Theoretically, if there were only $10 in the world and 10 people. Only $1 of that would exist in physical money. The rest is just debt. Or money that somebody owes somebody else. So spread that $1 among 10 people, and each person has 10 cents. The other 90 cents each person owns, is owed to them by one of the other ten people. It’s just a figure on their bank statement. The currency to back this computerised money does not exist. This video about MONEY CREATION explains how this works.
What happens if one of them ten people decide not to pay up? There would be less money to go around. The $1 in existence will take longer to make a full circle. Eventually, one of these ten people might get annoyed and try keep more for themselves so their wealth isn’t affected. When this happens, somebody else has to go without. Eventually, one person has it all, and most are going without.
This is the cruel truth. 10% of the population control 90% of the world’s wealth. 90% of the world’s wealth isn’t real money. The 10% of money being controlled is 100% of the money that actually exists. Really, we don’t really own any money. If we are lucky, collectively, we might control 1% of the world’s theoretical bank balance.
If you would like to know in more detail, read on.
Economics is one of the most bland and boring topics to learn about. This article has been condensed to include only the information needed to understand how economics fits into the bigger picture. For those who want to understand on a deeper level, there will be other articles with more in-depth information to come. Some people may find this difficult to grasp regardless of how easy it is to understand.
Humanity as a collective, wants an unlimited amount of material things. However there is a finite, or limited amount of resources that can be harvested from the planet. Economists refer to this problem as scarcity and use the supply of money to influence our spending habits, which in turn influences the harvesting of resources. If everybody in the world could afford what they wanted, the planet we live on would most likely already have ceased to exist.
In recent times, things like global warming and corporate greed have raised many questions about the legitimacy of the current economic system. I want to help people understand how the system is not broken, and works as it was intended. This will help you understand that only debt exists, leading to why money is nothing but a cleverly performed illusion.
Debt is the only thing in existence. Why? Because a small group of people known as the Global Elites are playing a game of monopoly. How? Well hold on to your seats…
Over 70% of the world’s currency are numbers made up on computers. The remaining 30% is actual physical currency. Roughly 30% of actual currency, or a third of the entire world’s supply of physical currency is kept as the banks reserve. That’s a third of a third (33% ÷ 3 = 11%) of money that exists, is actually real. The rest is all made up through complex equations that can be found in an article called Money Mechanics, and is a process known as fractional reserve lending.
The system we know relies on the economy. The government has to borrow money from the reserve bank. Each time they do, the national debt increases.
The more the national debt increases, the higher inflation rises. The higher inflation rises, the less each dollar is worth. The less each dollar is worth, the more we become attached towards the cash we do have. The more attached we become to our cash, the less willing we are to spend it. The less willing we are to spend cash, the less profit businesses make. The less profit businesses make, mean that the more the reserve bank decreases the interest rates. The lower the interest rate, the more likely banks are to lend money. The more likely banks are to lend money, the less attached we become towards our money and again the less each dollar is worth because of there is more money to go around.
The less attached we become to our money, the more we are willing to spend. The more we are willing to spend, the more money businesses borrow to buy the product they need to meet demand. The more inventory businesses buy to meet demand, the more money the banks need to supply. When there is more demand there is for money, the reserve bank raises the interest. The more the interest rates go up, the less money is demanded because it comes at a higher price. Less money demanded means the value of money is decreased.
The more the value of money decreases, the less money is supplied to stop the money from losing too much value. The decrease in the value of money means we now need $2 to buy a loaf of bread whereas yesterday, that loaf might have cost only a dollar. To us, it seems the bread is worth more money. But really, money is worth less, meaning you need more of it to buy said loaf of bread. This is inflation. Cost of living goes up so businesses don’t lose profit.
So basically, the lesser the supply of money, the more people are willing to pay in order to get it. That influences the reserve bank to increase the interest rate because they know businesses will borrow the money in order to meet demand. It’s a monopoly where the Reserve Bank is the monopolist and we are their pawns. Once the price of money gets too high, the supply of money will slow. Once the supply slows down too much, the interest rates are lowered to decrease the cost of money, thereby increasing the demand. It’s a game of buy low, sell high.