Who Creates M1 Money Today in the USA and How?

“Who controls the money, controls the world.” Henry Kissinger, circa 1995, Council on Foreign Relations.

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By Alan Myers

  1. WHO CREATES ALL OF OUR M1 MONEY?

            Banks do, that’s it, no other person or entity creates M1 Money, just banks.           

  1. IS M1 MONEY CREATED OUT OF THIN AIR?

            No, it is not.

  1. IS M1 MONEY PRINTED INTO EXISTENCE?

            No, it is not.

  1. HOW IS M1 MONEY CREATED AND EXTINGUISHED BY BANKS?

            M1 Money is neither created out of thin air or printed into existence by anyone.  M1 Money is created, that is, M1 Money comes into existence, as the end result of a bank funding a loan to a borrower.  M1 Money is extinguished, or goes out of existence, when a bank receives a loan payment from a borrower.  Only banks hold and control the power to create and extinguish money.  It is all done with nothing more than fingertips on a keyboard posting a journal entry into a bank’s computerized accounting system.

  1. WHAT IS THE PROBLEM WITH BANK CREATED M1 MONEY?

            As a direct result of the M1 Money creation process described in #4 above, the amount of the debt owed to a bank is more than the amount of Money the bank created when funding the loan.  That is to say, the total amount of the principal and interest that must be paid back to the bank in order to pay off the loan in full, is more than the amount of money (the principal) the bank created when it funded the loan.

  1. IS THERE ANOTHER PROBLEM ASSOCIATED WITH THIS SYSTEM?

            YES!!!  As a direct consequence of banks being the sole creators of M1 Money, our federal government must tax and borrow to meet all its financial obligations.  In a proper monetary system, a federal government would have no need to tax or borrow.  I describe a proper monetary system in Module 13, oh lucky 13.

            The Take Away – In the past, only people, not banks or governments created the money they would use.  Not today.  Today, the vast majority of our national money supply comes into existence as bank created M1ed.  Bank do not loan out M1 Money that already exists.  Banks make or fund loans with M1ed that they just created.  The importance of these facts will soon become crystal clear.

 

Alan Myers is a San Diego CPA and forensic accountant.  For 8 years, he has dedicated himself to researching, studying and analyzing the Federal Reserve System, banking and the national debt.  He is a writer, speaker and radio commentator on these and other related topics.  You can contact Alan at: Alan Myers, CPA amcpa53@gmail.com


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