The Financial System and Money Supply

crimsonfalcon10 said:It isn't dollars leaving; it's Euros... though even that is questionable... since most of this capital gets reinvested back into the US... meaning the money stays in the system and keeps circulating... what leaves are the Euros coming in via exports, tourism, investments, swap pensions, etc.

Getting the US out of a crisis is actually quite simple... reduce imports, increase exports and tourism revenue... and we're out of the crisis. Let's buy American and there won't be a problem... we don't need any credit-based money... just a shift in the mindset of citizens to value American products more, and that's it.

crimsonfalcon10 said:It isn't dollars leaving; it's Euros... though even that is questionable... since most of this capital gets reinvested back into the US... meaning the money stays in the system and keeps circulating... what leaves are the Euros coming in via exports, tourism, investments, swap pensions, etc.

Getting the US out of a crisis is actually quite simple... reduce imports, increase exports and tourism revenue... and we're out of the crisis. Let's buy American and there won't be a problem... we don't need any credit-based money... just a shift in the mindset of citizens to value American products more, and that's it.

Maria Thomas48 said:The Federal Reserve sets that rate for the government and the banks. Then the banks turn around and make their own profit on interest. Plus, the principal has to be paid back. It is pretty obvious this isn't some kind of non-credit money injection. Only the stuff that gets written off could be considered non-credit. But written off to whom? If it is a write-off to a bank, then it is just an even bigger scam.

The central bank doesn't lose because it issues all the money, part of which creates inflation and part of which goes toward monetary profit. Interest is applied to everything (which commercial banks skim off the top). This is just a hole in macroeconomic knowledge that is confusing you.

A bank can't go under when it can source money almost for free and then lend it out at interest. Only the central bank can be forced into bankruptcy by demanding payment for issued money (which it basically created out of nothing—just paper and ink). And that happens when credit expansion stops and everyone has to pay back the full principal plus interest using whatever other money is left. You can already see that this is becoming a reality.

That is why Americans cannot pay back the debt to the Federal Reserve, and why the Fed keeps cutting rates; they have an infinite supply of dollars out there, so even at 250 basis points, they are making an absolutely massive profit.

Just think about it. If I understood correctly, all the banks are co-owners of the Federal Reserve here in America. They issue money to themselves at 0.25% interest and then lend it out at much higher rates. Whatever the Fed earns at the end, they split based on their shares. Since the money supply grows by about 14-17% every year, it is clearly endless profit at the expense of foolish Americans and the rest of the world.

I already explained that when the government takes a loan like that, the community only ends up with a monetary loss, while the government pays for goods and services with the interest. It is a scam and a fraud that couldn't get any bigger.

Even the assassination of John F. Kennedy showed what happens when bankers are stripped of what they believe belongs to them—the right to issue money. It matters so much to them that they resort to any measure to keep it. Reading through these proofs, it seems almost silly that we had a nearly identical law regarding the Federal Reserve, where they issue money to banks so those banks can profit from credit issuance to citizens (and the state), only for the final result to be an economic collapse (not going into the details of how that process unfolds). Meanwhile, the Federal Reserve's profit is negligible because it shouldn't issue too much money or it would destroy the exchange rate (just like the Fed does). It is pure economic masochism enacted by elected representatives. We have exactly what we deserve. And if we ever wake up, maybe then we will change it.

I opened this thread specifically to spread the easily proven truth that the system is heading toward ruin due to flawed money regulation, not just because of bad investments, waste, corruption, bad tax policy, bloated bureaucracy, too many retirees, etc. Even if we removed every single retiree today, we wouldn't succeed because there is no way to actually earn anything at a community level as long as commerce is conducted using money derived from credit.

Regards
sites.google.com/site/financijskisustav/home

Maria Thomas48 said:But how do you plan to tackle inflation? You know, the whole consequence of having massive amounts of cash circulating in the economy that keeps growing by the day. You can't just write off debt like it doesn't exist.

And how are you going to handle paying off debts when bank profits from interest rates are hovering near 7% of the GDP and showing no signs of slowing down?

Then there's the issue of the deficit spenders. Tourism profits aren't enough to satisfy the appetite of domestic profiteers, and those guys make their money off the losers. You can't just eliminate the loss-makers. New ones will always pop up until you've basically gutted the entire economy. The fact that these three deficits are essentially equal proves that point.

Best,

Gregory Williams7 said:Nothing confuses me. If the Federal Reserve issues $x, and expects to receive $x + 0.25% back in a year...

And annual inflation is 5%, for example.

Money represents labor.

The Federal Reserve has lost 5% of that labor.

You have completely ignored the time component. It is entirely illogical to claim that this money costs the Federal Reserve nothing more than paper and ink. How much it costs the Federal Reserve is irrelevant. What matters is the value people assign to it. If I give you something, and a year later I demand 5% less in return, I have incurred a loss. It does not matter how much of that asset I still possess.

Oh, and you also have to factor in that debt owed to the Federal Reserve is growing at about 14 to 17 percent annually—if you calculate it based on how fast it doubles. So yeah, that's way higher than inflation.

Hey there.

Gregory Williams7 said:Ultimately, this entire discussion is irrelevant. I asked you to adjust your spreadsheet to reflect a model where inflation sits at 2.5%, the Federal Reserve interest rate is 2%, and economic growth hits 5%.
Annual economic growth should cover the interest rates while still leaving room for savings. Set the interest rate at 2.5% and inflation at 2%. It makes no difference. In reality, inflation is a non-factor in this equation. The only thing that truly matters is whether there is enough economic growth to offset the interest. Given the circulation of money, those interest payments will be covered regardless.

Is this San Francisco or not? Let’s move past that. The only thing that matters is whether we have a sustainable system that allows for saving.

crimsonfalcon10 said:What's the issue here? First, we have to balance the trade deficit... which means cutting imports. The easiest way to do that? Pivot consumers toward American-made products. By shifting demand to domestic goods, sales for American companies rise. That growth allows for more investment in R&D, which lowers production costs. Once those costs drop, we become hyper-competitive in the global export market, which ultimately drives up exports and boosts the GDP. 😉

Oh, one more thing... we should bring all the diaspora retirees back to the States... then you'll see how quickly we climb out of this crisis...

Gregory Williams7 said:Matthew Patel12, you have completely lost it. No offense intended.

Did I not already explain the origins of that GDP surge to you? And yet, you continue to insist on repeating the same tired arguments.
Only two people seem to be advocating for this theory regarding "non-credit" money. And for some reason, no one else appears capable of grasping it.

Both individuals share one glaring commonality: they refuse to listen to anyone. They persist in repeating the exact same points, even after those arguments have been thoroughly debunked multiple times. Why do they insist on this?

Here is an interesting system for you to consider:

External debt: 100% of GDP.
The average annual interest rate on debt currently sits at 7%. Is this figure sustainable?
The average GDP growth stands at 2%. Is this sufficient?

This is a situation that should concern you. It is a debt that can never truly be repaid. Everything else seems to be functioning perfectly.

Matthew Patel12 said:Ashley Barnes9, when I mentioned 5% of the money in circulation, I was referring specifically to a non-credit monetary system where all figures remain real. Currently, we are dealing with nominal values that have been artificially inflated beyond recognition. Following World War II, the United States provided Europe with the Marshall Plan, an infusion of approximately $12 billion. At the time, that represented roughly 5% of the U.S. GDP. Spread over four years, that amounted to just 1.25% of the annual U.S. GDP. Yet, with such a modest sum, Europe managed to boost its GDP by 30%, rebuilt itself from the ruins of war, and soon reached a GDP surpassing that of the United States. One achieves a far greater impact using non-credit money than through credit-based systems. When non-credit money enters circulation, it stays there permanently, continuously generating new GDP. If it circulates 100 times over a decade, it generates a GDP 100 times larger than the initial gift. Conversely, when money is issued as credit, it eventually has to be paid back, forcing the entire process to start from zero again.

Gregory Williams7 said:Matthew Patel12, you have completely lost it. No offense intended.

Did I not already explain the origins of that GDP surge to you? And yet, you continue to insist on repeating the same tired arguments.
Only two people seem to be advocating for this theory regarding "non-credit" money. And for some reason, no one else appears capable of grasping it.

Both individuals share one glaring commonality: they refuse to listen to anyone. They persist in repeating the exact same points, even after those arguments have been thoroughly debunked multiple times. Why do they insist on this?

Here is an interesting system for you to consider:

External debt: 100% of GDP.
The average annual interest rate on debt currently sits at 7%. Is this figure sustainable?
The average GDP growth stands at 2%. Is this sufficient?

This is a situation that should concern you. It is a debt that can never truly be repaid. Everything else seems to be functioning perfectly.

Maria Thomas48 said:I'll be polite and say I just stick to the reduced equality of the three deficits, which is standard and undisputed in economics. Since you can't disprove that equality, everything else you say is just a fairy tale for the naive.

I laid out examples showing why it's correct. Then you just write that it's been disproven. By what? Just a bunch of words? Prove it with math.

There’s a gap in economic knowledge here, and we all know why. It's to hide the fraud. And when I uncover it using math, you refuse to believe it. That's on you. Either prove with math that I'm wrong, or admit you haven't a clue.

I read this thread from the very beginning and saw you jumping in constantly. Sometimes you were right, sure, but you never once backed it up with actual math. Take that step and prove you're an expert.

You're just confusing other people on the forum with amateur attacks. Even though I'm a layman regarding economics and don't know everything, you can't just talk me around with words. You need concrete mathematical proof to convince me.

I know it's silly for me to start this thread since I'm not an economist, but it makes sense because economists haven't learned what they actually need to. This should be a prompt for economists to fill the gaps in their knowledge so we can finally discuss solving the crisis instead of just endlessly arguing with empty arguments.

Regards

Matthew Patel12 said:Listen, crimsonfalcon10, my formula doesn't just address a single issue; it addresses everything. You can't underestimate China, as they have ascended to become the most dominant industrial powerhouse on the planet. Their workers are seeing substantial wages now, a far cry from the meager earnings of the recent past. There is virtually no distinction between gross and net income, which implies that China operates without the burden of taxes or crippling debt. Because their prices sit roughly 45% lower than global averages, they maintain an edge over everyone else. Don't bother trying to lecture me on the sheer scale of China. Any small nation, whether it's a place like Ohio or a territory like Mexico, can claim size; that isn't a unique feat. Anyone can be big.

crimsonfalcon10 said:Just one question... how exactly do you plan to solve things through a non-credit system? How will that boost American exports? How will it improve the standard of living for the average American citizen? How will you prevent the circulation of money within the system from slowing down? How will you curb excessive inflation? How will you determine fair prices for new products? How will you combat product shortages in the market? Or how will you deal with a surplus? I fear that when you truly contemplate these questions... you will realize that your proposed system is even more flawed than the credit-based one... your formulas may be accurate, but they solve nothing... they apply to perhaps one out of a thousand possible scenarios... the real question is how the system will handle the other 999 possibilities... how will this system defend itself against specific economic shocks?

By removing interest, you have essentially tied one hand behind your back while trying to steer the economy... if it is hard enough to steer with two hands, what do you think it is like with only one?

It is going to take a lot more time before you truly understand economics... ☕

Robert Vaughn10 said:Saving is mandatory, regardless of whether interest rates exist or not. Interest is nothing more than a noose around the neck of the economy, and we are seeing that clearly now. In a system backed by precious metals, prices drop, excesses are eliminated, and saving actually makes sense. How do you jumpstart growth? You roll up your sleeves and produce more. That drives prices down and purchasing power up. The beauty of a tangible economy is that it forces productivity; there's no room for fluff, and if something is off, the alarm sounds immediately. On the flip side, it guarantees stability and falling prices alongside higher productivity.
That means lower wages initially—sacrifice, sure—but it also prevents manipulation.
The problem is people are too soft for that, which is why triggering that kind of growth is so difficult. But once it starts, it's nearly impossible to stop, and purchasing power climbs steadily.
The formula is simple: work, more work, then a better standard of living, followed by more work again.
Printing paper, manipulating the currency through endless schemes, and clear-cutting forests—all of that needs to be left in the past.