[envenonearo]

About a year ago, one of these threads was introduced here, and someone (I can't remember who) said "as far as I'm concerned this subject can't ever be discussed enough". I agreed with him/her then and I agree with them now. I'm going to give my understanding of the system and I'd love to here feedback on it as well as the perspective of other members of this forum. BTW I don't consider myself an expert.

A consumer goes to a bank and fills out a credit application. We'll say that it is an application for a credit card, for 5k. The bank approves the loan at, say, 20% interest. The consumer proceeds to cash advance the card for 5k, then the consumer pays off the loan over a year. What just happened?

First of all, I believe that the bank created the 5k out of thin air. Now some people say that the banks have reserve requirements of 10x their deposit base, others 16x, or 20x, and still others say that it's unlimited. Some people concede the reserve requirements, but claim that the bank doesn't necessarily use their reserves to fund loans. I believe that when banks extend credit, it is always created out of thin air. The reason is simple: why risk real money when you don't have to? I think most people on this forum would agree that when banks extend credit, it is money created out of thin air.

I often hear from people that concede that banks create credit out of thin air that the credit extended is not inflationary, only the interest is. They will often say, "when the money is paid back, it dissapears into a black hole from where it came from." I don't agree with this conclusion. I say the credit is inflationary based on the laws of supply and demand. If I take out a 5k cash advance and spend the money, 5k just got added to the system that wasn't there before. The net result is an increase of 5k into the system. First rule of economics: you can't get something for nothing. That 5k is paid for via inflation. However, I don't see how the interest on the loan is inflationary. If the interest is repaid, the money has to come from somewhere...it doesn't simply appear as bank credit loans do. If the interest is repaid, it has to be taken from someone else's pocket. This is one of the ways that the system creates inevitable poverty.

Implications: bank risks nothing and does nothing productive to create the credit. Loan is paid for by the people, via inflation. Bank either a: loses nothing if loan goes unpaid, b: reaps a reward of the loan in the form of interest if loan is repaid, c: reaps the reward of a free asset in the case of collateralized loans that go unpaid and are acquired through what the system calls 'repossession' or 'foreclosure'.
Obviously the loan is fraudulent from the start as the interest charged is predicated on a non existent risk. Furthermore, the bank is engaging in high treason by unlawfully creating money without the authority to do so (much like the federal reserve).

In this world, money is power. Assets are money. Money is money. Bank parlays acquired assets into policical power through bribery, press manipulation, obfuscation of balance sheets, creation of shell companies, favorable legislation, and a million other ways. As bank slowly acquires more and more assets/money/power, bank can effectively hedge their risk in a million different ways including buying enough PMs to insure that even under a system change/reset, they maintain their power.

This is my understanding.

dys