Banks loan money they don't have. Most hold a limited reserve to serve the few who decide to make redraws. When the majority decides to liquidate their bank accounts we have what is called a bank run.In order to protect the banks, central banks were created to provide a guaranteed reserve for commercial banks. But once the government stepped in to protect the banks the fractional reserve mandates(only a fraction of deposits are backed by actual cash) began to be used to make up the money from thin air. Every dollar that a bank holds can be multiplied by at least 10x.

Fractional Reserve & Money Supply

We can measure the supply of money that exists in the market with main metrics:<ul><li>M1 money supply includes liquid money aka cash. </li><li>M2 (which includes M1) includes loans, deposits & market funds. This is mainly made up money. </li></ul>As the chart shows the US (and all other countries with central banks) have most of the monetary mass made up. An influx of money causes inflation and this is exactly what during the last decades.

Money Supply & Inflation

1933 - President Franklin D. Roosevelt had gold confiscated and people were forced to accept paper money for their gold. The government needed people to adopt the inflated paper and they used force. 1940s - Bretton Woods Agreement created a collective international currency peg to the U.S. dollar which was in turn pegged to the price of gold.1971 - President Nixon unilaterally cancelled the direct international convertibility of the US dollars to gold. Making the US government in charge of money supply and world money master.

A history of the US fiat currency

We print money digitally. As a central bank, we have the ability to create money. And we do that by buying bonds for other government guaranteed securities. And that actually increases the money supply. We also print actual currency and we distribute that through the Federal Reserve banks.

Fiat money is a government-issued currency that is not backed by a commodity such as gold. Most paper notes started as being backed by a reserve of valuable commodities, usually gold (the "Gold Standard"). Tying a currency to gold limits inflation and money supply.But politicians hate the gold standard, so since Nixon's presidency, the US dollar was no longer tied to gold and money had value just because the government says so.

Fiat money

🔥 TOP Crypto TIPS In My Newsletter 👉 https://guy.coinbureau.com/signup/ 📲 Insider Info in my Socials 👉 https://guy.coinbureau.com/socials/ 🛒 Get The Best Deals In Crypto 👉 https://guy.coinbureau.com/deals/ 👕 My Merch Stores 👉 https://store.coinbureau.com ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 📺 Useful Vids 📺 Institutional Adoption 👉 https://www.youtube.com/watch?v=o6xIEYlAK6U Inflation 👉 https://www.youtube.com/watch?v=lUM5uN5XsFU Bitcoin vs. Gold 👉 https://www.youtube.com/watch?v=B_QaL9fAKoM ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ - TIMESTAMPS - 0:00 Intro 1:55 What is Fiat Money? 4:58 End of Convertibility 6:41 Fractional Reserve 10:17 Money Supply 12:44 Money Multiplier 17:02 Honey Badger Money 19:07 Final Thoughts ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ⛓️ 🔗 Helpful Links & Sources 🔗 ⛓️ ► Money Multiplier: https://www.investopedia.com/terms/m/multipliereffect.asp ► Reserve Ratio: https://www.investopedia.com/terms/r/reserveratio.asp ► Fed Unlock Inflation: https://www.cnbc.com/2020/08/05/the-ballooning-money-supply-may-be-the-key-to-unlocking-inflation-in-the-us.html ► Money Supply Rockets: https://seekingalpha.com/article/4395704-money-supply-rockets-25-in-just-two-weeks-got-gold ► Pandemic Money Printing: https://www.usatoday.com/in-depth/money/2020/05/12/coronavirushow-u-s-printing-dollars-save-economy-during-crisis-fed/3038117001/ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 🤔 What is Paper Money 🤔 Pound paper money first started being issued in 1697 by the bank of England. US dollars starting hitting the scene in 1792 per the 'Coinage act'. Prior to this, coins made from Gold & Silver were used as the monetary medium in society. However, with the introduction of paper money, these banks could issue bills that were a lot easier to denominate, store and spend. This money was always able to be converted into a reserve asset. In 1944, there was the Bretton woods agreement which would make the US dollar the global reserve currency and have it backed by a certain amount of gold. 💸 In Comes Fiat 💸 Nixon ended the convertibility of the US dollar into gold which eventually meant that there was nothing backing the dollars. From then on, money only had value because the Federal reserve and the US government said it did. It was a piece of paper that people agreed between themselves had a certain value. It is also no coin incidence that after we saw this abandonment of a form of monetary tether, we had an inflation of the monetary base. 🤔 Fractional Reserve Banking 🤔 Money lent to the bank can easily be lent out to other customers. This is what is called fractional reserve banking. What the banks are hoping for in this situation is that only a small proportion of their users will actually withdraw. If all of the banks depositors run to withdraw their funds at the same time, it's called a "bank run" and you then see the long lines and other scenes that were incredibly popular back in the great depression. What's really pretty scary about bank runs is that every single bank is susceptible. It's not only those that are short of liquidity but also those that are in a relatively strong position. ✖️ Money Multiplier ✖️ This reserve ratio is not determined by the banks themselves but by the Fed (or equivalent central bank). It is the minimum amount of deposits that they must hold in liquid securities in order meet their obligations Because the banks are allowed to lend out money to their customers, they can increase the broader money supply to many multiples of the actual money that is in the system. For example, if the reserve requirement is 5%, only 5% of the banks balance sheet should be held in this liquid money. The other 95% can be loaned out. That basically means that the bank can lend out 20 times the amount of money that is kept on their balance sheet. This is called the multiplier effect of money and means that the broader money in the economy can be many multiples of the money that actually exists in the bank. You can think of it as a leveraged trade in crypto position. 💯 Bitcoin Salvation 💯 Bitcoin is the best way to preserve your wealth. This is because it has a limited supply of only 21 million coins. There cannot be anymore printed. The amount that hits the market regularly is defined by the protocol. It is also permissionless and completely transparent. There is no one single entity who controls it and you hold complete control over those coins thanks to being able ot self custody. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 📜 Disclaimer 📜 The information contained herein is for informational purposes only. Nothing herein shall be construed to be financial legal or tax advice. The content of this video is solely the opinions of the speaker who is not a licensed financial advisor or registered investment advisor. Trading Forex, cryptocurrencies and CFDs poses considerable risk of loss. The speaker does not guarantee any particular outcome. #fiat #bitcoin #ponzi #inflation #fed

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🔥 TOP Crypto TIPS In My Newsletter 👉 https://guy.coinbureau.com/signup/
📲 Insider Info in my Socials 👉 https://guy.coinbureau.com/socials/
🛒 Get The Best Deals In Crypto 👉 https://guy.coinbureau.com/deals/
👕 My Merch Stores 👉 https://store.coinbureau.com

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

📺 Useful Vids 📺 

Institutional Adoption 👉 https://www.youtube.com/watch?v=o6xIEYlAK6U
Inflation 👉 https://www.youtube.com/watch?v=lUM5uN5XsFU
Bitcoin vs. Gold 👉 https://www.youtube.com/watch?v=B_QaL9fAKoM

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

- TIMESTAMPS -
0:00 Intro
1:55 What is Fiat Money?
4:58 End of Convertibility
6:41 Fractional Reserve
10:17 Money Supply
12:44 Money Multiplier
17:02 Honey Badger Money
19:07 Final Thoughts

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

⛓️ 🔗 Helpful Links & Sources 🔗 ⛓️

► Money Multiplier: https://www.investopedia.com/terms/m/multipliereffect.asp
► Reserve Ratio: https://www.investopedia.com/terms/r/reserveratio.asp
► Fed Unlock Inflation: https://www.cnbc.com/2020/08/05/the-ballooning-money-supply-may-be-the-key-to-unlocking-inflation-in-the-us.html
► Money Supply Rockets: https://seekingalpha.com/article/4395704-money-supply-rockets-25-in-just-two-weeks-got-gold
► Pandemic Money Printing: https://www.usatoday.com/in-depth/money/2020/05/12/coronavirushow-u-s-printing-dollars-save-economy-during-crisis-fed/3038117001/

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

🤔 What is Paper Money 🤔

Pound paper money first started being issued in 1697 by the bank of England. US dollars starting hitting the scene in 1792 per the 'Coinage act'. 

Prior to this, coins made from Gold & Silver were used as the monetary medium in society. 

However, with the introduction of paper money, these banks could issue bills that were a lot easier to denominate, store and spend. This money was always able to be converted into a reserve asset.

In 1944, there was the Bretton woods agreement which would make the US dollar the global reserve currency and have it backed by a certain amount of gold. 

💸 In Comes Fiat 💸

Nixon ended the convertibility of the US dollar into gold which eventually meant that there was nothing backing the dollars. 

From then on, money only had value because the Federal reserve and the US government said it did. It was a piece of paper that people agreed between themselves had a certain value.

It is also no coin incidence that after we saw this abandonment of a form of monetary tether, we had an inflation of the monetary base.

🤔 Fractional Reserve Banking 🤔

Money lent to the bank can easily be lent out to other customers. This is what is called fractional reserve banking. What the banks are hoping for in this situation is that only a small proportion of their users will actually withdraw. 

If all of the banks depositors run to withdraw their funds at the same time, it's called a "bank run" and you then see the long lines and other scenes that were incredibly popular back in the great depression. 

What's really pretty scary about bank runs is that every single bank is susceptible. It's not only those that are short of liquidity but also those that are in a relatively strong position. 

✖️ Money Multiplier ✖️

This reserve ratio is not determined by the banks themselves but by the Fed (or equivalent central bank). It is the minimum amount of deposits that they must hold in liquid securities in order meet their obligations
 
Because the banks are allowed to lend out money to their customers, they can increase the broader money supply to many multiples of the actual money that is in the system. 

For example, if the reserve requirement is 5%, only 5% of the banks balance sheet should be held in this liquid money. The other 95% can be loaned out. That basically means that the bank can lend out 20 times the amount of money that is kept on their balance sheet. 

This is called the multiplier effect of money and means that the broader money in the economy can be many multiples of the money that actually exists in the bank. You can think of it as a leveraged trade in crypto position.

💯 Bitcoin Salvation 💯

Bitcoin is the best way to preserve your wealth. This is because it has a limited supply of only 21 million coins. There cannot be anymore printed. The amount that hits the market regularly is defined by the protocol. 

It is also permissionless and completely transparent. There is no one single entity who controls it and you hold complete control over those coins thanks to being able ot self custody. 

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~


📜 Disclaimer 📜

The information contained herein is for informational purposes only. Nothing herein shall be construed to be financial legal or tax advice. The content of this video is solely the opinions of the speaker who is not a licensed financial advisor or registered investment advisor. Trading Forex, cryptocurrencies and CFDs poses considerable risk of loss. The speaker does not guarantee any particular outcome.

#fiat #bitcoin #ponzi #inflation #fed

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A history of the US fiat currency

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