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What Is Fiat Money?

Hits: 13305 | Rating: (3.5) | Category: News & Politics | Added by: Pooptart19
Page: 1 2 3 Next >   Jump to: Bottom    Last Post
obhwfgirl
Female, 18-29, Western US
 584 Posts
Wednesday, September 28, 2011 11:03:18 PM
This video sees the big picture but is putting the puzzle pieces together incorrectly. Banks don't just poof and make money. There are accounting laws that prevent you from just changing digits.

Banks don't really "make" money at all. Investment and production do. Take the housing market, banks were capitalizing on the increased demand of a tangible product (houses). As demand rises, so does price and perceived value. As value rises so does wealth. That wealth spread to every level -- rich and poor. The problem is when the supply becomes higher than the demand and the price/value drops for the product.

The main problem with this speculative system is the fact that wealth is not standardized to any tangible supply of anything (although some would argue the closest is oil). It's dependent upon the perceived value and credit.

The gap is widening because it's faster and easier to make money with investment than actual wages.

M_Archer
Male, 18-29, Canada
 529 Posts
Wednesday, September 28, 2011 12:53:52 PM
@WobxFobxdobx: Wrong. The Federal Reserve inflated the currency and made people think that their assets (and their wealth) was worth more than it really was. That's why the 20s "roared"; people thought they were rich, due to inflation. They looked at their stocks going up and thought "oh, I'm getting rich!" when the prices were just reflecting inflation caused by the Federal Reserve injecting money into the system. The Smoot-Hawley Tariff Act is what finally put us into the depression.

All of this wouldn't have happened had the state and economics been separate (like how the state and church are separate).

When the free market fails because of statist government policies, the statists insist that the free market failed and more controls are necessary. Despite the fact that the Great Depression was caused by government controls, the statists use red herrings in order to blame it on the free market.

Crabes
Male, 30-39, Canada
 1049 Posts
Wednesday, September 28, 2011 11:09:33 AM
@strivejaylen they give you what they have in stock and the fed print it and eventually come back in the bank. If everybody keep their money at home then its gonna be a big problem

mcboozerilla
Male, 30-39, Europe
 649 Posts
Tuesday, September 27, 2011 10:54:19 PM
Is this more Ron Paul crazy?

strivejaylen
Male, 18-29, Southern US
 196 Posts
Tuesday, September 27, 2011 7:47:37 PM
so by what i see as the statement"banks print money" - bank of america, regions, bank of putnam county, first national bank and so all never have money from 1. deposits 2. stocks, 3. investors
and they all just make up numbers to give you, and if you ask it in cash they go to the back of the bank and print them off
and no way they can have 200 in there bank from the three things and loan 180 dollars at 10 percent interest per month so when you pay it off they now have 218 dollars.

WobxFobxdobx
Male, 18-29, Western US
 54 Posts
Tuesday, September 27, 2011 5:37:08 PM
The Great Depression was caused by the Federal Reserve making fiat money; this money meant nothing, but people bought stuff with it anyway. That's why the Depression started--because people were buying things with money that didn't exist or have value.


Bit of history: The Federal Reserve, or Fed for short, was created in 1918. The Great Depression directly followed the crash of the NYSE of October 1929.

In 1933, the FDIC was established to insure depositors for up to $250,000 in the event of a bank failure. The reason so many banks failed during the Great Depression was because people panicked and all went to withdraw their money at once, and because of the fractional reserve banking system, NOT Fiat money, banks failed. A similar thing would have happened, gold standard or not. The banks didn't have their investors' money when they wanted it.

WobxFobxdobx
Male, 18-29, Western US
 54 Posts
Tuesday, September 27, 2011 5:23:40 PM
I think what is killing us are the interest, we should ban interest, it was by all religion



Sure, go ahead and ban interest. So there is no longer an interest rate, so now nobody has any sort of incentive to lend money. Now, people can only buy things that they can afford with their available assets. There would be no credit.

Oh, yeah, you might as well halt all financial investment, since the only reason to invest money in anything is for the returns, and without interest, there would be no monetary return...

asurazero
Male, 18-29, Eastern US
 185 Posts
Tuesday, September 27, 2011 2:23:30 PM
so while things cost more and more the dollar is worth less and less...

greenbasterd
Male, 18-29, Canada
 2342 Posts
Tuesday, September 27, 2011 2:08:34 PM
"The problem with gold:there is not enough for everybody "

sure there is. its just has to be worth more

Crabes
Male, 30-39, Canada
 1049 Posts
Tuesday, September 27, 2011 12:51:34 PM
@dang007 That what they want you to think but they are not. They keep it in bank to make more money debt

They have a ratio to respect. I dont have the number but for example they can make 9 times of debt of one deposit. So for 10k they make 90k money debt. Then the seller get the borrower's money, they assume the seller will deposit this back to another bank. So with this they can make more money debt.

I think what is killing us are the interest, we should ban interest, it was by all religion

Amurika
Male, 30-39, Eastern US
 282 Posts
Tuesday, September 27, 2011 12:07:33 PM
Federal Reserve = Legalized Counterfeiting = Fascism

Burton_Ian
Male, 18-29, Eastern US
 809 Posts
Tuesday, September 27, 2011 12:00:26 PM
Actually pfkdxius, banks (not the fed) do create money, it's a process called Fractional Reserve Banking. The film made it appear as if they just print more money, because they don't "physically increase" the amount, instead they increase the "money supply" by lending money that they do not currently have in their vaults to other customers or banks.

Most countries follow this system and it doesn't exactly make since to me, but then I'm not the one creating profits from nothing.

Crabes
Male, 30-39, Canada
 1049 Posts
Tuesday, September 27, 2011 12:00:08 PM
The problem with gold:there is not enough for everybody

M_Archer
Male, 18-29, Canada
 529 Posts
Tuesday, September 27, 2011 11:41:12 AM
@Gerry1of1: President Theodore Roosevelt outlawed the Gold Standard in 1933.

There were a lot of things that caused the depression, but it certainly wasn't gold. In fact, if the government brought back the gold standard, the economy would've recovered very quickly.

The Great Depression was caused by the Federal Reserve making fiat money; this money meant nothing, but people bought stuff with it anyway. That's why the Depression started--because people were buying things with money that didn't exist or have value.

Gold has an objective value. If we used gold, the depression wouldn't have happened.

pfkdxius
Male, 18-29, Midwest US
 315 Posts
Tuesday, September 27, 2011 10:11:04 AM
This video is very misleading. Only the Federal Reserve can create money from nothing. Your neighborhood bank obeys the normal rules of lending money they have on hand, or accumulating debt when they lend more than they have.

sbeelz
Male, 30-39, Western US
 2869 Posts
Tuesday, September 27, 2011 9:58:32 AM
@HIPCAT- Yes.

dang007
Male, 30-39, Southern US
 590 Posts
Tuesday, September 27, 2011 9:09:33 AM
The banks create money by lending money they don't actually have, for example in the form of a vault filled with gold. If you go to a bank and lend money for something, they don't give you hard currency. Instead, they give you a number in a computer file or a piece of paper which represents fiat value, or in other words dollar bills. <<


Sorry I am still missing something. Don't banks loan out funds that they have held as deposits. i.e. I deposit $100 in my savings account. The bank now loans $80 to someone. (I recall that they can not lend all the deposits but must keep some on hand, doubt that it is 20% percent.) Regardless I do not see money being "produced from thin air"

HIPCAT
Male, 18-29, Southern US
 126 Posts
Tuesday, September 27, 2011 8:14:57 AM
Isn't that set-up the banks use called a pryamid scheme.

GeFeldz
Male, 18-29, Europe
 128 Posts
Tuesday, September 27, 2011 7:36:03 AM
The banks create money by lending money they don't actually have, for example in the form of a vault filled with gold. If you go to a bank and lend money for something, they don't give you hard currency. Instead, they give you a number in a computer file or a piece of paper which represents fiat value, or in other words dollar bills. The actual value of a 100 dollar bill is very low because it is mostly made of paper. The value bestowed upon it is 100 dollars and what you can actually buy for that 100 dollars is determined by the extremely complex international financial economy. Money as we know it today simply does not hold a genuine value as for example a pound of flour or butter did before we started using fiat currency instead of trading things we had for other things.

dang007
Male, 30-39, Southern US
 590 Posts
Tuesday, September 27, 2011 6:54:11 AM
I must admit that I am a bit ignorant on this topic. I have a hard time understanding the statement "banks create money" How does this work?

Buiadh
Male, 30-39, Europe
 6653 Posts
Tuesday, September 27, 2011 4:23:21 AM
Knew that shizz already. No shock.

SvampeBob
Male, 18-29, Europe
 3088 Posts
Tuesday, September 27, 2011 3:07:34 AM
so we live in a corupt world?
huh I dind't know that....

CadillacJack
Male, 18-29, Southern US
 105 Posts
Tuesday, September 27, 2011 2:43:27 AM
Now I feel more poor than I already did.

xCYBERDYNEx
Male, 18-29, Southern US
 4799 Posts
Tuesday, September 27, 2011 12:30:37 AM
Well sh*t

Gerry1of1
Male, 50-59, Western US
 33910 Posts
Tuesday, September 27, 2011 12:16:37 AM
"Back when gold backed up money, there was no such thing as inflation"

Huh?!

Inflation has always existed. As long as there has been money prices fluctuate up and down

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