But there’s much more to it than that. These bubbles are symptoms.
They are
created because our wage and salary earners lack purchasing power due
to
stagnant incomes and various structural causes. These causes include
the
outsourcing of our manufacturing industries to China and other cheap
labor
markets and the super-efficiency of the remaining U.S. industry which
is
able to manufacture products with ever-fewer workers.

Also, our farming, mining, and other resource-based industries are in
a
long-term slide. This and the decline of hard manufacturing have been
going
on since our oil production peaked in the 1970s, followed by the
Federal
Reserve-induced recession of 1979-83. Next came the deregulation of
the
financial industry. It was all part of the economic disintegration
that led
to today’s “service economy.”

Now, for the first time in modern U.S. history, there are no new
economic
engines at all. The last real engine was the internet which has now
reached
maturity with marginal players being weeded out.

Our biggest sources of new private-sector jobs today are food service,
processing of financial paperwork, health care for the growing numbers
of
retirees, and menial low-paying jobs, like landscaping and building
maintenance. These are increasingly being performed by immigrants who
are
also underpricing U.S. citizens in many service jobs like childcare
and auto
repair.

Today the rank-and-file of our population must increasingly turn to
borrowing in order to survive. Only the banks and the credit card
companies
are the beneficiaries. The total societal debt for individuals,
businesses,
and government is over $45 trillion and climbing. This is happening
even
while the real value of wages and salaries is decreasing.

What I have just been saying is bad enough, but here’s where the real
lunacy
enters in.

A major factor connected to the decline in the value of employee
earnings is
dollar devaluation in the overarching financial economy due to the
proliferation of huge quantities of bank credit being used to keep the
stock
market afloat and to fuel the speculative games of equity, hedge, and
derivative funds.

In other words, while our factories continue to shut down, the Wall
Street
gambling casino-like its Las Vegas counterpart-is running full-bore,
24/7.
This, along with financing of the massive federal deficit, is what
critics
are talking about when they speak of the Federal Reserve “printing
money.”

The main growth factors for federal spending are Middle East war
expenditures and interest on the national debt. But within the private
sector it’s leveraged loans to businesses which The Economist recently
said
“mirror..interest-only and negative-amortization mortgages” in the
subprime
market. But here’s the big difference: in the leveraged business
economy,
the amount of assets at stake are even greater than with the housing
bubble.

The financial world, which Dr. Michael Hudson calls the FIRE
economy-Finance, Insurance, and Real Estate-has been producing
millionaires
and billionaires among those who know how to play the game.

The Wall Street hedge funds stand out as the most irresponsible
financial
scams in history. Unregulated and secretive, they account for a third
of all
stock trades, own $2 trillion in assets, and pay their individual
managers
over $1 billion a year. Think about this the next time someone you
know has
their job outsourced to China or when his adjustable rate mortgage
resets
and drives up his monthly house payment past the level of
affordability.

The hedge funds borrow huge sums from the banks which generate loans
under
their Federal Reserve-sanctioned fractional reserve privileges. Often
this
money is used by the hedge funds to “short the market,” thereby
earning
profits when stock prices decline.

In other words, the hedge funds and their banking enablers use banking
leverage to bet against the producing economy. In doing so, they may
actually drive stock prices down, causing ordinary investors to lose a
portion of their own wealth. Can this be called anything other than a
crime?

The livelihood of much of the U.S. workforce and perhaps half of the
rest of
the world’s population-maybe three billion people-is being threatened
by
such financial lawlessness. The justification that was first used for
financial deregulation and tax cuts for the rich was that the trickle-
down
effect of wealthy peoples’ earnings would spill over to the rank-and-
file.

The Reagan administration ushered in these policies in the 1980s under
the
heading of “supply-side economics.” But the opposite has happened. The
system has institutionalized an increasingly stratified worldwide
culture of
haves and have-nots.

Amy Gluckman, an editor of Dollars and Sense, reported in the
November/December 2006 issue: “During the Clinton administration,
Greenspan
was relatively ‘unembedded’-averaging only one meeting per month at
the
White House..

“But when George W. Bush moved into 1600 Pennsylvania Ave. ,
Greenspan’s
behavior changed. During 2001, he averaged 3.3 White House visits a
month,
more than triple his rate under Clinton and much more often with high-
level
officials like Vice President Cheney. His visits rose to 4.6 a month
in 2002
and 5.7 in 2003.

“Whatever White House officials were whispering in Greenspan’s ear, it
worked: Greenspan abruptly changed his tune on tax cuts, lending
critical
support to Bush’s massive 2001 and 2003 tax giveaways, and he loosened
the
reins by cutting Fed-controlled interest rates repeatedly beginning in
January 2001, a gift to the Republicans in power.”

Along the way, the bubble caused housing prices to inflate
drastically,
which officialdom touted as economic “growth.” Even today, periodicals
like
Barron’s naively boast that this inflation boosted American’s
“wealth.”

But this source of liquidity for everyday people has been maxed out,
like
our credit cards, and there is nothing to replace it. There is no cash
cushion anymore, because years ago people stopped earning enough money
for
personal or household savings.

As purchasers lose their homes to foreclosure, the real estate is
being
grabbed at bankruptcy prices by the banks and by any other investors
with
ready money. Whole neighborhoods of cities like Cleveland or Atlanta
are
turning into boarded-up ghost towns.

What we are seeing are the results of an economic crime on a fantastic
scale
that implicates the highest levels of our financial and governmental
establishments. It spanned three presidential administrations-Bush I,
Clinton, and Bush II-though the worst of it came with the surge of
outright
lending fraud after 2001.

As usual when hypocrisy is rampant only the small fry are being called
to
account. Commentators, including a sleepwalking Congress, have
self-righteously railed at consumers who got in over their heads. The
Mortgage Bankers Association is even lobbying Congress to allocate $7
million more to the FBI to go after the supposedly rogue brokers
within
their own industry who are being scapegoated.

Even so, these investors are increasingly uneasy with their dollar
holdings
and are bailing out anyway. Foreign purchase of U.S. securities has
plummeted. And our debt-laden economy, where our manufacturing base
has been
largely outsourced, is no longer capable of providing our own
population
with a living by utilizing our own productive resources.

For a while we were floating on the housing bubble, but those days are
now
history when, according to a Merrill-Lynch study, the artificially
pumped-up
housing industry, as late as 2005, accounted for fifty percent of U.S.
economic growth.

As everyone knows, the Federal Reserve under Chairman Alan Greenspan
used
the housing bubble, like a steroid drug, to pump liquidity into the
economy.
This worked, at least for a while, because consumers could borrow huge
amounts of money at relatively low interest rates for the purchase of
homes
or for taking out home equity loans to pay off their credit cards,
finance
college education for their children, buy new cars, etc.

When the final history of the housing bubble is written, its
beginnings will
be dated as early as 1989-90, when credit restrictions on the purchase
of
real estate first began to be eased. According to mortgage industry
insiders
interviewed for this article, they began to be taught the methods for
getting around consumers’ weak credit reports and selling them homes
anyway
in the mid to late 1990s.

The Fed started inflating the housing bubble in earnest around 2001,
after
the collapse of the dot.com bubble, which failed with the stock market
decline of 2000-2002. Then, over a trillion dollars of wealth,
including
working peoples’ retirement savings, simply vanished.

Also according to mortgage specialists, it was in March 2001, two
months
after George W. Bush became president, that a “wave of intoxicated
fraud”
started. Mortgage companies began to be instructed, by the
creditors/lenders, on how to package loan applications as “master
strokes of
forgery,” so that completely unqualified buyers could purchase homes.

There could not have been a sudden onset of industry-wide illegal
activity
without direction from higher-up in the money chain. It could not have
continued without reports being filed by whistleblowers with
regulatory
agencies. Today the government is prosecuting mortgage fraud, but they
certainly had to know about it while it was actually going on.

The bubble was coordinated from Wall Street, where brokerages
“bundled” the
“creatively-financed” mortgages and sold them as bonds to retirement
and
mutual funds and to overseas investors. Portfolio managers were
directed to
buy subprime bonds as other bonds matured. It’s the subprime segment
of the
industry that has now collapsed, triggering, for instance, the recent
highly-publicized demise of two Bear Stearns hedge funds.

And it’s not just lower-income home purchasers who are affected. The
Washington Post has reported that for the first time in living memory
foreclosures are happening in Washington ‘s affluent suburban
neighborhoods
in places like Fairfax , Loudon, and Montgomery Counties .

The subprime bonds were known to be suspect. One reason was that they
were
based on adjustable rate mortgages that were actually time bombs,
scheduled
to detonate a couple of years later with monthly payments hundreds of
dollars a month higher than when they were written. Many of these
mortgages
will reset to higher payments this October.

Purchasers were lied to when they were told they could re-sell their
homes
in time to escape the payment hikes. Now the collapse of the market
has made
further resale at prices high enough to escape without losses
impossible.

One way the system worked was for mortgage lenders to maximize the
“points”
buyers were required to finance, making the mortgages more attractive
to
Wall Street. Of course bundling and selling the mortgages relieved the
banks
which originated the loans from exposure, pushing a considerable
amount of
the risk onto millions of small investors. This was in addition to the
normal sale of mortgages to quasi-public agencies like Freddie Mac and
Fannie Mae.

Was it a scam? Of course. Did the Federal Reserve know about it? They
had
to. Did Congress exercise any oversight? No.

Let’s start by defining inflation:

[a] persistent increase in the level of consumer prices OR a persistent decline in the purchasing power of money

But, are they both the same thing? And what triggers them?

Demand-Pull Inflation – [is] summarized as “too much money chasing too few goods.” In other words, if demand is growing faster than supply, then prices will increase. This usually occurs in growing economies.

Cost-Push Inflation – When companies’ costs go up, they need to increase prices to maintain their profit margins. Increased costs can include things such as wages, taxes, or increased costs of imports. [of course, no one ever mentions interest]

This raises some KEY questions. First, does each type of inflation require a different monetary approach in response?

And if so, how does the Fed know which type of inflation the economy is suffering from?

To answer the second, there’s no indication that the Fed distinguishes between the two causes of inflation. In fact, it appears that regardless of its cause, the Fed has a ‘one size fits all’ method of dealing with inflation that comes in two favorite flavors: open market operations and the discount rate.

That makes the cause of inflation irrelevant, at least when it comes to the Fed’s response. But, we shall see that, as the aggregate level of debt accumulates in the economy, the underlying cause of inflation becomes increasingly important with respect to the effect the Fed’s response has on the economy.

Through open market operations, the Fed increases or decreases bank reserves by buying or selling securities, respectively. “The Fed buys securities when it wants to increase the flow of money and credit, and sells securities when it wants to reduce the flow.”

When the Fed sees that too much money is going through the economy and prices are rising too quickly (inflation), they put the brakes on by selling securities. This reduces the amount of reserves available to banks, causing interest rates to rise, and banks will not make as many loans because it costs more for consumers to borrow.

Or, the Fed increases or decreases the infamous discount rate, thereby setting “the interest rate that a regional Reserve Bank charges banks and financial institutions when they borrow funds on a short-term basis.”

Changes in the discount rate can affect:

• Lending rates (by making it either more or less expensive for banks to get money to lend or hold in reserve)

• Other open market interest rates in the economy (because of its “announcement effect”) [NOTE: it need not actually affect prices, but only threaten to]

Let’s ignore, for now, the glaring illegitimacy of a private banking cartel that allows member banks to create their own money from thin air and lend it out at interest!

By now, it should be fairly obvious that, by increasing the supply of money and credit beyond the level of productivity in the economy, the Fed (and its cohorts) cause demand-pull inflation.

(See, Why the Federal Reserve is Irrelevant for a compelling argument that banks wield unfettered control over the money supply through zero-reserve lending.)

In fact, the only other possible cause of demand-pull inflation is a decline in productivity, which the Fed (and its cohorts) bring about by contracting the money supply, making it more difficult to conduct business, i.e., be productive!

You see, even though increased dollars to goods ratio can cause the price of goods to rise, the inverse does not necessarily cause deflation – not for products whose marginal cost is relatively high, or whose price is inelastic.

In fact, in an economy like ours where control over capital and industry is concentrated in a handful of corporations, if push comes to shove, they are more likely to destroy or hoard their goods before selling them at below optimum price in our market.

So, when the Fed ‘tightens’ the money supply through open market operations it merely arrests the inflation that it caused!

BUT also, when the Fed ‘tightens’ the money supply, it slows down the economy (a.k.a. productivity) which in turn pulls on the dollars to goods ratio, keeping prices inflated!

But, hold on to your hats; it gets worse.

Next, we examine cost-push inflation and ask how does the Fed know when to act?

Basically, the Fed monitors consumer PRICES and the COSTS of doing business, focusing mainly on the cost of labor.

As I’ve already demonstrated, the inflated prices that you and I perpetually suffer from are different from the prices that the Fed relies upon to guide its monetary policy. While they worry about “core” inflation, we suffer from REAL inflation measured by an index of prices that include volatile goods (food and energy).

Why are they volatile? Because we need these products, so suppliers extort whatever price the market will bear.

Why does the Fed ignore volatile prices, and act only on changes in core, or elastic prices?

First, the Fed doesn’t care about us. But also, there’s NO risk that the price of necessary goods would deflate below desired price; every price is the desired price! Control over food and energy sectors is so concentrated that suppliers simply dictate prices, consumers either pay or do without the product.

Finally, the cost variable the Fed seems to monitor more closely than any other is Labor.

[L]abor accounts for roughly two-thirds of all business costs.

Is that really true? Not entirely.

The exact proportion varies according to the capital versus the labor, maintenance, administrative and other costs of the goods and services we buy. [see, Margrit Kennedy, PDF p.3]

For example, garbage collection is very labor intensive, whereas public housing is not. So, even though ours is primarily a service economy, it is also an economy saddled with DEBT, i.e., high financing costs, which may dramatically affect the ratio of capital to labor costs.

Nevertheless, the Fed focuses almost exclusively on labor. Consider the following formula used by a senior analyst to predict whether the Fed will tighten the money supply:

“This is a Fed tightening trifecta: strong economic growth (via payrolls), resource utilization pressures (via the unemployment rate) and inflation risks (via average weekly earnings).”

There are a number of things wrong with this formula. First, all these indicators are consistent with increased productivity. Companies certainly don’t hire more people unless they’re productive, and while lower unemployment and increased wages may indicate, as the Fed argues, a ‘tightened labor market,’ it’s still not inconsistent with productivity; ordinarily, where profits are the goal, companies would never dish out what they could not recoup.

What business does the Fed have stifling productivity???

Moreover, this formula focuses only on labor, to the exclusion of other costs, specifically, capital.

Nevertheless, this economist sees the following labor figures as clear evidence that the Fed will increase rates yet again in March of this year:

• The unemployment rate in the [US] dipped to 4.7 per cent last month, its lowest level since July 2001.

• Employers added 193,000 new jobs in January for the biggest addition since November; and

• Average hourly earnings also edged up in January, climbing by 0.4 per cent – matching December’s gain.

First, it is not clear that these estimates of fluctuations in labor (which are at best tenuous) can actually cause inflation. For example, a new technology or business process may improve productivity such that increases in labor costs would not (necessarily) increase the price of goods.

But also, the economy’s aggregate financing costs may already be so high that any effort to ‘fight’ the higher cost of increased wages with a further increase in interest rates could have disastrous consequences, like stagflation:

“the combination of high unemployment and economic stagnation with inflation.”

So, to sum it up, the Fed (and its cohorts) cause demand-pull inflation, after which they badly exacerbate cost-push inflation by raising interest rates in our already debt-ridden economy.

The TRUTH is that the Fed does NOT, and CANNOT ‘fight’ inflation by increasing interest rates.

If anything, the Fed fights de-flation and productivity, to the benefit of banks and their offspring corporations and to the detriment of American workers and consumers.

The act before me proposes another gratuity to the holders of the same stock, and in many cases to the same men, of at least seven millions more….It is not our own citizens only who are to receive the bounty of our Government. More than eight millions of the stock of this bank are held by foreigners. By this act the American Republic proposes virtually to make them a present of some millions of dollars.

Every monopoly and all exclusive privileges are granted at the expense of the public, which ought to receive a fair equivalent. The many millions which this act proposes to bestow on the stockholders of the existing bank must come directly or indirectly out of the earnings of the American people….

It appears that more than a fourth part of the stock is held by foreigners and the residue is held by a few hundred of our own citizens, chiefly of the richest class.

Is there no danger to our liberty and independence in a bank that in its nature has so little to bind it to our country? The president of the bank has told us that most of the State banks exist by its forbearance. Should its influence become concentered, as it may under the operation of such an act as this, in the hands of a self-elected directory whose interests are identified with those of the foreign stockholders, will there not be cause to tremble for the purity of our elections in peace and for the independence of our country in war? Their power would be great whenever they might choose to exert it; but if this monopoly were regularly renewed every fifteen or twenty years on terms proposed by themselves, they might seldom in peace put forth their strength to influence elections or control the affairs of the nation. But if any private citizen or public functionary should interpose to curtail its powers or prevent a renewal of its privileges, it can not be doubted that he would be made to feel its influence.

It is to be regretted that the rich and powerful too often bend the acts of government to their selfish purposes. Distinctions in society will always exist under every just government. Equality of talents, of education, or of wealth can not be produced by human institutions. In the full enjoyment of the gifts of Heaven and the fruits of superior industry, economy, and virtue, every man is equally entitled to protection by law; but when the laws undertake to add to these natural and just advantages artificial distinctions, to grant titles, gratuities, and exclusive privileges, to make the rich richer and the potent more powerful, the humble members of society the farmers, mechanics, and laborers who have neither the time nor the means of securing like favors to themselves, have a right to complain of the injustice of their Government. There are no necessary evils in government. Its evils exist only in its abuses. If it would confine itself to equal protection, and, as Heaven does its rains, shower its favors alike on the high and the low, the rich and the poor, it would be an unqualified blessing. In the act before me there seems to be a wide and unnecessary departure from these just principles.

Nor is our Government to be maintained or our Union preserved by invasions of the rights and powers of the several States. In thus attempting to make our General Government strong we make it weak. Its true strength consists in leaving individuals and States as much as possible to themselves in making itself felt, not in its power, but in its beneficence; not in its control, but in its protection; not in binding the States more closely to the center, but leaving each to move unobstructed in its proper orbit.

Experience should teach us wisdom. Most of the difficulties our Government now encounters and most of the dangers which impend over our Union have sprung from an abandonment of the legitimate objects of Government by our national legislation, and the adoption of such principles as are embodied in this act. Many of our rich men have not been content with equal protection and equal benefits, but have besought us to make them richer by act of Congress. By attempting to gratify their desires we have in the results of our legislation arrayed section against section, interest against interest, and man against man, in a fearful commotion which threatens to shake the foundations of our Union. It is time to pause in our career to review our principles, and if possible revive that devoted patriotism and spirit of compromise which distinguished the sages of the Revolution and the fathers of our Union. If we can not at once, in justice to interests vested under improvident legislation, make our Government what it ought to be, we can at least take a stand against all new grants of monopolies and exclusive privileges, against any prostitution of our Government to the advancement of the few at the expense of the many, and in favor of compromise and gradual reform in our code of laws and system of political economy….

source :  http://odur.let.rug.nl/~usa/P/aj7/writings/veto.htm

quoted ref: http://odur.let.rug.nl/~usa/P/aj7/writings/veto00.htm

Enriched country, indebted country

Besides, the United States sends more products to other countries than it receives from them. Whether it is under the Marshall Plan, or through aid to the organization for the defense of the West, the United States puts at the disposition of other countries millions of American dollars, which can buy American products for the value of these millions of dollars.

Which is the country that is the most indebted in the world?

It is the United States of America. Their national debt alone is 273 billion dollars today in 1953. (5.5 trillion in 1998.)

The game of a false financial system

Is this not a contradiction? How can the richest country be the country with the biggest public debt?

Speaking logically, it is certainly contradictory. But, with the actual financial system, this is what must happen. In reality, the more a country augments its potential for production, the more it enriches itself; but at the same time, the more it indebts itself financially.

It is not any different in Canada. Compare, on one side, the actual riches of the country now to what they were 300 years ago, 200 years ago, 100 years ago, 50 years ago, 25 years ago. You will find that the actual riches have always increased. On the other hand, compare the national debt with what it was in the beginning, with what it was 200 years ago, 100 years ago, 50 years ago, 25 years ago; you will see that the debt has also augmented.

It is the same thing for the debts of the provinces and the municipalities.

But how can this be?

It is because, the more there is production, the greater the amount of money that is needed to represent it, and to permit the transfer or flow of products. Therefore, the increase of money cannot be made without an increase in the debt, in a system where all new money comes under the form of loans which constitute a debt.

Loans and reimbursements

What do you call “new money”?

All increases in the volume of money in circulation.

If, in a country, there was 5 billion dollars in circulation last year, and if there are 6 billion in circulation this year, it is evidently because, at some point, we added one billion. This billion, which did not exist last year and which exists this year, is a new billion.

This billion did not come by itself. There is no money which is created spontaneously.

It did not fall from heaven: there is no money that falls like rain or snow.

It was not made by the Government:

The Government proclaims, to those who want to listen, that there is no other money than the money which comes from taxes and loans.

This billion was not manufactured by farmers, the working class, nor by the industrialists. These people manufacture agricultural and industrial products, but they do not manufacture money.

This extra billion came about because borrowers (individual borrowers or public borrowers) obtained loans from banks amounting to a billion dollars. (These loans consisted simply of: amounts inscribed by the banker in credit, not by investors who brought cash, but by a borrower who came to get some.)

To be more exact, it would be necessary to say that there was more than a billion dollars in loans during the year, because, during this period of time, there were also reimbursements.

These reimbursements remove money from circulation. Loans put money into circulation. If the amount in circulation went up by one billion, it is because the sum of the loans surpassed by one billion the sum of the reimbursements.

Loans constitute debts to be reimbursed. These reimbursements discharge debts. If the loans surpass the reimbursements by one billion, the debts contracted exceed by one billion the debts paid off.

And this is how all increases in money create an increase in debts.

But could it not happen that the sum of the reimbursements would be greater than the sum of the loans?

Yes, for a limited time. This is what happens, for example, when banks, together, make it harder to lend and are more demanding of reimbursements. In that case, the money in circulation decreases, and we soon have a depression. Less money to pay for products. Less money to pay salaries. It is a true crisis.

But, never can the total of the debts disappear completely: it is impossible to reimburse them completely, even by taking all the money which has been put into circulation through loans. This, for the good reason that he who borrows indebts himself for more than the amount of the loan. We call this interest on the loan.

Since money enters into circulation through loans, and since money disappears through reimbursements which must be larger than the loans, this signifies that we would have to globally reimburse more money than what is in total circulation. It is a mathematical impossibility.

That is why the total of the debts is unpayable. This is why the world remains indebted, more and more, as mankind develops more, necessitating loans from the Financiers.

In that case, should not the sum of the debts be even bigger than it is?

The sum of the debts would be even bigger, in effect, if there would not be debts which are discharged in other ways than by reimbursements.

There are debts which are discharged through bankruptcies. The debt, therefore, is not reimbursed, or is only partially reimbursed, but the guarantees of the loan are seized.

Bankruptcies, the closed factories, the abandoned farms, and all the miseries which ensue for the deposed owners, for the unemployed workers, are the fruits of the stupidity of a system which demands reimbursement of more money than it has created.

A paralyzing load, but not removed

But there are industries which reimburse their loans, including the interest. There are others who develop their enterprises without loans from the banks. There are governments which, in certain years, diminish their public debts.

All this is true, because, like you say, there are reimbursements, there are some who do it: but altogether they cannot. Those who succeed in finding 106 where there was put only 100, take the additional 6 from the sums put into circulation by the loans of others. Those others will only have more difficulty in trying to make their own reimbursements.

The success of one makes the plight of the others more desperate.

As for the industries which finance their developments without loans, they do so with money extracted from the public through higher prices to finance the amount. We call this auto-financing. But it is not at all an automatic financing; it is financing at the expense of the buyers. The result: it is that buyers are obliged to deprive themselves of products which are offered and which they need because the higher prices are over their budget. This is another bad fruit of a financial system which is false and unhealthy.

As for the governments who succeed at times in diminishing their public debts, it is because they also extract from the public, through taxes, more money than they put back into circulation through their expenses.

What they give in reimbursement of their debt, the citizens no longer have to buy the products which are offered to them. The result is again the same: less purchases, products not sold, total or partial unemployment for many, establishments closed because of the bad flow of their products.

A bad tree can only give bad fruit. And the fact of passing the weight from one shoulder to the next does not lessen the load: it only succeeds in creating conflicts. And we know there are many conflicts today.

What is true between those in debt in the same country is true among other countries which are in debt. And the sources of conflict among individuals and between classes are also the sources of conflict among nations. It always ends badly.

Is it possible to have a financial system that does not indebt as we become richer?

Yes, there is one, proposed to the world in 1917: Social Credit.

Social Credit does not create unpayable debts, because it would cause money to be created to the rhythm of production, and to disappear to the rhythm of consumption.

If it is somehow possible, in a limited time, to consume more than we produce, because of earlier surpluses, it is impossible, on the whole, to consume more than that which is produced. No one can make a loaf of bread, a pair of boots, or a pin disappear, which was not first produced.

If therefore money would come according to production, and disappear according to consumption, the system of progressive indebtedness would be inconceivable.

An individual, a group of individuals, could certainly still indebt themselves, but on the whole, the common debt would not exist. On the contrary, real total enrichment would express itself by a total financial enrichment; and, instead of taxes and surcharges on prices, individuals would receive dividends and discounts on prices.

The actual system is a lie; it is a false accounting. Social Credit would be a just accounting, an exact financial expression of economic realities. The first can only give rotten fruit. The second would produce good fruit, in abundance for all.

source: http://www.prolognet.qc.ca/clyde/badfruit.htm

]]>

Return the monetary system to the public domain where Andrew Jackson left it almost 200 years ago and eliminate lending at interest and this metastatic carcinoma in our economy will gradually become a thing of the past.

Please, read and learn about how money is supposed to work and how the current system was thoroughly corrupted long before G.W. was installed.

Both Abraham Lincoln and JFK tried to wrest control of the monetary system from private interests before they were assassinated. Coincidence? Read the facts and draw your own conclusions.

How much longer do you think we the people or the world can survive this increasingly ruthless ravaging?

The bankers who manufactured this grotesque system KNOW that the only way they can make themselves filthy rich is off the backs of others.

Think about it; a banker has only 24 hours in his day–JUST LIKE every other human being.

But, somehow his hour is worth millions, while the average laborer’s hour is worth 7 bucks.

Why?

Bankers insist that INTEREST represents “the time value of money.”

But you and I know that money does not have time, only people do.

I challenge anyone to bury a dollar, come back in a week and see if it’s not still a dollar!

So, what gives?

By gaining control of the MONEY SUPPLY and convincing people that money has a TIME value, central bankers (through interest) effortlessly collect unto themselves the value of millions of hours of other people’s time, the equivalent of RENT on all MONEY in circulation, leaving those who borrow MONEY with only a fraction of their TIME! (i.e., wealth) Voila!

The value of a central banker’s hour is now worth millions of hours OF OTHER PEOPLE’S TIME!!!

Among men, some will be able to see clearly what others must struggle to understand.

If you see clearly, then please, help someone else to understand because we can only change this together.

On March 23, 2006, the Board of Governors of the Federal Reserve System will cease publication of the M3 monetary aggregate. The Board will also cease publishing the following components: large-denomination time deposits, repurchase agreements (RPs), and Eurodollars. The Board will continue to publish institutional money market mutual funds as a memorandum item in this release.

Measures of large-denomination time deposits will continue to be published by the Board in the Flow of Funds Accounts (Z.1 release) on a quarterly basis and in the H.8 release on a weekly basis (for commercial banks).

M3 does not appear to convey any additional information about economic activity that is not already embodied in M2 and has not played a role in the monetary policy process for many years. Consequently, the Board judged that the costs of collecting the underlying data and publishing M3 outweigh the benefits.

source:http://www.federalreserve.gov/releases/h6/discm3.htm