Do central banks open accounts to other central banks ?When we hear that a central bank has a lot of foreign liabilities in the form of foreign currencies reserves, where do the money physically is ? As I understand, money does not travel physically that much, as banknotes only represent a tiny fraction of all the money in circulation. My conclusion would be that if... | |
Big question. OK lets start with world banks. The world banks are controlled by a membership of controlling countries. Of witch the united states has the largest controlling share. Now the exchange of money gets a little tricky. A Chinese company receives money from a American company. The Chinese than takes that money and exchanges it into Chinese dollars. Now this money is held by China. The benefit of this to China is that the value of there dollar increases via the exchange rate. Case in point America started buying oil from Canada. As the American dollar flowed into Canada the exchange between the two counties dollars started to match each others. Now with oil prices dropping the Canadian dollar has dropped more than 20%. OK now for the third world countries. The exchange in places such as Jamaica is severe that you will receive thosands of Jamaican dollars for $20 American. This is due to the fact that Jamaica has no natural reserves and imports most of it's goods from America. Now that the stage is set and you see the player's. You may wonder why America would continue to do business with a country that could never return more goods than it receives. This is when the loans come in. In order for Jamaica to continue to recieve goods they need American money to purchase them since the Jamaican dollar no longer has any value. Now America is happy to loan Jaimaca money threw the world banks on certain conditions. Now these conditions grow with the amount of money borrowed and are desighned to put the borrower further in dept as american companies begin to take over it's infrastucture (hydro gas water and camunications) now selling these things is not an option for it is a condition on the loans. So in affect America is taking over the third world with piece. I wouldn't be suprised to one day see third world countries suppling soldiers for Americas wars to pay this dept. This brings up the question of a new world order.
At first glance this may not seem to be a bad thing as the world turns towards a one goverment society. The end of war as we know it. Think twice and learn from history. Absolute power currupts absolutely. Our liberties have already shrunk and as terrorism maybe the only weapon in the future to fight the ruling body. It will also be the weapon goverment uses to continue the decline of civil liberties.
If your interested and wanna learn more here are some realy good video's on the subject of money.
http://voodotv.com/documenatries.html
look under money the history of
Sorry i got way off subject. So now back to your question lol. The simple truth about your money is that it never existed at all. American banks work on a fractional reserve system. Wich means in plain english is that when a bank gives you a loan it creates the money. It doesn't come from another account it is simply typed into the computer and is created on your abillity to pay it back. Pretty good scam hey lol. Now they do have rules on how much they can create but to keep it simple i will just say that how much money there is is directly related to how much dept there is hence the American 5 trillion dollar dept. This is money that is created also. It is not borrowed from other countries. The federal reserve simply creates it on Americas ability to pay it back with interest. Thats right Americas only dept is to the federal reserve. This is a problem of great concern because these banks only create enough money to cover the origional loan and not the interest. So the economy must grow at 3% or it can't pay it's interest. This is why the (gdp) gross demestic product is so important. OK I wen't off track again. So now understanding how money is created you can look at it a different way. Money is another form of dept you are simply promising to return the service when it is called apon you. This only becomes a problem when countries no longer believe in your abillity to return the service. So to sum it up the money doesn't exist never has and never will. It is simply your dept to another country. Which you will pay by honouring there dollar at a higher value.
