Re: How to save the Big 3 US automakers
onder: I'll get right on that once my Magic 8 Ball "Who's Picture is That Edition" comes in the mail.
<=== Meet Master Charles Ponzi. His creation was largely expanded on a more largely scale and his model is used to establish modern banking system worldwide. This system is legal because its enforced with legal force (army and police), its stealth because media are bought during 1920’s by the same crooks who run the show and the system is going on for so many years because people are ignorant and deliberately brainwashed by these media. Usury Lords don’t want people to see that politicians are just puppets in their hands - the cloak of deception – The Matrix.
Actually this scam started way back in 1694 when The Bank of England was established. From this point we have a gigantic scam where one legal institution could lend out money that they actually don’t have. Now we come to a point to ask ourselves what is money, real money? We have to go deeper in history to explain the foundations.
In the earliest times, people traded goods and services directly. This form of exchange is known as "barter." That is, if a fishing tribe desired to have maybe wheat, which they themselves did not produce, they would seek out other individuals that produced wheat, and then they would exchange theirs for fish.
But barter had limitations in the marketplace.
People perceived pretty quickly problems with that direct exchange: if you wanted, for example, fish and you had wheat, but the people who had fish didn't desire the wheat, you were stuck. Unless you went out and found some other good, possibly berries, that everyone in that society consumed. Then you would trade the wheat for the berries in full confidence that you could turn around and trade the berries for the fish or anything else you desired.
Eventually, the most widely accepted goods in a society became valued for their use in indirect exchange. Money is simply another name for the most generally accepted medium of exchange.
Gold and Silver were one of those commodities that were accepted as medium of exchange. As early as the 16th century in Europe, goldsmiths stored gold coins for their customers for a fee and issued receipts for the gold to the depositor. Thus began the use of paper as money.
These receipts soon became widely accepted as means of exchange, since it was easier and safer to use the receipts for significant transactions. This was the origin of banknotes as money substitutes. These first bankers then took that process one step further. If the goldsmith had 1,000 ounces of gold and 1,000 ounces of legitimate receipts being held by the depositor of that gold, he could increase his profits by merely printing another thousand ounces worth of receipts, and lending them out. In which case he would effectively get fifty-percent reserve banking, or fractional reserve banking. Only a fraction — 50% of the receipts — were now backed by gold.
There was no longer a one-to-one ratio of paper to gold. Now there could be three or four pieces of paper in circulation for every unit of gold in the vault. These bankers were no longer simply storing or warehousing gold for a fee, they were artificially inflating the money supply and loaning out these phony receipts at interest. This system became known as "fractional reserve banking" and was later transported to the early American colonies. It formed the root of the American commercial banking and ultimately the Federal Reserve System.
This is a fraudulent system, it's not allowed in any other business. If you had a grain warehouse that had loaned out the grain it was supposed to have in storage, that's considered criminal, and you would go to jail. But the banks are the one industry that's allowed to get away with this and to profit from it.
As long as all the claim check holders didn’t come to the vault at the same time and demand real gold, how would anyone find out?
During many years, the magnitude of banking loans and their ostentatious wealth did trigger suspicions. Some depositors started to demand real gold instead of paper representations. This set off rumors. Suddenly, several wealthy depositors showed up to remove their gold. The game was up!
A sea of claim check holders flooded the street outside the closed doors of the bank, like in 1907. The bankers did not have enough gold & silver to redeem all the paper they had put into their hands. This is called a “run on the bank” and is what every banker dreads. Bernard Madoff was running this same game. But his game is nothing when comparing to the global scene.
This phenomenon of a “run on the bank” ruined individual banks and, not surprisingly, damaged public confidence in all bankers. It would have been straightforward to outlaw the practice of creating money from nothing. But the large volumes of credit the bankers were offering had become essential to the success of European commercial expansion. So, instead, the practice was legalized and regulated.
Bankers agreed to stay in the limits on the amount of fictional loan money that could be lent out. The limit would still be a number much larger than the actual value of gold & silver in the vault. Quite often the ratio was 9 fictional dollars to 1 actual dollar in gold. You can read this in a workbook issued by The Fed “Modern Money Mechanics”
It was also arranged that, in the event of a run, central banks would support local banks with emergency infusions of gold. Only if there were runs on a lot of banks simultaneously would the bankers’ credit bubble burst and the system come crashing down as we see it today.
Over the years, the fractional reserve system and its integrated network of banks backed by a central bank has become the dominant money system of the world. At the same time, the fraction of gold backing the debt money has steadily shrunk to nothing. In the past, the total amount of money in existence was limited to the actual physical quantities of whatever commodity was in use as money. For example, in order for new gold or silver money to be created, more gold or silver had to be found and dug out of the ground.
In the present, money is literally created as debt. New money is created whenever anyone takes a loan from a bank. As a result, the total amount of money that can be created has only one real limit - the total level of debt.
Governments place an additional statutory limit on the creation of new money, by enforcing rules known as fractional reserve requirements. Essentially arbitrary, fractional reserve requirements vary from country to country and from time to time
Today, a bank’s reserves consist of the amount of government-issued cash or equivalent that it has deposited with the central bank, and the amount of already existing debt money the bank has on deposit.
To illustrate this in a simple way…. let us imagine that I opened a new bank and I don’t have any depositors yet. However I have made a reserve deposit of $1,111.12 of existing cash money at the central bank and the required reserve ratio is 9:1. This is by law and you can read it in Modern Money Mechanics.
1. The doors open and my new bank welcomes its first loan customer. The customer needs $10,000 to buy a good used car. At a 9:1 reserve ratio, the bank’s reserve at the central bank, also known as “high-powered money”, allows it to legally conjure 9 times that amount, or $10,000, into existence on the basis of the borrower’s pledge of debt. This $10,000 is not taken from anywhere. It is brand new money simply typed into the borrower’s account as bank credit. The borrower then writes a check on that bank credit to buy the used car.
2. The seller then deposits this newly created $10,000 at his bank. Unlike the high-powered government money deposited at the central bank, this newly created credit money cannot be multiplied by the reserve ratio. Instead it is divided by the reserve ratio. At a ratio of 9:1, a new loan of $9,000 can be created on the basis of the $10,000 deposit.
3. If that $9000 is then deposited by a third party, at the same bank that created it, or a different one, it becomes the legal basis for a third issue of bank credit, this time for the amount of $8100. Like one of those Russian dolls, each layer of which contains a slightly smaller doll inside, each new deposit contains the potential for a slightly smaller loan in an infinitely decreasing series.
4. New money will always be deposited at a bank, and the reserve ratio process can repeat itself over and over until almost $100,000 of brand new money has been created within the banking system. All of this new money has been created entirely from debt, the whole process legally authorized by the initial reserve deposit of just $1,111.12, which is still sitting untouched at the central bank!
5. Now, unless each successive loan were deposited at the same bank, it cannot be said that any one bank got to multiply its initial high powered money reserve almost 90 times by issuing bank credit out of nothing. However, the banking system is a closed loop, bank credit created at one bank becomes a deposit in another, and vice versa. In a theoretical world of perfectly equal exchanges, the ultimate effect would be exactly the same as if the whole process took place within one bank. That is, the bank’s initial central bank reserve of a little over eleven hundred dollars allows it to ultimately collect interest on up to $100,000 the bank never had.
The banks can only practice this money system with the active cooperation of government.
Furthermore, bankers create only the amount of the Principal. They no not create the money to pay the Interest. Where is that supposed to come from?
The only place borrowers can go to obtain the money to pay the Interest is the general economy’s overall money supply. But almost all of that overall money supply has been created exactly the same way –as bank credit that has to be paid back with more than was created!
So everywhere, there are other borrowers in the same situation, frantically trying to obtain the money they need to pay back both Principal and Interest from a total money pool which contains only Principal. !!!!
It is clearly impossible for everyone to pay back the Principal plus the Interest because the Interest money does not exist. So in order to get your money to pay back the debt you are enforced to borrow more so that pyramid does not collapse.
And there you go. US total debt is over 65 trillion. This is the reason why you have high prices and low wages; they need you to go in debt so with your new loan they will pay back their old debts. Your new loan is new “money” in the circulation, new debt that someone else will pay. This is the reason why Detroit makes bad cars. They don’t want them to last long. They want them to serve you just for a few years so you could buy a new car, a new debt. That’s the reason why western societies have become consumer societies. The pyramid must not collapse.
But it did. It was done deliberately when the whole world was integrated in one Big Ponzi Scheme. And his name is only used because he was the first person who dared to use this enslaving system with no license from the Usury Lords like Madoff had.
The whole world is integrated in one system of dependence and the collapse of western consumption will lead to collapse of eastern production. This is designed, its staged. After every collapse of the world we are closer to a one world Government. Just like after WWI and WWII they brought us League of Nations and UN.
"We are on the verge of a global transformation. All we need is the right major crisis and the nations will accept the New World Order."
Lord David Rockefeller
If you want to hear how US Ponzi Scheme runs listen to Peter Schiff. I listen to him every Wednesday; he has a good view on sound economics. Download his show from
24 December. Or listen his predictions several years ago on
Youtube.
If you want to know where US economy is heading listen to world’s No.1 forecaster
Gerald Celente.
On Youtube find Max Keiser and Jim Rogers, they also have a good view on economic issues.
