Apple builds and sells iPhones. I happen to own one of the older models, for the same reason I own a last-legs older model car. What if Apple could skip the build part and sell only the phone? The money saved would be an enormous boost to its bottom line. And if Apple passed the savings onto customers I could conceivably afford to upgrade.
Where would the phones come from? From a bookkeeping entry, of course.
Unfortunately, Apple’s customers are very demanding and want the real things, so the build operations will have to stay. Perhaps their executives looked upon another business and envied their ability to sell loans without drawing down their savings. Customer with good credit wants a loan? Create the amount with a few taps on a keyboard and send him on his way.
The customer will spend his newly-acquired money, thus keeping people employed. Since he has good credit, he will be able to make monthly payments, and the lender, the bank, will normally apply his payments to extinguish the loan, with the interest being the bank’s profit. Everyone’s happy and the economy keeps expanding until it busts.
Experts will diagnose the bust. The usual fiends will get blamed. Government will step in to cure the problem its monetary and banking interventions helped create. The economy will slowly recover and continue on the same path as before, meaning banks will continue extending credit from ether rather than savings.
How did this racket get started? It’s complicated. That’s one reason it works—the crime doesn’t exist if enough people don’t see it.
Gold and silver coins have long served as money, until more recent times. For government, gold became an economic culprit during the Great Depression, as explained by JM Bullion,
The Great Depression officially began on October 28, 1929, when the Dow Jones Industrial Average lost 13% of its value in a single day. The following day, it dropped an additional 12%, and in a matter of weeks, it was worth half as much as before.
In response, consumer confidence plummeted, and people began withdrawing their money from banks as quickly as possible. Banks, which work with reserves and don’t keep much of their deposits on hand, began closing their doors. (emphasis added)
Bank-created money was disappearing, and prices fell accordingly. Let’s expand on this.
The Federal Reserve Act of 1913 required the Fed to hold gold equal to only 40 percent of the currency it issued. By adjusting interest rates, the Fed could increase or decrease its stock of gold. Higher interest rates shifted “gold from the pockets of the public (both here and abroad) to the vaults of Federal Reserve district and member banks.” Conversely, lower rates drove gold from the Fed’s “coffers into the hands of the public both at home and overseas.”
Hellbound and Down 