Monday, September 19, 2011

Get Rid of the Problem. Embrace the Solution.


A Comment on Their

This article is just more false assumption, misconception and misinformation. How many parrots does it take to make something true? Sheeesh. The gobbledygook is almost unbearable.

Some Things To Know

1. Now, we monetize debt. There is no money unless there is first borrowing from a private commercial bank. For money to exist in the first place, someone, somewhere in the system, has to borrow it into existence. That means, somewhere in the equation is an "instrument of debt" - that means a loan. Government/business/personal debt creates "money" or "liquidity".

2. Now, we use debt for money. No debt, no money.

3. There are 2 inherent problems with using debt for money:

A) The "Interest"

At the creation of the new debt, only the principal amount is created, never the amount due as interest. All money is debt (or evidence of debt); therefore all money is loan principal. Interest is too. This is so simple it repels the mind, and yet, it's true. That means NO money is available to pay interest EXCEPT someone else's loan principal. Interest, in the system, gets paid with someone else's loan principal. That's unworkable.

Additionally, the cost of borrowing, (unpayable) interest or debt service, is rolled into the cost of doing business - that's the true cause of inflation; not too much money.

B) The "Principal"

When a loan payment is made, the principal amount is zeroed off the books. It was created as a loan; it gets zeroed off once paid. In the words of the Federal Reserve from its own publication "Purpose and Function", the principal payment is "extinguished". That means that there is a constant draw on the system in at least the exact amount as all of the principal payments made, each month. That's why we can't get this thing fixed by borrowing. It is the borrowing that is the problem and it's the interest causing the inflation, drop in the dollar and flight to slave labor that takes jobs out of the country borrowing the most. Such obvious nonsense.

These two things combine to make an unworkable system, no matter whom you point the finger at - Keynes, von Mises, Friedman or Greenspan - it makes no difference.

Bailouts = borrowing first

"Stimulus" = borrowing first

Spending = borrowing first

Taxes = paid from money someone borrowed first

Austerity programs = economic strangulation because of the draw on the economy made by extinguishing principal payments. This can only lead to record bankruptcies and wreckage.

The debt money system is unworkable. Soon, we will not be able to pay the interest alone, and mathematically, we can never pay back all of the debt. The level of indebtedness goes way beyond the "National Debt" - Business and Private debt exceed that by a great deal. Why, including the unfunded pensions ($90 Trillion according to the Dallas Federal Reserve) and derivatives ($600 Trillion+) - that alone can never be paid. The GWP (Gross World Product) is around $70 Trillion. The entire world could not pay off our debt! So, we push it down the road, dress it up and hope that someone comes up with the magic formula. We should be asking, how the most productive country in history, a sovereign nation with the ability to create its own money (Article 1, Section 8, U.S. Constitution) owns anyone anything!

Psychologically, you may not be able to see this because even the idea of it may be a "threat" to you; you were not informed by any institution that you still value, that it works this way. So, break your conditioning and open your eyes to the obvious truth: You cannot borrow yourself out of debt.

Also unworkable? Gold. There is not enough of it to run a global economy and there is nothing to stop the banks from buying it all up - then you'd have to borrow it from them anyway. Same thing. You need debt free money. And frankly, debt free money that can produce jobs. Isn't that right? Do we or don't we need jobs? Then, with all of this false talk about "thinking outside the box", why don't you try it once?

Let's see.

The solution to debt is wealth - would you agree? We need a wealth-based system that is tied to production (noninflationary) that benefits everyone. Here's the phrase that holds the solution: "Monetize the Production of a Value Added Infrastructure Rebuild". Roads / bridges / sewer systems / dams / levies / ports / transportation systems / energy - all need to be rebuilt. You know we need that. You know we need the jobs. Minnesota has a bill before its House and Senate to do just that. Go find Minnesota Senate File 65. There's your solution. Jobs? Yes. Debt free? Yes. Inflation free? Yes. No new taxes? Yes. Implemented overnight using the same infrastructure (RFP bid process, electronic banking infrastructure, etc. All the same.) Yes. Why, even the banks will benefit as people can pay off their debts! No more bailouts!

Solutions are easy when you are not married to the problem.