The colour of money

Yumnam Devjit Singh *

Indian Rupee :: Pic Courtesy : wikipedia/Jovianeye

Human beings as I have come to understand place very little value to the process of thinking. People don't want to think, instead the experience of the senses enjoys a much higher regard in the life of a human being. Majority of the people live their lives to experience the inputs of their senses, obsession in sex, food, power, love, music etc are indeed manipulation of the senses. This fundamental human nature is a major reason why our society and civilization is going in a particular direction. At present making someone think deep and hard is the same as torturing the person.

Hello my name is Devjit and I am here to think torture you! This session is about money, I am going to tell you how little you know about it and how all of us have been fooled.

Answer these 7 sets of questions. It's just a small test to prove how little you know about money.

Q1. Amongst the top 5 most important things in life, how do you rank money?
Q2. Why is money important?
Q3. Is it possible to become rich by using only just means?
Q4. What is money?
Q5. How does the central bank (RBI) print new money?
Q6. What is fractional reserve banking?
Q7. Why does the value of goods and services keep increasing?

Most of the people to whom I have asked these questions have answered 2nd as the answer to the 1st question. So to most of the people money is the 2nd most important thing in life

The answer to the 2nd question yields varying answers but the underlying theme of their answers have been that money is necessary for survival and livelihood, for this reason it is important.

And yes you guessed it right the most popular answer to question no 3 is "NO". It is not possible to become rich by using only just means.

Now beyond this, almost all of the people to whom I asked these questions were not able to give proper answers for Q4, Q5, Q6 and Q7.

So what is money? Well money is a medium of exchange that can also be used as a unit of accounts, is portable, durable, divisible, fungible and a store of value over a long period of time.

What the hell does that mean? Allow me to explain, it means that money is an entity that can be used as an exchange for goods like food grains, computer, cars, fuel and services like medical care, education etc., it also provides a unit of accounts which means that money can be used for accounting or measuring our wealth. For example a rich industrialist's wealth can be accounted as 100 crores worth of assets.

Portable meaning we can carry around money with ease be it as paper money, credit card or gold coins. Durable meaning it last for a long time, as is in the case of gold and silver. Divisible meaning a 1000 rupees note can be divided in value as 10, 100 rupees note and the 100 rupees note into 10, 10 rupees note and so on. Fungible meaning a 100 rupees note in your pocket will buy the same goods and services as a 100 rupees note in mine.

The value of money is the same anywhere. Store of value means that, when you earn wealth through work in the form of money, you are storing your wealth in your money. If money does not store its value the wealth accumulated by you disappears. As in case of inflation for example, if you save 1 lakh rupees in cash and keep it in a safe, year after year its purchasing power will diminish due to inflation. This would lead to the argument that all currencies; dollar, rupee, euro or yen cannot store its value over a long period of time.

Coming to question number 5, How does the central banks (RBI) print new money? Whenever a govt. comes into power, it comes into power for its promises to provide more to the people. If a govt. makes its budget based only on the money collected as taxes than the govt. is very limited in how much it can spend and do. In order to overcome this shortage of money the govt. takes loans in the form of public debt by selling treasury bonds in the market.

A treasury bond is a fancy piece of paper that says I owe you (IOU) this amount of money which I will return in this time period with this much amount of interest. These bonds are purchased by various banks in the market called open market trading. These banks than go to the central banks (RBI) and exchange these treasury bonds for newly printed money by the central banks (RBI). This is how the central banks (RBI) print new money.

The next question, what is fractional reserve banking? When you and I borrow money from a friend, say I borrow 50,000 rupees from Thanen, the money he lends me is the money that he earned at the expense of his time and freedom. But when you go and borrow money from a bank, the money we borrow is not the bank's money but the money the account holders deposited in their bank accounts. So when I go to a bank and borrow 50,000 rupees the money is loaned to me by taking the money out of the bank account holder's deposit and transferring it to mine. Now regulations are placed as to how much money can be taken from an account and loaned to another person. The fraction of the account holder's money which the bank must keep as reserve is dictated by the central banks, and hence this system is called fractional reserve banking.

Coming to our last question, why does the value of goods and services keep increasing? This question can also be framed as what causes inflation? Imagine that there are 10 customers at an antique car auction, 3 out of the 10 have only 10,000 rupees with them each, another 4 have 2 lakh rupees with them each another 2 have 5 lakh rupees with them and the last person has 10 lakh rupees. If all of them want to buy a particular car, logically the car would sell for little over 5 lakh rupees, the richest guy with 10 lakh rupees outbidding everyone else. At the most the car can fetch a value of 10 lakh rupees and no more than that.

It is so because nobody has money more than 10 lakhs. Now if all of the 10 people have just 2 lakh rupees each with them, than the price of the car would fetch only 2 lakhs at maximum. If everybody had 5 lakhs, it would sell for 5 lakhs at most. So inflation or deflation depends upon the demand for the commodity and the money possessed by the customers. More money there is, higher the prices. Inflation in our present situation is caused by the increasing money supply in our system.

Coming to my theory of human beings valuing experience of the senses more than the process of thinking about things. I bet you were so immersed in the experience of reading that you didn't stop and think that: Money which a majority of people regard as the 2nd most important thing in life, essential for survival and livelihood in this world is a complete mystery to all. Most of us don't even know how it's created and how it affects our lives.

Having said that, don't blame yourself completely. Keeping the people in the dark helps certain people in the society scam everybody. This may be a reason why you are not told about money.

If you know how the central banks create money than you will realize that every money in existence is created as a debt, when the Treasury bond is issued, it is done so with a promise to give an interest on the money. A 100 crore rupees bond contains a promise from the govt. to pay back the money with interest but the central bank creates only the principle money (the 100 crores) and not the interest. The money to pay for the interest is never created, so the govt. can never pay back the interest, it is forever in dept to the central bank.

If you also knew about the fractional reserve banking than you would realize that when you deposit 10,000 rupees into a bank and the bank keeps it in its vaults then the bank can say it has 1 lakh rupees (assuming the reserve ratio is at 10%) just by showing only your 10,000 rupees in the vault to the RBI. Thereby creating 90,000 rupees out of thin air, using your 10,000 rupees. This newly created money by the bank is called digital money and it only exists in computers as numbers.

But the financial system has no way of differentiating if the money the bank claims it has is the actual real cash you deposited or the free money created by the bank for themselves. There are no free lunches in this world, you either pay for it or you steal it, and the money the bank creates get their value by stealing it from the rest of the money in circulation, money which are real and hard earned through sweat and blood.

When this new money created by banks out of your money comes into circulation in the system, it increases the money supply and causes inflation of goods and services. 90% of the money in use today is digital money created by banks through this system. The success of banks all over the world lies in the practice of this system. The fractional reserve banking system legalizes stealing of value of money from the people by the banks. Legalizing a crime does not make it legitimate, making the killing of an atheist Muslim legal under Sharia law does not stop it from being a crime.

Adding insult to injury, in Manipur the banking system follow a particular trend of asking for a 10 to 15 % deposit of money as fixed deposit for the approval of any loan. This being an addition to a security asset already provided. This is so because when you deposit the 10 or 15% money, through the fractional reserve banking it creates money from that deposit and loans you the money created with your money and earns interest on it also. It's like going to a bar that has no alcohol and asking for 10 glasses of whiskey, the bartender replying "I don't trust your looks, let me first check your credibility.

First you bring me a glass of whiskey then I will give you your 10 glasses of whiskey" so you go out, beg borrow and steal a glass of whiskey and give it to the bartender. The bartender takes your whiskey pours water to it and pour it out into 11 glasses. Keeps 1 for him and gives the rest to you for 1000 rupees per glass. You take the 10 glasses smiling and thinking "Oh, I am gonna get drunk tonight". Banking is a very profitable business indeed.

All the central banks in the world are a replica of the federal reserve bank of America and the banking system is a copy of what is followed there. As the world reserve currency is dollar, the Federal Reserve Bank has indirect control over all the central banks of the world. But unlike the RBI in India, Federal Reserve Bank is a private bank owned and controlled by a group of individuals. All govt. are in dept to their central bank and all central banks are controlled indirectly by the Federal Reserve Bank (FED). America the world's biggest superpower is around 18 trillion dollars in debt to the FED.

Who controls your money, controls you.

For those of you who have read my previous article "the name is bond, James bond", the individuals who own the Federal Reserve Bank of America are the Spectre.

"I care not what puppet is placed upon the throne to rule the empire on which the sun never sets.
The man who controls Britain's money supply controls the British Empire, and I control the British money supply." - Nathan Mayer Rothschild

Money is the biggest scam in history of the world and its colour is greed.

Ok, you may now return to your world of experiencing the senses.