Hextall

You probably already know this

but the concept is still relatively new to me.

Up until the 1970's the US monetary system was based on a gold standard. The US was supposed to have gold or other precious metals ( Fort Knox et al) representing the amount of money in circulation.

At some point, the people in power decided that was a big pain in the ass, especially when they just wanted to print up some money. So the gold standard was abandoned, and effectively all money ( international currency was based primarily on US dollars) then had an arbitrary value.

For alchemists, who had tried to turn lead and other worthless items into gold since the time of the Egyptian pyramids, this was Christmas, New Years and the 4th of July all rolled up into one.

Moving from the gold standard opened the door for fractal-reserve banking. fractal banking is simply the ability of a bank to lend the same dollar over and over again.

So you deposit $100
Bob borrows $80 from the bank. That $80 makes its way back into the bank either from Bob depositing it, or from whomever he gives it to depositing it.
Mary then comes in and borrows $60 based on the $80 that Bob deposited.
Joe then borrows $40 based on the $60 that Mary deposited.
Tom then borrows $20 based on Joe's $40.

So in the end, the bank has lent out ($20+40+60+80)= $200....but it really only ever took in your $100 deposit. The "other" $100 that it has lend out does not exis, its an imaginary promise on future labor.

Effectively this goes one step past having to actually print worthless money, now you can just make a mark in an accounting column and create imaginary money.

Even the alchemists couldn't have hoped for something that amazing.

So provided that people are willing to keep taking out loans, that most of the people pay at least the minimum payment on interest, and provided that people don't actually show up to the bank asking for the actual cash money that they deposited, then there's virtually no limit on the amount of fake money that the banks can keep conjuring up.

That might explain why new banks are outpacing 7-11s and McDonalds.

The more cynical of us might also consider that a system that uses high taxes and available credit to compel people into long term debt ( mortgages, car payments and school loans) would prime the pump and keep the bankers...and for that matter the car, oil, and housing companies fat as hogs. But that sounds too much indentured servitude to be democracy.

I am not making this stuff up

A woman called me today unhappy about getting a ticket for setting her police alarm off. The fine, for having the police dispatched, respond on site, check everything out, and then write up a report, because she forgot to turn off the alarm (again) is $10.

She opened with, "I think its unfair that you have this new law and you didn't tell anyone about it."

" Well ma'am we did have an article on the front page of the newsletter outlining the ordinance. Did you get a newsletter ?", I asked.

" Yes I got a newsletter and I read the headline where it talked about alarms, but I didn't know it was about false alarms...it didn't say FALSE alarms in the headlines and I only read the headlines. If you want people to know something then you have to put it in the headline, people are too busy these days to be reading all the way down into paragraphs and stuff."

"(sigh) Sorry ma'am, I'll try and do a better job with the newsletter for now on."

" That's right...like three months ago you sent me a personalized letter. The letter was from the town to me and it only dealt with one thing. And it was very, very clear and short. That's the type of thing that you should be doing more of"

" Oh, ok. Can you tell me what the letter was about so I can use that as an example ?", I asked not trying to sound too patronizing.

" Oh hell, how am I supposed to remember what it was about, that was a couple of months ago."

( double sigh)


-- As if it could get any worse, out of curiosity I looked up what we had sent her. I was a warning letter for a previous false alarm indicating that any further false alarms would result in a $10 fine.

idioms

"greatest thing since sliced bread" - seriously ? at one time this was a problem ?

"he's such a good friend he's like brother from another mother" - our Dad's a dick and our mothers are whores.

---------------------

I'm so used to writing everything in 140 characters, this post seems exhausting. It probably feels the same to read but for another reason.