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Topic: Money creation


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  How Money is Created
Money is created when a trader makes a commitment, by buying goods or services from other traders, to place goods or services in the marketplace of equal value in the future.
While banks are generally credited with the creation of money, it is still the traders who go to the bank to borrow who are making the commitment to place goods or services on the market to repay their debt.
As such, a secondary function of money creation--and all borrowing under the present rules--is that of a private social security or welfare system, funded by the “tax” (interest) on traders who have a negative balance in their accounts, and paid to those who have positive balances and those who mediate the money creation process.
www.vantagequest.org /trees/money.htm   (6643 words)

  
 Freedom For All - Creation of Money - Period I   (Site not responding. Last check: 2007-10-07)
“Money is a universal medium, or common standard, by comparison with which the value of all merchandize may be ascertained: or it is sign, which represents the respective values of all commodities.
The paper money experiments of early America and the consequent disastrous results thereof were fresh in the minds of the framers of the Constitution when they met in Philadelphia in 1787, where they determined that a uniform specie currency must be the money of America.
The friends of paper money during this dark era in our history made certain that gold would never again offend them; the embarrassing predicament in which they placed the federal government was sufficient to cause the federal government to take an action unprecedented in the annals of the history of money.
www.worldnewsstand.net /money/fiat.htm   (6004 words)

  
 Financing sustainable development: Money Creation
Money creation for the state is, of course, the exact opposite of what economists, politicians, and other experts consider as sound monetary and economic policy.
Money creation for use by the state would violate one of the most sacred dogmas of the financial community.
Thus, money creation for use by the state was recently proposed by none other than the director of the International Monetary Fund - one of the greatest bastions of conservative economics.
home.wanadoo.nl /f.j.doorman/Page23.htm   (5286 words)

  
 Money creation - Wikipedia, the free encyclopedia
Money creation is the process by which the money supply of a country is increased.
This lending of money that it has on deposit is the precise point at which new money is created, because the depositor still has his money, and the person getting the loan now has money too.
With 90% of that money lent out, if the original depositor wants their money back, the bank has to borrow that money from another bank (or maybe from another source), at rate of interest set by the government (the overnight rate, or the federal funds rate in the US).
en.wikipedia.org /wiki/Money_creation   (1188 words)

  
 Money Created Out of Thin Air
Money is created in two ways: First, money creation comes from borrowing it and spending it.
Money creation in the private sector tends to concentrate in certain asset classes that facilitate the creation of new credit.
As central banks inject money growth directly into their respective economies by buying assets such as United States treasury bonds with Helicopter Money, it is impossible to totally conceal the fact that there is more money chasing the same number of goods.
www.gold-eagle.com /editorials_04/benson073004.html   (1505 words)

  
 Meatball Wiki: CreationOfMoney   (Site not responding. Last check: 2007-10-07)
The reason is that deposits are money that the bank may have to give away in the future (if the customer withdraws it), and loans are expected income for the future (presuming that the default rate is predictable).
That the right to issue money is an ability to borrow interest free, is one of the things which makes that right valuable and why banks don't like people inventing their own currencies.
The 1995 essay "Governments and Money" at [4] has many interesting notes on the gold standard, fiat money (not backed by gold), the Bretton-Woods system (the last attempt at an international gold-based system which collapsed in 1973), and other related topics.
www.usemod.com /cgi-bin/mb.pl?CreationOfMoney   (2113 words)

  
 Money Creation
When banks create money, they effectively tax everyone to pay for it with inflation, the same as the federal government.
But when they create money to lend they simultaneously put a debt on their books with the interest owed.
Money: the documentary by Isaac Isitan and desperate people in Turkey and Argentina banking vainly on the bank doors that no longer return deposits.
mindprod.com /money/moneycreation.html   (1361 words)

  
 Modern Money Mechanics   (Site not responding. Last check: 2007-10-07)
Money is such a routine part of everyday living that its existence and acceptance ordinarily are taken for granted.
Broader concepts of money (M2 and M3) include M1 as well as certain other financial assets (such as savings and time deposits at depository institutions and shares in money market mutual funds) which are relatively liquid but believed to represent principally investments to their holders rather than media of exchange.
From the standpoint of money creation, however, the essential point is that the reserves of banks are, for the most part, liabilities of the Federal Reserve Banks, and net changes in them are largely determined by actions of the Federal Reserve System.
www.worldnewsstand.net /money/mmm2.html   (13326 words)

  
 Money Creation
The sum of money which the government obtains, and which is debt-free so far as the government is concerned, is then added to whatever taxation revenue has been raised to fund the public sector.
Thus, coins and notes are created by the government, and an amount equivalent to the face value of those coins and notes is spent into the economy as a direct, debt-free input.
Thus, the IMF is now creating and issuing money in the form of a new international currency, created in parallel with debt, under a system essentially the same as that of a bank...
www.prosperityuk.com /prosperity/articles/moneymake.html   (3068 words)

  
 Australian Monetary System : Money Creation in Australia
We have all heard it said that "money is the root of all evil" and probably thought that was a bit of an exaggeration.
Money according to the Macquarie dictionary is "coins or certificates (such as banknotes etc.) generally accepted in payment of debts and transactions, or any article or substance similarly used".
In time, the credit created by the loan is extinguished as the loan is repaid, so at the end of the loan the temporarily created credit will have disappeared, except for leaving the bank richer by the amount of interest paid.
dkd.net /davekidd/politics/money.html   (3679 words)

  
 Libertarian Views on Money - its Creation and Control
The Uses and Abuses of Money by Nick Elliott Politicians have often laboured under the delusion that money is something created and manipulable by themselves, when in fact it is the spontaneous institution of a free society and will continue to evolve in ways outside their grasp.
The development of modern banking and paper money broke the government monopoly of money creation and fostered the growth of democracy.
Although not written from an explicitly libertarian perspective this essay, based on A History of Money from Ancient Times to the Present Day by Glyn Davies is on a theme of interest to libertarians.
www.ex.ac.uk /~RDavies/arian/libertarian.html   (574 words)

  
 Gottheil SG Money Creation and the Banking System
This money creation process doesn't go on forever because each round of deposits is smaller as more reserves must be set aside.
The money supply is unlikely to expand to the extent indicated by the potential money multiplier for two reasons.
The money supply shrinks as outstanding loans are called in, causing the interest rate to rise and the quantity of investment to fall, just when investment is needed the most.
www.swlearning.com /economics/gottheil/money_creation.html   (1493 words)

  
 Debt-free money - Wikipedia, the free encyclopedia
Debt-free money is notably discussed in the writings of Clifford Douglas who was the founder of Social Credit.
But afterwards money created by bank loans is the money in circulation that nations tax to advance their national programs and meet their operating and capital needs.[Citation needed]
The creation process occurs when a customer takes out a loan, and the money is created to his or her account.
en.wikipedia.org /wiki/Debt-free_money   (822 words)

  
 VITALfinal   (Site not responding. Last check: 2007-10-07)
And since money on deposit in commercial banks pays virtually no interest—last I looked my checking account paid.8% interest, the interest that they get from the government on their bonds is virtually all theirs to keep.
Folks should know that every time money is created out of nothing, it dilutes the purchasing power of money that has been saved or promised for future payments, such as pensions.
The reason why fiat money monetary systems always fail is this: whenever bankers and/or politicians are left in charge of the integrity of legal tender fiat money, the temptation to manipulate that money for their own benefit has been so overwhelming that none of them have been able to resist the temptation.
www.fame.org /HTM/VITALfinal.htm   (4594 words)

  
 The Creation of Money
Rather than raise taxes (which could be political suicide), they create a gov. bond or Treasury note.
If played out to the theoretical end, it loans the same money out over 50 times and at a total of 9 times the original $1,000 deposit.
Add up the whole thing, and you can see that the total money introduced into the system can be up to 10 times the original gov. note.
political-resources.com /money/creation.htm   (532 words)

  
 EconEdLink | EconomicsMinute | Multipliers and the Mystery of the Magic Money
The uncontrolled creation of money causes a quick decrease in the value of currency and very rapid hyperinflation (in annual price increases of hundreds or thousands of percent), which can destroy an economy.
This “magic money” is created because the some of the same dollars are being used twice: Tamika holds papers saying that she has $1,000 in her bank account, and Mariluz holds papers saying that she has $900 in her bank account.
Also, money may leave the country through the purchase of imports or foreign investments, and money may enter the country through foreign purchases of our exports or investment in American assets.
www.econedlink.org /lessons/index.cfm?lesson=EM348   (1333 words)

  
 FNF: MONEY CREATION    SOURCE: Money creation - Wikipedia, the free encyclopedia
fractional-reserve banking regime, as virtually all countries do, not all of the money in circulation needs to be backed by other currencies, physical assets such as gold, or government assets.
This lending of money that it has on deposit is the precise point new money is created, because the depositor still has his money, and the person getting the loan now has money too.
With 90% of that money lent out, if the original depositor wants their money back, the bank has to borrow that money from another bank (or maybe from another source), at rate of interest set by the government (the overnight rate, or the
www.hi.is /~joner/eaps/fin_Money_Creation_1.htm   (1132 words)

  
 Australian Monetary System : Various Views on Money Creation
In our related page Money Creation in Australia, a detailed explanation is given of how privately owned banks create 95% of Australia's money as credit, virtually out of thin air, and then get people to pay them interest on it.
Ninety-six per cent of the growth in the money supply in the two years from March 1996 occurred in financial institution deposits as a result of the financial institutions themselves growing the money supply.
In Britain, for example, only 3% of new money is produced by the government (in the form of new coins and notes); the other 97% is created by banks, when they make various kinds of loans.
dkd.net /davekidd/politics/moneyalt.html   (1592 words)

  
 Creation of Money
But money "manufactures" have no limit on their profits, since a few cents will print a $1 bill or a $10,000 bill.
Money is the blood of civilized society, the means of all commercial trade except simple barter.
Remove money or even reduce the supply below that which is necessary to carry on current levels of trade, and the results are catastrophic.
www.justiceplus.org /creating.htm   (397 words)

  
 Abolish the Federal Reserve
The dollar, and all our money, is nothing more and nothing less than what it looks like: a cut piece of linen paper with fancy printing on it.
When money is as good as gold, the government cannot manipulate the supply for its own purposes.
For the first time in nearly ten years, some measures of money (M2 and MZM) are showing a falling money stock, which is likely to prompt a second dip in the continuing recession.
www.house.gov /paul/congrec/congrec2002/cr091002b.htm   (1811 words)

  
 Creation of Money
Creation of Money in the form of Checking Account Balances
When bank reserves increase, it becomes possible to create new money in the form of checking account balances.
For you, it reduces the amount of money that you hold in cash by $1,000, but increases the amount of money you hold in the form of your checking account balance by $1,000
www.rci.rutgers.edu /~lsmall/Money/iv_creation.htm   (213 words)

  
 RealMoney.com: Money Creation Stays High
Until then, the trend in commercial paper issuance, which is an important gauge of business sentiment, should be characterized as favorable, especially with the current level up $300 billion versus a year ago.
The gain is consistent, as it historically has been, with the gains seen in factory activity over the past year, a factor that has helped to boost job creation.
CP is often used as a vehicle to finance short-term needs such as manufacturing production and the import of goods from abroad.
www.thestreet.com /p/_rmrss/rmoney/tcrescenziblog/10294690.html   (438 words)

  
 Exploring Money Creation
Explain what will happen on the above balance sheet if the goldsmith makes a loan for 20 pounds to John Smyth.
Paper money is a promise by the goldsmith to pay gold.)
Will the amount of money change as a result of this transaction?
www.ingrimayne.com /econ/Banking/exploring_money_creation.htm   (151 words)

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