Wednesday, February 1, 2012
Bank Lending in UK; Fractional Reserve Banking
Taxpayers of the world unite! You have been BAILING OUT BANKS in the hope that those banks would LEND money to stimulate economic activity and ultimately, JOBS.
But none of this has been happening! To the contrary, banks are lending less even after been bailed out.
The ENTIRE EDIFICE of bank lending is based upon LENDING OUR DEPOSITS out to others.
The trouble with lending too much money is that the more of a currency circulating that is NOT BEING PUT TO GOOD USE, the less value placed on that currency.
Since 1971, fiat money has exploded exponentially as in the chart right.
Inflation, as it is calculated presently, is a FALSE representation of the cost of living as it doesn't take into account the PRICE OF GASOLINE!
By PURPOSELY EXCLUDING gas from the equation the government wants us all to think our currency, whether USD, EURO or POUND is "worth" something. Inflation should be analyzed against what our dollar can buy in the real world of NECESSITIES:
#1. Wheat (bread, bagels)
#2. Hops (beer)
#3. Housing (rent, mortgages)
#4. Education (cost of college education)
These are REAL THINGS that we all need and the conventional inflation measurements are not keeping up with reality. But the powers that be would have us all believe that inflation is miminal, economic growth is steady and unemployment is stabilizing.