This article caught my eye today:

Bank tax push gains momentum

A commenter said:

The only solution here is to tighten regulations on the banks so the risk they take on is within tolerance.

Fail.  Warning: Public Education at work here!

S/he needs to understand how money comes into existence, who is privileged to manufacture our money, who that process benefits, who it hurts, and how it works….and why regulation will not fix anything until we know the answers to the above on a wide scale and understand how reform of the monetary apparatus is necessary.

Such is the murky world of banking, people have absolutely no understanding of it. It’s not taught at home, in the schools, or presented in media. It’s a shared obfuscation as if it were not, people would be completely alarmed.

All money is created out of debt. The 5% circulating in our economy in the form of paper notes is generated by the BoC buying government debt instruments (usually) in return for money it prints out of thin air. This is no conspiracy. Have a look at the BoC’s annual report’s consolidated balance sheet. It’s right in there:

http://bankofcanada.ca/en/annual/2009/finstate09.pdf, page 4.

The other 95% (approx) of money in circulation really isn’t money at all, but a substitute for money called “bank credit”. This money is created at the point where a bank grants the loan, less a very small percentage held in reserve:

http://www.cba.ca/contents/files/statistics/stat_banksann_db251_en.pdf

According to that spreadsheet, the big 6 banks have 1.3+T out on loan, in the aggregate. Via a simple accounting rule, a loan is a revenue generating vehicle and is tagged as an asset. Every loan created ends up as a deposit somewhere else…maybe in the same bank or another one. This is a liability. Thus the columns balance.

In order for me to lend you money, I actually have to have the money to lend. I cannot do what the banks do via their regulated fractional reserve banking fraud. The State in all G8/20 nations permit it.

This “tax” is nothing more than lipstick on a pig.

The nature of our monetary system is inherently unstable.

Think on this. If I can effectively print money out of thin air, I don’t have to charge you a whole heck of a lot of interest on it to show a profit. Likewise, as long as I am permitted to practice fractional reserve banking, have a State/Banking cartel – sometimes called a “central bank” – that will drive dump trucks of money up to my door if need be offering a 24x7x365 bailout, what does that do?

It allows me to unilaterally shift focus to return and neglect risk, as long as I am granted a mulligan if I adhere to the regulatory framework. As a bank, I have more out on loan than I have on reserve. If you or I did that, we’d be called insolvent.

Since every unit of currency is created out of debt, debt must be repaid. Debt carries interest. At any point in time, there is always more debt in the system than there is money in circulation.

Interest on old loans can only come from the principal on new ones issued. As such, even though economics says nothing about growth, we must have infinite economic growth or our money supply contracts and, left unchecked, vanishes. Rome burns.

When banks pyramid loans off deposits, which then becomes deposits themselves, you can imagine our money supply stretching tight like an elastic. However, when we have growth less than 3-5% / year on average, the elastic “snaps back” with ever increasing defaults as more and more people compete for fewer and fewer dollars in circulation. Prices fall, jobs are lost, abuse rises, stress abounds.

It’s like a game of musical chairs where those who do not get a seat go bankrupt.

A bank tax solves nothing with respect to the greatest Ponzi scheme in existence today.

Government permission to live/work points – sometimes called money – would have no value in a free market but for State violence called taxation or legal tender laws. Gresham’s law does not hold in a free market.

We have forgotten what money was.

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