Lending and Spending

II. LENDING AND SPENDING

"Single acts of tyranny may be ascribed to the accidental opinion of a day; but a series of oppressions, begun at a distinguished period and pursued unalterably through every change of ministers, too plainly prove a deliberate, systematic plan of reducing us to slavery." ~ Thomas Jefferson 1774 ~

1. Axiom One for Constructive Social Change: National leaders are usually very capable people. If the leaders of a country claim to be working for specific positive change, but decade after decade the public gets only the opposite, then the cause of this will usually be discovered by finding out who is making great amounts of money from the status quo. "Follow the money!"

2. It is impossible for a small group of masters to exploit hundreds of millions of victims by brute force alone. It has to be done primarily by making the victims believe that they are in control. This is called "rule by misdirection." The exploiters themselves refer to the techniques they use to persuade the populace as the "engineering of consent."

3. Almost all people are completely ignorant about how societies, including their own, are run, and about what works well and what does not. The vast majority of people, however, also believe that we are all responding ideologically to the same information. They believe that all of what comes to us courtesy of the popular media is fact and that there are no relevant facts that do not reach us in this way. They will perceive political differences as being based almost completely upon character traits such as sensitivity and caring on the one hand, or upon maturity and judgment on the other. The idea that there could exist a completely different base of information to which a person might be reacting will allude them completely. The idea that anyone could react differently from themselves politically and yet be both sensitive and caring, as well as mature and rational, will also allude them completely.

4. Most of what happens in the larger arena of human affairs happens because of international finance, because of those who lend money to governments for repayment with interest. This financial-military-industrial-complex are the people commonly referred to as the "vested interests" or the "Establishment." This is not supposition or opinion. There is a highly specific body of knowledge about all this, and the individual who lacks this knowledge can have absolutely no understanding of current events or of history. Even people who call themselves Capitalists, but who do not address this problem, are mere dilettantes (8).

5. The consent for a collectivist system is gained by making a majority of the population believe that there is no better way of running things. The two subcategories of collectivism are "Fascism" and "Socialism" but are rarely called by these names (9). Most societies and political parties today are subtle mixtures of these two elements, using less conspicuous labels like "Democracy" or "Populism." They are all however, controlled or at least manipulated, by international finance. This is accomplished primarily through the regulation of national currencies.

6. The value of a currency is established in the same way as with a commodity. It is the relative scarcity of a usable commodity which determines it's value. If you increase the amount in markets of a commodity relative to what it is traded for, then the relative value of the commodity is diminished thereby. The same is true for currency and for the same reason - the currency is then relatively less scarce.

7. The only stable currency is one which serves as a system of warehouse receipts for a fixed amount of scarce and durable commodity, and whose value is agreed to depend, within reasonable limits, upon the market value of such commodity relative to the goods and services which the currency will be used to purchase. A mixed "portfolio" of many commodities would provide the most stable backing for a currency because it would eliminate the problems which accrue to massive changes in supply or demand for any one commodity.

8. Even a privately issued commodity-backed currency will lose value unless backed by a one hundred percent reserve. Having less reserve would render the currency less scarce relative to the commodity it is supposed to represent.

9. A currency not backed by anything of intrinsic value, but created by a central bank at government request, is called "fiat" currency. This has the same effect on an economy as counterfeiting in the private sector, and should be illegal for the same reason.

10. There is absolutely no ambiguity whatsoever about what causes price inflation. It is simply a rise in consumer prices representing the normal response of producers to any increase in consumer spending for goods and services. The increase in spending itself is a normal response to any increase in the money supply. This usually precedes the price inflation by about two years. This time lag completely obscures the cause-and-effect relationship involved except to those who study graphs.

11. An increase in the "money supply" is any increase in the total amount of currency in circulation relative to the amount of goods and services that the currency is used to purchase. The amount of currency in circulation at any given time is determined by the central bank in any particular country.

12. Central banks insist that they can control the "economic cycle" with fiat currency. They neglect to mention however, that without fiat currency there is no economic cycle in the first place - just a continuing slow prosperity with full employment. No boom and no bust. Statistics about all this don't tell the whole story because they are based on national averages. The unworkable policies of Socialism have their destructive effect much sooner in some places than others because of local economic conditions. When one area is going into the recession phase another area is beginning to reinflate. At any given point when the numbers are averaged together the illusion is created of a fairly even and uneventful "national" economy.

13. Central banks are privately owned corporations held publicly only through investor participation. They are not truly "national" or "federal" because they are not actually part of government. They are insolvent and do not keep a one hundred percent "reserve" today, only about one and a half percent. They have their own agendas and make most of their profit by borrowing money from large international banks and then lending it to government and individuals at a higher rate. Government borrows by selling large blocks of redeemable securities, like T-Bills, to the international banks and smaller amounts to individuals. The money government receives from the banks is the newly printed unbacked currency.

14. Increasing the money supply effectively robs society. The central banks finance government programs which seem to be needed to relieve the hardships caused by the economic cycle, itself produced by fiat currency in the first place. Increasing the money supply rewards cooperating government officials by allowing them to draw and spend large salaries in connection with all the unnecessary government programs before the normal response of markets results in price increases. This ongoing interaction, combined with aligned industrial interests like defense manufacturers, is what is correctly known in it's entirety as the "Welfare-Warfare Economy." While there are many charming and likable individuals involved in all of this, collectively, in terms of their impact upon this planet, they are at best a crew of wicked old pirates, more so than even the most infamous villains of olden times. They simply wear business suits (10).

15. In "managing" the economy, a less obvious way of increasing the money supply is through fractional reserve banking. This occurs when central bank regulations encourage the smaller banks to lend out amounts far in excess of deposits. This makes the smaller banks illiquid. All of them, including the central bank, are insolvent. Fractional reserves render banks unstable and later seem to justify even further increase in the money supply by the central bank to "monetize" the bailout of many of these banks in order to "save the economy" from collapse. The people pay for all of this with increased taxes, price inflation, and recessions. In this case disclosure laws are a good free market remedy, but can only work if people understand the cause and effect of what's going on.

16. One specific way that monetized bailouts are used to rob society is when a large international bank or a government, through the central bank, makes a reckless unsecured loan to a Third World country. When the loan is inevitably defaulted, government arranges for the bailout to be monetized. The central bank creates fiat money and pays off or refinances the loan to "save" us from the banking collapse which would be triggered by the defaulted loan. Those who speak up are labeled "heartless, irresponsible advocates of isolationist foreign policy."

Riding ourselves of these cental bank monetizing problems does not involve interfering with international finance capitalism by regulating bank lending procedure. It simply involves eliminating government bailout policy. When this is done, the large banks will have a natural free market incentive not to make these imprudent loans in the first place.

17. Perhaps the most tragic irony in society today is that the means used to pay for entitlement programs actually cause the problems, the effects of which, the programs are supposed to relieve. Entitlements necessitate deficit spending via fiat currency, which itself is the only cause of the economic cycles which lead to the rise in living costs, followed by the recessions which produce unemployment.

18. Deficit spending for defense seems to become necessary in response to painful shortages occurring when goods and services cease to cross borders because of trade deficits. These in turn are produced in world markets by fluctuations in the relative values of the fiat currencies used to finance all the government spending programs. Most of the military in so called "free" societies today are not really necessary and are effectively rendered little more than elite welfare bums, brave and well intentioned though they may be.

19. It has been posited that giant laser and particle beams targeting missiles from orbiting space stations can make nations safe from nuclear attack. Nuclear weapons however, can be clandestinely assembled and maintained throughout a targeted country and then detonated by radio control from a distance outside the borders. In reply to this, some have suggested that a laser defense system could prevent an alien invasion from another planet. A man with a stone ax might, in some exceptional instance, triumph over a modern aircraft carrier. The real "advanced technology" here is one of finance propaganda (11).

20. On the surface it often seems that economic upheavals in a nation are not just determined by central bank policy, but by longer term things, such as when people representing a large bulge in population reach an age where their numbers cause a disastrous distortion in markets. For example, a post-war boom generation is destined to flood the market with primary residences at retirement. Ironically, however, even these distortions are determined by central banks since there would, in this example, be no post-war population boom without a war, and no war without the manipulative policies of central banks.

21. Like the royal families of old, the international families who control the central banks cause and finance wars for profit and self aggrandizement. They too are all intermarried, but the different branches usually finance only their own country in any particular conflict and thus avoid being charged with treason. History, of course, reveals some outstanding exceptions where one branch has actually lent money to both sides (12).

22. Unnecessary prohibition of a usable commodity causes all the problems it is supposed to solve. By increasing the risk in selling the commodity, it causes the price to rise, creating a large profit potential for black market entrepreneurs. This soon increases supply, and ultimately, because of increased sales promotion, demand. The central bankers of course, finance the massive, always increasing, government enforcement expenditures and lobby against legalization of any such illegal commodity. Victimless crimes make central bankers rich a second way. The bankers finance the bulging prison system and have been known to ruthlessly oppose therapeutic methods to reduce recidivism (13).

23. Even if we were to accept the immoral premise that fiat currency for massive government spending is somehow desirable, there is still no excuse to run a deficit. The only reason that government borrows fiat currency from a central bank instead of simply issuing it themselves is because the people are not vigilant. If we must suffer the instability caused by counterfeit money, why make things worse by having to pay it back to anyone? It is created out of thin air. Nobody has earned it. It doesn't represent wealth generated by productive activity of any kind.

The Bankers Right Now

History of the Federal Reserve