Has anyone seen this documentary called Money as Debt? I guess I don't really know enough about it yet, but I was just wondering what you guys thought - monetary cranks or serious analysis?
It starts off well I seem to recall. It ends up claiming that "P / P+I" (where P = Principal, I = Interest) doesn't add up and that this is the main problem of the fed. Something along those lines at least. It's wrong however.
In any case I suspect this one is better: Money, Banking and the Federal Reserve
not serious analysis and here's why.
they make the assumption that "money" can't just appear out of nowhere. this is wrong. when you use your labor and time to produce something of value you are producing money out of thin air because money just represents value.
Say you take out a loan for a car. When you promise to pay a certain amount of money back to someone in exchange for something now (a car) you are promising some of your future production to this person. That promise is a form of money. The bank has a piece of paper laying out the terms by which you will commit your future production. This piece of paper now has the value of the principal and interest MINUS a certain amount determined by: your chance of defaulting, the period of the loan, loan market conditions (supply and demand of loans).
So yes, loans DO create money. But that isn't the reason why fractional reserve banking is fraudulent. The reason that fractional reserve banking is fraudulent is that it invests depositors money and uses it as collateral on all its loans. by making loans based on this vast pool of funds that don't really belong to the bank (a demand deposit is a liability for the bank, not an asset) banks get over leveraged. when the market suffers a downtick all the banks try to sell off some investments and loans to rebalance their books. Only problem is that when every bank does this at once it suddenly changes supply and demand in the loan market and the presumed value of the loans drops significantly. Now all the banks go insolvent at once.
That is a great video, easy to find on youtube also. Hoepfully people will find it trolling around youtube and learn something. =]
Two thumbs down. The entire analysis is muddled and the solutions are statist.
Save yourself the frustration and watch Money, Banking, and the Federal Reserve, which is done by actual economists.
AnalyticalAnarchism.net - The Positive Political Economy of Anarchism
The video I like is the one under the mises youtube page.