NationStates Jolt Archive

http://video.google.com/videoplay?docid=-9050474362583451279

This has to be one of the most enlightening, and disturbing videos I have seen on the internet yet. Forget the Loose Change, Zeitgeist video, this thing is backed up with hard evidence of the activities of the banks. And it's very alarming!

http://paulgrignon.netfirms.com/MoneyasDebt/references.htm
There's the full list of references.

good time to be broke?

that was very interesting!

*steals for homeschooling purposes*

Any chance of a quick synopsis for people unable/unwilling to spend 47 minutes watching something?

Any chance of a quick synopsis for people unable/unwilling to spend 47 minutes watching something?

nope. you watch it. be disturbed.

I actually already knew, but had never seen it explained with cartoons, so that was cool.

Any chance of a quick synopsis for people unable/unwilling to spend 47 minutes watching something?

It just explains in detail how money and banks actually work in most, if not all, of the world. Basically, it's debt compounded on debt compounded on debt, ad infinitum. It is kind of disturbing how retarded our money system is, especially considering that, at it's most fundamental level, money is simply the symbolic transfer of what doesn't amount to anything more than favors.

Any chance of a quick synopsis for people unable/unwilling to spend 47 minutes watching something?

Banks create money from debt instead from actual assets they have because they are allowed to loan money they don't have. This is ultimately sustained with an unsustainable (due to the planet's limited resources) exponential economic growth and the only thing keeping the whole shebang from collapsing is time. Some ideas for a solution are given.

Aha, cheers chaps. Sounds interesting...

wow. that was really informative. I loved the graphics, with the guy and the hammer... hehhehheh

That was interesting.

Although that bloke is clearly an environmentalist and a socialist, so what does he know?

I didn't realise this was news to anyone. That's how central banks control the money supply...they print a little bit, allow banks to borrow a bit more cash and then they take that cash and multiply it by lending it out.

Banking systems collapse when they start defaulting and everyone wants to get their money out, because they don't actually have as much money as they took from everyone. Hence regulations that require banks to keep a certain ratio of their lendings in actual cash as well as central bank-provided insurance. Might not necessarily work in a full-blown collapse but it can greatly soften the impact of a minor crisis of confidence.

I don't have time or bandwidth to watch the thing...does the guy give any reasons why he thinks this is all bad and unsustainable?

I don't have time or bandwidth to watch the thing...does the guy give any reasons why he thinks this is all bad and unsustainable?

He said that it relies on exponential growth in a world of finite resources.

He said that it relies on exponential growth in a world of finite resources.
That doesn't make a lot of sense, unless he's saying that the investments the banks finance can't keep returning enough money to pay the interest.

It is always funny watching people try to make sense of economics with little grasp of the dynamics and definitions wherein. It is like listening to a GED student trying to describe fractals to his drinking buddy. :p

That doesn't make a lot of sense, unless he's saying that the investments the banks finance can't keep returning enough money to pay the interest.

essentially, what he is saying is that in order to sustain growth, there must be a constant increase in debt...basically, since our money represents debt instead of value, we have to continue to increase debt to create money rather than increase value (as with the gold standard). This is limited because there is a finite number of humans the world can support, a finite amount of resources, etc.

He argues that, at some point, we can't increase the debt load. At that point, the money supply will catch up to the debt load, and we will have a massive economic crisis. He isn't entirely inaccurate...

essentially, what he is saying is that in order to sustain growth, there must be a constant increase in debt...
That's not really true. Growth is caused and sustained by all sorts of things, and if debt markets were to collapse and banks wouldn't be able to make big loans, people would get the money to do stuff from somewhere else. Not to mention that the system of banking is hardly something that would just disappear, even if there was a crisis.

basically, since our money represents debt instead of value, we have to continue to increase debt to create money rather than increase value (as with the gold standard).
I'm thinking you should be more rigid with the terms you use. I suspect that the share of debt relative to equity/asset wealth in the economy has been rising in some countries, that much is true.

But that doesn't have anything to do with "value". Value comes from the usefulness of something and the interplay of supply and demand. Where the financing came from is irrelevant.

This is limited because there is a finite number of humans the world can support, a finite amount of resources, etc.
Why is the amount of debt we can make limited by anything (other than the government-imposed rules on how much cash a bank has to hold)?

At that point, the money supply will catch up to the debt load, and we will have a massive economic crisis.
I think you might have to rephrase that, because right now I don't understand that sentence at all.

I have a feeling that this has to do with the negative connotations the word "debt" carries. When we hear the word, most people usually think bad things. I know because I used to cringe at the thought of a buy-out firm buying some company just to then take loans on that company and keep that money to themselves (or pay off their own debtholders).

But debt isn't a bad thing, nor a good thing. In terms of finance as a discipline, the two (debt and equity) are just two ways of getting capital to do stuff. There is no actual difference between the two in the sense that any cash flow to your company ends up going either to the people you borrowed from or the people who own your company. As far as the mechanics are concerned, there is little difference (other than that the debtholders enjoy first dibs on any cash flow). In fact, as far as we can tell most companies don't have enough debt.

But I digress. The fact is that debt is only a bad thing if you can't pay it back. These days there are quite sophisticated rules on what banks can do with their money in order to prevent emergencies like the ones that made the Great Depression such a big event, and the banks' own models and strategies are even more sophisticated still.

This is just an issue of managing various cash flows over time and if banks are good at one thing, it's that.

Well that opened my eyes!

Everyone I know is going to be watching that.

Well that opened my eyes!

Everyone I know is going to be watching that.
Don't just take it at face value. It's good if you never knew the mechanics of it, but so far it doesn't sound like his case for it being unsustainable is particularly solid or relevant.

Don't just take it at face value. It's good if you never knew the mechanics of it, but so far it doesn't sound like his case for it being unsustainable is particularly solid or relevant.

So I'm guessing you think the current system is good and it is sustainable?

That's not really true. Growth is caused and sustained by all sorts of things, and if debt markets were to collapse and banks wouldn't be able to make big loans, people would get the money to do stuff from somewhere else. Not to mention that the system of banking is hardly something that would just disappear, even if there was a crisis.growth of economy is caused by all sorts of things. Growth of money is caused by a) printing more money and b) modern banking. Without input, there is no output in banking (or, really, no reliable input).


I'm thinking you should be more rigid with the terms you use. I suspect that the share of debt relative to equity/asset wealth in the economy has been rising in some countries, that much is true.
You asked for a summary of the video. I never claimed these are my words, or even his. It is entirely possible that I have messed up his message (it is late, I'm sick, etc). If you want the concrete terms, watch the video. what I gave is just a summary, and a very cursory one at that.
But that doesn't have anything to do with "value". Value comes from the usefulness of something and the interplay of supply and demand. Where the financing came from is irrelevant.adding value as in creating something of use (a pot, silverware, a gold coin) rather than manipulating money to get more money.


Why is the amount of debt we can make limited by anything (other than the government-imposed rules on how much cash a bank has to hold)?debt must be balanced out by something. there is a point where you cannot create more debt because no one can pay it back in any form. At that point, banks own all property and real money. the rest own debt. Again, watch the movie if you want a more in depth look than a summary will provide.
I think you might have to rephrase that, because right now I don't understand that sentence at all.It is simple. Our world currently opporates on a constantly expanding amount of debt. This creates a constantly expanding amount of money supply. However, nothing is infinite. At some point, we will reach the threshold of debt. At this point, the money supply will reach the debt threshold, and the economy will collapse. No debt=no money.

I have a feeling that this has to do with the negative connotations the word "debt" carries. When we hear the word, most people usually think bad things. I know because I used to cringe at the thought of a buy-out firm buying some company just to then take loans on that company and keep that money to themselves (or pay off their own debtholders).

But debt isn't a bad thing, nor a good thing. In terms of finance as a discipline, the two (debt and equity) are just two ways of getting capital to do stuff. There is no actual difference between the two in the sense that any cash flow to your company ends up going either to the people you borrowed from or the people who own your company. As far as the mechanics are concerned, there is little difference (other than that the debtholders enjoy first dibs on any cash flow). In fact, as far as we can tell most companies don't have enough debt.

But I digress. The fact is that debt is only a bad thing if you can't pay it back. These days there are quite sophisticated rules on what banks can do with their money in order to prevent emergencies like the ones that made the Great Depression such a big event, and the banks' own models and strategies are even more sophisticated still.

This is just an issue of managing various cash flows over time and if banks are good at one thing, it's that.
If you want to actually understand the point the movie is focused on, watch the movie. It doesn't deal with personal debt or lack there of. It deals with the overall system of banking and debt involved in centralized banking. In the most boiled down form I have ever seen, it takes a 45 minute cartoon or 3 1-hour lectures. I don't have the energy to type that much.

The documentary doesn't manage to explain why this is a problem, except for "nothing lasts forever". They just assume that we'll be disgusted by the fact that the money the bank loans to people is created the moment it's lent, and of course that the cartoon bankers have evil grins and speech bubbles saying things like "they still fell for it".

They set up the regular people that if only educated about how the system works would be completely against this system, against the bankers that make money out of nothing, to the benefit of only themselves. Money is the master and the people are the slaves, like the quote near the end by Leo Tolstoy states.

I'm not saying there isn't a problem here somewhere, or that things couldn't be done better, but if I want to be educated on the economy, I'd like a less biased source. I'm going to dismiss this documentary and and continue to have no opinion whatsoever.

I find it more disturbing that if I don't fork over money to the government to go kill Iraqis, I get put into prison and ass-raped. This is known as taxation.

So I'm guessing you think the current system is good and it is sustainable?
Pretty much, yes.

I mean, it's worked for a long time now, and the only time it really failed badly was when the financial markets collapsed in 1929. And, perversely, the main weakness of the system then was caused by government in the form of anti-monopoly legislation that prevented banks from growing really large. There were many small competing banks which all individually weren't strong enough to absorb the damage done by the stockmarket crash. Combined with there being no cash reserves required (so banks could lend out more money that they didn't have than they can today), that destroyed the system. And only because the system collapsed like that did the stockmarket crash turn into a problem of the real economy.

These days the system has been secured against these threats. Banks are now much better legislated, not anyone can just open a bank. You're also required to keep some minimum amount of cash, so you're safer against mass runs against your holdings. And if all that doesn't help the government usually bails you out because it realises the damage a collapse in the banking sector can do (as I believe happened with a smaller bank in Germany recently).

So in terms of sustainability, the system seems safe. And morality shouldn't enter into it, in my view. It works and it allows entrepreneurs access to the funds they need to make stuff happen. And not only that, but I've never had problems getting the money I put in a bank account back in cash. And they even pay me interest.

So yeah, no complaints from me.

Growth of money is caused by a) printing more money and b) modern banking.
And so is a reduction in the money supply. That's how monetary policy works: the central bank prints money and offers to buy government securities from the banks in return for that printed cash (and as a side effect, the number of securities available changes their price which in turn affects the interest you can get for them). The banks take them up on the offer and get the cash, which then enters into their reserves and can be multiplied (economists know it as the "money multiplier"). It's not a secret, there's nothing shady about it and the rules are tightly legislated.

there is a point where you cannot create more debt because no one can pay it back in any form.
And you don't think interest rates would change long before such a point is reached?

I mean, the only case I can think of right now where banks couldn't motivate people to borrow money was in Japan in the 90s when deflation was going. Real interest rates were actually negative at some point, so you could earn money by borrowing it and people still couldn't be bothered.

But that had different reasons and the system didn't collapse.

What a horrendous example of ignorant propaganda.

You are shackled to endless debt until you go bankrupt because a secret group of bankers has crafted a conspiracy to put everyone in debt to them, get all their assets, and rule the world!

Please, spare me your tinfoil hat conspiracies and actually take the time to learn why our economic system is the way it is today. Oh yeah, and do it from legitimate sources and not communist propaganda.

Government should just print all the money we need! That is a recipe for disaster. Printing your way out of problems does nothing but debase the currency into worthlessness. Politicians cannot be trusted to have unlimited spending power with naught but the hope that they understand basic economics sufficiently not to crash the system because they cannot resist more conjuring up political favors that personally benefits them while personally costing them nothing.

Banks loan out money and demand interest as payment for the risk that someone will not pay – this means that investments will go where they will actually be productive. If that new factory isn't going to make enough profit to pay back the loan, it is not worth building. Just trying to print endless money to give it away freely does not make an economy function.

I’m so tired of hearing anti-money people prattle on about evil bankers plotting to take over the world by using the banking system to make everyone slaves – at least it was more obvious when they just called them jews.

I’m so tired of hearing anti-money people prattle on about evil bankers plotting to take over the world by using the banking system to make everyone slaves – at least it was more obvious when they just called them jews.

Hear, hear.

I'm not sure I'm particularly worried about what the guy had to say. I did find what he had to say interesting. Especially the bit about LETS. I've always been intrigued about proper trust-based economies.

We starts by saying banks can artificially create money, what he seems to neglect to mention is that money is also disappearing at the same time, via the process of inflation and defaulting.

Banks have the ability to create money, but individuals and corporations also have the ability to destroy that money through bankruptcy or other less serious actions. And whilst the money is destroyed the person isn't. The person after bankruptcy still has all their faculties and skills and then enable them to create wealth.

I know several people who have gone bankrupt in the past. And, yes, they lost their property, but here they are, now, with more property and wealth than before.

Money is just money. It isn't anything but a medium of exchange. If the money supply were to disappear tomorrow nothing would disappear except the money. All the infrastructure would still be in place to help create wealth.

So I believe the monetary system is sustainable. However, what isn't sustainable is the mode of production. Which, previously, was a linear process, and is only now being slowly transformed into a cyclical process - just like the monetary system is currently.

Bah, I feel I wrote to much. I nearly started noted whilst watching the cartoon so I would be able to write a more coherent post.

Government should just print all the money we need! That is a recipe for disaster. Printing your way out of problems does nothing but debase the currency into worthlessness. Politicians cannot be trusted to have unlimited spending power with naught but the hope that they understand basic economics sufficiently not to crash the system because they cannot resist more conjuring up political favors that personally benefits them while personally costing them nothing.To be fair banks don't tend to be so great either - since they are only human.

I'm having trouble remembering, but it's something to do with the oil money glut, changes in interest rates, irresponsible lending, and the near bankruptcy of Midland Bank and others.

I've known the mechanics of the system for a long time, and I fail to find the same sustainability issues that the original fellow finds.

I've known the mechanics of the system for a long time, and I fail to find the same sustainability issues that the original fellow finds.

A fundamental confusion is over the nature of growth itself. Growth is not growth is not growth; there is a huge difference between intensive growth and extensive growth and the nature of economic growth has shifted to include information technology and ideas. The more of our growth that is in the form of ideas and information, and the greater the share that comes from productivity improvements, the fewer resources required to continue economic growth.

To paraphrase Gordon Moore, no exponential trend can continue forever, but we can keep working to delay forever. Accelerating technological development in particular will ease this burden by greatly improving the economic sustainability of all aspects of society.

Not this crap again, I'll give it a view though...

Interesting video.

The cartoon goldsmith guy seemed a bit like a stereotypical Jew to me though...

Another sign of control they never seem to mention on these videos is that. It's harder to get a loan when you haven't been in debt.