For many, the US dollar is the country’s fiat currency. It all begins with the US Treasury whom creates bonds which are government IOU’s that are paid back on the specific time period with interest.
The Treasury holds every month auctions to sell off a bonds to primary dealers, who are the major loan companies. Then the US Federal Park enters the game by investing in all the bonds from the loan companies through something called “open market operations”.
The next person then comes along, and borrows capital. Once the new borrower gives the seller for what these bought the money again is normally re-deposited into the bank and now there is $271 dollars on deposit. This creation in money through deposits and loans (fractional reserve lending) keeps re-occurring to when at some point your original $100. 00 deposit has grown to help you $1000. 00 (ten circumstances the amount of your original deposit) in fiat currency created from the bank.
Once again the banks go back to the US Treasury auctions the next month buying more bonds and providing them to the Federal Reserve. And every month this bike of buying and selling preserves on getting repeated.
Once again nothing backs a lot of these dollars except IOU’s. Furthermore, for the hard work each US citizen does to earn his or her salary, a small piece of it eventually ends up for the Treasury in the form of income taxes. This is exactly what pays the principle and interest on the bond that Fed bought with a examine from nothing. US citizens will be forced into paying taxes for the use of our recent money supply system.
Within the commercial banking sector we now have the things I refer to as “magic money creation” which is actually . called “Fractional Reserve Lending”. Here is an example of how fractional reserve lending works. Let’s pretend someone deposits $100. 00 into a bank account, the bank who received that deposit currently is legally allowed to remove $90. 00 orninety percent of your deposit and re-lend it to someone else.
Finally over time, there becomes an excessive amount of bonds at the Fed and cash in the Treasury. All the Treasury now takes that excess cash and build up it into the various twigs of government.
Which is consequently spend on wars, military, federal salaries, social programs, public work projects and other debt spending that keeps on re-occurring. Next all those government employees and military personnel take their salaries and deposit them into different bank accounts throughout the nation. This is how the fiat capital now enters the store-bought banking sector.
However, it’s important to note, that when the Fed writes and concerns a check, there is no funds what so ever on the account to cover the amount of that check. The account these kind of checks are written out of will always carry some zero balance. Therefore each individual dollar that exists, is normally borrowed and must be paid back.
This can be the Ultimate Government backed and sponsored pyramid scheme, when only the banking high level who own the Fed and other central banks around the globe, massively profit by stealing out of generations of innocent locals.
The person who received your money from the bank as a loan will use it to buy an item such as a car. Then that person will pay the car dealer while using the money he borrowed. Today the car dealer will bank this money into your partner’s own account at the loan company. Now there is $190. 00 on deposit and the loan provider can legally steal Ninety percent again or $81. 00 and lend this out.
The entire system of producing money from nothing is a total scam. It all starts with the Federal Reserve and the YOU AND ME Treasury exchanging IOU’s. A check is an IOU for cash and a link is an IOU to be reimbursed with interest at some later date. Cash has existence once the Fed difficulties someone a check.
Thereby actually leaving your profile with only $10. 00 or ten percent of your 100 % deposit. However your bank statement will still exhibit the entire $100. 00 pounds or one hundred percent of your money, on deposit in your account.