TheBlackSheep » Fri Feb 28, 2014 7:27 am wrote:I'm really not familiar with economics, it's one of my biggest blind spots I think. I have a question, I'm reading through Tragedy and Hope and according to Quigley, the international bankers were highly in favor of a gold standard for currency. I am pretty sure that at leas Ludwig von Mises advocated that, and I'm not sure becuase I haven't read the books, but it seems like Anthony C Sutton might have written books advocating the gold standard.
Am I wrong about these things? Has something changed in the banking/international banking industry. I will continue to read on and see if it is mentioned in Tragedy and Hope, but since this book is huge and the amount of information available out there is endless, and because I have a restless curiousity, I was wondering if anyone could give me some info on this.
To-day we have a totally different kind of a crisis, much worse. For one thing, it is an inflationary crisis. You can see that. The reason is that banks have changed totally their rôle. Back in that period banks had a creditor status, i.e., money was owed to them. Creditors like low prices. Inflation injures creditors, because it make the value of the money owed to you greater [actually, lesser]. You have to understand these principles, either through economics or by from what you've read in my book Because of the fact that bankers were deflationary here, they held only credit and any organization they controlled held only credit. For example, they controlled insurance companies. Insurance companies invested their money often entirely in bonds They controlled various other banks. These various other banks invested their money only in bonds.
Now, this then is a totally different system. All the universities were, endowments were in bonds, not in stock. Not in equity. They set up foundations. Foundations were invested in bonds. If you are in bonds, then you want deflation, because you are interested in the value of money. But if you leave bonds, and cease being a creditor, and become an owner, then you have everything that you want in, what you call, equity. And if you are in equity, you want inflation. To-day all the banks, all of the endowments of the old universities, and all of the holdings of the Rockefellers are in equity.
But what I'm concerned with, however, is not the fact that middle class people bought mutual funds and get [just] part of the returns from the shares that the corporation bought using the money to pay for this. What I'm concerned with is: who votes those shares? Who voted XXXX. Because that is what you gave up. How conveniently XXXX they voted XXXX knock out. They voted for them, no matter what they're doing. But these same banks vote the shares. This means that if you are a very, very big shot banker, you will not control just the corporations that you have invested in. You control those corporations that you can vote the shares that are being held by the trustee. Now, who is the trustee? The trustee is the trust company that was given control of the shares by this corporation and who guarantee the payments will be made. And these are the biggest four or five commercial banks in this country, including Morgan Guaranty, First National City, Chase Manhattan, it's the three of them, and a couple of others. So they can control every significant corporation in the United States. Thousands of people. Now, now savings are part of.... Oh, suppose the government has not balanced the budget? This means that the government is putting into savings, in spending here more than it's taking from people in taxes there. They have to get that from the banks. When I drew the diagram here, I put the banks up here, but it became too complicated. In other words, if the government needs money it has to come down to these bankers and borrow from the banks.
The result is that the whole system to-day is inflationary. It's inflationary because that is what the small group of people who really dominate the system want. And they want it because they are in equity. Now, the real reason they want that is not just because they value their equity so much, every piece of land they own, every security they own and control, including XXXX. It's that, is that having pushed credit to the absolute limit in everything they control, including everything in the United States, to-day every significant entity in the United States, and that includes corporations, is technically bankrupt. By "technically bankrupt" I mean that their assets are less than their debts. Now, you know a lot of these. And they'll always tell you it's crookedness. Well, sure, it's crookedness. Even the ones that didn't go bankrupt are run crookedly. But you know Boeing, Penn Central, New York City, Lockheed, Pan American (I said that, didn't i?), in England, Rolls Royce, Chrysler of England, which is now pulling out of England. All these are bankrupt. They are all bankrupt because they borrowed more money than they possible could ever pay [back]. All right, what you do is exactly what the Germans did in 1923. That is, you deliberately inflate. If you can double prices, you cut the burden of your XXXX debt in half. Because if you double prices, you can sell, if you're making Quaker Oats,.... If you double the prices,.... And they certainly did double it. Now it's 110. That's $1.10 for two pounds of Quaker Oats to-day. Even though you can buy it in health stores for 29 cents a pound. But they got some nice XXXX, you see. And so forth. It has gone up from 59 cents to $1.10 in little over a year, they doubled it. So this means, they sell, if they sell the same amount of [Quaker] Oats, they take in twice as much money. And it means that the burden of their debt has been cut in half.
if the government needs money it has to come down to these bankers and borrow from the banks.
drstrangelove wrote:he bonds are mostly sold onto middle class pension funds, so the banks and government borrow from middle class savings.
https://www.bankofengland.co.uk/-/media ... conomy.pdf
Money creation in the modern economy
In the modern economy, most money takes the form of bank deposits. But how those bank deposits are created is often misunderstood: the principal way is through commercial banks making loans. Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.
The reality of how money is created today differs from the description found in some economics textbooks:
- Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits.
- In normal times, the central bank does not fix the amount of money in circulation, nor is central bank money ‘multiplied up’ into more loans and deposits.
https://billtotten.wordpress.com/2014/0 ... read-myth/
The Bank of England Corrects a Widespread Myth
a 1960s Chicago Federal Reserve Bank booklet entitled “Modern Money Mechanics” said:
[Banks] do not really pay out loans from the money they receive as deposits. If they did this, no additional money would be created. What they do when they make loans is to accept promissory notes in exchange for credits to the borrowers’ transaction accounts.
drstrangelove wrote:The Treasury borrows from The Fed and they create the money and give it to the government. The Fed then auctions the government bonds off
drstrangelove wrote:Middle class retirement savings are used to purchase government bonds via mutual funds. Which means the government is being funded by the middle class.
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