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frugalista

Central Banking For Dummies

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I've found that even after watching "the money masters" and engaging in various discussions on this forum, I was unable to explain how money is created in the current central banking system.

Can anyone recommend a non-crackpot book on this subject?

cheers,

frugalista

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I've found that even after watching "the money masters" and engaging in various discussions on this forum, I was unable to explain how money is created in the current central banking system.

Can anyone recommend a non-crackpot book on this subject?

cheers,

frugalista

Depends what you mean by created.

Look up Seigniorage and Fractional Reserve Banking for how money is created out of thin air.

Warning! If the penny drops and you fully understand the banking system (especially seigniorage, FRB and inflation) don't tell any of the rest of the population how it works. There would be trouble for sure...

Seigniorage, also spelled seignorage or seigneurage, is the net revenue derived from the issuing of currency. It arises from the difference between the face value of a coin or bank note and the cost of producing and distributing it. Seigniorage is an important source of revenue for some national governments.

For example, after the "50 State" series of Quarters was launched in the U.S. in the late 1990s, the U.S. government discovered that a large number of people were collecting each new quarter as it rolled out of the U.S. Mint, taking the pieces out of circulation. Since it costs the Mint less than five cents for each 25-cent piece it produces, the government made money whenever someone "bought" a coin and chose not to spend it. The U.S. Treasury estimates that it has earned about $5 billion in seignorage profits from the quarters so far[citation needed] (April 2005).

Edited by Without_a_Paddle

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http://www.amazon.co.uk/exec/obidos/ASIN/1...8225527-3546367

An absolutely brilliant book.

It shows that most economic or political debates are pointless if no account is taken of the 'whatness' of money.

COAB -- are you sure this book is 100% non-crackpot? Some of the reviews allude to it being out there on the conspiracy theorists fringe...

frugalista

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Murray Rothbard's 'The Mystery of Banking' is one of the classics. Don't be put off by the date when it was written. It starts off giving the absolute basics of what money is, and moves on to discuss the mechanics and development of fractional reserve banking. Well worth reading, with the big plus that it's available on the Web as a PDF:

The Mystery of Banking

When you've read that, have a look at this March 2005 speech by Ben Bernanke which will give you a good overview of how the Fed currently implements day-to-day monetary policy:

Implementing Monetary Policy

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COAB -- are you sure this book is 100% non-crackpot? Some of the reviews allude to it being out there on the conspiracy theorists fringe...

frugalista

Certainly, some money reformists have been accused of having a 'conspiracy theory of history', but Rowbotham isn't a conspiracy theorist.

He IS sympathetic to the theories of C H Douglas and the Social Credit movement and, again, many people like to shout 'crank' at anyone who looks at Douglas's theories rather than looking at the arguments themselves. I'm sure a quick google search will find articles based on the following structure 'monetary reform=C H Douglas=anti-semite=cranky' with not a mention of what monetary reform ideas are about.

Most anti-Social Credit material ignores the fact that this was once a major mass-movement with a wide range of opinions and picks out anti-Semitic quotes from Douglas to discredit it. There's no doubt C H Douglas DID become anti-semitic, or at least anti the 'Jewish banking houses', but then he wrote in an age of paranoia where many people made remarks many would say were anti-Semitic, including remarks by Winston Chruchill. Karl Marx, too, made anti-semitic remarks. Yet if a capitalist like Henry Ford published whole books with an anti-semitic theme no one conludes that capitalism is anti-semitic, do they?

John Hargreaves, by contrast, was founder of the Social Credit Party. His writings actively praised Jewish civilisation and his writings make clear the problem was a system, not a conspiracy, although he was naturally mindful that he was up against very powerful banking interests. His Kibbo Kift scouting movement combined a world peace manifesto and the rituals the Kift created had a real global feel by including native american and global-styled customs. To label monetary reform 'anti-semitic' or 'conspiracy theorist', therefore, based on a few comments of just one famous reformer is utterly laughable. On one hand Hargreaves was a kind of folksy English 'nationalist'(for want of a better term), on the other had a one-world global culture fan - a mindset I think is still to be found among many in the green movement today.

Indeed, there are some 'Green Marxists' trying to undermine the large part the green movement which appears to be a direct descendent of the social credit era.

Of course, not all monetary reform come from the 'social credit' branch. 'Full Reserve Banking' is a more capitalistic alternative, and there are dozens more monetary reform and alternative currency ideas to take on board.

Edited by CrashedOutAndBurned

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Murray Rothbard's 'The Mystery of Banking' is one of the classics. Don't be put off by the date when it was written. It starts off giving the absolute basics of what money is, and moves on to discuss the mechanics and development of fractional reserve banking. Well worth reading, with the big plus that it's available on the Web as a PDF:

The Mystery of Banking

Aha, looks perfect!

frugalista

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  • 301 Brexit, House prices and Summer 2020

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      • down 5% +
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