Hi, Mr. Tan,
I have been taking about fake money very often in your blog, but I suspect not many people understand me..
Below is a link to an instructive cartoon about the fractional reserve banking system
> how it creates money out of thin air
> how it skews the wealth distribution, making the bankers richer and richer over time
> why this system is a ponzi scheme and will eventually collapse
http://video.google.com/videoplay?docid=-9050474362583451279
After watching the video, people should realise nearly all money is actually fake, created out of debt.. and we will need more and more fake money to keep the economy going (exactly like a ponzi scheme)..
When the amount of debt gets too big and balks at creating more fake money, the system will collapse and cause a severe recession/depression.
I believe we are really close to this point of collapse now.... and we should welcome the collapse and take the chance to adopt a different banking system, one where is sustainable and money not controlled by bankers/central bankers.. one such system is a free banking system proposed by most Austrian economists.. but which government is willing to give up the power to create money?
ym
Debasement of currency will create massive inflation.
ReplyDeleteDuring massive inflation, like 1978 to 1980, the best protection of wealth were Gold and Silver Currency.
The Keynesian theory of money should add debt into the equation to accelarate quantity.Quantity is a function of rate of exchange and debt
ReplyDeletecreation.
I've wondered about this many times in the past. Finally a video that explains it well. I encourage other readers of the blog to watch it. Run-time is approx 40mins, but definitely well worth your time.
ReplyDeleteOn banking system proposed by Austrian economist, Thais economist has proposed "Sufficient Economy" after 1997 financial crsis. This new econ is supported by the royal family. By following the new idea, the PAD (not a legal political party) or the Thai elite introduce "New Politic" to Thailand - a challenge to popular democracy and capitalism in Thailand!
ReplyDeleteToday, politcal unrest in Thailand never end. A very painful process to make a change and not to change !
A Singapore leading telco was the first scapegoat under the new econ and new polity of Thailand! It may cost the telcom $2 billion or more.
Wow... this is a very cool video. Explains the money creation process very well...
ReplyDeleteBut honestly, I do not think the problem is caused by "Fake Money". This kind of "Fake Money" is very useful when used by businesses in the form of micro-loans to poor farmers, etc....
It is just unfortunate when "Fake Money" is also used to speculative assets like housing...
...and even more unfortunate that CDOs have given people a false sense of security on their mortgage assets, perpetuating the low interest rates on housing loans, thus further fueling speculation...
james, the fractional reserve banking is the core of the problem..
ReplyDeletenotice how if 500,000 ppl in singapore wanted to buy condos, they can and will get the money at the low low interest of 3%.. how can this be sustainable??..
this system always blows bubbles.. ALWAYS.. and its just an illusion of wealth and imprisons the economy in needing more and more FAKE money.. exactly a ponzi scheme..
and these bubbles are always in unproductive assets.. tell me, the crowds borrow $1mil each to start a farm? or to buy a posh condo?..