‘Printing’ Money vs. ‘Creating’ Money – What Is The Difference?
Are most new money units today ‘printed’ from paper or are new money units ‘created’ from consciousness? What is the reality today?
I just finished listening to a great conversation on the weekly McAlvany report (which I listen to on a regular basis). This conversation was with Steve Forbes, a person I view as a wise, honest, and a well-informed person on economic issues. Early in the week I listened to a commercial on radio which was marketing gold as a great investment since our government is ‘printing’ so much money at the Bureau of Engraving and Printing. The commercial implied that the ‘price’ of gold should skyrocket because of all this ‘printing’ of new paper money by our Treasury. I realize that many pundits still have a hard time with the idea that most of our money units are ‘no longer’ printed as paper units (only 4% of our money in circulation is paper). After all, the history of money has suggested that money is physical (either in coin form or as paper notes). So for many, the new idea that money is ‘no longer’ a printed note (paper) is hard to digest. Yet, if we desire to be current on the money issues we need to recognize that most of our new money units today are NOT printed notes. Let’s think about the differences between ‘printing’ money and ‘creating’ money from one’s consciousness.
When I purchase goods at the local store with my credit card what precisely am I doing with my money? Let’s assume that I have a typical consumer credit card with a $4000 credit limit. What are my options? I would suggest that I can execute a purchase transaction via this credit card at my local store. I then am able to ’create’ money from my consciousness (since in my mind I legally own 4000 money units). I then spend these new money units by swiping my card in the electronic machine at the checkout counter. What happens? Immediately (at near the speed of light) by purchase transaction (say $100) goes by computer from my local store to another central computer…which then evaluates the validity of my purchase transaction. Then the signal goes directly from this computer machine to my local bank for a final debit to my personal checking account. All this is done by electronic signals (mostly 1′s and 0′s) within the wired electronic machines (now ubiquitous everywhere). The Cashless Society has arrived for most financial transactions.
What I did above is THINK, then PURCHASE, then PAY with money units which I ‘created’ OUT OF NOTHING (my consciousness). I had NO money units (in reality) for the above purchase transaction. I merely ‘created’ new money from the ‘authority’ given me as a result of owning a credit card. This simple example provides a basic ‘glimpse’ of what the Big Boys are doing at our Central Banks on this planet Today, we do not need to PRINT new money as in prior periods of history. Back in the early 1970′s, and prior to this period, we did not have the technology of a high-speed computer or the ubiquitous plastic credit cards which most of us use today. Our money units were mostly metal coins and paper notes. Central Banks and most Governments had to ‘print’ new notes and ‘mint’ new coins so we could SPEND these units in the marketplace. Those days are now mostly OVER (for our Western World and also for most Emerging and Developing Nations). We now have a new global technology (the computer) which allows VIRTUAL currencies to flow as our money globally. Money units now flow in real-time (at near the speed of light) from computer screen to computer screen. What a change from the old days!
The above example provides a demonstration of what is now being done by the BIG BOYS within the Central Banks of this World. New money (also called currency units or legal tender units) can now be ‘created’ from the legal authority given these Central Banks by their Governments. For example: today our Federal Reserve System (the FED) is legally responsible for ‘creating’ all our currency units (called ‘dollars’). Our Treasury Department and our Congress have delegated to the FED all their prior Constitutional Authority over money creation. Today, our Treasury does not ‘print’ any of our money units. Our Congress and our Executive Branches do not ‘print’ any money units. Those days are over. Today we have merely a few elite Central Bankers who ‘create’ (not print) all the World’s currencies (now virtual digits within the computer screen). This new operation (within Central Banks) allows the Trading Desks (now all computerized) to ’create’ computer digits (virtual numbers) as our legal tender units. We call these units (dollars, pounds, euros, krona, pesos, etc.). Notice, however, that new money units emerge into the computer screen without any PRINTING involved. Digits (virtual numbers) have replaced most (some 96%) of all money units now in circulation. There are no ‘printing’ of paper units as espoused (and implied) by so many financial pundits who continually provide investment advice to the uninformed public.
The best example of ‘creating’ new money units is demonstrated by the U.S. FED Chairman, Ben Shalom Bernanke. Ben’s recent financial operations (generally referred to as QE) demonstrate the concept of money creation as well as the ‘nature’ of our money units. Since the financial Crash of 2008, Ben has been instrumental in creating some $16 trillion of new loan facilities for various dealer banks and then some $2 trillion of new virtual dollars for his own FED account, called the SOMA. Where did Ben get all these money units. Did he ‘print’ up paper notes for all his loan and QE transactions? Did he request that our Bureau of Engraving and Printing run the printing presses (rolling out new $100 paper notes) for these huge monetary transactions (as espoused by so many financial pundits)? I don’t think so! What Ben now does is simply THINK, CREATE, SPEND. He uses his consciousness as the source of new money creation (he thinks up a QE amount) and he then has his Trading Desk (at the New York Federal Reserve Bank) type in new digits (virtual numbers) into his System Open Market Account (SOMA)…no cost is involved. Ben views this process as legal and constitutional and within his authority (given him by the Federal Reserve Act of 1913). He needs NOT ask anyone (from Congress or within our elected body of representatives) permission for his trillions that he spends or creates via QE operations (as he has LEGAL authority from his Federal Reserve Act of 1913).
Few Americans understand the operation of our Federal Reserve Banking System. Few understand the power and control which this System has over the entire world financial markets. Few understand why Ben and his Committee (called the FOMC) can ‘create’ $trillions of dollars with no input from our elected representatives in Congress or the Executive Branch. Where did Ben get all this authority and independence? You will need to study and research the history of the FED to understand these questions. A good book on this subject is “The Creature from Jekyll Island” by G. Edward Griffin. Go to Amazon.com for price and details.
Why can Ben just THINK up numbers in his MIND and then implement his thinking (mostly his QE operations) as a sole proprietor over all United States Legal Tender (dollars)? Our entire marketplace, as well as the World marketplace, must now listen and discern the inner THINKING of this one person (when it comes to financial, trading, and investment decisions). Does any of this make any SENSE? What has happened to allow this ONE person (mostly) to exercise this overwhelming influence and control over all the planet’s financial markets? Have you noticed that we now have mostly zero interest rates for our savings (due mostly to the operations of Ben and his Committee)? Have you noticed the extreme ‘volatility’ in todays financial markets? Have you noticed the ‘manipulation’ that is occurring in the silver/gold/oil markets? Have you noticed that most stock market volume is now accomplished by HFT computer trading?
There is much to consider today when we think about our financial problems and issues. Will Ben and his FOMC group monetize all new Treasury Debt issues if foreign buyers flee the U.S. bond markets? Who within our Congress or Executive Branches understands today’s markets and all these new technologies which have emerged since the 1980′s? Where is all this leading and what effects will all these new technologies have for our markets going forward? The old days of ‘printing’ paper notes and ‘minting’ metal coins are basically over. We now need to THINK in terms of virtual currencies, virtual stocks, virtual bonds, and virtual investing and saving. Capitalism as we’ve experienced it in the past is now OVER and DONE. We now live in a new global world of Cyberspace, Virtual Reality, and Real-time Communication. Consciousness has replaced Materialism as the foundation of this new world. Dualism has replaced Monism as the relevant philosophy.
If you desire to reboot Capitalism, I would suggest that you study the philosophy and actions of Thomas Jefferson. T.J. was instrumental in establishing our monetary system and he also understood human nature better than most of our Founding Fathers. This made T.J. special when it comes to economics, money, Capitalism, Freedom, and Spirituality. T.J. was not an Atheist. He recognized that our Creator was real. He recognized that nature revealed the reality of a Creator. He recognized that our ‘rights’ and ‘future’ depend on Providence. The American experiment derived much of its energy from the philosophy of T.J. Thomas Jefferson was born in 1743. I was born 200 years later in 1943. Personally, I identify with T.J. and his philosophy. I recommend all the new books and literature that is now revealing the philosophy of T.J. Thomas was not perfect (as done of us are)…but he was someone who created our philosophical foundation. America is based on many of the principles and ideas of T.J. My mission is to continue this philosophy and add to it.