Fiat Money

Please take a look at my book Life After The State - http://www.amazon.co.uk/Life-After-State-Dominic-Frisby/dp/1908717890 Here is the sister video to this - http://www.youtube.com/watch?v=RvL_Dm2d99A Despite every effort by governments, the gap between rich and poor continues to grow. It is now the biggest it has even been in history. All sorts of reasons for this have been proffered, but few, however, seem to realise that is a simple, inevitable consequence of our system of money and credit. This video, a shorter version of which appears in the film The Four Horsemen (which I co-wrote), explains ... Written and narrated by Dominic Frisby Animated by Pola Gruszka www.dominicfrisby.com Produced by Renegade Economist www.fourhorsemenfilm.com

Comments

1. very good video! 👏👏👏👏
2. This is faith in money. But this faith must disappear.
3. This is from the 4 horsemen documentary.. what right have you got to give permission? BTW Nice surname :D
4. Question: If banks can create money through lending why would they be interested in the money Carney has just made available to them?
5. Jeez! So you're telling me I've been get fucked everyday of my life and basically I'm a slave? Right, when are we starting the revolution?
6. Fiat currency = money. Fiat Deity. = religion. Word on paper backed by NOTHING.
7. In the US the Federal Reserve can print more money, buy stocks, bonds, debt instruments, and set the interest rate banks pay to borrow from other banks when their deposit reserves are below bank regulation standards.  
8. I think banks cant create money out of nothing. Government only can do that through one national central bank. Eg eu central bank, fed or bank of england.
9. to understand the moneysystem watch hans hermann hoppe on youtube ;)
10. Half the shit on here is not only exaggeration if not 100% untrue bald-faced lies! Every single dollar bill out there was not created by banks, The US Government is the one who either directly or indirectly create every damn cent through spending it into creation. Secondly the Government, even back when we had both silver  and gold-standard, and especially nowadays, has never taxed in order to fund it's own spending. Until Reagan, most of the money brought in to the government was entirely due to tariffs and it's only been resent;y after eliminating them, thus allowing the complete destruction of unions, our manufacturing base and so on and was ramped up after end both glass-steagal, passing NAFT, The WTO, and of course KAFTA, all done by the single most corrupt corporatist-President who is ultimately responsible for most of the current economic, financial, and even nowadays political catastrophes of the past decade and a half, (and yes, he was even more responsible that Reagan, HW Bush, and even - GW BUSH), and that's of course Clinton! Taxes though were and still are meant to do one thing only and that was to keep the US populous invested into not just our economic and financial systems, but our Government primarily! It even currently without tariffs, still spend first to get the capital out into circulation first, and then bring in the taxes on the back side of that! They do for a limited time increase the supply before though eventually the government compensating them through the Fed.
    
    QE and the Fed by moving money around which acts as nothing more than a mimic what a real well-functioning economy should look like. When it really, like i said, is just moving money from one account in the fed to another. This just masks how broken our economy still really is, and is exactly why we desperately need not just another, but a larger and far better-targeted stimulus bill! Increasing money supply through lowered interest rates is all funded on the back-end by the Fed which is funded by the US Government! Another thing, a nation who bases it's financial system on a fiat and free-floating currency, while also denominated it's national-debt in that same currency, it is not just very hard, but in fact 100% impossible for that nation to ever be forced into bankruptcy! Since our Gov controls our currency creation, either directly like out-in-out direct deficit-spending or through backing bank loans, our gov will NEVER run out of dollars! Not a single nation who have this system has ever gone bankrupt, Greece and other's dont have their own currency and have no ability to control the currency-circulation or slow it down because they are on the Euro, proving exactly why a money system like that is entirely broken and really was ever since it's inception! Neither debt nor deficits though, have any direct correlation to our nations economy, none. especially with a fiat currency. The only way they could possibly, is if we kept injecting mountains of cash into circulation after our economy get's back "Full-Employment," which will inevitably lead to inflation. But, inflation and inflation alone, is the one thing that limits how much a government like ours can and should spend. Huge increases in Gov spending though lead to any significant dollar devaluation, as morons on here state. People like this seem to forget the most important factor, that factor that is the single reason why direct Government-Deficit-spending leads to economic stimulus, and that's the huge increase in economic output! More people buying things, leading to businesses  being forced to go out and higher new workers be cause they have too much business to handle currently, which then in tern gives those workers with a new job - who of course have that increase in income which allows them to go out and spend more - if not spend where they were spending at all before, and so this cycle repeats itself. That's stimulus. People don't higher new workers out of the goodness of their heart, they do it not because they can't handle the increase of cash - they do it because they can't keep up with the work and need to higher new employees to pick up the slack! Spending, and spending alone is the one and only thing that feeds our economy, it doesn't come spontaneously, and that spending doesn't matter whether it's done by our Gov or the private sector! Increased-economic output is what eats up either the entirety or most of that possible dollar-devaluation.
    
    That's why inflation only occurs when a economy is running on all cylender and yet the Government keeps spending. Debt and deficits have no link to inflation nor do they with each other or the economy as a whole.. If it did, back after WWII - the monster sized debts/deficits created and then increased again by Eisenhower with the Highway project in the 50's, would have lead to economic collapse, and yet- that was the economic golden-era for the US and then for Europe too by the 1950's and 60's! After WWII, our debt was literally double the size our's  is nowadays by comparison - it was at 200% of GDP! All WWII and the massive debt and def only showed us, is that the one main flaw with FDR's New-Deal, (economically-speaking), is that it was near large enough and  that it took WWII to get our Gov to do the amount of def-spending needed to get us out of the depression!
    
    We aren't a household, and our national debt is nothing close to this fantasy that we "Owe" China billions of dollars or something, and ne day they'll come break our legs. A National-Debt is sold off to entities, and not nation on Earth would ever dump the debt they had or stop buying more, and it would only ever do that if we ever do reach inflationary levels. They know that whether they get a  return on their investment year from now or a century, either way - they will make money off of the debt that they had purchased. And because of this there is literally no level in which our debt or def could hurt our economy, they have no correlation to each-other first of all, nor do they ave any on our economy! The Austrian economists pushing the bullshit idea that eventually once our debt was to get to 90% or higher of our total-GDP, it would eventually lead to a downward spiral in the form of "hyper-inflation," which is nothing more than a made up concept that has never happened and could never happen!
    
    It's based on the premise that the Fed eventually will be forced to raise it's interest rates to the point of catastrophe, and so they are always using the equally hilarious term, that it is "artificially keeping the interest-rates low!" It's hilarious, because the Fed has 100% control on the setting of interest rates and it to is impossible to be forced into ever raising them! It's also funny, because the 2 poster-kids for the Austrian-Economic perspective, eventually had their "thorough," report proven to be  pure bullshit! They said they did it on accident, but they left out entire nations when it came to their "comprehensive study," and that u add the many factors they left out - it proved their whole conclusion was utter as much bullshit and not backed by the evidence in the slightest! Though they've embarrassingly have stood by their conclusions, - despite how untrue their conclusions were and how it looked like it was pretty obviously doctored and not done on accident! 
11. My-RA Muddavuggers!
12. Let the ruling classes tremble at a Communistic revolution. The proletarians have nothing to lose but their chains...
13. The largest pyramid scheme in the world, and it's enforced by federal governments.
14. global revolution,,, thats only way...
15. Of course they dont! For example, a bank has 1B in reserves, due to capital requirements those reserves can represent a minimum of 10% of their assets (loans). Thus the bank can lend another $9B due to its 1B in reserves. Reserves can be grown through profits or sales of assets to the CB. The increase in reserves allows to lend more money. Simple. The capital adequacy requirements limit inflation. Please explain and provide reference to cases of fraudulent lending on a large scale.
16. One of the primary roles of a central bank is to control the money supply. Who else is going to do it? Just magically appears? If anyone can just 'decide' how much money they had the economy wouldn't work. CB's control MS through the commercial banks by buying their assets (loans) and crediting their reserves account with the CB. The new reserves allow for credit creation.
17. en(dot)wikipedia(dot)org/wiki/Endogenous_money. That is precisely what it means. Capital constraints by definition constrain/ limit credit creation. Basil III requires banks to hold a total of 12% in reserves* for its total credit created. (The 12% is split between common equity, RWA, conservation buffer, discretionary counter-cyclical buffer and during high credit growth an additional 2.5% of capital). The whole point of capital requirements is to limit credit creation.
18. Money supply cannot be endogenous i.e created by commercial banks on the back of demand for loans. It may appear that way however banks must hold a capital adequacy ratio as implemented by Basil II, and coming up Basil III. What has happened during QE is that the FED has been buying $xxb per month in tied up bank assets (mortgage backed securities) in exchange for increasing each banks ability to loan out money. Severe inflation is a possibility as a result of increase in capital adequacy.
19. Control of money supply is one of the main roles of the central bank en.wikipedia(dot)org/wiki/Central_bank. You're correct with regards to bankruptcy however I wasn't very clear on what I meant by 'wiped out'. I meant that somebody suffers the loss of the cancelled debt e.g. investor or debt-holder.
20. An idea.