Banks Admit They Create Money When Making A Loan

In a post below about the book “The Creature From Jekyll Island”, the claim is made that banks create money when the lend. That the money for the loan is just poofed out of the air when you sign the loan documents.

A lot of people don’t believe that. I don’t blame them. How could our government give the money creation power over to banks? It’s just not possible that’s the way it really works!


Well, sometimes the banks or their masters ( the central banks) do come right out and say it, like the Bank Of England says right here in this PDF on their site…

This article explains how the majority of money in the modern economy is created by commercial
banks making loans.
If you read that, you’ll realize that not only do the bankers create the money in “our”(really their”) economic system, they do it with interest attached, and they don’t create the interest which of course means that more loans have to be made to create the money to pay the interest. Doesn’t that sound like a ponzi scheme to you?

Our Shared Predicament

Back in the day, I used to post a lot about peak oil, global warming, our pyramid scheme financial system and some other related things, but I stopped for a quite a while as most seemed to be not interested or at a loss for what to do. Well, most of what I was saying back then were trends happening or expected to happen and, as they say, time will tell. So I decided to sit back and let things happen for a while and see if what happened adheres to my expectations.

It seems that for, the most part, time is telling. Continue reading


Andrew Jackson’s Farewell Speech

I haven’t posted much cause I don’t think anybody listens, but the farewell speech by Andrew Jackson when he was retiring from the presidency is quite inspiring.
This is an excerpt. The whole speech is here
Emphasis, is of course, mine, although I don’t think he would mind…  😉
Keep in mind he said his greatest accomplishment was abolishing the Second Bank of the United States, a bank in the same model as the Federal Reserve.
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Explaining the “forgivable” home repair loans

I hope you all realize that far from being “free money”, these loans are guaranteed by HUD/FHA and when they’re “forgiven” what actually happens is that the federal government assumes the loan and pays the interest on it from your taxes.

So really, instead of being interest-free and forgivable, you and your descendants will be paying interest on these loans through your taxes forever. The total amount will far exceed the amount that was “forgiven”. And of course, since these loans increase the money supply, as all loans do, the inflation that results will also eat into your paycheck’s buying power.

Don’t worry, the banks get their interest in the end. They’re assured of it because the government has pledged your taxes to pay it. Not only that, but should you end up defaulting on your loan, they have a property that’s been kept up by the taxpayers, rather than they having to rehab the property before selling it as a REO.

The banker’s scam is beautiful in its insidiousness and subterfuge.

Oh, and while helping the elderly and others down on their luck is a fine goal, this isn’t the way to do it. Consider that fact that if these people hadn’t had to pay 2 1/2 times the price of their house in interest on bank-created money, they’d have plenty to do their own repairs.


Housing prices to crater yet again…

Uh-oh! More foreclosed property is about to hit the market!

There’s Never Been a Worse Time to Buy a House » Counterpunch: Tells the Facts, Names the Names
This copy is for your personal, non-commercial use only.

March 08, 2012
The Foreclosure Surge
There’s Never Been a Worse Time to Buy a House

Foreclosure starts surged 28 percent in January, according to Lender Processing Services (LPS).

Now that the banks are confident that a settlement will be reached in the $25 billion robo-signing scandal, they’ve started aggressively processing the mountainous backlog of delinquent mortgages on their books. As the process gains pace, a deluge of REOs will be dumped onto the market pushing down home prices and adding to the 10.7 million properties that are already underwater. Fitch Ratings Agency estimates that home prices could fall another 9.1 percent before the market touches bottom.

Here’s more from CNBC’s Diana Olick:

“… repeat foreclosures hit an all-time high in January, representing 47 percent of all foreclosure starts… This is going to cause some short-term pain in the housing market because as foreclosure starts increase, so do foreclosure sales…. (And) that pushes home prices down…..

We’ve also got … 60 months of inventory to get through in judicial states. Judicial states are the ones where you do need a judge to get through.” (“Unclogging the foreclosure market”, Diana Olick, CNBC) Continue reading


Some quotes about banking

I’ve been trying, here and elsewhere, to get people to realize what the banks are doing to us. But maybe, since I’m just SomeGuyOnTheInternet©, perhaps some quotes from famous people in history might open some eyes.

“But if you want to continue to be slaves of the banks and pay the cost of your own slavery, then let bankers continue to create money and control credit.” – Josiah Stamp

“History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by  controlling money and its issuance.” – James Madison

“If congress has the right under the Constitution to issue paper money, it was  given them to use themselves, not to be delegated to individuals or corporations.” – Andrew Jackson

“The Government should create, issue, and circulate all the currency and  credits needed to satisfy the spending power of the Government and the buying power of  consumers. By the adoption of these principles, the taxpayers will be saved immense sums of interest. Money will cease to be master and become the servant of humanity.” – Abraham  Lincoln

“Issue of currency should be lodged with the government and be protected from domination by Wall Street. We are opposed to…provisions [which] would place our currency and credit system in private hands.” – Theodore Roosevelt

“When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes… Money has no motherland; financiers are without patriotism and without decency; their sole object is gain.” – Napoleon Bonaparte, Emperor of France, 1815
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The National Debt, and debt and more debt…

I really want to know how facts don’t seem to get in the way of people’s opinions. It’s a puzzlement to me, it really is.

There’s ranting on the “other board” about how much Clinton and Obama has raised the national debt. Wow, $6 trillion in 11 years. That is a big number and I agree it’s terrible and more in absolute dollar amount than Reagan, Bush and Bush did in 20 years. Granted, no argument from me. On the other hand, as this page shows, in percentage increase terms, Bush II raised the debt by 89% in 8 years, while Obama is on pace to exceed that (41% in 3 years), he’s got quite a ways to go to surpass Reagan’s record increase in the national debt of 189% in 8 years. (Clinton was 36% in  years and Bush II was 55% in 4 years).

What the narrow focus on Republican versus Democrat avoids seeing, is that all presidents and congresses have increased the debt in the last 40 or so years, no matter what their party affiliation happens to be. This has accelerated since Nixon closed the “gold window” and placed us on a fiat money system with no tangible backing. I can say with complete confidence that should Obama be beaten in this year’s elections, the Republican successor will invariably increase the debt, the only question is, will it be slower or faster than Obama.

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Mortgage and Credit Meltdown

Home Prices Hit New Post-2006 Lows – DailyFinance

[quote]Just when it looked like housing prices were bottoming out and now was the time to snap up the best bargains around comes news that may make you want to cool your heels. The latest updates on the S&P/Case-Shiller Home Price Indices were released on Tuesday, and they paint a picture of deteriorating prices that have continued to descend.

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Unsustainable, but economists ignore it…

In a post on her blog, Gail Tverber places our quandary in plain view for all to see. When analyzed like this, it’s hard to see how anyone can deny the crappy hand we’ve been dealt by the banks and their corporations. At this point, there’s very little any of us can do except stock up on popcorn and enjoy the show.

Repost from Our Finite World:

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The Rich Don’t Create Jobs!

The rich create jobs? Nope it doesn’t make any sense. Sure they can spend money and create a job for a short time, but without customers, those jobs go bye-bye fairly quickly. So who creates jobs then?

Let’s ask a rich guy…

Raise Taxes on Rich to Reward True Job Creators: Nick Hanauer

It is a tenet of American economic beliefs, and an article of faith for Republicans that is seldom contested by Democrats: If taxes are raised on the rich, job creation will stop.

Trouble is, sometimes the things that we know to be true are dead wrong. For the larger part of human history, for example, people were sure that the sun circles the Earth and that we are at the center of the universe. It doesn’t, and we aren’t. The conventional wisdom that the rich and businesses are our nation’s “job creators” is every bit as false.

I’m a very rich person. As an entrepreneur and venture capitalist, I’ve started or helped get off the ground dozens of companies in industries including manufacturing, retail, medical services, the Internet and software. I founded the Internet media company aQuantive Inc., which was acquired by Microsoft Corp. (MSFT) in 2007 for $6.4 billion. I was also the first non-family investor in Amazon.com Inc. (AMZN)

Even so, I’ve never been a “job creator.” I can start a business based on a great idea, and initially hire dozens or hundreds of people. But if no one can afford to buy what I have to sell, my business will soon fail and all those jobs will evaporate.

That’s why I can say with confidence that rich people don’t create jobs, nor do businesses, large or small. What does lead to more employment is the feedback loop between customers and businesses. And only consumers can set in motion a virtuous cycle that allows companies to survive and thrive and business owners to hire. An ordinary middle-class consumer is far more of a job creator than I ever have been or ever will be.

Theory of Evolution

When businesspeople take credit for creating jobs, it is like squirrels taking credit for creating evolution. In fact, it’s the other way around.

It is unquestionably true that without entrepreneurs and investors, you can’t have a dynamic and growing capitalist economy. But it’s equally true that without consumers, you can’t have entrepreneurs and investors. And the more we have happy customers with lots of disposable income, the better our businesses will do.

That’s why our current policies are so upside down. When the American middle class defends a tax system in which the lion’s share of benefits accrues to the richest, all in the name of job creation, all that happens is that the rich get richer.

And that’s what has been happening in the U.S. for the last 30 years.

Since 1980, the share of the nation’s income for fat cats like me in the top 0.1 percent has increased a shocking 400 percent, while the share for the bottom 50 percent of Americans has declined 33 percent. At the same time, effective tax rates on the superwealthy fell to 16.6 percent in 2007, from 42 percent at the peak of U.S. productivity in the early 1960s, and about 30 percent during the expansion of the 1990s. In my case, that means that this year, I paid an 11 percent rate on an eight-figure income.

One reason this policy is so wrong-headed is that there can never be enough superrich Americans to power a great economy. The annual earnings of people like me are hundreds, if not thousands, of times greater than those of the average American, but we don’t buy hundreds or thousands of times more stuff. My family owns three cars, not 3,000. I buy a few pairs of pants and a few shirts a year, just like most American men. Like everyone else, I go out to eat with friends and family only occasionally.

It’s true that we do spend a lot more than the average family. Yet the one truly expensive line item in our budget is our airplane (which, by the way, was manufactured in France by Dassault Aviation SA (AM)), and those annual costs are mostly for fuel (from the Middle East). It’s just crazy to believe that any of this is more beneficial to our economy than hiring more teachers or police officers or investing in our infrastructure.

More Shoppers Needed

I can’t buy enough of anything to make up for the fact that millions of unemployed and underemployed Americans can’t buy any new clothes or enjoy any meals out. Or to make up for the decreasing consumption of the tens of millions of middle-class families that are barely squeaking by, buried by spiraling costs and trapped by stagnant or declining wages.

If the average American family still got the same share of income they earned in 1980, they would have an astounding $13,000 more in their pockets a year. It’s worth pausing to consider what our economy would be like today if middle-class consumers had that additional income to spend.

It is mathematically impossible to invest enough in our economy and our country to sustain the middle class (our customers) without taxing the top 1 percent at reasonable levels again. Shifting the burden from the 99 percent to the 1 percent is the surest and best way to get our consumer-based economy rolling again.

Significant tax increases on the about $1.5 trillion in collective income of those of us in the top 1 percent could create hundreds of billions of dollars to invest in our economy, rather than letting it pile up in a few bank accounts like a huge clot in our nation’s economic circulatory system.

Consider, for example, that a puny 3 percent surtax on incomes above $1 million would be enough to maintain and expand the current payroll tax cut beyond December, preventing a $1,000 increase on the average worker’s taxes at the worst possible time for the economy. With a few more pennies on the dollar, we could invest in rebuilding schools and infrastructure. And even if we imposed a millionaires’ surtax and rolled back the Bush- era tax cuts for those at the top, the taxes on the richest Americans would still be historically low, and their incomes would still be astronomically high.

We’ve had it backward for the last 30 years. Rich businesspeople like me don’t create jobs. Middle-class consumers do, and when they thrive, U.S. businesses grow and profit. That’s why taxing the rich to pay for investments that benefit all is a great deal for both the middle class and the rich.

So let’s give a break to the true job creators. Let’s tax the rich like we once did and use that money to spur growth by putting purchasing power back in the hands of the middle class. And let’s remember that capitalists without customers are out of business.

(Nick Hanauer is a founder of Second Avenue Partners, a venture capital company in Seattle specializing in early state startups and emerging technology. He has helped launch more than 20 companies, including aQuantive Inc. and Amazon.com, and is the co-author of two books, “The True Patriot” and “The Gardens of Democracy.” The opinions expressed are his own.)

To contact the writer of this article: Nick Hanauer at Nick@secondave.com.

To contact the editor responsible for this article: Max Berley at mberley@bloomberg.net.

It’s just more brainwashing that most of you believe the rich create jobs. If you ever sat and used your brain for something other than a sponge for Fox drippings, you’d know that you are the job creators, not the rich.