When the US dollar was decoupled from gold in 1971, this was the beginning of a global ideological shift, an economic coup, over the means by which money would be created. Almost all central banks at this time were brought under the Bank of International Settlements system, and the power of money creation was consolidated into the hands of private banks. Publicly owned central banks, such as the Bank of Canada, would no longer be the primary lender to their respective federal governments, they would now borrow from private banks.
However, due to growing populations, expanding markets, and technological innovation, new money needs to be created to match new value being created in an economy. This new money would be created by private banks to expand the money supply. When governments would borrow money to fund infrastructure or technological advancement or anything, they would be forced to have private banks contract bonds or treasuries which governments would purchase from private banks. This is what caused a global ballooning of government debt beginning in 1971, governments were no longer using a public central bank to create their own money, they were allowing private banks to create money and hold the majority of government debt obligations.
What we’ve seen post 2008, quantitative easing, has been occurring broadly since 1971, whereby private creation of money has been flooding markets in order to capture market share over real assets. This has been steadily ramping up with each decade since bringing more deregulation. Alan Greenspan as Federal Reserve Chairman brought interest rates below 1% in 2002, this practically speaking was quantitative easing but was labelled as such, this move caused the 2007 asset bubble, as cheap debt propped up the stock market and securities market.
Now, really think about the effect of unregulated, undemocratic money creation. Imagine an economy where the total money supply is $1000, and imagine one person controls $500 of the total money supply, one person controls $250, and many people control $1. Now suppose a new $500 is added to the money supply so that the new total supply becomes $1500. What happens to all the market participants? Well, the one person with $500 would see their control over the money supply drop from 50% control to 33%, a decrease of 16.7%. The person with $250 would see their control drop from 25% to 16.6%, a decrease of 8.4%, and the people with $1 would see their control drop from 0.1% to 0.06%, a decrease of 40%. In this example we can see that inflation always punishes the poorest members of society the hardest. The richest will never lose more than the poorest during inflation.
Now suppose that the new $500 is not created in some vacuum and left untouched by the existing market participants. Imagine the new $500 is created by the one person who already has $500, and they decide to give themselves $400 of the new $500, and they give $100 to the person with $250, and nothing to the people with $1. So now the economy has grown from $1000 total supply to $1500 total supply. The person with $500 now has $900, the person with $250 now has $350, and the people with $1 still have $1. The new distributions would see the person with $900 increase their control over the money supply from 50% to 60%, the person with $350 would see a decrease in their control from 25% to 23.3%, and the people who still only have $1 would still see a decrease from 0.1% to 0.06%.
Simply through inflation control by the powerful, the richest in this example gain 10% control of the money supply, the ‘middle class’ person barely notices their 1.7% decrease, and the poorest are obliterated by their 40% loss in value. This thought experiment demonstrates two powerful lessons of inflation. First, it shows that in its proper context inflation is in reality a transfer of value from the poor to the creators of money. When a commercial bank is earning a profit via inflation, they’re literally taking value from anyone that isn’t benefiting from this monetary expansion, which is almost always the poorest people, statistically. This reconceptualization shows that bank profits from inflation are never earned, only made possible by this ‘loan’, theft, of the poor. And finally, this example shows the true insidious nature of inflation, as on the surface nothing happened to the poorest, they still have their $1. The paper in their hand didn’t change, nor did the number in their bank account. Yet through this alchemical process their $1 became 60 cents. And if these market participants lived in a highly propagandized society where lies dominate the mainstream media, reality is obfuscated or omitted in educational institutions, they will never know their $1 became 60 cents.
So when you read in the news that the Federal Reserve injected $1.5 trillion into financial markets, they literally created $1.5 trillion. But this didn’t come out of thin air, as people commonly say about the fiat/debt system. This is so so important. It came from us. It came from the poor. When the Federal Reserve creates money, they’re stealing. When any private bank creates money, they’re stealing.
Now, google the S&P 500 and look at the graph on the maximum timeframe. Do the same for the DOW. Think about how home prices have gone from $14,000 for a modest house in the 60s to $700,000 for the same house today. We all got poor because of hyperinflation.
Here’s the conspiracy: they’ll never accurately report hyperinflation. It’s not in the financial elite’s interest (no pun). Hyperinflation captured by the powerful is the means of mass enslavement. It keeps the poor, poor. It keeps the poor in debt.
The problem now, is that inflation is getting out of control and it’s going to ruin the economy. They got too greedy. Raising interest rates would cause massive defaults. So the plan is to introduce negative interest rates. They’re going to suppress prices and bring all asset prices as low as possible, bring consumer mortgage rates to 0% and try to remove money from the system. But mortgagees even though they’ll have no interest payments, they’ll have a $500,000 mortgage on a house that will be valued at $200,000.
For people not in a dire debt situation, their bank accounts will carry a negative interest rate. We’re going to be charged to keep money in a bank account. The economic crisis will be blamed on a lack of spending (hmmm why are people not spending? because of mass economic shutdown due to a pandemic?) and negative rates will be justified as a way to induce spending. However, all of this is a further means by the financial elite to consolidate power. A prolonged economic shutdown will wreck the lower and middle class and leave everyone broke while the elite dive in like vultures with their freshly minted money to buy up the whole world.
Our only hope to stop this is to wake up to the debt/ money creation system. You can read further here.
Edit: Appreciate the silver, but don’t give reddit money, they don’t deserve it.
Also, the users saying my math is wrong are switching the context of what I’m talking about. I’m speaking of the absolute values over market share, there’s no denying math sorry, and apparently 90% of the users here can understand that perfectly. $1500 total supply. $500 guy gets $400 more for $900 total. $900 = 60% of $1500; $1= 0.06% of $1500. 10% gain for the rich. 40% loss for the poor. Take your shilling elsewhere.
Disclaimer: This is a guest post and it doesn’t represent the views of IWB.