Photos
Dr. Kalinda Rose Stevenson
Why Money Itself Is The Underlying Cause Of The Recession
Welcome back!
Money itself is the underlying cause of the recession. Although you will hear many explanations for the economic meltdown, few explanations analyze the role of money itself in creating the problem. Instead, analysts blame a long list of usual suspects, including irresponsible consumers, greedy bankers, and corrupt government officials. However much truth there is in these explanations, the ultimate cause of our economic crises originates from the nature of money itself.
What is money? In most of the commentaries, accusations, and proposals about what went wrong and how to fix it, this critical question remains unasked.
Watch the news broadcasts about the economic stimulus plan. What do they show as they talk about proposed solutions? They show high-speed printing presses spewing out endless sheets of currency at the Bureau of Printing and Engraving in Washington D.C.
Listen to the commentators. You will hear again and again. “We need the government to step in because only the government can print money.”
This idea that the government can “print money” obscures the fundamental cause of the dire global economic crises. The notion that governments “print money” misrepresents the nature of money. It misrepresents what governments do. And it even misrepresents what we are seeing as the printing presses print out sheets of paper currency.
Let us start with the most basic question. Is the United States government in fact printing money? To answer this question, look carefully at a United States twenty-dollar bill and ask yourself: “What is this piece of paper?” You will see the answer printed on the paper itself. Conveniently and truthfully, United States paper currency identifies each piece of paper currency with this label: “Federal Reserve Note.”
And so then the question is: Is a Federal Reserve Note actually money? In fact, a “note” is a promise to pay. The pieces of paper the government prints out on its high-speed presses are in fact sheets and sheets of promissory notes.
If you wonder if these pieces of paper are equivalent to money, ask yourself another question: “If someone writes an IOU on a piece of paper, do you have money?” One way to find out is to take your IOU to your local supermarket, load up your cart with groceries, and then attempt to use your IOU to pay for them. You will quickly find out that your IOU won’t buy you anything. Your IOU is a piece of paper promising to pay a debt. It is not money.
The critical point is that every piece of currency is a promise to pay a debt. These pieces of paper printed by the Bureau of Printing and Engraving are not money at all. They are promissory notes. And yes, you can use those promissory notes from the United States government to pay for your groceries, but this does not change the fact that these pieces of paper are notes rather than money itself.
So what is money? Money can be represented by tangible things, but it is itself intangible. Money is fundamentally a belief. Money is not a piece of paper.
In fact, currency is a symbol for money, not money itself. Money itself is an idea and the currency we hold in our hands is the physical representation of the idea of money. No Money Limits
And why is money itself the cause of the recession? Money itself has no capacity to make decisions or take actions. Money as the cause of the recession comes from the nature of money as a belief in value. Because money is an idea, money can be created at will by people who understand that money is not equivalent to any tangible object. The long list of culprits who share responsibility for the financial crisis share one critical distinction. They know that money can be created out of thin air, through all sorts of creative financing techniques.
[This is the first post in a series about how creative financing techniques, which created money out of thin air, led to economic crises around the world.]
Dr. Kalinda Rose Stevenson
Find out more about the nature of money and how money is created out of thin air in No Money Limits For Real Estate Investors: Discover The Money-Making Secret In The Real Estate Game That Transforms Your Money Struggles Into Financial Abundance, National Best Books 2007 Awards Winner in Business: Real Estate Category and Finalist in Business: Personal Finance Category.
For a simple and clear guide to real estate notes as the safest way to increase profit, sell quickly, and increase cash flow, see Owner Financing Made Easy.
Popularity: unranked [?]
Sphere: Related ContentTags: creative financing, currency, economic stimulus, Federal Reserve notes, money, No Money Limits for Real Estate Investors, notes, recession
Related posts
Syndicate
Subscribe to this site's RSS feed.