How Is Money Created Flashcards
Who has to pay the money back that is being created?
There is a theory that so long as the interests are being paid (by us) no one is going to pay it back.
So what is the money system based on? What keeps money circulating?
This is a system based on Debt circulation. Debt = Money
What is stagflation?
slow economic growth + massive inflation.
The system will more than likely collapsed due to?
Eventually massive inflation & loss of faith in the American dollar.
Banks believe that they should be able to create more deposits/money than what’s actually there. How?
Through DEBT. So DEBT IS MONEY. So banks use debt notes to circulate as money.
Banks create brand new money when issuing out the loan. Their profit comes from the interest you pay. What happens when the debt is paid?
The money & debt (that was created) disappears but the bank’s profit remains.
The banks now don’t have to keep any of your money. What was the typical arrangement of your money after a deposit has been made?
The banks keep 10% of your deposited money in reserve while being able to use the other 90% of your money for loans/assets.
Quantitive easing adds the ability for Central Banks to loan out money to the government, banking sectors & corps. Why?
to bail itself out & stimulate the economy w/ fake non-existent money. The banks buy bonds & real assets for its troubles of Quantitive Easing.
Who is responsible for paying back the government’s debt (interests)?
We are. Through taxes & inflation
Real money is assets that appreciate over time. How does this factor into wealth inequality?
Banks & The Central Bank buy large amounts of bonds, stocks & other assets from the general public.
How does the Central Bank pumping money into commercial banks & hedge funds at zero interests, stocks & assets affect the market?
The Rich who are in the market get richer but the actual economy itself doesn’t get aid or any true backing. They get inflation and increased taxation while the rich pockets get fat.
What are the 3 types of money?
Physical, Digital (Debt-based), Quantitive Easing
What percentage does physical money make up in the economy?
3-8%
What percentage does debt money make up in the economy?
97%
How does printing money aid in taxation in the form of seigniorage?
The government earns money from printing money - that profit goes into Tax revenue which reduces debt & taxation on us.
