Alternative Knowledge

[Khris]

Jack, you forgot the Jews.

[Jack]

What about the Jews, Fah Knut?

[Mandle]

We know that not only did the twin towers collapse in this manner, but did so cleanly, from the top down, and into their own footprint, the path of greatest resistance, a collapse which has never before or since been possible than with anything other than a perfectly executed controlled demolition.

For all I know, the building wasn't built to code.

Actually they were built perfectly to code: Skyscrapers are, and always have been, designed to collapse straight down into their own footprint. There are two reasons for this:

(1) It makes a controlled demolition much easier to safely achieve.

(2) In the event of a massive structural failure the building does not topple sideways into the next, setting off a domino effect throughout the entire city. Does anyone really believe that the safety of a city like that of Manhatten is built solely on the dumb-luck of one single building never ever collapsing or else you lose that entire row?

Also, Jack, you can plainly see a large portion of the debris following the path of least resistance as it spills massively outwards over the collapsing floors below, and actually starts falling faster through the air than the main central collapse (this also completely debunks the "free-fall speed collapse" lies). Just because straight down into the remaining floors of the building is not the path of least resistance does not mean that the tons of debris are going to levitate sideways to avoid that route. They smack into it and some continue downwards while some are forced out sideways. This is exactly what is expected by physics and is exactly what we see in all the footage of the collapse.

A bit off-point but:

Spoiler

There are those who point out that you can see windows lower than the collapse blowing out before the damage reaches them and claim that this shows evidence of the explosives used in a controlled demolition. I have a different theory: I'm not an engineer and could be completely wrong but, wouldn't the increasing air pressure of the inside of a building acordioning into itself be enough to explosively blow those windows out? The air pressure would be increasing in the areas below the collapse and so the blowouts would happen before the damaged area hit them. Once a window or two with slightly less structural integrity had blown out then no others on that floor would as the air pressure has been reduced already. This is why it only happens randomly here and there instead of entire floors blowing out like you would see in a movie.

Just my own theory of course...

[close]

[Jack]

Also, Jack, you can plainly see a large portion of the debris following the path of least resistance as it spills massively outwards over the collapsing floors below, and actually starts falling faster through the air than the main central collapse (this also completely debunks the "free-fall speed collapse" lies). Just because straight down into the remaining floors of the building is not the path of least resistance does not mean that the tons of debris are going to levitate sideways to avoid that route. They smack into it and some continue downwards while some are forced out sideways. This is exactly what is expected by physics and is exactly what we see in all the footage of the collapse.

Using WTC 1&2's collapse to debunk the "free fall speed lies" is an oft used straw man of debunking sites, since the admission (by NIST) of free fall for several seconds relates to WTC 7.

I'm quite out of my depth when it comes to the collapse of WTCs 1&2, which is why I stick to WTC7, which is plain as day. I do know that the very top of the building plowing through the rest of it is impossible without the lower part being structurally weakened to practically nothing (and by this I mean the complete lower part of the building, not the hole that was made by the plane), which fits with the pre-cutting of columns, which in turn is much more difficult to prove since the USG destroyed the evidence.

[Danvzare]

Don't you find it odd that it's simply laughed off, considering all the unanswered questions and the gravity of the matter?

Not really. Considering how the media blew it way out of proportions, that conspiracy theorists also did the same thing, and just how big of a deal this incident means to people, I can completely understand why it gets laughed off.

Besides, a plane crashed into a building. For most people (me included) that's an open and shut case. I mean, would YOU do the extra work required to investigate something that seems that simple to you? For most people, the answer is no.
Even if something weird is going on, which it kinda seem as though it is. You can't deny that a plane crashed into a building. And with that in mind, that's all people will see.

It's a bit like this. Let's assume that there's a car crash. You go down, and find one survivor, so you stab them to death. The police finally arrive and see the car crash, and the weird stab wounds. They wonder who on earth would just murder a lone survivor in a car crash? They then ignore it, because who wants to do the extra leg work for such an open and shut case.

In short, it's not odd at all.

[Jack]

It's a bit like this. Let's assume that there's a car crash. You go down, and find one survivor, so you stab them to death. The police finally arrive and see the car crash, and the weird stab wounds. They wonder who on earth would just murder a lone survivor in a car crash? They then ignore it, because who wants to do the extra leg work for such an open and shut case.

Good analogy. It would be extremely odd for the police to ignore a murder, assuming they recognised the stab wounds for what they are.

It's true, most people don't think it's weird at all. I certainly didn't question it until I saw footage of WTC7 coming down, many years later. The government and media can't claim this, though. They have always had access to all the things I listed and more. And let's not pretend they started out ignorant like the rest of us. The USG knew enough to destroy the evidence right away, and the media has been pretending that WTC7 doesn't exist to the extent that most people have never heard of it (and some can't parse it even when you mention it repeatedly).

So to re-use your analogy, it's not odd for the policeman to not want to investigate a murder if he doesn't recognise the wounds. But if he does recognise them as stab wounds and then doesn't investigate, this means he's not investigating to protect his own interests, directly or indirectly.

[Ali]

I think an example of an actual, real conspiracy might be useful for comparison:

After 27 years, a jury concluded that the 96 fans who died in the Hillsborough disaster were unlawfully killed.

The police were responsible for both the crush, and the subsequent lack of medical attention which lead to the 96 deaths. The police, in concert with the media and politicians put out a story blaming Liverpool fans for the disaster, inventing tales of 'drunken yobs' urinating on and looting from bodies. It's taken years for the families of the dead to be vindicated. Most of the people responsible for the cover-up are probably beyond prosecution now, but the establishment has finally acknowledged the truth.

That's what a real conspiracy looks like: Shabby, shameful and ultimately unsuccessful. Real conspiracies don't require secret elites, shadow governments, Zionists, lizards or holograms. Just venal people protecting their own interests.

[monkey424]

As much as I'd love to chat about 9/11 (or even Madeline McCann - remember her?) I'm going to push on with the next topic.

This one will BLOW YOUR MIND! Or put you to sleep...

Alternative Knowledge Topic #5:
Money

I'm not an economist or anything like that so I won't pretend to be an expert on the subject of money. However, everyone knows that money is the root of all evil, so in the interest of my conspiracy ramblings / vigilante-like thread, I think it's a topic worth exploring. Again, this might be an obvious or well-known subject to some, but I'm writing about this here mainly for my benefit - just to get my head round it all. Hopefully a few will be enlightened too. As it is also quite a dry subject, it may be good reading material before bed.

Brief History of Money

• At some point in time there became a need to replace bartering with a monetary system, and new laws facilitated this transition.
• Raw materials were processed into some form of currency, e.g. precious metals were forged into coins by goldsmiths.
• Currency began to circulate through the economy through trade and taxes.
• Trade was also sometimes facilitated by promissory notes.
• In this system, it is the goods and services that have value.
• Promissory notes are only as valuable as the good or service it represents (this is where the phrase "as good as gold" comes from).

      


The Goldsmiths

• Because 17th century goldsmiths worked with precious metals, they had the most secure safes in all the land. Consequently, there was a public demand for storing money in these safes.
• The goldsmiths were essentially like a bank for depositing money.
• At some point, the goldsmiths cottoned onto this idea of lending money out once they'd accumulated sufficient cash in their inventory.
• The goldsmiths started lending out a portion of the money and collecting interest, just like the banks of today.

   


Modern-Day Money

• Modern-day money is called fiat currency - money that the government has declared to be legal tender, but is not backed by a physical commodity.
• Because modern-day money has no intrinsic value (goods and services do), introducing more money into an economy will cause inflation (if disproportionate to the goods and services in that economy).
• Nowadays, nearly all money across the world is digital (about 95%) which is created as simply as pressing a key on a computer.

Fractional-Reserve Banking

• The fractional-reserve banking system is illustrated in this diagram below, sourced from the internet (with some improvised graphics).
• The bank typically reserves 10% of a deposit and loans out the remaining 90%.
• The result (according to the diagram) appears to be additional money in the economy, however I would suggest this is offset by the borrower's ability to pay back the principle. In other words, the goods and services make up the total value in the system, not the money in circulation.
• The problem with this system is when a borrower defaults on a loan.
• Another problem is when everyone wants to withdraw at the same time!
• Note - an alternative to this system is full-reserve banking, or some sort of hybrid system.

Interest

• Note - the concept of interest is not shown in the above diagram.
• Paying interest on loans is called usury, and it is prohibited in Islamic banking systems. I believe Islamic banks earn profit by other means (e.g. higher admin fees).
• The biggest problem with our Western banks is the interest they charge on loans, as the profit made by interest is disproportionate to the value the banks add to society.
• If a commercial bank had (say) $10 million in loan requests on any given day, it would simply request that money from the central bank, who would type a few keys to create the money from nowhere and send it to the commercial bank that night. They would then distribute it as loans to its customers. They earn interest from the customer and, of course, pay interest to the central bank for the loan of the capital. Money and profit from nowhere.

The Central Bank

• According to this article on the US banking system, the central bank is owned by private commercial banks, like shareholders of any private industry, however monetary policy is dictated by 12 District Banks and the Board of Governors appointed by the government. The central bank, called the Federal Reserve Bank (FRB) in the US, primarily deals with the buying and selling of government bonds (open market operations). A bond is really not much more than an IOU with a serial number. The FRB buys a large chunk of these, which the government then pays back over time, plus interest.
• According to this financial statement from the Board of Governors 1999 Annual Report, the FRB also contributes a generous annual rebate to the government. However, this does not compensate for the interest owed by the government, so the government operates on a loss. This is typical of most years, as illustrated in the chart below.
• Furthermore, the FRB also collects surplus (every year it seems), also illustrated in the chart below. Since 1998 the surplus has accumulated by nearly $30 billion $US.

   


FAQ's

• If the US central bank is controlled by the government, then why isn't the money held in surplus used immediately to service the government debt?
• More pertinently, why is the debt there in the first place? Again, if the central bank is controlled by the government, why does the government effectively pay interest to itself and perpetuate the debt? Who's running the show?
• If most of the money across the world is digital (and costs next to nothing to create) then why is there this disproportionate debt attached to the money in its creation?

Mainstream Media

Repeating what I said earlier – I'm not an expert on this topic, but am interested in learning more about it and encourage discussion. Unfortunately, the mainstream media (as we've seen) is not a reliable source of information because they won't focus on the real issue with our monetary system – they won't question the idiocy of the system itself.

If you have some time, please watch this presentation by Richard D Hall on the very topic I've been discussing, with more detail about the apparent role of mainstream media to keep us uninformed.

[embed=425,349]http://www.youtube.com/watch?v=BilSlHFzr88&t=28s[/embed]

[Ali]

I'm not an economist either, but I don't think you have your facts straight. Fractional reserve banking doesn't mean I deposit $1000 and the bank loans out a percentage of that deposit. It means that the bank loans significantly MORE than my deposit. Commercial banks extend credit that EXCEEDS their reserves, and that's where extra money enters the system. EDIT: It seems like I didn't have my facts straight!

I'm no expert (EDIT: demonstrably), but I did happen to be reading  a book by Adair Turner about this today. These things aren't secrets, there are books about them all over the place!

If the US central bank is controlled by the government, then why isn't the money held in surplus used immediately to service the government debt?

One big reason, which you mentioned, is that Governments/Central Banks printing money can lead to disastrous hyperinflation. Look at Zimbabwe or Weimar Germany.

More pertinently, why is the debt there in the first place? Again, if the central bank is controlled by the government, why does the government effectively pay interest to itself and perpetuate the debt? Who's running the show?

I don't know about the US, but in the UK the Central Bank is largely independent and mainly responsible for making adjustments to the wider economy by setting interest rates. The debt is there because governments borrow, for instance by selling government bonds, which are treated as 'risk-free' investments because the government is very unlikely to default. Government debt is particularly troublesome now (post-2008) because (according to a graph I saw in that book) the enormous private-sector debt built up before the crash has effectively been shifted onto government in order to get the economy moving again.

Who's running the show? No one, we are adrift on a vast ocean. That's partly why government debt exists - governments do not have a free hand to do whatever they want (except in conspiracy theories).

If most of the money across the world is digital (and costs next to nothing to create) then why is there this disproportionate debt attached to the money in its creation?

Because the money is created AS credit. Because debts and debt derivatives are valuable in modern, complex financial markets. A commercial bank can make a loan, and then the debt itself can be sold, sliced, repackaged and bet against. It possible for this liquidity to benefit the real economy by (for instance) making it easier to invest in new businesses. It's also possible for banks and other financial organisations to make (and lose) a lot of money trading derivatives back and forth without adding any value to the economy as a whole. It's also possible that this could crash economies across the western world (See 2008).

[Danvzare]

What do you know, I already knew most of this.

So here's my two cents. The reason why the whole world is still in debt, is because everyone is too proud to call it off.
Think of it like this. There's three people, Bill, Will, and Jill.
Bill owes Will £10
Will owes Jill £10
and Jill owes Bill £10

The cumulative debt is £30, although in actual fact, they could easily (and definitely should) just call off the debt altogether, since they'd all be effectively paying each other off by calling off the debt.

Of course it's much more complex than that, because there's a lot more than just three, and each country doesn't owe each other the exact same amount. But I'm sure if you did a bit of math, you'd easily be able to find out that the actual debt that should be paid, is barely a faction of what it's supposed to be.

[Snarky]

I'm not an economist either, but I don't think you have your facts straight. Fractional reserve banking doesn't mean I deposit $1000 and the bank loans out a percentage of that deposit. It means that the bank loans significantly MORE than my deposit. Commercial banks extend credit that EXCEEDS their reserves, and that's where extra money enters the system.

I don't think that's quite right, Ali. A fractional reserve means that they keep part of the money you deposit in reserve (to cover withdrawals) and lend out or invest the rest. They can't lend out more money than people have deposited, because they don't have any more "in their vault" (if you imagine that it's all in coin, you see why).

However, because they only keep a fraction of people's deposits (let's say 10%) in reserve, they can take the rest of that money and "recycle" it over and over:

Person A deposits $100
Bank keeps $10 in reserve, lends out $90 to Person B
Person B pays that $90 to Person C
Person C deposits that $90 to their account
Bank keeps $9 in reserve, lends out $81
etc.

Ultimately, different people may deposit those same physical $100 over and over, so that their accounts, taken together, hold much more money than there ever was, and money has seemingly been "created" (because it's all balanced out by debt). But the bank reserve (of actual cash) is still 10% of all the "virtual" money that has been created: in the limit, the sum of all deposits are $1000, backed by the entire original $100 in reserve, and the other $900 as debt.

[Jack]

Person A deposits $100
Bank keeps $10 in reserve, lends out $90 to Person B
Person B pays that $90 to Person C
Person C deposits that $90 to their account
Bank keeps $9 in reserve, lends out $81
etc.

This is correct, except that the whole deposit is counted as a reserve, since it's now "real money" that the bank has in reserve. So when they receive $1, they are allowed to lend out $10 since they have 10% of the loan in reserve.

This is why fractional reserve lending is a form of money creation.

Money creation in and of itself is not a bad thing. The core of the issue is that banks are a profit-run business, which we are all forced to use because of crony-ism more than a century old.

And countries do all owe sums to each other, but they also all owe their respective central banks much more. The sole issuers of currency, the world over, does so with interest. The debt will grow until the system is changed.

[Snarky]

This is correct, except that the whole deposit is counted as a reserve, since it's now "real money" that the bank has in reserve. So when they receive $1, they are allowed to lend out $10 since they have 10% of the loan in reserve.

This is why fractional reserve lending is a form of money creation.

That's what Ali said, but you are both wrong. They can't directly lend more money than they have, because they don't have it, and they're not allowed to magically create hard currency. Rather, as I explained, "virtual money" is created through the mere fact of lending out the cash that was deposited while also allowing the person who deposited it to claim it as theirs.

Your mistake here is that you're using the reserve requirement backwards (you seem to have gotten confused about the money multiplier equation), and that you assume that they can keep the $1 in reserve and also lend it out (along with another $9 that I suppose you think they conjure up from thin air). No. Once they've lent it out, it's no longer in reserve, obviously, and they're immediately afoul of the reserve requirements. On a $1 deposit and a 10% reserve requirement, they can only lend out $0.90.

[Jack]

We're not talking about notes of currency, but money, virtual or not.

No one was suggesting that the paper actually appeared out of thin air. Banks don't issue paper and coins, the treasury does.

[Snarky]

The point is that for the bank to lend out a certain sum, it has to actually have that sum available in "real" money: treasury notes, gold bullion or what have you. As in your post before, you're not taking into account that when the bank lends out money, it actually has to give out that money, which means that (1) it has to have the money, and (2) once it's given it out, it no longer holds it in reserve.

If I'm a bank, and various people have given me a total of $1000 in various deposits, and you come to me and ask, "Hey, can you lend me $10,000?" the answer is no, I can't, because I don't have it. I might be able to borrow the money from another bank and then lend it to you, but that's like having that bank "deposit" the money in my bank (a deposit is essentially a loan to the bank: the bank now owes you that money, it's in debt to you). Only once that sum has been deposited, when I have the "money in the vault", can I actually lend it to you. And because of the reserve requirements, I can't lend you all of it: I have to keep some fraction of it in the vault.

This idea that banks lend out more than people have deposited is a misunderstanding of fractional reserve banking and the money multiplier effect. As previously demonstrated, money is "created" by the fact that some part of the money that has been deposited is lent out (and can be deposited again), not by the bank just pretending it has more money than it really does.

But there's no point arguing over this. The correct answer is a simple google search away:

When you put your money into a bank, the bank is required to keep a certain percentage, a fraction, of that money on reserve at the bank, but the bank can lend the rest out. For instance, if you deposit $100,000 at the bank and the bank has a reserve requirement of 10 percent, the bank must keep $10,000 of your money on reserve and can lend out the $90,000.

http://www.learningmarkets.com/understanding-the-fractional-reserve-banking-system/

[Ali]

The point is that for the bank to lend out a certain sum, it has to actually have that sum available in "real" money: treasury notes, gold bullion or what have you. As in your post before, you're not taking into account that when the bank lends out money, it actually has to give out that money, which means that (1) it has to have the money, and (2) once it's given it out, it no longer holds it in reserve.

Fair dos, my account of Fractional Reserve Banking is clearly wrong! But, is it really true that when a bank issues a loan they actually have to give out "real" money that they hold in reserve? I ask that in the context of reading things like this:

"When banks extend loans to their customers, they create money by crediting their customers' accounts."
Mervyn King (Former Gov. of the Bank of England)

"Read an undergraduate textbook of economics... and if they describe banks at all, it is usually as follows: "banks take deposits from households and lend money to businesses, allocating capital between alternative capital investment possibilities." But as a description of what modern banks do, this account is largely fictional, and it fails to capture their essential role and implications.
Banks create credit, money, and thus purchasing power. They make loans to borrowers, crediting an asset on the banks' balance sheet; at the same time they put money in the borrowers' account, creating a bank liability. The loan is repayable at a later date, but the money is immediately available. It is this "maturity transformation" that creates effective purchasing power. The borrower may, and almost certainly will, then pay out the money to another business or household, but that creates money in that person's account. The vast majority of what we count as "money" in modern economics is created in this fashion: in the United Kingdom 98% of money takes this form, and only 2% represents the notes and coins liabilities of the state."
Adair Turner (Former head of the UK's Financial Services Authority) - any typos are mine, not his.

If money = purchasing power, is there a practical difference between what we're calling "real" and "virtual" money?

[Snarky]

Fair dos, my account of Fractional Reserve Banking is clearly wrong! But, is it really true that when a bank issues a loan they actually have to give out "real" money that they hold in reserve?

I think that depends on exactly what you mean. Clearly, in practice a lot of transactions today happen purely "on paper" or digitally, and don't involve the immediate physical transfer of actual bills or coins. However, the point is still that when the banks make a loan, they have to debit their reserve, and if this makes them fall below the reserve requirements, they need to increase their hard assets somehow. I don't know exactly what forms of money are considered acceptable as bank reserve, but I imagine that the banks and the treasury or central bank work with various kinds of obligations that, although not regular cash, are "as good" as currency.

I note that the quotes are not incompatible with this account. The idea that only 2% of "money" is cash and state obligations is maybe surprising when we've been talking about 10% reserve requirements, but in fact the UK currently has no reserve requirement, and this number is consistent with its reserve targets achieved in various ways.

If money = purchasing power, is there a practical difference between what we're calling "real" and "virtual" money?

It depends on your point of view. For many purposes, no, it does not matter. "Money can be exchanged for goods and services" â€" and any kind of token or promise that can be traded (ideally at a predictable value) can effectively act as a currency: airline miles, cigarettes, baseball cards, casino chips, stamps, Microsoft points (formerly), etc. (Unofficial currencies such as these are known as "scrip".)

What sets different forms of "money" apart in practice are its liquidity and its risk of default, which are usually linked. If your money is kept as a promissory note (debt) from a private party, you run a risk that the debtor will refuse or be unable to pay you back, and that you won't be able to trade it to anyone else. This is true even of "money in the bank", although there are laws and insurance that protects some of the money in checking accounts in the case of bank failure. Hard cash is guaranteed by the government, and in a well-functioning economy that's as safe and as liquid as it gets.

Economists talk of different classes of money. What we've been calling "real" money is technically known as "base" money, or MB. Other classes of money are M1, M2, M3, ranked by liquidity.

[Mandle]

Wow...now I understand why so many big finance dudes think they can skim a bit of money and hide their crime in such a hugely complex system...

There must be some serious economic Sherlock-types out there working to catch them...

[Ali]

However, the point is still that when the banks make a loan, they have to debit their reserve, and if this makes them fall below the reserve requirements, they need to increase their hard assets somehow.

This totally makes sense. But is it effectively true? (If it is I'll be happy to be proven wrong again!)

The reality of how money is created today differs from the description found in some economics textbooks:
• Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits.
• In normal times, the central bank does not fix the amount of money in circulation, nor is central bank money ‘multiplied up' into more loans and deposits.
Although commercial banks create money through lending, they cannot do so freely without limit. Banks are limited in how much they can lend if they are to remain profitable in a competitive banking system.

From a Bank of England PDF.

[Snarky]

Nice one, Ali. A great explanation there.

My takeaway is that the answer is a little of both. While the explanation at first sounds like a firm contradiction, if you read the details, it's actually not that different.

I acknowledge that you were right that they can lend money that they don't "have" by depositing whatever they want into a customer's account, matched by the debt that customer takes on, thereby creating money at the stroke of a pen. However, note that this creates a deposit for the customer, which is subject to any reserve requirement. The UK, as mentioned before, doesn't have such a requirement (instead it uses incentives such as interest rate to keep the banks' lending at a reasonable level), but many other countries, including the US, do. So this means that the bank could be forced to increase its reserve. As the paper explains:

As discussed earlier, the higher stock of deposits may mean that banks want, or are required, to hold more central bank money in order to meet withdrawals by the public or make payments to other banks.  And reserves are, in normal times, supplied ‘on demand' by the Bank of England to commercial banks in exchange for other assets on their balance sheets.

In other words, very similar to the point I made earlier that they can borrow from another bank (or in this case the central bank) in order to make the loan. It switches the order of things around, but since this is all happening dynamically all the time, it doesn't really make a huge difference.

So instead of saying:

Person A deposits $100
Bank keeps $10 in reserve, lends out $90 to Person B

We have:

Bank lends $100 to Person B, as a deposit in their account
Bank now needs to increase its reserve by $10, so it sells $10 worth of the loan to another bank or the central bank, in return for vault or reserve money

In either case, the bank's balance sheet ends up the same (Assets: $10 in reserve cash, $90 in outstanding loans; Liabilities: $100 in deposits in customers' accounts).

Of course, the bank will also want to actually be able to pay the loan they've pledged if the customer does withdraw the money from their account; so if they don't have $100 lying around, they're not going to offer Person B a loan of that amount. But in practice, the total cash they hold is much greater than the value of any one loan, so this isn't much of a problem unless there's a crisis or bank run.