Sunday, November 06, 2005

I GOT MY PRIMARY SOUCE, THANK GOD, AND SPECIAL THANKS TO PAUL KRUMM!!!!!

so here are some of the questions I asked him and the things he answered.


How does the government, or anybody, controls the
production of counterfeits?

I believe that counterfeiting is dealt with by the Treasury department
and the Justice department. This is out of my area of expertise.

About how much money is produced in a year? Who
enforces the amount that will be produced in a year?

Money is created at two levels. The primary level is the Federal
Reserve Bank. The secondary level is commercial banks, Credit Unions
and Savings and Loans. They can create roughly 20 times the money that
they have invested in the Federal Reserve Bank. So the basic
"Enforcement mechanism" is at the Federal Reserve Bank. The Federal
Reserve Bank is an interesting institution. It is chartered by the
Federal Government, however its governors are paid by the commercial
banks.

Who produces money? Is it the United States Treasury?

If you mean bills and coins, they are produced by the Federal mint.
But
they go to the Federal Reserve Bank to be put into circulation. The
greatest portion of money is created in the process of making loans.
To
understand this it is necessary to understand that money is not
"stuff". Money is information, executive information. It gives a
person or entity permission to execute their desires.

A patron goes to a bank for a loan. the bank takes a lien on some
property (usually, although some loans are signature loans) and sets up
an account based on the value of the property pledged, offsetting that
with the principal of a loan to the patron. That credit is given to
the
seller of the property that the patron is buying.

Who invented money?

There are different kinds of money that have been invented over the
centuries. The first known examples are from Sumeria and Egypt.

In your opinion, how do you think our world will be
different if there wasn't money to trade things with?

If there wasn't any money, something would be chosen to act as money.
During WW2 cigarettes were used as money in Europe. In east Africa,
until less than 100 years ago, cowry shells were used as money. In
other cultures cows, stones, ceremonial axes, humans, and many other
objects, plants, animals, minerals and metals have been used as money,
as well as abstract money, i.e. pieces of paper that acknowledge that
one trader owes and another has a surplus in trading.


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