The united states, the US dollar is the country’s fiat currency. It all starts off with the US Treasury whom creates bonds which are federal IOU’s that are paid back for a specific time period with interest.
Nevertheless it’s important to note, that when the Fed writes and issues a check, there is no capital what so ever on the account to cover the amount of the fact that check. The account these kind of checks are written with will always carry a zero balance. Therefore just about every dollar that exists, is in fact borrowed and must be reimbursed.
Which is then spend on wars, military, federal salaries, social programs, general public work projects and other deficit spending that keeps at re-occurring. Next all those governing administration employees and military people take their salaries and deposit them into various bank accounts throughout the location. This is how the fiat funds now enters the financial banking sector.
At last over time, there becomes too much bonds at the Fed and cash in the Treasury. Any Treasury now takes this excess cash and deposits it into the various branches of government.
The person who received your money from the bank as a lending product will use it to buy something such as a car. Then the face will pay the car dealer together with the money he borrowed. Right now the car dealer will pay in this money into an individual’s own account at the bank. Now there is $190. 00 on deposit and the bank can legally steal Three months percent again or $81. 00 and lend the idea out.
This can be the Ultimate Government backed and sponsored pyramid scheme, where only the banking high level who own the Federal reserve and other central banks world wide, massively profit by stealing with generations of innocent people.
Within the industrial banking sector we now have what I refer to as “magic money creation” which is literally called “Fractional Reserve Lending”. Here is an example of how fractional reserve lending works. Say someone deposits $100. 00 into a bank account, the bank that received that deposit currently is legally allowed to remove $90. 00 or ninety percent of your deposit and re-lend it to someone else.
The entire system of creating money from nothing is a total scam. It all starts while using the Federal Reserve and the YOU AND ME Treasury exchanging IOU’s. A good check is an IOU designed for cash and a relationship is an IOU to be repaid with interest at a lot of later date. Cash has existence once the Fed concerns someone a check.
The Treasury holds each month auctions to sell off a bonds to primary dealers, who are the major mortgage lenders. Then the US Federal Reserve enters the game by getting all the bonds from the banks through something called “open market operations”.
Once again any banks go back to the US Treasury auctions the next month investing in more bonds and providing them to the Federal Park. And every month this action of buying and selling preserves on getting repeated.
Thereby actually leaving your bank account with only $10. 00 or ten percent of your 100 % deposit. However your bank statement will still demonstrate the entire $100. 00 greenbacks or one hundred percent of your bank, on deposit in your bank account.
Once again nothing backs these dollars except IOU’s. Furthermore, for the hard work each US citizen does to make sure you earn his or her salary, a small piece of it eventually ends up with the Treasury in the form of income taxes. Goods on the market pays the principle and interest on the bond that the Fed bought with a check from nothing. US citizens are forced into paying income taxes for the use of our recent money supply system.
The next person after that comes along, and borrows funds. Once the new borrower gives the seller for what they will bought the money again can be re-deposited into the bank and after this there is $271 dollars at deposit. This creation of money through deposits and loans (fractional reserve lending) keeps re-occurring to the place at some point your original $100. 00 deposit has grown to help you $1000. 00 (ten circumstances the amount of your original deposit) in fiat currency constructed from the bank.