In other words, it's a disorganized mess, the traps and barriers of which are often hard to see amid the complexity that passes for economics and the incomprehensible waffle that governments and the media spew out as “explanations” of why things aren’t running right.
If one wishes to make something run better one has to first know the cause of it running badly so that one can remove that cause.
At the risk of flogging to death the analogy I used in What Is Money?, imagine a car. It is a very fine, powerful car but it just won’t run. It coughs and splutters and dies. Try as one might one cannot work out what is wrong with it. One has the bonnet up, one checks everything from the carburettor to the fuel pump, from the state of the battery to whether there is any fuel in the tank. One changes the spark plugs and renews the cam belt and checks the timing. Yet still it won’t run. One sacks one’s mechanic and hires a new one and the new man goes over the thing with a fine tooth comb and winds up with a blank look on his face and a helpless shrug. So one sacks him and hires yet another mechanic. who also fails to make the car go. So one dumps the car and buys a new one, a different model. But this one manifests the same problems and off we go again on a now familiar merry-go-round of frustrations.
In the end perhaps one concludes in exasperation that “cars are just unreliable things” and that “mechanics are con merchants who don’t really know what they are doing.” None of which solves the problem, which we have now decided is beyond the wit of Man to resolve. What on Earth can be wrong with these ruddy cars?
One gets even more basic than spark plugs and the state of the battery and one day checks the nature of the fuel itself. Now that’s well south of where we would expect the cause of the problem to lie. The nature of the fuel itself is above suspicion because “everybody knows” there’s gasoline in the tank. Of course there is! Yet, lo and behold, one discovers that the station where we buy the fuel has been selling us kerosene labelled as gasoline. So one buys fuel elsewhere, makes sure it’s actually gasoline in the tank, cleans out the engine of the residues of counterfeit fuel and the car runs like a dream.
The problem with our spluttering, disaster-prone economy is just about that ridiculously basic - and in this essay I am going to sketch out an explanation of that basic for you.
THE MISSING PIECES OF THE JIGSAW
Most of our economic ills are a symptom of an underlying cause the way a fever indicates the presence of a virus.
That cause is a hoax so scandalous those responsible throw up a screen of bewildering complexity so as to hide it from view.
Which seems to me to be a perfectly good reason for explaining it to you.
What I wish to bring to your attention is probably the cleverest fraud ever dreamed up by the criminal mind. And every single one of us is being taken for a ride.
We endure crippling taxation, widespread debt, a crumbling economy and the disappearance of entire industries as if these are somehow natural disasters, but they are not acts of nature, they are Man-made. What is made by Man can be unmade by Man.
In order to make sense of what is happening, all one needs to know is a few missing facts and, like a jigsaw when the last missing pieces are slotted neatly into place, the picture becomes clear.
The effort to hide the missing pieces of the jigsaw from view has brought about a lot of yakety-yak, confusion and noise about how the economy works - and the fundamental simplicity of money itself has been distorted.
Therefore in order for you to understand clearly the hoax I wish to explain to you, it is necessary for us to pause briefly and establish a very simple basic: what precisely is money and what is it supposed to do?
I have outlined this at length in my essay What Is Money and I recommend you read that essay first, for a full explanation and then the History of Money, which will further clarify things.
WHERE DOES MONEY COME FROM?
Most people assume that money gets into the economy because the government prints notes and mints coins and dishes them out in some way.
Unfortunately this is currently not what is happening.
It is true that the government has notes and coins made and then spends them into the economy and this is perfectly fine and dandy. It is how money should be made and circulated and government merely needs to regulate its supply so that there is not too much or too little of it in circulation and its value remains as stable as possible.
At the root of our economic problems however lies the startling truth that this sane, simple method of money creation only accounts for a tiny fraction (about 3%) of all the money in circulation.
Almost all the nation's money - around 97% - isn't created by the government at all. It is created by private-profit corporations known as banks and it is then loaned to the economy at interest.
Government has dropped the ball of supplying the economy with money. The amount of notes and coins it supplies falls woefully short of the economy’s needs for money.
There is a massive shortfall of money supply, which is bridged by the supply of money from another source, the banking sector.
The supply of money by the banking sector comes with strings attached: the money is only loaned to the economy and interest is charged on the loan. Those strings completely sabotage the ability of that “money” to operate as true money should - as a support and facilitator of economic activity. In fact it becomes a serious hindrance to economic activity and will eventually destroy it.
It is beyond the scope of this essay to go into how and why this came about but you will, if you are interested, find it an explanation here.
Let us however remain focused on the central point: how our money is created and gotten into circulation right here and right now.
THE GREAT LENDING HOAX
Virtually all money enters the economy through bank lending, when a bank or similar money lending institution lends you, me, a business, a local council or the government money. When the borrower spends that borrowed money, it enters circulation.
There are two main routes by which almost all money is currently supplied to the economy: by banks lending to individuals and companies on one hand and on the other hand by banks lending to the government.
The next question is an obvious one: from where does the bank get the money that it lends to people, businesses and government?
The answer is somewhat less predictable. Get this: it does not come from anywhere. It does not exist until it is loaned. It is created out of thin air.
That's right: when a bank lends money to you, me, a business or government, it creates new money out of nothing in order to lend it.
How does a bank create money out of nothing? Simple.
Let's imagine that Joe Citizen goes to the bank for a £5000 loan. The bank ever so kindly - and with an air of taking a profound financial gamble on Joe's trustworthiness - agrees to make the loan. The figure £5000 is credited to Joe's account and he can now spend that £5000 in the economy by writing cheques against it.
But when the bank credits Joe with £5000 nobody else's account is debited!
Tom, Dick or Harry do not receive a letter from the bank saying they cannot spend some of the money in their savings accounts because it has been loaned to Joe for a few years. It does not work that way at all, although people are allowed to assume that it does.
All that actually happens is that the number £5000 has been credited to Joe's account and that is all that has happened. That loan is nothing more than a ledger entry: nowadays, the changing of numbers in a computer's memory. All it takes is a click of computer keys and, hey presto, the bank has created £5000 out of nothing.
GIVE IT A FANCY NAME
This method of creating money out of nothing is given a fancy name: fractional reserve lending.
Put simply, it is the notion that if the bank has, say, £1000, in gold sitting in a vault somewhere, the law gives it the right to lend that £1000 to many different borrowers at the same time. It can, simply through a process of making ledger entries, register a credit of £1000 to Joe's account, a credit of £1000 to Jim's account, a credit of £1000 to Mike's account and so on.
Each credit of £1000 is backed up by that solitary £1000 still sitting in its reserves. Nowadays it is even worse than that because banks are no longer required to have real gold sitting in a vault against which to lend: they can now lend against a ledger entry saying they have £1000!
The Banks can do this because as borrowers' accounts are credited with these loans no real, solid money such as notes and coins has to change hands: all that occurs is the adjusting of numbers in columns of figures: just that and nothing more.
This is the way bank lending works: the creation out of thin air of new money as an interest-bearing loan.
Most people, including the vast majority of innocent bank employees, bank executives and politicians are either unaware that this is what is happening or have not realised the terrible harm this is doing to their fellow man.
Any economics text book for example will include a section that describes how banks create money in order to lend it. What they never do is explore the consequences of the process for the rest of us and the distortions this introduces.
There is nothing wrong with us using electronic money provided people have confidence in it but as I discussed in "What is Money?" new money must be supplied to the economy to facilitate exchange and as a service to the economy. It must not be loaned and certainly not at interest, which amounts to hiring out to us our own means of exchange and charging us a tax or toll for its use.
And he who has the job of money creation must never never never have the right to use the money he creates for his own gain, otherwise he has access to all the wealth of the economy without having produced anything to earn it!
THE REALLY SINISTER BIT
Now, the really sinister bit is this: because that £5000 given in our example is a loan, it has to be paid back at interest.
When £5000 is loaned to Joe, interest is added and Joe now owes (say) £8000. Joe pays that money back in time, through honest hard work and real wealth creation. As the loan is paid off, the original £5000 created out of nothing to provide the loan returns to the bank, vanishes from circulation and is effectively cancelled out of existence again. However the bank accounts the interest on the loan - £3000 in our example - as its profit, not a bad return on the few minutes it takes to move around numbers in a computer, or the "risk" of lending money it did not have in the first place.
Every time the bank creates and lends £5000 out of nothing, it is at the same time, because of the interest added, creating a debt of £8000! In other words, debt is being created at a faster rate than money is being created.
Although it creates the £5000 to lend, the bank does not create the interest on the loan.
This practice has been going on for a very long time, during which time millions of such loan transactions have taken place, each one lending money into existence and adding it to the money stock - but each time adding an even greater debt to the economy's overall level of indebtedness.
As the debts are repaid, money is continually being removed from circulation, necessitating a further round of borrowing to replace it and with each round of borrowing siphoning, through interest payments, an increasing amount of existing money into ownership of the banks.
As a result we have long since passed the point where the bank-created debt-money far exceeds the relatively tiny amount of money created as notes and coins by the government.
In fact the overall debt far exceeds the total amount of money in circulation!
UN-REPAYABLE DEBT
If we simplify the numbers and imagine the banks have created and lent to the economy a total money stock of £100 billion, to which is added 10% interest, then we can see that the economy as a whole owes to the banks £110 billion. But as there is only £100 billion in existence, all the debt in the economy can never be paid off!
The £110 billion of debt is owed by businesses, individuals, mortgage holders, local authorities and central government.
This tells us two things: first, it is utterly impossible for all those debtors to clear their debts, even if £100 billion of debts were cleared there would have to remain £10 billion of debts that cannot be cleared. Second, for the £100 billion of debts to be cleared all the money in circulation would have to wind up in the possession of the banks and nobody else would have any money!
How then is the economy supposed to honour its debts? How does it find the money to pay off the £10 billion interest on the debt, which does not exist?
Clearly, as loans are being repaid the disappearing money has to be replaced: in other words more money has to be created. How is it created? The banks create it out of thin air and lend it and, of course, as they do so create another debt which is greater than the total amount of money created and which therefore can never be paid off....except by borrowing more money into existence.
Look at it another way; the bank creates £5000 and lends it to Joe as per our above example. In time Joe has to pay that £5000 back. But he also has to find £3000 interest from money already in existence - but as that £3000 is only in the economy because it was created by an earlier round of lending and is already owed, it is now owed twice!
If we total up all the private, commercial and government debt in the economy, we find that well over a trillion pounds is owed. The total amount of money currently in circulation is roughly only half that amount.
If we ever endeavoured to pay off all our debts to the lending institutions, all the money in the economy would disappear into a black hole and we would still owe massive debts.
And those remaining debts could not then be settled because there is no money with which to settle them. Tthe nation in effect would be in default of its debts and the banks would have the right to seize the homes, farms and businesses on which the debts are secured - to the value of half a trillion pounds!
It is very easy in the modern world to slide into debt and well nigh impossible to get out of it again. Well, now you know why.
WHY ARE WE RUNNING OUT OF MONEY?
You have probably noticed that there is a worsening shortage of money at every level of the economy - a shortage increasingly bridged by borrowing.
The rules of the present system we are using dictate that debt must exist if there is to be any money!
Worse than that, not only must there be debt, the level of debt must continually increase merely to support economic activity at a certain level, not to mention permit economic growth.
This is easy to see why if we simplify the figures again:
Imagine an economy with £100 billion in circulation in it, which is just the right amount of money for the level of economic production and exchange that must be sustained.
That £100 billion exists because someone - many someones - took out loans and mortgages and borrowed it into existence. But they did so at interest, let’s say 10% for the sake of simplicity. So the economy’s many borrowers together owe £110 billion in all and, in order to settle all the debts, more money must be removed from general circulation than was supplied to the economy by the round of borrowing that created it.
That money must be replaced if the economy is not to be drained of money and thrown into massive recession and eventual ruin.
It is replaced by further borrowing of new money into existence.
In this next round of borrowing however £110 billion must be borrowed. But that too is borrowed at interest, meaning that £110 billion plus £11 billion must over time be removed from general circulation and flowed to the money lenders, a total of £121 billion.
But that £121 billion must also be replaced if the economy is not to be drained of money, so over a period of time £121 billion of new money must be created. It too is created by the mechanics of lending and must be repaid at interest.
It is easy to see that even without expanding the economy, just keeping it at the same level, the volume of debt must continually escalate. Forever. This of course is precisely what is happening to us and the reason why we experience an apparent money scarcity while debt levels everywhere are increasing.
We are never told that there is no way debt can do anything but increase - because the only cure for the malaise is to cut out the cancer, the system of money creation that enriches the world’s banks through the stream of interest payments on those debts. We are somehow made to feel it is our fault for "not being frugal enough" or some such thing.
The mechanism I have described here is, in real life, made much more complex than my example and it is further obscured by the fact that all the outstanding debt does not have to be repaid at any one moment. It is staggered over sometimes long periods of time: money returning to the banking sector in a continuous stream from millions of borrowers, new money continually created in a continuous stream flowing to new borrowers.
The net effect however is rather like a bucket with a hole in it: as fast as it is filled up it empties. Indeed as the hole gradually widens it empties faster than it can be filled up! And if you have to pay for the water you pour into the bucket at ever increasing speed, then your water bill will escalate at an accelerating rate as time goes by.
As debt increases, more and more of the money in circulation is committed to servicing that debt through the weekly, monthly and annual instalments on loans, mortgages, overdrafts, credit cards and so forth. As you are no doubt well aware, money committed to servicing debt is money that cannot be used in any other way except to pay one's creditors.
A man brings home £300 per week. He must pay the bank £100 per week on his mortgage and a further £30 per week on bank loans, credit cards, overdrafts and so on. Therefore total of £130 of his income cannot be spent on goods and services.
Over time his debt levels increase and his repayments thereon rise to, say £40 per week while a rise in interest rates increases his mortgage payments to £110 per week. He now has only £150 a week to spend on goods and services because he is flowing more money to the banking sector.
He and the shops and so on where he spends his money are consequently worse off. So he demands a pay rise and the shops raise their prices so as to try to maintain living standards and avoid becoming and remaining poorer. And so we have what is referred as “inflation” - a phenomenon caused not by too much money chasing too few goods, the classic definition of inflation, but an over-supply of debt.
Governments criticise workers for wanting more pay and businesses for putting up their prices, blaming it on greed! In other words they make the citizenry wrong for trying not to become poorer when the entire phenomenon results from government’s failure to do its job of money supply, having gifted to the banking sector the privilege of creating money for its own enrichment, no matter what the cost to the ordinary citizen!
The cumulative effect of all this is a money shortage, a growing constriction of the stock of circulating money that is actually available to people to spend on goods and services. This accounts for the strange phenomenon of the economy appearing to be awash with money yet more and more people being unable to afford the goods and services that are available. A clear example of this is the escalation of mortgage borrowing with an ever greater slice of a household’s income being captured by the demands of servicing the mortgage.
This constriction of spending power itself drives consumers into more borrowing so as to bridge the shortfall in their spending power. It creates a money shortage that is often misleadingly referred to as a "drop in demand," which suggests that somehow people have lost interest in buying the cars, washing machines, hair spray and self-assembly kitchen units they were only too happy to buy before.
It is not in fact demand that has fallen at all but the consumer's ability to find enough tokens (unless he or she borrows them) with which to express his or her demand, a different thing entirely.
As we continue to supply the economy with bogus money through this mechanism of bank lending, the banking sector accumulates vast riches through the raking in of interest, while the rest of us enable them to do so by sinking ever deeper into debt.
It is the interest on outstanding debt that constitutes bank profits. The interest of the banks is not in people getting out of debt but in people, businesses and governments getting into debt...and staying there.
There is hardly any true money in the economy at all - merely a vast surplus of debt, a counterfeit masquerading as money.
This error is the reason our economy works erratically, is unstable and appears to be perpetually out of control, why steered in one direction it promptly lurches in another, unexpected direction.
Returning to the analogy of the spluttering car: we are using kerosene in the belief that we are using gasoline.
POWER
This places a terrible power in the hands of the international banking cartels because they can control the fortunes of any economy - and thereby all the citizens of any nation - by regulating the money supply through granting or withholding loans. They can crash or boom any economy as they see fit and are at this very moment engaged in the process of doing just that.
Through control of the money supply, the banking sector controls taxation levels, the cost of your home, and your car, the general condition of the economic environment in which you are trying to survive, your disposable income, the success or failure of your company and the general cost of living.
Theoretically banks are merely private businesses providing a service to their customers, yet these private businesses have achieved without our consent a position of almost totalitarian power over our lives and over our governments, through their ability to manipulate money supply and, in essence, charge us a rental fee for the use of our own currency.
It is a power that is not benignly exercised.
For example, the bankers created the terrible Depression of the 1930s by refusing loans to businesses and farms while still demanding payment on existing loans. As a result money disappeared from circulation as loans were repaid but was not replaced by new lending. The money stock constricted. The factories, farms, roads, railways and workforce were still there, the goods and services were still available but economic activity ground to a halt and people, often literally, starved next to fields full of crops that were being burned because the crops could not be sold - because there was a shortage of money with which people could buy them.
Yet that shortage of money just as suddenly vanished, enabling national economies to move into high gear, when World War two needed to be financed. Suddenly there was no problem creating new money to lend to people to fight a war. It is said that World War Two ended the Great Depression but it would be more accurate to say that the bankers ended the Depression so that World War Two could be fought.
CONTROLLING MONEY SUPPLY
In modern times banks use a clumsy mechanism for controlling money supply: periodically raising and lowering interest rates.
What on earth, you ask, do interest rates have to do with the amount of money in circulatuion? Interest rates can only be relevant to money supply if money is loaned into existence.
Raising interest rates is used to slow down the rate at which people borrow new money into circulation by making it more expensive for them so to do.
Higher interest rates increase the amount of their income that borrowers must commit to loan repayment. It thereby reduces the money people and businesses have with which to makes purchases in the economy, and increases the flow of money out of circulation, while making it harder to borrow new money into circulation to replace it.
Consumer spending power is consequently reduced as money becomes scarcer and companies begin to experience difficulties selling their products due to the mythical "drop in demand". People have increased difficulty paying their mortgages, businesses go under, homes are forfeit and ultimately the money lenders are able to
repossess the property and assets against which their loans of previously non-existent money were secured.
Lowering interest rates on the other hand is used to speed up the supply of new money borrowed into circulation. It makes money more plentiful by easing somewhat the costs to both consumer and industry of repaying mortgages and other loans. Essentially it is a lowering of the rental charge we must pay to banks for temporary use of the money they created out of thin air.
People can then more easily be seduced into borrowing more money into existence because it is now, temporarily, "cheaper" so to do.
However, when people are persuaded to borrow, they borrow up to the limits of the repayments they consider they can afford based on the interest rates being charged at the time and are unable to predict which way interest rates will "jump" in the future. But as sure as night follows day, interest rates are raised on one pretext or another, usually "just when things seemed to be getting better" and the nation is plunged into the money scarcity phase of the cycle.
This an engineered boom-bust cycle, a periodic squeezing or easing off on the money supply through interest rates and bank policies on lending and there is nothing natural about it at all.
Each time the country moves through its recession phase, homes, farms, businesses and assets can be seized by the money lenders, removing another slice of the nation's wealth into the ownership or control of the international financiers who own the banking chains.
If we trace the ownership of the banking chains back to source, we discover a wealthy international banking elite in possession of a global power to control money supply, answerable to no-one, creating nothing of benefit to Man and with no loyalties to the nations whose fortunes they can manipulate for their own gain.
PLAYING GOD
Through this control of the debt-money supply the international banking elite virtually plays God with the lives and fortunes of millions of the rest of us. They can boost any nation or business they favour and destroy any they don't. They can dictate the policies of the corporations, businesses, governments, political parties and media chains that are hopelessly indebted to them.
The people and groups within the economy become increasingly dependent for their survival upon the willingness of the financial elite to continue extending credit. Moreover, as they control - indeed create - vast oceans of money, the financial elite can and do easily manipulate the values of currencies and their exchange rates, influencing the relative abilities of nations to trade.
Thus some nation such as Britain can be made to endure higher interest rates than its competitors or a currency so “strong” that its efforts to export are continually undermined.
Vast pools of borrowed money slosh around the international money markets, directed by those who control them at some country that enjoys for a short while the boon of “inward investment” (lending) and then the crushing blow of “capital flight” when the money and the profits made on it are withdrawn for “investment” in some other “lucky” nation.
All this makes for a massive instability of money supply and thus of economic fortunes that has nothing to do with the productiveness, honesty or worth of millions of people who must endure the periodic sweep of such man-made financial maelstroms across their national landscapes.
The instability inherent in the system is hardly surprising for two reasons.
First, almost all the money in circulation isn’t proper money at all. It is a counterfeit that looks like money and is called money but does not function or behave the way proper money should.
Second, the creation of this bogus money upon which all economic life is now, God help us, dependent, is not in the hands of governments or accountable organisations but of private profit corporations who control and manipulate its supply for their own, ends. In other words money is not supplied to the economy for the purpose of facilitating exchange between producer and consumer but to satisfy the agendas of the money lenders, which is a different, false, purpose entirely.
Times of instability such as wars or stock market crashes are highly desirable to the money powers because it is then that the greatest profits are made and the flow of wealth into their hands is most pronounced.
The effects of an unworkable money system and the machinations of an unscrupulous elite who manipulate it combine to undermine human endeavour in the direction of peace, prosperity and stability. Global civilization is consequently needlessly experiencing inordinate levels of turmoil and breakdown.
There are no real beneficiaries of this system except the criminals who run it - certainly not the ordinary people who create the wealth of nations. However, some nations are spared its worst excesses.
Heavily indebted European nations and, the biggest debtor of them all, the US, are spared the destitution that is the lot of the Third World because their creditors do not impose upon them the same crippling conditions for the granting of loans. If they did, many people in those countries would starve, just as people are starving in the Third World right now.
Lest people of the developed nations become complacent, they should reflect that the debt system is causing a global spread of poverty unprecedented in all history.
If the cancer is poverty, then the virus is debt and the cancer is spreading. Even nations not regarded as part of the Third World are beginning to experience Third World conditions and are displaying growing pockets of decay and deprivation.
This spread of poverty is occurring at a time when in terms of material reality, our technological capabilities to produce real goods and services we are becoming potentially wealthier! The problem is an organizational one, not a technological one. We can produce the food but if people don't have the money with which to buy the seeds or tractors with which to produce it or to buy the finished product when it is produced, they are going to starve in the midst of plenty.
This situation is built into a debt-money system that is so inept it would be laughable were its consequences for millions not so vicious.
This state of affairs will continue until Man bases his economic life upon a proper, sensible system of money issued as a support to the productive community rather than a get-rich-quick scam devised so that parasites can grab for themselves the wealth created by honest people.
MIGHTY CORPORATIONS
The giant global corporations of the wealthy nations are intertwined in complex alliance with the money powers.
Their dominance is easy to understand when one realizes that at the very apex of their pyramids of ownership and control and the apex of the corporate pyramids of the banking cartels one finds the same people, the same network of money dynasties, the aristocracy of international finance.
The corporate giants are themselves built upon huge towers of credit, they thrive and grow and enjoy advantage from their easy access to credit granted on favourable terms. They bask in the gift of the global financial dictatorship that decides who will flourish and who will perish.
Seizing control of a company is not that difficult when you have control of the debt-money supply. As the corporate giants are, like everyone else, hopelessly in debt and utterly dependent on the willingness of the banks to continue extending credit, not only can the banks dictate the policy of their debtors, but a refusal of credit will cause a company's shares on the stock market to fall in price. As the shares tumble, the bank is able to buy up the stock at knock-down prices and seize control of the company. When that is achieved, loans are then approved causing the stock to rise in value again. The stock is then sold by the bank at a huge profit, providing vastly more money to use the same trick again to buy up more stock at bargain basement prices.
This is now so refined that an announcement in the press of a rise or fall in interest rates can send stocks up and down as the bankers wish. In this way stock markets can be manipulated and open or secret control of almost every large corporation can be achieved by an elite of international financiers. Once in control they can force those corporations to borrow huge sums from their banks and then, through interest on the loans, siphon off the company's earnings, leaving little or no actual profits from which dividends can be paid . The banks can reap huge benefits from interest payments on the loans, while leaving little reward for ordinary shareholders.
THE BASIC MECHANISM
Each time we create money by having banks create it as interest-bearing loans, we simultaneously increase the overall indebtedness in the economy, while enriching the money lenders.
In a debt economy, economic growth actually accelerates the plunge into debt. In contravention of our common-sense expectations of what should happen, the bigger and more productive the economy, the more deeply in debt it tends to be.
In order to further understand the devastating way this basic mechanism works, let us return to a simplified model again and this time imagine an economy that is trying to grow.
Our imaginary economy as we take up our story, requires £100 billion circulating in it in order to function smoothly. That £100 billion ensures that it hums along comfortably with no money shortage that would make buying and selling difficult and thus cause recession and no over-supply that causes inflation and reduces the buying power of the pound, with all its attendant ills of rising prices and wages and erosion of the value of people's savings.
One day, through growth in population, improved production know-how or new goods and services coming onto the market, there is an increase by 10% of the amount of goods and services being produced and offered up for exchange. The economy therefore requires a 10% increase in the money stock (£10 billion) in order to avoid a money shortage.
At that point a sensible government would simply print a further £10 billion and spend it into the economy, say by paying for new roads, schools and hospitals, subsidies to industry to help further increase production or whatever the incumbent government's priorities are. This would not be inflationary because the new money would be absorbed by an increase in production. Moreover, that £10 billion would provide the government with additional revenue that did not have to be raised through taxes.
However, instead of doing the sensible thing, the government decides not to create that £10 billion itself but have the banks create it and enter it into circulation by lending it to people, businesses or government.
The distribution by lending of £10 billion of new money duly increases the amount of money in circulation to the desired new level of £110 billion. But the extra ten billion that was borrowed has to be paid back at, say, 10% interest. In other words a total of £11 billion is now owed and when it is eventually paid back to the banks by those who borrowed it, the £11 billion repaid is removed from general circulation, leaving only £99 billion circulating. The bank cancels out the original loan and accounts the interest as profit: it is £1 billion richer than when it started and everyone else is £1 billion poorer.
To restore the money stock to the required £110 billion the economy must now borrow £11 billion, which with 10% interest added means that £12.1 billion will then be owed to the banks. When that is paid off, £12.1 billion disappears from circulation. Interest on that repaid loan gives the bank another £1.1 billion of profit and the economy is now short of its target figure of £110 billion by £12.1 billion - there now being only £97.9 billion in circulation. £12.1 billion must now be borrowed to restore the money stock to £110 billion, incurring a total debt, when 10% interest is added, of £13.31 billion, which when it is paid off reduces the money stock to £96.69 billion. And so it goes on.
When economies expand, as they do, they need to increase the money stock. Our imaginary economy might need to borrow £10 billion one year to get the money stock up to £110 billion but with economic growth it might need a money stock of £115 billion the next year, then £120 billion the year after that, necessitating the borrowing of far more than the above figures have assumed. Which means an even steeper plunge into total debt and an even more rapid accumulation of bank wealth - wealth in exchange for which nothing of value has been produced.
This is a one way flow: wealth flowing to the bank but debt, the opposite of wealth, flowing from it in return. The entire principle of exchange, the entire purpose of money, both indispensable foundations of civilisation, are violated because goods and services are not being exchanged for goods and services.
You can see from this simplified model that while the government refuses to create money itself but instead has the banking sector create it and lend it into circulation at interest, the only way to stop the increase in the general level of debt carried by the economy would be to cease all economic activity!
If there is one thing an economy requires for its good health, it is money that is stable in value, in purchasing power. It is utter folly for government to permit instability in the value of the nation’s money. It is a cardinal sin to actively cause such instability.
Any government that permits such an unnecessary and debilitating scam to be run on its people, to their immense cost and the immense profit of private banking cartels, must either be unforgivably stupid or, its heartfelt please to the contrary, working in the interests of those cartels, against the interests of of the people it purports to serve.
It is one or the other. Only government can tell you which - provided you can solicit from it an honest answer.
RIDDLED WITH DEBT
The economy, as anyone can see if they look around them, has become riddled by debt, through bank loans, overdrafts, credit cards, business loans, government borrowing.
Even share issues are another form of borrowing and it is no surprise that as industry is consumed by debt and inherent insolvency the global casinos of the stock markets, prospering parasitically upon the the efforts of productive sectors, assume inordinate prominence.
For money to exist in the economy, the economy must carry debt. That debt is not distributed evenly: different people and organisations carry differing portions of the whole. One person might owe a few thousand, another a mortgage of a few hundred thousand, a company or local authority might owe millions, and someone else (an increasing rarity) owe nothing at all. The inescapable truth however is that someone has to carry the debt.
If one person reduces his debt by paying off some or all of what he owes, new debt must be created to replace the money taken out of circulation: in other words, for someone to improve their solvency, to avoid, reduce or get rid of debt, someone else must go further into debt! This is so much so that paying off a debt, clearing your overdraft or even receiving a wage packet or a lottery win cannot occur without someone else somewhere going deeper into debt!
This is of course highly objectionable.; our efforts to get along and prosper place us unwittingly in the position of trying to drive our fellows into debt.
It is little wonder that the economic environment can feel vaguely threatening in ways we cannot quite define or instil in us an anxiety whose source we cannot quite see.
The system is rigged to suppress honest men. This trap was neither made nor designed by men of good will but if they can achieve an understanding of it, they will know how to replace it with something more benign.
This is the situation in which we find ourselves: people, companies and local and central government sliding deeper into debt as they carry their share of a debt burden that cannot do anything but increase.
This sets up an intense competition among people that goes far beyond the reasonable competition to sell goods and services. It sets up in fact a desperate scramble for scarce money so as to avoid being the one who must carry the debt burden upon which the existence of money depends. We all try hard to get out of debt or to avoid debt but the truth is that this is not possible for the majority of families, businesses and home owners. And it is becoming less possible by the day.
The system demands an inexorable increase in borrowing so as to avoid money scarcity and recession. Built into it is the need for the increase of debt to accelerate, which it has been doing. The money lenders therefore must, if their system is somehow to keep going, find ways to persuade us to borrow more and more.
Thus mortgage borrowing ratchets ever upwards, credit card borrowing takes off like a rocket, overdraft facilities mushroom. The banking sector itself becomes propelled into a mad scramble to keep us borrowing, with inducements and easy terms, credit card offers popping through the letterbox daily and “easy loan” adverts proliferating......and, of course, war or preparation for war, which is the most effective way of getting governments to borrow on a grand scale.
You, meanwhile, are left with some illusion that debt is temporary, that debt will not go on inexorably mounting into the unlimited future, that poverty is not spreading, that a hopelessly mortgaged media is still "free;" that even though the mortgage is not cleared and the bank or building society possesses the deeds, you actually own the roof over your head.
You are encouraged to believe that your elected government is in charge of your nation's affairs and that banking institutions are highly reputable organisations doing you a favour when they lend you money or "reluctantly" increase already exorbitant charges, so that you and your children will continue to pay from your earnings an ever greater tribute to them.
Meanwhile your nation crumbles, governments try to hide their powerlessness and hope for any kind of bright future steadily evaporates. And no-one comes clean and tells you why all this is happening to you.
THE SUBLIME AND THE RIDICULOUS
How this system causes so many of us unnecessary pain becomes obvious when we take the above example and consider what would have happened if the government had simply created the extra money itself and spent it into the economy:
The economy hums along at £100 billion as before. Economic growth for whatever reason creates a demand for an increase in the money stock by 10%. The government prints a further £10 billion in nice crisp new notes and spends it, say, on building a much needed new rail network somewhere. The £10 billion enters circulation as the government pays the contractors who build the new network and those contractors use it to pay wages, buy equipment and materials from suppliers and so on and the money circulates.
The country now has a new rail network it badly needs, but no taxes had to be raised and no other services cut in order to finance it. People are put in work, reducing the dole queues and the tax burden through reduced social security payments. Those people will then go out and spend their wages on everything from after-shave to having the lounge painted and so the new money will circulate in the economy, stimulating new economic activity. No inflation has occurred because the government has been careful not to create more money than the economy actually required. Most importantly, no debt was created: that £10 billion entered circulation without anyone anywhere having to borrow.
Compare these two methods of money supply, both of which involve the creation of new money out of nothing.
On the one hand: the government grants the banks a mandate to create money out of nothing; the banks create that money and lend it to the government; the government spends the money on needed projects and so it enters circulation. Through taxation the government removes it from circulation again, plus an additional amount in interest, and pays it to the bank; the economy is now even shorter of money and recession looms, so the government borrows even more from the bank.....
Alternatively, instead of borrowing directly, the government leaves it to you and I to solve the problem of money shortage by borrowing it ourselves, spending it, then at a later date paying it back plus interest, creating an even bigger problem of money shortage which we have to solve by even more borrowing....
On the other hand: the government creates the money itself; the government spends it into circulation and .....well, that's it.
EUROPEAN UNION
The campaign for a single European superstate feeds upon noble sentiments: the wish for co-operation among European peoples and an end to war. There is nothing at all wrong with those sentiments but any trap, to be effective, requires an alluring bait, otherwise people will not walk into it.
The bait then is the noble “reasons” that are put forward for Union, that naturally appeal to men of good will. But the trap we are being persuaded to enter is well concealed and lies in the real agendum that is never openly declared.
In Monetary Reform Not Monetary Union, The Withheld Alternative, I discussed the anatomy of the trap in more detail. I plan tyo publish that book on this website in the near future but in the meantime I will but briefly sketch it here.
And I would like to stress what I said in that book: I am not opposed to the idea of the unification of peoples. But I am opposed to European Union in its current form because there is a deceit built into it that, if not exposed, understood and rejected by people, is going to ruin them.
In similar vein I am not, for instance, opposed to people selling other people time share apartments in Tenerife. It’s a splendid idea and I wouldn’t mind owning one myself. But what I would object to would be a bunch of shysters robbing people of their life savings by preying upon people’s belief or hope that they will own a time share in Tenerife.
I would have thought, by the way, that one thing that would give us all pause for thought before voting “yes” in a referendum is the very fact that so many of our politicians think Union is a good idea and a jolly fine solution to our problems.
I am hard put to think of one idea put forward by government and its “experts” as a solution to something or other or “the way forward” or “in our best interests” that didn’t turn out to be (a) a bigger problem than the problem it was “solving” or (b) not to the real tangible benefit of the broad majority of decent citizens but instead to their overall inconvenience and disadvantage.
One could probably arrive at a rule of thumb based on our experience of government: if the politicians are keen to persuade us something is a good idea, it almost certainly isn’t and we shouldn’t touch it with a barge-pole.
European Union in the form it is currently proposed means a single European currency controlled by a single European bank based in Frankfurt. It is in fact a move to consolidate and centralize banking power.
When we realize the power that control of the money supply gives the small coterie of international financiers, we realize that what is being sought is centralised, unaccountable and largely unseen power over all the once-free peoples of Europe. At this time probably only Britain, thanks to the instinctive reticence of its people, stands in the way of the financial elite consolidating their covert dictatorship.
There can be no truly democratic vote by the people on this issue while they are obliged to base their decision on patchy, slanted, edited, incomplete or downright untrue “information” they receive from a media itself heavily indebted to creditors who have a massive vested interest in such a union.
Those same powers that exercise financial leverage over the mainstream media can easily manipulate the economy as they wish. They can throw it into recession at any moment or crush, as they have done, industries targeted for elimination. My book The Spoils of War (which I also plan to publish free of charge on this site soon) relates the example of Yugoslavia, which targeted for plunder by western banking interests, was first wrecked economically by the manipulations of international finance. The experience of that unfortunate nation should be a lesson for all of us.
The financial elite has a vested interest in Union being achieved come what may because its power will be centralized and strengthened. That the rabble must be cajoled, duped or frightened into voting for the Promised Land is an inconvenience but not an insurmountable one.
The financial elite can manipulate money supply and bring about conditions of such economic travail that a people will believe their efforts at productive nationhood are futile and vote for Union out of sheer desperation.
Such a vote would be the absolutely worst thing a nation’s citizens could do because the way out of their economic troubles lies in reforming their money systems, not consolidating the very system that is the true source and cause of their difficulties.
By all means let the peoples of Europe have union if they so decide but let them first have accurate information as to the real reasons their economies are failing and the correct solution to the problem.
If then union should be the educated desire of the people, then let the currency of that union be created debt-free by its (DEMOCRATIC AND OPEN) government, not by its banking sector in the form of interest-bearing debt, whose will is enforced by a remote bureaucracy based on foreign soil.
The current method of money creation sets the banking elite above government and above democratic accountability. This is an elite moreover whose track record is of disregard for the well-being of their fellow human beings. And economic “management” that is utter debacle.
Union, as currently so ardently propagandized, will solve none of our economic problems. It amounts to a stronger dose of the very medicine that is killing us and will set in concrete the debt-money banking fraud that wrecks the endeavour of millions of honest men to build a stable, decent civilisation. It will remove even further from our grasp the chance to put things right.
And that is the very reason it is being so heavily propagandised.
SIMPLE SOLUTION IGNORED
Logically, any shortfall in spending power - a dysfunction in the distribution of the wealth created by our civilization - could be rectified by simply supplying the economy with the missing money. But how, in our modern economy, is this done? It is done by borrowing into existence more new money, either by the consumer or industry or by government itself.
But why oh why, I hear you ask, does government not simply itself create and spend into circulation - debt free - the missing money through improved provision of services to the people rather than having usurers create it and force innocent people to carry debt in order to get it into circulation?
Good question!
Government would certainly save itself and all of us a great deal of grief if it did just that - and it is the simplest thing in the world to do. It is my hope that you will ask your government in no uncertain terms why on Earth it doesn't do this. The blunt truth is that it had better start doing so soon because unless it does, our economic decay will continue.
One could be ever so “reasonable” about the intellects that occupy positions of governance and imagine that they are simply ill-advised or ignorant of the truth of the situation. But it is absolutely unforgivable of such people that they should allow themselves to be so ill-informed.
The debt-based system is a criminal scam run for the benefit of an unimaginably wealthy elite and is currently pulling the economic rug from under the nations in whose interests governments purport to govern. It is sabotaging the efforts of generations of honest people who by sweat and perseverance labour to build a decent civilization for themselves and their children.
But that government failure to correct this fatal flaw in our economies, given that it is so easy to do and would produce almost unimaginable benefits, is hard to explain in terms of mere stupidity.
While governments disingenuously blame our economic slide into oblivion on this and that factor beyond their control or powers to predict - and often even blame us for "living beyond our means" or some such nonsense - the causes of the problem and their resolution are entirely, one hundred percent within government’s power to control.
Moreover, while knowledge of the scam is not yet the property of the ordinary citizen, over a period of several centuries eminent men have attempted to alert our political elites to the problem and/or do something about it.
Among these were President Abraham Lincoln (assassinated) President James Garfield (assassinated) President John F Kennedy (assassinated) Congressman Louis T McFadden who died suddenly, Congressman Lindbergh and, in Britain, Lord Stamp (former Governor of the Bank of England) and CH Douglas in the 1930s whose popular campaign was making serious progress until it was interrupted by the bank-financed World War Two.
Even as I write, many worthy men within the monetary reform movement are labouring in vain to persuade government to at least look this over before it is too late.
What is happening here on the part of government is a wilful turning of many a blind eye.
While the existing system is a tremendous boon and a most wonderful racket so far as a small financial elite are concerned, it is a recipe for ruin for almost everybody else. It is government's duty to serve ALL its people and an honest government worthy of our support would do just that. Such a government would take the route of the greatest good for the greatest number of its citizens and it most certainly would not aid and abet the shenanigans of a small money-grubbing clique of racketeers.
Perhaps the citizenry then should cease electing people who pretend to serve them, while actually serving a small vested-interest group instead, and elect someone who will work for the greater good of all the people.
By their DEEDS shall ye know them.
INDUSTRY
In economic terms, a person or group performs two important roles: we perform the role of consumer when we buy something and producer when we produce something.
For the sake of convenience I shall refer to every producer large or small producing any type of goods or service for exchange with other people and groups under one term: industry.
When industry produces goods or services it spends money in the process of production. Everyone engaged in producing anything - and this includes local and central government which produce various services for people and charge for them through taxation - incurs costs in the process of that production.
So as not to lose money, industry must sell what it produces for at least as much as the total amount it spends making or providing it. If it receives from the sale of its products as much money as it spent in producing them, it breaks even. If it can receive from its customers more money than it spent, it makes a profit.
Industry therefore seeks to charge for its products enough money at the very least to cover all its costs. Even government itself is a part of industry as I have defined industry when it, for instance, provides a hospital - although it is in the unique position of being able to force everyone (whether they use the service or not) to pay for it through taxation.
The consumer uses money in his possession to buy industry's products. But where does a consumer's money come from? Well, in the form of wages, salaries, commissions, fees, dividend pay-outs, even wins at the dog track or dole handouts from government.
In other words, through one avenue or another, from one source or another, in one form or another, the consumer's money comes from industry. Industry distributes to the consumer the money with which the consumer buys industry's goods.
And here, in a debt economy, we have a serious problem: industry as a whole cannot possibly ever distribute to the consumer enough money for the consumer to be able to buy the goods and services industry produces at prices which cover the cost to industry of producing what is sold.
Let's look at this closer, starting with this datum: the cost of everything you buy boils down to what must be paid to someone else for his labour in making, producing or providing something.
Imagine you go to a shop and buy a light bulb. The cost of that light bulb is what the people who produce the light bulb, transport the light bulb or provide the shop that sells it to you want to receive for the part they play in making that light bulb available to you. The cost of making the light bulb in the first place involves what the people who make it want to receive for making it. The cost of the glass and filament that go into the light bulb is what the people who make the glass and filament want to receive for doing so. The cost of the raw materials used to make the various components amounts to what the people who mine the raw materials want to receive for mining them and even the cost of the machines used to mine the raw materials or the fuel used to run the machines is comprised of what the people who retrieve the oil from deep under the earth or who make the machines want to receive for so doing. And so on. There is no cost anywhere that does not derive from what one human being charges another.
If industry distributes to the consumer the money the consumer needs to buy its goods, how does industry distribute that money? It distributes money by paying its wages and commissions, buying materials, buying fuel, paying its bills, hiring contractors and so on. In other words as it incurs and pays costs in running its operations and producing its products, it distributes money into the economy, money which ultimately by one route or another will wind up in the possession of some group or individual who, as a consumer, will buy products from industry!
From this we can see that industry must distribute to the consumer sufficient money for the consumer to be able to buy its goods.
Let us simplify again and imagine all of industry represented by a single manufacturer that produces in a one week period 9000 light bulbs. In so doing it spends a total of £9000 on fuel, materials, wages, insurance, electricity, transport, maintenance, tax, marketing, dividend payments to its shareholders, new plant and so on. To just break even it must consequently sell that produce for at least the total cost of producing it, that is £9000 for 9000 bulbs.
If it is to receive £9000 minimum from the consumer, it must have distributed £9000 minimum into the economy as it paid its bills and wages and so forth, so that the consumer can have the money to spend!
Unfortunately this is impossible under the current system because some of industry's costs do not distribute money to the consumer.
The light bulb company for example may have spent £9000 - its total costs - producing its bulbs but if we imagine that £500 of those total costs were repayments on its past borrowing we immediately see we have trouble. That £500, in being repaid to the bank, vanishes from circulation and so does not wind up in the hands of the consumer! The light bulb company needs to distribute £9000 but in fact can only distribute £8500!
Moreover, almost every consumer - be it an individual purchaser, a company or government department - also has debts in the form of loans, overdrafts and mortgages that he or she or it must pay to the bank. This means that of the £8500 the light bulb company is able to distribute, some portion of it will also be spent on loan repayments. If we imagine that that portion is £2000, then the amount of money actually distributed to the consumer that the consumer is able to spend on industry’s products is a mere £6500, falling short of the £9000 industry needs to obtain from the consumer in order to break even!
This is the worm in the apple, the flaw that cripples the economic system and undermines our efforts to organise the smooth production and distribution, through exchange, of wealth.
There are hundreds of thousands of producers in the same position as our light bulb manufacturer, each one servicing debt of one kind or another as part of its overall costs. There are millions of consumers who flow a portion of the money they receive from industry in the form of wages and so forth to the banking sector and so cannot spend it.
Debt, as we have seen is a crucial component of our money system, which is rigged so that escalating debt is built into it. Debt must be carried by industry and consumer and the more industrious we become, the more debt we must carry.
There is a debt component to virtually every transaction we, as producer or consumer, make. Every time a bill is paid, an item purchased or indeed money changes hands, a portion of that money is earmarked not for use as the medium by which goods are exchanged but for a return to the banking sector that has a prior claim to it.
There is a gap between the amount of money with which the consumer is able to bid for the goods and services industry offers up for sale on the one hand and on the other hand the money industry needs to obtain from the consumer for what it has produced. In fact it is not so much a gap as a chasm - a chasm that grows ever wider as debt pervades the economy.
That chasm, the shortfall in consumer spending power is bridged by borrowing. The consumer has insufficient money to offer for industry’s goods, the money simply isn’t there. The solution is to enter more money into the system to make up the shortfall. But how is new money introduced into the economy? That’s right, by borrowing. The gap is bridged by borrowing.
But that borrowing adds to the existing debt burden at a rate always faster than new money is created and therefore causes the aforementioned gap to widen, which necessitates further borrowing to bridge it, which widens the gap faster than it can be bridged....and so on. It hardly needs pointing out that this is, ultimately, a recipe for economic disaster, particularly as most of the planet is already living that disaster.
That shortfall in spending power, of produced goods that cannot be sold at viable prices, is distributed throughout the economy and some producer somewhere will have to carry a small or large portion of it. We have as a result producers in fierce competition with other producers to capture the consumer's perpetually inadequate spending power, all fighting to avoid being the ones who must carry the shortfall.
If we look again at our light bulb manufacturer, we discover him embroiled in that ferocious competition to capture scarce money, meet his costs and stay ahead of mounting debts. He does not want to become one of the producers who cannot make sufficient sales to cover his costs, but neither does any other producer: yet somebody is going to have to. Even if every product produced were vitally needed and wanted by the nation's consumers they could not all be sold.
Our manufacturer fights hard to sell his 9000 light bulbs. He is not just competing against other light bulb producers but against every other producer of every other product to capture money that is simply in too short supply for the consumer to be able to buy all the goods and services on offer.
He invests heavily in promoting his product, in every imaginable hard-sell trick and gimmick to persuade, cajole and seduce the consumer to flow a portion of his inadequate spending power in his direction but the additional cost of intensifying his promotional effort considerably increases his overall costs. In fact, as is often the case with the modern economy, he begins to find it costs him more to promote and sell his product than to make it in the first place!
That increased expenditure on marketing increases the distribution of money into the wider economy but here again a portion of it will return to the banking sector as the recipients of it service their debts and so not all of it will reach the consumer as spending power. The shortfall of consumer spending power is exacerbated, placing on the producer even greater pressure to market and sell. In other words, the more the producer markets, the more he will need to market in order to cover the costs of marketing!
Thus we witness in the modern economy the phenomenon of marketing gone mad, an intense upward spiral of advertising, gimmicks, special offers, telesales, “free” gifts, mailings, “new” and “improved” versions of the same product, unscrupulous tricks and capers.
The shortfall in consumer spending power means that all that is produced by industry cannot be sold and unsold goods are likely to stack up in industry's warehouses and, because what the consumer is able to pay tends to fall short of what industry needs to charge, the competition among producers is to cut prices down to a level where what is produced can be sold.
The pressure however is to cut prices down below a level where the cost of production can be covered and profit margins on each product produced become slender or non-existent. This forces producers to seek ways to cut the cost of production.
One way to cut costs is to cut the wages bill by mechanising and saving on labour. The problem with that is that, aside from depriving people of a livelihood, it also reduces the money distributed by the producer through wage packets, cutting overall consumer spending power further.
Another way to cut costs and to accrue some kind of viable return on slender unit profits is to mass produce and use cheaper materials in the production process, to market and sell in bulk or to make other short-cuts on the quality of the product.
This makes for a market flooded with millions of identical, poor quality, less durable products made appealing by glossy packaging and slick marketing. But once again, as industry cuts costs, it reduces the spending power distributed to the consumer.
The debt component of almost every transaction ensures that however much and by whatever means industry cuts costs, it cannot cut costs enough and is pressured to cut costs further.
All this mass marketing and bulk production, the life or death struggle for market share and the pressure on industry to sell more and expand in order to stay ahead of rising debt-derived costs, makes for frantic debt-driven economic growth.
This is growth not driven by human need but driven instead by the competition for scarce spending power against a background of mounting debt.
The problem for producer and consumer alike is that this economic growth continually demands growth of the money stock but as that stock is created by someone taking on debt, every time new money is created, debt becomes an increasing component both of industry's costs and the consumer's income, and the gap between industry's prices and consumer spending power widens. This leads to even more goods unsold, an even larger shortfall, squeeze on profits, pressure to cut costs and make economies, to sell in more bulk and expand to stay ahead of debt.
In fact, making a poorer quality product that is less durable and has to be replaced more often has now become an advantage in terms of volume of sales. Producers have difficulty selling all the products they produce and unsold goods tend to stack up. How can industry get people to keep coming back to buy more products more often? If, for example, light bulbs last only half as long before they simply have to be replaced, customers will buy from light bulb manufacturers twice as often as they did. That this requires the manufacturer to produce twice as many bulbs, consume twice as much of the Earth's resources, use twice as much energy and create twice as much pollution is not a problem the manufacturer, embroiled as he is in a life or death struggle for market share, is able to address, much as he - who must also breathe the air - would like to.
This is but a step to built-in obsolescence as a way of preventing a build-up of unsold goods and obliging the consumer to return as frequently as possible to purchase more goods. Built-in obsolescence is achieved in two ways. The first is to simply build the product so that it or its essential components will fall apart or otherwise break down early - or to design a product as a disposable item that can be thrown away after a short period of use - and have to be replaced.
The second is to create, through media campaigns and advertising, a climate of changing fashions. The consumer is persuaded to reject last year's model - colour - logo - shape - "look" etc in favour of this year's fad. Although there is little difference between last year's version of a product and this year's "new, improved" but not very different (and changed at little added cost to the production process) variation, a new round of buying by the consumer can hopefully be stimulated as last year's passé item threatens to stockpile unsold in industry's warehouses.
As the home market cannot absorb all that industry produces, a solution to the problem is sought by seeking to sell products abroad; that is, invade someone else's home market and capture some of that market’s spending power.
The pressure grows upon industry to export as it becomes increasingly unable to capture sufficient spending power in its home markets. Unfortunately every other country's economy has the same debt-derived problems and the same scarcity of spending power in their home markets because they too operate on the same money system. Industries in other countries are also trying to export in order to sell their unsold goods and capture spending power in foreign markets. Consequently the home market becomes invaded by products from abroad, further increasing the manufacturer's problems in selling his own products and intensifying the need to export, mechanize, make a cheaper product and so on.
The debt basis of the money supply ensures that for any producer costs are creeping upwards: taxes, fuel bills, fees, costs of materials, vehicles, labour, insurance or what have you. They creep upwards because there is a debt component built into them and the debt component continually increases.
Moreover, those who supply a producer are now supplying goods and components more cheaply made, designed to become quickly obsolete or whose lines are continually discontinued, in an effort to get him to spend more money and this too drives his costs upwards.
Any one increase in the cost of parts, or fuel, or a tax rise, or a rise in interest rates, or insurance premiums, or a wage demand, or a consultation fee and so forth might not on its own be too much to worry about, but the aggregate impact of several or even many such increases can be considerable. And it is, naturally, passed on the consumer.
The net result across the economy as a whole is that while mass production, intense marketing and poor durability are used to drive costs down, costs tend to increase in any case. The consumer consequently discovers that while he is now buying junk food, junk furniture, services cut to the bone and everything from cars to kettles that quickly deteriorate and have to be replaced, they nevertheless become increasingly inaccessible to him unless he borrows to cover the shortfall in his spending power.
None of this is intended as a criticism of our scientific advance, our technical expertise, our ability to mechanise and remove much of the strain from human labour.
In fact, the opportunities presented by our technical know-how should usher in an age of greater ease, of machines and tools used to produce well-made products turned out to a high standard and with optimum durability and due regard for the environment. Yet the pressures of the debt-money system to a considerable degree diverts technology from a valid role and enslaves all that innovative ability, energy and ingenuity instead to the production of low quality junk, persuading the consumer to consume that junk and producing the same junk again and again.
Technology has offset the worst effects of the debt economy in that it has enabled industry’s treadmill of debt-driven growth to turn ever more frantically without actually breaking up under the stresses. Yet.
THE CONSUMER
The consumer, finding his spending power in decline, can attempt to rectify the situation in two ways.The first is to demand higher wages of industry. Although industry actually needs to distribute more spending power via wages, this adds to industry's costs and so drives up prices.
The second is to bridge the shortfall by borrowing money. The consequence of increased borrowing is increased interest and loan repayments and these, as they bite, cut the consumer's disposable income further, remove from circulation more money than was borrowed into circulation to begin with, and necessitate further borrowing.
Borrowing to buy, although it resolves a money shortage in the short term by enabling the consumer to spend, in effect, money he has not yet earned (in other words the consumer is borrowing from his own future income) creates a greater money shortage some time later when the borrower discovers that what he is now earning cannot be spent because he has already spent it in the past!
Borrowing to buy also increases the cost to the consumer of any item so purchased .If one buys a car for cash it costs one, say, £15000. If one borrows that £15000 to purchase the car, when the loan plus interest is repaid it will have cost one around twice that sum. That is, the car has been purchased for £30000 so far as the consumer is concerned (although the producer still only benefits to the tune of £15000)!
The consumer is in effect paying for the car twice over - once to the seller of the car and once to the banking sector. The first £15 000 pays for the car, the second £15 000 constitutes in effect a toll paid to the lender for the use of the first £15 000, which he created out of nothing. Paying the cost of the car twice over reduces the amount of money the consumer has available to spend on other purchases in an economy already creaking under the strain of inadequate spending power. This further intensifies industry's problems in selling its products.
SUPPLY AND DEMAND DISRUPTED
It can be seen from this how the normal functioning of simple supply and demand (people as consumers need or want something so people as producers try to supply it) becomes disrupted.
Money is the mechanism through which we express demand. We want, for instance a high quality, durable light bulb that lasts ten years and we offer a producer of light bulbs money for it. The producer needs to receive so much money for producing such a bulb - which he is perfectly capable of producing! - but a high quality bulb requiring more labour to produce, better materials and so on comes at a high price. As we are trying to maintain (or raise) our standard of living, wishing to purchase many goods and many services that industry offers us but finding our spending power drifts shorter and shorter of being able to buy them, we have to make economies somewhere. We cannot offer the producer quite what he needs to be paid, so the producer endeavours to cut his prices (thus his costs and inevitably the quality of his product) in the hope that he can bring his price down to a level we can accommodate.
The point here is we are not demanding cheap light bulbs, just as we are not demanding cheap mass-produced food laced with chemicals, furniture that falls apart, cars that rust, washing machines that break down, clothes that split at the seams, shoes that disintegrate or houses the size of shoe boxes. We want well made light bulbs but we cannot find enough money to express our demand for them. We can however express a demand for inferior quality products. From industry's point of view then, the demand, expressed by the amount of money the consumer is able to bid for its products, is for cheaper quality products
There ensues a downward spiral in quality and durability of product in which the consumer and industry are in apparent accord. But it is an accord that derives from the distortions placed upon exchange by a system of counterfeit money. Money scarcity ensures the tendency for the consumer to “demand” cheap, inferior quality products. Money scarcity ensures that industry tends in the direction of cutting costs by producing cheap, inferior quality products.
YOUR MORTGAGE
( from old French, gage = grip + mort = death. Literally: death grip).
Have you ever wondered why for most people the effort to have a roof over their heads saddles them with a mortgage burden they must carry for most of their lives? Not only that, but the debt burden that comes with having said roof over your head is getting bigger. The houses aren’t but the debt is.
Understanding how the debt system of money creation works renders this easy to understand. Mortgage borrowing is the main route through which money is supplied to the economy - about sixty percent of all the money in circulation came into existence through mortgage borrowing. House buyers are carrying the major share of the burden of supplying the economy with money.
Joe borrows, say, £70,000 to buy a house; he takes on a commitment to pay interest at a high rate over twenty five years on money created out of nothing. By and large he is committed to repaying at least double what he borrowed and God help him if he at any time over that 25 years falters in his efforts to pay because the lender can repossess his home even after years of Joe paying them money hand-over-fist! Joe, like any mortgage borrower, does not actually own the house until the mortgage and its massive interest are paid in full: the lender keeps possession of the deeds and essentially possession of the property until the last instalment of the mortgage and its interest are paid off.
When we look this over we see that the "service" provided by the lender in exchange for this vast sum of money is meagre indeed, particularly compared with the amount of production undertaken by Joe to honour his side of the bargain. A small amount of paperwork and a tap of computer keys sets up the deal and creates the money that is loaned and the lender's efforts thereafter largely involve chasing Joe for "their" money - money they did not actually have to begin with. They just put pen to paper and created it!
The principle of a fair and equitable exchange of goods and services for goods and services - upon which healthy economies and civilisations with any life expectancy depend - is entirely violated. If your window cleaner charged you £150,000 for cleaning your windows you would think he was a crook, yet the banking institutions are considered to be highly respectable pillars of the community!
None of this is illegal: current law empowers the banking system to operate in this parasitic way. Governments that purport to represent the citizens of the nation do nothing at all to protect them from this fraud.
SO MUCH FOR A HOME-OWNING DEMOCRACY!
A few years ago people were persuaded that it was a good idea to "own their own home." Tens of thousands were persuaded to get on the property ladder and the lending institutions very obligingly created millions of pounds on their computers and loaned it at high rates of interest. The sudden surge of new money chasing relatively scarce housing pushed the prices of properties through the roof and of course as prices soared more mortgage borrowing was required. Young couples took on a lifetime of debt for the privilege of owning a centrally heated rabbit hutch and all the way up the property ladder people became increasingly indebted. And what happened when the population was nicely up to their ears in mortgage debt? The banks raised interest rates, putting a sharp squeeze on disposable incomes, plunging industry into recession and causing a devastating round of business failure and home and property repossession.
If someone at the time had taken the trouble to explain how the system works and why all this was being done, rather than leaving everyone bewildered, heads might well have rolled because this whole scenario was nothing short of calculated criminal betrayal and an infliction of completely unnecessary pain.
At this writing house prices are sky-rocketing, putting homes beyond the pockets of ordinary people and making it increasingly hard for the young to get on the property ladder at all. When I say houses are beyond the pockets of ordinary people I mean they are waaaay beyond. Just look at how much the average person has to borrow and over how long a period just to own one of these consumer items!
And it is getting worse. As house prices soar, the amount people must borrow in order to own one soars. In Japan, I believe, they have already introduced the “2nd Generation Mortgage” in which the term of the mortgage can extend beyond one lifetime and the kids inherit the mortgage undertaken by the parents. In Britain things are headed the same way as mortgage periods are being stretched longer and longer so as to keep the interest payments within the pockets of wage and salary earners. This is economics gone mad.
It is also lovely for the money lenders. You’ll recall that the money lenders seek to have people in debt and paying interest, preferably forever. It is the stream of interest payments that constitutes their profits. It is however absolutely catastrophic for everybody else.
What exactly is happening to the housing market? Houses just happen to be the largest consumer item and the least easy to afford, consequently the housing market is the area where the money scarcity of the debt economy makes itself most keenly felt. It is the market that will most attract debt. The money shortage/debt phenomenon filters down through the broad economy to smaller consumer items and as the situation deteriorates these too begin to attract more and more debt: cars for example, mobile homes and so forth. Generally speaking, the bigger the consumer item the more debt it will attract.
So, as the gap between the prices of produced goods (in this case houses) and incomes widens, borrowing moves in to “supply the missing money,” The increase in borrowing accelerates the widening of the gap and this necessitates more borrowing by more and more people.
The contemporary scene is that here we have a market into which borrowed money is pumped by the lending institutions. A great deal of borrowed money is pumped into it. This is an inflationary situation: too much money chasing too few goods. In an inflationary situation prices rise. The lenders are keen to lend, the economy requires ever more borrowing in order to stay out of recession so more and more borrowed money is poured into the market and consequently prices keep rising. Any restriction on that supply of borrowed money stalls or reverses the rise in prices as one would expect. There is however a limiting factor on how much money can be pumped into the market and that is how much the consumer can be persuaded to borrow. The consumer is understandably pretty desperate to own his own home and have a roof that keeps the rain off and the lenders can jiggle things about to keep ever-rising debt commitments just within range of his pay packet. The housing market could be stabilised simply by not pumping money into it with such gay abandon, by some sort of sensible policy on lending. But the lenders have to seduce us into debt and the system depends utterly upon debt levels increasing. When consumers become over-exposed and can no longer take on more debt or when they become unwilling to do so or when a rise in interest rates makes borrowing more expensive, the housing market cools off and prices either stabilise or fall. The cessation of the mad skyrocketing of house prices that obliges people to shoulder an ever increasing debt burden may seem like a good thing but even here there is a catch. Mortgage borrowing supplies the economy with money. When it constricts it constricts the supply of money to the economy. A constriction of money supply shoves the economy into recession.
The problem with using such an unworkable system of money supply is that it is...well, unworkable. The problems caused by it will not resolve unless you address the money system itself. All you get instead is one failed “solution” after another, each one in turn becoming a new complexity of problem added to those that already exist - and the unabated decline in the health of the patient. The fact is we are foolishly trying to make our economies run on the wrong fuel: debt and adjusting the carburettor, kicking the tyres or adjusting the spark-gasp won’t make the car run any better.
It doesn’t take a genius to see that this is not a sustainable system. The game played by the criminal clique running the scam has been to milk the money cow to within an inch of its life without actually killing it. Yet it is inevitable that its health will deteriorate. There is not a great deal of time left in which things can be put right.
The fact is that outright ownership by people of the homes in which they live is at an all time low. The lenders retain the deeds to the property until the debt is paid and the size of the debt that must be paid before ownership becomes fact rather than merely nominal is at an all time high: the size of the average mortgage compared with the average income is now double what it was just a few years ago.
We are not living in a home owning democracy at all: we are living in a debt owing financial dictatorship. The fact that the dictatorship is hidden from view makes in no less a reality.
DEBT SLAVERY
The exposure of people to ever-increasing debt gradually moves them into a position of virtual slavery without their realizing it. Their freedom of choice and their freedom of economic maneuver are rather sneakily constricted.
Anyone wishing to set up in business for example now finds it very difficult indeed to do so without borrowing. As soon as one borrows one has placed oneself in a position junior to the lender. He who lends money is always senior to he who needs to borrow it. Once one is in debt it is very very difficult to get out of it again. Most businesses find their quest for true solvency rather elusive. Mortgage, loan, overdraft and credit card debt tend to increase.
People who are tied to hefty mortgage repayments, loan instalments and credit card bills dare not risk being out of work, between jobs even for a second. They cannot take a temporary drop in income for some career move or new venture that might in the long term enable them to be happier or prosper beyond their current level. It is easy to imagine how much more freedom of movement and decision one would have if one were by and large free of debt But most people can only dream. Today the average citizen carries a far larger burden of debt, a far larger obligation to pay what is essentially a regular tribute to a money-lending elite, than ever in history.
The demands of debt servicing are pretty remorseless, the system is an unthinking and rather intimidating machine geared to extract regular tribute from the citizenry. It wants its money on time, week in and week out. It doesn’t exactly break your legs if you don’t pay but default on your mortgage and you lose your home, default on your debts and there are the bailiffs to take away your furniture and humiliate you in front of the neighbours and so forth. Anyone who has run into difficulty keeping up with their debts knows how intimidating the situation can be. A degree of intimidation is necessary to keep people paying their tribute to the banking elite, the tax levied for the use of money. On behalf of the money lending elite the state mobilises debt collectors and bailiffs and laws and courts and confiscations and bankruptcies, the subtle machinery of threat that punishes the citizenry for doing what the system obliges them to do, what they must do if the economy is to run at all: borrow!
The system in other words shackles increasing numbers of people in ever increasing degrees to the treadmill of debt. As the commitment of income to debt servicing grows as a proportion of total income, they are in effect obliged to spend larger and larger portions of their working lives in a kind of peonage in which they work for the enrichment of a non-producing leisure class, an money-lending aristocracy.
If this process is permitted to continue and if government takes no steps to protect the people from it, then it will continue to move inexorably towards an end result of total ownership of all money and thus all wealth by the banking sector. It will result in the total, inextricable indebtedness of everyone else with all revenues and all incomes flowing to the banking sector. We can observe this process happening before our eyes and its mathematics are inescapable. This is what is going to happen unless we cease to put up with it and do something about it.
There is another name for this sly process: subjugation. And another name for the end result that is being sought: slavery.
WHY TAX US TO DEATH?
Government, local and national, is as adversely effected by the debt-money system as any other sector. The widening gap between industry’s prices and consumer spending power makes itself felt here also.
As producers supplying services, governments and local authorities need to raise prices (taxes and tolls) in order to cover increasing costs but find the consumer increasingly unable to meet the prices they must charge. As consumers buying raw materials, stationery, computers, buildings, vehicles and the like, or hiring contractors and staff, they find their own spending power continually falls short of the prices they are being asked to pay.
They follow the familiar pattern of trying to raise prices (taxes and tolls, car parking charges, fines etc) while making economies in production or quality of product (cuts in services, “reorganisations” and “economy drives”, privatisations etc). In raising prices they are however in the somewhat unique position of being able to forcibly extract from the consumer the price increases they require rather than rely on supply and demand. Try not paying your grossly inflated council tax for example and see what happens to you.
In a debt economy, government experiences difficulty in balancing its books: most years the revenue it is able to raise through taxation of a people already belaboured by a shortfall in spending power is insufficient to cover the costs of providing services and paying the interest on its past borrowing.
The short-fall is referred to as the budget deficit. A government that finds itself many billions short of the money it needs to cover all its costs has several options:
1.) It can simply print the money it requires and spend it into the economy. Governments across the world however currently refuse to take this option. The argument usually put forward is that for government to simply print and spend money would be inflationary. Yet billions annually are being printed and spent into the economy through the mechanism of borrowing I have described. All government would be doing is taking money creation out of bank hands and getting money into circulation by spending it on needed projects as opposed to obliging all and sundry to carry debt! Instead of using the clumsy and punitive mechanism of interest rates to regulate how much new money is created it would have to bring into play something possibly new and unheard of for governments: judgment and responsibility. It would merely need to monitor the growth or otherwise of the economy, any changes in purchasing power of the currency and ensure that it released money in line with economic growth. That billions upon billions are borrowed into existence annually tells us emphatically that there is a dire shortage of money. The economy is simply crying out for money!
Issuance of money debt-free by the government would reduce the pressure to borrow money into existence that is placed upon industry and the consumer. There would be “more money about,” less need therefore to borrow and therefore “less debt about.” But this is too simple and too easy on the citizenry for most governments to bear, apparently.
2.) It could take steps to ensure there is efficiency and no waste in the way it spends money in delivering its services. This is, of course, asking governments to change the habit of centuries but it would at least ensure the citizen got an improved exchange on the money that is levered steadfastly from his wallet. It would not however of itself handle the underlying problem. It would not matter how efficient, honest and near god-like in its wisdom government became in its expenditure of the hard-earned money we entrust to it, the tendency for there to exist a shortfall between what we pay and what we get would remain, so long as there remained a government debt. Imagine a government that spends £100 billion on services - and then rakes in £100 billion in taxes to pay for it. Of that £100 billion it must pay £10 billion to the banking sector to service the interest on its outstanding debt. This leaves government with £90 billion to spend on services that ran up costs of £100 billion. Looking at it from the perspective of the tax payer, he pays £100 billion but only receives £90 billion-worth (if government is efficient and scrupulously honest in serving the tax payer - a big “if.”) of services. Money is diverted out of general circulation into possession of the banking sector. So far as the rest of the economy is concerned, it’s disappeared into a big black hole.
3.) Have banks create it and borrow it off them.This is money creation but, as we have seen, it also creates debt at a faster rate than it creates money, increases the size of the government’s already vast debt and simply ensures the interest payments will be bigger next time.
4.) Increase taxes. This is in essence hiking prices and forcing its rather
disgruntled customers to pay them using threats, duress and punishment. It would enable government to “pay the bills it has incurred” but we can now see that the debt component ensures the tax payer will still not receive value for money. Moreover, an increase in taxation constricts disposable incomes and profits by cutting off income before it can be spent: that is, it reduces the spending power at the disposal of industry and consumer. This places pressure on industry to compensate by raising its prices, while reducing consumer ability to pay those prices. It tends to exacerbate the growing chasm between prices and consumer spending power. Any tax on incomes or business profits - particularly the most pernicious tax of all, income tax - tends therefore to drive business and consumer into the welcoming arms of the money-lending sector.
5.) Cut costs by cutting back the services they provide. As we saw in our discussion of industry, efforts to cut costs inhibits the redistribution of spending power to the consumer. So it is with government: by buying less from suppliers, by paying less to contractors, by cutting the public sector wage bill and social security provision it constricts how much money flows back into the wider economy and into the pockets of consumers. This in turn constricts how much money is available to people and industry to pay the next round of taxes...and so forth.
6.) Some combination of 2,3, 4 and 5.
Most governments are currently trying to balance the books by some combination of 2, 3, 4 and 5: where the emphasis is placed depends upon the mandate and policies of a particular government. Many governments borrow heavily and run up the national debt, whose repayment can be left to future generations, in the form of ever-increasing taxation. The United States is a case in point - her national debt is now well in excess of five trillion dollars, roughly the size of the country’s entire money stock.
Some overtly or covertly raise taxation while overtly or covertly reducing the services they provide in exchange for their citizenry's hard-earned money. Great Britain is a good example of this approach. The sorry state of her affairs, the cynical mistrust of the British for their government and the shambles that has been made of her infrastructure and public services demonstrate very clearly that it is such a destructive policy only idiots or criminals would keep on doing it year after year. After all if I and a growing army of people like me can figure this out, then so can the mighty intellects that have taken it upon themselves to manage the affairs of the nation. The willingness to tolerate such a chronic down-trend in the nation’s fortunes and the neglect of the obvious and straightforward remedial actions required to turn things around for the sake of furthering the entrenched privileges of an unproductive few is in my view a willful betrayal of trust.
If the British elite find themselves increasingly reviled by the nation they have
ruined, then they have only themselves to blame. The pity is that a
disgruntled nation might become disillusioned with democracy and conclude that it “does not work.” I would contend that the only thing wrong with the democratic system at the moment is that it has been suborned by criminals. There is nothing much wrong with it that the attentions of honest and well-intentioned men could not cure.
The needless sacrifice enforced upon the long-suffering British by this pretended “doing something about it” has utterly failed to prevent the government’s plunge into debt. By the turn of the millennium, Britain’s national debt had multiplied to over twenty times what it had been at the mid-point of the twentieth century.
Governments that are content to run up their national debts are able, to some degree, to keep taxes lower and avoid the erosion of services that so plagues the British economy. If we take a close look at the basic mechanism of government borrowing, using a simplified model, we see that government, along with everyone else, is in a no-win situation.
Imagine a government that borrows £30 billion one year in order to cover a £30 billion budget deficit. That loan is repaid at, say, 10% interest. In other words the total cost of paying it off is going to be £33 billion, money the government is going to have to take from tax revenues. Even if other costs do not rise and taxes are not increased, this will increase its budget deficit from £30 billion to £33 billion. So it borrows £33 billion and later has to honour that debt at 10% interest, a total of £36.3 billion, making its budget deficit even larger and requiring even more borrowing to cover it. In reality a welter of complexity sufficient to make one’s head spin hides it from view but this is the essence of the matter, the basic mechanism by which the national debt ratchets upwards at an alarming rate year in and year out. Britain's stood at £26 billion in 1960, £90 billion in 1980 and a staggering £380 billion in 1996. It is predicted to top one trillion pounds in the next ten or so years!
TAXES AND MORE TAXES
When we talk about government paying off its debt, what we mean in reality is that you, the tax payer, carry the burden. The income tax is probably the most pernicious and suppressive of all taxes, a dis-incentive to produce, justly hated by the productive population, complex and expensive to administer and collect. It cuts off income before it can be spent and so drives people and businesses into the arms of the money lenders. If you want to destroy a prosperous, productive civilisation, then suborn its government and get it to implement an income tax! People have lived with - or in spite of - income tax for so long it has become a fixture whose necessity or usefulness is rarely questioned yet it is probably the worst way of generating government revenue ever dreamed up by gormless bureaucrats. It simply is not necessary: the only useful purpose it serves is to secure government loans against the productive endeavour of the citizenry.
While we are looking at taxes, however, it is worth discussing just how much we are really taxed.
The British for example, one of the most heavily taxed nations in history, on average pay about half of what they earn to their beloved tax collector. Each year the government rakes in around half the entire money stock in various overt or hidden taxes and this is a tremendous burden placed upon the productive population, particularly as the return provided by government in terms of anything that truly helps, as opposed to hinders, their efforts to survive is paltry at best.
Many countries operate a “sliding scale” of income tax and this is erroneously deemed to be “more fair.” When we look at this more closely we discover that it is actually a mechanism for sneakily impoverishing the citizen. This can be best illustrated by a simplified example. Let’s imagine that on incomes up to £200 per week, income tax is levied at 25% so that a worker on £200 per week will pay £50 income tax to the government. Between £200 and £1000 per week it is levied at, say, 40% so a worker on £800 a week pays £50 on his first £200, plus another £240 (40%) on his next £600 of earnings. Above $1000 a week let’s imagine income tax is levied at 90%. A person who earns, say, £1200 per week will then pay £50 on his first £200, £320 on his next £800 and £180 on his next £200.
This doesn’t look so bad until we realize that inflation, or rather the steady erosion of spending power that occurs in the debt economy, tends to push up incomes. People’s incomes rise. They don’t get any richer because money is losing purchasing power - everything they buy is getting more expensive - but the numerical value of their pay packet increases. Someone on £190 per week for example, and paying tax on his earnings at 25%, gets a pay rise to £230 per week to keep pace with the rise in the cost of living. But now, on £30 of his earnings he is paying tax at 40% because he has moved into the higher tax bracket. His packet packet has the same purchasing power but a bigger slice of it is taken in tax. He is therefore to that degree poorer.
If we consider this in terms of hours of work we can see more clearly what is happening. Joe is on £200 per week and just within the 25% tax bracket. He works 40 hours a week and so he in effect is taxed to the value of 10 hours of his labour. But then he increases his income for some reason to, say, £400 per week. He still works 40 hours but now his first £200 is taxed at 25% and the remainder of his income at 40%, an average of 32.5% of his total income and equivalent to.13 hours of his work. In other words as inflation pushes up nominal incomes, people tend to move up into higher tax brackets and as they do so they get poorer and wind up spending a greater portion of their time working for the government instead of themselves or their employer!
This is of course a massive penalty placed upon what should be rewarded: self improvement, ambition, industriousness and so forth. Not only that it punishes people for having to put up with inflation that erodes their savings and their pay packets. One wonders how many more ways governments are going to find to knock their honest citizens about and how long before they realise the patently obvious: the civilisation rests on the shoulders of the honest citizen; the honest citizen is the one who makes it run and keeps it going; if you kill him off through an overwhelm of economic and other duresses you will not in the end have anything to govern! You dopes!
Governments seldom do things that aren’t inflationary and indeed protect a criminal system that has inflation built into it and one can see a sliding scale of income tax liability actually makes inflation advantageous in the distorted logic of governments and other mad operations. It causes incomes to drift up into higher brackets and enables government to collect increased tax revenues without overtly “putting up taxes.” It’s yet another chapter from the ruling elite’s “How to Fleece the Citizen” handbook.
Government finds all kinds of ruses for increasing taxation without the victims realising it. It struggles desperately to mask what it is doing for fear the citizen might become uppity if he realized the full extent to which he is paying through the nose for its shabby dis-services. The income tax is perhaps the biggest con but two others are worth a mention because they illustrate just how sneaky things can get.
The first is shedding public services that were being financed from the public purse, privatising them and making the public pay for them on a commercial basis but not reflecting the savings in government expenditure in a tax reduction.
The second is one is covert taxation, exemplified by a ruse that is currently being pulled on the British. Everybody is given to believe that the county’s emergency services, ambulances and so forth, are financed from the public purse. In the case of road accidents however, the emergency services bill the insurance of the drivers involved. The cost of fire and ambulance attendance at road accidents is therefore borne by the motorist through higher motoring insurance premiums. Higher insurance premiums become thereby a covert additional tax.
As if these were not a bad enough impositions upon the citizen, it is seldom recognised that the honest man actually pays two other, hidden, taxes.
The first is the interest he pays on his borrowing. Given that we are obliged to borrow money so that money can exist and then pay interest for the privilege, the interest charged by the lending institutions constitutes a toll or tax that we pay for the use of money! That the revenue does not accrue to government and so cannot be used by government for the provision of services that are of use to people and that it accrues instead to private profit corporations makes it no less a tax.
The second hidden tax is inflation itself: inflation is a covert taxation of the people. In an inflationary situation where money is constantly losing value it is worth more in terms of what it will buy at the point of issue, than later when spent by the citizen.
Let’s imagine that £100 of new money is created, whether by government or by banks who then lend it to government. When it is first spent by government, say to pay a printer for services rendered, that £100 will buy (say) 100 loaves of bread. In effect then the government pays the printer £100, which represent 100 loaves of bread and the printer supplies a stack of forms in exchange that are worth £100 or 100 loaves of bread. But by the time the printer spends that 100 it has lost value. For the sake of easy illustration let’s imagine it loses value by 10%. When the printer tries to buy loaves of bread with it, it will only buy 90 loaves. The printer has lost out on the deal to the tune of ten loaves of bread. He supplied to government a service worth 100 loaves of bread and received from government, in effect, something only worth 90 loaves of bread. The government has gained on the deal by 10 loaves of bread. Just how much government gains and the citizen loses - and the same applies however government spends newly created money into circulation - depends on how much inflation there is. But where there is inflation there is to that degree a further, hidden, method of taxing the people.
It seems that between working so many hours for the government and so many hours of our lives for a banking sector that in many respects is senior to the government, we spend far less time than we realise working for ourselves and our families.
It is little wonder that even in “democracy” we somehow never feel very free.
FRUGAL GOVERNMENTS
Some governments, like the British as I mentioned earlier, try to present themselves as “virtuous” in their management of the economy, seeking to “balance the books” and “pay the nation’s debts” and so forth. Whether instructed to do so by their creditors or through a failure to understand the debt basis of money supply, they have tried to “restrict” or even reduce the national debt by cutting services and even selling off national assets. Far from such frugal economic policy even making a dent in the national debt, that debt has continued remorselessly to soar into the stratosphere. For “cut the national debt” one might as well say “cut the nation’s throat” because even attempting to do so has had a catastrophic affect upon the national economy.
All governments have massive national debts. If they were to stop borrowing, they would not be able to cover their costs and would either have to cut services drastically or raise taxes to even more punitive levels. If they were to attempt to start reducing their national debts, they would have to start removing money from general circulation, creating a money shortage and recession.
Government borrowing is one of the major routes by which money is currently supplied to the economy - the others being private and commercial borrowing. Attempts by government to restrict or reduce borrowing therefore constrict the money supply and push the economy towards recession. In an economy already under-supplied with money, even a relatively small constriction of the money supply can be catastrophic to industry and consumer alike.
Britain's national debt amounts to roughly half of all the money in circulation. Any British chancellor intent on "paying off the national debt" must surely realise that if he ever did so he would remove from the economy one of the major sources by which new money is supplied to it, plunging the country into a devastating recession from which it would probably never recover
Remember, in a debt based economy almost all money only exists by virtue of someone carrying debt: either government, industry or the consumer and for one person or group to move out of debt someone else - or many someones - must move more deeply into debt.
As a nation reduces or seeks to limit the growth of its national debt, its government simply places pressure on industry and the consumer to carry more debt.Therefore where we have a government that restricts its borrowing, we would expect to find a.) high taxation and b.) an explosion of mortgage, commercial, credit card and other avenues of borrowing or c.) both. Which is of course Britain's current predicament. A frugal government that boasts about how it is trimming the national debt is essentially conning us because it is simply obliging the rest of us to borrow more.
A succession of "frugal" British governments have restricted the money supply and thrown the economy into a prolonged and near-fatal recession that has turned a once mighty industrial and commercial world power into a third rate also-ran, turned private and commercial borrowing into an epidemic, forced mortgage borrowing through the roof and rendered theirs one of the most heavily taxed nations on Earth, not to mention all the accompanying - and ultimately unnecessary - ills of national decline, service cuts, poverty, unemployment, confusion and loss of pride and morale.
RUNNING OUT OF MONEY
The effect of the debt mechanism is to create a perpetual squeeze on liquidity that is felt at every level - put simply the world is running out of money. This impacts upon local and central government no less than it impacts upon industry and the consumer.
Local and central government entities are, like industry, seeking to deliver services to consumers and receive payment for them sufficient to enable them to stay in business and continue providing those services. The shortfall in consumer spending power, the difficulty in extracting from the consumer viable prices that enable costs to be covered and distributing enough money to the consumer for those prices to be met, affects local and central government no less than it affects any other sector.
The difference is that government can more or less force, by duress and threat of punishment, the consumer to pay its prices. The injustice of this is obvious: government runs a system in which it does not distribute to the consumer sufficient money for its prices (taxes) to be met and punishes the consumer for failing to meet its prices!
Neither does government suffer the added burden of having to compete in an open market place. The nearest it comes to competition is the threat that the electorate will change government every few years and this is tantamount to merely changing the management of the same monopoly every now and then, with the outgoing management team not obliged to take any responsibility for its foul-ups and not personally liable for the resultant bankruptcies, losses and consumer dissatisfactions.
Government’s culpability for this mess is, however, much greater than industry’s in that it is in the unique position of having the power to change the system that so disadvantages almost everybody. Yet its successive management teams have taken no steps whatever to correct the basic cause of their perpetual short-changing of the citizen.
At this writing, the British press are reporting that huge rises in local council taxes are on the horizon, another nail in the national coffin. It is worth reflecting that local government suffers the same basic problems with debt and budget deficit as does central government. While central government can pass the buck of its self-same problems down to local government, by withdrawing central government funding from bankrupt local government in an effort to cut its own costs, local government can only pass those costs on to the consumer in the form of hugely hiked local taxes or drastic service cuts. Thus we see the steady collapse of local government, the accelerating breakdown of services and soaring taxes.
Local government is bankrupt. It persistently cannot collect from the tax payer sufficient taxes to fund its services AND its huge backlog of debt. It borrows to fund its operations and bridge its budget deficit. Withdrawal of central government funding merely accelerates the process by driving local government further into the arms of the money lenders. Borrowing to fund its operations makes the cost of those operations hugely more expensive to the tax payer. If we imagine that a local council wishes to build a new bridge somewhere and the cost of that bridge is £10 million, if it borrows that £10 million at, say, 5% interest per annum over 20 years, then the
total cost to the tax payer of the debt and its interest will be £20 million. In other words to have ONE bridge, the citizen actually pays for TWO bridges!
As local government borrows more and more to finance its deficit much as central government does, it thereby merely accelerates its own financial decline and its short-changing of the consumer.
It levies its own stealth taxes too. Many councils for example levy a tax called “car parking charges” whereby they set up parking machines in every street, to extract from the motorist a fee every time he parks his car. In an increasingly centralised society in which people are rendered increasingly dependent on their cars for business, shopping, or getting the kids to and from school and in which the vanishing from the landscape of rural post offices, bank branches, shops and so forth drives people into the towns, they are then punished for it by a bit of polite arm-twisting called “parking machines.” This is portrayed as a measure to “do something” or other about traffic congestion in towns. It, by observation, makes little difference to traffic congestion and merely upsets the motorist. It is a classic example of the wrong solution to the wrong problem, which itself becomes a further problem. What it does do is provide local government with an excuse and opportunity to crowbar from the car-driving citizen’s wallet every bit of spare cash it can get its hands on. It is a desperate measure on the part of bankrupt councils to inject a modicum of liquidity into their money-starved operations. It is my contention that, in the interests of best serving the people who elect them, it is the DUTY of local politicians as much as those of central government to acquaint themselves with the true nature of our money system and to DO SOMETHING effective to correct the hideous flaw that sabotages their every effort to properly manage local affairs.
There are of course skilled managers around who make a better job than others of serving the citizen within the suffocating strictures of the debt economy. However, the point I wish to make is that no matter how skilled the management nor how much the underlying problem is obscured by spin, “explanation” and the shifting of blame, this situation is going to get worse and worse until it kills off the economy. It simply is not going to miraculously right itself or go away unless its cause is actually addressed.
Anyone in government, central or local, who truly wishes to serve his community had better make it his business to understand the system within which he is trying to get things done and then demand urgent reform of it. I can can think of few better ways at this point in our history that a man of good will in public office could serve his fellows than to use his influence to bring about the reform of that which is destroying the lives of the people he wishes to serve.
WHY CAN'T WE HAVE A CLEAN ENVIRONMENT?
Everyone recognises that we cannot afford not to. If we do not have breathable air, drinkable water and bodies free from contamination, then we will die. We all agree we need to protect the environment, a lot of good people fight tooth and nail to that end but the environment continues to be damaged with frightening recklessness. A soon-to-be-released companion book to this one shall focus on the debt economy’s impact on the environment in more detail but it would be appropriate to look it over quickly here.
Financial, as opposed to observable, physical reality tells us that we "cannot afford" the "luxury" of safeguarding the environment because “there isn't enough money for things like that.” Financial reality and physical reality have somehow parted company and this tells us very clearly that the constraints placed upon us by the malfunction of our money system run profoundly counter to our survival interests.
If you want to get something done, generally speaking you need to fuel that activity with money. The added productive activity required to protect and safeguard the environment naturally requires extra money. But business operates in a climate of money scarcity in which the activity required to get out a product is being pared down to the bone. It is constrained by the burden of servicing debt and dangerously slender profit margins. It is so short of money that it has to borrow the stuff in order to invest in the future and so the cost of that investment is greatly increased. It is tied by money scarcity to mass production of cheap, junk goods that continually wear out or break down and have to be replaced It can seldom accommodate the increased production costs, that would have to be passed on to the consumer, of improving durability and quality. Industry spends billions each year merely flowing a portion of its revenue to the banking sector in service of debts. How different might things be if that money were able to be flowed not to the banking sector but instead to the improvement of service, delivery, quality and environmental protection? If money can be considered the energy of a productive economy, then what is happening is that the system is diverting energy away from the creation of things that serve man’s needs towards a parasitic entity that grows and becomes energised without contributing anything to human well-being! The productive economy becomes to that degree drained of energy, too “anemic” to rouse itself to robust endeavour, to the energetic provision of that which supports its long-term survival needs. It can just about summon the energy to get out of bed in the morning and tend to its bare present-time needs with little provision for the future at all.
As a brief aside, I must pause to stress that none of this is meant to suggest that there are not also other factors at work upon our culture.There is no workable technology of how to manage groups currently in broad use for example (pretended technologies that make things worse don’t count) and the wilful destruction of the moral codes that bind societies together has led to a torridly unethical business climate that will kill industry as surely as cyanide will kill a horse is another critical influence. Yet if we are to straighten out these other influences, we will have to straighten out the money system because honest enterprise and sound management will be endlessly hamstrung if the economy continues to try to run on bogus money.
The entry into production of greater durability and quality and the necessary steps to take care of the environment upon which human activity impacts require a greater investment of human labour in one form or another. Therefore more money must be spent paying people for that greater investment of labour. This naturally increases costs and to cover that increase industry must command higher prices. But there is always too little spending power in the economy for prices pared down to the bone to be met, let alone those higher prices. One is asking industry to “price itself out of the market,” to move in a direction contrary to that which the entire force of the debt economy obliges it to take.
To make things with care and craftsmanship, with due regard to environmental consequences, using methods that provide fulfilling work for human beings is physically both highly desirable and possible. But the reality of our money system is that, financially, it undesirable and can't be done.
Forced economic growth and junk production, an incredibly wasteful transport network for moving duplicated goods, centralization, the erosion of public services and winding down of many local amenities and other symptoms of serious economic malfunction are the factors damaging the environment.
The problem of the environment goes far deeper than that of, for example, the motorist using too much fuel. If we really intend to handle pollution we must handle it at source, not several miles down stream. And only when we handle it at source do we really handle it.
If you want a world fit for human beings to live in, you must first correct a faulty basic: bring in a money system that is a servant of man and not his master.
ROB PETER TO PAY PAUL? WHY?
Alongside the disingenuous use of environmental concerns to justify punitive taxes on motor fuel, British politicians are currently applying a little emotional blackmail to the motorist who screams at this attack on his standard of living. It exemplifies the way government gets away with murder because nobody has bothered to tell the citizen that the economy is being used by a bunch of elite crooks to enrich themselves at his or her expense.
We are told that the government simply cannot possibly reduce the tax on petrol because if it does so that will mean that schools and hospitals won't get built. Of course in the debt economy we have at the moment, that is perfectly true. In fact if we continue as we are they won’t get built in any case, no matter how high taxes go. We are so used to living in a debt economy we tend to accept such a claim at face value and do not see the flaw in it. Because government refuses to do its job of supplying the economy with money and so allows the chronic money shortage to worsen year by year, it cannot hope to raise in tax enough money to finance all the things it is duty bound to do. If it reduces a tax, it is obliged either to raise the money through another tax, borrow it, or cut services.
The economy suffers a dire shortage of money and, as a result, a huge surfeit of debt. There simply isn’t enough money to go around. The burden of shortage has to fall somewhere and wherever it falls, people scream. Government therefore is perpetually trying to juggle the accounts, it engages in a long-running con game in which it seeks to spread the burden or bring it to rest where people won’t kick up too much of a fuss or blame can be assigned to someone else. Then, if people do scream it juggles the accounts a bit more and moves the burden elsewhere for a while. The firemen scream for more pay because their standard of living is in decline, so the burden is shifted to the nurses until they scream, or to pensioners through dwindling pensions, or the police through cut-backs and so on. It, or part of it, is spread through the population through increased taxes or it is dumped on the middle classes through skyrocketing mortgages and house prices where, handily, “market forces” can be blamed and few can trace the fact that they spend a life in debt for the privilege of owning a shoe box with windows in it to inept economic management Yet, when government raises its hands and tells us there is "nothing it can do about it," that simply is not true. The solution is simple: stop borrowing, rectify the economy's chronic shortage of money by creating and spending into circulation new money debt-free - by, for example, building those schools and hospitals or whatever the government's mandated priorities are.
If there is a demand and real need for a school or hospital, if the materials to build it are obtainable, if the labour to work in or on it is standing idle and if we have the technical know-how to create it, then there is no reason not to build it. Unless government creates a reason by refusing to support the economy by supplying it with its means of exchange.
DISSATISFACTIONS
There are two areas of turmoil that bring irritation and turbulence into our lives and these are worth a brief look because we are now in a position to understand - and handle - the root cause of them.
The first is the tension between employer and work-force over pay. Worker demand for more pay (and the conviction that the employer is out to fleece him) and employer resistance to wage demands (and the conviction that the employee is out to fleece him) has been the source of much social division and unrest. In some countries much of this unrest may have, at least temporarily, subsided of late due to several factors. The first is the neutralisation of union power that has left the employee without representation. The second is rising unemployment and the relocation of industries to the Third World where they can take advantage of virtual slave labour. Both are direct consequences of the debt economy. The third is another consequence of the debt economy mentioned earlier: job slavery. The latter two have left the employee without leverage and the increasingly easy access to credit that has enabled credit card and other forms of borrowing to subsidise inadequate wages - becoming in effect another income, albeit one that has to be paid back later at interest.
The problem with suppressing the symptoms of illness is that the organism gets sicker without one noticing it and the illness eventually bursts forth from its constraints with a vengeance. As labour unrest is likely to shatter today’s false calm at some point in the not too distant future, it is worth understanding what underlies it. And it is this:
The employer seeks to keep his labour costs down below a level that enables him to distribute to the consumer enough money for him to be able to sell what he produces at prices that are viable for him. He needs to distribute more money through wages so his goods can be bought but if he does his costs will rise, the consumer still won’t be able to buy his goods and he will not be able to cover his costs. He resists the employee’s demand for more wages, even though he needs to pay the employee more so that his goods can be sold - because if he pays the employee what he needs so as to be able to buy the goods, the employer won’t be able to sell the goods! The employee meanwhile wants more wages so that he can buy all the goods produced by industry. But if he secures wages high enough for him to be able to buy the goods, his employer will go bust and there won’t be goods for him to buy! This is the hidden underlying influence that undermines the affinity and co-action that should exist between two vital components of any industry if the industry is to flourish for the good of all who contribute to it. Hidden from view there lies a parasitic, unproductive group that fleeces both sides for its own gain. Added to that one finds also the agitator, trouble-maker or unscrupulous profiteer who seeks to use this basic malfunction for his own ends.
The second source of social tension and division is similar to the above and derives from the same source: the debt basis of modern money. Industry is trying to charge prices for its goods high enough for it to cover costs and remain viable. But to cover costs and remain viable it must charge prices higher than the consumer can afford because insufficient money has been distributed to the consumer for the prices industry needs to charge to be met. The consumer on the other hand, with insufficient spending power, is trying to bid down the price of industry’s goods to a level where he can afford to buy them. But to be able to afford to buy them he must bid industry’s prices down below a level at which industry can make enough money to cover its costs and remain in business! From the point of view of the consumer, industry is always trying to “over-charge” for its goods and from the point of view of industry the consumer is always trying to “under-pay” for those goods.
Thus man as employer and man in the role of employee, man in the role of producer and man as consumer is assailed by these contradictions and irked and troubled by their stresses. The co-operative survival endeavour of man working with man is to that degree undermined.and human co-efforts mis-aligned.
Utterly mad, isn’t it?
WHAT MUST GOVERNMENT DO?
Simple. It must take back the right to be sole supplier of money to the economy. It must satisfy all the needs of the economy by creating money and spending (never lending) it into circulation and at a rate that keeps pace with and nurtures economic growth.
When it spends it should spend in the direction of reducing taxation and so create a new right: the right to keep what has been honestly earned.
We have lived for so long with better than half our incomes swallowed by excessive taxes and the rest by needless debt, with declining living standards, massive mortgages and sky high motor fuel prices that we think this is natural.
It isn't. It is entirely engineered to our detriment and the benefit of a handful of international bankers.
Why don't we demand something better, now that we have escaped the ignorance that kept this hoax out of view?
IS REFORM DIFFICULT TO DO?
No. Government is doing the sensible thing already with three percent of the money stock - printing and then spending into the economy the notes and coins of which we are all so fond. It just needs to increase that three percent until it is one hundred percent. That way the issuance of money will come under democratic control.
There are many ways reform could be achieved but government could start on it tomorrow if it were of a mind to. The next time it has a budget deficit to cover, it could, for example, not bother with having the banks create the needed money and borrowing it off the banks: it could simply create the money itself and spend it. It could do the same year after year, covering its deficit by creating and spending money into the economy. In time all the money in the economy would become debt-free money and debt all but vanished from our lives.
It should be noted that all this would strengthen government in the sense of
finally enabling it to do its job: to handle unemployment, build the schools, hospitals and transport networks and all those things that governments promise to do, and often start out intending to do, yet consistently find themselves unable to do as they become enmeshed in the sticky, bewildering web of a cranky economy. It will certainly restore a people's faith in its elected leaders
None of this is difficult. But it falls to us, the electorate, to wake government up to its responsibilities.
IF IT IS SUCH A GOOD IDEA, WHY DOESN'T GOVERNMENT DO IT?
Government operates within a system it inherited, in which the money powers hold the whip hand and have done so for a very long time. Within that system an interweaving of the banking elite, the political elite and the elite of the state bureaucracy has evolved. It has become to all intents and purposes an aristocracy of largely criminal colour, self-serving and jealous of its power and privilege. The lynch-pin of that power and privilege, the keystone of the entire suppressive edifice is the money-scam it nurtures and protects.
Government lacks neither the know-how nor the means to carry out reform of the money system. It could do it tomorrow if it had the will.
The problem is it lacks the will. It lacks the will because there is no demand for change from the electorate.
There is no demand for change from the electorate because the electorate has been kept in the dark. But will the electorate tolerate this scam a moment longer, once it understands it? Or will it take government by the scruff of the neck and demand change?
The power lies in your hands. Use it.
WHAT CAN WE DO ABOUT IT?
The first step is to understand the nature of what is going on. This booklet has sketched out some of the aspects of this scam. I have produced and am in the process of producing other books that will tell you more about it. Each book is designed to approach the issue from a different angle and so broaden your understanding but at the same time each is designed to stand on its own. Each will give you sufficient data that the fraudsters will never again be able to pull the wool over your eyes.
A broad understanding by the electorate of the money fraud is what the money powers fear. No fraud works when the intended victims see through it. When the mechanics of exploitation and theft behind unnecessary impositions such as high fuel prices and extortionate taxes are understood by the people they will not tolerate it a moment longer, their new knowledge will empower them to do something about it and the fraudsters will have had it.
If you have read this booklet you already know more about all this than the perpetrators ever wanted you to know.
All you have to do is spread the word. Pass this book and its companion books around, TALK about it to your friends, write to your MP (don’t be surprised if you get waffle in reply) write to the newspapers, contact groups you think might benefit from this knowledge, make sure everybody knows. Form yourselves into groups and get a grass-roots movement going. HELP your country and your fellow good people.
Demand that government get its act together and makes the necessary sensible reforms NOW before it is too late.
If government still won't do it, then it is not working in your interests or the interests of the broad sweep of its citizens. It is a government suborned by criminals so don't vote for it and elect one that will. And if there isn’t a party you can so elect, form one.
It is my purpose to loudly and broadly expose this money fraud and to help bring about a powerful grass-roots movement that no government can ignore.
It was Edmund Burke who said that for evil to triumph it is only necessary for good men to do nothing. Personally, I would amend that to: it is only necessary for good men do underestimate the effort required for good to prevail and so fail to organise and do too little, too late.
But if you stir yourself now and spread the word with a modicum of determination, you can take back your country from those who stole it from you.
The very worst thing you could do about all this is nothing.
WON'T MONETARY REFORM ROCK THE BOAT?
Many people are afraid of making a fuss for fear they will rock the boat and destroy whatever stability is left to us in these troubled times. Some who, to their immense credit, manage to carve out a measure of success despite the economic cards stacked against them fear that change may oblige them to sacrifice their hard won gains for the greater good.
To the latter I would say they should consider that if they have found success operating in a mad economy, how much more prosperity might they find in a sane one? In a sane economy no honest man shall be penalised or disadvantaged - it is insane economies like our present one that do that.
To those who fear to rock the boat, all I can say is: the economic boat is already rocking - in fact it is likely to capsize at any moment and take us all down with it unless we act NOW to save it!
The brutal facts of our situation are that, unless the money system is corrected, things are not magically going to get better of their own accord. They are going to continue to get worse and the rate at which they get worse is accelerating. Poverty will continue to spread. We will go deeper and deeper into debt, taxation will increase and our freedoms will melt away entirely. Somewhere up ahead the yawning chasm waits and no amount of wishful thinking, or “ignore it and maybe it will go away” will change that fact. Our prosperity, liberty, homes, jobs, hopes and dreams and those of our children are at grave risk. Yet we have the means to protect them. The solution to all this goes begging and it will not be used until we, the people, demand that it is used. Monetary reform is all about how to stabilise the boat and make it safe to sail in. It requires no revolution and no drastic change to our way of life apart from the arrival of economic calm and the removal of debt and high taxation from it.
All it requires is democratically elected government to show some common sense. Evidently it will not do so until we, the electorate, generate a demand that it does.
CONCLUSION
I have given you a brief sketch of how the banking scam works and some of the ways it adversely impacts upon our economic lives.This is more understanding than the perpetrators of the fraud wish you to have.
Our situation is at this time pretty grim. It requires our urgent attention because we no longer have a great deal of time in which to put matters right. Our economic problems are not going to magically go away of their own accord and the prognosis for our economic future, should we fail to face up to what must be done, is almost too awful to contemplate.
This would be a terrible pity because the mess is not actually all that difficult to sort out when it proceeds from an understanding of why we are in the mess in the first place.
The rewards for monetary reform will be as many and profound as will the penalties for neglecting them, as money becomes the servant of Man and his individual, group and national goals. Free at last of debt and the burden of excessive taxation, his societies liberated from the manipulations of corrupt hidden powers that subordinate its governments, the human community will at last begin to realize some of the economic potential Man’s technical genius has created.
Economic reform may not be the answer for all Man’s ills and there may be much more to be done but it will provide him with a good start, sound economic rudiments upon which to build.
There can be very good times ahead. If we make them so.
Kieron McFadden
