Well, to arrive at that point we must put some basic principles.
First of all, now many know that the so-called *National* Reserve Banks are **private** and the fact that the title of American, English, European, Italian and what else does **not** refer to the fact that that nation *owns* this Institute of Credit, for this they are...
Second Point: The →Great Whore **is** this System which, from a certain date, took shelter and rooted in Usa but it is not American or English or Italian or French or Chinese or Japanese or Brazilian, it is **sovra-national** from the beginning, in this very sense: The **interests** of this System are not coincident with the ones of the nation in which it takes and took roots... Historically speaking the current is: Renaissance Italy>Netherlands (the basics but still not completely formed)>England (plain formation)>Usa (worldly expansion), from Usa the whole world...
Third Point: Production in Capitalism is owned and governed by Great Corporations. Great Corporations are owned and governed by the Great Finance. So the very centre of this System is the Banking System, the currency, the money. It is called *Great Whore* for this System is perfectly betrayer, it goes where it can have the biggest profits... So to criticize them in terms of nations is basically wrong for they **never** ever thought in terms of nations... Money have no nation...
Ok, said all this let us see **how** it functions and how it functioned from the beginning. Ah, by the way, **when** is it the beginning of this System of the Great Whore? In XVIIth Century England, when William of Orange was forced to make a debt with a Syndicate of usurers that gave his government a big loan in the exchange of being called, subsequently, exactly *Bank of England*, of England in the sense they made a loan to the King and his government... **Not** in the sense that the government of England owned it! It was born the first Public Debt...
But let us not miss the point and arrive at the mechanism, for this is my goal, to explain the mechanism in action... From centuries...
When you, anyone you may be today, went or go to a Bank putting a certain amount of money in it - let us assume, for a mere example, you put 1,000 Us Dollars, or 1,000 Euros if you like it - in that Bank and opened a bank account there, that bank will *****not***** loan that sum to another client, to whom the bank will ask, by the way, interests on the loan...
The bank takes the 1,000 Us Dollars as a **reserve** and loans, as a loan or also as cheques, 9,000 Us Dollars. The sum is an example. The *nub* of all is a concept: The «reserve» that, in our example, is the 10% while it varies from nation to nation and today is tendentially largely far less than 10% !, the reserve is **not at all** what is loaned... What is loaned is far more than what is owned as a reserve...
Ok, let us return to the point. Now let us focus on the entrepreneur who has received a loan. If he cannot repay the loan **and** the interests on the loan itself he will lose the →money-back guarantees and so the house or other things while, if the entrepreneur can pay the loan **and** the interests, the bank appears to earn the 6% - again an example, in reality it is usually far more - on the loan given...
All appears ok... But let us ask a question: Did the bank loan the 1,000 Dollars or 9,000 Dollars, nine times the money put in the bank by the first individual of our example?
The bank loaned the 9,000 Us Dollars... So, the 6% on the 1,000 Dollars are a false calculation.
The correct one is 6% on the sum loaned which is 9 times the sum effectively owned! So: 6% x 9 = 54% that is to say that the bank earned 54% on the sum **effectively** owned by it, the 1,000 Us Dollars of our example...
Understand the point?!
In this way Banks create and especially destroy richness...
Practically the →mechanism at the very base of Capitalism, its Financial mechanism, which moves ***all*** the rest - for without money you can do nothing at all - the basic mechanism can be summoned in few words:
→They loan what they do not own...
All is here.
But this very fact has another consequence, to which few usually think.
Let us consider now ourselves, normal people who put usually small amount of money into a bank.
Let us make this hypothesis: For a reason whatever we, people who put money into banks, have the necessity to take the sums back. We all go to the banks asking for the sums we gave. No matter the interests to which we would have had right...
What does it happen? It happens a story which always happened many times:
→The money do not exist!
This fact repeated many times in history and it will...
And those sums do not exist not for the fact that the →bad guys of the situation robbed them, even for this but not in the **all** amounts...
The very fact is really different:
Those sums never existed, they were loned but never owned... Never owned by the banks, of course...
Understand the very point?
These things should be taught in schools...
Now I leave anyone to do his/her considerations adding this: It did not happen to me to read this →mechanism explained in other parts in such a plain way and so easily...
Understand please another point: Production, which is real, lives of people, which are real, depend on this mechanism of production of money sums from nothing by means of a mechanism of credit on credit on credit on credit on credit... Up to the moment in which, for a reason whatever, the chain breaks in some part...
Sounds familiar? Is it what is happened in the recent Crisis? Or not...
All these real things depend on something, like the money, which are not real but a convention. The only real economical **basical** relationship is the barter, the swap, the *give you this - you gimme this* mechanism...
Another point: This mechanism of creating money from nothing is not that exists from the Stimulus Package. It exists from the **beginning** of Capitalism, it's its basic... (It's, contraction of it is, its, the possessive of it: On the web it's very easy that they're confused)
Someone went to the trouble to do the calculation of the quantity of goods produced in comparison with the financial «products» - inexactly called so for they are conventions of value measuring and not effective products! - fluttering for the world. These last ones, the financial side, is far more than the effective amount of goods produced...
This is a confirmation of the fact that in Capitalism Financial System loans what it owns not...
And that is the basic knot of this world...
(*) Links to two preceeding posts:
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http://blogs.myspace.com/index.cfm?fuseaction=blog.view&friendId=453782385&blogId=517805164
http://blogs.myspace.com/index.cfm?fuseaction=blog.view&friendId=453782385&blogId=518599836