For many, the US dollar is the place’s fiat currency. It all begins with the US Treasury exactly who creates bonds which are united states government IOU’s that are paid back for a specific time period with interest.
Within the store-bought banking sector we now have what I refer to as “magic money creation” which is actually called “Fractional Reserve Lending”. Here is an example of how fractional reserve lending works. Let’s pretend someone deposits $100. 00 into a bank account, the bank that received that deposit is now legally allowed to remove $90. 00 or ninety percent of your deposit and re-lend it to someone else.
At last over time, there becomes too much bonds at the Fed and cash in the Treasury. Any Treasury now takes the following excess cash and build up it into the various branches of government.
However, it’s important to note, that when all the Fed writes and problems a check, there is no capital what so ever inside the account to cover the amount of which usually check. The account those checks are written out of will always carry your zero balance. Therefore every single dollar that exists, is usually borrowed and must be reimbursed.
Once again any banks go back to the US Treasury auctions the next month investing in more bonds and selling them to the Federal Reserve. And every month this pattern of buying and selling may keep on getting repeated.
The Treasury holds every month auctions to sell off its bonds to primary dealers, who are the major banks. Then the US Federal Preserve enters the game by investing in all the bonds from the loan companies through something called “open market operations”.
Once again nothing backs those dollars except IOU’s. Furthermore, for the hard work each individual US citizen does to make sure you earn his or her salary, a portion of it eventually ends up for the Treasury in the form of income taxes. This is what pays the principle and interest on the bond of the fact that Fed bought with a check from nothing. US citizens happen to be forced into paying duty for the use of our recent money supply system.
The person who received your cash from the bank as a loan product will use it to buy something such as a car. Then that person will pay the car dealer along with the money he borrowed. Today the car dealer will lodge this money into your partner’s own account at the lender. Now there is $190. 00 on deposit and the lender can legally steal Ninety percent again or $81. 00 and lend that out.
Which is in that case spend on wars, military, government salaries, social programs, open public work projects and other debt spending that keeps at re-occurring. Next all those federal employees and military personnel take their salaries and deposit them into several bank accounts throughout the country. This is how the fiat money now enters the industrial banking sector.
The entire system of making money from nothing is a total scam. It all starts along with the Federal Reserve and the YOU AND ME Treasury exchanging IOU’s. Your check is an IOU to get cash and a connection is an IOU to be repaid with interest at a lot of later date. Cash has existence once the Fed difficulties someone a check.
The next person then comes along, and borrows funds. Once the new borrower pays off the seller for what these bought the money again is re-deposited into the bank and after this there is $271 dollars at deposit. This creation in money through deposits and loans (fractional reserve lending) keeps re-occurring to when at some point your original $100. 00 deposit has grown to help you $1000. 00 (ten instances the amount of your original deposit) in fiat currency produced from the bank.
This can be a Ultimate Government backed and sponsored pyramid scheme, where only the banking top dogs who own the Given and other central banks all over, massively profit by stealing with generations of innocent citizens.
In that way actually leaving your bank account with only $10. 00 or ten percent of your 100 % deposit. However your loan company statement will still demonstrate to the entire $100. 00 dollars or one hundred percent of your deposit, on deposit in your bank account.