What Scams have you only just Realised?

M50 Toll. Nowhere else in Europe would you have to pay the equivalent, such a joke.

Nucular Arms wrote: »

It's actually sad how uninformed most people are about the operation of the financial system.

When the government needs more money in the supply, let's say, 2 billion euro, they approach the central bank and trade government bonds as a form of security to the central bank on a loan of the 2billion.

As you know, loans are susceptible to interest. And yet, if the central bank is the only entity that can affect the money supply, and seeing as this latest loan is for money not already existing in the money supply, the key thing to consider is.. how is the government supposed to pay off the interest of the loan? As, by definition, there is no more money in the supply in order to do so.

So where does it come from? Tax. That's where from.

You can see the effects of this fractional reserve banking even in the creation of irish water. The IMF and the eu, acting as the central bank of the nation, basically agreed to loan money to the irish government on condition that it would be paid back with interest.

Where does the interest come from? USC, Irish water etc, etc, etc

Well, it works fairly different to that but you touch on some important points alright: Nearly all money (about 97%) is created through loans (there is no fractional reserve banking, neither is there a money multiplier - it's just created from nothing), which means that new Debt is created at the same time as money, at a 1:1 ratio.

As you say though, Debt carries interest over time - but if all the money in the economy is created through loans/debt, where does the money to pay the interest come from?
Answer: From more loans (that also carry interest...), as that's the only way to create more money in the current system - it's effectively rolled-over forever, or until the economic system crashes (as it does every 30 years or so).

If you count All Money in the economy and All Debt, then - assuming we start off at a 1:1 ratio of 'All Money':'All Debt' - due to interest, the total amount of Debt in the economy is greater than the total amount of Money, and keeps on growing!

So, over time the ratio of 'All Money':'All Debt' will become 1:2, 1:10, 1:20 etc. (all of that carrying interest, creating an ever-greater burden on the economy), unless something brings that ratio down closer to 1:1 - obviously this is completely unsustainable, and this is a big part of what causes the 'economic cycle'.


There are a few ways of reducing the total ratio of Money:Debt, such as:
1: Give out more loans (creates Money:Debt at a 1:1 ratio, pulling the overall ratio of 'All Money':'All Debt' closer to 1:1 - problem is, nobody wants to take out loans now)
2: Defaults/writedowns (reduces overall Debt)
3: Have the central bank give money to government, or directly to the people (increases overall Money, without having to rely on banks)

Usually '1', giving out more loans, is what is done to keep stability - but if Private Debt is allowed to grow too large, and loans are invested unwisely (e.g. into a housing/construction bubble, leading to a crash later on), then the entire system becomes stuck as soon as a big enough economic crash is hit, because people have too much debt already, and don't want more loans.

Economies then get stuck in debt-deflation, where trying to pay down the excessive amount of Private Debt (which removes Money from the economy as well as Debt) without adding more Money to the economy to help pay for this, holds the entire economy down in long-term stagnation.

Nucular Arms wrote: »

The crazy thing is that it isn't even a conspiracy! This is just a statement of the acknowledged policies and practices of the world's banking system. Apparently everyone just thinks this is all ok?

I mean komrade Bishop above linked to a document published by the bank of england ffs! There doesn't need to be a conspiracy precisely because nobody really gets finance / economics spiel bar trained financial / economic personnel.

You know, the ones making obscene profits from the system they have created that no one understands bar them and which no one has a choice but to fall in line with?

And the even more amusing thing is that, as you say, if you were to actually point out the glaring nuttiness of the whole system that you would be the the one to get the funny looks!

The system has worked like this, with banks creating money from nothing, for about 70+ years - but until relatively recently, the vast majority of economists did not know this (and many economic textbooks, still teach the wrong version of how bank lending and money creation works)

So, the vast majority of economists have been getting wrong, their understanding of money creation, the monetary system, money and banking itself (all the most core/critical parts of the economy), for the best part of 70 years.

Little surprise then, that practically none of them saw the economic crisis coming

LDN_Irish wrote: »

Pyramid scheme.

Yep, total scams, I prefer the Trapazoid model though ...