Increasing interest rates benefits only trading banks
By Ron Chapman
Here’s a recent example of commentariat shilling for usurious fractional reserve banking: https://www.youtube.com/watch?v=PBOUPE4QZ6s
In the video Marc Faber says “the economic system needs pain…Interest rates are still negative in real terms … banks haven’t increased rates enough to curtail inflation… But of course the poor people suffer… Nobody can avoid a recession in the long term. Recessions come and go and are necessary”.
That is misleading propaganda. Recessions are not necessary. Rather, hiking interest rates ENOUGH to reduce inflation is what causes suffering. It does that by reducing the money supply by levying unconscionable interest rates on borrowers which fraudulently syphons wealth from the general population into the pockets of private corporation bank shareholders. Eventually the process causes such hardship that the money supply shrinks as populations cannot afford to borrow more currency into circulation. That causes recessions and depressions that are exacerbated by governments (who are in cahoots with the banks as governments create the situation by licensing banks to issue currency which the government’s Treasury should emit) instituting austerity measures that reduce government spending on welfare and everything else. This process is entirely organised and controlled by the governments and banks.
Limiting inflation really means hiking the PRICE of ‘money’ (currency) so much that unemployment rises and people’s spending is restricted because their wages haven’t risen proportionately; or they lose employment and cannot afford to borrow more or even pay rising interest payments on existing loans. Resultant reductions in the money supply causes recessions and depressions i.e PAIN. Adding to that pain, the banks not only get increased income from high interest rates, but they also obtain ownership of houses and other assets for pennies on the dollar as borrowers default on their loans. This further impoverishes the general population reducing their borrowing capacity even more.
Borrowers defaulting on loans cause the money supply to fall because it only exists as bank loans i.e. book entries that disappear from circulation when banks foreclose on a loan or the loan is paid out.
Bank loans are the ONLY way that “money” is said to be created but in fact no money is created by banks because governments and banks fraudulently label intangible electronic digits as “money”. Except for the 3% of notes and coins emitted by Treasury, money in Australia is a government imposed mental construct imposed on society to facilitate the exchange of real goods and services.
The other way that interest rate hikes REDUCE the money supply is when high interest rates and low wages or lost employment reduce the population’s ability to pay interest on existing loans and/or take out new loans. Lack of new loans reduces the money supply causing recessions and depressions. Adding to that pain, the banks not only get increased income from high interest rates, but they also obtain ownership of houses and other assets for pennies on the dollar as borrowers default on their loans. This further impoverishes the general population.
That’s what Marc Farber really means when he says “the economic system needs pain” AND: “of course the poor people suffer”. Arguably though, he should say that most people suffer unnecessarily as a result of recessions and depressions caused by banks hiking interest rates; AND from banks charging ANY interest for their fake loans of electronic digits conjured out of thin air.
IF the Australian Treasury accepted sole responsible for, and did, issue adequate quantities of asset backed money and currency, INTEREST FREE, in sufficient quantities to service the needs of Australians, having proper regard to the availability of human labour and physical resources, we would never suffer real recessions or depressions AND all of us would rapidly experience abundance.