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DanB (Previously DB)

Feb 28, 2009, 12:46:34 PM2/28/09
Hi xxx,
Yes, I have a very strong opinion. First, it is important to understand
were money comes from. And it is hard to find information out there that
doesn't sound like a rant. The reason for that is when someone finds out
how the system works, they go off.

So I keep this paper, the explanation is from the horses mouth. Note the

Essentially, the banking system creates money out of thin air then
charges interest for that money. All our money is created from debt. If
there were no debt, there would be no dollars anymore. We tend to think
of money as bills. But there is very little of this kind of money in
circulation. Most little guy money is in the form of what they call
'M1'. Ledger entries in the banks computer system. When someone uses a
credit card, puff, new money comes into existence.

Now, why we are in the trouble we are in. Debt needs to be serviced. If
there were no defaults on debt the banking system would be able to just
keep creating new money and the supply of money grows so the previous
debts can be paid off. But when there is more debt than can be serviced
by the activity of our economy, things start to come apart. Here is our
current condition:

This is data from the federal reserve to 2007:

Now that gdp is contracting, this ratio will continue to grow, look at
the thirties. So what does the government do? It pours money into the
banking system. This money goes into the bank's reserves. It preserves
the debt on their books so that total market debt doesn't get written
off. In other words, we loose our ability to pay the debt while the
banks get to keep debtors on the hook.

If it all sounds like a scam, that is why folks that start to look at
this stuff go off, it is. The trouble is that it is our scam, meaning,
we own it. We are stuck with the threat of monetary deflation now. There
is no good reason for new borrowing, even if some qualify, and the
creation of new money. We, the world, won't get passed this one. Our
money system is designed to work with growth. We are coming to a time
where that will no longer be possible. We don't have a next cheaper
source of energy to replace oil and the production of oil will challenge
demand for oil again. The resources of this planet are not limitless and
we have exploited all the easy stuff.

BTW, I see that the limit was pushed in July, commodities went through
the roof, and what put this 'money' failure into fast forward. Note, I
don't say it is the cause, total debt is the cause, but that it was the

Best, Dan.

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