October 14, 2014
This micro-documentary is brought to you by our friend Claudio Grass at Global Gold Inc. A very informative 10 minutes explaining what money, fiat currency, and fractional reserve banking are. Share with those who you think could use this valuable information!
For more information on precious metal ownership:
Claudio Grass, Managing Director
Global Gold Inc. Herrengasse 9 | 8640 Rapperswil | Switzerland
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I believe Kelly is correct. When the first 100 units are deposited the bank loans 90 and keeps 10 and also creates bank money (IOU) of 90 units. At that moment there is 190 units in existence. When the 90 units loaned is spent and subsequently deposited by the seller to his bank, then an additional 81 units are loaned and 81 units of bank money are created. Thus 271 units now exit in the system. The happens over and over. If you want to learn more of the details of how currency is created, go to hiddenmoneysecrets.com and watch specifically episode 4. If you want to get the explanation of reserve banking start at about the 7 minute mark of episode 4. Excellent information.
P.S. You can’t balance the budget or eliminate the country’s debt. The currency is the evidence of the debt and with no debt there would be no national currency in circulation.
Dave,
I believe Kelly is correct. The bank creates bank money for the 90 units and now 190 unites exist. When the 90 units are spent/deposited in another bank, 90% again in loaned out and now there is 271 units of bank money that have been created. This happens over and over to where the original 100 units expands to 1000 units or more. Want more information on the creation of currency? Go to hiddensecretsofmoney.com and watch episode 4. To see how fractional reserve banking works, you can go to the seven minute mark of episode 4.
P.S. you can’t balance the budget. it’s called deficit spending and severe deflation would occur. If you eliminate the debt you eliminate all currency of the country as it is no more than evidence of the national debt.
The example is Wrong!! The initial 100 unit deposit is used as a 10% reserve for the first bank to loan 1,000 units!! Then the same for other banks in sequence.
I don’t think so. The “money” is “created” from the lines of credit extended. So the initial loan is 90 units: the only legitimate loan made.
balance the budget