What is money? This question has been baffling me for quite some time. I didn't know how was/is the money created. I didn't know why people always said real estate is a good investment and it has constantly skyrocketed to an unaffordable unrealistically high values/prices. I didn't know why people said a meal was only costing about 20 cents 2 or 3 decades ago but it has inflated to 7-8 ringgits per meal nowadays. I didn't know why the petrol price had skyrocketed to $140 per barrel during the peak of the boom last year but dropped to $30-40 per barrel after the hit of the crisis. Wasn't that we been taught in school that price fluctuation is influenced by "Supply and Demand"? However, it didn't seem to me that oil was running out last year.
Look around property development projects in Kota Kinabalu, Sabah. There are more houses and shoplots and malls than the whole KK population combined. The question is - Do we really have that kind of demands? or are we just simply following America's housing "leverage" trend taught in the well-known "Rich Dad Poor Dad" book so that we can flip properties in just a few months time or a year to become a millionaire? Ever wonder why our government abolished the "Property Gain Tax Act" just a few years ago which prevent you from selling your property if your property has not reached its 5 years lifespan? Is this just some kind of delusion created by the banks' easy credit policies? Well, go figure out yourself. Think and see what happens around you. Whenever I discuss the issues of money with my friends, I often get laughed hysterically by them. LOL never mind. I got used to it somehow. Let's see who gets the last laugh.
According to the Modern Money Mechanics published by the Federal Reserve, neither paper currency nor deposits have value as commodities. Intrinsically, a dollar bill is just a piece of paper, deposits merely book entries. Coins do have some intrinsic value as metal, but generally far less than their face value. What, then, makes these instruments - checks, paper money, and coins - acceptable at face value in payment of all debts and for other monetary uses? Mainly, it is the "confidence" people have that they will be able to exchange such money for other financial assets and for real goods and services whenever they choose to do so. Money, like anything else, derives its value from its "scarcity" in relation to its usefulness.
Well, it basically translates "money does not have any values". It is not backed any commodities like gold, silver or other precious stones but "promise to pay back, in rhetorical term - loan contract". Money gains its value by depending upon the total money supply in circulation, in the whole economy of which trades occur, period. So who creates money? Lets go back to the modern money mechanics. It stated that - changes in the quantity of money may originate with actions of the Federal Reserve System (the central bank), depository institutions (principally commercial banks), or the public. The major control, however, rests with the central bank. In fact, the Federal Reserve is the mother of all banks in the world because US dollar is still dominated as the world's reserve currency so long as the investors and bond buyers around the world still have "confidence" in US dollar. The most unbelievable thing is that the Federal Reserve is actually a private cartel that can inflate and contract the total money supply at will and it cannot be audited by US government! It is undoubtedly the most powerful unseen monster in the 21st century.
"Give me control of a nation's money and I care not who makes it's laws" -Mayer Amschel Bauer Rothschild
"It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." -Henry Ford
"I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a monied aristocracy that has set the government at defiance. The issuing power (of money) should be taken away from the banks and restored to the people to whom it properly belongs." -Thomas Jefferson
Money, Banking, and The Federal Reserve
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