As things exist today, banks are the only entities in the Unites States legally allowed to create money. There are three means of money creation: the Discount Window of the Federal Reserve; the Open Market Operations capacity of the Federal Reserve; and the use of banks of fractional reserve banking. (Note: physical money is only a small percentage of the total in circulation, so the details don’t matter, but the net is that the paper money is first created electronically, and that is therefore its principle form; you will note as well that your dollar says “Federal Reserve Note”.)
The Federal Reserve is a private corporation with no government oversight which is owned and controlled by invitation-only banks. The details of who has been allowed to buy the non-transferable stocks which comprise the ownership of this corporation are secret, but member banks certainly include Goldman Sachs, JP Morgan Chase, and the Bank of America.
Anyone able to create money possesses, intrinsically, the ability to make claims on our collected wealth without contributing anything of economic value. Bill Gates had to make the PC viable. Warren Buffett had to invest in successful corporations, who used his money to further their own success, with all the hiring of employees, investment in communities, and other benefits that flow from any business success.
Banks do not do this.
Discount Window: the way it works now is the Fed can simply gift anyone it wants as much money as it wants for as long as it wants for as little interest as it feels like charging, which is seemingly zero. In 2008, it created some $12 trillion. Much of this was paid back, but let us posit that some small number, let us say $500 billion, was not. That is money that was gifted to banks around the world, which at some point–slowly or quickly, now or ten years from now–will cause a decrease in the value of our money. It will damage the economic well being of ordinary citizens.
Open Market Operations: the Fed can buy securities in any quantity from anyone, which can include buying foreign currencies. Again: this power has been given to a handful of bankers whose activities are completely secret. This is ludicrous. Bank robbers might get $10,000 in a successful robbery. The Fed can grant its members hundreds of BILLIONS.
Fractional Reserve banking: this is what was covered at that site. Banks are allowed by law to loan out up to 90% of their deposits. Since this causes money to circulate that would otherwise have been in a vault, it is inflationary. It is also money that was created in the process of making the loan. They write a check for a house, but in theory still owe you your deposit back. This ability, too, is intrinsically predatory.
If we consider that the dollar has lost 95% of its value since the founding of the Fed–and that it steadily INCREASED in value after Jackson broke Biddle until the founding of the Fed–then it becomes obvious that that lost value has gone to those who created the money that caused the inflation.
Logically, then, there should be twenty times more wealth out there. Houses should cost a quarter what they do. Work weeks should be 20 hours. There should be no unemployment. healthcare should be within easy reach of all citizens.
There is no more important issue for the left and the right to coalesce around. BOTH Obama and Romney are taking HUGE donations from Fed member banks, and thus NEITHER should be looked to to make the slightest difference.
There is no more important political task, therefore, than creating a generalized awareness as to how our system actually works, and working to change it.