Now that we are rapidly becoming poorer, financial education is necessary more than ever.
We find ourselves in a spiral in which many families find themselves in moments of difficulty because prices, taxes, and mortgage payments have risen, but not wages. And, even if two payrolls come in at home, it is difficult to make ends meet.
Knowing how money moves will allow you to be on the right side and make the right decisions.
To find out how this framework is set up, we must go back to December 23, 1913 with the creation of the Federal Reserve, the Central Bank of the United States. Although it was not the first, it was the most powerful and served as a model for those of other countries.
It must have been an operation studied for a long time because it still exists and is signifying the most important transfer of wealth in history, from citizens to bankers.
As the renowned economist John Maynard Keynes said: “Through a continuous process of inflation, the government can secretly and unobservedly confiscate a significant part of the wealth of citizens. Not even one man in a million will be able to detect the theft.” I have always found this phrase amazing. The government, which in theory should take care of us, is stealing from us. Que???
The rulers are passing through and throw away the money for free. And the party is always paid for by the same people. Guess how?
In 1913, two months before they created the Federal Reserve, they created the income tax. I repeat: two months before. Coincidence or causality?
In a matter of two months they closed the circle of money. Banks create money out of nothing (and get rich from it) and we taxpayers allow us to pay that government debt with the banks with work, sweat and effort. The salaries received began to carry a new tax that went to the Government. These funds were used to return the debt to the Central Bank. Another factor of impoverishment to be added to Keynes’s inflation: taxes. But do not go yet, there is still more.
The rulers want to perpetuate themselves in power and increase Public Expenditure to meet the demands of citizens. They ask the Central Banks for money and receive it gladly. The one who comes after will take care of it. That money is not free. It is a debt to the Central Bank and the government has to pay it back with interest. But, you know, the taxes of the citizens are the ones that pay for the party.
Charging for an invented product is the business of the century. Issuing a check without funds is a crime if it is done by one of us, but if it is done by a Central Bank it is a “permissible crime”. What an oxymoron.
Bankers also create money from the commercial banks themselves. In fact, more money is created in this way than we have seen before. Thanks to the fractional reserve they are allowed to make loans beyond the amount of the deposits they have. They are allowed to keep up to 1% of the money and create, also out of nothing, 99% on top. As my friend Jaume says, they create that base that they must have deposited at the same time that they grant the loan. The opening commission that they charge you for lending you money, normally 1%, is the money that serves as the calculation base to create loans with money that they do not have. It is called the cash ratio. That is, they cook it for themselves and they eat it, but we pay for the raw material that goes into the stew.
This is how money is generated. And that is the origin of inflation, which is not the rise in prices but the loss of purchasing power due to the increase in money in circulation without a correspondence with an increase in the production of goods and services. The consequence is that prices rise.
Inflation impoverishes our economy but enriches that of the bankers who issued money and charge for it. That is what Keynes meant.
And the pandemic came, with an origin every day further away from the pangolin and closer to the hand of man. Even the FBI talks about the escape from the Wuhan laboratory. And 40% of all the money that had been printed up to that point was printed. It was a huge accelerator for the impoverishment of the population. Such a brutal slowdown in the economy caused ICO loans to be given to the whole world. Bankers rubbing their hands. More debt. More Keynes.
And to control the rise in prices, the Central Banks decide to raise interest rates. They have always done it and here I have explained it to you. I hope they didn’t get caught.
And the Treasury has taken advantage of the inflationary pull to make record collections. A covert tax increase has been made by failing to deflate (reduce) taxes.
Taxes, interest and inflation at full speed. The three mechanisms of impoverishment at full speed. All with “i” for “gut” if they have not seen it coming. I hope that they are one of those among a million who have been able to see the robbery that Keynes alluded to.
But no, someone decided that knowing the flow of money and why we get poorer even if we continue working was not important and they didn’t teach us at school.