Where does money come from?


Diabloii.Net Member
Where does money come from?

As stated above, where does it come from? Who makes the money? How can money just be "created" into existence? It's supposed to represent something of value, but how can something of value be made into existence in form of money? Man... this is an endless paradox D:

I can somewhat understand how banks COULD go about it: Someone deposits something valuable and the bank gives the person something that represents their possessions in the vault (that being paper money).

Well that's weird because nowadays we don't put anything of value in the bank beside paper money! But where does that paper money come from? WTF!?!?!? How does paper money come to existence? It certainly isn't just given to people fresh out of the printer. And then again, what gives the paper money value? Sure, it's something that we all agree has a certain value but why...?

Imagine when the US came into existence. How did the US dollar come to be? Did the government just take some foreign currency, burn it, and create dollars to make the amount of money equal? Or did it just create some money out of nowhere and other countries agreed to view it as something valuable but gave it some kind of debt?

.... I can't figure this out.

I've watched a video about this topic but I've been a little bit confused. From what I understand, majority of the paper currency is made by banks. The bank gives out a loan to the borrower, but the money that is given out is not actually real. The bank really gives out money that it doesn't not have, hence, in reality, it is actually a debt to the borrower.

So basically, the money that we deal with nowadays is made up. It has absolutely no value as it was forced into existence and represent nothing valuable. When money is returned to the bank, the bank really "earn" any profit because the money that they borrowed didn't exist in the first place. We're dealing in paper that represents a "promise" of payment but since all of it cycles in and out of the bank, the "payment" is not actually redeemed, therefore money can be created and as it cycles through people it is being returned to the bank therefore the bank doesn't have to keep the so called promise.

Here's a diagram of what I've figured of the explanation:

1. Jake wants to loan money to buy a new home, so he goes to the bank.

2. The bank doesn't actually give him anything valuable, but, instead, it gives him paper that stands for the value that Jake is trying to loan. This constitutes value in itself: a promise for something of value.

3. Jake then goes to buy the home from the seller and hands over part of the promised money to the seller.

4. The bank has a duty to recognize the paper money as something valuable, as made in the promise in the loan.

Now, the truth of reality is this: money has no real value (metaphorically and physically). Money is a debt. If every single loan was payed, money would not exist.

Actually... after writing that block of text I seem to understand how it works... o.o Nevertheless, it's confusing as all hell -.-


Diabloii.Net Member
Re: Where does money come from?

Where is vdezle when you need him?

He can give you a very good overview of why the current US banking system is in the ****ter, but I think his explanations are pretty hard to follow at times (though, I'm told that's partly a language barrier).

How about this: we deal in barter. But, suppose that I am very wealthy, and many people come to me to broker trades, since I have resources, I can often make up small differences in smaller items. So, at some point, someone asks me to lend them some money because they want to go buy grain at the market, but their crop doesn't come in until the summer; so I do, but instead of giving the guy gold or chickens or what-have-you, I give him a letter to the farmer saying that I promise to repay up to X amount on the first guys bill. Bam, money. And the rest you can figure out on your own. (This was just my educated guess; I could be quite wrong.)

It's a good question to ask: what is money? If money is work/value, then where do the actual goods go in trade for that money? I think it's probably the case that for all of the money (excusing for a moment any "fake" money) there is some tradable wealth held in reserve. But, in my example, that wealth doesn't exist, except for in the future.


Diabloii.Net Member
Re: Where does money come from?

Well, I know only little of this, but here it goes:

The money gets produced in a mint. I THINK it would not be the 'banks' who decide how many notes get printed, but the government. I think you are wrong about the lack of value for the paper. I was told long ago that each bill has a tiny portion of vaulted gold somewhere that it represents, but don't take my word on that.

But governments cannot just print off as much paper money as they like, or you get inflation. This is where it costs a wheelbarrow of cash, like billions of dollars, to buy a loaf of bread. It happened in Germany durring the war days, for example.

The mint might take bags upon bags of old, cruddy, damaged bills from the bank and destroy those bills and make more bills to replace those, but they cannot just print off more money for no reason. You can bet this money printing process has levels upon levels of security and monitoring up the ying yang.

Surely, someone else in OTF knows more about all this. My lore is primitive here. But rest assured, the money has true value (except nowadys in USA, according to some experts who believe all the borrowing and spending is devaluing the money being printed off. Ha ha, you gluttons are screwed, and so are your children).


Diabloii.Net Member
Re: Where does money come from?

Sounds like you actually have a pretty grasp on it. You also have a wonderful grasp of the ABSURDITY of it all too. Kudos! :thumbsup:

Yeah, it's pretty much that stupid. I don't know how that is allowed to actually function, but it does.

Money hasn't always been that way, though. Paper money has always been a 'promise', but 'back in da day' (much of the pre-1900's), money wasn't backed by debt, but by actual, tangible resources like gold. It was a promise that could readily by replaced by an actual valuable commodity in more of a bartering fashion. Hmm, in a way, you say that instead of being backed by commodities, it's backed by your mortgage, your car loan, your credit card debt, even your flat-screen tv, microwave, or gas-powered jackhammer-dildo that you're still making payments on!

The problem is, that system depends on people staying in debt on whole, otherwise the money system will collapse, thereby encouraging all of the powers that be to encourage everyone else to constantly be in debt. It also acts as a form of capitalistic enslavement, creating an environment where everyone has to work within an inch of their sanity to keep all these things they've been convinced they can afford, but can't. If everyone owned their own house, you honestly think people would put up with so much **** from their overlords that make a fortune off of their blood and sweat? Hell no! People would have the freedom to be financially independent, start their own business, create their own things of value to other people, etc. As it is, no one has the time for that because they have to spend 60 hours a week trying to pay off the debt they have to get into just to exist.

That's exactly how 'they' want it.

EDIT: DAMN!!! Double-ninja'd!!!

EDIT 2: @stillman: I used to think that each bill was a partial value of resources like gold, but in more recent times, I've come under the impression that that is either non-existent or negligible. And don't be too smug, we used to have a commodity based money system, but guess where we got the whole debt based money system? That's right. Europe. If we're screwed, I guess you'll already be there to greet us at the bottom. :wave:


Diabloii.Net Member
Re: Where does money come from?

Paper or digital money has no value. Money is medium of exchange of real goods and services that everybody wants and needs. Something like Ist runes in LOD, those runes are common denominators for mass exchange, everything worthy is almost valued in them. I guess those people that sell digits for real money on d2 shop sites, were the ones who founded this rune as a common denominator. Those who control the market with lot of ‘goods’, are the ones who brought us these rules. It’s mostly convenient for them.

The same thing goes for gold. It has no real value, but people used it in the past because it was shiny and scarce and therefore was good to be used as coins, medium of exchange of real goods. Not everyone could control the amount of coins in the market and therefore control the society. Usually it was the ‘god giving right’ that Kings had the right to own mines. Those who controlled the mines were the true rulers and history was in fact a never-ending battle over who controls the printing press – Kings or The Usury Lords.

Bringing too much gold coins to the market will force inflation and reduce your purchasing power and if you have low amount brings depression, like now. Hording too much goods, usually over 2/3, from the market makes you the ruler of prices and goods flow.

The reason why people still trust in gold is because in the early days of mankind the only thing that made kings different and distinguish from the petty people are his ‘feathers’. More feathers made him more unreachable. And the shiniest feathers were gold. Since he had everything he wanted, he had to make his queen the shiniest of them all. During war times, gold has no value at all. You cannot eat it. I experienced this. Except if you have some and you can smuggle gold to the outside world for food. But if you have huge disaster, whole region or the globe, gold means nothing. Same thing with money, people in those situations trade real money which are commodities.

Gold could be a better solution in a transition period like now, because it’s more tangible than fiat issued money. Gold could keep your purchasing power over these times. Just keep in mind what could you buy for one ounce of gold now and 100 years ago. Basic things such as food, clothing and shelter. In a period where Usury Lords were blowing the balloon they heavily tried to suppressed the price of gold. This is because they wanted to artificially lower gold as better solution than their digits and force people into markets where they will be sheered when the time comes. They wanted you to trust more in their ghost digits.

Diamonds have no real value also. In fact they are not scarce at all and earth has much of them to bring the prices to zero. But The Usury Lords convinced common people over 150 years that it’s cool have them and you are a looser if you don’t have them, which makes them gods because they controlled the mines. Since most people are not smart, they once again felt on their frauds. Over the decades diamonds were found all over world, not only in South Africa, and the Usury Lords had a rough time of convincing everybody who discovered and owned diamond mines that they should deliver their diamonds to their headquarters in The City of London. This way they controled the volume of diamonds all over the world, through one pipeline. This gateway makes them always scarce. On the other hand they destroy huge amount of them at the source, in the mines, so they create artificial scarcity. Something like Enron did with electrical power in the US. They created artificial shortages and that boosted the prices. Or what the D2 sites do with Annies. They control the technology of spawning Uber Diablo which makes them the Usury Lords of Bnet. They dictate the prices.

Usury Lords are the true owners of most central banks in the world. They own the private banks and the Centrals banks. Countries that don’t want to join The Matrix, so called democracies or free world, are called rogue nations. They are subject of demonizing and false flag operations.

I can explain you the true mechanism of money creation and it means. In the meanwhile read my history background of The Matrix. They through it your face but you cannot see it.

Notice in the link that I predicted these days of depression :whistling:


Oil is one commodity that is also controlled by the Usury Lords. In most parts of the world that is. Except for Russia and Venezuela, which is why they want to attack them and take their goodies. This is their main goal - to take down the western world and more easily merge them with the rest – one world government, new world order. So, they need to destroy your industrial capacity by bringing new Carbon Taxes. These taxes will accelerate fall of your society, which is their agenda. But Russia is their biggest obstacle because Russians developed Deep oil wells 40 years ago. This technology, pumping oil in deep ground, makes oil plentiful, which is opposite for what they want. They cannot stand the idea that any country has abundance of energy and therefore be independent. But making money scarce on fraudulent excuses is also good. That’s why you have depression.
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Diabloii.Net Member
Re: Where does money come from?

This highly recommanded, witty book tells you all about it.



Diabloii.Net Member
Re: Where does money come from?

Where money actualy comes from ( at least here in switzerland ) : http://en.wikipedia.org/wiki/Central_bank
That statement provided from en.wikipedia.org for the ignorant masses is fraudulent.

Germany’s central bank, the Deutsche Bundesbank - has admitted that banks also create credit out of thin air. Just as they do.

They state in a publication entitled “Money and Monetary Policy” (pages **-93)

4.4 Creation of the banks money

Money is created by “money creation”. Both [central banks] and private commercial banks can create money. In the euro monetary system [money creation] arises mainly through the granting of loans, as well as the fact that central banks or commercial banks to buy assets such as gold, foreign currencies, real estate or securities. If the central bank granted a loan from a commercial bank and crediting the amount in the account of the bank at the central bank, created “central bank money.”
The same money creation is described in Modern Money Mechanics issued by the private Federal Reserve. Both brochures are for internal usage and they thought that common people won't bother with their boring guidelines.

But some people do like to read what they write. They are interested in all off their scams. Someone like me. :coffee:

Switzerland is no exception. In fact, central bank of all central banks is in Basel.



Re: Where does money come from?

Switzerland is no exception. In fact, central bank of all central banks is in Basel.
I live a 5 minutes bike ride from the BiZ :)

But i am no expert on these matters, i just found that wiki link i posted and it somehow remembered me of the economics class i once had.



Diabloii.Net Member
Re: Where does money come from?

The same thing goes for gold. It has no real value, but people used it in the past because it was shiny and scarce and therefore was good to be used as coins, medium of exchange of real goods.
Eh, it had economic value for the reason that people wanted it because it was shiny and scarce. The only way for something to have economic value is for people to want it -- regardless of the reason they want it.

I live a 5 minutes bike ride from the BiZ :)
I generally drive when I need to get to my BiZank.



Europe Trade Moderator
Re: Where does money come from?

Money is nothing but IOUs, a promise to do a favour or give you something in return. For example, German bank notes had the text "The German Reichsbank pays 100 Mark in gold on receipt of this bank note" before the 1923 crash (maybe even later). Money isn't bound to gold anymore, however, it's bound to the trust which the people have into the power of the economy behind it.

It's a fundamental aspect of all money that it is made out of nothing since the times humans exchanged food, arms, slaves, drugs or whatever for shiny baubles, promises or favours. Paper money, book money, stocks and all the other "products" are just taking things a step or two further, e.g. making bets about the future value of let's say an imaginary 1000 ounces of gold. It's what bookmakers earn their living with and if the bookmakers cannot pay, your money is gone. If your future pension is funded on anything of such an abstraction level, you could as well place it all on dog racing bets. And of course, you know that it involves a lot of cheating, don't you?


Diabloii.Net Member
Re: Where does money come from?

While the theoretical idea is that money is a representation of goods or services, the reality is that it's a way of controlling people and making them do what the rich wants them to. Every time you spend money on something you really don't need, you hand over some freedom to the rich.

Leopold Stotch

Diabloii.Net Member
Re: Where does money come from?

money is the root of all evil. there, that's really all you need to know, haha!

and Vivi's book had a pug on it. cute! :cloud9:


Diabloii.Net Member
Re: Where does money come from?

While the theoretical idea is that money is a representation of goods or services, the reality is that it's a way of controlling people and making them do what the rich wants them to. Every time you spend money on something you really don't need, you hand over some freedom to the rich.
Yes, this is something I want to comment on. A good way to fight back against all the ursury lords n' such (corporate bastards) is to not buy stuff. Just get food and bills paid. Then, you can try out some of these things that I do:

1- Watch free stuff on internet. The more the merrier.
2- Buy a toy that lasts a long time (like a game about demons with very high replayablility) so you can chissel the cost down to fractions of pennies per hour of playtime from all the entertainment you have gotten out of that one purchase.
3- Be a hermit.
4- Buy cheap wine, or quit drinking.
5- Make your own emergency savings fund for medical things instead of paying for health insurance (for those of you who get to choose to opt out of such plans)
6- Don't give any money to any charity, ever, and tell them to ask the bank or Ford, since you are nothing but a little ant.
7- Emulators. Free games! Your entire SNES collection was a waste of money, though it was fun at the time, becasue it all became free later.

What the hell am I talking about? You are all doing half these things already. Maybe just keep doing them more, and buy less stuff?

Many people protest agaisnt giant corporate greedy bastards, but these same sheep keep buying their stuff! Why don't they just ban together and all agree to stop eating at McDonnalds and stop buying Coke and Pepsi?



Diabloii.Net Site Pal
Re: Where does money come from?

It's been answered already, but I'll chime in anyway. ^_^
As stated above, where does it come from?
Money is an abstraction of value. It allows people to liquidate their labor into a common good that everyone wants, which eases trading between people with disparate skill sets.

Example: I am a software engineer. If I want to trade for a chicken, it's extremely unlikely that I will be able to trade my services as a software engineer to a farmer who raises chickens. However, if there were something that everyone wanted and would take in trade, I could trade my abilities as a software engineer for that thing, and the farmer could trade his chicken to me for that thing as well. That thing is money.

Who makes the money?
In days of yore, government would be responsible for physically making money. These days, however, most money is "made" electronically via a country's central bank.

How can money just be "created" into existence? It's supposed to represent something of value, but how can something of value be made into existence in form of money?
Money only has value as long as the people agreeing to trade for it believe it has value. If you printed your own money and tried to trade it to me for my services, I would refuse, since I would not believe I would be able to trade your personal money for goods in the future. You could say that I would have no trust in the value of your money, or what I could purchase with it.

It used to be that paper money was simply a proxy for a real, tangible good (gold, for example). That paper money could be redeemed for gold at any time, and generally paper money was just a convenience so that people would not have to lug around a ton of metal. Even so, a paper bill backed by gold still had to be taken on trust, since a person's personal use for gold would generally be rather small.

When that trust breaks down, the money you possess is worth whatever the intrinsic value of the material it is printed on possesses. In the case of currency backed by gold, the worth (minus trust) is whatever the worth of gold is. Gold is a useful metal, being conductive, non-corrosive, etc. and reasonably rare, so that even when the value of the trust is gone, the money has some intrinsic value left to it.

Today, money is backed by nothing but trust. So when that trust breaks down, paper money (which is really cloth, not paper) has exactly the value of a scrap of cloth. Perhaps you could stitch a quilt with it and barter that away. :jig:

The bank gives out a loan to the borrower, but the money that is given out is not actually real.
In a proper system, the money given out would represent real work done by someone in the system. But since we don't have a proper system:

So basically, the money that we deal with nowadays is made up.
This is the case. As a shameless plug, I'll quote myself on my blog about the subject:
Me said:
Most people don't really have a grasp of how the Federal Reserve works, so before I can explain the tax to you in detail, we'll start with a primer on central banking.

As (I hope) most people know, the bank itself does not keep on-hand 100% of the money it takes from you in deposits. Banks make money by taking the money you deposit, and loaning it out to people and businesses that need it and can afford, in the bank's estimation, to pay it back with interest. Obviously, they can't loan all of it out at once, or there would be nothing to give you when you come into the bank to make a withdrawal. Banks, therefore, keep a small percentage of total funds on hand to accommodate these day-to-day transactions. This is known as fractional-reserve banking, and the minimum reserve percentage a bank must keep on hand (typically 10%) is mandated by the Federal Reserve, for banks in the US.

Sometimes, however, after making a loan, a bank finds that it does not have this minimum reserve amount on-hand. In this case, the bank with too little reserves may take out a loan from another bank that does have reserves in excess of the minimum. The weighted average of the interest rates on all of these loans across the banking industry is known as the federal funds rate. Like any economic scenario, this rate is subject to supply and demand. If a bank has a large reserve on-hand, the price of borrowing money from them (the interest rate) goes down. Likewise, if a bank has very little reserve cash on hand, the price of borrowing that money from the bank goes up. So we can see that if all banks in the system have little cash on hand, the federal funds rate (being the average of all transactions) will be high.

In a situation where there is little to no money to borrow in the banking system as a whole, and the interest rates for such loans are high, what is a bank under the reserve minimum to do? This is where the Federal Reserve comes in. The Federal Reserve may lend money to a bank to increase its liquidity. This allows the Federal Reserve to manipulate the federal funds rate, since the liquidity of the system as a whole is the major factor in the interest rate at which banks loan to one another.

Where does the Federal Reserve get the money to loan? The answer, as you may have guessed, is "Nowhere". Some might say that the Federal Reserve simply "prints" the money, but this is not literally the case in the modern banking system. In simple terms, the Federal Reserve just adds some zeros to the accounts of the banks in question. Whether by printing money or adding zeros, however, the result is the same: inflation.
Read the rest if you want to know exactly why this is bad. But generally, inflation is the process by which value is taken from you surreptitiously and returned to the banks (vdzele's "usury lords"), so they can loan it back to you with interest. If for some reason they manage to royally **** up this nearly fool-proof robbery scheme (as they did recently with the economic downturn) and people stop paying the banks, the government steps in to tax you at the point of a gun so they can make sure the banks don't go under ("too big to fail!")



Diablo: IncGamers Member
Re: Where does money come from?

Very interesting and clear interpretation SaroDarksbane.

Since you seem to know more than I do, is there a working alternative to this "scam"?