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  • "The old appeals to racial, sexual and religious chauvinism,

  • to rabid nationalist fervor are beginning not to work."

  • "The business of who I am and whether I'm good or bad

  • or achieving or not, all that's learned along the way."

  • "It's just a ride

  • and we can change it anytime we want. It's only a choice.

  • No effort, no work, no job, no savings of money."

  • "I realized that I had the game wrong,

  • that the game was to find out what I already was."

  • "We were saying,

  • how very important it is

  • to bring about, in the human mind,

  • the radical revolution.

  • The crisis is a crisis in consciousness.

  • A crisis that cannot, anymore,

  • accept the old norms,

  • the old patterns,

  • the ancient traditions.

  • And, considering what the world is now,

  • with all the misery,

  • conflict,

  • destructive brutality,

  • aggression,

  • and so on...

  • Man

  • is still as he was.

  • Is still brutal,

  • violent,

  • aggressive,

  • acquisitive,

  • competitive.

  • And, he's built a society along these lines."

  • .

  • ZEITGEIST ADDENDUM

  • "It is no measure of health to be well adjusted

  • to a profoundly sick society." J. Krishnamurti

  • Society today, is composed of a series of institutions.

  • .

  • From political institutions,

  • legal institutions,

  • religious institutions.

  • To institutions of social class,

  • familial values,

  • and occupational specialization.

  • It is obvious, the profound influence

  • these traditionalized structures have

  • in shaping our understandings and perspectives.

  • Yet, of all the social institutions, we are born into,

  • directed by and conditioned upon,

  • there seems to be no system as taken for granted,

  • and misunderstood,

  • as the monetary system.

  • Taking on nearly religious proportions,

  • the established monetary institution exists

  • as one of the most unquestioned forms of faith there is.

  • How money is created, the policies by which it is governed,

  • .

  • and how it truly affects society,

  • are unregistered interests of the great majority of the population.

  • In a world where 1% of the population owns 40% of the planet's wealth.

  • In a world where 34.000 children die every single day

  • from poverty and preventable diseases,

  • and where 50% of the world's population

  • lives on less than 2 dollars a day...

  • One thing is clear.

  • Something is very wrong.

  • And, whether we are aware of it or not,

  • the lifeblood of all of our established institutions,

  • and thus society itself, is money.

  • Therefore, understanding this institution of monetary policy

  • is critical to understanding why our lives are the way they are.

  • Unfortunately, economics is often viewed with confusion and boredom.

  • Endless streams of financial jargon,

  • coupled with intimidating mathematics,

  • quickly deters people from attempts at understanding it.

  • However, the fact is:

  • The complexity associated with the financial system is a mere mask,

  • designed to conceal one of the most socially paralyzing structures,

  • humanity has ever endured.

  • "None are more hopelessly enslaved

  • than those who falsely believe they are free."

  • -Johann Wolfgang von Goethe - 1749-1832

  • A number of years ago,

  • the central bank of the United States, the Federal Reserve,

  • produced a document entitled "Modern Money Mechanics".

  • This publication detailed the institutionalized practice

  • of money creation as utilized by the Federal Reserve

  • and the web of global commercial banks it supports.

  • On the opening page the document states its objective:

  • "The purpose of this booklet is to describe

  • the basic process of money creation

  • in a 'fractional reserve' banking system."

  • It then proceeds to describe this fractional reserve process

  • through various banking terminology.

  • A translation of which goes something like this:

  • The United States government decides it needs some money.

  • So it calls up the Federal Reserve

  • and requests, say, 10 billion dollars.

  • The FED replies saying:

  • "Sure, we'll buy ten billion in government bonds from you".

  • So the government takes some pieces of paper,

  • paints some official looking designs on them

  • and calls them treasury bonds.

  • Then it puts a value on these bonds to the sum of 10 billion dollars,

  • and sends them over to the FED.

  • In turn, the people of the FED

  • draw up a bunch of impressive pieces of papers themselves,

  • only this time, calling them "Federal Reserve notes",

  • also designating a value of ten billion dollars to the set.

  • The FED than takes these notes and trades them for the bonds.

  • Once this exchange is complete,

  • the government then takes the ten billion in federal reserve notes,

  • and deposits it into an bank account.

  • And, upon this deposit,

  • the paper notes officially become legal tender money,

  • adding ten billion to the US money supply.

  • And there it is, ten billion in new money has been created.

  • Of course, this example is a generalization.

  • For, in reality, this transaction would occur electronically,

  • with no paper used at all.

  • In fact, only 3% of the US money supply exists in physical currency.

  • The other 97 percent essentially exists in computers alone.

  • Now, government bonds are by design instruments of debt.

  • And when the FED purchases these bonds,

  • with money it essentially created out of thin air,

  • the government is actually promising

  • to pay back that money to the FED.

  • In other words, the money was created out of debt.

  • This mind numbing paradox,

  • of how money or value can be created out of debt or a liability,

  • will become more clear as we further this exercise.

  • So, the exchange has been made,

  • and now ten billion dollars sits in a commercial bank account.

  • Here is where it gets really interesting.

  • For, as based on the fractional reserve practice,

  • that ten billion dollar deposit

  • instantly becomes part of the bank's reserves,

  • just as all deposits do.

  • And, regarding reserve requirements,

  • as stated in "Modern Money Mechanics":

  • "A bank must maintain legally required reserves

  • equal to a prescribed percentage of its deposits".

  • It then quantifies this by stating: "Under current regulations

  • .

  • the reserve requirement against most transaction accounts is 10%".

  • This means that with a ten billion dollar deposit,

  • 10%, or one billion, is held as the required reserve,

  • .

  • while the other nine billion is considered an excessive reserve,

  • and can be used as the basis for new loans.

  • .

  • Now, it is logical to assume, that this nine billion

  • is literally coming out of the existing ten billion dollar deposit.

  • However, this is actually not the case.

  • What really happens, is that the nine billion

  • is simply created out of thin air

  • on top of the existing 10 billion dollar deposit.

  • This is how the money supply is expanded.

  • As stated in "Modern Money Mechanics":

  • "Of course they" -the banks-

  • "do not really pay out loans for the money they receive as deposits.

  • If they did this, no additional money would be created.

  • What they do when they make loans

  • is to accept promissory notes" -loan contracts-

  • "in exchange for credits" -money-

  • "to the borrowers' transaction accounts."

  • In other words, the nine billion can be created out of nothing,

  • simply because there is a demand for such a loan,

  • and that there is a 10 billion dollar deposit

  • to satisfy the reserve requirements.

  • Now, let's assume that somebody walks into this bank

  • and borrows the newly available nine billion dollars.

  • They will then most likely take that money

  • and deposit it into their own bank account.

  • The process then repeats.

  • For that deposit becomes part of the bank's reserves.

  • 10% is isolated and in turn 90% of the nine billion, or 8.1 billion,

  • is now available as newly created money for more loans.

  • And, of course, that 8.1 can be loaned out and redeposited

  • creating an additional 7.2 billion.

  • To 6.5 billion... to 5.9 billion... etc.

  • This deposit money creation loan cycle

  • can technically go on to infinity.

  • The average mathematical result is that about 90 billion dollars

  • can be created on top of the original 10 billion.

  • In other words, for every deposit

  • that ever occurs in the banking system,

  • about nine times that amount can be created out of thin air.

  • Money-Jitters. Ask the obliging Bank of America

  • for a jar of soothing instant money.

  • M-O-N-E-Y in the form of a convenient personal loan.

  • So, now that we understand how money is created

  • by this fractional reserve banking system,

  • a logical yet illusive question might come to mind:

  • What is actually giving this newly created money value?

  • The answer: the money that already exists.

  • The new money essentially steals value from the existing money supply.

  • For the total pool of money is being increased

  • irrespective to demand for goods and services.

  • And, as supply and demand finds equilibrium, prices rise,

  • diminishing the purchasing power of each individual dollar.

  • This is generally referred to as inflation.

  • And inflation is essentially a hidden tax on the public.

  • What is the advice that you generally get?

  • And that is, inflate the currency.

  • They don't say: debase the currency.

  • They don't say: devalue the currency.

  • They don't say: cheat the people who are safe.

  • They say: lower the interest rates.

  • The real deception is when we distort the value of money.

  • When we create money out of thin air, we have no savings.

  • Yet there's so called "capital".

  • So, my question boils down to this:

  • How in the world can we expect to solve the problems of inflation?

  • That is: the increase in the supply of money, with more inflation."

  • Of course, it can't.

  • The fractional reserve system of monetary expansion

  • is inherently inflationary.

  • For the act of expanding the money supply,

  • without there being a proportional expansion of goods and services

  • in the economy, will always debase a currency.

  • In fact, a quick glance at the historical values of the US dollar,

  • versus the money supply, reflects this point definitively

  • for inverse relationship is obvious.

  • One dollar in 1913 required $21.60 in 2007 to match value.

  • That is a 96% devaluation

  • since the Federal Reserve came into existence.

  • Now, if this reality of inherent and perpetual inflation

  • seems absurd and economically self defeating,

  • hold that thought, for absurdity is an understatement

  • in regard to how our financial system really operates.

  • For in our financial system money is debt,

  • and debt is money.

  • Here is a chart of the US money supply from 1950 to 2006.

  • Here is a chart of the US national debt for the same period.

  • How interesting it is that the trends are virtually the same.

  • For the more money there is, the more debt there is.

  • The more debt there is, the more money there is.

  • To put it a different way, every single dollar in your wallet

  • is owed to somebody by somebody. For remember:

  • The only way the money can come into existence is from loans.

  • Therefore, if everyone in the country were able to pay off all debts,

  • including the government,

  • there would not be one dollar in circulation.

  • "If there were no debts in our money system,

  • there wouldn't be any money."

  • -Marriner Eccles- Governor of the Federal Reserve September 30th, 1941

  • In fact, the last time in American history

  • the national debt was completely paid off was in 1835

  • after president Andrew Jackson shut down the central bank

  • that preceded the Federal Reserve.

  • In fact, Jackson's entire political platform essentially revolved

  • around his commitment to shut down the central bank.

  • Stating at one point:

  • "The bold efforts the present bank has made to control the government

  • are but premonitions of the fate that awaits the American people

  • should they be