If you have seen the 2 videos, you may be wondering what is the point of this posting. The 1st video shows how money is created, the 2nd video shows the US Federal Reserve is able to create trillions in new money. The 3rd part is an article by Larry Haverkamp (aka Dr. Money) a columnist with the New Paper : [Link]. An extract from his article:
"US$200 trillion in world wealth is small compared to the new centrepiece of this recession: derivatives. They are US$1,232 trillion, which is - get ready - US$1.232 quadrillion. A quadrillion is 1,000 trillion, or 1 followed by 15 zeros........looking at the value of all derivatives. As explained, it stands at US$1,232 trillion, which is six times the US$200 trillion value of the world's wealth." - Larry Haverkamp.
Analogy is something like this : soccer is a game that many love and players earn their income by entertaining the fans, clubs earn money selling souveniors, ticket sales, TV broadcast rights etc. At the side, another game take place - soccer betting. Suppose the betting game grows and the money involved in betting on soccer games become larger than the money generated by the game itself. What happens? The players in the second game start to try to fix the actual soccer game and influence the outcome.
In the past, the amount of speculative money in the financial markets is a small fraction of the total wealth in the world. A small amount of speculation is good for markets because it helps to make markets liquid and more efficient. But through leverage and use derivatives the total amount of money used for speculation has grown to an amount several times the total wealth in the world. The 2nd game - that of speculation in the financial markets - now has great influence over the actual economy. Speculators acting in herd-like fashion can create a recession by betting that there is going to be one. During the Asian Crisis, Dr. Mahathir was ridiculed for calling currency speculation 'evil'. ..he was laughed at for trying pin Malaysia's economic woes on someone else and also for being a naive authoritarian who couldn't understand and accept the natural outcome capitalism. Looking back weren't those speculators attacking the ringgit causing a loss of confidence that made investors flee thereby bringing the Malaysian economy to its knees. ...that was downright evil....no different from the Somali pirates who hijack ships for a ransom.
Why is all this important? We, the good people of this earth, study hard, work hard and obey the law yet our lives can be disrupted and even ruined by people whose activities are unproductive and unbeneficial to society...whose goal is to line their own pockets with money.
If you watched the earlier video, you might want to watch this video in which the US Inspector General is questioned about the Federal Reserve...listen to it carefully.
A small but growing number of Americans are calling for the Federal Reserve to be shutdown and the ability to 'create money' put back in the hands of the US govt. Given the current crisis can be traced back to the actions of the Federal Reserve under Alan Greenspan and over-leveraged banks, Americans are beginning to ask if the entire system is rigged so that while ordinary citizens work like slaves servicing their debts, another group of people just sit around creating and lending money earning interest and manufacturing inflation that eats away the savings of ordinary folks. ....