Debt is the single largest threat to your financial well-being. Actually, it's
more than a threat. It is much like a metastatic cancer.|
Debt permeates our economy.
Consumer debt and federal debt are two types; there are many more.
In simplest terms, debt is the opposite of wealth. You can think of wealth as a
stack of goodies, and debt as just a hole. That oversimplifies, because debt has
cancer-like attributes. A unit of debt is not simply in the inverse of a unit of
wealth. It's much heavier than that.
Theft plus debt
When someone takes your wealth without your permission, that is stealing.
When someone takes your wealth and leaves you with debt, that isn't merely
double-stealing but something much worse.
If someone stole your new car that you paid $18,000 for and told you
convincingly that if you tried to do anything about it they would kill you
and/or your family, that would be pretty bad. If they also forced you to assume
the mortgage payments for the $250,000 loan they took out on a home they are
living in (but you are not), the picture is now much closer to what the federal
"government" does to the average American citizen. A similar pathos applies to
citizens of many other nations. This has been the case for longer than any of us
have been alive.
Many people can intuit the truth that adding debt on top of
the stealing is a lot worse than simply stealing. So to prevent revolution,
national governments engage in further fraud to mask the stealing.
One way that national governments attempt to mask national debt is by debauching
their respective currencies. Everyone has more marks, francs, pounds, or
dollars, and so feels richer than they would if they incurred the same loss of
wealth if the value of the monetary unit remained the same. Just compare hourly
wages from 1964 to those earned today; yet people today have far less spending
power for their hourly earnings than people did 50 years ago.
The bandits change the measuring stick, but not the actual wealth being
measured. Pretty sneaky.
This tactic is called “inflating the currency,” and it’s how we get
inflation. Wikipedia claims inflation is a general rise in prices. That is not
only a wrong statement, it is a blatant lie. Inflation occurs when the central
bank increases the money supply faster than the basket of goods and services is
There's a reason why the word "inflation" was chosen for this puffing up of
the money supply. How anyone can think it applies to a general price increase
boggles my mind, but many people accept this lie without question. Inflation is
one input into prices, and, yes, prices generally rise following an inflationary
move by the central bank. But prices on some items also drop, regardless of
inflation--just look at the cost per byte of computer memory as an example.
Inflation is difficult to do when the currency is tied to a physical
asset, and for that reason some people propound such a scheme as a cure for
inflation. It's not a cure for inflation (there are plenty of historical
examples of rampant inflation of asset-based currencies) and it creates other
problems; it's tantamount to throwing out the baby with the bathwater.
That said, what if you tied the currency to the entire economy? That is, you
have a means to accurately measure the entire basket of goods and services and
have honest people charged with doing this, then you assign one unit of currency
to x unit of economic value. That pretty much does the same thing as backing it
with gold, assuming those managing the system do their jobs correctly. And it
solves the main reason the typical asset-backed scheme cannot possibly work
Allegedly, Europe has done such a thing and the major European banks are
committed to maintaining zero inflation so they don't inflate the number of
Euros relative to the size of the economy.
Asset-based currency is no cure
A modern economy does not work with an asset-based currency (one in which
each unit of currency is worth X units of some asset such as gold). This fact is
obvious to anyone who does a little math, and we'll get to that in a moment. If
you're a gold standard fan, please take the knot out of your knickers, for the
truth is about to set you free.
Back in the 1880s, it was abundantly clear that the gold standard wasn’t
working. The frequent money shortages and various crises that ensued were
perhaps the major symptoms. There's a reason why this wasn't working, and we'll
get to that in a moment.
The failure of the gold standard as a currency basis was driven home
particularly hard after Wilson's War I (commonly called World War I). The flow
of gold between nations is worth studying. In fact, that whole period is worth extensive study if you want to understand
why asset-based currencies don't function in an industrialized economy.
This fact was also driven home particularly hard in the late 19th century as
the economies of nations grew thanks to a combination of population growth and
technology-enabled growth in output per capita. That's where the math comes in.
Do you need more clarity, or do you get it now? More clarity coming, in a
But just realize that a graph of the world's population looks like a fairly
flat line until the oil age appeared, and with it huge productivity gains. The
line shoots up at a steep angle, thus making the gold standard totally obsolete.
And that's just based on population; it was also made totally obsolete with
productivity and output gains. Combine the two, and it's hopeless for gold to
If you have 100 units of currency and 100 citizens, things seem pretty
straightforward. But what happens if there are immigrants and babies and you
have that same 100 units of currency and 150 citizens? What if those citizens
used to produce 100 units of wealth a year, but now thanks to industrialization
they can produce 1500 units? How do you pay them, without expanding the
currency? Ah, there's one of several points on which mathematics and the gold
standard can't get along.
And it's not just theory. In the 1880s USA, farmers (for example),
experienced money shortages because the amount of money in circulation was
limited by the amount of gold held in bank vaults. This limitation was fine in
an economy that didn’t need credit or that didn’t need to grow along with
population and/or output, but as the industrial age dawned and things like mass
production made the rapid creation of wealth (and thus economic expansion) a
reality, this artificial limitation on the currency created enormous problems.
We will describe one of those problems, in a moment.
Following Wilson’s War I, the major nations had no choice but to move to a
flexible currency. But the way they did it is a huge problem.
The reason stated by many leaders for going off the gold
standard was to pay down national debts in cheaper monetary units; that is,
defraud those to whom they had debt obligations by debauching their currencies.
So stealing was the justification for, and motivator for, modernizing the
currency. There were more compelling, and ethical, reasons for making that move.
But since stealing was the main reason the method of managing the currency was
inherently fraudulent. As it is today.
So we entered a new monetary age, that of a managed currency. Unfortunately, the
folks “managing” it are unaccountable and have abused their power to inflate the
currency to an extreme but only because their mission is to defraud.
We actually have is a (grossly) mismanaged
currency. And it's because the "need" to defraud is the reason for the system.
Regardless of the
monetary system, fraud is possible. You need proper controls, and when you are
establishing the monetary system and your goal is to defraud people you make
sure those controls don't get put into the system. That's how we got what we
have. The solution to this is obvious, so I won't even mention it.
It was this mismanagement that Milton Friedman and other prominent economists
blamed for turning a market downturn during the Hoover administration into an
economic depression. They make a fairly air-tight case, using hard data.
The underlying cause was a shortage of money, exactly what you would have
under a gold standard. This, despite having a "federal reserve" that allegedly
was chartered to specifically prevent this very problem. As the record shows,
the Fed didn't interfere, leaving things just as they would be with a gold
standard. Thus, the collapse that eventually became "The Great Depression" once
FDR began his attacks on the economy.
But then, the Fed wasn't created to help the economy. It was created to
In reality, the
"Federal Reserve" isn't federal and doesn't reserve anything. And it wasn't
chartered to actually prevent any economic problems.
It is SO depressing
Friedman gives a good analysis of The Great Depression in his tome, "A Monetary
History of the United States." Basically, the problem would not have occurred if
the "Federal Reserve" had done what its creators claimed it would do.
But that wasn't its real mission.
Really, the organization is a nonFederal
nonReserve and its main function is to convert wealth into debt. That is exactly
what it has done, which is why now we have a grossly debauched currency and a
national debt that exceeds the GDP of all nations combined--three times over.
The national pain didn't stop with a money shortage depression during
Hoover's time in office. It got worse. Far worse. FDR's radical debt generation
turned the Hoover Depression into The Great Depression. One could claim that somehow
FDR just didn't make it through second grade math and so was merely incompetent.
But that is really a stretch, to say the least.
And remember, FDR is the same
psychopath who ordered vast quantities of food destroyed while American children
were starving. It is more rational to conclude that he did this deliberately,
than to claim he just couldn't grasp that addition and subtraction are opposite
No protection from psychopaths
Unfortunately, the Constitution was de facto repealed after the War Between
The States. One consequence of this is our system is not capable of protecting
us from Presidents who, for whatever reason, seek to wreak massive damage on the
nation. Wilson got by with egregious treason, and so did FDR. Both men were
tools of the small cadre of criminals who put them in office.
To understand how FDR turned a relatively minor economic depression into the
Great Depression, you just have to understand that removing capital from a
capitalistic economy has the same effect on that economy as draining the water
from a swimming pool has on the level of water in that pool. Pretty basic stuff.
He did this by violating the Constitution, particularly the 10th Amendment.
While he should have been arrested or at least stopped by one of the other two
branches, we were already more than half a century into lawless government that
simply ignored the Constitution. So a psychopath like this could freely engage
in a crime spree that damaged the nation immensely and nobody would stop him.
Just like today.
Inflation nigh impossible to measure
Maybe the nFnR inflicted this monetary shortage to "justify" inflation, because
rather than having a money shortage we have had increasingly too much money
(relative to the creation of wealth) ever since.
Because inflation is relative (it increases as the supply of money increases
relative to the size of the economy, which is also increasing in size), rather
than absolute, it’s very difficult to measure directly or
accurately. You can do inferential measurements, such as looking at
prices to see if they are going up. But remember, inflation is only one input
into price. If someone tries to tell you that inflation equals rising prices,
ask them to look at the price of a byte of RAM over the past 30 years. Some
things have gone way up in price, some way down.
But price is a useful way of indirectly detecting inflation, if you sample
enough items and they are statistically representative (unlike the bull--- CPI). In fact, price comparison is
exactly what the major oil producing nations have been doing. A sheik visits
Paris and finds that a meal he buys in dollars costs twice as much as it did
five years ago but only 15% more in Euros or Yen (or some other currency). This
is why oil-producing nations are increasingly rejecting the Petro Dollar. The
United States has been cheating them by paying them in debauched dollars.
But near-zero inflation isn't a challenge
With a properly managed currency, it’s possible to keep inflation within a
tight band that averages out to
zero. Several monetary theorists have proposed systems that automatically keep
inflation at zero. So there’s no excuse for inflation, especially not for
inflation of the epic proportions we have seen inflicted upon the US dollar. And
as noted earlier, the Europeans claim to be there (zero inflation) right now.
I’m giving you this history of the Depression, info on monetary shortages, and
thumbnail overview of inflation so you can understand what’s going on and decide
to learn more about these related subjects. That will help you see how your
earnings and your savings are being stolen and replaced with debt. Odious debt,
at that. It is critical to understand that inflation is a form of theft, and
it's deliberately done.
Remember that the main reason the nonFederal nonReserve inflates your
currency is because it’s masking the hideously huge debt that is burdening our
nation (central banks in other nations also do this, but nowhere near as
extremely). Other reasons include cheating you the same way the oil-producing
nations are cheated. The debt is the main driver, and golly gee who is the
organization that holds most of our debt? Yep, you guessed it. And that's why
they try to hide what they're doing. By inflating the currency.
Back to gold?
The idea of going “back to the gold standard” sounds attractive, but it would
also mean going back to regional and/or local shortages of money. It would mean
that sometimes you don’t have your paycheck because your employer can’t simply
cut you a check; your employer must first trade goods for gold (or the
equivalent thereof) and if the bank’s out of gold you don’t get paid. In 2008,
we heard a lot about foreclosures but they were also rampant during the money
shortages of the 1880s and 1890s.
If we did go on a gold standard, nearly all of us could forget about buying
a car, buying a home, or using a credit card; all of these transactions create
money out of thin air. Probably no online purchases, either. With a gold standard or any other type of static system,
monetary credit cannot exist because it creates money out of thin air and thus
violates the standard.
Pay as you go, if you have the gold-backed money on hand, just is not
realistic unless you like economic depressions and major inconveniences. Such a
system also makes "those who have the gold make the rules" more potent than
Remember, the Hoover Depression was due to lack of dollars. That is also true
of several depressions that preceded it. This fact was used to "justify" the
Federal Reserve Act. But as we now know from actual events, the existence of
this entity does not prevent or even attenuate economic depressions. It just
makes them worse by adding massive theft to the mix.
A different kind of economic depression
FDR's Great Depression was due to a deliberate draining of capital from the
economy. FDR's Great Depression is an exception to the rule of how depressions
are created, and in fact we are still in that same Depression for the reasons it
came into being in the first place (we had a slight reprieve following Wilson
War II, because all of our competitors had bombed each others' factories but by
the late 1950s factories in the USA were laying people off).
Obamageddon is basically a gross exacerbation of FDR's GD, accomplished by
taking the FDR debt creation insanity to extremes.
The cure is to kill the Fed
On the spot money creation is not a problem in a properly managed monetary
system, especially one in a growing economy. It is a problem in an abused
monetary system, which is what we have.
The solution to the inflation problem necessarily includes vastly reducing
federal “spending,” most of which is blatantly illegal (see the 10th Amendment).
Possibly, the solution could exclude abolishing the nonFederal nonReserve,
and possibly you could talk a leopard into changing its spots. A solution that
permits the nFnR to exist is just too theoretical and abstract for my mind to
grapple with, and it would involve controls too complicated to be implemented
and administered. So let's not even go there.
the nFnR must be abolished. Since it serves no real purpose other than to
defraud you, we don’t need another institution to replace it. But we do need to
We need a good monetary system, yes. We don't need another nFnR style
organization that will only breed criminals and defraud us. There are plenty of
alternative monetary systems to choose from. Though I don’t know which one is
best, what we have now simply is not acceptable because it's based on
fraudulently created debt.
Your vote matters
We aren’t going to end the lying, cheating, and stealing without ending
“business as usual.” If you like our 51% unemployment and if you like the fact
that the dollar has been debauched by 98% (by some estimates) or "only" 97% (by
other estimates), and if you like
the fact that the USA is in a downward spiral by almost any meaningful measure,
then vote Demopublican / Republicrat and you’ll keep getting more of this same
destructive, morally bankrupt criminal behavior. So Step One is to deny these
crooks your vote at “election” time.
In a sense, we do need to go on the “gold standard,” but not the metal. We need
a government that follows the laws that are suppose to govern it. We need
representatives in Congress, not mere employees of large corporations in there
stealing from us.
The United States Constitution is the “gold standard” for governments. Our
needs to return to that standard. It can start by following the Tenth Amendment,
something it has not done in over 100 years. The Demopublicans have shown
contempt for our laws during that whole time. Vote in the affirmative for law
and order; vote Libertarian. You won't change the outcome of the next fake
"election" for Psychopath In Chief, but you will be part of a growing portion of
voters who show they want a lawful system. That message does carry some weight.