Must Watch: The Biggest Scam In The History Of Mankind

A fantastic, animated and refined description of how the modern banking system works, narrated by Mike Maloney.

This is part 4 in the series, which covers modern money creation.  To view the whole series, see this playlist.

  • Christian

    The premise is the banks buy the bonds from the treasury and sell them to the fed and this creates currency. Are they selling the bonds to the fed at a higher price or is the fed buying them with checks that get redeemed even though there is no currency in the account? It all seems fishy on the surface.

  • Tim

    Has anyone every attempted to calculate the loss in the value of savings of a working man who saved X amount of money weekly over 40 years? Somehow this scam needs to be brought home to the average guy and something like this might help.

    • lf0d

      The “loss” from printing money is called inflation. It’s much lower than what you get when you invest the money. If you invest $100/week and get a return of 5% after subtracting inflation, you’ll have accumulated about $600000 after 40 years.

      • http://www.libertariannews.org/ Michael Suede

        Well, not really. The current LIBOR rate is 0.63% – which is wayyyyyy below even the government’s phony CPI numbers. Current CD rates are less than half of that. Getting a return of 5% after inflation would require a high risk investment.

        Inflation is a wealth transference to the people who get the new money first. When money is being dumped into the banking system, interest rates are artificially depressed, which destroys the incentive for people to save money.

        In a free market, interest rates would probably be 20 to 30 times higher than they are right now, given the present situation.

        • lf0d

          “Getting a return of 5% after inflation would require a high risk investment.”

          5% risk-free return on investment over 40 years is easy in the stock market; that already takes into account the price you pay for risk management and inflation and is quite conservative. Average long-term returns without risk management are around 10%.

          “Inflation is a wealth transference to the people who get the new money first”

          It is, and it’s not a good thing. But it doesn’t prevent you from making a good deal of money yourself.

          • http://www.libertariannews.org/ Michael Suede

            “5% risk-free return on investment over 40 years is easy in the stock market ”

            No, it is not. The stock market is way over-bought and will likely crash. These kinds of returns are/were only possible because the Fed is delaying the bankruptcies. If you have your money invested in the stock market, you will lose it all when the system collapses.

            http://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929

          • lf0d

            Since 1900, the stock market has appreciated an average of 9.4%, plus 4.8% in dividends, in constant dollars. That includes several big crashes. A crash is not a problem if you are investing right, and you have more enough leeway to reduce your risk to essentially nil (by buying a mix of stocks and other vehicles) if you are going for only 5% return. Furthermore, big crashes happen with or without the Fed or government intervention. In fact, if you are so certain that a crash is going to happen and you are right, you can become insanely rich that way too.

            You are giving people very bad advice by keeping them out of the market out of an irrational fear of risk. Government interference makes the market less efficient than it ought to be, but ultimately, our wealth reduces to the ability to trade and invest freely, and you can do that better and more easily today than at almost any time in human history.

          • http://www.libertariannews.org/ Michael Suede

            Ok, keep your money in the market.

            Don’t say I didn’t warn you about what is coming.

            I think you’re the one who is giving the bad advice here.

          • lf0d

            Anybody who wants to get the real story can just look at a graph of stock prices and the price of gold in constant dollars.