In a market economy, the financial system spends money from positive savers (ie depositors) to passive savers (i.e. people running out of money and in need of money). Loans for the purchase of a property, etc.). In addition, financial systems facilitate cash payments. Natural or legal persons
The financial system monopolizes the legal service. Only banks can accept deposits, only insurance companies can provide insurance services, and the best way to manage mutual fund management is a large bank rather than a single investor.
How is money created?
In the past, one of the reasons why ancient Greek states were strong was the ability to create their own currency. At the time of Pericles, the silver drachma was the reserve currency at the time. The same applies to the gold coin of Philip of Macedonia. Any of these currencies can be exchanged for a certain amount of gold.
Today, the Federal Reserve is creating the US dollar and the European Central Bank, two of the money, that is, in essence, a currency that is essentially created by the European Central Bank as a real currency. Therefore, we have to accept it as real currency. In most countries, central banks sell coins and bonds to the extent they represent only 5% to 15% of cash stocks, the remainder virtual currency, and accounting data entry.
Depending on the amount of funds created by central banks, we are in crisis or in economic development. It should be noted that central banks are not public banks, but private companies. States were given the right to spend money on private bankers. These private central banks, in turn, lend to countries that have interest loans and, therefore, have economic power and, of course, political power. The paper money distributed in a country is in fact public debt, that is, countries owe money to private central bankers and the repayment of that debt guarantees the issuance of bonds. -Guarantee of the government to repay its debt to private central banks consists of taxes on the population. The higher the national debt, the higher the taxes, the greater the number of suffering.
The heads of these central banks cannot be dismissed by governments and do not inform governments. In Europe, they inform the European Central Bank, which sets monetary policy of the European Union. The ECB is not controlled by the European Parliament or the European Commission.
The state or borrower issues bonds, that is, it recognizes that the central bank has an equal amount of debt, which, on this assumption, creates a currency from scratch and lends it at interest. These funds are provided through accounting. However, the interest rate does not exist, they are only obligations in the form of loan agreements. For this reason, global debt is greater than real or accounting debt. As a result, people become slaves because they have to work to get real money to pay public or individual debt. Very few of them can repay their loans, others are bankrupt and lose everything.
If a country has its own currency, as in the US and other countries, it can "force" the central bank to accept its government bonds and lend to the government interest. As a result, the bankruptcy of any country where the central bank acts as a lender of last resort is avoided. The European Central Bank is another case, because it does not lend euro zone member states. The absence of a European security commitment leaves the "markets" of euro-zone countries imposing high interest rates for fear of not recovering their money. Recently, European values have gained ground despite differences between European decision makers, while Germans are the main reason for their absence, because they do not want national ties to be simple European ties. There is another (perhaps even more serious) reason: if this bond is created, the euro will be devalued as a currency and German debt rates will increase.
In the United States, this is different because the state lends its currency (USD) from the Federal Reserve. Therefore, the local currency is devalued and the national debt is devalued. When a currency is devalued, the products of any country become cheaper without wage cuts, but imported products become more expensive. A country with a strong primary sector (agriculture) and a strong secondary sector (industry) can be more competitive through its own currency, provided it has its own energy sources, ie. H must have sufficient power. Banks with deposits of between $ 16 million and $ 122.3 million have minimum reserve requirements of 3% and banks with deposits greater than $ 122.3 million have minimum reserve requirements of 10%. Then, if all depositors decide to withdraw their money from banks at the same time, banks will not be able to grant it and create a bank account. At this point, it should be noted that for every dollar, euros, etc. Deposited in a bank, the banking system creates and lends ten. Banks create money when lending, and the money you create is money that appears on the screen, not real money deposited in the bank's treasury. However, the bank lends virtual money, but receives real money and interest from the borrower.
As Professor Mark Job said, no one can escape paying interest. When a person lends money from a bank, he or she must pay interest rates on the loan, but anyone who pays taxes and buys goods and services pays the borrower's original rates because taxes must be collected to pay the latter's fees. The national debt must include all companies and individuals who sell goods and services the cost of credit at their prices. Therefore, the entire company supports banks, even if part of this subsidy is paid to depositors in the form of interest rates. Professor Mark Joop continues to say that the interest rate paid to banks is a subsidy to them, since the paper / accounting currency they create is a legal tender. This is why bankers receive very high salaries and the banking sector is so large because it supports banks. In terms of interest rates, the poor generally get more credit than savings, while the rich have more savings than loans. When interest rates are paid, money is transferred from the poor to the rich, so interest rates to accumulate wealth are favorable. Commercial banks benefit from investment and the difference between deposit and loan interest rates. If the interest rate is regularly added to the initial investment, more interest will be generated with the compound interest on the initial capital increased significantly. Real money as such does not increase because this interest rate does not come from production. Only human labor can generate high interest rates, but labor and productivity costs are under pressure. This is due to the fact that employment must meet capitalization requirements significantly.
The borrower has to work to get real money, in other words, banks lend virtual money and recover money. Since borrowed money is more than real money, banks must create new funds in the form of loans and loans. If they increase the amount of money there is growth (but in this case, we also increase with the specific indebtedness of the banking and monetary system), but if they want to create a crisis, they stop lending and because many people are bankrupt because of lack of funds and is about to depression.
It is a "clever trick" by bankers who realized they could lend more money than they wanted, because depositors would not take their money, and at the same time, banks. This is called the Reserve Bank. Here is the definition of “Quickonomics” of a fractional reserve bank: “A fractional reserve bank is a banking system in which banks have only a fraction of the money deposited by their customers, allowing commercial banks to directly influence. Most modern currency currencies are funds created by commercial banks through the Reserve Bank. "
Are economies protected?
In the case of Italian debt, as in the case of Greek debt, politicians (in fact, employees paying the bank) said they wanted to protect people's savings. But are these economies protected in this monetary and banking system? The answer is simple no. As mentioned earlier, banks have limited cash reserves. That's why they need to trust their customers. Bankruptcy can create liquidity and bankruptcy problems. Deposit guarantee systems provide deposits in accordance with EU standards and protect depositors' savings through a deposit guarantee of up to € 100,000. However, in the case of a chain reaction, commercial banks must be bailed out by governments and central banks as lenders.
Then?
The economic system, shaped by the power of banks, is unsustainable and does not serve human values such as freedom, justice and democracy. It is irrational and must be changed immediately if we are to survive.