What is Inflation? - by J. Richard Duke
Most people believe that inflation is a rise in prices, but inflation is more dollars causing a loss in purchasing power of the dollar. [Teaching on inflation and its consequences]
Inflation is the creation of currency (dollars), primarily through credit (loans) out of thin air. In other words, the Federal Reserve (Fed) and the banks create credit by typing on computer keyboards and digitally depositing loans into the accounts of borrowers. The largest borrower is the state (federal government).
The state provides a Treasury Note (IOU) to the Fed in exchange for a digital entry into the U.S. Treasury’s bank account. The U.S. is subject to debt (the loan it received). No “money” exists; it is debt — a loan in exchange for the IOU from the U.S. Treasury.
The state uses this loan to: (i) pay salaries and bonuses to state employees; (ii) subsidize companies; (iii) bail out banks and companies; (iv) pay for “wars” and conflicts; and (v) all other expenditures of the state.
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SEE:
Fractional Reserve Banking
“Fractional reserve banking is a system in which only a fraction of bank deposits are backed by actual cash on hand and available for withdrawal. This is done to theoretically expand the economy by freeing capital for lending.”
“Banks are required to keep on hand a certain amount of the cash that depositors give them, but banks are not required to keep the entire amount on hand.”
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I have one problem with the definition. The banks are NOT freeing “capital” because a checking account (deposits) is not an investment/capital. - JRD
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