How money is created

blueblood · March 25, 2010

The banks need not to earn more, but the bankers can earn a lot.

Do you know who capitalizes the banks? Bondholders, shareholders, and depositors. They charge those "high" interest rates on loans and "earn" more because the banks have an obligation to these people to give a return on their "investment" plus interest. If they didn't, people would say to pot with it and stuff their money in a mattress, and everyone is poorer as a result.

Allen · March 25, 2010

Again, that is not how money is created. And if you continue along the fallacy you are pursuing, you won't be creating any money either.

Money is created then given to banks to loan out. Same difference. You don't even understand the system and yet you are saying I'm incorrect. Don't even try and say I don't understand. I cannot go and get any money from any bank without debt unless I worked at one. Too bad not everyone can work at one. Even that money to pay the employee's comes from the interest banks obtain from loans. They do not create money to pay their employee's. Then the rest of us have to borrow the money. Or the companies we work for have to. Then we or our company have to screw people out of their borrowed money to turn a profit otherwise we go bankrupt. Honestly, how can Canada a nation with so many natural resources suffer from a recession? There is nothing but work to be done here. Do you think we have too many people and not enough jobs? Or not enough resources to turn to finished goods? Do you think we owe anyone for giving us the money to have our own people do the work to turn our resources into finished goods? Does this system make any sense at all to you? The USSR was a communist society. Canada is a mixed. There is a big difference. We can create our good based on the demand for them. The consumer ultimately has the choice. How would that change with the system I suggested earlier? The USSR had nothing even close to it. This is not a system the world has even seen. I understand how people would think this is a conspiracy but it is not. I'm saying use our current system and tweak it to make it better. Nothing more. In the laws of commerce, money is a measurement of energy. Now does that fit in to our CENTRAL BANKING system? Do not argue this as we have the bank of Canada that receives its money from the mint in order to loan it to the big banks which in turn loan it to people and business. So unless I am the bank of Canada, money for me is created through debt.

M.Dancer · March 25, 2010

Money is created then given to banks to loan out.

And money is created when the banks loan out money...money is always being created...

Don't even try and say I don't understand.

I cannot go and get any money from any bank without debt unless I worked at one.

even if you worked at one, you borow money, it costs....that's who banks make money.

Even that money to pay the employee's comes from the interest banks obtain from loans. They do not create money to pay their employee's.

No? Where did they get the money? Oh? They earned it? Is that like....creating money? Sure is...

You simply don't understand..and I am being polite here...

Then the rest of us have to borrow the money

Really...why? I don't have to borrow money...

Honestly, how can Canada a nation with so many natural resources suffer from a recession?

Obvioulsy you don't understand....someone has to need the resources and buy them...if country X is in a recession they are buying less from us....

Do you think we owe anyone for giving us the money to have our own people do the work to turn our resources into finished goods?

Depends on whether you borrowed the money

Does this system make any sense at all to you?

Which system? The system you don't understand or articulate well or the system that is actually in place?

Moonbox · March 25, 2010

The system is fundamentally flawed. To have a fair system, money should be created at the point labour is complete. This only makes sense because once your done working, you have already "paid" for your service. Then to create a functioning circular system, at the point of sale of any good or service, have the money return to the bank. No conspiricy theroy here. Money is created through a signature to pay the money back with interest. The bank doesn't just hand out money. Well ok maybe a little but well below their profit margins.

I'm not sure you understand the system all that well. If money was created at the point of labour, we'd be creating money non-stop and causing ridiculous inflation. The system as it stands right now is designed to promote economic stability. The fact that the government is able to control monetary policy helps smooth out shocks to our economy. The situation you're explaining applies perhaps to new money being created, but the VAST majority of money at any given time has been in the system forever.

bjre · March 25, 2010

What created by labour is value, the value does not always paid by a fair amount of money.

Money is simply a number in computers of banks. When some so called investors try to make money, he need not to have real money, for example, he can use $10,000 to invest for $1,000,000 and take the interest. That is so called margin. In this way, the amount of money he made in a day can be much more than the income of you for hard work for years, although he need not create any value at all. Where is the money he made come from? the value you guys will created for the rest of your life. If you guys can not create so much values, the bank will have to print more money to make money less valuable.

Alta4ever · March 25, 2010

What created by labour is value, the value does not always paid by a fair amount of money.

That is up to you to negotiate when you either take the job or buy the service.

Allen · March 25, 2010

Even though you are not borrowing money yourself you are earning borrowed money. IF money is created through labour, you give it back at the point of sale creating a fair circulatory system. If money is supposed to be a measurement of energy the system we currently use does not make any sense at all. I'm just going to start repeating myself here if I keep going. You have the information now instead of defending a flawed system would it hurt to think of alternatives?

Michael Hardner · March 25, 2010

Even though you are not borrowing money yourself you are earning borrowed money. IF money is created through labour, you give it back at the point of sale creating a fair circulatory system. If money is supposed to be a measurement of energy the system we currently use does not make any sense at all. I'm just going to start repeating myself here if I keep going. You have the information now instead of defending a flawed system would it hurt to think of alternatives?

Why am I earning borrowed money ? If I work and get paid after the word is done then where is the borrowing ?

Allen · March 26, 2010

Why am I earning borrowed money ? If I work and get paid after the word is done then where is the borrowing ?

Where do you think the source of the money you were paid is from?

Michael Hardner · March 26, 2010

Where do you think the source of the money you were paid is from?

Let's see. If I work for HBC, for example, then it came from King Charles II originally I think.

groupeii · March 26, 2010

Why not fly away moonbat, I have already seen what your type do to good forums. If you post outrageously moronic conspiracy theory you will be ridiculed for it.

Alta4ever is a troll.

groupeii · March 26, 2010

The system is fundamentally flawed. To have a fair system, money should be created at the point labour is complete. This only makes sense because once your done working, you have already "paid" for your service. Then to create a functioning circular system, at the point of sale of any good or service, have the money return to the bank. No conspiricy theroy here. Money is created through a signature to pay the money back with interest. The bank doesn't just hand out money. Well ok maybe a little but well below their profit margins.

Well it can be.. comapanies and workers can make a joint contract to exchange their labour in a mutually agreeable form. Thing is people accept being paid in money. Employers get their money from banks who are entrusted in managing the governments money supply.

Barter is a legal form of trade... and people can freely exchange as they would like.

There are still potential taxes through capital gains taxation.

Edited March 26, 2010 by groupeii

Moonbox · March 26, 2010

Alta4ever is a troll.

He has a point. You get some really stupid things posted here (Mr. Canada is one of our top offenders) and all they serve to do is mire any potential discussion down in stupidity. The original post for this thread follows that trend.

bjre · March 26, 2010

Let's see. If I work for HBC, for example, then it came from King Charles II originally I think.

1. Where is the money of King Charles II come from? By print money? Can you print money and ask others to use?

2. If King Charles II still have enough money for you to use, why need HBC exist now? Why not all employees of HBC take money regularly and then just stay at home or have trips around the world? Why need they work?

M.Dancer · March 26, 2010

If money is supposed to be a measurement of energy ....

I have never heard of money as a measurement of energy...

Horsepower, watts, newtons ...yes

Money is a measurement of value..

M.Dancer · March 26, 2010

Employers get their money from banks who are entrusted in managing the governments money supply.

really? from banks? They why do we have a sales team?

Michael Hardner · March 26, 2010

1. Where is the money of King Charles II come from? By print money? Can you print money and ask others to use?

2. If King Charles II still have enough money for you to use, why need HBC exist now? Why not all employees of HBC take money regularly and then just stay at home or have trips around the world? Why need they work?

I think that it was gold. King Charles died February 6, 1685 so he doesn't need money. HBC exists to return the investment made by whomever owns it now - I believe it's a US group. I've answered a few obvious questions for you, probably more than I should have.

bjre · March 26, 2010

I think that it was gold. King Charles died February 6, 1685 so he doesn't need money.

Thanks for the answer. I am not sure if you can answer where King Charles's gold come from? Is he a miner?

HBC exists to return the investment made by whomever owns it now - I believe it's a US group.

That is the key. Companies are exist for return investment. The Employees are paid by only what they can survive, that is the "market price" of a labour, which is far less than the value they created. The largest part of values that the employees created are taken away by investors. Government will take some part from both company and employees (24% from personal income tax, 18% from sales tax, 7% from corporations tax ...) and used in various services (27% in health sector, 11% in children's and social services sector, 8% ($10Billion) pay for interest on debt which become banker's income again ... http://www.fin.gov.on.ca/en/budget/ontariobudgets/2010/ch2h.html#c2_secH_chart19 )

That is the reason why working class can not buy house without mortgage (or short time mortgage) and have to give bankers more interest. Because the value they created was taken away to too many places.

That "market price" of labour is protected by laws, the laws said you need to pay this amount of tax, the law said company need license so that even if it is profitable, only 'qualified' companies can do that business, so that it is hard for others to enter the market for the employer to make less money and compete with the existing companies to make the labour "market price" more reasonable. Why there are those laws, because the big cats have their lobbyist and they have good relationship with the lawmakers and they control the media so that those kind of laws will be there for ever.

BTW, more and more domestic companies such as Nortel bankrupt, more and more companies become own by US or others, the bosses aboard will take values that Canadian created out of Canada constantly, that is another reason that more and more people need longer and longer mortgage...

I've answered a few obvious questions for you, probably more than I should have.

Thanks for your generous words. You have always been so kindness.

Edited March 26, 2010 by bjre

maple_leafs182 · March 26, 2010

I can never understand these money conspiracies. How exactly would Canada look if we weren't conspired against ? The banks would make less money ? Ok.....

The banks are capitalized at about $250 B and our GDP is 1.3 TRILLION collars.

GDP is 1.3 Trillion collars, man that is a lot of collars, I wouldn't even know what to do with that many collars.

All you need to know is that central banks can manipulate economies by controlling the amount of money in circulation and by setting interests rates. They by extension can control countries. Not very complex, pretty simple.

Michael Hardner · March 26, 2010

Thanks for the answer. I am not sure if you can answer where King Charles's gold come from? Is he a miner?

This is a variation on what we call the "why" game. It's a came that children play wherein they ask a question - like why is the sky blue - then proceed to ask "why" to each of your answers.

Where did the gold come from ? From somewhere else... all money comes from somewhere else.

You can keep asking "where did it come from there, Uncle Michael ?" and I will answer until I'm bored, or it's time for you to go to bed. I'm sure you'd rather me read you a story as you fall asleep in your jammies, bjre, than go through this tiresome "why" game. I let kids play it with me once or twice.

That is the key. Companies are exist for return investment. The Employees are paid by only what they can survive, that is the "market price" of a labour, which is far less than the value they created. The largest part of values that the employees created are taken away by investors. Government will take some part from both company and employees (24% from personal income tax, 18% from sales tax, 7% from corporations tax ...) and used in various services (27% in health sector, 11% in children's and social services sector, 8% ($10Billion) pay for interest on debt which become banker's income again ... http://www.fin.gov.on.ca/en/budget/ontariobudgets/2010/ch2h.html#c2_secH_chart19 )

That is the reason why working class can not buy house without mortgage (or short time mortgage) and have to give bankers more interest. Because the value they created was taken away to too many places.

That "market price" of labour is protected by laws, the laws said you need to pay this amount of tax, the law said company need license so that even if it is profitable, only 'qualified' companies can do that business, so that it is hard for others to enter the market for the employer to make less money and compete with the existing companies to make the labour "market price" more reasonable. Why there are those laws, because the big cats have their lobbyist and they have good relationship with the lawmakers and they control the media so that those kind of laws will be there for ever.

BTW, more and more domestic companies such as Nortel bankrupt, more and more companies become own by US or others, the bosses aboard will take values that Canadian created out of Canada constantly, that is another reason that more and more people need longer and longer mortgage...

Thanks for your generous words. You have always been so kindness.

And I try to be kindness.

Michael Hardner · March 26, 2010

GDP is 1.3 Trillion collars, man that is a lot of collars, I wouldn't even know what to do with that many collars.

All you need to know is that central banks can manipulate economies by controlling the amount of money in circulation and by setting interests rates. They by extension can control countries. Not very complex, pretty simple.

:lol: And some of them are white collars too !

Central Banks do that, I understand. I also understand that there are risks with going too high or low with the interest rate.

But we're talking about 'private banks' here mostly, I think.

Allen · March 26, 2010

I wasn't really talking about the extange of money. It's the source I'm interested in. No matter what, that source is our central bank (The Bank Of Canada). With the extange of of money you can repay your loan but that makes it impossible for another person or business to pay off theirs. It's simple math/accounting really. Yes banks have the power to manipulate the economy and this is not a good thing as recessions and depressions don't just happen.

The system I suggested would not cause massive inflation because when you spend your money that would go back to the "bank" as you are trading your money for the good or service. Everyone working for the good or service you purchase would have already been paid for it. This is a circulatory system. Inflation would not exist. Taxation and the laws of supply and demand would still exist yes but inflation is not a byproduct of this system. There are a number of ways to make this system work. I could tell you my opinion on how I think it should work but there would still be a need for democracy as everyone would have their own.

If you read up on the laws of commerce; Money is a measurement of energy. Energy meaning effort. Sorry if this post seems fragmented but I'm debating against a bunch of posts.

LesActive · March 26, 2010

For those who still think that 'our' money is made in Canada at the Royal Mint, here's the site for the German company that prints, among other valuable documents, many of the bank notes for the Bank of Canada:

Giesecke & Devrient

http://www.gi-de.com/

cybercoma · March 27, 2010

First year macroeconomics guys. Money is created by the banks. You give them your money, they lend it out with interest. They create money by lending out your savings. That's a huge oversimplification, but essentially what happens.

August1991 · March 27, 2010

For those who still think that 'our' money is made in Canada at the Royal Mint, here's the site for the German company that prints, among other valuable documents, many of the bank notes for the Bank of Canada:
Giesecke & Devrient

http://www.gi-de.com/

In fact, we'll have plastic money in 2011, perhaps made in Australia: CBC

First year macroeconomics guys. Money is created by the banks.

It would probably be more accurate to refer to "financial paper" and to say that we create money or financial paper whenever we issue an IOU by receiving help from a friend when moving apartments.

I can never understand these money conspiracies....

I reckon that some people's obsession with money is akin to some women's desire for cosmetic surgery or to some men's desire to appear cool. At issue is not money in any economic sense - but something else.