By Alan Marston, 29 June 2009

 

In the 19th and 20th Centuries governments replaced gold money with paper money as the symbol of monetary value, issued to themselves the monopoly right to print paper money independently of the amount of gold the country owned and set minimum reserves of gold that a government-approved member bank had to keep as a deposit with the government-run central bank at, say, 10 percent. Thus 10 percent of `real' money was retained by the central bank in gold but the reserve ratio of 9:1 meant that banks could loan out ten times as much in paper `virtual' money (notes, currency, etc.) as they actually had deposited in gold. Keep in mind the money banks

hold and use is DEPOSITED with them by people outside the bank who are the actual owners of that money. Banks do not own the money they have been allowed to control.

 

 

In other words 90 percent of the money that banks could loan out was/is unreal money and dollar/pound notes-on-paper were only receipts-on-paper for gold owned by others. Governments arbitrarily printed these receipts and allowed member banks to lend them to unsuspecting individuals as though they were money. People, in effect, pay interest on counterfeit receipts — receipts for a pile of gold that does not exist.

The revolutionary overthrow of control over ones own money and the value of it was in full swing after WWI but not completed until the US Government, in the early 1930s, abandoned the gold standard. Gold receipts (which by this time were referred to by everyone as "dollars") could no longer be redeemed for gold. In addition, the government stopped printing gold receipts altogether and replaced them with "Federal Reserve notes."

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