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| Your Money Now |
With great fanfare they have announced it, and the mainstream news media are lapping it up. For example, the BBC states that… “QE in theory increases the supply of money, something that keeps interest rates low and encourages borrowing and therefore spending”, however, they have failed to take note of what actually happens during the QE process, or during the money creation part of it to be precise.
Firstly, the European Central Bank (ECB) will ‘create’ new money (out of thin air, probably on a computer screen by adding numbers to an account, rather than actually printing notes or pressing coins), which will then be pumped into the system, bit-by-bit (€60b billion monthly in this case, purchasing bank bonds from private banks). By adding this newly created money to the money already in circulation, this creates inflation, which means that the euro’s (€) that are already in circulation, will now be devalued, to the tune of the amount that was added in.
This system that allows for new money to be created out of thin air, and with no cost, is called the Fractional Reserve System, and it is the system which most of the World operates under. Under this system a country can never be out of debt, inflation will always continue to rise (unless there is a catastrophic economic event, like the recent financial crisis), and your money will be continually devalued when new money is magically ‘created’ within the system.
Furthermore, this massive €1,100 billion that Mario Draghi is proposing to pump into the system, is actually going to be pumped into the private (already bailed-out) banks, and we must trust them to make sure that massive wad of our cash is then filtered down to the right people, for QE to work. Can we trust them? And if this money is eventually filtered towards businesses primarily, is it them and the banks who have benefited from this massive stimulus – and devaluation – of our Euro’s?
If businesses benefit, and we don’t, we have just given away another bundle of our wealth to those who certainly don’t need it. Bit by bit, this is just one of the ways which the rich appear to be getting richer, and the rest of us seem to be struggling more. Ask your politicians about this system, and ask them to actually look at how it operates. It’s actually not that complicated!
Watch this cartoon to find out about our Fractional Reserve System. It’s called Money as Debt by the talented Paul Grignon, and it describes the US system primarily, but our own systems – the Eurozone, and in individual Eurozone nations – all work in a similar fashion.
