Results 1 to 2 of 2

Thread: How today's economy works

  1. #1
    Administrator rady's Avatar
    Join Date
    Dec 2002
    Location
    Romania
    Posts
    3,846
    Rep Power
    10

    Default How today's economy works

    Some of you might be familiar with these things, for those who aren't, this animation explains it very nice




  2. #2
    12th man
    Join Date
    Nov 2006
    Location
    Far far away from the orgy that consist of clyde, 8's, rady, smokes and rono
    Posts
    11,260
    Rep Power
    0

    Default The Money Fraud Simplified

    From the Zeitgeist Movement

    To understand the mechanics of the monetary system we should have a clear picture of the dynamics of the system.

    Consider the following:-

    Let the Initial Deposit in a bank = D

    Now, Reserve requirement as per fractional reserve practice = 10% of D
    = 0.1D (As documented in Modern Money Mechanics, page- 7)
    Under current regulations, the reserve requirement
    Against most transaction accounts is 10 percent.

    So, Portion of the deposit that is excess and can be loaned out
    = (100 – 10) % = 90% of D
    = 0.9D

    Now, considering the Initial Deposit to be = 1000$

    The amount that can be loaned out in the 1st step = 0.9 x 1000 = 900$
    Keeping 100$ as reserve.

    The amount that can be loaned out in the 2nd step = 0.9 x 900 = 810$
    Keeping 90$ as reserve.

    The amount that can be loaned out in the 3rd step = 0.9 x 810 = 729$
    Keeping 81$ as reserve.

    And the process repeats until the amount which is remaining becomes reasonably close to zero (It can never be exactly equal to zero as that would require an infinite number of steps)

    The above process can be formulated as below:-

    Considering the residual amount = 0.01D (1% of Initial Deposit)

    D x 0.9^N = 0.01D where N = No. of steps required to satisfy the given condition

    0.9^N = 0.01

    N = 43.709 = 44 times (Approximately).

    So, we see that in the Fractional Reserve Banking System a certain deposit can be loaned out approximately 44 times before it reduces to an amount which is 1% of the Initial Deposit.

    How much money is created in the process?

    Now, based on the Fractional Reserve Banking System, the Banks do not deduct the amount loaned out from its accounts (if it did then the banks wouldn’t have created any money at all). So in every such step money is virtually created out of thin air which in turn inflates the amount of money initially deposited.

    Note: Of course, they do not really pay out loans from the money they
    Receive as deposits. If they did this, no additional money would be created. What they do when they make loans is to accept promissory notes in exchange for credits to the Borrowers' transaction accounts (MODERN MONEY MECHANICS, pg – 7)

    Let’s check out the dynamics of the money creation process:-


    In the 1st step the amount of money in the economy = 1000$

    In the 2nd step the amount of money in the economy = 1000$ + 0.9 x 1000$ = 1900$

    In the 3rd step the amount of money in the economy = 1000$ + 0.9 x 1000$ + 0.9^2 x 1000 = 2710$ and so on……….

    The process can be formulated as below:-

    Total money in the Economy (T) = 1000 x 0.9^0 + 1000 x 0.9^1 + 1000 x 0.9^2 + 1000 x 0.9^3 +………………..+ 1000 x 0.9^44




    Symbolically:-

    T = D + 0.9D + 0.9^2 x D + 0.9^3 x D + 0.9^4 x D +
    +…………. + 0.9^44 x D

    T = D (0.9^0+ 0.9^1 + 0.9^2 + 0.9^3 + ………………………..+ 0.9^44)

    We can easily identify that it’s a Geometric series

    So we can write:-

    T = D (1- r ^ n)/ (1-r)

    Therefore the general equation of the
    Money Multiplier = (1 – r ^n) / (1 – r)
    Where; r = factor for excess reserve and n = Number of steps

    Now, r = 0.9 and n = (44 + 1) = 45 in this case.

    T = ((1 – 0.9 ^ 45)/(1 – 0.9)) x D = 9.912 D
    = 10D (Approximately)

    Virtual Money created in the process = 10D – D = 9D where; D= Initial Deposit.


    So we see that FOR EVERY DEPOSIT IN THIS SYSTEM 9 TIMES IT’S VALUE CAN BE CREATED OUT OF THIN AIR.

    Now regarding the application of INTEREST and to completely understand the FRAUDULANT nature of this whole system lets start a mental exercise considering the amount which has to be paid back in order to clear all the loans in a single chain of alternate lending and borrowing.

    THE MONEY INFILTRATES IN THE ECONOMY AS BELOW:-
    (D) 9.70$ (1% of D)729$……810$ 900$1000$

    Whose Nth term is given by = 1000 x 0.9^ (N – 1)
    = D x 0.9^ (N – 1)


    Now, had there been no interest then the money would have retraced its path destroying the virtual money in every step, as follows:-

    1000$900$810$....................9.70$ ------------ 1

    Now, considering an uniform rate of interest = 2% (which is quite generous)

    The money to be returned back is shown sequentially:-

    1020$918$826.19$9.90$.................... ----------2

    Note: Though it seems that a deposit of 1000$ will create a deficit of only 20$ (2%) in the system but that is not the case. In fact, the deficit in each step of the above example will add up because there is no possibility of it being fulfilled from the very beginning of the contraction process.

    Therefore the total deficit generated in the system
    = 0.02 D x summation of 0.9^ (N -1)
    = 0.02 D x Money Multiplier

    = 0.02D x 10 = 0.2D (Approximately).

    It is interesting to note as the money gets expanded in the system so does the interest on it!!

    Therefore the total shortage of money so generated
    = 1000$ x 0.2 = 200$ (Approximately)

    = 10D x (R/100) = D(R/10)
    WHERE; R = INTEREST RATE

    So there is the mind boggling paradox!! Where will this extra 200$ come from?

    There is no chance of it being created in the process; we are not printing any currency in the system nor does money reproduce like living organisms.
    So who is going to make for up this deficit?

    Now, consider a more detailed exercise

    Let Initial Deposit = D = 1023$

    Let the Population = P = 1023

    So, Money available per Capita = D/P = 1023/1023 = 1$

    Let the Reserve Requirement (R) = 10% of D = 0.1D

    Now for total infiltration of money in the system a person in the system should receive at least 1$. In
    other words the last lent out amount should be equal
    to 1$.

    Consider that in each step the money is getting branched in 2 paths (which is much more realistic than the linear distribution)


    1023$ = 1023$


    460.35$ + 460.35$ = 920.7$


    207.16$ + 207.16$ + 207.16$ + 207.16$ = 828.64$

    .
    .
    .
    .


    And the process repeats

    How many steps can this process run before the residual amount becomes equal to 1$?

    The general equation is:

    1023 x 0.9^ (n – 1) / 2^ (n – 1) = 1

    0.45^ (n – 1) = 1/1023

    n= 9.68 = 9 times ( n is bound to be an integer)

    Therefore the money infiltrates to the 9th step of the distribution process.

    But there are 10 steps in the total distribution process because
    P = 1023 = 2^10 – 1(now you can understand the significance of the population considered)

    Therefore the number of people who received money
    = 2^9 – 1 = 511 persons

    And the number who did not receive any money at all
    = 1023 – 511 = 512 persons

    Therefore the percentage of poverty so generated
    = (512/ 1023) x 100 = 50%

    Therefore we see that a reserve requirement of 10% guarantees a poverty of 50% in the system. That is the money is never going to reach 50% of the lot due to this system.

    If we repeat the exercise with 20%, 30% and 40% Reserve Requirement the consecutive Poverty generated would be 75%, 88% and 94% respectively

    Therefore the GENERAL POVERTY EQUATION is
    = [(2^n – 2^ (n – R/10)) / (2^n -1)] x 100 -------------- (P)

    Where (2^n – 1) represents the total POPULATION in the system.

    In other words a Reserve Requirement of 10% will ensure only 50% infiltration of the money in the system keeping the remaining 50% away from any money and thereby in poverty.

    (I could have considered Trilateral branching but believe me the situation would be worse and this is the least lethal consideration!!)

    Hey!! The exercise is not over yet!!

    What will happen to those 50% that received the money?

    The money has to be returned back with an interest.

    Let us consider a uniform interest rate
    = 2% (As generous as it can be)

    Now the money that each receive in the 9th step
    = (1023 x 0.9^9) / 2^9 = 0.77$
    Therefore each person has to return back
    = 1.02 x 0.77$ = 0.79$

    But the money in that step is still
    = 1023^0.9^9 =396.33$
    Therefore number of possible returns
    = (396.33 / 0.79) = 501.68 = 501 returns

    So the number of defaulters = 2^9 – 501 = 11 no.

    Therefore total number of subsequent defaulters
    = 8+4+2+1+1+1+1+1+1+
    +2+1+1+1+1+1+1+1+
    +1+1+1+1+1+1+1 = 36 no.

    Therefore the percentage of defaulters /debtors/slaves generated by the system due to an interest rate of 2%
    = [36 / (2^9 – 1)] x 100 = 7% (leaving aside the 50% who did not even receive any money in the first place)

    So we can well understand that in order to make up for this deficit the next injection of money will have to be of a higher magnitude than before but that again will create more debt in the system. So it’s a vicious cycle which perpetuates itself and constantly enhances differences and thereby concentrates the money/wealth/resources to the dwellers on the top level of the money chain. It’s like a pumping mechanism which constantly drains out wealth from the lower rungs to the upper rungs of the money chain.

    The banks of our world are not there to distribute wealth it is there to increase differences and to concentrate all the money/wealth/resources into the hands of a very few on the top of the money chain.

    Now considering the present world population
    = 7 billions (App.)

    Or 2^n - 1 = 7 x 10^9

    Or n = 32.70 = 32 (App.)

    Considering R = 10% (which is common for most transactions as documented in Modern Money Mechanics, p-7)

    The Poverty %
    = [(2^32 – 2^ (32 – 10/10)) / (2^32 -1)] x 100
    = 50% (GUARANTED)

    Now we have seen earlier that the distribution of the money in this system can never be uniform. It slowly decays in magnitude as we drift downwards in the money chain.
    So what is the amount of money possessed by the terminal person that is the person on the top of the chain?
    We can easily visualize that it is 10% of the amount injected in the system i.e. 102.3$ say 100$.

    So you can well understand that if the total money in the world were to add up to 7 billion$ which is just equal to the population i.e. 7 billion, then for every 100$ that you possessed, there would be a story of 512 people who didn’t get any money because of you and 32 more who is going to get robbed of everything just because of you!!

    What if you were a millionaire?

    That means (1000000/100) x (512 +32) x q = 5.44q Million people would be suffering for you!
    And a billionaire?

    That means 5440000000q = 5.44q Billion people enslaved and in poverty just because of you.

    So how much personal wealth will be required to enslave the whole world?
    = (7/ 5.44) k Billion $
    Where k = Money / population Ratio.
    = Total base money in the economy / Total Population.
    And q = (1/k) i.e reciprocal of k


    By now we know that an injection of M$ in the economy creates a debt deficit of
    = MR/100 x ((1 – F ^n) / (1- F))
    Where F = Excess reserve factor = 0.9 for a reserve requirement of 10%.

    Money injection required for the next cycle
    = M + MR/100 x ((1 – F ^n) / (1- F))

    = M (1 + R/100 ((1 – F ^n) / (1- F)))

    So the process repeats with the next injection being higher in amount than the previous one

    The general term of this process is:-

    = M (1 + R/100 ((1 – F ^n) / (1- F))) ^T

    Let the Population at Tth instant = P

    So that the Population at any time may be given as

    P = P x f (T)

    Considering (M / P) = 1 at a time T we can find out the corresponding devaluation of the currency at any other time starting from that period by using the following formula:-


    Cost index (C) = (1 + R/100 ((1 – F ^n) / (1- F))) ^T / f (T)


    The salient points to be noted in the above examples are:-

    1) EVERY DEPOSIT IN THIS SYSTEM CAN CREATE 9 TIMES ITS VALUE OF MONEY OUT OF THIN AIR.

    2) EVERY DEPOSIT IN THIS SYSTEM CAN CREATE A MONEY DEFICIT EQUALS TO 10 TIMES THE INITIAL DEPOSIT x (R/100), WHERE R = RATE OF INTEREST CHARGED AGAINST LOAN.

    3) THERE IS NO POSSIBILITY OF FULFILLING THIS DEFICIT BECAUSE THE ECONOMY DOES NOT CREATE MONEY OR MONEY CANNOT REPRODUCE ITSELF LIKE LIVING ORGANISMS.

    4) THE AMOUNT OF MONEY ENTERING THE SYSTEM = MONEY LEAVING THE SYSTEM, SO EVERY DEPOSIT CREATES A VACCUM OF UNRECOVERED DEBT.

    5) THIS NECESSITATES THE INJECTION OF MORE MONEY IN THE SYSTEM WHICH IN TURN CREATES MORE DEBT.


    6) EACH DEPOSIT IN THIS SYSTEM WOULD REQUIRE A FURTHER INJECTION OF D (1 + R/10) ^N WHERE D= INITIAL DEPOSIT;
    R= RATE OF INTEREST AND N= NUMBER OF INJECTIONS.

    7) AN INCREASE IN THE MONEY SUPPLY REDUCES ITS PURCHASING POWER AND ULTIMATELY INCREASES PRICE OF EVERY COMMODITY.

    8) SO WE CAN WELL UNDERSTAND WHY EVERYTHING IN THE ECONOMIC SYSTEM IS GEOMETRIC IN NATURE.

    9) MONEY IS PURELY A DEBT INSTRUMENT

    10) MONEY = DEBT = SLAVERY

Similar Threads

  1. Blockbuster Trade In The Works!!!!!!
    By Knickerbocker201 in forum NY Knicks
    Replies: 21
    Last Post: Oct 22, 2010, 17:22
  2. Make A Move For Draft Picks If Nothing Else Works?
    By RunningJumper in forum NY Knicks
    Replies: 6
    Last Post: Apr 21, 2010, 03:27
  3. Would the 93-94 knicks be an elite team in todays NBA
    By DontForgetDerekHarper in forum NY Knicks
    Replies: 14
    Last Post: Jul 06, 2009, 11:48
  4. Stephon Marbury on today's Regis & Kelly show
    By Trin_Starr in forum NY Knicks
    Replies: 1
    Last Post: Aug 03, 2006, 02:34
  5. Today's Headlines
    By rady in forum Site Feedback
    Replies: 5
    Last Post: Jul 23, 2005, 14:48

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •