Does fractional reserve banking lead to a cycle of perpetual debt?

If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the bankswill deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.
Thomas Jefferson, 1743-1826"If the American people only understood the rank injustice of our money and banking system - there would be a revolution before morning..."
"I killed the banks!"
Andrew Jackson, 1767-1845"The government should create, issue and circulate all the currency and credit needed to satisfy the spending power of the government and the buying power of consumers..... The privilege of creating and issuing money is not only the supreme prerogative of Government, but it is the Government's greatest creative opportunity. By the adoption of these principles, the long-felt want for a uniform medium will be satisfied. The taxpayers will be saved immense sums of interest, discounts and exchanges. The financing of all public enterprises, the maintenance of stable government and ordered progress, and the conduct of the Treasury will become matters of practical administration. The people can and will be furnished with a currency as safe as their own government. Money will cease to be the master and become the servant of humanity. Democracy will rise superior to the money power."
Abraham Lincoln, 1809-1865There are many examples of American heroes opposed to giving the power of fiat currency creation to private banks. They forwsaw the events of today with incredible accuracy. We who do not learn from history are doomed to repeat it. I am not overly informed on the ins and outs of our financial system but from what I do know, there seems to be a good reason for concern.Today around 90% of all money is created by private banks as debt. That money is lent to people at interest. I see this as fundamentally wrong, money creation is a necessary service, why is that power given to private companies only loyal to profit?That aside, there seems to be more problems. If only principal is created but interest is demanded back on top of principal, then where does the interest come from? If money is destroyed when debt is repaid, then everyone repaying their debts necessarily means less money in the economy. Which leads to recession/depression. This can only be overcome by lending more money into existence and thus continuing the perpetual debt cycle. Please point out how this is wrong? If it is not, our governments and bankers have screwed us royally.The money is created effectively by our promise to pay it back. It is backed by our future labour. Paying usurious amounts of interest to people who own bank shares when you aren't even borrowing THEIR money is theft as far as I'm concerned. Many great Americans risked and gave their lives to protect us from debt slavery, we owe it to them to stand up for change.Hopefully there's something I'm missing and my concern is unwarranted. That's why I'm after the input of you fine people, please show me how it's not true!

Thread copied here from the Does fractional reserve banking lead to a cycle of perpetual debt? thread in the Proposed New Topics forum.

Actually I think that it is true to some extent. We have had arguments here at EvC before about this. The Giant Pool Of Money I basically argued that the emerging Third World is grabbing the "share" of the buying power that was always a birthright of the United States. Jar saw no problem with that, but to me it is a war issue.Over the years I have argued in favor of Gold and Silver but was always shot down.These investments are no guarantee of future security--what good does it do in a depression to be the only guy on the block with gold stashed away when everybody else has guns? They are useful in a crash, however, as counter-cyclical investments. They will hold their value in the event of a major correction.

Well I hope more Americans agree with Jar than you mate. The poorest nations in the world are getting a little wealthier and you, with the biggest economy on earth, want to attack them for it? Seriously? WTF?Free trade agreements have caused the offshoring of manufacturing to 3rd world nations. Removing the penalties from importing the products made it far more profitable to export the jobs manufacturing them. Any company with the resources to do so has done this and all new companies now have more incentive to import rather than source locally. So it's the governments fault for caving to the whims of multinationals really. Direct your anger there, not at helpless poor people, please for the love of God.

I read somewhere that in a post-apocalyptic world the three most important things to have would be a bicycle, canned sardines and gold coins. Presumably, you could use the gold coins to buy more sardines from somebody who valued them less than gold.

I never said i wanted to attack anyone. What I fear, however, is that the leveling of the playing field will mean a drastic decline in the standard of living of many middle class older Americans who once survived on social security and twenty thousand dollars stashed...whereas now it seems less and less probable. I blame the wealthy. They have no problem with everyone in the working class owing them money forever. It is a steady source of income for them. I don't blame the global poor for wanting to move up. It is good that the overall global standard of living is increasing---but realistically I don't see it working so far that everyone on earth earns a livable wage.As for God, I believe that prayer and humility will help keep people such as myself from wanting a war. Perhaps this is how the future is meant to be.

If there were food shortages, the gold wouldn't work very well. Hopefully there would still be sardines to catch.Assuming the water didn't turn to blood or some other such horrible apocalyptic scenario.The bicycle would be great. Hopefully no one would try and knock me off of it and steal it. Much of the question of survival in such a scenario hinges on the inner Spirit of the people. Would they want to help each other or would they want to tear each other apart?

We need to realise that everyone alive today is a victim of the system they were born and raised into, even the super rich. They inherited the system and were raised to function in it the same as everyone else, they just happened to have the 'right' parents. We need to point the finger at the system, not each other, if we are to ever stand united enough to change it.Does no one else want to discuss this topic?

I think the worst problem of banking is that they only haveto have 10% of someones savings on hand, with the rest they can paly with ie lend it buy sotcks whatever.Why is this a problem well lets say i deposit 10 000 Eur at the bank, they then keep 1000 EUR then lend 9000 to some blocke who uses it to buy a car the guy who sold the car or eventually the 9000 get deposited at the bank again. the bank has to keep 900 EUR of that money and buys some stock for that money, the guy who sells the stock deposits the money at the bank .......
Its a fucking legal financial scheeme that turns 10 000 in to 100 000 for the bank.

They don't even need your savings, they can lend 1m(fiat) from the reserve bank at x% and then lend 9m(fiat) out to the public at y%. The money doesn't exist until you lend it. In most cases.

We got one who can see!!!!

Gold will have value as long as anybody thinks it has value. You'd see misers starving to death on a bed of money. Yes, most of our problems are caused by us.

The dollar's 70-year dominance is coming to an end
Within a decade, greenback's could be replaced as the world's reserve currencyThis will mean major problems with our economy and rate of inflation. I dont see how so many people overlook this! Let there be no illusions! Once the dollar ceases to be King, we Americans will pay a lot more!

yea but you will go to war with anyone that lets say tries to stop selling oil for dollars. Edited by frako, : No reason given.

Phat, do you even know what a Reserve Currency is?