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Wednesday, December 22, 2010

Simplified History of Central Banking


1) The money system of nearly the entire planet is known as the central banking system (CBS).

2) The central banking system is identified by certain key characteristics:

1 --- The CBS is composed of one central headquarters where the Board of Governors operates, several reserve banks which act as the Banker's banks, and many 'member banks' which are the typical commercial banks that people use for their financial needs.

2 --- The CBS regulates the nation's money supply by creating money and purchasing bonds.   Purchasing bonds is equivalent to giving money in exchange for an IOU and thus, loaning the money.   Simply put, the CBS of a nation increases the nation's money supply by loaning money to the government through the reserve banks or member banks.   The head of the CBS regulates the money supply by loaning money to commercial banks --- at higher rates to decrease the money supply and at lower rates to increase the money supply, which results in correspondingly adjusted interest rates for people --- thereby adjusting the amount of loans and money in the system.

3 --- The CBS is a partially governmental.   The CBS is owned by its member banks (commercial banks) which own stock in the CBS, analogous to a corporation which is owned by its stockholders.   Since the CBS is partially private, to an extent, private banking institutions, including the reserve banks and its operators, and the commercial banks that are holding savings accounts, are able to create money and loan the money to governments at interest --- hence, national debt and interest on the national debt.

4 --- One of the most significant components of the CBS is the type of banking named, fractional reserve banking.   Fractional reserve banking allows a bank to create money equal to a certain multiple of the money its has in the form of assets (such as, savings accounts, real estate, securities, interest) and use this created money for profit.   One way that the head of the CBS can regulate the money supply is by adjusting multiple of money or reserve ratio that a bank can create based on their assets.

3) The CBS can be dangerous to a nation for many reasons, which include (1) the fact that private banks are able to control the nation's money supply according to their profit intentions, and (2) when a bank creates money, it is adding money to the money supply and if there is too much money in the system, then the value of the money decreases, which reflects as rising prices and the advancing death of the entire monetary system.   This process of having money supply in excess of money demand is known as inflation.   As previously stated, inflation reflects as rising prices (because more money is necessary to equal a fixed value), which means that food costs more, housing costs more, water costs more, the currency purchases less, the job wages lose potency, and financial crisis is creeping.   What appears to be important to note, is that a bank can earn interest by creating money, thus offering an incentive to possibly contribute to inflation and the decreasing financial well-being of the remaining population --- incentive to sell out the masses.

4) When inflation expands at its most rapid rate, this phenomenon is known as a hyperinflation, which has happened often throughout monetary history.   One of the most recent hyperinflations was the hyperinflation if Zimbabwe, and to illustrate the possible severity of hyperinflation, one may consider this --- in the time span of approx 2 years, prices in Zimbabwe inflated from typical levels to levels, which required million, billion, and trillion dollar notes.

5) The CBS began in England in 1694 with the Bank of England.   Since that fateful year, the central banking virus has spread to the United States and caused symptoms in the form of 4 central banks in US history.   The CBS is possessing the Earth.   The CBS has presently infected over 150 nations, and many of these nations are currently being inflated to death.

6) Many seekers have been hearing clamors and reading words, waxing urgent on the destructive actions of the Federal Reserve System (the Fed).   What is the Fed?   The Fed is presently the CBS of the United States.   The Fed is playing a star role in the fundamental rebirth of the United States, thus, affording savvy souls to transmute this Crisis to Profit, utilizing their knowledge of a financial system, which is Born to Die.

Thank you.

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