YouTube Transcript:
How MONEY & BANKING Really works - Part 1 (3 of 5)

despite the endlessly presented mint
footage government created money
typically accounts for less than 5% of
the money in circulation more than 95%
of all money in existence today was
created by someone signing a pledge of
indebtedness to a bank what's more this
bank credit money is being created and
destroyed in huge amounts every day as
new loans are made and old ones repaid
Banks can only practice this money
system with active cooperation of
government first governments pass legal
tender laws to make us use the national
fiat currency secondly governments allow
private bank credit to be paid out in
this government currency thirdly
government courts enforce debts and
lastly governments pass regulations to
protect the money system's functionality
and credibility with the public while
doing nothing to inform the public about
where money really comes from
the simple truth is that when we sign on
the dotted line for a so-called loan or
mortgage our signed pledge of payment
backed by the assets we pledge to
Forfeit should we fail to pay is the
only thing of real value involved in the
transaction to anyone who believes we
will honor our pledge that loan
agreement or mortgage is now a portable
exchangeable and sailable piece of paper
it's an IOU it represents value and is
therefore a form of money this money the
borrower exchanges for the bank's
so-called
loan now a loan in the real world means
that the lender must have something to
lend if you need a hammer my loaning you
a promise to provide a hammer I don't
have won't be of much help but in the
artificial world of money A bank's
promise to pay money it doesn't have is
allowed to be passed off as money and we
accept it as such
once the borrower signs the pledge of
debt the bank then balances the
transaction by creating with a few
keystrokes on a computer a matching debt
of the bank to the borrower from the
borrower's point of view this becomes
loan money in his or her account and
because the government allows this debt
of the bank to the borrower to be
converted to government FEI at currency
everyone has to accept it as
money again the basic truth is very
simple without the document the borrower
signed the banker would have nothing to
lend have you ever wondered how everyone
governments corporations small
businesses families can all be in debt
at the same time and for such
astronomical amounts have you ever
questioned how there can be that much
money out there to lend now you know
there isn't Banks do not lend money they
simply create it from debt and his debt
is potentially unlimited so is the
supply of money and as it turns out the
opposite situation is also
true isn't it astounding that despite
the incred wealth of resources
Innovation and productivity that
surrounds us almost all of us from
governments to companies to individuals
are heavily in debt to
Bankers if only people would stop and
think how can that be how can it be that
the people who actually produce all the
real wealth in the world are in debt to
those who merely lend out the money that
represents the wealth even more amazing
is that once we realize that money
really is debt we realize that if if
there was no debt there'd be no
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money if this is news to you you are not
alone most people imagine that if all
debts were paid off the state of the
economy would improve it's certainly
true on an individual level
just as we have more money to spend when
our loan payments are finished we think
that if everyone were out of debt there
would be more money to spend in general
but the truth is the exact opposite
there would be no money at
all there it is we are totally dependent
on continually renewed Bank credit for
there to be any money in existence no
loans no money which is what happened
during the Great Depression the money
supply crank drastically as the supply
of loans dried up
and that's not all banks create only the
amount of the principle they don't
create the money to pay the interest
where is that supposed to come
from the only place borrowers can go to
obtain the money to pay interest is the
general economy's overall money supply
but almost all that overall money supply
has been created exactly the same way as
Bank credit that has to be paid back
with more than was created so everywhere
there are other borrowers in the same
situation frantically trying to obtain
the money they need to pay back both
principal and interest from a total
money pool which contains only principal
it is clearly impossible for everyone to
pay back the principal plus interest
because the interest money doesn't exist
this can even be expressed by a simple
mathematical
formula the big problem here is that for
long-term loans such as mortgages and
government debt the total interest far
exceeds the principal so unless a lot of
extra money is created to pay the
interest it means a very high proportion
of foreclosures in a nonfunctioning
economy to maintain a functional Society
the rate of foreclosure needs to be low
and so to accomplish this more and more
new debt money has to be created to
satisfy today's demands for money to
service the previous debt but of course
this just makes the total debt bigger
and that means more interest must
ultimately be paid resulting in an Ever
escalating and inescapable spiral of
mounting
indebtedness it is only the time lag
between money's creation as new loans
and its repayment that keeps the overall
shortage of money from catching up and
bankrupting the entire
system however as the bank's insatiable
credit monster gets bigger and bigger
the need to create more and more debt
money to feed it becomes increasingly
urgent why are interest rates so low why
do we get unsolicited credit cards in
the mail why is the US government
spending faster than ever could it be to
Stave off collapse of the entire
monetary system a rational person has to
ask can this really go on forever isn't
a collapse
inevitable money facilitates production
and trade as the money supply increases
money just becomes increasingly
worthless unless the volume of
production and trade in the real world
Grows by the same amount add to this the
realization that when we hear that the
economy is growing at 3% per year it
sounds like a constant rate but it's not
this year's 3% represents more real
goods and services than last year's 3%
because it's 3% of the new Total instead
of a straight line is as naturally
visualized from the words it is really
an exponential curve getting steeper and
steeper the problem of course is that
Perpetual growth of the real economy
requires perpetually escalating use of
real world resources and energy more and
more stuff has to go from natural
resource to garbage every year forever
just to keep this system from collapsing
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