Wise Up Journal
By Gabriel O’Hara
The Irish Independent on March 11 reported, “The EU may need to print money to get out of the economic crisis, the governor of the Central Bank warned yesterday. John Hurley spoke as the Bank of England began a process of “quantitative easing” — to pump cash into the British economy. However, this has led to a fall in the value of the pound and could trigger inflation in the future.”
All banks print money out of thin air everyday due to Fractional Reserve Banking, which is the main cause of inflation. The real money making action takes place with the banking corporations on the street and the central banks keep the show running. When central banks create money you get a massive injection of cash in one go followed by an even bigger smack of rising prices. It is bigger because once that massive electronic bundle created out of nothing hits the banks, legalised fraud (known as fractional reserve banking) allows them to loan out 90% of that and they keep 10% on reserve. The even grander legalised fraud occurs after that.
When that second bundle (the one created on the backing of the first) hits the market by being spent and ends back up at the banks it allows them to create another loan (money from debt) to the amount of 90% again until eventually the total amount owed equals just over 9 times the original amount (this process is highlighted with an example near the end of the article). When a central bank (which are also private or private majority owned entities) gets the green light from their buddies in Government to “print”/create electronically more money, say €100 billion, this will eventually turn into 9 times that amount, €900 billion in digital cash (not to be mistaken with circulating paper currency).
When more money is added savings of ordinary people are diluted, meaning they can buy less because of rising prices caused by more money, which is called inflation aka saving thief/tax. Yes, bank owners make profits on money created out of thin air and you pay and work for it. Some of the largest loans go to the extremely wealthy to buy up media conglomerates etc, and other big loans go to governments to setup new institutions, programs, wars and lets not forget the 3rd world who use their resources as collateral and the defaulted loans are backed up by developed nations’ tax payers. If the banks go bankrupt for these massive bad loans, well of course it’s impossible for politicians managing the government to think of letting them go bust like any other poor or fraudulent business. The politicians of the day commit the people (who happen to live on the land of the country such a bank is located in) and their future children to insure the bank owners make their guaranteed profit. How can there be such rules you might ask. Who makes the rules is a better question. Those who own the gold…. or as we might say in this progressive “civilised” global village, those who control the fiat money. This system is better for the dominant minority than alchemy if that was real, as alchemy requires possessing real resources first to transform into something valuable but in the civilisation of banking billions are created out of nothing with the touch of a button.
What is happening at this moment may seem contradictory, falling energy, house and stock prices with the price of some other goods like food going up. Prices for investment assets (houses, stocks etc) are falling because money is being pulled out of those due to the credit that everyone was enticed on to for monthly business survival having been severed. It’s very easy to crash an economy if almost everything is run on credit and you control the flow of credit. Luxury goods such as new cars are also falling. Once the money is out then inflation will kick in, and massive price rises on everything will kick in once those new bundles of money make their rounds multiplying. This should help create an even bigger useful crisis that will allow for a new economic order being created which is what all the talking heads of governments globally are calling for. Click here to view the EU calling for a new global order.
Example of how money created out of thin air increases by over 9 times
[Note: Names of companies in this example are fictional, any similarities could be a coincidence.]
- Redshield Bank has 100 million added to it’s reserves from it’s central bank loans or from depositors.
- Legally it’s allowed keep just 10% on reserve. The bank loans out 90 million to Waldoc Corp.
- Out of the 90 million Waldoc Corp buys a couple of news papers and TV news stations to form NewsGlobal (a media conglomerate).
- That 90 million gets deposited in Rockman Bank.
- Rockman Bank is legally allowed to loan out 90% of that, keeping 10% on reserve.
- Rockman Bank loans out 81 million to Sargent-Dynamics (a missile contractor).
- Sargent-Dynamics spends that money on materials from a subsidised resource provider.
At this moment there is 171 million (90 + 81) on the Banks’ debt books all coming from the original 100 million. There is also 19 million in the reserves of the banks (10 million at Redshield Bank and 9 million at Rockman Bank) and there could be a double claim against the 100 million if it is depositor’s money which can be removed at any time. The next step comes from the 81 million that Sargent-Dynamics spent which is deposited into a bank of course and 90% of that is now loaned out (to say a property investor). This loop keeps on going until just over 900 million is on the books owed to the banks plus interest. This increases/dilutes the money supply, creates inflation (higher prices) which means you can buy less with your savings, your savings (fruit of your labour) are worth less and less as time goes by, it is effectively stolen for other people’s gain. Large chunks of money are typically spent by electronic transactions or by cheque book which means the amount of paper and coin currency in circulation are not affected and this gives a nice low number for central banks to quote such as, “the money supply in circulation has only increased by 2% annual for the past 5 years.”
The following text is from the Daily Mail about the central Bank assigned in England being given authority to craft 150 billion pound.
By Dan Atkinson
“Panicked financial markets will this week get the first dose of the Bank of England’s £150billion bailout as it launches its ‘quantitative easing’ plan.
“On Wednesday the Bank will buy back £2billion of Government bonds, or gilts, from City investors with newly created money. While the payment will be made electronically to bank accounts, the scheme has been described as ‘printing money’.
“Fears also grew that life insurance groups could be the next sector to be shattered by the crisis. Insurers can become caught in a vicious circle, as dropping share prices undermine the value of their assets held to cover life policies.
“Quantitative easing is a huge gamble,
“But a leading authority on debt markets warned of long-term consequences. ‘We are deluding ourselves in thinking it is not going to be inflationary,’ said Peter Warburton, director of Economic Perspectives. ‘I approve of it, but we should not expect it to be a free lunch.’
“Bank of England Governor Mervyn King and his colleagues on the nine-member Monetary Policy Committee announced last week that they had Treasury permission to ‘print’ up to £150billion
“Initially, the focus will be on gilts, with the Bank staging auctions on Mondays and Wednesdays, for about three months.”
Comments from the Daily Mail’s website:
“‘Quantitative easing is a huge gamble’ Yes, and at no time in history has it worked.”
– Bob, UK
Video: A Second Look at The Federal Reserve *
* Wise Up Journal article from 2007: Irish Stock Market Crash & Global Depression *