Sunday, October 1, 2017

The Federal Reserve's Balance Sheet

Dispelling some of the myths and hysteria 

In order to understand the Fed's $4.5-Trillion 'denominated in dollars' balance sheet, you have to understand what comprises that balance sheet.  So in that vein, let's cover just two of its primary components.

The first component is $2.4-Trillion of bank assets (not money) held on deposit at the Fed.  The majority of these bank-owned assets (primarily Treasuries and Agency Mortgage Backed Securities) are referred to as "excess reserves". The Fed, being a depository for the banking system, has little control or say over the disposition of those assets.

The second component is $1.53-Trillion of assets (primarily Treasuries and Agency Mortgage Backed Securities) held as collateral backing the issue of legal tender from the Treasury, it cannot get rid of that.

Setting aside several billion in other Fed held assets they can’t unload, you’re looking at maybe about $520 Billion or so in Fed held assets that they can actually work with. Not so much, is it.

Let’s look at this from a different angle, 'reserves'. 'Reserves' is one of those ambiguous Fed doublespeak terms that can reference a range of different items and aspects of the bankster system serving different functions. So, let’s cover, what are ‘reserves’?

1) Reserves are: Cash held in bank vaults (actual money).
2) Reserves are: Bank assets held on deposit at the Fed  (not money).
3) Reserves are: Assets purchased by the Fed in its open market operations (credit generation).
4) Reserves are: The liquidity provided by #2 and #3 in the interbank settlement system (credit).

When the Fed talks about 'adjusting bank reserves', it’s talking about using #3 to effect changes in #4 and because the interbank system is a closed system, under normal conditions, the Fed could affect the overnight interest rates (interest charged on loans within the interbank system) by buying and selling its reserve assets, which affected available liquidity (also referred to as 'money supply') in the interbank system, which also affects the banking system's ability to generate debt/credit as 'loans'.

That’s not the case anymore. With the banks holding excess reserves (assets) providing liquidity (credit) to the interbank system, the Fed’s ability to affect Interbank interest rates in the traditional manner has been effectively naturalized. This is because the Fed’s share of the liquidity is proportionally insignificant to the liquidity provided via the banks’ reserve assets parked at the Fed.  The Fed has effectively lost control of the interbank system and its balance sheet. The only thing the Fed can do is arbitrarily set interbank interest rates, as it has been doing, along with paying interest on excess reserves as a means to establish a floor under those rates and,  hopefully, temper the pavlovian responsiveness of the markets and Wall Street by dazzling them with bullshit.

One of the primary reasons the Fed is reluctant to reduce its balance sheet by selling its comparatively meager assets is because, they know full well that the banks that buy those assets will turn right around and park them in their reserve accounts, effectively nullifying their efforts while highlighting what a farcical joke the entire Fed system is.  And this is why the Fed has chosen to reduce its balance sheet in the manner it has, which is by allowing a set amount of securities come to term and simply zeroing that amount off their balance sheet.  (How much 'liquidity' do you figure that drains from the system as opposed to selling the securities?  How come nobody is puzzling this?)  A side affect from the Fed reducing its balance sheet in this manner is that it also reduces USG debt by the same amount.

*Even if the Fed could convince the banks to relinquish their control over the interbank system and withdraw their reserve assets, those assets would just become 'assets held outside the Fed', not money.

And none of this has anything to do with the actual money supply,
which currently stands @ $1.68-Trillion in U.S. Legal Tender.

Note: In case it wasn't made clear enough; the bank reserves provided by the banks and held at the Fed are the assets, not the liquidity (electronically transferable claims) the assets provide to the interbank system, which is managed by the Fed via it's Open Market Operations.

Also, the Fed does not create reserves. The only agencies that create reserves are the Bureau of Printing and Engraving (Federal Reserve notes), the Treasury (Treasury Bonds & Special Drawing Rights Certificates),  Government National Mortgage Association, Federal National Mortgage Association, and the Federal Home Loan Mortgage Corporation (Agency MBSs).  Federal Reserve notes, Treasuries, SDRs and Agency MBSs, along with Gold Certificates, are the only items that legally qualify as reserves, none of which are created by the Fed.  Fed and bank generated debt/credit is not a reserve asset.

Who Is Holding All the Excess Reserves?

Feel Free To Comment

Monday, February 29, 2016

MONEY (or the lack thereof)

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 is not borrowed, loaned or spent into circulation.  The only way it gets into circulation is by your demonstrated productivity and by your 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, which is not designated or acknowledged in law as being a money, or a currency, or a medium of exchange, with the only legal aspect associated with it, residing in the debts incurred with its use.

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, 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, the Federal Reserve, the U.S. Banking system, IAS-IFRS, US GAAP, 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% Bank Debt, even when it comes from the Fed.

The legal tender 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 surrendered 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 the legal tender 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. It was our money/property first.

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, the medium of exchange (the asset) 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 the 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 card (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, it's just the banks transferring their legal obligations to pay from one account to another.

The notion that we’re using ‘digital money’ or ‘digital currency’ or ‘digital dollars’ or 'credit dollars' or 'credit money' (terms made-up by ignorant people who believe in magic) 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.

Note: Bank deposit accounts are nothing more than bank managed records of legal claims held by account holders against the legal tender money that is supposed/assumed to be in the bank's vault.  That's why deposit accounts are categorized as liabilities of the banks and why account holders are designated as "the creditor" and banks are designated as "the debtor" in all deposit account contracts.  A deposit account (a.k.a. record of bank debt, a legal liability) is not, and cannot be money in and of itself.

When you write a check or use a debit card you are directing the bank to transfer a specified amount of 'money proper' to a designated recipient. Debiting your account signifies that the transfer of money has been made, and crediting the recipient's account signifies that the money has been received and is available for immediate withdrawal or for use in other bank administered transactions.

That the banks resort to debiting and crediting user accounts with the amounts without effecting the transfer of money as directed, is perpetrating a fraud upon the account holders. That the banks do not have the money and do not possess the means to get the money, and referring to that condition of insolvency as 'fractionally reserved banking', only compounds the fraud.

Regardless of anyone's acceptance of a bank crediting their account in the amount as payment, by law, claimed or not, money is still owed to the account holder by the bank.  Crediting a deposit account with the amount and payment are two separate events, especially so in a banking system that is chronically necessitous of the money it owes, in other words, institutionally bankrupt.

The only reason(s) their fraudulent system gives the appearance (perception) of working is the Fed ran interbank settlements system which allows the use of securities as a means to settle accounts between banks instead of the legal tender, which bolsters the perception that their debt-based system works. And I find it puzzling that people claim a credit to a deposit account is money/payment when the Fed ran interbank settlements system conclusively demonstrates that it is not.

Another reason is the fact that the USG does not tax or borrow in the designated legal tender, opting instead to accept the Fed's crediting of the government's accounts in the amounts.


Correcting a few reassuring lies.

The Federal Reserve has to be one of the most talked about and least understood institutions on the face of the planet.  It's attributed with powers it does not possess and functions that it does not do, and the majority of the misunderstanding stems from the profound and systemic conflation of money, credit and asset values, which is exacerbated by an apparent systemic inability to discern the difference between theory and reality.

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."
Please Note: This also debunks the myth of "Central Bank Money" a.k.a. "High Power Money" as well.

Banks are not intermediaries between borrowers and savers (because there's no money), they originate pseudo-loans as pseudo-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

There is nothing in law that designates the 'private debt/credit' generated by banks as being a "money" so, when they use the term "money", think "debt/credit".
Banks do not loan money.
Money creation in the modern economy

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

Payment of obligations and interest on the public debt
"The faith of the United States Government is pledged to pay, in legal tender, principal, and interest on the obligations of the Government issued under this chapter."

Seigniorage in the United States
How Much Does the U. S. Government Make from Money Production?
All profits obtained by the Fed's monetary activities and surrendered to the Treasury are counted as seigniorage interest payments on the notes issued (rent).  In other words, the Fed is paying the Treasury interest on the notes it puts into circulation, and that interest is all of the Fed's profits minus dividend payments and expenses.


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 notes (FRNs), and they must post collateral of equal value to the notes it then issues into circulation.  (The Fed assets used as the collateral mentioned, have changed to Mortgage Backed Securities and Treasuries.  This collateral backs the issue of the notes to the Fed, regulating the Fed's access to the money. it does not back the notes in circulation.)   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, the seigniorage interest payments on the note issue made by the Fed to the Treasury and the fact that the U.S.G. can pay its debts with U.S. legal tender, 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, 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 associated with the debt-based private credit, is held by the debts incurred with its use. 

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 the FOMC as Fed "Monetary Policy" and Rote Hearsay.

Currently, There is a total of $1.65-Trillion in U.S. legal tender money/currency in circulation around the globe. Of that, there is an estimated total of $280-Billion in circulation within the U.S. Of that, there is $74-Billion held in bank vaults.

That $74-Billion held in bank vaults backs the $1.9-Trillion in credited demand deposit accounts. It also backs the $9.3-Trillion in credited savings accounts. It also backs the $100s of billions in bank mediated credit transactions that occur on a daily basis. It also backs all government expenditures.

And that, is the stark reality of the Fractionally Reserved Banking Fraud.

Please note, they're counting $11+Trillion in bank debt to deposit account holders as being the "money supply".

How the Debit/Credit Card System Actually Works

Note: The U.S.G. is under no legal obligation to make good on Fed and bankster generated debt-based private 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.

95% of Economics is pure Bullshit

To Be Continued......

Feel Free To Comment

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 02/2017 the actual Money Supply stands at $1.53-Trillion in circulation and another $2.6-Trillion of U.S.G. securities held as reserves.  That is the extent of our Legal Tender Money (LTM) Supply, everything else is Credit, a ledger book account entry that denotes a legal obligation 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: $1.53-Trillion LTM in circulation (-) $1.18-Trillion LTM overseas (-) $11-Trillion in Deposit Accounts (-) $18-Trillion in Public Debt (-) $59-Trillion Total Economic Debt (-) $1,000-Trillion in Derivatives (+) $183-Billion LTM in Reserves (+) $24-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'.

Within the U.S., that equates to an $11-Trillion, measured in legal tender dollars, gift to the banks.  (For the readers from other countries, just add up total deposit liabilities of your banks, and that will be your gift to your banking system when they implement a ban on 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.

Note: When you use a debit card, you are using bank debt administered as a line of credit. This is because all deposit accounts are merely a record of legal claims held by depositors against the money (checkable deposits) that is supposed to be in the bank's vault. All deposit accounts are bank debt. That's why depositors are listed as the 'creditors' and the banks are listed as the 'debtors' in all deposit contracts.

When a bank generates credit as a deposit, it is creating a legal claim against itself, a legal obligation to pay the account holder in legal tender dollars upon their demand. Luckily for the banks, hardly anyone bothers to make that demand. (It's so much easier to use a debit card.)

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 depositor withdrawals.
That's called "Fractional Reserve Banking".  
The 'Fractional Reserve System' was born in bankruptcy and it will die bankrupt.

Making It Real
Rendering total Bankster controlled, Government administered ownership
of your lives and livelihood.


Joshua Krause


Acting Man

Feel Free To Comment

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 $0.03 in legal tender.

Note: 97% of the dollar's value has been stolen via the use of bankster generated debt/credit, erroneously referred to as 'dollars' and operating in the guise of 'our money'.


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!

And think about this; they're counting $11+Trillion in bank debt obligations to deposit account holders as being the "money supply".  How insane is that?

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?

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.

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!

Blog Archive

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