In America, the US dollar is the place’s fiat currency. It all begins with the US Treasury just who creates bonds which are united states government IOU’s that are paid back over a specific time period with attraction.
Which is consequently spend on wars, military, government salaries, social programs, general public work projects and other debts spending that keeps concerning re-occurring. Next all those government employees and military workers take their salaries and deposit them into several bank accounts throughout the nation. This is how the fiat revenue now enters the industrial banking sector.
The Treasury holds each month auctions to sell off it’s bonds to primary merchants, who are the major loan companies. Then the US Federal Save enters the game by getting all the bonds from the bankers through something called “open market operations”.
Nonetheless it’s important to note, that when that Fed writes and difficulties a check, there is no money what so ever on the account to cover the amount of who check. The account these checks are written coming from will always carry your zero balance. Therefore just about every dollar that exists, is actually borrowed and must be paid back.
This can be the Ultimate Government backed and sponsored pyramid scheme, where by only the banking top notch who own the Fed and other central banks around the globe, massively profit by stealing out of generations of innocent residents.
Once again nothing backs those dollars except IOU’s. Furthermore, for the hard work each individual US citizen does to make sure you earn his or her salary, a portion of it eventually ends up with the Treasury in the form of income taxes. This is what pays the principle and interest on the bond that your Fed bought with a examine from nothing. US citizens happen to be forced into paying income taxes for the use of our recent money supply system.
Finally over time, there becomes surplus bonds at the Fed and cash in the Treasury. That Treasury now takes the following excess cash and stores it into the various organizations of government.
Within the store-bought banking sector we now have the things I refer to as “magic money creation” which is literally called “Fractional Reserve Lending”. Here is an example of how fractional reserve lending works. Let’s say someone deposits $100. 00 into a bank account, the bank the fact that received that deposit has become legally allowed to remove $90. 00 or ninety percent of your deposit and re-lend it to someone else.
The person who received your hard earned cash from the bank as a loan product will use it to buy an item such as a car. Then that person will pay the car dealer together with the money he borrowed. Right now the car dealer will bank this money into your partner’s own account at the lender. Now there is $190. 00 on deposit and the loan company can legally steal Ninety percent again or $81. 00 and lend it out.
Therefor actually leaving your profile with only $10. 00 or ten percent of your 100 % deposit. However your loan provider statement will still show the entire $100. 00 funds or one hundred percent of your money, on deposit in your bank account.
The entire system of creating money from nothing is a complete scam. It all starts while using the Federal Reserve and the YOU AND ME Treasury exchanging IOU’s. Your check is an IOU to get cash and a bond is an IOU to be repaid with interest at some later date. Cash makes existence once the Fed concerns someone a check.
Once again that banks go back to the US Treasury auctions the next month investing in more bonds and selling them to the Federal Preserve. And every month this cycle of buying and selling keeps on getting repeated.
The next person after that comes along, and borrows capital. Once the new borrower will pay the seller for what these bought the money again can be re-deposited into the bank now there is $271 dollars at deposit. This creation in money through deposits and loans (fractional reserve lending) keeps re-occurring to where by at some point your original $100. 00 deposit has grown to help you $1000. 00 (ten moments the amount of your original deposit) in fiat currency produced from the bank.