THE BIGGEST SCAM IN THE WORLD - THE MONETARY SYSTEM

Money, it exchanges the hands of many, yet many fail to hold on to it or become rich, it is believed that 1% of the world’s population holds more wealth than the remaining 99%. I believe the reason why people are unable to become rich is due to lack of education, not the education we are taught in schools, colleges or universities, we lack financial education. It is not a coincidence that some people have more money than others, it all comes down to us, the choices we make and the opportunities we take.

WHAT IS MONEY ?

Money as we know it comes in the form of notes and coins, this is known as legal tender around the world; meaning it is backed by the governments and the central banks therefore it must be accepted if offered in payment of a debt. Money provides a method of paying for a service or a product; it is a used as a common denominator against which the values of all services or products can be measured. Money is a means of exchange it was created to be sufficient in supply, portable and divisible into small units so transactions of all sizes could be carried out.

THE ORIGIN OF MONEY

Money has been around for a very long time no one knows for sure who had the idea but it was invented around the B.C period where metal objects were used as a medium of exchange and a method of payment. Tribes made their own coins which held specific values and were used to trade. Prior to coins many things were used as a medium of exchange in the markets such as livestock, precious metals, beads, sacks of grain and many other valuables.

In the present day and age we still use coins and notes but now also have electronic money, this includes money held in bank accounts and on credit / debit cards. Further advancements in technology has given birth to cryptocurrencies which are a form of digital money designed to work as a medium of exchange. The first of these cryptocurrencies was Bitcoin a decentralized open source peer to peer system that is currently not backed by the government or the central banks.

BANKS

The modern day monetary system is made up of the central banks, commercial banks and mints. The governments use these institutions to provide money to the country’s economy. Almost all countries around the globe have a central bank, most people believe these banks are owned and controlled by the country’s government however, this is far from the truth; the central banks are privately owned self-profiting organizations established by a select few. The central banks are responsible for the supply of money they must ensure an adequate supply of money is in circulation at all times. The banks rely on the mints for the production of their coins and other private organizations to print their notes. A major role of the central banks is to act as banker to the country’s governments, meaning the government’s own bank account is held here. When the government is in a deficit and requires money whether the cause be war or to make up for the over spending they go to the central bank and can get an automatic loan, yes a loan defined as a sum of money which is borrowed and is expected to be paid back with interest. The central banks also act as advisers to the governments helping them construct the monetary policy, assisting with setting interest rates and inflation targets. The central banks act as bankers to commercial banks, all major banks hold accounts here for depositing money, obtaining money and carrying out other transactions, the central banks are able to influence the rates of interest the commercial banks can offer as they control the rates of interest that they borrow at. The central banks play a role in the foreign exchange markets by managing its reserves of gold and foreign currencies this can have an influence on the market and the value of the country’s own currency.

HOW COMMERCIAL BANKS WORK

Commercial banks were designed to bring people together those people fall in to two categories: the surplus sector and the deficit sector. The surplus sector consists of people who are cash rich and have more money than they can spend and would like to lend this extra money to earn more money and the deficit sector consists of people who have less money than they would like to spend and would be prepared to pay money to those who will lend to them. The commercial banks profit from bringing these two sectors together, they borrow money from the surplus sector at a low rate of interest and lend to the deficit sector at a higher rate of interest, the difference between the interest rates is their profit. Many people don’t understand how banks work, they believe that when they deposit money at their bank the money just sits there waiting to be spent or withdrawn, whereas what actually happens is the money you deposit at the bank is used to make profit, the money may be pooled together with many other depositors money and used towards a loan or mortgage by someone else who requires the money. This is why we are encouraged by banks to save in a savings account

TAX

A great phenomenon which is hardly understood is tax. Taxation is the process of raising revenue; it is imposed on individuals and legal entities by the government these are defined as taxpayers. Avoidance, resistance or failure to pay tax is punishable by law in many countries and could result in a jail sentence. Different countries have different tax systems in place some countries such as the Cayman Island are deemed to be safe havens for legitimately avoiding large tax bills whereas, the United Kingdom is no safe haven. If you are a United Kingdom resident and remain in the United Kingdom for at least 183 days you are subject to income tax, capital gains tax, consumption tax, corporation tax, stamp duty, inheritance tax and national insurance contributions. I'm no tax expert but that seems to be a lot of tax to pay and as it isn’t a voluntary contribution it seems as if we are being robbed of our wealth by the government as we are forcibly paying tax to keep our freedom. Although it seems like it may be the end of the tunnel due to being robbed by the government of our riches this does not mean we can not be rich. The key to overcoming this issue is to get advice from someone who specializes in this field, we all have something we are good at and there are people that are better at things than us, finding a specialist tax advisor and making them a part of your financial life is very important; with good tax planning and a great tax advisor on hand to assist, you will be able to vastly reduce your tax bill legally. Now you may be wondering if the government makes us pay tax where does all this tax revenue go, remember we mentioned the governments get loans from the central banks which are privately owned by a few individuals, well the government must pay back these loans with interest that the central bank sets. Almost every country around the globe is in debt and owes large sums of money; the United Kingdom owes trillions of pounds to the central bank of England at the time of writing this post.

INTEREST AND THE HIDDEN TAX (INFLATION)

Interest is the fee paid to the lender for the privilege of borrowing money; it is typically shown as an annual percentage rate. The commercial banks encourage people to deposit money in to bank accounts offering a small interest on the money deposited, the banks use this money to make more money by borrowing this to other people who need a loan; which they charge a higher interest rate on making profit. Interest applies to all debt including loans, mortgages, car finance loans and student loans. Interest rates can go up or down, the central banks decide when to push them up or lower them, this acts as a stimulus on the growth of the economy either expanding it or contracting it. By raising interest rates depositors earn more money for leaving their money in the banks however, the people that need to borrow money will need to pay more money as a result of the interest rates being raised, this slows the economy as less people borrow due to the high rates. If interest rates are lowered, borrowing money becomes more attractive as you pay less interest this speeds up the growth of the economy by increasing the money supply and putting more money in to circulation which increases the number of loans and debt given to people which can then go on to building houses, building factories, investing in new products and people buying homes etc. however, lower interest rates means depositors earn less on their deposits at the banks.

You may be wondering why the central banks would want to prevent the growth of the economy, let me explain, interest rates work hand in hand with inflation. Lower interest rates increase borrowing which increases consumer spending as money is easily accessible and people buy using credit this result in demand of products and services being higher than the supply of products and services which causes inflation. Inflation is also caused by an increased in the money supply by printing more money and putting it in to circulation this causes the value of the currency to drop, there is too much money chasing too few goods. Inflation is the rise over time of prices of products and services usually also measured as an annual percentage rate. Due to demand outweighing supply, prices increase and day to day living costs increase. Inflation is a hidden tax, it reduces your buying power meaning the value of your money is decreasing each year; for example if you wanted to buy a wardrobe which cost five thousand pounds but you only had one thousand pounds so you decide to save the money over the next four years saving one thousand pounds each year to buy the wardrobe and eventually you have five thousand pounds so you go to buy the wardrobe but the price of that same wardrobe has changed it now costs five thousand four hundred and twelve pounds this is because of two percent inflation per year. The central banks try to control inflation because the currency they have created could end up becoming worthless if it loses too much of its buying power and value which could result in the economy collapsing.

THE ELITES

The individuals who own these central banks around the globe have control over the governments and the ordinary people like you and me, these individuals know if you can control the money of a country, you are able to control the people of the country. We are modern day slaves, the cost of living is set by these individuals; they influence the rate of interest we are charged on our mortgages, car finances, the cost of consumer products form the food we eat to the luxuries we buy, they take our hard earned money from us as tax which we pay unwillingly, as well as having a big influence on the decisions the governments make which affect our daily lives.

I hope this post has opened your mind to some of the things kept hidden from us

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