The subject matter of this video and the next two videos is about how currency is created.
My guess is that most people think it’s Governments that create currency, but that’s not the case. Governments play their part, but they are not the ones that actually create the currency.
It’s Central Banks, as well as the Big banks and also the ordinary High Street banks that actually create currency in an economy.
How then does currency get created?
There are two main means by which currency gets created - two separate systems.
I will talk about the two systems one after the other.
Central Banks
Let’s look at the Central Bank currency creation scam, I mean system, first.
Mike Maloney on YouTube does a very good job of explaining the process of how currency comes into existence and other things besides. I would highly recommend you watching his whole series “the Hidden Secrets of Money”. A lot of what I’m going to say here is taken from Episode 4 of that series.
Let’s start from the very beginning.
A political party proposes an agenda in accord with their political persuasions in their manifesto.
Once elected and in office, they put forward a spending plan - outlining where the currency should be spent for the forthcoming fiscal year. In the UK, this spending plan is called “the Budget” and it’s announced to Parliament and the public by the Chancellor of the Exchequer. In the US, it’s called the Federal Budget.
In both cases, assuming that the Budget proposals are agreed upon, Government funds are allocated to services and programmes such as Defence, Social welfare and Health etc.
The Government is essentially given the green light to start spending currency as per their proposals.
But where does this currency come from? The short answer is taxes. Taxes can be considered as the revenue stream of the Government.
If revenues exceed expenditures, then the Government will have a Budget Surplus. If however, expenditures exceed revenues, then the Government will have a Budget Deficit.
So, if the Government is able to collect more in taxes than it spends in a fiscal year, then this is all well and good. If the Government is spending more in a fiscal year than it collects in taxes then this is not quite so good.
This is, so far, all very straightforward.
