Watching It Work

The VIDEO-DIAGRAMS Continued....#3

Video-Diagram #2 outlined the basic structure and mechanisms of Fiat Reserve Banking. Now, in Video-Diagram #3, we’ll watch that mechanism operate to do something that, when you consider it, is quite remarkable: create fiat money—APOLITICALLY and as necessary—to support the profit-making initiatives of Private Enterprise. Those two modifiers are the remarkable part.

First, “apolitically” means that even though fiat money is, by definition, issued by the sovereign national government—an entity embodied in the elected U.S. Congress—the Reserve Banking System manages to make the issuing happen without the involvement of political process or debate. (Just imagine how well the economy would function if every bank-loan for a proposed business venture had to be voted on by Congress!)

Second, “as necessary” is quite different in meaning than “as available.” It means that the Reserve Banking System doesn’t look in some pot of fiat dollar Reserves to see if it has enough to spare. New Reserves are issued with keystrokes “automatically” to ensure the clearing/payments process—in response to the aggregate profit-making lending decisions of the private banking system—is ALWAYS completed. This, in turn, reflects the needs of the overall economic society itself. Fiat Reserve Banking is, in effect, an auto-pilot mechanism that PAYS for the production of (a great portion) of the goods and services that people need to meet the needs of their daily lives.

Let’s watch it, now, in operation.