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 | On Sun, Jul 11, 2010 at 6:48 PM, <someone@gmail.com> wrote:
http://video.google.com/videoplay?docid=7065205277695921912# Looking forward to your reflections!
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And writing a long critique of it section by section. I find the movie, while making some very very good points, overly simplistic and off base on other points. This movie makes it too easy to throw out the baby with the bath water. I will try to tease out the difference......
Movie: "It is no measure of health to be well adjusted to a profoundly sick society".... - J. Krisnamurti
Movie: No system we are born into is as misunderstood as the monetary system... How money is created, how it is governed, how it affects society, are unregistered as interests to the great majority of the population.
Response: Money as a fungible transferable store of value that results from the exercise of an individuals creativity and strength, has never been surpassed.
Movie: 1% of population owns 40% of the worlds wealth..... So many children dying every day...... Living on less than $2 a day... Something is very wrong....
Response: No connection, false logic. Many of those children dying are living under despots where their parents have no freedom, and are surrounded by people who will destroy any progress that is brought to their land. (Many of those same people are in this country too, look at riots after sports victories, or court cases, were mobs take their anger out on innocent business owners who happen to have shops nearby. Fortunately, we have more law and order to contain, and maybe even deal justice to those mobs.) Those children need to be enabled to produce for themselves, and to have freedom. Just stealing the money of the wealthy and, oops, I mean redistributing it to these children for their food this week does nothing to solve the problem of what will they eat next week. Even if not the money is taken from the wealthy, but instead the tools and things that make the wealthy able to produce wealth, and redistributed to those who dont know what to do with them, the tools go to waste, or are used to fashion weapons to let the impoverished steal more. For better or worse, our system brings more people out of poverty than does their system in those impoverished nations. And, in this country, all are free to reject, and many do, and they can live in poverty here. For the vast majority of those not making in todays society, who are at least as capable, and have nothing less than the immigrants who landed on our shores in past generations to work hard and make a life for themselves and their families, they really have only their own motivation, integrity, courage, and dependability, to blaim for their failures to thrive along side those who started in the same place.
Movie: Lifeblood is money..... Understanding monetary policy is critical to understanding why our lives are the way they are.... Difficult mathematics and complexity makes it hard to understand, and is a mask....
Response: But it is far from rocket science. We have free public libraries full of dusty books on the subject for anyone who really wants to educate themselves. But the lure of TV and entertainment is so much greater. How much more celebrated are those who can recall sports trivia or Hollywood movie histories.
I - None are more hopelessly enslaved than those who falsely believe they are free.... - Johann Wolfgang von Goethe - 1749-1832
Movie: Central Reserve Bank in U.S. produced document "modern money mechanics." - Detailed process of money creation in a fractional reserve banking system. It then describes the fractional reserve process, as follows..... Bonds are created, and given to the federal reserve which gives back paper money that it creates. The government deposits the cash, and $10 billion enters the system. Most is electronic. Only 3% is physical money, the rest is digital. government is promising to pay the money back, creating money out of thin air, creating money out of debt.
Response: Yep. Understand that none of this describes why money itself is bad. The problem is the fractional nature of the federal reserve, and the debt of the bonds with interest, that forces taxpayers to pay back 3x what was borrowed by the government, the excess being kept by the banks.
Response continued: And the creating money out of debt is not a problem, in and of itself. The creating of money out of debt is what any store owner does when he borrows money to setup a store and stock it with inventory. As he sells his items, he generates a profit, and pays back the debt. Eventually, if he is successful, he pays back all the debt, and then has a store furnished with nothing but the energy supplied by his work (and his employees), and the profits from the sales to consumers. No one is harmed in this process, because everyone participates voluntarily: The store owner is voluntarily given money by the bank, his employees work for him voluntarily, people shop in the store voluntarily.
Movie: $10,000,000,000 sits in a commercial bank account. It becomes part of the banks reserves, as all deposits do. A bank must maintain legally required reserves of a certain percent of deposits, which is 10%. This means that with the 10 billion deposit, meaning $1 billion is reserved, and $9 billion is used as the basis for new loans. The money however doesn't come out of the $10 billion. It is instead is created on top of the original money.
Response: Put another way: Of the $10 billion originally on deposit, $9 billion is loaned out in the form of additional deposits to the accounts of the borrowers at the bank. Of course the borrowers may move some money to another bank, but still, the extra $9 billion is then floating around the system.
Movie: Loan is possible because of demand for the loan, and the original $10 billion deposit to use as reserve. Suppose someone goes into a bank to get the loan, they deposit the money into their own bank account. That deposit then becomes an additional reserve, that can be loaned against.... On and on... Average mathematical result is that about $90 billion can be created on top fo the $10 billion original deposit.
Movie: What is actually giving this newly created money value? The money that already exists.
Response: Yes, and no. Don't forget the promisory notes. Those are the true value. If no one can pay back their loans, then the value of the money collapses, because the money of depositors can not be replaced if the borrowers dont pay it back.
Movie: For the total pool of money is being increased irrespective of supply and demand for goods, diminishing the purchasing power.
Response: Known simply as: More money chasing the same amount of goods........ But again, this is overly simplistic. Lets say Safeway borrows $9 billion to create a chain of supermarkets. Where nothing existed before, afterwards there are jobs for people, places for people to shop, jobs for people to build the supermarket, jobs for farmers to supply the supermarket..... Or a housing developer borrows the money to create a housing subdivision. Now there is housing for people to live in, where before there was a low value fallow field...... This is not the same however, when that developer is forced to create low cost housing. In that case, the government takes away your deposits, and gives them to a developer to build houses for people who have done nothing for you in exchange for the money that the government removed from your account. The government becomes their landlord, and guarantees those individuals an artificially low rate of return in exchange for providing them with a below market value place to live. They get a nice place to live, while you get to struggle harder to accumulate enough to afford your own place at "fair market value". Again, having government solve a "societal problem", i.e. people who cant afford their own independent homes, results in unjust taking from some, and unjust enrichment of others. What makes it unjust is the lack of fair exchange of value between the groups.
Money: This is generally refered to as inflation, a hidden tax on the public.
Response: Yes, along with the interest the public is forced to pay in taxes to support the bonds that the government issues, and taxes to support redistribution of wealth to objects of benevolence, something our government was never originally designed to do.
Movie: Ron Paul talking about the real distortion of creating capital out of thin air. "How in the world can we solve the problem of inflation, increase in supply of money, with the creation of more money?" Fractional reserve is always inherently inflationary.
Movie: $1 in 1913, required $21.60.... 96% devaluation in 94 years. Absurdity is an understatement.
Movie: Money is debt, and debt is money.
Response: Bible warned against debt.
Movie: More money there is, there is more debt. More debt, more money. Every single dollar in your wallet is owed by someone to someone. Paying off all debts would mean there would be no money in our system.
"If there were no debts in our money system, there wouldn't be any money" - Marriner Eccles - Governor of the Federal Reserve, September 30th, 1941, House Committee Hearing on Banking and Currency
Response: That is only because of fractional reserve. Something like a gold standard, and pegging of money to something of intrinsic tangible value, would solve that problem. Government would tax, bringing in gold, which could be stored, and paper money issued against it. Of course people given the paper money could bring it to the government, and say, "I dont want this paper money, I want the gold represented by it" and the government would have to make the exchange.... Say, that was what was done years ago, before Nixon took us off the gold standard! Why? Because fractional reserve creates more money, which the politicans can tax. Think about this: If there was no debt, there would be no basis for taxation to support the ever expansive government.
Response: Imagine no government taxation to support contrived social schemes...... Now how excited are you about getting rid of our current monetary system?
Movie: 1835 - last time the national debt was paid off, and Andrew Jackson shut down the central bank that preceeded the Federal Reserve. It was his whole political platform, saying
"The bold efforts the present bank has made to control the government... are but premonitions of the fate that awaits the American people should they be deluded into a perpetuation of this institution, or the establishment of another like it." - President Andew Jackson 1767-1845
In 1913 our Federal Reserve system was created. Our current system guarantees perpetual debt.
Fractional Reserve allows 9 times any deposit to be created. Debases money supply , and causes inflation. Since money is created out of debt, circulated randomly in commerce, "people become detached from their origiinal debt, and people are forced to compete for labor in order to pull enough money out of the money supply for their living expenses"
Response: Error: The people don't become detached from the original debt, the money becomes detached from the original debt. And it is supposed to be labor that earns the money. Explanation:
Person A and Person B, 18 years old. New adults. No debt. They are doing out into the world.
Person A gets a loan from the bank, or a credit line from a supplier (costco could extend their own credit line by giving you goods in exchange for a promise to pay them back with money at some future date), and sets up a shop. He needs someone to work there at night. So he pays B a wage to work the store at night. B receives money, either from people purchasing items in the store, or from the savings of A until his store turns a profit. B doesn't owe anyone any of this money he received. A is willing to give him the money, because the labor that B expends in his business earns A more than the money A is giving to B. This profit on B's labor, is what A earns for taking the risk of losing his savings if the store is not profitable..... B receives a wage for his labor, to use for his living expenses (and pay taxes to the government to give the earnings of his labor to someone else who didn't work for it.) A also receives a profit from investing capital, and taking on debt, to start a store, which gives B a job that B would not have had otherwise, and A makes extra money ontop of his costs, which A can then use for his living expenses. If A does things right, eventually his profits allow him to repay all the debt, and all the inventory in his store is then purchased with profits from previous sales.
This system is successfully used in microloans to help people in Africa start small businesses.
When A is at retirement age, he can then sell the business to someone who invests money that they received from some source, to buy an established business that will give them what they feel is an acceptable return on the money they invest to buy the business. A then is cashed out for the value he created. And taxed by government to give to others who had no part in creating the value that he sold to the new owner.
These people deserve the money and profits that their labor accumulates through their own creativity. They merely borrowed the use of money as a frictionless medium of exchange and store of value.
Movie: As disfunctional and backwards as this might seem....
Response: Nothing disfunctional about trading labor for value that can then be used to purchase the things that you need. the fractional reserve system obviously creates a lot of problems, \but the idea of debt itself, and money itself, and labor itself, are not disfunctional.
Movie: One more element to the equation that reveals the "truly fraudulent nature of the system itself": The application of Interest.
Movie: When a person borrows money, it has to be paid back with acrued interest. It must be returned ot a bank plus acrued interest. The principal is the money supply. Where is the money to cover the interest that is charged? No where. The ramifications of this are staggering.
Response: If I have a process to produce widgets, and I employ you to make widgets according to my process, for your labor I give you some widgets in return for my supplying you all the materials, plans, and a place to make widgets. You then have to go and somehow sell the widgets. If these widgets are very specialized, it might be difficult for you to sell them,. So you give the widgets back to me, as I have someone else who works for me who specializes in selling widgets, and instead I give you some of the money that other person brings in from their sales efforts. That salesman, I could also pay in widgets, but he sells enough widgets, that I have enough cash, that I can afford to give him cash, instead of widgets. From my profits, I am able to pay back whoever loaned me money to set up my widget factor (it might have even been done from money made by my own previous labor as a wadget maker, or my ancesters labor as a wodget maker and inherited to me), plus some extra money in return for the use of their money. That is interest. and to pay it is not a bad thing. Because without that money to start with to create the widget company, neither you, nor the salesman, or myself, have any way to produce anything that anyone would willingly give us money for. Another reason whoever loaned me the money deserves to receive interest: What if they loan me the money, and my widget company does not succeed. You are unable to make the widgets according to the plan, or the plan is flawed, or the salesman can't sell the widgets, etc. The person "Mr. Howell" (from Gilligans Island) who loaned me money is taking a risk that instead of money, I might go out of business and the only thing I have to give him back is a warehouse full of unsellable widgets, or worse yet, just widget parts. If Mr. Howell is able to loan money to help start 10 different businesses, and in 5 years, 1 of them goes bankrupt, the 9 remaining each need to pay back their loans plus 1% extra, just so Mr. Howell can have 99% of his money back, not to mention any kind of profit. Since considerably more than 1 business out of 10 fail, lets say 5 out of ten fail. The other 5 need to pay back double their loans (20% per year over 5 years), just for Mr. Howell to break even. Fortunately Mr. Howell is a more savvy loaner than that, and he is lucky enough that only 1/4th of the businesses he loans to go under, and the other 75% pay back their amounts. But somehow, that 25% loss needs to spread across the successful borrowers, or else Mr. Howell will eventually lose all his money, and then no one gets to borrow his money to start new businesses. It is just gone. If Mr. Howell is competing with Mr. Gilligan, and Mr. Howell has a better track record at loaning to businesses, and therefore needs to charge less interest to break even, plus a small profit for his efforts at screening the business plans of borrowers, making sure the borrowers repay, etc., and Mr. Gilligan has a higher failure rate on loans, and needs to charge more interest, borrowers are then free to compete for the business of getting a loan from Mr. Howell, and if they can't meet his standards for a lower rate loan, then they gave Mr. Gilligan to fall back on, who charges a higher rate.
Interest is simply a form of rent paid for the temporary use of someone else's property.
So again, interest is not evil, if the transfer is between willing borrowers and lenders. A problem comes in when government has to pay interest that is reimbursed by confiscatory taxes. Even more problems come in if the government starts guaranteeing loans with the taxation on top of individuals who had no say if the loans were good or bad risks, no profit from the loans succeeed, and higher taxes to lose if the loans go bad.
Movie: The banks will always exceed the amount of money because of debt plus interest, and new money is always needed to cover this perpetual deficit built in.
Response: The Bible specified a year of jubilee (every 70 years) where all debts forgiven, and lands returned to their original families.
Movie: Mathematically, defaults are built into the system, and pockets of society that get the short end of the stick. Game of musical chairs, when music stops someone is left out to dry, with someone going bankrupt. "and thats the point"
Response: False logic. What about people who start businesses with no real chance of succeeding? Or people who borrow money to buy things with their credit cards, or too big houses, knowing they can't pay it back. Mr. Howell might correctly see the business wont succeed, or the person is not capable of repaying the credit card or the house, and deny the loan. But if Uncle Sam comes in and says "Go ahead, make the loan, I'll guarantee the loan if there is a default" then Mr. Howell will likely get sloppy and make loans that should not have been made. If Mr. Howell can make the loan, make the interest, and have someone else cover the default, why not? Or what if Mr. Howell makes a bunch of people think he can be trusted to steward their small money, and pool it together to do big things with it, to give them back some rent on their money they've entrusted to him? By itself, this is not bad, especially if Mr. Howell treats their money like his own. And he has no fractional reserve. He gets a dollar, he can loan a dollar, nothing more, nothing less...... But if Mr. Howell can rely on someone else to take the risk, and gets sloppy, that is where it goes bad. This is the source of much financial contagion in our system, government intervention. And also insurance companies making bad bets on risks that are poorly understood. People should not be entitled to get money out of their system for their own schemes when the taxpayer is the guarantor of last resort.
Time: 19:00
Movie: It (interest) invariably transfers true wealth from the individual to the banks....
Response: As my examples above of A&B, and Mr. Howell and Mr. Gilligan show, people who borrow can sometimes create more wealth and jobs than what they borrowed, and they return some of the profit as rent (interest, or return on investment) for the money borrowed to start their enterprise.... Again it is not the interest, or the rent, that is evil.
Movie: "For if you are unable to (or dont) pay for your mortgage, the bank will take your property."
Response: Again, think of B above, who worked hard for A. B got his paychecks, and saved. A worked hard, built his business, and eventually retired, and sold his business (trading the value he had built up in inventory, good will, business systems, loyal customers, etc for money), and A has a savings too. They both give some of the money to Mr. Howell, and he loans their money to Seymour to buy a house. They are going to want Mr. Howell to take back the money if Seymour refuses to make payments on the loan. Unfortunately, if Seymour used up the money, building the Winchester mystery house with tons of rooms no one lives in, and filling it over the years with expensive but now worthless computer equipment, there is no money for Mr. Howell to get. So the only choice Mr. Howell has is to take back the house if Seymour refuses to pay back the loan. Mr. Howell hopes to make enough on selling the house to someone else, just to cover the deposits that he owes back to A&B....... Remember, there was nothing faulty about the money that from A&B that they entrusted Mr. Howell to loan to Seymour. Seymour spent the money just fine. He should have a way to repay the loan, or he should not continue to enjoy the house filled with toys that was bought with money earned and saved by the sweat and sacrifice of A&B's brow.
Movie: "This is particularly enraging because such a default is inevitable because of the fractional reserve system, but the money didn't even legally exist in the first place."
Response: The only thing enraging is the idea the without foreclosure, people who borrowed money that they could not repay get to keep the houses and toys they bought with other people's money. And there is nothing inevitable about foreclosure. Many people live modestly, within the means that their labor can produce, and they buy homes, and pay them off with the "fruits of their labor", i.e. money that people voluntarily paid them for their fruit.
And as for didn't even legally exist in the first place, that's a specious claim. It might be immoral. It might be the source of many problems. It might be unconstitutional, but until the law establishing the federal reserve system, and fractional reserve is overturned, it is definitely legal.
Movie: 1969- Jerome Daily court case. Mortgage contract required both parties put up a legitimate form of property for exchange. This is called consideration.
Response: Arguing the intricacies of lawyer speak, "is money a legitimate form of property", is not impressive. The movie probably misses the point that overlawyers, non-commonsense interpretations, is another fundamental poison in the system. just remember, the money in the bank represents a frictionless way to exchange the stored labor of the depositors.
To use an analogy: Your wallet is like a battery. The electrical charge is like money. You can use your labor to turn a crank generator, and create an electrical current that can be stored in a battery. You can use the energy in your battery to produce light to read by, or heat to keep warm with. Once you are out of stored energy, you need to expend your energy to turn the crank. If you spend a lot of time turning the crank, you can charge a lot of batteries, perhaps more than you need. You can take them to the bank which stores them, and loans them out to others, who use them, and then eventually, somehow through their own labors, recharge the batteries, and eventually bring them back to the bank.
Lets say you go to school, and you learn how to improve the generator you use to you charge your batteries. Maybe hear about solar power, and you spend your energy building solar cells to charge your batteries. If you do that, and your neighbor doesn't, is it your fault that your neighbor might not have light to read by at night? Should the government come and take away your batteries and give them to your neighbor? Or should your neighbor come to you, and offer you something of value for the batteries that have the energy stored that was produced by your labor? You see, when you use your energy to charge a battery that you can give him so he can use it to keep himself warm, and he gives you something in return that is valuable to you, that is every bit as useful to you as just saving the battery for your own use.
Anyhow, just remember that Money is a store of the value of the labor you have expended. If someone wants to accept that in exchange for their property that their labor has built, that should be their right.
Interesting google search: jerome daly 1969 court case
See: http://en.wikipedia.org/wiki/Martin_Mahoney http://www.lawlibrary.state.mn.us/newsletter/0711.html
"should answer your questions. to summarize: it was never a binding decision since it was made by a justice of the peace and was later overturned by higher courts. Daly was subsequently disbarred as well."
In other words, Daly was trying to be a clever lawyer, and lost his right to practice law. And the judge wasn't even a real judge. The case can not be used as a precedent in any other case. The defendant, Jerome Daly, was a longtime tax protester2 and attorney who was later disbarred by a decision of the Minnesota Supreme Court.3
Movie: Mr. Daily said the money didn't exist until the loan was signed....
Response: Irrelevant. And the charge in your battery didn't exist until you turned the crank. The generator exists to charge the battery. You dont argue, after you've used up the battery lighting up your dining room for the whole evening, that the electricity was invalid because it didn't exist before you charged the battery.
Movie: The money doesn't come out of the banks assets, they are just creating it out of a theoretical repayment on paper.
Response: This is nothing against loans, nothing against money, nothing against the need of borrowers to repay the labor of others, borrowed for their own use, in the form of money. It is only an indictment against the fractional reserve system itself.
But the reality is: The Congress setup the banking system, and gave them the power to create this fictional money to represent the value of labor, and provide a frictionless medium of exchange of that value. (Imagine if we could only use apples as a way to exchange value. What happens when people dont need any more apples to eat, or the apples rot?) . It is like Congress gave the banks the power to create electrons. While those electrons are in your battery, they give the same light in your lightbulb as any other electrons generated by your own generator. You could have generated electrons from your own generator, but if you chose to borrow electrons, why shouldn't you have to give them back?
Movie: As the court case progressed, the plantiff admitted the bank did create the money on its books by bookkeeping entry. No US law gave him the right to do this. They jury found there was no consideration and the judge agreed.
Response: The accounts of the story above don't mention a jury being involved.
movie: And Daly kept his home
Response: This is inaccurate lie of this movie. Both the links above say that the justice of the peace Mahoney's ruling was overturned.
 | Unfortunately, a little research shows that this film has lied about some issues, and I can't spend any more time on it at the moment.... Let me know what you think of my rebutal so far, if you find it educational, maybe I'll go through the rest and continue writing.
Interesting google search: zeitgeist addendum debunked This looks like a pretty thorough response: http://conspiracyscience.com/articles/zeitgeist-addendum/ However, my rebutal is more based on "Lets think about all this from a common sense viewpoint". |