You Are A Slave
"Modern banking is often explained by analogy with the practices of goldsmiths in early seventeenth century England. These goldsmiths held their customer's gold in safe keeping and issued notes to the customers instead, promising to deliver the gold on demand. The goldsmiths discovered that the customers would not all want the gold back at the same time, so it was safe to loan the gold to someone else in the meantime. When the goldsmiths loaned the gold out, he had created money. Obviously, the amount of gold had not increased, but the note promising to pay the gold circulated as money and so did the gold it was based on - before the goldsmith intervened only the gold circulated as money. It was an easy step to making the loan in the form of a note promising to pay gold, and keeping the gold safely in vaults at all times. Then only the notes circulated as money"
Not a bad story, ok, what did Mr. Munk tell us? It appears that those who came before us weren't any smarter then we are today. (With the exception of the 'dumb farmers' at the turn of the 1900's who knew what a wooden nickel was - most today have no clue what a dollar is!) Do you see what happened? They put their gold on deposit for safe keeping, were issued a note for the gold on deposit, FIGURED (incorrectly) that since the note could redeem the gold, it must be just as good as the gold it can redeem, and then they began spending the note in the market place!
Dumb, dumb, dumb, and well deserving of being fleeced.
The NOTE was NOT as good as the gold any more than a warehouse receipt for an apple is as good as the apple, nor is the note for the apple an APPLE! Master that! The note or receipt is probably paper, and one can effortlessly write anything on paper...but how do you get gold? Doesn't someone have to apply human effort in mining and refining...LABOR!!!
Guess what else happened? You now had two units of consumption (the gold and the note) chasing after no additional increase of stuff in the market place - goods! There should have only been one unit of consumption - THE GOLD, but the slaves thought the note was as good as the gold and increased consumption...get it?
Do I hear you say: WHAT'S WRONG WITH THAT?
You have to understand that gold is wealth...somebody had to labor for it. When the gold is bartered in the market place for some other thing, a non-inflationary exchange takes place - one thing for one thing! Great, and no nosey, snooping government involved in the equation!
How much effort does it take to write a note? Is the note wealth or just a DEMAND for the wealth on deposit? See the problem starting to rear its ugly head?
Again, Mr. Munk: ".Nothing limited the number of notes the goldsmith could issue except the fact that he did have to pay gold if anyone presented them to him. If he issued to many, people would not believe that he would be able to pay, and would refuse to accept them. To avoid this problem, prudent goldsmiths - and later, prudent bankers - always kept a certain amount of gold on hand as a reserve".
WOW! The goldsmiths could issue unlimited notes to bid in the market place against LIMITED consumables, without EFFORT, and the laboring slaves who created the consumables were OUTBID by the goldsmiths, who used AS money the notes they got for nothing, that the slaves had to work for (how else did the slaves get the extra notes the goldsmiths were writing? They probably labored or surrendered their wealth for them thinking they got PAID!) and all the slaves stood around wondering what caused the inflated prices, since there was far more notes chasing fewer goods. What a scam!
Those 'prudent' goldsmiths who lost sleep at night worrying about a run on their banks did keep a little gold on hand just in case some slave wanted gold...But why worry? The dumb slaves never asked for the gold, they liked the notes..."not as heavy to lug around at the shopping malls as filthy gold..." I suspect Mr. Munk is too kind in stating the slaves may lose confidence in the goldsmith's ability to pay gold...I believe that the goldsmiths worried a run on the bank equals a public lynching of the goldsmiths!
Consider this: "For what is the commodity which a banker deals in and makes a profit by? He opens his business and has an array of clerks with their desks, ledgers, etc. He then gives notice that he is ready to buy gold from anyone who has it to sell. And what is the commodity with which he buys the gold - what does he give in exchange for it? His own credit." A HISTORY OF BANKING IN ALL LENDING NATIONS, Vol.2 ["A History of Banking in Great Britain," by Henry Dunning MacLeod], p.210 (1896)
Man oh man! The world's most profitable industry - banking - has no tangible product...just 'his own credit'!
Why do most have to labor for what few get to create? Why doesn't that make you mad? Why do you think you are not enslaved to the creators of credit?
--------------------------------------------------------------------------------