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The insidious nature of debt-based money

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posted on May, 29 2023 @ 07:26 AM
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It's that time again when the US needs to increase their debt ceiling or risk defaulting. Looking at the history of the United States debt ceiling we can see that the ceiling is rising exponentially, because US debt is also increasing exponentially, primarily as a result of increased government spending. If they can't make a deal to increase the debt ceiling, they can't accrue more debt so they can't keep increasing government budgets. This of course can have very serious economic consequences and even lead to government shutdowns.

So we are told it's absolutely crucial that the debt ceiling is continually increased every time it is reached, as if this can simply go on forever. We are now living through what is probably the worst economic crisis in my life time. Every time I turn on the TV I see something about the cost of living crisis, or the record levels of homelessness, or the rise in mental health issues, and it's very clear to me how we have arrived in this situation. But until the masses can understand it, we will not be capable of fixing it.

Many people seem to think that inflation is caused by resources becoming more scarce, which increases the cost of living. Obviously that can happen, but in fact the main cause of inflation is the government and banks spending money they don't really have. They are literally inflating the money supply, which is how we end up with situations where people are buying a loaf of bread with a wheel barrow full of notes. In 2022 Argentina experienced almost 100% inflation, all that currency didn't magically fall out of the sky.

Many countries borrowed an absurd amount of money throughout the pandemic, and at the same time they shut down their economies which halted or reversed GDP growth. Even the believers of debt-based Keynesian economics will tell you GDP is a key factor in determining the health of an economy and its ability to pay back debts. It was a highly destructive economic plan which packed a decade worth of damage into a couple of years. Just take a look at this chart from Investopedia showing how the M1 money supply changed:



The M1 money supply basically refers to all liquid currency in the money supply, things like cash and money held in bank accounts. Unless my eyes are playing tricks on me, it appears the M1 money supply in the United States didn't just double or triple, it increased by 5 times. It went from 4 trillion to 20 trillion, meaning 16 trillion dollars were somehow injected into the money supply in a shockingly small amount of time. But did the money in your bank account increase by 5 times or do you get paid 5 times more?

The US dollar now has less than 1% of it's original purchasing power because even a small amount of inflation every year can compound into a large amount of inflation. Every time the government borrows money it increases the interest owed on its debts, and it also causes inflation by injecting new money into circulation. More debt and a weaker dollar means the government needs to spend even more in order to cover their costs, they also need to spend more money trying to fix the cost of living problem caused by inflation.

Not to mention politicians love increasing their own wages and expanding the government every chance they get. So it's virtually impossible for them to stop accruing new debt, in fact historic data shows that US debt has been rising with the debt ceiling on a predictable path regardless of what political party was in power. Yet they want us to believe the solution to all these problems is to simply create even more money and raise taxes to absurd levels so we can live in a socialist utopia.

They may have the best of intentions, but it's the most delusional way a person can possibly think about economics because they're ensuring that society will remain poverty ridden while those who control the money live like gods. It's some illogical faith they have in debt-based money, they seem to have no concept of what real money should actually be. It seems to me there will come a day when the last forms of currency left standing will be those which are founded on real intrinsic value and real world utility.

These will be things like crypto and precious metals, but probably mostly crypto. We will look back and wonder how the elite ever managed to scam us so badly, I can already see this shift starting. It always ends the same way when the debt grows too large. As long as the system exists the way it does now, people will continue to get poorer on average, but people can only get so poor before they revolt and adopt a new system. I just hope it isn't hive-mind communism where there's no money and we own nothing.



posted on May, 29 2023 @ 08:29 AM
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originally posted by: ChaoticOrder
I just hope it isn't hive-mind communism where there's no money and we own nothing.


That already seems to be the mindset for most.
Subscription based services rising, inflationary spending, rampant consumerism, lease-based financing, credit backed spending habits, and perpetual debt are all things that drive this hive-mind "communism" we see today. It's not about what we own, it's about how convenient it is to own something.

If everything is becoming more expensive to own, perhaps by design, then people will not be afforded the opportunity to own things. They will back down, sign up for subscriptions, and pay a monthly fee.

In this world it's inevitable, isn't it?






posted on May, 29 2023 @ 10:53 AM
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originally posted by: havok

originally posted by: ChaoticOrder
I just hope it isn't hive-mind communism where there's no money and we own nothing.


That already seems to be the mindset for most.
Subscription based services rising, inflationary spending, rampant consumerism, lease-based financing, credit backed spending habits, and perpetual debt are all things that drive this hive-mind "communism" we see today. It's not about what we own, it's about how convenient it is to own something.

If everything is becoming more expensive to own, perhaps by design, then people will not be afforded the opportunity to own things. They will back down, sign up for subscriptions, and pay a monthly fee.

In this world it's inevitable, isn't it?





Or people will wake up and see that there is no happiness in being owned by things, and let go.

We don’t “need” subscriptions. We need to learn to enjoy life in its purest form. Joy and happiness are only gifts if we choose to accept them.



posted on May, 29 2023 @ 02:45 PM
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So how much is the USSA government paying back on their debts each year?

a reply to: ChaoticOrder


things like crypto and precious metals, but probably mostly crypto.


Seriously. Real world intrinsic value. How about barter and trading for actual goods and services.

Then ask yourself what a politician has to offer you personally. Your answer is what they’re worth.
edit on 29-5-2023 by Dalamax because: Eta



posted on May, 29 2023 @ 04:00 PM
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originally posted by: Dalamax

Seriously. Real world intrinsic value. How about barter and trading for actual goods and services.

Cryptocurrency is more practical than trading physical items and it has more utility than any other form of currency. Unlike fiat, new bitcoins are difficult and expensive to create, and Bitcoin also benefits from having hard limits (eg only a certain number of bitcoins will ever exist). The algorithm allows us to predict exactly how the money supply will grow over time since bitcoins are mined at a predictable rate.

Since bitcoins can't be created out of thin air, if you want to get a loan in bitcoin, then you need someone who already holds bitcoins who is willing to give them to you, trusting that you will pay them back with a bit of extra interest. Every time a government needs a loan who gives them that money? Well there obviously isn't enough money in circulation to supply them with the constant stream of loans they require.

So the central bank must create new money which the government trades for bonds which represent debt the government has promised to repay with interest. Even banks themselves can give out loans using money they don't really have due to fractional reserve banking. They can simply add numbers to a bank account and they only need to hold a fraction of that amount in their reserves. That is why we call it debt-based money.

Every new dollar which comes into existence is attached to some debt. What I call hard money or hard currency is currency which can not be infinitely created out of thin air, things like gold-backed currencies and cryptocurrencies are examples. Hard money places inherent limits on how much a government can borrow because it limits the creation of new money, which prevents runaway debt.

The debt ceiling is not really a ceiling or any type of limit on government spending because they simply increase the ceiling every time they reach it. So it's pretty clear debt-based money is the root cause of many economic problems we now face, and it's also clear the elite are scared of any system which could expose or replace their scam, so authoritarian governments like China ban crypto.
edit on 29/5/2023 by ChaoticOrder because: (no reason given)



posted on May, 29 2023 @ 10:51 PM
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Oh I thought you meant real world intrinsic value.

Like if I want to dig a hole a shovel has real world intrinsic value. A one hundred dollar note doesn’t.

Unless someone will dig my hole for that one hundred dollar note. Then it suddenly equals a portion of human labour. But it doesn’t have intrinsic value.


intrinsic
ĭn-trĭn′zĭk, -sĭk
adjective
Of or relating to the essential nature of a thing; inherent.


a reply to: ChaoticOrder



posted on May, 29 2023 @ 10:54 PM
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a reply to: ChaoticOrder

The Debt Ceiling has to be constantly increased not because of government spending, but because of government borrowing. Even if the government stopped spending tomorrow, they would never be able to pay back what they "borrowed" from the Federal Reserve because the Federal Reserve charges interest. The government would still have to borrow additional money to pay back the interest, and there would be interest on that borrowed money.



posted on May, 30 2023 @ 07:33 AM
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a reply to: VictorVonDoom

I probably use the word spending a bit too interchangeably with the word borrowing, but that's because more spending often requires more borrowing. Also I'm not sure if it's entirely impossible to repay all the debt, it might be simply due to the way every new dollar created also created some debt with interest, like you said.

But I actually think it could be possible to repay the debt over a long period of time if the government was able to achieve massive spending cuts, freeing up enough money to pay off the interest and some of the actual debt. They always have a flow of tax money coming in so in theory it would appear possible.

However, in reality we might as well assume it's virtually impossible for any government to achieve such a massive budget re-balancing, especially since debt is basically the life blood of modern governments and modern economics in general. Unfortunately I think we'll have to see the system implode before we change it.



posted on May, 30 2023 @ 08:13 AM
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a reply to: VictorVonDoom

From my understanding is that the money is never actually meant to be paid back in full. The interest and debt being attempted to being paid off is like winding up a grand father clock to it's maximum length (inflationary, raise debt cieling) , and you don't want it to get too close to the end (deflationary, the point at which money and interest is close to being paid off), so you rewind it again at the right moment.
edit on 30-5-2023 by strongfp because: (no reason given)



posted on May, 30 2023 @ 11:23 AM
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a reply to: ChaoticOrder


but when they say it needs to be increased they threaten
that seniors wont get social security

and when its increased it mostly all goes to weapons contractors instead
EVERYTIME




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