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How Money is Created

The funny thing is what most people don't realize that it not government nor banks that create money. Let me illustrate this to you.

You work for the money don't you? Well whenever a body in motion moves any distance that creates work or energy [m x d = W to use a simple physics formula]. That energy is represented by the numbers on the check that is paid to you by your employer. When this check is deposited in the bank, it through a process governed by banking legislation is converted to money. 

Subsequently you now can use that money to buy goods and services. So far this is not rocket science since everyone knows this, but the point is that:

 Banks primarily provide a community service by being the mechanism that governs the means of exchange of our energy for goods and services.


Money is not created by Banks nor Government 

What I am suggesting to you is that people not banks are the source of 'all capital' or currency. In its most basic essence money represents our energy and ingenuity that we expend when creating work. This value is represented by what is repositioned into our personal bank accounts which in turn is depositioned by currency. This is the very currency that all banks and all corporations depend upon for their corporate life flow.

So in one way of thinking since we are the originator of all funds, we are the original creditor who has not been paid back by what has been deposited. In otherwords as the original creator of all value put into the banks we can not ever be debtors to banks or governments when we are in fact creditors and therefore do not owe any institution anything. Whoaa ... "How can this be?"  you ask?

Before I go further let me clarify since thre is a very critical fact operating here. Since the notes we call currency are not created by government but rather are created by a third party government must pay that third party back the principle plus interest. Government notes are in effect IOU's to its third party creditor.

Therefore the notes created by your reposit [repositioning of the value you create into the bank representing positive energy] are deposited [depositioned or replaced] through banking legislation wih legal government notes. These notes represent IOU's or negative energy to a third party creditor. In this way a positive is legally changed or replaced by a negative [Bait and Switch].

Currently the cost of every dollar so created in Canada according to its own literature is -$1.08. Ironically if Canada printed her own money without using a third party all citizens would own nothing to that third party since all currency printed would simply represent the value for exchange created by its citizens.

Another way of putting this is to say that banks are solely here to serve us and facilitate the exchange of our goods and services. So when we look at bailing out of the banks because of their bad investments - because they are too big to fail and therefore we need them - fundamentally the reasoning is flawed.

We don't need the banks as much as the banks need us. The primary of purpose of government should be on preserving the health and vitality of the goose that lays the golden eggs as we are the ones that gives value to society not the banks. Governments sense of priorities to put it mildly appears to be skewed.

In this sense since we create all value it is us who has the value in our ability to create it. It is not the currency nor the institutions that handle the currency which represents that value, that have value - that value rests in us.

Next GO TO - The World of Paper Fiction





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