Social Credit is Plan C

[oldickeastman]

Americans are being told by corporation news media that  they live in times of great national debt for one of two reasons  either A) there has been too much socialism forced on us by politicians who promise the lazy rabble "entitlements" for votes which ran up a big debt burden  that we must we now work down with austerity to a sustainable level of debt;  or B) that there is too much profit  to the rich who are not paying their fair share of taxes and not paying wage earners what they should be paid on account of the greed of the rich, so that now we must, says group B, through increased taxation and government partnership with business make the rich pay more so that the less fortunate can keep the public benefits that the compassionate politicians have provided for them.   These are the sides in the debate in Congress and between the two blocks -- red and blue -- of the mainstream media.  Of course there is fodder to feed endless debate between these to positions.  Red.  Blue.  Republican. Democrat. Conservative. Liberal. Right. Left. Reactionary. Progressive. Rich. Poor. 1%.  99%.  Reagan. Roosevelt.  Wall Street. The street.  Yet for all this difference both sides are in solid agreement on one thing, on one prime directive, one political imperative that trumps all other issues -- no debate and no discussion  -- it is unspoken law the breaking of which is taboo and leads to a very shortened political career and a statistically very low life expectancy  -- and, of course, that prime directive is  that both "sides" agree that the serviceing of the $17 trillion dollar debt, i.e., the keeping up of interest payments on the debt  in such a way and with such provsion that international lenders continue feel comfortable enough  about holding our bonds that they will be willing to issue new debt. The debt grows at 3 billion a day.

 

Those are the two positions  -- so hurry up and decide  --  which is the lesser evil?  Obama or Romney?  McCain or Obama?  Bush or Kerry?  Bush or Gore?  Clinton or Dole? Clinton or Bush? Bush or Dukakis? ...

 

 

But what if the reason why we live in great national debt is something other than the explanations given by side A and side B?

 

What if the debt is big because the lenders have gotten so rich on interest that they have bought legislators and had them makthrough legislation create a financial infrastructure and monetary system, integrating  the two  in such a way, that there can be no money in the economy unless it is created by loan.  That no one can have any money to buy anything unless someone has borrowed the dollars to be used in that transaction.  This is indeed what has happened.

 

Notice that all but 7% of buying and selling and debt servicing is done by check.  Checks transfer deposits from buyers account to sellers account, from employers account to employees account, from tax payers account to country treasury's account etc.  Our money is deposits held by banks, the liability upon  which the bank is required to pay to the bearer on demand is transferred when you write a check.

 

But what about paper money, the Federal Reserve $1 note with George Washingtons face on it?   Is that permanent money, additional to the checkbook money?  Not really.  The "paper money" is simply the bank allowing a temporary transformation of deposit into paper -- but that paper only stays in circulation a short while, as most of it is spent in grocery and other retail stores which take bundles of dollar bills to the bank, usually ever day or two.  When a dollar goes out the bank has less "reserve" (required or excess) to cover their loans outstanding than before, so they make sure that they always have their loans outstanding low enough so they don't fall short of required reserves and face a penalty and other trouble from a bank audit.    So really the banks provide both the loan created checking account money supply and the paper money supply, which really is excess deposit reserves that they they give out when people ask for "cash" or pull it from the ATM so people can have very short term use of "paper money" out-and-back-in-an-average of three-days -- and of course the ATM machine gives cash the same way.  Only cash for illegal drugs etc. may not get back to the domestic banking system, finding its way to international banks through laundering. 

 

So all of our money that we need for running the economy -- for allowing the houshold sector and business sectors to do business with each other -- comes from bank lending.  Your paycheck is possible because someone got a second mortgage on their house, or took out a student loan, or borrowed money to buy stock for the spring season etc.

 

So where is the fraud in all this?  Where is the problem?  Why are we "under water?"  Why is the system doomed to fail, whether we use red-right remedy A or blue-left remedy B?

 

Because every loan that gives us money for our economy must be paid back to the financial sector principal plus interest.

 

Americans pledge collateral and take out loans.  The loan is spent, the deposit is transferred to retailers, or the IRS, or landlords, or home sellers &c.   This money puts people to work.  It moves good.  It pays wages.  It makes businesses profitable.  It enables ends to meet.  It provides the money incentive that allows production and distribution to take place. 

 

But the loan must be repaid to the financial sector, principal plus continuously compounded interest. 

 

But interest plus principal is an amount bigger than the amount of the loan which is just equal to the principal by itself.

 

Now we all know that most of us, at least until recently, have been able to pay our bills and stay out of bankruptcy court.  We have the common belief that if you work hard and are frugal, and make sensible business decisions that you can make it in America.  And of course some do.  But what is really happening is this: 

 

In the last 12 months;

 

Filings for liquidation under the bankruptcy: 958,757 

Reorganization of debtors in bankruptcy (Chapters 11 & 13): 407,514

 

And this does not include firms that quit business and absorbed the loss out of pocket to avert inevitable bankruptcy, or people who lost their homes and downsized their standard of living to avoid bankruptcy.

 

Because they are lazy?  Because they wanted something for nothing?  Because they were greedy and took risks that were too big for their abilities?

 

No.  None of that.  The reason is because the banks added obligation to pay interest upon a nation of citizens who sell their labor or trade on their entrepreneurial ability and who own assets that can be pledged as collateral  -- and these people all toether borrowed  money from the banks totalling so much simultaneously taking on the obligation to pay back to the banks that much plus interest with the stipulation that if they default the bank has the right to receive possession of the collateral and sell it to collect.  And that is the answer to the question of why some people can make avoid bankruptcy while others do not  -- because the creditors have taken collateral instead of all the interest due  -- and so there was some money left over for some people to make ends meet and "keep the farm" for another year.

 

So Americans owned this country and its resources and working and developing  the land and building up industry the wealth of the nation was increased.  Land and labor and the knowledge and resourcefulness of the common man provided for all of our needs.  But upon this good state of affairs there was imposed, almost from the first, the system of debt-based money.  This nation has always been short of money for transacting all of the good things that there were people and resources to produce and human beings who could be made better off with that production. 

 

The reason is that thanks to the victory of Hamilton and John Marshall over Thomas Jefferson and James Madison  -- we have an economy based on debt rather than on "thin-air" tokens that circulate without the creation of a corresponding debt -- requiring that money to eventually drain away again and drag either interest or pledged collateral with it.

 

With this system the money lenders have been able to get ownership of the entire productive capacity of the nation  -- through the collection of interest and the taking of pledged collateral.

 

The name of the shortage of money that comes about when principal and interest are drained out of the domestic economy is called DEFLATION.  Depressions are caused when debt is big and interest drain flows at a high rate because of the high rate of interest put on borrowing money in the last boom.   A boom is when, after a deflationary depression when the banks have harvested all of the bankrupted collateral in their "harvest season"  -- they then make a lot of new loans at initially low rates to get a new boom going  -- so that people will borrow in the boom  -- and of course that bids interest rates up  -- and interest rates also go up because prices are bid up in the boom as inventory is bid off the shelves and orders are placed for new inventory and better inventory  -- putting pressure on businesses to expand in a hurry  -  so the boom results in price inflation   and when there is inflation the lending banks increase the interest rate to make up for the inflation they expect.   But of course this higher interest rates means that the drain of purchasing power to the financial sector is going to be that much greater.  The depression will come faster and harder.  It is interest drain that causes depressions, that ruins lives.  And the interest drain is fatal because there is no souce of money to pay the interest other than taking out a new loan  (refinancing your house at a new rate, with a little extra to pay your otherwise unpayable bills  -- I'm talking to the former middle class here).