23rd Sep 2008 by Mark Turansky
Money as Debt
Filed under Engineering Want to know why the credit crunch is going on? Watch this highly enlightening video (broken down into 5 individual movies to fit YouTube limits). The video clearly explains why a “run on the bank” is deadly to an individual bank, and why there would be a “credit crunch” when there’s a run on all the banks.
And that’s what’s going on today. We’ve got a run on all the banks. Money created as debt is only good when the debts are repaid (which isn’t happening with rising foreclosure rates), so the entire highly leveraged system is crashing down. And that’s why we need a $1 trillion bailout of the financial system.
The fractional reserve system (as practiced by all banks today in the world) is awesome, scary, brilliant, and fragile. Money created as debt is fascinating and frightening. No debt == no money. That’s what happened during the Depression. Banks stopped or couldn’t lend
“That is what our money system is. If there were no debts in our money system, there wouldn’t be any money.” ~ Marriner Eccles, Chairman and Governor of the Federal Reserve Board
Enjoy or shudder!
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Thanks for posting this. Great information, well worth the time to watch. I’m sorry to say it is rather scary, don’t watch before going to sleep.
[…] Gregory Turansky posted a series of 5 YouTube videos not long ago. Although factually their content is true they are highly biased, trying to make you […]
I was starting to write a massive response but then realized it just grew too big, check it out here: http://inferredlogic.com/2008/10/12/on-fractional-reserve-banking/