

   Money as Debt    
 
 
   
by Carolyn Baker

  
Anyone who hasn't watched "Money As Debt," an animated DVD by Paul Grignon, 
should consider purchasing this extraordinary explanation of money's origin 
in an economy totally dependent on debt. Almost everyone has seen footage of 
federal printing presses cranking out paper money, and some of us have even 
visited a government mint or two and have observed the process firsthand. But 
like so many other illusions with which the U.S. economy is replete, money is 
not created by government printing presses. 

During the first few minutes of "Money As Debt" I began feeling my eyes 
glazing over in anticipation that I would soon begin viewing photo footage 
instead of animation. I then realized that I, like the masses of Americans 
who demand that every video experience provide them with entertainment, was 
unconsciously holding the same expectation. I then promptly hit the rewind 
button and started over, this time listening and watching attentively. 

"Money As Debt" is not entertainment-far from it. The film offers amazingly 
elementary facts about the creation of money in the United States, narrated 
by a soothing voice, which could make for a bland presentation, yet the 
film's message is anything but vapid. In fact, if it doesn't leave your blood 
boiling, it behooves you to check your vital signs. 

Beginning with the most fundamental question of all, Grignon asks: Where does 
money come from? The answer to this question will almost never be found in 
grammar school-or even college. What we aren't told in formal education is 
that money is created by central banks. 

Banks create money, not from their own earnings or from the funds deposited 
by customers, but from the borrowers' promises to repay loans. Most 
importantly, borrowers not only promise to repay, but to repay with interest, 
and the bank writes the amount of money of both into the borrower's account. 

Grignon opens with a story from antiquity. In the days before paper money, 
goldsmiths produced gold coins and kept them safe for the purchaser in the 
same way that banks hold deposits today. These goldsmiths soon noticed, 
however, that purchasers rarely came in for their actual gold and almost 
never all at the same time. So the gold merchants began issuing claim checks 
for the gold which made the exchange of gold in the marketplace easier and 
less cumbersome. Thus, paper money was born which made doing business much 
more convenient. 

Eventually, goldsmiths began loaning money to customers and charging interest 
on the loans, and borrowers began asking for their loans in the form of claim 
checks. The goldsmith shared interest earnings with depositors, but since no 
one actually knew how much gold he was holding, he got the idea that he could 
lend out claim checks on gold that wasn't actually there and soon started 
becoming enormously wealthy from the interest paid on gold that didn't exist. 

Thus began the power to create money out of nothing, but it wasn't long 
before bank runs began, and banking regulations evolved regarding how much 
money could be lent out. However, the regulations allowed a ratio of 9 to 
1-that is, banks could lend out 9 times the amount of the deposits that were 
already there. This policy has come to be known as Fractional Reserve 
Banking. Regulation also arranged for central banks to support local banks 
with emergency infusions of gold, and only if there were many runs at once 
would the system crash.

Fast forward to 1913 when that so-called progressive president, Woodrow 
Wilson, signed into law the Federal Reserve Act which created the banking 
cartel now in charge of America's money system. 


For those who have not seen Aaron Russo's DVD "Freedom To Fascism" - run, 
don't walk to see or purchase it. It is required viewing for understanding 
the Federal Reserve System and the power it has over the U.S economy and over 
our individual lives. Very few Americans know how money is created and even 
fewer know how the Fed originated and what it actually does. Does anyone 
really believe this is an "accident"? As the media guru Marshall McLuhan is 
reported to have said, "Only the small secrets need to be protected. The big 
ones are kept secret by public incredulity."  

Whereas U.S. paper currency used to be backed by gold, that is no longer the 
case, and we have instead a fiat currency backed by nothing except the word 
of the Federal Reserve that the money is worth its stated value. Moreover, 
money today is created as debt, that is, money is created whenever anyone 
takes a loan from a bank. In fact, every deposit becomes a potential for a 
loan-a process which can be and is repeated many times, ultimately creating 
infinite amounts of money from debt. 

Whereas the 9 to 1 ratio reigned at the beginning of banking regulation, 
today in some banks, ratios are as high as 20 to 1 or 30 to 1, and 
frighteningly, some banks have no reserves at all! 

The bottom line is that banks can create as much money as we can borrow!
 
This is the link to the video: 

http://video.google.com/videoplay?docid=-9050474362583451279


This is the link to the populist party (I know nothing about them, but I 
borrowed their explanation, so I shoulsd provide a link to their site

http://www.populistamerica.com/money_as_debt

--- On Thu, 10/16/08, roxann <roxann AT ancientearthwisdom.com> wrote:

> From: roxann <roxann AT ancientearthwisdom.com>
> Subject: Re: [Homestead] It depends on whose ox is being gored.
> To: bobford79 AT yahoo.com
> Date: Thursday, October 16, 2008, 2:33 PM
> why wouldn't there be money if there was no debt? what
> about to pay for goods and services rendered? there would be
> the opportunity for people to be more creative or productive
> and make more money by making whatever good or service they
> sell to be more desired by the public, or by producing more
> of it. their businesses would grow slowly, as more money is
> saved up, more supplies can be purchased or more equipment
> purchased, etc., and the business could expand based on real
> income. banks should only lend what they have in deposits.
> larger banks with larger deposit bases, will lend more money
> than smaller banks with smaller bases. why is that the
> making of a 'bad' economy? to me, it seems the
> sensible economy. real money exchanged for real goods and
> services.
> 
> Roxann, NW AR
> http://blog.ancientearthwisdom.com (Ozark Musings from the
> homestead)
> http://www.madisonwoods.wordpress.com (Fantasy Fiction
> works in progress)
> 
> 
>  -------Original Message-------
>  From: bob ford <bobford79 AT yahoo.com>
>  Subject: Re: [Homestead] It depends on whose ox is being
> gored.
>  Sent: 16 Oct '08 19:44
>  
>  That is something else I don't know how to
> answer.  If we had no debt (used no credit) there would be
> no money.  Our economic system is built on debt.