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July 31, 2010
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How Our Money System Creates Scarcity
Fall 2008
Very few people, including many in the banking industry, are aware of how money is actually created in the United States and throughout most of the world. Understanding how the system really works is vitally important to understanding why so many are losing their homes to foreclosure and becoming buried under insurmountable debt. The economic survival of this country could very well hinge on how many of us come to understand how our money system works.
All federal money is debt
All of the federal money in America, every penny on the street, every dollar in your wallet, every electronic entry in every bank account, was created as the result of a loan. There are no exceptions. No federal money is in existence that was not lent into circulation. As you are probably well aware, all loans are subject to an interest rate, which means that everyone must pay back the original loan plus the interest that has accrued on top of it.
This sounds reasonable until one realizes that the banks issuing money into existence via a loan do not print or put into circulation the interest that the loan will generate. Now, the major problem with this model comes to light. It is literally impossible for everyone to get out of debt, because there is never enough money in existence to pay off the debt. The interest money was never printed!
An example
Suppose there exists one banker and ten citizens. The ten citizens go to the banker and borrow one hundred dollars each. The banker lends each citizen the one hundred dollars but requires each of them to repay one hundred and fifty dollars over five years. The first hundred dollars is called principal and the extra fifty dollars, interest.
What is not commonly known is that the interest is never put into circulation by the banker. This means that the ten citizens must compete with each other to acquire not only the first hundred dollars, but also the extra fifty dollars to repay the banker. Where will the extra money come from?
Central bankers know before loans are ever made that a certain percentage of the borrowers will never be able to repay their debts. They know this because they know that there is not enough money in circulation for them all to do so. These debts are often secured by land or homes as collateral. When the five years is up and only a handful of the ten borrowers have been able to repay the loan with interest, the banker proceeds to foreclose on the land and homes of
the other people.
The banker now finds himself the owner of much property. He can then resell the property, again by making loans to people. The banker knows these new loans will also have a certain percentage of failure, simply because the money to pay all the loans with interest does not exist.
Competing for limited dollars
This is the way the banking system works in America. The same scenario is replayed daily throughout our country. In fact, it is the way the banking system works almost everywhere in the world. The system requires that some people lose so that others can win.
While debtors, often our friends and neighbors, are competing with each other to obtain the money they need to repay their interest and principal, the bankers are reaping the benefits of our labor, environment and humanity.
People often don’t believe that this is how it all works. Those same people are usually the ones who also aren’t aware that the Federal Reserve Bank is a privately-owned corporation. If you were to look it up in the phone book, the Federal Reserve is not in the government section, it is in the business section. The Federal Reserve ultimately oversees and controls every bank in the United States. Even the United States government borrows its money from the private owners of the “Fed.”
Keeping us in fear
By keeping the losers visible, the system keeps us in fear, competing against each other so that we won’t “end up like them.” Our current banking system keeps the wealthy on top and the poor on the bottom. When you want to understand why a person would pull a lever that dumps tons of dioxin into the Columbia River, or runs an incinerator that releases tons of creosote into the air, or drives hundreds of miles on interstates at night to empty a tanker of radioactive waste, think about what we are competing for and why.
Most people’s homes are at stake, and if that person has children, there is almost nothing they won’t do to keep their job. They know that there is another competitor waiting to fill his position, making it extremely difficult to take a moral stand. This artificially created competitive system is an important factor in all environmental problems, war, slavery and greed.
Make banking reform a campaign issue
Banking reform should be considered strongly out of all issues in the upcoming elections, but you’ll find it is hardly mentioned in mainstream media. The current candidates seem to be maintaining the status quo. Many commentators try to make you believe that if you don’t vote for the
mainstream candidates, you’ll be “wasting” your vote.
If these issues aren’t taken into consideration at the polling place, the opportunity to change the system will be lost once again. There are knowledgable people waiting to lead our country, but they won’t be getting any funding from VISA or MasterCard, and they certainly get little, if any, air time or press from the major media.
There have been several politicians who have tried to abolish the Federal Reserve and return to a banking system that doesn’t generate endless debt. They want to return to a banking system that is owned by the people of the country as our Constitution intends. This banking system does not purposefully create losers but instead provides opportunity for everyone to be winners. Unfortunately, most of these politicians have been silenced.
What you can do
Use RiverHOURS
RiverHOURS are not issued into circulation with debt/interest attached. The additional currency in circulation can and will help fill the gap that debt-generated bank loans create.
Educate yourself
There are excellent books and videos explaining in detail how the scheme was created and how to fix it. Contact the GLCC for additional educational materials. There is also a list of links at our web site where you can learn more.
Vote
Use your vote only for candidates that promise banking reform and termination of the
privately-owned Federal Reserve System.
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The Local Currency Education Project is a joint venture of
the Columbia Gorge Earth Center and Gorge Local Currency Cooperative
updated
July 13, 2009
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