Monday, February 29, 2016

MONEY




What is our current money?
Let's recap, shall we.....

Within the U.S. there is a debt free money already available that circumvents bank lending, it's called "legal tender".  Legal tender (public money*1) is not borrowed, loaned or spent into circulation and the only legal way to get it, is by your demonstrated productivity and by demand for the medium.

Another interesting thing, neither the Fed or the banks possess the legal authority to create money, and they don't.  What they do create is asset backed, debt based private credit, not a legal tender.

You see, ours is a Legal Tender Monetary System. This means that our money is not defined by Ludwig von Mises, John Maynard Keynes, Murray Rothbard, Milton Friedman, Joseph Salerno, G. Edward Griffin, Paul Krugman, Mike Maloney, Peter Schiff, Ron Paul or any other economist or talking head.  Nor is it defined by Austrian Economics, Keynesian Economics, Monetarist Economics, Capitalist Economics, Socialist Economics, Modern Monetary Theory, the Federal Reserve, the U.S. Banking system, conventional wisdoms, esoteric blather or what people may use.  It means our money is defined by law.  And nowhere in law does it designate or even acknowledge Fed and bank generated asset backed, debt based private credit as being a legal tender, or money, or currency, or a medium of exchange, it is 100% private issue, Bank Debt, even when it comes from the Fed.

The legal tender (public money) in use today is provided as a duty, an obligation of the U.S.G., born from the outlawing and confiscation of gold as money back in 1933. People with and without bank accounts, turned in their gold property and received the legal tender as replacement property. The legal tender system today is an extension of that time. That time has obscured the legal tender's gold origins, existing as the people's property first, makes it no less our property in the present, and the banking system's legal obligation to provide either upon demand or over time, the fruits of our labor as represented by those deposit accounts, our legal tender property.

The legal tender (Federal Reserve notes, U.S. notes and coins) is the official currency of the United States, it is what the U.S.G. owes in payment of its debts and it is what the banks owe to their depositors.  Fractional reserve banking allows banks to generate credit (a non-monetary unit) in excess of the legal tender held as reserves.  The reason that the credit is a non-monetary unit is that it fails to meet any of the qualifying aspects of a money, it has no physical presence so it's not a medium, it doesn't store or transfer value, it's a marker of debt, and it requires an intermediary for its use and continued existence.  The only reason private credit is accepted is the underlying belief that it represents the transfer and payment of actual legal tender money and that, the legal tender is available upon demand.  In other words, it is the legal tender that is being utilized 'in absentia' by people in commerce, not the debt obligations of the banks.

People are confusing a means of payment, the transfer of a debt obligation (credit), for the medium of exchange, what is owed as payment (an asset).  By legal definition United States coins and currency, including Federal reserve notes, are legal tender money, a medium of exchange by law. Checks as well as debit cards, credit cards, money orders, etc., are a means of payment, referred to as a generally accepted (institutional) arrangement or method that facilitates delivery of money from one to another. Payment has not been made unless or until actual money proper has changed hands. All credit is debt outstanding.

All you’re doing when you use a debit/credit card (private bank credit) to make a purchase is, transferring your obligation to pay the vendor, to the bank, payment has yet to be made. The bank deducts the amount from its debt to you, as represented by your account with them, and adds that amount to the debt it owes to the vendor, as represented by his account with the bank. There was no money or currency of any type, digital, electronic or otherwise, used or exchanged in that transaction, just a transfer of an obligation to pay, which has yet to be met.

The notion that we’re using ‘digital money’ or ‘digital currency’ or ‘digital dollars’ or 'credit dollars' or 'credit money' (an oxymoron) as a medium of exchange is nothing more than a trick of the mind, a figment of our overactive imaginations, a deception, it’s how we rationalize the transaction, and it's how the banksters get away with stealing our labor and wealth.

.....


Correcting a few reassuring lies.

The "Money Multiplier" theory, is pure fiction.
The Bank of England Corrects a Widespread Myth

Does the Money Multiplier Exist?
The role of reserves and money in macroeconomics has a long history.  Simple textbook treatments of the money multiplier give the quantity of bank reserves a causal role in determining the quantity of money and bank lending and thus the transmission mechanism of monetary policy.  This role results from the assumptions that reserve requirements generate a direct and tight linkage between money and reserves and that the central bank controls the money supply by adjusting the quantity of reserves through open market operations.  Using data from recent decades, we have demonstrated that this simple textbook link is implausible in the United States for a number of reasons.   First, when money is measured as M2, only a small portion of it is reservable and thus only a small portion is linked to the level of reserve balances the Fed provides through open market operations.  Second, except for a brief period in the early 1980s, the Fed has traditionally aimed to control the federal funds rate rather than the quantity of reserves.  Third, reserve balances are not identical to required reserves, and the federal funds rate is the interest rate in the market for all reserve balances, not just required reserves.  Reserve balances are supplied elastically at the target funds rate.  Finally, reservable liabilities fund only a small fraction of bank lending and the evidence suggests that they are not the marginal source data for the most liquid and well-capitalized banks.  Changes in reserves are unrelated to changes in lending, and open market operations do not have a direct impact on lending.  We conclude that the textbook treatment of money in the transmission mechanism can be rejected.  Specifically, our results indicate that bank loan supply does not respond to changes in monetary policy through a bank lending channel, no matter how we group the banks."

Here's a good explanation on how pseudo-loans are actually created.
Banks do not loan money.
Basics of Banking: Loans Create a Lot More Than Deposits

Banks are not intermediaries between borrowers and savers, they originate pseudo-loans as deposits, irrespective of credited savings accounts or current reserves held.
Banks do not loan money.
Working Paper No. 529: Banks are not intermediaries of loanable funds

Legal tender money (cash) is not borrowed or loaned into circulation.
Banks do not loan money.
How Currency Gets into Circulation


Applicable Laws and Information.
Federal Reserve Act, Section 16

Legal Tender Status

Legal tender Law


Now, we can observe in the Treasury's Legal Tender Status, (a brief synopsis of the Federal Reserve Act) that the Fed must pay for the production of FRN notes, and they must post collateral of equal value to the notes it issues into circulation.  (The Fed assets used as the collateral mentioned, have changed to Mortgage Backed Securities and Treasuries.)   Also noteworthy is that member banks must buy the notes at face value from the Fed by drawing down their accounts with the Fed and that, Federal Reserve notes represent a first lien on all the assets of the Federal Reserve banks and on the collateral specifically held against them.

Taking that into consideration along with congress's right to take possession of the notes and collateral upon the dissolution of the Fed, we can infer that, the Fed does not own the legal tender Federal Reserve notes.  Combine that with the New York Fed's explanation of how FRNs get into circulation, we can also infer that FRNs are neither borrowed, loaned or spent into circulation.

From this, we can  objectively conclude that Federal Reserve notes are a debt free legal tender currency (public money), issued into circulation through the Fed and the banking system, in compliance with their legal obligation to supply that money property, as represented by the credited deposit accounts, to the account holders upon their demand.

As I cannot prove a negative, the next three assertions require a little bit of effort, they require disproving.

1) There is no law anywhere that grants to the Federal Reserve or the banking system the authority to create money, and they don't.

2) There is no law anywhere that designates or acknowledges the debt based credit generated by the Fed or the banking system as being a legal tender, or money, or currency, or even a medium of exchange.

3) The only legal validity given to the debt based credit, is held by the debts incurred with its use. 

If the banking system collapsed tomorrow and all debt based credit !POOF!ed out of existence, all debts will still be valid and collectible even though the debt based credit used to create and service them, no longer exists.  See: 1930's Great Depression.  2007-10 Credit Collapse.

The takeaway from all of this should be the realization that, there are two Federal Reserve administered systems in operation and running concurrently within the U.S.:
1) The legal tender monetary system. - Implemented by U.S. Law.
2) The Fed and Banks' asset backed, debt based private credit system. - Implemented by Rote Hearsay.

Currently, there is only $1.45-Trillion in U.S. legal tender money in circulation around the globe, with about $280-Billion of that in circulation within the U.S., all the rest is Fed and bankster generated asset backed, debt based credit, not money.

Note: The U.S.G. is under no legal obligation to make good on Fed and bankster generated debt based credit.  They proved that point in the 1930's and again in 2008, so the notion that the U.S.G. will simply print to cover, is erroneous.

Note: *1Public Money: money issued into circulation by a government or its agent and used in daily commerce by the public; legal tender is public money.








To Be Continued......


Thursday, May 14, 2015

The Ban on Cash - Part II


Chasing After Debt


So anyway, I ran my little observation of the 'ban on cash' by Mike "Mish" Shedlock and his reaction was, shall I say, less than receptive.  His response; "banning cash does not eliminate debt the notions is totally absurd and it should be obvious why".

Now, I know that on rare occasions I have managed to miss sighting the tree standing in the forest but, I don't think this is one of those occasions.  I think Mish's apparently startled and clipped response is a product of his rote learning and let me explain why.

If I repeatedly called an apple an orange and I managed to convince others around me to call the apple an orange to the point that everyone routinely referred to the apple as an orange, would the apple be an orange?  The 'obvious' answer is NO.  The apple is an apple and the orange an orange, one cannot change the nature of an apple simply by changing what you call it, obvious.

As with our inability to change the nature of the apple to an orange by simply calling it an orange, calling credit 'money' does not change the true nature of credit to money.  And I think this is the key to understanding Mish's response, and in the push to ban cash.  People have gotten so used to referring to credit as if it were money, they actually believe that credit and money are the same thing, especially so if that credit populates their deposit accounts or comes in the form of loans or even, from the Federal Reserve.  That is simply not the case because unlike money, all credit is someone else's debt, it cannot exist otherwise.  For example, the credit that populates your deposit account, is the bank's debt.

To aid you in understanding my position, let me break it down to its base: Our 'money' is defined by law, specifically Section 31 U.S.C. 5103, it's a short paragraph.  In it, you will not find the credit generated by the banks or the Federal Reserve listed.  In point of fact, there is no law anywhere that grants to either the Federal Reserve or the banks the authority to create money, not even the Federal Reserve Act does that.  That right/privilege/authority is exclusively retained by the U.S. government via the U.S. Department of the Treasury (it's a 'Sovereign Right' thing).

This means that, as of 04/2015 the actual Money Supply stands at $1.36-Trillion in circulation and another $2.6-Trillion held in reserves.  That is the extent of our Legal Tender Money (LTM) Supply, everything else is Credit, a ledger book account entry that denotes a promise to pay LTM, or the assumption that LTM will be paid, either upon demand or over time.  Thanks to modern technologies, we can use these "ledger book account entries" to mimic a medium of exchange, so much so, that we don't even bother with the LTM that supposedly backs the credit's use, and are promised in payment in the end when all ledger book accounts are settled, LTM = Unit of Account (UoA).  Credit cannot be the UoA because it's a promise to pay LTM, all credit is debt.

Let's do a little math: $1.36-Trillion LTM in circulation (-) $620-Billion LTM overseas (-) $11-Trillion in Deposit Accounts (-) $18-Trillion in Public Debt (-) $59-Trillion Total Economic Debt (-) $1,000-Trillion in Derivatives (+) $2.6-Trillion LTM in Reserves (+) $20-Billion in FDIC (I don't know what the FDIC is holding, it could be LTM, or just their fingers crossed for luck) (=) Somebody Is Not Getting Paid.  Can you guess who?



Bankster solution: Ban Cash, Ban LTM/UoA, in effect, they force the apple to be an orange.  Not an unprecedented move, they've managed to get the LTM/UoA outlawed once before, when it was Gold.

What does banning LTM (cash) do for the UoA?  It makes credit the de facto 'money' by which all accounts can be settled.  Hooray for the banksters!  They get out of their obligations to pay LTM upon demand and over time, and the account entries that were on the debit side of their ledger get moved over to the credit side.  (For them, not you, you still owe, you still have to pay.)  Your credited deposit accounts, which were bank debt, are 'monetized' and reserves are no longer needed, as all accounts are now fully covered with credit as the money.  And all those few people with over $250,000 in deposits will be happy because their deposits will be more than just 'iffy bank debt' subject to POOF!ing out of existence the moment their bank goes insolvent. (Goodbye FDIC, your placebo services are no longer needed.)

Most people probably wouldn't even notice the change.  That is, until the Fed sets the interest rates at below zero and the amount is deducted from their deposit accounts. (Gesell's demurrage comes into play.)  With credit as the de facto money, and your deposit account directly affected by interest rates, with a negative rate your only options to prevent loss will be to move your credit to an investment that pays interest, spend your credit. Or, you can just sit back and watch your earnings/savings dwindle away, demurrage.  Most with investable credit will choose to invest and those with modest or humble means, will spend.  Banksters and Wall Street win again, the economy and stock markets get boosted and the banksters get more credit deposited under their "care".

So the banksters have finally reached their promised land, total control over the money supply and the economy via a system of debits/credits, that is 100% theirs.  No bothersome LTM limitations, no more reserves to maintain or constrict their activities, no more threats of insolvency and, no apparent down side.  Well, there is that one pesky little thing, the U.S. government's sovereign right to coin money.

Question: When is the issue of U.S. Treasury Bonds not a debt?  Answer: When the bonds are used to back the medium with which they are paid......WOAH, WAIT, What????

On the Federal Reserve note the 'FRN', our 'LTM': Congress has specified that a Federal Reserve Bank must hold collateral equal in value to the FRNs that the Bank receives. This collateral is chiefly gold certificates and United States securities. This provides "backing" for the note issue.  A commercial bank belonging to the Federal Reserve System can obtain FRNs from the Federal Reserve Bank in its district whenever it wishes. It must pay for them in full, dollar for dollar, by drawing down its account with its district Federal Reserve Bank.  Federal Reserve notes represent a first lien on all the assets of the Federal Reserve Banks, and on the collateral specifically held against them.

The "Federal Reserve Note" designator on every Dollar is not a mark of ownership, it's a mark of Liability.  What is the topic?  Oh yes,  Banning Fed/Bankster Liabilities.....I mean 'cash'.

Question: When is U.S. Government not borrowing to spend?  Answer: When the spending by U.S. Government automatically creates the payment.

The Banksters get their way, cash is banned, their obligations are mitigated, a system of credit/debts is locked in and the entire economic system is theirs to command and control, except they've lost one key element, government debt.  You see, it's not just the banksters that get the benefit of moving their debit to the credit side of the ledger, the U.S.G. gets to do that too.  With the ban  on cash, the U.S.G. takes back its LTM and, it also gets all the assets held by the Fed that were used to back the LTM, as well.  As for the Treasuries held by the banks, the banksters would most likely have to prove that there are no credit obligations attached to the bond at maturity in order to get a reimbursement for holding and using them as collateral backing for the credit they've created, otherwise they may be considered paid in full, or any outstanding credit attached, due and payable.

And the reason for this; it's the U.S.G.'s sovereign right to coin the money.  Credit is now the money, which means that the 'money' (formerly credit) generated from U.S.G. debt is now, the payment in full.  The 'money' generated by banksters using U.S. bonds to cover their obligations, is the property of the U.S.G. as well.  In effect, the banksters were acting as a proxy of the U.S.G. when they used the bond to create the credit, now money.  (Goodbye Federal Reserve, your services are no longer needed.)
Hooray! for the U.S.G.....

As the monetary system currently stands, it is almost entirely a credit/debit system with cash being little more than an addendum, acting as a weak restraint upon the banksters due to its status as the UoA (Unit of Account), the medium in which all credit generated by the banksters is due and assumed payable.  In that regard, LTM (Legal Tender Money) represents the Sword of Damocles hanging over the bankster's head.  And it is that sword they're attempting to get out from under with the banning of cash.


Summary:  
The U.S.G. does not 'borrow' the Legal Tender Money from the Fed.
 Neither the Fed or the banks can create 'Money'.
They can generate credit and use a percentage of 'Money'
as a reserve backing for the credit they generate.
That's called "Fractional Reserve Banking"..  
The 'Fractional Reserve System' was born in bankruptcy and it will die bankrupt.

ADDENDUM:
Making It Real
Rendering total Bankster controlled, Government administered ownership
of your lives and livelihood.
Can you say, TOTALITARIANISM

--------------------------

Joshua Krause

------------------------

Acting Man

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Saturday, May 9, 2015

On The Banning of Cash...



Doesn’t banning cash transform credit/debt into the de facto ‘Unit Of Account’?

If so then, it will make the Fed, whose primary function is converting government checks/debt into spendable credit, obsolete as the very act of deposit creates the credit to pay in one step.  There is nothing to settle, the check is paid in full upon deposit, and any bank can do that. Banning cash would totally eliminate government debt. What would they owe? It’s already paid in full at the moment of deposit !!

What value would a Treasury Bond held by any bank hold? They would no longer be I.O.U. Cash Dollars, they would no longer represent a government debt obligation, as any ‘Promise To Pay’ by government, is paid the instant the banks used it to create credit, paid in full.

With credit as the de facto ‘Unit Of Account’, any credit created by banks using Government Bonds, would have to be returned to the government with the bond as that credit is a product of the bond and is attached to the bond throughout its existence. No bond, no credit. This transforms banks into the primary debtors, effectively reversing the rolls of obligor and obligee.

Those fools in the banking system who are promoting the banning of cash are totally outwitting themselves as it will make all centralized banking with its attendant government debt obsolete, and place the banks who use Treasuries to create credit, in debt to the government!

Also: If they ban the use of cash, that ban would have to be 100%, any less than that, and they leave in place a tool to measure the value of the credit in use, a means by which credit can and would be discounted. To give you an idea of that potential discount; if we were to properly value the 'credit dollar' against the current unit of account, the legal tender FRN, the true value of the bankster's fictitious 'credit dollar' would be around $0.14 in legal tender.


Note: 86% of the dollar's value has been stolen via the use of bankster generated credit/debt, erroneously referred to as 'dollars' and operating in the guise of 'our money'.

Wow......

Random Thought: The reason the QE's didn't work is simply due to the fact that it did not add any 'money' to the economy.  It increased credit/debt but not the actual money supply.  Credit, which is always someone else's debt, is channel locked, it cannot and does not flow the way actual, debt free, money flows, it is not dynamic.  And new credit always has to be borrowed into economic existence.  It is my contention that the economy is starved for the lack of free flowing, debt free cash.

Credit as currency is invisible, it does not provide the tangible, visible proof of quantity and it is this intangible, lack of proof of quantity that lets the government run up an $18-Trillion debt with little inflationary consequence.   Can you just imagine the effects from $18-Trillion in Legal Tender Notes flooding the world?  The dollar's value would have been crashed into a hyper-inflated mass, long before it reached $18-Trillion.    Seeing is Believing.
Something to think about.....

Monday, February 16, 2015

There is a difference between Money and Credit.

Money as defined by law.  Section 31 U.S.C. 5103, defines legal tender as "United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues.

The Fed defines credit as such: "Credit dollars are a debt generated currency that is denominated by a unit of account. Unlike money, credit itself cannot act as a unit of account. However, many forms of credit can readily act as a medium of exchange. As such, various forms of credit are frequently referred to as money and are included in estimates of the money supply."

As an aside; why does the Fed count 'credit', which is primarily BANK DEBT, as if it were money and include it, even though they admit it isn't, as being part of the 'money supply'?  Also noteworthy is the Fed's use of the term "credit dollars", which is a fiction, the credit they generate is neither dollars or a currency.

Do you think you would confuse a gold sovereign with a tally stick? They were both used to purchase the same basic things at the same basic price. Because they shared this functional commonality, does that make them the same thing?  Money - Credit.

What about the official legal tender money supply which is a product of Law and Government, and credit (digital tally sticks), which can be created by anyone in contract. They are both used to purchase the same basic things at the same basic price. Because they share this functional commonality, does that make them the same thing?  Money - Credit.

As with that gold sovereign, you can hold a legal tender note free from any obligatory attachments, not so with credit, it only exist as a debt obligation. In fact, unlike tally sticks, you can't even hold credit, you are totally dependent upon the banking system to hold and manage its existence for you. And when I say existence I mean exactly that, the bank goes insolvent and your credit is gone!...POOF!

Read this carefully:
Congress has specified that a Federal Reserve Bank must hold collateral equal in value to the Federal Reserve notes that the Bank receives. This collateral is chiefly gold certificates and United States securities. This provides backing for the note issue. The idea was that if the Congress dissolved the Federal Reserve System, the United States would take over the notes (Fed liabilities). This would meet the requirements of Section 411 (Federal Reserve Act), but the government would also take over the assets, which would be of equal value. Federal Reserve notes represent a first lien on all the assets of the Federal Reserve Banks, and on the collateral specifically held against them.

Do you comprehend that? (I knew you would)

Now, what does the government NOT get in that transaction?

It does not get the Trillions in credit created by the banks and Wall Street!

Why is that you may ask?

Because all that credit created by the banksters and Wall Street IS NOT PART OF THE MONEY SUPPLY!!!

It is because we conflate money with credit, we are living in a bankster's paradise (debt hell for us).

Do you think the banksters give a rat's ass worth of care that their exuberant over expansion of credit drives inflation up and the value of the legal tender down?  NO!  They just create more credit by having you go further in debt to compensate!

There is no law anywhere that grants to banks the power to create money, not even the Federal Reserve has that power, which is a right retained exclusively by the government via the U.S. Department of the Treasury.

The whole credit system runs on the belief that somebody will eventually pay what is owed.
'Crediting Your Account' and 'Payment' Are Two Different Things

Do you still believe legal tender money and credit are the same thing?

Addendum:
The only ones who benefit from the conflation of money and credit are the issuers of credit with no money.
Has the term 'Fractional Reserve Banking' lost all meaning?
This is how safe your 'money' is when it is deposited in a U.S. bank; it is stolen by the bank at the moment of deposit (assuming the 'money' existed in the first place) and your account is credited with the amount stolen. This means that the richest amongst us have exactly the same amount of 'money' in their credited accounts as the poorest amongst us have in theirs, $0.00.

That a bank maintains some 'money' on hand to placate a few requests for the medium, does not negate the fact that all credited accounts maintain a zero monetary balance. A ledger book entry denoting the amount of 'money' the bank owes to (stole from) the depositor, is not 'money', regardless of anyone's ability to 'simulate spending' that ledger book entry with a debit card. Passing around bank debt from one recipient to another, is not payment for anything. Crediting an account with the amount and actual payment are two different things.
Some people bitch, howl, whine and complain all the time about 'gold' and 'silver' being 'real money' and denounce the 'fiat paper', and they're not even getting or using the 'fiat paper', which is the money as defined by law. Do you know what is not listed in that legal definition of money?  Ledger book entries made by the Fed and the banks denoting the amount of money they owe.
The only reason any government issuing a fiat currency can be in debt is due to the fact that it did not print the payment. This also means that the U.S.G. does not need to 'borrow' or 'tax' to meet any of its obligations. The whole U.S.G. debt meme, is B.S..
**By the way, I just gave you a description of real 'fractional reserve banking', did you spot it?

Banking In Real Time

-----------------------------


Working Paper No. 529: Banks are not intermediaries of loanable funds

------------------------------

 Does the Money Multiplier Exist?

Federal Reserve Board
.......................................

Wednesday, April 27, 2011

All money is currency but not all currency is money


Fiat Currency:
Section 31 U.S.C. 5103, defines legal tender as "United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues."
Federal Reserve notes are legal tender currency notes. The twelve Federal Reserve Banks issue them into circulation pursuant to the Federal Reserve Act of 1913. A commercial bank belonging to the Federal Reserve System can obtain Federal Reserve notes from the Federal Reserve Bank in its district whenever it wishes. It must pay for them in full, dollar for dollar, by drawing down its account with its district Federal Reserve Bank. 
Congress has specified that a Federal Reserve Bank must hold collateral equal in value to the Federal Reserve notes that the Bank receives. This collateral is chiefly gold certificates and United States securities. This provides backing for the note issue. The idea was that if the Congress dissolved the Federal Reserve System, the United States would take over the notes (liabilities). This would meet the requirements of Section 411, but the government would also take over the assets, which would be of equal value. Federal Reserve notes represent a first lien on all the assets of the Federal Reserve Banks, and on the collateral specifically held against them.
By law, Federal Reserve Notes (FRNs) are money, a tightly controlled, tangible product with severe penalties for their unauthorized reproduction.
FRN's (a.k.a. Dollars) are the primary unit of account by which all public/private debt can be extinguished.  They are also a medium of exchange and are assumed to be a store of wealth.
Fractional Reserve Currency:
Commercial banks do not create money as defined by law.  They create a "money substitute" a.k.a. "book keeping money", a.k.a. "electronic digits", a.k.a. "Credit Dollars", a fractionalized derivative of the primary money, Federal Reserve Notes, that is denominated in dollars.  This practice is known as Fractional Reserve Banking (a practice that has been destroying economies, countries and lives for over 600 years).
'Credit dollars' are a debt generated pseudo-currency that is denominated by a unit of account (FRNs). Unlike money (by a strict definition), credit itself cannot act as a unit of account. However, many forms of credit can readily act as a medium of exchange. As such, various forms of credit are frequently referred to as money and are included in estimates of the money supply.
Credit as currency is, quite simply, a promise to pay FRN's (dollars) upon demand as well as over time.  The everyday physical representation of that promise is the debit/credit card, which is the hallmark of modern computerized, fractionalized, debt driven commercial/investment banking.  Literally billions of dollars' worth of transactions are conducted in credit currency each and every day without any thought given to the un-fulfill-able promise that backs its use or the inevitable consequences of its failure.
Our economy is totally dependent upon the continuing flow of digits, which necessitates the continued expansion of public/private debt as well as the continued expansion of assets and asset values, for its survival.
Unlike FRNs, which are an obligation of the government (the provision of a monetary system) and a liability of the Fed (financially liable for every FRN in circulation) .  Credit, when used as a currency, is not covered, thus the need for the FDIC.  The objective of the FDIC is to re-digitize credited deposits (positive credit) that have reverted to their natural state of bank debt upon its failure.  In other words; the FDIC's function is to keep the illusion of "credit is money", and the fractionally reserved banking system that issues and administers this "money substitute", alive. 

Credit has no legal standing as currency, but all debts incurred through its use as such, are legally binding.



How Currency Gets into Circulation




The Chicago Plan Revisited

Aside From Erroneously Calling Bankster Credit, 'Money'

Michael Kumhof Gets Most Of It Right.
He Misses On The Current Fiat


To Be Continued.....

                    
** Without skipping a beat, they took the old "Gold Standard" accounting practices (where governments borrowed or owed gold and went into debt) and applied them to the Fiat as if they were the same!

82 years later and not a hint that anyone has caught on to that scam!

And now they have you convinced that the "Credit" the Fed and the banksters are creating is 'Fiat' too.
damn...


It’s as I’ve stated before (revised):

1787 - 1834
Gold, Silver = Money
Paper = A Proxy For Money
Credit = Debt

1834 - 1933
Gold = Money
Paper = A Proxy For Money
Credit = Debt

1933 - 1990
Paper gets Promoted = Money (Fiat)
Credit = Debt

1990 - Present
Paper = Money (Fiat)
Credit = Debt + A Proxy For Money

In Progress
Credit/Debt gets Promoted = Money = Perpetual Debt

We’ve Been Weaned!









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