posted on Jan, 9 2013 @ 05:17 AM
While I have been interested in economics for a while, the book 'How to screw your bank' downloadable from many places help in understanding the
finer technical going on. Now I fully understand the question 'Where does money come from?' - from the process of book entry credit creation in the
balance sheet. It has been this economic principle that forms the debt based economy we have today. From this all the money in the economy today is
based on debt, be that a government bond, house loan or one of the many types of debts available today. One advantage of having money based on debt it
that the money demand can be easily meet, but at a cost.
So while people look at the US or another nations debt and go wow, that is a big number, it also means that there is a lot of money circulating
throughout the economy. Unfortunately associated to these big numbers is a big interest payment and sucking public resources away from the government
to the private sector.
The debt based economy is also self regulating as once the debt is paid, the volume on the balance sheet reduced and so is the overall money supply.
So if every debt in the world was paid off, there would be no money left and this is one of the big problems when looking for a better way. The banks
do need to keep some cash supplies to handle changes in daily trading, but any significant events like bank runs do shut them down as they use many
different assets on their balance sheets, some which take a very long time to turn into cash. There are also things like money multipliers and
leveraging tricks that banks and financial traders can do to make new money, but at a risk.
So due to the balance sheet dictating economic supply, half of the worlds money will be in the red, half in the black. The more cash rich millionaires
and billionaires we support, the more debt ridden individuals, businesses and nations we will have. This is the reality of a debt based economy.
Reducing or eliminating interest payments will create a fairer playing field as the compounding effect of interest can be quite extraordinary and out
of proportion over time.
As banks claim they make money like refineries make steel or other resources, this does place an immense amount of political power in their hands as
the banks have the final say on which loans are approved and which endeavors society undertakes. While I like this site with all of its calls to end
the FED, without a solid plan to improve the situation things will end up worst.
A gold and/or other metal back economy is touted as a common replacement and has worked in the past. With the price fluctuation in today's
marketplace I have strong doubts in its stability, sustainability and ability to meet consumer monetary demand. Combine this with the foreign
exchange, futures and stock markets and the currency is very open to attack.
Then the NWO plans of accounting for everything, land, air, water and other stuff as they are all resources, tradable and an asset. This has a lot of
accounting overheads and different perceptions of value making it quite a complex and error prone activity, also with a lot of blood and displacement
along the way. The gradual corporate takeover of these natural and other resources may very well lead the economy into its next evolution.
Bitcoin is one option still growing as it is a currency backed by nothing except its own security and public demand. Maybe currency deregulation is
also an option, let anyone start they own. Most will fail for one reason or another but if someone can find the right recipe for a strong, solid, fair
currency that does promote productivity would all the fallout be worth it?
Globally debt based economies have taken over the world, with a few little tweaks in different parts. Thanks to the balance sheet money is a zero sum
game. Not much is coming out of congress at the moment so I am just throwing in my two cents as the fiscal cliff looms and what it all means. Any
questions, comments or ideas are welcomed.