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Germany Says Money Is Created Out Of Thin Air



I’m still in a state of shock after visiting the Money Museum, at the Bundesbank’s complex in Frankfurt.
There are different exhibitions. A few of them are video displays, where a person, supposedly a Bundesbank's employee because they are in an office, explains basic concepts about different economic subjects, like the exchange rates or how money is created through “Book Money”.
Book Money? I don’t know you but it’s the first time I read that term. In three different stages (each one you have to press a button), they try to explain how money is created. I didn't tape it but I took a picture of the buttons: 


1. BOOK MONEY AND LENDING: Basically they say money is created when the Book Money exits the bank through lending.

2. CREATING BOOK MONEY: This whole subject is simply to say that “the money the banks use for lending, unlike many people assume, doesn’t necessarily come from the deposits made by the customers”. So, it refutes the economic theory that says the banks are mere intermediaries and lend the money that depositors have previously deposited in the banks. That person in the video display, immediately after, in a fancy way, adds “Book Money is simply money that is there”. There? As if by magic? The exhibit fails to explain its purpose, how Book Money is created. They don’t mention it comes from bonds or other debt instruments issued by the banks. They just say that the money is created through lending out the money that simply is there, in the banks' books. Period.

3. LIMITS OF CREATING MONEY: After asking if you can create all the money you want and lend it out, they signal that the limit is that you have to pay it back. If not, they would have to stop creating money.
They use the word “creation” of money because they truly think money is created out of thin air, and not that the money used for lending does have to come from somewhere.

In order to dig in more on the concept of  Book Money, I browsed the internet, and, guess what, the only place where it’s mentioned is in the very Bundesbank’s website, in a section used as dictionary of economic terms. One comes up to the conclusion that they have invented this term and, in order to give it an appearance of normality, they just have added it on a dictionary.

So, Book Money is deposits at banks which were created through postings in the banks’ accounts books. Linking this idea with the Bundesbank's video display mentioned before, if neither the customers are the bulk of the deposits, nor they mention the bondholders, who is depositing funds in the banks’ account books?
I has to be the Central Bank through the magic tool called “the printing money machine”. They just create money by depositing it in the bank’s account books and that’s it. It’s there.

This post is a continuation of my previous one with the headline “China’s Creditworthiness Ratio In A Death Spiral”, where I denounced the Worldwide Association of Cheaters that comprise the G20, who have agreed to print money like mad. The Money Supply M2 is galloping in many countries, for instance, in the last 10 years, China’s M2 has increased 14% annually on average, Japan 3% and the Euro Zone 6%, but their foreign exchange reserves to back up their currencies account for just 12.7%, 14.2% and 3.75% of their Money Supply M2, respectively.
The conclusion of that post is that the countries with Money Supply increasing even a small amount, would have to back up their currency with the same amount of collateral in the form of Foreign Exchange Reserves, in order to increase their creditworthiness ratio.

The Euro Zone aimed to create a big Economic and Monetary Union (EMU) in order to be exempted from the obligation of holding collateral in the form of foreign exchange reserves to back up its currency (measure imposed as a solution to Germany’s 1931 crisis), as occurs with strong economies like the United States’. Therefore, a pretext to print money like crazy (Money Supply M2) to cover the budgetary indiscipline of its member States.

The collateral used in ancient times was what the coins were made of, that is, the amount of silver or gold used to manufacture a coin. If one year they decide to put less silver into a coin, they would need more coins than before to buy goods, provoking inflation.This was the cause of many revolutions of peasants back then.

But now, as it’s explained in other exhibition:
It doesn’t really matter what money is made of, or what form it takes. All that counts is that it is accepted as a medium of exchange, unit of account and store of value. This can only work if people trust money.
Nowadays, with currencies without any type of collateral, it’s hard to trust money.

And about the Central Banks’ role: 
It’s all about maintaining the nominal value. It’s the job of the Central Banks to keep the value of money stable. That way, we will be able to buy just as much for the same amount of money tomorrow as we can today.
But by increasing the Money Supply M2, they are failing to fulfill their mandate of stable prices, because it prompts disproportionate inflation.

BOTTOM LINE

We live in difficult times, where an association of politicians around the globe is colluding to print money without collateral as a lubricant for the economy, in their goal to hold up the pillars of their ideology: setting up thousands of mini-Local Administrations so that they turn into mini-Kingdoms for the politicians and, in the absence of an economic problem, they can pursue their leftist agenda (social engineering, subsidizing only leftist groups, etc).

This is why they are using the Book Money. Money deposited in the banks’ books as if by magic, from where money is created through lending to the Local Administrations and not small and medium-sized enterprises (the same problem in the run-up to Germany’s 1931 currency crisis exposed in the previous post).

Besides printing money, they are capable of using the police for drug-trafficking (disguised as apprehensions of drugs), staged events utilized as content for the Fake News Media that, in turn, gives donations to the political parties and, also, promoting terrorist attacks and wars by arming rebels, everywhere in the world to transform themselves later in champions of refugee welcoming, that is, utilize demographics as an economic driver to hold up another pillar of their Kingdoms.

As it’s explained in the book where I partially based my previous post on (linking Germany’s 1931 currency crisis with current situation in China and other countries), the politicians and other groups, in the run up to Germany’s 1931 currency crisis, hired civilians “many were recruited into the swelling ranks of paramilitary groups run by parties and groups on the right; others joined groups run by parties of the left, notably the German Communist Party (KPD)”. History repeats itself, and these paramilitary groups under the orders of the police around the world, are being used now again to psychologically harass the economists, journalists, etc. that denounce the massive cheating programs over the population.

This international generation of politicians is no different than others where many atrocities have occurred. Another generation full of shit.

Germany is no longer a country we can trust to. The Volkswagen gas-emission scandal is not a coincidence. It’s a reflection of a society based on mass-cheating of the population. If money is created out of thin air, according to the Bundesbank, it’s dirty money because the air is polluted.

Remember to visit the Money Museum in Frankfurt. It’s a must see terrifying attraction.

Comments

  1. Here Germany is put as an example of inflation when the government prints too much money: https://en.wikiversity.org/wiki/10_Principles_of_Economics
    "Examples: Germany after World War I (in the early 1920s) and the United States in the 1970s"

    There you are. Printing money like mad in the run-up to its 1931 currency crisis.

    History repeats itself:
    1- Money Supply M2 galloping.
    2- Bank lending to Local Administrations.
    3- Budgetary indiscipline.
    4- Lack of Foreign Exchange reserves.

    We are lucky to see it.

    ReplyDelete

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