26 May 2013


Mature Caucasian man typing on laptop in home.
















If you have a check from one bank, and you use it to buy something, or you deposit that check in another bank, do you think that money couriers rush around behind the scenes, carrying bags of paper bills to and fro?


If the government electronically credits your bank account by $1,000 for Social Security, or $125 for food stamps, do you think the government sends physical paper bills to your bank?


In most nations, coins and bills represent less than 3% of the overall money supply. I say “represent” because coins and bills are not money. They represent claims to digital units of money. The digital units have no physical existence, since they are accounting concepts, expressed as numbers in computers.


Why do the big banks have limitless money, while you and I are broke? Why do the big banks have elegant buildings, while you and I live in squalor and despair? Answer: banks create money out of nothing, just like Monetary Sovereign governments do — although most bank money exists as loans.

Yes folks, it’s all digital. You would realize this if you honestly considered what happens in your everyday life.

However most people don’t want to do that. Most people prefer to live in a dream world where money is somehow physical, and therefore limited.

If you live in this dream world then:

>> You believe the lie that government money is limited, and you must have austerity.

>> You believe the lie that the US government has a “debt crisis,” and “can’t spend money it doesn’t have.”

>> You want taxes to be imposed on rich people, or some other group, falsely believing that if they have less, you will have more.

>> You cannot accept that the US government has no need or use for tax revenue, and in fact destroys revenue upon receipt.

>> You think that gold has intrinsic value, and will keep that value even if all the bank systems crash.

>> You habitually say the government is “printing money like mad,” even though less than 3% of the money supply consists of coins and bills.

>> You feel anxiety when someone tells you that banks and government create money out of thin air.

>> You are totally confused about money and economics.

In short, if you think money is physical, then you are brainwashed. And to those who are brainwashed, reality looks bizarre and absurd.

The idiotic Socialist Party of Great Britain is brainwashed. It says:

“An urban myth is circulating on the internet that banks have been creating money out of thin air.”

The article then proceeds through irrelevant bullshit, and says, “It is, however, true that the new currency has been created out of nothing.”

Such endless self-contradiction is one reason why people are so confused, and therefore submissive.

The article is very long and technical (i.e. empty) and full of errors — e.g. it says that banks still practice fractional reserve lending.

You can cick the link if you want, but you won’t get past the first couple of articles without thinking, “This is bullshit,” and clicking elsewhere.


Elsewhere, one guy sort of gets it…

The government prints our paper money, but that’s only a small fraction of the money in use. Most of the money in national economies is created when banks write it into their customers’ accounts out of thin air as bank loans.

Yes, if the FY 2013 U.S. deficit is $643 billion, that’s about 4.3% of the US GDP, which means the other 95.7% of the U.S. money supply comes from banks, or was left over from previous years, and is still in circulation.

The article then says that banks engage in fractional reserve lending. (Sigh.)

Look folks: banks must technically have a certain amount of digital “reserves,” but banks can get that digital cash for little or nothing. Therefore discussions about “reserves” are irrelevant. Ultimately, banks do not need reserves to make loans. When a bank makes a loan for $100, it simply creates an account, and digitally credits it with $100, and lends the money. Period. When the $100 is paid back, that $100 in loan money is destroyed, although the bank keeps the interest. (Government money is destroyed via taxation. How? By debiting the numbers in accounts.)

That’s all there is to it.


In fact, this clarifies something…

“The financial crisis of 2007/08 occurred because we failed to constrain the private financial system’s creation of private credit and money.”

~ Lord Adair Turner, former chairman of the Finacial Services Authority, Speech to the South African Reserve Bank, 2 November 2012

Exactly! Banks used their power to create loan money out of nothing, and went wild with fraud and abuses. When people started to wonder if any of the bank numbers corresponded to physical reality, the Great Bubble popped. Then, when we were on our knees, the rich and the bankers decided to impose austerity on us.

“When banks extend loans to their customers, they create money by crediting their customers’ accounts.”

 ~ Sir Mervyn King, head of the Bank of England, Speech to the South Wales Chamber of Commerce at The Millenium Centre, Cardiff on 23 October 2012


Under the present system banks do not have to wait for depositors to appear and make funds available before banks can lend. Rather, banks create their own funds, deposits, in the act of lending. This fact can be verified in the description of the money creation system in many central bank statements, and it is obvious to anybody who has ever lent money and created the resulting book entries.

~ IMF Working Paper, “The Chicago Plan Revisited, ” page 9

Yes. When you take out a loan from the bank, the “money” is just typed into your account and created out of nothing. Why? Because all money is digital.

Banks extend credit by simply increasing the borrowing customer’s current account … That is, banks extend credit [i.e. make loans] by creating money.

~ Paul Tucker, Deputy Governor for Financial Stability, Bank of England. Speech: “Money and Credit: Banking and the Macroeconomy”



Xinhua is the Chinese government’s official press agency, and the largest news agency in China.

From Xinhua:

Under a 78-billion-euro bailout agreement with the Troika in May 2011, Portugal’s government has been implementing a harsh austerity policy that has sparked widespread protests in recent months. On Saturday 25 May 2013, thousands of Portuguese held rallies across the nation against tough austerity measures in return for the bailout from the international lenders. According to a latest survey, over 80 percent of Portuguese are dissatisfied with the government’s fresh agreement with the troika, demanding the government renegotiate with them on the terms and conditions for the bailout.

However, no one demands that Portugal dump the euro currency, and return to using the Portuguese escudo.

Hence the austerity and the depression will continue to become much  worse, which each “bailout” being another debt bomb.









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