Finance and Banking

How the banking system works - money is debt

Separate country and global pages:

Finance & Banking Overview
by Anonymiss Eve

One of the subjects that seems to be missing in our Public Schools is how Finance and
Banking works. This particular subject affects everyone, and everything we do, every day of
our lives. It is necessary for each and every person to understand how Finance and Banking
work as it also affects the economy of each nation, so why would public schools neglect to
teach you all about it?

GDP ~ Gross domestic product (GDP) at market prices is the expenditure on final goods and
services minus imports: final consumption expenditures, gross capital formation, and exports
less imports. "Gross" signifies that no deduction has been made for the depreciation of
machinery, buildings and other capital products used in production. "Domestic" means that it is
production by the resident institutional units of the country. The products refer to final goods
and services, that is, those that are purchased, imputed or otherwise, as: final consumption of
households, non-profit institutions serving households and government; fixed assets; and
exports (minus imports). Data are internationally comparable by following the System of
National Accounts. This indicator is measured in USD per capita (GDP per capita) and in
million USD (U.S. Dollar)at current prices and PPPs.

GDI ~ Gross domestic income It represents the total of all forms of income generated by the
production of goods and delivery of services nationwide. It includes taxes, income earned by
employees, and profits from operating businesses. Any subsidies are subtracted from this
amount to find the total gross domestic income.
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The basic difference between the two is that GDP measures what the economy produces —
goods, services, technology, intellectual property — while GDI measures what the economy
makes, tracking things like wages, profits, and taxes.
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Adjusted for Inflation ~ When using any variables measured in terms of dollars such as
income, earnings, sales, profit, GNP, care must be taken when interpreting changes in these
variables over time. To avoid, or more accurately, to correct for the distortion caused by rising
prices in a dollar denominated variable, economists construct a new variable known as the
real, constant dollar, or inflation-adjusted variable.
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What is inflation? Inflation is when a certain form of currency starts to have less value over
time. Mainly two things cause it: people's perception of its value, and the economic principle of
supply and demand.
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What is the Federal Reserve and how was it created? ‘The "monetary reform" plan prepared at
Jekyll Island was to be presented to Congress as the completed work of the National Monetary
Commission. It was imperative that the real authors of the bill remain hidden. So great was
popular resentment against bankers since the Panic of 1907 that no Congressman would dare
to vote for a bill bearing the Wall Street taint, no matter who had contributed to his campaign
expenses. The Jekyll Island plan was a central bank plan, and in this country there was a long
tradition of struggle against inflicting a central bank on the American people. It had begun with
Thomas Jefferson’s fight against Alexander Hamilton’s scheme for the First Bank of the United
States, backed by James Rothschild. It had continued with President Andrew Jackson’s
successful war against Alexander Hamilton’s scheme for the Second Bank of the United States,
in which Nicholas Biddle was acting as the agent for James Rothschild of Paris. The result of
that struggle was the creation of the Independent Sub-Treasury System, which supposedly
had served to keep the funds of the United States out of the hands of the financiers. A study of
the panics of 1873, 1893, and 1907 indicates that these panics were the result of the
international bankers’ operations in London. The public was demanding in 1908 that Congress
enact legislation to prevent the recurrence of artificially induced money panics. Such monetary
reform now seemed inevitable. It was to head off and control such reform that the National
Monetary Commission had been set up with Nelson Aldrich at its head, since he was majority
leader of the Senate. The main problem, as Paul Warburg informed his colleagues, was to
avoid the name "Central Bank". For that reason, he had decided upon the designation of
"Federal Reserve System". This would deceive the people into thinking it was not a central
bank. However, the Jekyll Island plan would be a central bank plan, fulfilling the main functions
of a central bank; it would be owned by private individuals who would profit from ownership of
shares. As a bank of issue, it would control the nation’s money and credit.’
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