How the banks steal your money in the form of a loan

We'll get to how the unemployment rate and inflation are calculated and what it says about the real numbers a little later. We'll also get into what the petrodollar system is, how it came about, why it came about, and how it pertains to the discussion.

But first, if the government borrows money from the Federal Reserve because it is short of funds, and then has to pay that money back with interest that is ever increasing, where is that money going to come from and how is that situation resolved? And also, who has the power to coin money?

I want you to tell me why this all matters. You keep wanting to dive into these ideological weeds. We have a economy and a banking system that is working very well by any measure. The big question you aren't answering is; who cares?

To answer your questions.

1. Obviously the national debt is paid off by taxpayers. If you are arguing that we should be raising taxing and cutting spending... we can do that just fine without blowing up the banking system.

2. Are you confusing the two terms "coin money" and "create money"? Money is coined by the US Mint. I think you are asking who has the power to create money. And the answer is all of us do. I think you are arguing that the banks are "creating money". My response is that if this is the backbone of a well-functioning financial system in a large modern economy, who cares?

I work for a growing software company that has borrowed heavily to create a software product that is having great success in the market. Without the banking system, I wouldn't have this job, nor would millions of other Americans with similar jobs.

Between my new car, and my new job, I am rather fond of this banking system you want to dismantle.

You call the concern about an exponentially increasing national debt a matter of ideology. It's not. It's an objective issue. I asked you how the interest on the debt is going to be paid off when it increases faster than it can be paid off. I also asked you where the money for this unpayable interest is going to come from. You're not addressing that. Your position is that it's a non issue. And the reason you believe that is because we haven't yet reached the watershed moment. There will come a time when the debt ceiling will not be raised. Have you looked into the consequences of not raising the debt ceiling?

See above. Describe fractional reserve banking.

This is a pretty easy answer. The money comes from taxes. To take care of the national debt we can raise taxes and cut spending. You keep saying I am not answering the question. I don't know how I could answer the question any more clearly.

But the debt is continually increasing. What do you think that means for future generations? You speak of increased taxes and spending cuts as if they will have no effect on future generations.

Why is the government not creating its own interest free currency?

This is the national debt since 1940 (the banking system has been for longer than this).



I think the bottom graph is interesting (as my income increases, my debt is less difficult to pay back). In 2008 our debt spiked because of the financial crisis. In 1945 we incurred war debt.

In my opinion, the best solution to our debt problem is to raise taxes.

I think you are confusing money and currency. I don't know what you mean by "interest free currency". The government has a few levers it can pull to balance growth with inflation. When the government increases the money supply too much, there is a risk of a larger inflation... something that most of us don't want.

My mistake. I am asking why the government does not create its own money and not charge itself interest. Or, put another way, why is the government outsourcing the creation of money to an entity that charges interest on our own money.

Here is a House Joint Memorial from the Representatives of the State of Washington that embodies the spirit of my question.

H-1127.1 _____________________________________________
HOUSE JOINT MEMORIAL 4010 _____________________________________________
State of Washington 61st Legislature 2009 Regular Session
By Representatives Condotta, Shea, Klippert, Kretz, and McCune
Read first time 01/30/09. Referred to Committee on Financial Institutions & Insurance.

1 TO THE HONORABLE BARACK OBAMA, PRESIDENT OF THE UNITED STATES, AND 2 TO THE PRESIDENT OF THE SENATE AND THE SPEAKER OF THE HOUSE OF 3 REPRESENTATIVES, AND TO THE SENATE AND HOUSE OF REPRESENTATIVES OF THE 4 UNITED STATES, IN CONGRESS ASSEMBLED: 5

We, your Memorialists, the Senate and House of Representatives of 6 the State of Washington, in legislative session assembled, respectfully represent and petition as follows:

WHEREAS, There is an unprecedented need for Congress to pass legislation to help protect American citizens against potential, unprecedented losses in the value of take-home pay, retirement income, insurance policies, and investments due to the recent large-scale increases in the money supply by the Federal Reserve for the purpose of bailing out large corporations, loans to foreign central banks, etc., by restoring gold and silver money in accordance with the Constitution, then phasing out the Federal Reserve System and its inflationary paper money, the Federal Reserve Note; and

WHEREAS, Our Founding Fathers were very familiar with the 18 disastrous consequences, such as sharp price increases and the loss of 19 wealth by most citizens, experienced by those colonies that had issued 20 paper money not backed by gold or silver; and

WHEREAS, Our Founding Fathers were very careful to craft a Constitution that prohibits the issuance of paper money by either the federal government or the states by including such statements as "No state shall . . . make anything but gold and silver coin a tender in payment of debts . . . " (U.S. Constitution, Article I, Section 10), and only empowering the federal government "To coin money, regulate the value thereof, and of foreign coin . . . " (U.S. Constitution, Article 8 I, Section 8); and

WHEREAS, The U.S. Constitution designated the "dollar" as the standard of value (U.S. Constitution, Article I, Section 9, Clause 1 and the Bill of Rights, the Seventh Amendment), which was acknowledged in the federal Mint Act of 1792 to be a silver coin containing 371.25 13 grains (troy) of pure silver; and

WHEREAS, Our national government's first experiment with an unbacked paper currency, the Civil War-era "greenback," led to the large-scale loss of wealth by U.S. citizens when they were paid with "greenbacks," which had only about half of the value of gold-backed notes; and

WHEREAS, The creation of the quasi-public, independent Federal Reserve System by Congress in 1913 has led to our current monetary system of a fiat paper currency, the "Federal Reserve Note," not backed with either gold or silver since 1971; and

WHEREAS, The Federal Reserve System created a 3,000% increase in the money supply (properly known as inflation) over the years 1959 to 2006 which led to an 89% loss in the purchasing power of our "Federal Reserve Note" paper dollars (the classic effect of inflation) during the same time period; and

WHEREAS, The Federal Reserve System has been greatly increasing the money supply in recent years, and beginning with the financial crises of 2008, undertaking to create additional trillions of dollars out of thin air for bailouts with no end in sight, or as the New York Times for November 26, 2008, put it, "The Federal Reserve and the Treasury announced $800 billion in new lending programs on Tuesday, sending a message that they would print as much money as needed to revive the nation's crippled banking system."; and

WHEREAS, As a result of these recent, large-scale increases in the money supply, we can expect unprecedented rounds of price increases and economic
dislocations in the future, leading to unprecedented losses of the value of take-home pay, retirement income, insurance policies, and investments by most citizens, and possibly ultimate economic chaos;

NOW, THEREFORE, Your Memorialists respectfully pray that the Congress of the United States, and particularly, the legislative delegation to Congress of the State of Washington, use all of their efforts, energies, and diligence to protect all the citizens of this nation from potential, unprecedented losses in the value of take-home pay, retirement income, insurance policies, and investments as a result of the Federal Reserve's ongoing inflation of our unbacked paper money by passing legislation (such as H.R. 2756 to repeal our nation's legal tender laws, H.R. 4683 "The Free Competition in Currency Act of 2007," and H.R. 5427 the "Tax-Free Gold Act of 2008") to help restore gold and silver money in accordance with the Constitution, then phasing out the Federal Reserve System and its inflationary paper money, the Federal Reserve Note (as in H.R. 2755).

BE IT RESOLVED, That copies of this Memorial be immediately transmitted to the Honorable Barack Obama, President of the United States, the President of the United States Senate, the Speaker of the House of Representatives, and each member of Congress from the State of Washington.

This is a call to return to the Gold Standard. I thought you said that wasn't what you were advocating.

I've never advocated a return to the gold standard. I haven't studied the issue enough to make a call. However, whether or not a return to the gold standard is feasible does not take away from the fact that the government has outsourced the creation of money to an entity that charges interest on our own money.

Did you read what you posted? You posted a direct appeal to restore the gold standard.



Either this is what you want, or there is something else.

Oh I certainly did. And it serves my point well. You, however, are making the point that if the gold standard is inadequate, then allowing the outsourcing of the creation of money to an entity that charges interest on our own money is better than having our own government do it without creating debt.