G. Edward Griffin, in providing a chapter-by-chapter summary of his 1994 book, The Creature from Jekyll Island, made this claim in the summary for chapter 8:
“Fractional money is defined as paper money with precious-metal backing for part, not all, of its stated value. It was introduced in Europe when goldsmiths began to issue receipts for gold which they did not have, thus only a fraction of their receipts was redeemable. Fractional money always degenerates into pure fiat money.“
The reason for this, which he doesn’t mention, is that whenever new money is created, only the principal is created, and never the interest.
Compound interest charges will always eventually outstrip the supply of new precious metal.
Griffin admits that a fractional gold standard is inherently flawed, and, therefore, the Federal Reserve wasn’t the ultimate cause of the failure of the gold standard in the U.S. in 1933.
Be wary, therefore, of anyone who does advocate a gold standard with less than 100% backing.
For more on the gold standard, see my article, The gold double standard.
[...] G. Edward Griffin: a fractional gold standard always leads to “pure fiat money” (fauxcapitalist.com) [...]
Interestingly, the same problem happens in a banking system with debt free money:
http://realcurrencies.wordpress.com/2012/01/05/debt-free-money-alone-does-not-solve-compound-interest/
Hopefully this video will explain a lot – http://www.youtube.com/watch?v=-sTSUGNEoaA
Worse still: the same article proves that full reserve banking itself will always be quickly subverted by the Money Power.
Both in a debt free currency, or Gold based currency environment.
Through compound interest in full reserve banking, the Money Power will regain the control of the money supply in less than 20 years.
Once again I must point out that a “bank” that only “lends” out what it has on deposit is actually a brokerage. The depositors are risking their deposits. You are suffering from Econognosia. It’s similar to Anosognosia, Prosopagnosia and Anton Bobinski Syndrome, but has to do with banking and economics.
It is called ‘full reserve banking’ in the wider truth movement philo.
I’m happy I’ve come across the ‘brokerage’ concept, but will stick with the other term for the time being, if you don’t mind!
Who cares what the “wider truth movement” calls it if it’s BS. Does the truth mean anything? BTW, did you get the message that your blog is automatically censoring some of my comments?
semantics does not have the same status as truth to me philo. I understand you, you understand me, that’s good enough for me! I don’t want to get into a struggle about words, I just use the vocabulary that is comfortable for my partner, I’ve cut through so much jargon in my life that I’ve become very fluent in it myself…………
Your comments have been reinstated, sorry!
Manipulation of language is one of the most powerful tools of The Power Elite and that must be exposed.
[...] G. Edward Griffin: a fractional gold standard always leads to “pure fiat money” (fauxcapitalist.com) [...]
[...] G. Edward Griffin: a fractional gold standard always leads to “pure fiat money” (fauxcapitalist.com) [...]
I wish these guys would get together and get the story straight. Bill Still says pretty much the opposite in The Money Masters about Colonial Scrip. It brought major prosperity to the colonies until England forced a change in policy and eventually started counterfeiting it off shore. My guess is it was loaned in small amounts to a lot of producers interest free. I think Lincoln was probably going to start loaning Greenbacks in this manner before he was shot. Obviously people were using generic IOU’s long before 13th century China. The banker always usurps and gets his sticky fingers involved whether there’s any gold involved or not. I would be wary of anyone who wants gold to have anything to do with book entry IOU’s. And anyone who believes the bank has any reserves and not just a number of how much cash it can create when the borrower walks into the bank has a very limited understanding of what “money” is and how it’s created. When the banker adds a dollar debit(on top of the principal debits) to the borrowers account for a loan fee or an interest charge, he is simultaneously adding a dollar credit to his own account – that is how the interest in addition to the principal is created. The principal credits are given to the borrower in the form of bills/coin or transferred by book entry into another’s account. The borrower then proceeds to capture the credits from the banker and the producing collective to give back to the bank to be extinguished when balanced with the debits. Just like when the bank sells a foreclosed home at auction – the credits are extinguished to curb inflation. We really have to start admitting the bankers have some kind of super genius understanding of reality and manipulation if we are to strive to expose this fact. They are in complete control of the situation – they could turn the economy around at any time. We are completely at their mercy. Banking is a pure profit industry. They just have a code to be so profitable or go out of business.