I call it magic money, computer. Any computer which can just make money out of thin air, best magic money, Musk and PERS are being absolutely stunned by is how money is being created. I think we've found now 14 magic money computers here on Europe. Musk maths is a bit wrong. There aren't 14 magic money computers in the United States. There's at least 5,000. The influential contrarian economist, Steve Keane, brilliant economist that criticizes much modern economics, the research fellow at the Institute for Strategy Resilience, and. Security at University College in London. He is someone that each and every one of us has to listen to, whether we agree or disagree. Steve Keen, well, Ted Cruz has just dropped a podcast he did with Elon Musk at the White House, and this particular part of the podcast stands out for me. Magic Money Computers. Well, so tell us about it because I never heard of that until you, you brought that up. Okay. So you may think that these, that, that the government computers, uh, like all talk to each other, they synchronize, they, they add up what funds are going somewhere and it's. You know, um, it's coherent. I mean, they're not totally wrong, but they're probably oh five, 5% or 10% in some cases. So, uh, I call it magic. My computer. Any computer which can just make money out of linear air to me, this conversation is like what would happen if a primitive society that had not invented airlines that simply only had invented vehicles, cars suddenly managed to take over a country that had airplanes. And so you smashed the fence in, you all die. And that's what's happening here because Musk and uh, crews are being. Absolutely stunned by is how money has been created ever since we've used computers to do it. Before that there would've been a department involved in making those payments. And Elon, your math maths, maths is a bit wrong. There aren't 14 magic money computers in the United States. There's at least 5,000 and the majority of those belong to private banks. In fact, there's more likely to be far more than 5,000 because there are roughly 5,000 banks in the United States. So this is a very simple model in my Ravel software. Of just a private banking system and the model that students are taught in their economics classes, other banks or inter majors who enable savers to lend to borrowers. So what you have going on here is that the banks, uh, just enable savers and borrowers both to have bank accounts and savers can lend to borrowers, and then borrowers pay interest back to savers. And there's bank charges a fee for the. Fact that it's made the, uh, introduction between the saver and the borrower, and then the bank spends those fees back on savers and borrowers. And if you run this system, and it's, what I've got down here is very simple mathematics to say, well, the sum of the amount of money in these three accounts, savers, borrowers, and banks, is the money supply. It turns over twice a year. I'm using Milton Friedman's idea of philosophy of money to generate GDP, and then as fraction is lent out, that could be positive or negative, and that gives you the amount of lending. And then, uh, with that lending, what happens is the savers get an asset, which is the debt that is owed by the borrowers to the savers. And that's where they, this is the savers point of view. Uh, they, the fee takes money outta their bank account. So they get a negative from that. Uh, they get paid interest, which is why they've made the loans. And then, uh, the lending reduces what's in their bank accounts, but increases the. Debt by the, that the, uh, borrowers owe them by the same amount, and then banks spend a bit on them as well. They spend on the borrowers. So you run this model and what you see is a flat line. JDP uh, bank accounts changing slowly because of spending rates. But if I now can say, let's just, uh, make the lending fraction positive so you get a, a fall in the amount of money in the savers account and a rising amount of borrow borrower's account. And if you get, you know, you can see you're getting, getting towards negative, you don't wanna do that. So let's just, what actually happens is the banks do the lending. So I can rapidly modify this system to make it look like the magic money tree, which is what Elon has just discovered. That is being the way that both banks and governments create money for ages. So the textbook version that people get taught that savers are the actual lenders, that's garbage. So we just delete that as an asset to the savers. And, uh, delete payment of, uh, interest, uh, from the savers to the borrowers, which doesn't happen. They pay to the banks instead, and they don't do any lending either. And let's get rid of the bank fees. What happens to the infraction is positive. Well, notice GDP is rising. Okay? This is how we create money, a world in which governments create money by spending more than they get back in taxation. That's the way it's always works. Welcome to the real world for Christ's sake. Don't try to redesign it so that your airplane flies like a car, because you'll crash the economy just like you'd crash a plane. So I have the same basic operations in this model, uh, lending by the savers to the borrowers, interest, fees and spending and so on. And I have to include what government financing looks like. And this is a fairly accurate summary level of the actual ways in which government finance operates. If the government spends more than it takes back in taxation. So the spending here is 31% of GDP, which given the numbers of startup, it happens to be 62. That could be 62. Trillion dollars, you know, global level, uh, and the tax 60. So they've got a deficit of two. And then, uh, they have to issue bonds equivalent to the deficit plus interest on existing bonds. And of course that will grow over time. So that's pretty much describes the legal, uh, constraints under which governments operate. Now what I'm doing in the model itself is, um, or the simulation I'm going to show is I have the firms. Borrowing equivalent to 1% of GDP every year, which I had in the previous simulation. And the government's spending 1% more of GDP than it takes back in taxation, uh, which is the, the new thing I've added. So if we now simulate this model and sees what happens, see what happens, and I'm showing, as well as showing GDP and the amount of money in bank accounts, I'm also showing the debt ratios which have. The the point that's scaring people like musker think the government's gonna go bankrupt and interest payments is a percentage of GDP as well. And we run this model and we see first of all, GDP flat lines. There's no change in GDP 'cause there's no money being created. And you can see that the level of, uh, government debt, which is the black line over here, is rising. Exponentially compared to the linear rise in private debt be because the government is borrowing to pay the interest and that causes a compounding effect. Uh, and then you have the same thing with interest payments. They get to be larger and larger as well. This is also screwing with the private sector because borrowers now find themselves with less money, even though they're borrowing from the savers. The savers are getting more because that's where the interest payments from the government are going to, and you can see the. Uh, debt ratios hit 500% of GDP after 70 years. Of course, that would never happen. There'd be a, a breakdown wall before that. Interest payments are 50% of GDP borrowers are heading down to having no money at all. This is obviously a catastrophic system, and if this were the real world, it would make plenty of sense to go in there and modify it. And the way you'd modify it is by getting rid of. Of government spending in excessive taxation. I just might as well show that. So we have government spending excessive taxation. Of course, there's no compounding of debt. Uh, the system can go on indefinitely. Uh, you can see a large level of private debt turning up here, but that's safe. You know, nobody worries about private debt to that. Okay? So that's, that's the fictional world of textbooks. Now let's just change this using. Uh, ravels, godly tables as we call them. So, uh, it's unrealistic to say that the savers own the debt. The banks do equally. It's unrealistic to say the government banks at the private banks, it banks at the Central Bank, which in this model, uh, which is the textbook model, there's really nothing happening at the Fed. It's just a placeholder in this system. So let's now modify the model. So I'm gonna bring up the savers table, first of all. And. Delete the concept that the debt is an asset of the household. It's not, it's an asset of the bank. So first of all, we delete it from being shown as an asset of the house. These, the savers, but it's still in there as a, as a debt of the borrowers. It's still in the system equally for government debt. And then all the interest payments, all the bank fees stuff, all the lending, uh, government selling bonds to savers. All that stuff is a myth. So I can just get rid of that and I've got a very simple picture for the savers accounts here. Then I bring up the private bank table and add those. The debt of the. Uh, private sector, the borrowers and the debt of the government as assets of the banking sector. I've deleted them from the savers table, but they're as assets, but they're still in the system as liabilities. Uh, where there is no magic money computer either at the private banks or at the Central bank, uh, you get a rising level of money. It's what's causing the rising GDP, so all bank accounts arising there, interest payments, which ran out and became impossible in the previous model. Stabilize at far lower than the levels that came out of the previous model. So does government debt. And this simple model that's with 1% of deficit per year. The debt ratio stabilizes about 30 or 40% of GDP because the, as well as increasing the debt, it's also increasing the amount of money and ultimately the two processes stabilize. So this is a sustainable system. This is the real world. It doesn't need to have the wings taken off the plane to make a drive like you think a car drives, as I explained in the previous video, so. If you do modify the system, if you shut those, um, those, uh, magic money computers down, then what you're gonna do is reduce the rate of growth of the economy because suddenly there's less, uh, government money being created. The economy slows down. You'll have a crisis. You'll cause it. 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