A lot of people are very upset about the rapidly increasing U.S. national debt these days and they are demanding a solution. What they don't realize is that there simply is not a solution under the current U.S. financial system. It is now mathematically impossible for the U.S. government to pay off the U.S. national debt. You see, the truth is that the U.S. government now owes more dollars than actually exist. If the U.S. government went out today and took every single penny from every single American bank, business and taxpayer, they still would not be able to pay off the national debt. And if they did that, obviously American society would stop functioning because nobody would have any money to buy or sell anything.
And the U.S. government would still be massively in debt.
So why doesn't the U.S. government just fire up the printing presses and print a bunch of money to pay off the debt?
Well, for one very simple reason.
That is not the way our system works.
You see, for more dollars to enter the system, the U.S. government has to go into more debt.
The U.S. government does not issue U.S. currency - the Federal Reserve does.
The Federal Reserve is a private bank owned and operated for profit by a very powerful group of elite international bankers.
If you will pull a dollar bill out and take a look at it, you will notice that it says "Federal Reserve Note" at the top.
It belongs to the Federal Reserve.
The U.S. government cannot simply go out and create new money whenever it wants under our current system.
Instead, it must get it from the Federal Reserve.
So, when the U.S. government needs to borrow more money (which happens a lot these days) it goes over to the Federal Reserve and asks them for some more green pieces of paper called Federal Reserve Notes.
The Federal Reserve swaps these green pieces of paper for pink pieces of paper called U.S. Treasury bonds. The Federal Reserve either sells these U.S. Treasury bonds or they keep the bonds for themselves (which happens a lot these days).
So that is how the U.S. government gets more green pieces of paper called "U.S. dollars" to put into circulation. But by doing so, they get themselves into even more debt which they will owe even more interest on.
So every time the U.S. government does this, the national debt gets even bigger and the interest on that debt gets even bigger.
Are you starting to get the picture?
As you read this, the U.S. national debt is approximately 12 trillion dollars, although it is going up so rapidly that it is really hard to pin down an exact figure.
So how much money actually exists in the United States today?
Well, there are several ways to measure this.
The "M0" money supply is the total of all physical bills and currency, plus the money on hand in bank vaults and all of the deposits those banks have at reserve banks. As of mid-2009, the Federal Reserve said that this amount was about 908 billion dollars.
The "M1" money supply includes all of the currency in the "M0" money supply, along with all of the money held in checking accounts and other checkable accounts at banks, as well as all money contained in travelers' checks. According to the Federal Reserve, this totaled approximately 1.7 trillion dollars in December 2009, but not all of this money actually "exists" as we will see in a moment.
The "M2" money supply includes everything in the "M1" money supply plus most other savings accounts, money market accounts, retail money market mutual funds, and small denomination time deposits (certificates of deposit of under $100,000). According to the Federal Reserve, this totaled approximately 8.5 trillion dollars in December 2009, but once again, not all of this money actually "exists" as we will see in a moment.
The "M3" money supply includes everything in the "M2" money supply plus all other CDs (large time deposits and institutional money market mutual fund balances), deposits of eurodollars and repurchase agreements. The Federal Reserve does not keep track of M3 anymore, but according to ShadowStats.com it is currently somewhere in the neighborhood of 14 trillion dollars. But again, not all of this "money" actually "exists" either.
So why doesn't it exist?
It is because our financial system is based on something called fractional reserve banking.
When you go over to your local bank and deposit $100, they do not keep your $100 in the bank. Instead, they keep only a small fraction of your money there at the bank and they lend out the rest to someone else. Then, if that person deposits the money that was just borrowed at the same bank, that bank can loan out most of that money once again. In this way, the amount of "money" quickly gets multiplied. But in reality, only $100 actually exists. The system works because we do not all run down to the bank and demand all of our money at the same time.
According to the New York Federal Reserve Bank, fractional reserve banking can be explained this way....
"If the reserve requirement is 10%, for example, a bank that receives a $100 deposit may lend out $90 of that deposit. If the borrower then writes a check to someone who deposits the $90, the bank receiving that deposit can lend out $81. As the process continues, the banking system can expand the initial deposit of $100 into a maximum of $1,000 of money ($100+$90+81+$72.90+...=$1,000)."
So much of the "money" out there today is basically made up out of thin air.
In fact, most banks have no reserve requirements at all on savings deposits, CDs and certain kinds of money market accounts. Primarily, reserve requirements apply only to "transactions deposits" – essentially checking accounts.
The truth is that banks are freer today to dramatically "multiply" the amounts deposited with them than ever before. But all of this "multiplied" money is only on paper - it doesn't actually exist.
The point is that the broadest measures of the money supply (M2 and M3) vastly overstate how much "real money" actually exists in the system.
So if the U.S. government went out today and demanded every single dollar from all banks, businesses and individuals in the United States it would not be able to collect 14 trillion dollars (M3) or even 8.5 trillion dollars (M2) because those amounts are based on fractional reserve banking.
So the bottom line is this....
#1) If all money owned by all American banks, businesses and individuals was gathered up today and sent to the U.S. government, there would not be enough to pay off the U.S. national debt.
#2) The only way to create more money is to go into even more debt which makes the problem even worse.
You see, this is what the whole Federal Reserve System was designed to do. It was designed to slowly drain the massive wealth of the American people and transfer it to the elite international bankers.
It is a game that is designed so that the U.S. government cannot win. As soon as they create more money by borrowing it, the U.S. government owes more than what was created because of interest.
If you owe more money than ever was created you can never pay it back.
That means perpetual debt for as long as the system exists.
It is a system designed to force the U.S. government into ever-increasing amounts of debt because there is no escape.
We could solve this problem by shutting down the Federal Reserve and restoring the power to issue U.S. currency to the U.S. Congress (which is what the U.S. Constitution calls for). But the politicians in Washington D.C. are not about to do that.
So unless you are willing to fundamentally change the current system, you might as well quit complaining about the U.S. national debt because it is now mathematically impossible to pay it off.
***UPDATE***
It has been suggested that the same dollar can be used to pay off debt over and over - this is theoretically true as long as the dollar remains in the system.
For example, if the U.S. government gives China a dollar to pay off a debt, there is a good chance that the U.S. government will be able to acquire that dollar again and use it to pay off another debt.
However, this is not true when debt is retired with the Federal Reserve. In that case, money is actually removed from the system. In fact, because of the "money multiplier", when debt is retired with the Federal Reserve it can remove ten times that amount of money (and actually more, but let's not get too technical) from the system.
You see, fractional reserve banking works both ways. When $100 is introduced into the system, it can theoretically create $1000 as the example in the article above demonstrates. However, when that $100 is removed, it can have the opposite impact.
And considering the fact that the Federal Reserve "purchased" the vast majority of new U.S. government debt last year, we have got a real mess on our hands.
Even if a way could be figured out how to pay off all the debt we owe to foreign nations (such as China, Japan, etc.) it would still be mathematically impossible to pay off the debt that we owe to the Federal Reserve which is exploding so fast that it is hard to even keep track of.
Of course we could repudiate that debt and shut down the Federal Reserve, but very few in Washington D.C. have any interest in doing that.
It has also been suggested that instead of just using dollars to pay off the U.S. national debt, we could use the assets of the U.S. government to pay it off.
That is rather extreme, but let us consider that for a moment.
That total value of all physical assets in the United States, both publicly and privately owned, is somewhere in the neighborhood of 45 to 50 trillion dollars. Of course the idea of the U.S. government "owning" every single asset of the American people is repugnant to our entire way of life, but let's assume that for a moment.
According to the 2008 Financial Report of the United States Government, which is an official United States government report, the total liabilities of the United States government, including future social security and medicare payments that the U.S. government is already committed to pay out, now exceed 65 TRILLION dollars. This amount is more than the entire GDP of the whole world.
In fact, there are other authors who have written that the actual figure for the future liabilities of the U.S. government should be much higher, but let's be conservative and go with 65 trillion for now.
So, if the U.S. government took control of all physical assets in the United States and sold them off, it could not even make enough money to pay for everything that the U.S. government is already on the hook for.
Ouch.
If you have not read the 2008 Financial Report of the United States Government, you really should. Actually the 2009 report should be available very soon if it isn't already. If anyone knows if it is available, please let us know.
The truth is that the U.S. government is in much bigger financial trouble than we have been led to believe.
For example, according to the report (which remember is an official U.S. government report) the real U.S. budget deficit for 2008 was not 455 billion dollars. It was actually 5.1 trillion dollars.
So why the difference?
The CBO's 455 billion figure is based on cash accounting, while the 5.1 trillion figure in the 2008 Financial Report of the United States Government is based on GAAP accounting. GAAP accounting is what is used by all the major firms on Wall Street and it is regarded as a much more accurate reflection of financial reality.
So needless to say, the United States is in a financial mess of unprecedented magnitude.
So what should we do? Does anyone have any suggestions?
***UPDATE 2***
We have received a lot of great comments on this article. Trying to understand the U.S. financial system (even after studying it for years) can be very difficult at times. In fact, it can almost seem like playing 3 dimensional chess.
Several readers have correctly pointed out that when the U.S. money supply is expanded by the Federal Reserve, the interest that is to be paid on that new debt is not created.
So where does the money to pay that interest come from? Well, eventually the money supply has to be expanded some more. But that creates even more debt.
That brings us to the next point.
Several readers have insisted that the Federal Reserve is not privately owned and that since it returns "most" of the profits it makes to the U.S. government that we should not be concerned about the debt owed to it.
The truth is that what you have with the Federal Reserve is layers of ownership. The following was originally posted on the Federal Reserve's website....
"The twelve regional Federal Reserve Banks, which were established by Congress as the operating arms of the nation’s central banking system, are organized much like private corporations – possibly leading to some confusion about "ownership." For example, the Reserve Banks issue shares of stock to member banks. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year."
So Federal Reserve "stock" is owned by member banks. So who owns the member banks? Well, when you sift through additional layers of ownership, you will ultimately find that people like the Rothschilds, the Rockefellers and the Queen of England have very large ownership interests in the big banks. But there are so many layers of ownership that they are able to disguise themselves well.
You see, these people are not stupid. They did not become the richest people in the world by being morons. It was the banking elite of the world who designed the Federal Reserve and it is the banking elite of the world who benefit the most from the Federal Reserve today. In the article above when we described the Federal Reserve as "a private bank owned and operated for profit by a very powerful group of elite international bankers" we may have been oversimplifying things a bit, but it is the essence of what is going on.
In an excellent article that she did on the Federal Reserve, Ellen Brown described a number of the ways that the Federal Reserve makes money for those who own it....
The interest on bonds acquired with its newly-issued Federal Reserve Notes pays the Fed’s operating expenses plus a guaranteed 6% return to its banker shareholders. A mere 6% a year may not be considered a profit in the world of Wall Street high finance, but most businesses that manage to cover all their expenses and give their shareholders a guaranteed 6% return are considered "for profit" corporations.
In addition to this guaranteed 6%, the banks will now be getting interest from the taxpayers on their "reserves." The basic reserve requirement set by the Federal Reserve is 10%. The website of the Federal Reserve Bank of New York explains that as money is redeposited and relent throughout the banking system, this 10% held in "reserve" can be fanned into ten times that sum in loans; that is, $10,000 in reserves becomes $100,000 in loans. Federal Reserve Statistical Release H.8 puts the total "loans and leases in bank credit" as of September 24, 2008 at $7,049 billion. Ten percent of that is $700 billion. That means we the taxpayers will be paying interest to the banks on at least $700 billion annually – this so that the banks can retain the reserves to accumulate interest on ten times that sum in loans.
The banks earn these returns from the taxpayers for the privilege of having the banks’ interests protected by an all-powerful independent private central bank, even when those interests may be opposed to the taxpayers’ -- for example, when the banks use their special status as private money creators to fund speculative derivative schemes that threaten to collapse the U.S. economy. Among other special benefits, banks and other financial institutions (but not other corporations) can borrow at the low Fed funds rate of about 2%. They can then turn around and put this money into 30-year Treasury bonds at 4.5%, earning an immediate 2.5% from the taxpayers, just by virtue of their position as favored banks. A long list of banks (but not other corporations) is also now protected from the short selling that can crash the price of other stocks.
The reality is that there are a lot of ways that the Federal Reserve is a money-making tool. Yes, they do return "some" of their profits to the U.S. government each year. But the Federal Reserve is NOT a government agency and it DOES make profits.
So just how much money is made over there? The truth is that we have to rely on what the Federal Reserve tells us, because they have never been subjected to a comprehensive audit by the U.S. government.
Ever.
Right now there is legislation going through Congress that would change that, and the Federal Reserve is fighting it tooth and nail. They are warning that such an audit could cause a financial disaster.
What are they so afraid of?
Are they afraid that we might get to peek inside and see what they have been up to all these years?
If you are a history buff, then you probably know that debates about a "central bank" go all the way back to the Founding Fathers.
The European banking elite have always been determined to control our currency, and that is exactly what is happening today.
Ever since the Federal Reserve was created, there have been members of the U.S. Congress that have been trying to warn the American people about the insidious nature of this institution.
Just check out what the Honorable Louis McFadden, Chairman of the House Banking and Currency Committee had to say all the way back in the 1930s....
"Some people think that the Federal Reserve Banks are United States Government institutions. They are private monopolies which prey upon the people of these United States for the benefit of themselves and their foreign customers; foreign and domestic speculators and swindlers; and rich and predatory money lenders."
The Federal Reserve is not the solution and it never has been.
The Federal Reserve is the problem.
Any thoughts?
Has there ever been a time in history when money in circulation equalled or exceeded all credit/debt – I doubt it. As long as there is one person willing to extend credit to another you are going to have this imbalance.
The big problem we just went through with the credit bubble was that the central banks lost control of the money supply. This led to a global credit bubble, which popped when there was a run on Lehman’s bank because the credit markets froze (largely due to an inability to price risk).
A run on the bank is when people have a money preference and pull out all their cash. This used to result in liquidity crises like 1907 when the British demanded we pay all our debt in gold. Now, the FDIC pays out on bank runs or the Fed does. We just went through the largest liquidity crisis in history and the Fed handled by doubling the assets on their balance sheet they created trillions in reserves. More importantly this “debt” that is the credit that was extended has 0% interest attached, so as the economy stabilizes the debt-service shoudl be pretty easy.
You’re right that in our system when we create money we create debt. I prefer direct money creation where Congress creates money to pay for infrastructure and that’s how we expand the money supply.
Bart…is your last name Simpson by any chance? If I have ten bucks and loan you five there is still ten bucks in circulation!! Hellooo! It is when I go to the printing press and print up another fiver like I just lent you and stick it in my pocket so I still have ten that is the problem!!
In 1835, under President Andrew Jackson, the US Federal Budget was balanced and the National Debt was paid in full. This has never happened since. This fine man did not appreciate Rockefeller and his fellow printer schiesters!! Get some history knowledge Bart, then you might be smart enough to grow some backbone instead of sounding comically loony!
Who exactly do we owe all this money to? Let them try and collect it. Worst case we stop spending trillions of the defense budget. Honestly people can’t realize the whole monetary system is scam to turn as all into slaves and deny us much as possible so that New World Order can use all as much output as possible for their own designs.
The problem isn’t the lending or borrowing. i.e. if I borrow a cup of sugar from my neighbor, they don’t expect to have a 5-pound bag returned to them as payment.
Yes, there WAS a time that money exceeded the debt, it was when the people worked to save for what they purchased, or loaned it without interest. The issue that makes the banking system so very flawed is that they loan money (or a percentage thereof) that was entrusted to them to others with the interest collected from all parties making use of the original individuals actual deposit.
While one could argue that this is a reasonable thing to do; which it was only slightly less corrupt in intention when there was REAL money, EG: Gold or silver, on hold; the fact that the depositors are now depositing federal reserve notes (which are counted at face value – already fractionally inflated) to be loaned using fractional accounting. THIS is what causes the so-called debt bubble.
The process cannot go on indefinitely, just as any pyramid or ponzi scheme… sooner or later the whole thing falls apart because there aren’t sufficient real funds to support the illusion.
The author here is absolutely correct, there isn’t enough “money” to repay the bankers, so the eventual collapse of the entire system is inevitable. Since the debt was incurred against treasury bonds, the only way to repay it now is with REAL PROPERTY since we don’t have real reserves to back it. In essence – they will own everything as it becomes nationalized to cover the increasing debt.
Um, yeah, I agree that we ignored the Constitutional requirement BUT: If we now were to somehow close down the Fed, would you really want to turn over the power of money creation to the current congress? I cannot imagine letting the 535 economically-ignorant party hacks devise a sound replacement. I fear for our republic.
It’s ALWAYS been impossible to pay off the “debt”! The interest has to be created, which is more debt! The only way to eliminate it is to repudiate the Federal Reserve and it’s claim of debt upon the people, then revert to either a nationally derived currency, or simply allow any form of currency to be used.
The Future of Money has been re-invented.
http://www.ivamu.com/
The creature from Jeckyl Island has now officially sealed the fate of ALL future generations of Americans. The really scary thing about this financial meltdown is the historical precedent that has benn established. What is the favorite remedy that corrupt governments use when faced with economic collapse? That’s right. War!
Philippians 6-12.
So they “doubled their balance sheet” which means that everything lost 50% of it’s value, or every dollar became 50 cents. That will make paying off the debt twice as hard.
Yes, it is very alarming the sort of things mathematics can point out. But do not start throwing your money out the window for the wind to catch and take away.
There is absolutely nothing in the Universe that can be described EXACTLY by mathematics. Why not? Because there are no two things anywhere in the Universe that are so perfectly alike, we can add them 1+1 and say “2″ describes these things to every extent possible.
The American dollar is still coveted by more people on this planet than any other currency.
Not one in a 100 people reading this post have ever seen a Yuan, a Euro, or even a Peso. Not one in a thousand has one in their pocket!
I live right on the Canadian border. The Canadians come over here to shop because milk is like $6.00 a gallon in Canada. They come over here to buy gasoline, and fill up five gallon containers they take home in their trunks.
And on the other border? The Mexicans, and the South Americans crash the border gates to get in.
The strength of an economy can be measured by the amount of currency that can be floated WITHOUT all that currency causing such inflation that buying power is destroyed.
You can spend dollars in every country in the world.
The dollar bill is the currency even the Iranian street vendors -hoard in their mattresses.
The big economic problem right now is deflation. And it’s a wonderful problem to have, if you have money in the bank, or even if you just have a job.
The reason for the deflation is, not everyone does have a job.
The credit economy is the culprit. Put your money in the bank. Leave it there. That’s the best advice anyone can give.
Forget the debt. No one is asking to have it paid off. No one ever thought it would be paid off.
Believe me, there are a lot of gold bugs today who are licking their wounds from this pop of their bubble. Expect it to get worse for them too. You cannot spend gold at the local hardware store.
Keep a written journal of these days and your perception of them. What you knew and what is. They will be a window into darkness and why.
Turn the Fed into an actual department of the Federal Government or amalgamate it with the Treasury. Money can then be issued without interest having to be paid to a private bank. At one stroke, a large part of the current debt can be removed as the debt owing to the ‘former Federal Reserve’ would be cancelled. Or is this too simple an idea?
Why the Fed & The National Debt Are Illegal
http://home.iae.nl/users/lightnet/creator/nationaldebt.htm
This Awareness indicates that you must understand that when the Federal Reserve bank, the privately owned Federal Reserve bank, was given authority to print Federal Reserve notes instead of the Treasury Department writing the Treasury Notes as directed by the U.S. Constitution, these Federal Reserve notes were not printed to be given out to the economy, in the way as the Treasury Notes of the Treasury Department. Rather, they were loaned to the U.S. government and then circulated into society, and society was required to pay back interest on the IRS notes and that amount of interest accumulated to the point of approximately 5 trillion dollars at this time (Revelations of Awareness newsletter issue no. 430 1994), to where, if everything in the United States were sold, half of the debt would still be owed.
This Awareness indicates that the Treasury Department has the potential for totally denouncing the Federal Reserve debt of 5 trillion dollars because it was illegal in the first place. The Treasury Department in the U.S. Constitution is the only proper way of financing the nation; Congress, operating the Treasury Department has the right to mint and coin money, and set the value thereof.
This Awareness indicates that in this fact, the Federal Reserve was never given any such a right, even with the vote of the Congress, because Congress did not have the right to relegate its obligations to the Federal Reserve, therefore the entire debt of five trillion dollars, because it was illegal in the fist place, is not forcible in a technical sense.
Inflation is the plan!
The debt can be repaid in cheaper dollars, so these politicians think, when the dollar drops in value, and they are able to raise more taxes at higher levels. But this only works if wages and earnings raise in tandem with inflation.
For example, if sales tax is 6%, and I buy a can of beans for a $1.00 I pay 6 cents in taxes. When inflation hits and that can of beans now costs $3.00, I pay 18 cents in taxes. And my higher wages or salary move me up in the tax brackets, so I pay more taxes on the inflated dollars, as do corporations.
The politicians will never say it, but that is the plan, just inflate this debt down to zilch, public be damned.
Bart,
I applaud your attempt to explain the situation… but it sounds like you are reciting a Economics 101 text book, and no offense intended, it would seem that you are not entirely knowledgeable of the facts.
Your post is entirely ignorant of the politics behind money.
What lead to our current situation? Your statement that the central banks lost control of the money supply is over simplification, at best, ignorance at worst. Over the past two decades, at the behest of powerful interest groups and lobbyist, Congress dismantled and restructured the then existing regulatory restrictions that protected the economy from the text book situation which you described. And the result? It was predicted many years ago… screamed from the mountaintops for anyone to hear. But no one paid attention. Technically those vested with the power to create law don’t actually break the law. When the regulation and rule of law are manipulated, the eventual outcome of those changes are predictable. Knowledge is power. Ignorance is misfortune.
As for runs on the bank… your illustration is a far cry from anything other than an illusion. While it is true that banks do not carry ready reserves of Cash on Hand to cover the cumulative balances of their accounts, the monies of the accounts themselves are properly recorded in the banks ledgers. Customers would not need to demand the balance in full, in cash. They could demand a cashiers check, or they could simply walk into another financial institution of their choosing and write a draft or check to transfer their monies from their old bank to their new institution. In the event of a bank failure, the proper action would have been to let the bank fail, at which point its assets would have been seized by the government, it deposits covered (to an extent) by FDIC, and then liquidated or managed in probate to recover losses on behalf of the injured parties. No Bail Outs would have been required. But there would have been a full accounting and investigation of corruption, mismanagement, maleficent, etc. Instead TARPs and Bailouts were appropriated and the monies were used to pay up to 100% on the dollar to the banks themselves, and subsequently the looting and pillaging of America began.
Let there be no doubt that our current economic crisis is very real, far from over, and deliberately engineered. What are the short and long term implications? As for credit and liquidity, Wall Street is flush, but Main Street has dried up. TARP funds and various bailouts have been used, not to extend credit to Main Street, but rather to starve out the middle class, small and medium businesses, local banks and middle America so that those whom have access and control of credit may buy up practically anything and everything of value for pennies on the dollar. Classic and textbook “Grapes of Wraith” Economics 101, where the Barons and Tycoons of Industry run rough shod over desperate peoples in tough times. The gains are privatized and the losses are socialized.
As for the long term implications… Doubling the money supply with 0% interest devalues the dollar and lends itself to several carnations of inflation, which may only be offset by artificially dampening cost of infrastructure and labor. In other words, importing cheap labor and exporting manufacturing and industry. Ring any bells? Ironically this only excelerates the phenomena.
Ultimately, this incomprehensible level of debt may only be solved one of two ways, if not both: 1) The yielding and merger of the American dollar into a new hyper national or international financial union, or 2) Negotiation or Eradication of Debt via the Conquest of Wars and Treaties. Hmm… have you been watching the news lately? G8 What? U.N. / IMF / World Bank are doing what exactly? What treaties have been pending on the horizon? Pray tell me, what exactly were the goals of The Project for the New American Century and the Council on Foreign Relations? Please tell me that you are at least somewhat familiar with the organizations that advise and create the policies that our Congress reviews and our President enacts as policy?
Bottom line: this is an engineered crisis with but one ultimate goal. Not merely the consolidation of wealth, but a consolidation of Power. The Federal Reserve itself has undergone consolidation. And Wall Street. And Main Street. And soon… as we continue marching towards globalization via Conquest and Treaty and the expansion of Power… Our National Sovereignty.
And although I most certainly agree with you and applaud you on your preference for direct money creation where Congress creates money to pay for infrastructure to expand the economy, alas, there too you have unwittingly overlooked or intentionally omitted several key details.
Although Congress does have the constitutional authority to mint coin and regulate the value of domestic and foreign monies, and does stimulate the economy with monies spent on militaries, infrastructure, and commerce, it ultimately can not and should not be responsible for insuring our economy. That said, for better or for worse, with our burgeoning debt our prosperity is being washed away.
Debt is slavery. Expanding the money supply with fiat currency is a devils game. The only thing that truly generates wealth is labor and resources. You can not exploit resources without access, be it public or private, to land. Be it beef, beans, or bread, or be it lumber, steel, silver, or gold, without land the supply to resources is severed, and with it the capacitance for manufacturing and industry are also severed.
We could easily transform our fiat money supply into that of one based entirely upon industrial and agricultural commodities, in addition to gold, silver, and other precious metals. But there in lies the crutch. Energy. For mining and harvesting, refinement and manufacturing, and for transportation.
What, pray tell, has our current economic crises entailed? Hmm… Land, I.e. Real Estate. Commodities and Industry, I.e. Main Street and Jobs. Energy, I.e. oil, gas, coal, and electricity. Financing, I.e. Credit, cash, and liquidity. What exactly have been several of the key issues facing most people these past several years?
Do you see the pattern yet. Do you recognize the cause, the reaction, the solution? It is NOT simply a matter of the central banks losing control of the money supply. It is about consolidation of financial and political power. Period. Once anyone realizes that, they will be better able to cope with the difficulties at hand and work towards regaining their financial footing, and hopefully, eventually, return to being financially independent.
When you are ready to set aside that primer for Economics 101 and start learning how things really work, I will be not only applauding you, but cheering you on.
Best wishes.
It is not “impossible” for the national debt to be paid off. It could theoretically be paid off without inflation, in fact. It would just take time.
If the money creation was halted, for example, the debt could be paid off over a very long period of time in the following manner:
1. I am taxed $100.
2. The government uses my $100 to pay down the debt to China.
3. China uses this $100 to buy a product from my company.
4. My company is taxed on this sale.
5. The government takes that tax money and gives it to China, again, etc., etc., etc.
Improbable, but not impossible.
United we stand!
SOME BROAD NOTES ON THE HISTORY OF MONEY (Without the complicated detail).
by Tom Dennen, author of ‘Grand Theft, Planet or Heidi’s Free Bar & Grill’ – (free on the Internet).
Most of this is probably deliberately scattered all over the Internet, and, if one just looks around a bit, people like me can pretend we have connected some dots.
(There is, incidentally, nothing in here about the role Switzerland played in the years under scrutiny.)
BUT:
*Study the ancient goldsmiths’ discovery of fractional lending and usury.
*Read Book Six of Tacitus’ “Annals of Rome”.
*Read “The Great Reckoning” by James Dale Davidson and William Rees-Mogg.
*Consider the fact that you spend twenty of the most productive years of your life paying off a mortgage (deathcage) bond.
*Wake up. This might help:
“Apocalypse” is a Greek word meaning “the lifting of the veil between you and God,” (or Knowledge or Reality).
“The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was ever invented. Banking was conceived in inequity and born in sin … Bankers own the earth. Take it away from them but leave them the power to create money, and, with a flick of a pen, they will create enough money to buy it back again … Take this great power away from them and all great fortunes like mine will disappear, for then this would be a better and happier world to live in … But, if you want to continue to be the slaves of bankers and pay the cost of your own slavery, then let bankers continue to create money and control credit. ”
Sir Josiah Stamp, director of the Bank of England and the second richest man in Britain in the 1920s, speaking at the University of Texas in 1927.
“In a dark time, the eye begins to see,”
Theodore Roethke.
“CAPITALISM IS A SYSTEM THROUGH WHICH WEALTH IS REGULARLY TRANSFERED (STOLEN) FROM THOSE WHO CREATE IT TO THOSE WHO ARE ALREADY WEALTHY, WHILE THOSE WHO CREATE IT ARE KEPT UNAWARE OF THE THEFT BY ‘THE MATRIX’ ” – t.d.
“All wealth is created by work.” – Adam Smith.
It’s becoming clear to many more people every day how the ‘matrix’ – the system – works, and how the Internet is the leaky bucket out of which the truth (Apocalypse) is flying and the leaks – like Ellen Brown, Rense, What Really hAPPENED ET AL, are hopefully out of control.
Since the early goldsmiths discovered fractional (reserve) banking, (created money out of thin air) and introduced predatory lending, they have been thrown out of every courntry they set up in, after which those countries returned to resource-based economies and went through several decades of economic recovery.
Until the sixteenth century, in Holland.
Then and there, when the goldsmiths were discovered plying their usurious debt / lending system, the already wealthy government and merchant classes simply joined them in the first full “collusion among corporatocracy, authoritarian government, controlled media and education.” – Fascism. (Global Research).
Add bankers to that conspiracy and you have the recipe for the last three hundred years of fiscal theft through market manipulation by ‘The Establishment’, The ‘Elite’, the ‘Illuminati’ or the “Rothschild Family’, take your pick, but once government was in on the scam, the wealth that the lower and middle classes created by work was harvested every fifty years or so.
Holland was, I believe, the site of the first experiment in money market manipulation by this collusion of classes.
‘Tulip Mania’ is regarded as seriously silly season stuff among some debunkers, but which today is also a generic for an ‘out-of-control’ Bull Market.
The thing is, it was for keeps.
‘Tulip Mania’ is a controlled boom situation; controlled by those who run the Great Wealth Shift every generation, starting with the South Sea Bubble crash in 1720.
This set of conclusions is largely gathered from a monetary history according to James Dale Davidson and William Rees-Mogg: Every fifty years or so since the South Sea Crash, financial markets have peaked – and exactly nine years later, crashed – followed by a depression during which, bracketed by expensive wars, vast amounts of properties have been foreclosed and the ‘masters’ transfered huge amounts of the wealth accumulated by the working class – “all wealth is created by work” (Adam Smith) – who were left to starve.
Just like today.
THE SHIFT IN WORLD ECONOMIC PREDOMINANCE
“All long-term credit cycles end with asset crashes in the markets of the leading economy. Measuring from crash to crash the dates of the modern credit cycles are as follows:”(starting with the South Sea Bubble)
Span Duration
1720 – 1772 52 years
1772 – 1825 53 years
1825 – 1873 48 years
1873 – 1929 56 years
1929 – 1990 61 years
“The crashes and resulting depressions appear to be less intense and traumatic when the end of the cycle does not coincide with a shift in world economic predominance.” – The Great Reckoning, James Dale Davidson & William Rees-Mogg, 1993.
Recent benchmarks are Common Cause:
1907 Financial Panic
1913 The privately-owned American Federal Reserve (FED) System Created
1929 The Great Depression – (Nice work, FED and Benjamin Shalom B. is returned to office!!)
1933 Theodore Roosevelt’s Executive Order 6102 outlaws owning gold
1934 Gold Reserve Act freezes gold at $35 per ounce
1971 United States abandons gold standard
1974 U.S. citizens allowed to own gold
2009 Gold exceeds $1100 per ounce
The depression following the 1990 crash is fully upon us and the consequences are global because we are in the middle of the biggest shift in world economic predominance.
We will not see the end of it for a long while – all we will see are futile reports of the transfer of huge amounts of money to the banking cartels and hear their stories of ‘green shoots’ and ‘recovery’.
Until people are back to work there is no recovery.
The essence of fiscal control is not race, religion or nationality but just a passion for control over other humans.
SOVEREIGN MONEY
Both Lincoln and Kennedy were assassinated after introducing sovereign currencies, which were quickly removed from circulation after the killings.
What happened to Schwartzenegger’s IOUs? They were de facto sovereign currency paid back on maturity by the state at a 3.75% interest.
(It took the entire western world including Russia, incidentally, to crush Hitler who had also introduced sovereign money against the web of banking debt).
When the directors of the Bank of England asked what was responsible for the booming economy of the young American colonies, Benjamin Franklin explained that the colonial governments issued their own money, which they both lent and spent into the economy:
“In the Colonies,” he said, “we issue our own paper money. It is called ‘Colonial Scrip.’ We issue it in proper proportion to make the goods pass easily from the producers to the consumers. In this manner, creating ourselves our own paper money, we control its purchasing power and we have no interest to pay to no one. You see, a legitimate government can both spend and lend money into circulation, while banks can only lend significant amounts of their promissory bank notes, for they can neither give away nor spend but a tiny fraction of the money the people need.
“Thus, when your bankers here in England place money in circulation, there is always a debt principal to be returned and usury to be paid. The result is that you have always too little credit in circulation to give the workers full employment. You do not have too many workers, you have too little money in circulation, and that which circulates, all bears the endless burden of unpayable debt and usury.” (Wikipedia)
One of the most significant – and Apocalyptic – leaks is Ellen Brown’s book, ‘Web of Debt’ along with the Global Warming lies now out in the open.
The Bilderbergs / governments / banks / merchants / landowners / fake scientists / Big Pharma and the rest are now too big not to fail at keeping their secrets.
Solution?
This will set us free:
Return to resource-based economies.
Do not borrow unless it’s from a state, county, city or people-owned bank that does not charge interest.
Gather together and itemize all the resources of your community and learn to barter.
Keep your wealth to yourselves. – you created it.
Above all, don’t listen to snake oil salesmen like Obummer and Al Bore who are just stealing while callously killing your children for money.
(Required reading: http://www.lexrex.com/enlightened/articles/warisaracket.htm
Tacitus, “The Annals of Rome”, Book Six).
(Optional: http://whatreallyhappened.com/WRHARTICLES/grandtheft.php)
THE BUSINESS OF BANKERS IS WAR, SO:
“I am as intolerant of imperialistic designs on the part of other nations as I was of such designs on the part of Germany. The choice is between two ideals; on the one hand, the ideal of democracy, which represents the rights of free peoples everywhere to govern themselves, and, the ideal of imperialism which seeks to dominate by force and unjust power, an ideal which is by no means dead and which is earnestly [sought] in many quarters still.” U.S. President Woodrow Wilson, July 1919
“Fight and kill the disbelievers wherever you find them, take them captive, harass them, lie in wait and ambush them using every stratagem of war.” The Qur’an (9:5), Islam’s holy book
“We are fighting them (the terrorists) over there so that we won’t have to fight them here at home.” Former U.S. President George W. Bush.
“I, like any head of state, reserve the right to act unilaterally if necessary to defend my nation.” U.S. President Barack Obama, December 10, 2009
“When the tyrant has disposed of foreign enemies by conquest…and there is nothing to fear from them, then he is always stirring up some war.” Plato, ancient Greek philosopher (428/427-348/347 B.C.)
Ken, have checked out the IVAMU site. What happens if this ‘golden paper money’ is burnt to extract its gold content in the way that gold coins used to be ‘clipped’, which was the reason why gold coins gave way to coins of base metal content?
(There may be a solution contained in Thunderhawk’s views in this forum: http://www.democracyforum.co.uk/economy/70530-can-we-live-without-money.html)
One word: velocity
This article articulates the money supply methodology using fiat currency fairly well, but it omits the one aspect that all such criticisms do: time. It is disingenuous to mis-match securities to day zero. Asking for every dollar loaned over widely varying periods of maturity to be immediately returned is nonsensical. To put it in microeconomic terms, an individual on a $50k salary who borrows $200k, will pay about ~$1.4k per month over 25 years @ 7% pa. Were the borrower asked to repay the entire sum TODAY does that mean the borrower is insolvent? No. The borrower has 25 years of income, which if NPV’d at a 7% discount rate, shows the borrower is quite solvent. If these data sets for US debt are to be put in their correct perspective, GDP must be summed for the same period at the debt, or its average maturity. To present the debt as a fraction of one year’s GDP only is just bad math. Yes, I’m an economist, and yes I used to work for a bank
The article is correct in its assumption but the explanation is not complete. To understand perfectly how the system works and why it is inherently unstable go to http://www.bibocurrency.org and read the bibocurrency rationale.
Depressed and now have a headache before starting my day, thank you!
great post.
1. Eliminating the Fed is not going to happen. JFK tried and look where he ended up.
2. Ever since government stopped guaranteeing $$$$ with gold – $$$ have no real value, its just paper with very nice pictures.(the value is based on believe, good faith, call it what you want)
3. The debt national debt vs.currency in circulation/treasuries/etc everything is connected/ the amount of currency + fed % rates moderate inflation/ but at the end it doesn’t really matter/ money is created on the computer screens now, and we see printed currency only in the evens like bailout (which by the way wasn’t the first one, probably not the last either)The rest is being recycled..
4. Catch-22 – congress is a bunch of puppets directed by the corporate sponsors (donations, donations, donations) or otherwise purchased just like in the mall.
5.IVAMU???? is this a joke idea? the only sensible and logical thing to do would be denationalization of money – anyone interested in what it is – read DENATIONALIZATION OF MONEY -ARGUMENT REFINED BY F.A. HAYEK. (as to practicality it would have to be applied, like every theory, but it makes sense)
6. To control society you don’t need debt – but ignorance, and fear factor (but there is no 50K to win)
7. someone mentioned WWIII on the discussion board, “i wonder where would it take place this time” because last two did not touch USA (oh yeah Pearl Harbor)could prevent it, but there had to be some excuse just like 9/11.
8. dont have this one
9. i like to see both side of the stick, and i would really like to see the other one….
10. Ups i did it again, 1913, 1920-30,1984 ups 1987, 2007-09-…ongoing. craps 2012 uuuuuuuu pt. 6
o just remembered nr.8 – global warming – or should i say climate change – or should i say natural change scientifically proven. I think i remember reading something about orbital changes and distance that the earth changes – similarly to 4 seasons
If you lend a cup of sugar you expect to get back something more than the cup of sugar, to make up for the fact that you’ve incurred a cost in going without the sugar and risked it never being returned.
Money is not required for repaying debt, so the premise of the article is bunk. Suppose the debt is to China, for the supply of a billion t-shirts, 200 million microwave ovens, etc. To repay the debt the US has to create a billion t-shirts, 200 million microwave ovens etc (plus interest) more than it consumes. The important bit is that the debtor’s production must be more than its consumption.
Now introduce money into the equation and start from zero cash in the US. The US has assets such as mining rights, so they can sell something to a dollar holder for cash. The cash can be used to repay debt, or it can be invested in productive activities which generate a profit. The tipping point for a country being or not being able to repay its debt is not related to the money supply. What you need to look at is the relationship between productivity, consumption, assets, debt and interest rates. Current and future generations of Americans need to (a) produce more than they consume to make up for the past generations which consumed more than they produced. Or they can (b) reject the inequitable system and default. Or they can (c) embrace the inequitable system and use the world’s largest military and most brainwashed population to go on a global pillaging spree in the name of freedom. My money’s not on (a).
Remember, when a debt is repaid with money it is the debt which disappears, not the money. The money continues to circulate so a penny can pay off an infinite amount of debt.
Lol barts a moron, sound like he gets his “information” from mainstream media. Like listening to an exact recording of the “news” on national tv. Wake up FOOL, youve been had!
One major flaw in the argument. Your right on how the money supply works and expands, but your forgetting that money is still just pieces of paper floating around. They really do not have value. Our goods and services are what really has value. How would it be mathematically impossible to pay back our debt with our goods and services when our debt has not yet even reached the dollar amount of all goods and services we produce in 1 year. Not even one year worth of our goods and services (GDP) would be needed to pay the debt back. We have had much higher debt in the past comparably. This is if you actually look at our debt compared to GDP. This is like you would look at your own debt compared to your income in your household. If my debt was equal to my income this year, I might be very worried, but it’s not the end of the world.
Hi, the founding fathers of the USA also said (iirc) that the people needed to be educated. For ppl (like me) who are not professionally in banking the money issue (in full) can seem complicated. I think that for sufficient political oversight #1 thing for a new system must be simplicity. Only what is simple people can understand, only what people can understand they can inspect, police & keep righteous.
What do you think of this system: a Gov issued fiat, legal tender law, fit for debt, and taxes payed in it. Now the money will work as money in exchange. Then a central gov owned bank as the infrastructural backbone, with collective accounts for banks (privacy from gov). Retail account & savings account services banks who are prohibited to lend out a single dime (inspected by gov), by law prohibited to lend anything. Then a separate mortgage & consumer credit sector, also heavily policed by gov. By law nobody can resell a loan to a third party. Then a third sector which handles business upstart & expansion credit, these investments are in the form of plain loans and can neither be traded to third parties.
It is my understanding that this third sector has to be dominated by political will of the people, to prevent that sector from growing up those tiranical and corrupt corporations the USA founding fathers may have talked about.
The money would then be spend into circulation and taxed out of it, the government never lends a single coin from anyone (only taxes). As a rule the (next) government never pays back loans, so that future govs won`t be able to get credit either …
I`d say this is simple, what people expect too. To round it off: international businesses are prohibited henceforth, and politics rules on import/export tariffs to protect its markets and industries out of long term self interest (at a cost to global economic effeciency). This program also requires the government to be a faithful true democracy … …
Is this something, if not why ? I personally don`t believe in gold / silver money that much. (Sorry to post such a long comment.)
[...] Original Story [...]
The reason the status quo exists is because of ignorance. Politicians, Bankers and the “Elite” rule because the sheeple can’t grasp what is going on and are complacent slaves oblivious to puppeteers manipulations. Our “Leaders” in this country are only in control of the destiny of our nation to the extent that they are allowed. If the sheeple were able to peek behind the curtain the revolution would already be upon us. “taught” (in congress) and the president If the government is able to keep
What we are seeing is the last and greatest betrayal of the American people. Next stop, serfdom.
Okay people, let me make this simple. CHINA owns us. Technically, at any moment, they can say – we want our money. And guess what? We can’t pay it. You know HOW we can pay it back though? Obviously not with our money…. (it’s worth nothing) We don’t have enough gold. But we do have real estate…. Yep, they can collect our collateral… Our precious land. And guess what else? The Chinese are COMMUNIST. SO, I guess our freedom IS for sale– Is there ANYONE out there with ANY kind of economic sense? Because this Congress and this administration are KILLING us (or at least SELLING us!)
Josh,
The money is owed to yourself and other Americans. Social Security money has been wasted and effectively funded Wall Street Bonuses this year and last year. Same for other liabilities (medicare!). So, when you portend the money will not be paid back then you are correct. The only problem is the losers are working Americans. Not Billionaires. Not Congress persons. Not the FED or their posse for sure! Fractional banking is a simple system to steal from those who produce value and give to those who control the printing press. Very simple. Very effective. (BTW, the legal limit in the UK is 666 fake credit bubble pounds to every actual pound on deposit. At least one bank made it up to 66 to 1 in 2008.)
The debt is phony, and the people of this country didn’t sign anything agreeing to pay off loans that didn’t go to them.
Each state legislature should immediately declare its independence from the brothel in DC, confiscate every military base within its borders (they paid for them, didn’t they?), start their own state banks, COIN their own money, and tell the criminals in DC to pound sand. The CONstitution isn’t legally binding on ANYBODY, and never has been, which means that the criminal syndicate calling itself the federal government has neither legitimacy nor legal authority.
Here’s how I see it:
Fractional banking is a simple way to steal from those who work. For every $1 you earn from working, they print $1 or so for themselves; so, no matter how hard you work, you will never get ahead.
Josh, Its actually worse than you portend. The theft is from each American in the way of Social Security, Medicare, etc. That money has been stolen and is gone.
“Fractional banking” is criminal. It is a way for those who do not work to reward themselves and take from others. Imagine if you offered auto insurance to all your friends and neighbors. What if one had a wreck and asked you to pay? How is this any different than what AIG did? The difference is they control the government and can take from the taxpayers. You cannot. The same for the FED. Imagine if you borrowed money from all of your friends and family to the point you borrowed $10,000 but you only really had $100. Well, that’s fractional banking. To make it worse, imagine if you never even had the $100 in the first place but your brother had given you an IOU for it – even though he himself was broke! That’s how the Federal Reserve Banking System works. Its a simple con job on trusting Americans. And it has destroyed the USA.
(The legal limit in the UK is 666 to 1. One banks was leverage 66 to 1 in 2008. They are all probably higher now since the derivatives markets are back in the stratosphere.)
Glenn Peters,
Do you have any idea what GDP is? Step out of the box and think about it for a minute! GDP is a measure of “tax ability” NOT productiveness. I’m sure you know how its components but others should look it up. Its good for a laugh and a cry. Anyone who quotes GDP as having any meaning to value of a country’s workforce and value of th country’s working people is either brainwashed, on the take, or ignorant of the facts.
The Elites “solution” to this problem was always for the Elites to move their financial operations to countries that still have wealth not yet appropriated, formally dissolve the USA Constitution, dissolve USA sovereignty, and make the US military the official enforcement arm of the United Nations (that is what Elites in control of the UN have wanted to protect “their” wealth, and prevent any other countries from threatening their power and control). The actual solution is going to be global rebellion against the Elites, denial of validity of all their ownership contracts, their apprehension, and execution. All assets will be returned. There will probably be some form of globalization, but not run by criminal organizations.
I believe there was a president who went against the norm and began printing U.S Notes – but he was killed soon after.
I’d say what’s missing from the article is that the US debt (including unfunded liabilities) is over 100 Trillion. Like the Romans, they promised much more then the state could deliver to their overly vast military and other government run organizations.
Though I don’t know how much I disagree with fractional reserve. Lending permits new companies to exist, you might even say that the west is so well developed because of its lending system…..but that’s just a thought, not a statement
strike last comment – he addressed unfunded liabilities in an update
Thank you Obama, Pelosi, Reid, et al for further adding to the debt by their socialist system of entitlement!!!!!!!
Cash in circulation can exceed debt/credit. Yes. How? whn people start putting more money under the matresses and not in Bank
What is the value of real estate owned by the government? How much of that could be sold and leased back to cut the debt by, say, 60%? There must be all kinds of hidden assets that the Ruling Class don’t want us to know about. What if we cut our defense budget to $100 billion a year, cut all foreign aid… daydreaming. What a bunch of crocs we have in Congress. Go Green, Recycle Congress. SERFDOM Or FREEDOM.
The federal reserve did not lend us any money. They lent us paper. Pay them back with reams of paper. If their paper is worth something just because they say it is then so is ours. They aren’t God; they’re just a bank.
Here’s some solutions and suggestions:
1. Setting up local currencies in your own town or city
http://www.newrules.org/retail/article/new-deal-local-economies
2. Tangible bartering for services and supplies within your community-keep it local
3. Get back to farming-organically-support your local farmer’s market or participate.
4. If you have to spend money, don’t spend it on the big corporations-give it to the local guy (even if its a little more expensive).
5. Stop participating in what the establishment wants us to participate in. The U.S government/ world banks/the UN/the Fed/the Media-> ALL IN BED TOGETHER-THEY DON’T CARE ABOUT US!!!
Watch:
http://www.youtube.com/watch?v=eAaQNACwaLw
http://www.youtube.com/watch?v=VebOTc-7shU
6. Buy commodities-seeds, food, precious metals…GET OUT OF THE DOLLAR!!!
http://www.theinternationalforecaster.com/
7. Make and invent your own energy and money saving ideas-> Google: “Suppressed Energy Technology”
Who do we owe money to? We don’t owe ANYBODY a dime. The money is created as a means of exchange and tender. That is what the CONSTITUTION states.
What the filthy, lying FED is doing is tacking on their MONEY-CHANGER fee. And we all know WHO the money changers are. They want to live a life of EXTREME wealth without having to work for it.
All this debt… who made profit from it and why??? I paid my house twice its value because of interests, but the money I was lent by the bank was pure invention from the bank… they did not have the money they lent me ( they legally need to have 10% ) of what they lend and the rest is AIR but I have to pay them interest on that AIR. It seems that the problem is the thiefs of the banking system and the Federal Reserve … and whoever profits from the interests on inexistent money… are the very persons who are taking the world’s economies hostage (some form of real slavery). The Federal Reserve + the banking system is THE problem.
Ace post – here’s more on the Federal Reserve/Rothschilds who also own the Bank of England and set the Gold Standard.
Lincoln also stood up to them – end of Lincoln.
Jackson, being a canny Ulsterman survived many assassination attempts.
Hamilton was allegedly the Rothschild’s inside man who tried to set up a Bank of America similar to their Bank of England.
They make their Banks and establishments appear to have Government status, and own 50% of the world’s assets.
the dynasty started with goldsmith Amschel Meyer who nailed a red shield to his door and called himself Rotschild. The House has bankrolled most major wars and profited handsomely therefrom. Not for all their fortune would I want the blood of one soldier on my hands.
Apparently five TRILLION dollars disappeared in the first week of the bankers bailout…and another 4.8 billion since…?
The Obama Deception
http://www.youtube.com/watch?v=eAaQNACwaLw&feature=fvw
http://www.youtube.com/watch?v=USGSOViaulc rothschild and american history
http://www.youtube.com/watch?v=CkzFbKeK5kM&feature=related
Who are the rothschilds
http://www.youtube.com/watch?v=8F4IGwuKdUQ&NR=1 Rots vs people econs
http://www.youtube.com/watch?v=8F4IGwuKdUQ&NR=1 Rot econs 101
The problem that is not addressed here is not money creation, which through fractional reserve banking gives banks the power to create credit from nothing. The real problem is interest. When the money supply is expanded via fractional reserve banking it creates more money to be injected into the money supply. However loans also charge interest. Only the money created for the loan contract or principal is actually distributed in the money supply. The money to pay the interest is not created in the money supply, thus creates a system of perpetual inflation. This is a lose-lose situation for the person taking the loan for not only does the amount of money in the money supply not even exist to pay off the interest, but the original loan that was taken devalues the money we already have. This means that not only are bankruptcies inevitable, but everyone is taxed subversively via inflation.
It’s sad read about how certain people on this blog try to make others feel IGNORANT because of thier lack of knowledge on the subject. This is a place where people from all over come in and pitch in their thoughts and opinons about whats happening to our corrupt financial system. This not to see who is the brightest in financial analysis and to see who is good about historical facts. so do us a favor the next time u post something dont make remarks about how dumb someone is in regards to the situation because honestly, its only shows how full of BS you really are.