You Create Money

2.1 Banks Don’t Create Money!

Many people believe money is created by banks! This is false data. The banking institute would like you to believe this for their own benefit. If they can get you to believe this false data they can steal the value from you that your money represents. By the way, this is the value you create working hard to produce products or services on a daily bases.

You create the value, which is inherent, in the money you possess. In most cases you actually create more money value than you receive in pay; you are under paid for the products and services you produce.

The first and primary service the Bank provides is to safeguard the money value or wealth you produce. This is their first and by far their most important product! The Banking service came into being when people used gold as a medium of exchange. Gold is very heavy and difficult to handle and transport around on your person. In order to handle this difficult to handle problem, the Bank was set up to hold and secure the gold in vaults and other secure means where it was made to be very difficult for anyone to steal. In exchange for securing your money the Bank would issue a paper Security of Deposit. This paper could be used instead of gold in the process of purchasing goods and services. You could purchase food, horses, buggies, clothing most anything with these paper Security of Deposits. The paper Security of Deposits became symbols for gold the Bank held on deposit in their vaults. You could go to the Bank and exchange paper Security of Deposits and in return receive gold. In exchange for securing the gold, the Bank would charge a small fee. Here they are producing money value by providing a very needed and wanted service.

From there they went into loaning out part of the money value they held in their vaults in exchange for interest. Here again, they were creating money value in exchange for the use of the money they were loaning out. Now everything is alright as long as the Bank doesn’t loan out too much of the money value it holds in its vaults. As long as there is enough money value held in the Bank vaults to cover the day to day needs of the depositors the economic system flourishes. If the Bank loans out too much money value on account and the depositors’ sense there is a shortage of money in the bank they will panic and make a run on the Bank. This loaning out too much money value will cause an economic problem, a perceived shortage of money problem.

When I talk about money value, I am talking about the value you produce in the production of goods and services. Value is what you create when you create goods and services. You could also look at it as energy because you in reality are creating energy and putting it into the goods and services you create on a daily basis. Money can be in the form of gold, paper, shells, silver, and cloth anything the people agree to be the symbol to represent the value/energy they create. It must be set up to be scarce and be in an absolute amount measured in units. Gold worked very well because it was impossible to create more of it. It is scarce. There is an almost absolute amount of it, and it is divided into units. The units in the United States are ounces. It was and is difficult to find new sources of it for mining. It was fairly constant in terms of a money supply, and was measured in units of weight.

Every now and then there would be a major new gold discovery and it would cause problems in the economic system. The reason it would cause problems is that the gold by itself didn’t have the same value without value created by the production of goods and services inherent in it.

All of a sudden a new supply of new gold would be introduced into the economic system. This would cause money value inherent in the existing money units of gold to be transferred to the newly mined gold which now become money units. Then the peoples’ gold value would decrease, decreasing the purchasing power of each gold money unit. This is the same principle that is followed today when the paper money supply gets expanded or increased, the value of each existing money unit decreases as the value is transferred to the newly printed money. This gives the apparency of goods and services getting more expensive when in fact the money unit is loosing value and purchasing less.

Sure you could argue that gold by itself did have value. However if you removed it from being the medium of exchange for goods and services, it would have far less value. What could you really use gold for if it was agreed not to be the medium of exchange? You can’t eat it; it can’t shelter you and can’t transport you. It wouldn’t have much more use than for jewelry, or industrial uses. Take platinum for example; it has the value it has for its industrial purposes. If it were substituted for gold as the medium of exchange its value would greatly increase and people would loose interest in gold.

Today when the Banking industry causes a shortage of money units by loaning out too much of what it has in its vaults it simply prints more money. This is fraud. Now by printing more money the bank is stealing money value from the money already in print and this value or energy flows to the newly printed money. The same can happen with gold when more new gold is introduced into the society. Value is transferred from the existing gold units to the new units. This happened in Spain after Spain brought the gold from the New World and introduced it into Spain’s society. They suffered an economic collapse.

BANKS DO NOT CREATE MONEY! They may create the symbol but they do not create the value the symbol represents. The value is created everyday by the producers of goods and services which must be marketed on the Open Market open to all on equal terms.

When Banks increase the supply of money symbols by printing more symbols, money is not created! When Banks increase the supply of money symbols, money value is transferred from the money currently in circulation to the newly printed money symbols.

This is very important to know! Banks do not create money! They may print symbols, but that reduces the value in each money unit you possess. This transfers money value from the money currently in circulation into the new money units, reducing the value of all money in circulation. This means, whenever the money supply gets expanded, people loose money value from the money they have in possession.

Banks have as their service; to secure the money value and the energy or wealth you create in your production. This is their primary duty. Their second duty is to provide money value in loans without loaning out more money than the society needs flowing in their everyday economic banking operations. Money is energy and it flows. It is the duty of the Bank to maintain an optimum level of money (energy) velocity in the society. This means the Bank cannot draw down its deposits of money to the point where the flow of money (energy) in the society slows down or is stopped.

When the Bank starts to print more money units in the mistaken belief that they are creating more money they are in fact sucking the energy out of the society. They are taking money value without an exchange in goods and services for it. They will suck the energy out of the society until a society will almost die out. They are parasitic and vampires on a society. Bankers allowed to print money are very destructive to themselves and their society!

Value which gives money its power can only and only be created by the production of goods and services, which must be marketed on the Open Market, open to all on equal terms.

The money supply must be held constant. If it is expanded money value is stolen from those who possess the money in present time and given to those who receive the newly printed money units.

Only Producers of goods and services can create money and the Producers must be paid all the money in exchange for the value they create in their production. Producers must not take more money than they have created in the production of goods and services or they will also be sucking energy out of the society.

Banking can and should be a tremendous asset in a society. They by securing money value (energy of the society) and with the maintaining of the optimum money velocity in a society by not loaning out to much or too little money held in their vaults, can help the producers create explosive prosperity!

Producer Rewarded Open Market Economics
The Science of Economics
By Raymond P. Obrigewitsch
April 24, 2011

Tags: banks don't create money, economics, gold value

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