Its no secret that the money system is a absolute monster.
So lets have a little look inside it and the history behind it.
The Australian dollar is one of the strongest currencies in the world because it is a commodity-backed currency.
That’s why it hit a 29-year high against the US dollar – and it’s all related to the gold price.
The gold in Australia’s ground acts as ‘gold standard’.
The gold standard is a monetary system where a country’s currency or paper money has a value directly linked to gold.
With the gold standard, countries agreed to convert paper money into a fixed amount of gold.
A country that uses the gold standard sets a fixed price for gold and buys and sells gold at that price
COMMONWEALTH OF AUSTRALIA CONSTITUTION ACT – SECT 115
States not to coin money
A State shall not coin money, nor make anything but gold and silver coin a legal tender in payment of debts.
COMMONWEALTH OF AUSTRALIA CONSTITUTION ACT – SECT 81
Consolidated Revenue Fund
All revenues or moneys raised or received by the Executive Government of the Commonwealth shall form one Consolidated Revenue Fund, to be appropriated for the purposes of the Commonwealth in the manner and subject to the charges and liabilities imposed by this Constitution.
What is money ?
Sure It helps us get some of life’s intangibles — freedom or independence, the opportunity to make the most of our skills and talents, the ability to choose our own course in life, financial security.
With money, much good can be done and much unnecessary suffering avoided or eliminated.
But what is it and why is it worth anything at all ?
Are we still on the Gold standard ?
Two Australian economists, Steve Keen and Bill Mitchell, said.
The old theory, taught in high school economics classes and to university undergrads, is that banks receive deposits and loan out of a percentage of that money, while keeping some in reserve.
The truth, according to Professor Werner, is closer to the following:
A bank receives $100 from a depositor, keeps that $100 in reserve, and then creates $9900 worth of new loans and deposits.
It may also create $15,000 in new deposits through its lending.
This is a rough approximation.
The main point is that the banks do not lend existing money, but add to deposits and the money supply when they ‘lend’. And when those loans are repaid, money is removed from circulation.
Thus, the supply of money is constantly being expanded and contracted by banks – which may explain why the ‘credit crunch’ of the global financial crisis was so devastating. Banks weren’t lending, so there was a shortage of money.
By some estimates, the banks create upwards of 97 per cent of money, in the form of electronic funds stored in online accounts. Banknotes and coins? They are just tokens of value, printed to represent the money already created by banks.
Money creation starts much the way you would expect.
A government agency like a central bank or a treasury puts in an order for more money to be printed.
Then, in a factory or mint somewhere, someone’s face is stamped on a bill or coin, turning previously useless paper or metal into valuable currency.
This money is then shipped to private commercial banks, who give it to the the rest of us when we make a withdrawal from our bank or ATM.
But that’s only a small part of the story. Roughly 3 percent of the story to be exact.¹
Banks hold your cash for you, in the form of deposits.
But banks don’t just look after money.
They also give it out, in the form of loans (including mortgages). And these loans are how most new money is made.
Confused? Let’s break it down.
Imagine you want to borrow £10,000 from your bank.
You wouldn’t just go into your local branch and leave with a big briefcase filled with cash (cool as that would be).
Instead, your bank will give you an electronic deposit, which means the next time you checked your bank account the number on the screen would be £10,000 higher than it was before you took out the loan.
This money is ‘real’ in the sense that you could walk into any shop and spend it, or withdraw it all from an ATM.
But it’s not ‘real’ in the sense that after they approved your loan application someone from the bank ran into some vault somewhere to grab ten grand worth of paper money and relabel it with your name. In other words, almost all the money that exists in our financial system is created when some numbers are programmed into a computer.
You may be wondering how this can be possible considering you could walk into your bank now, demand the entire contents of your account in paper money, and they’d have to give it to you.
The answer is because most people will never do this.
As long as almost all of us only keep a tiny percentage of our money in cash form, banks can meet all their customers’ withdrawal demands by keeping just a small* pile of notes and coins in-house.
Whenever someone wants ‘their’ money in cash form, the bank simply takes the requested amount of money out of this central pile and change the electronic number on the withdrawer’s bank account.
What is a Promissory Note?
July 22, 2018/in Debt and Bankruptcy Law /by LawAnswers Australia
A promissory note is a document that is written by one party promising to pay an amount owed to another party by a certain date.
This is also known as an IOU letter, payment on demand letter or payment on arrival letter.
This kind of document is used by people who want to have written evidence of a loan, but do not want to have a formal loan agreement drafted and signed by both parties.
This is commonly used for loans of money between family members or friends.
In Australia, promissory notes are usually governed under the Bills of Exchange Act 1909 (Cth).
However, if one becomes a complex financial product then it would be covered under the Corporations Act.
Promissory notes are legally binding whether the note is secured by collateral or based only on the promise of repayment.
If you lend money to someone who defaults on a promissory note and does not repay, you can legally possess any property that individual promised as collateral.
A promissory note, sometimes referred to as a note payable, is a legal instrument (more particularly, a financial instrument and a debt instrument), in which one party (the maker or issuer) promises in writing to pay a determinate sum of money to the other (the payee), either at a fixed or determinable future time or on demand of the payee, under specific terms.
The terms of a note usually include the principal amount, the interest rate if any, the parties, the date, the terms of repayment (which could include interest) and the maturity date.
Sometimes, provisions are included concerning the payee’s rights in the event of a default, which may include foreclosure of the maker’s assets. In foreclosures and contract breaches, promissory notes under CPLR 5001 allow creditors to recover prejudgement interest from the date interest is due until liability is established.
For loans between individuals, writing and signing a promissory note are often instrumental for tax and record keeping.
A promissory note alone is typically unsecured.
Use as private money.
Thus, promissory notes can work as a form of private money.
In the past, particularly during the 19th century, their widespread and unregulated use was a source of great risk for banks and private financiers, who would often face the insolvency of both debtors, or simply be scammed by both.
In 1930, under the League of Nations, a Convention providing a uniform law for bills of exchange and promissory notes was drafted and ratified by eighteen nations.
Article 75 of the treaty stated that a promissory note shall contain:
the term “promissory note” inserted in the body of the instrument and expressed in the language employed in drawing up the instrument.
an unconditional promise to pay a determinate sum of money;
a statement of the time of payment;
a statement of the place where payment is to be made;
the name of the person to whom or to whose order payment is to be made;
a statement of the date and of the place where the promissory note is issued;
the signature of the person who issues the instrument (maker).
As one can comprehend in todays age ,money definitely comes in many forms and values .
However how much is truly lawful legal tender ?
One thing is for sure based on what we see around us ,we can as a united people
Design and create any monetary system we choose.