November 2008

Demanding Accountability

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The World Monetary System
A Lesson in Futility

By Eric Coltrane

I was born in 1963 and grew up in the United States of America. All through my school years I was taught that my country was the greatest in the world. That a democracy of the people and by the people surpassed all other forms of government. Our founding fathers formed a democratic republic that is the basis of all other democracies in the world. What happened to that original republic and why have we peddled-away our birthright to this monetary monstrosity called fractional banking?

By my late twenties I was getting the sense that all was not well in our government. I didn’t really have the education to understand where our country was headed. I only knew what our school system had taught me, and I had dropped out by my junior year in high school. I’m not dumb; I was just bored out of my skull with the repetition of it all. I had life to live and beautiful women to pursue, but I digress...

I worked hard, because that is what I was taught to do. It seemed I would never get ahead no matter how hard I worked or how good of wages I made. I learned to juggle my bills, as well as, if not better than, any circus performer juggles various objects. I observed those around me that made similar wages as I, and they seemed to be doing better than me. Why? The answer was made clear later in life. I had shunned credit. A credit card was just one more bill I’d have to juggle. I knew that if you missed one or two credit card payments, you might as well have a big guy named “Iownya” standing behind you as you drop the soap. You get my meaning.

Now we can get to the core of the problem. Credit or debt is the true issue. How many people in this world know how our monetary system works? How many people know that money is created from debt? How many know that the last time our national debt was completely paid off was in the year 1835? How many know what the fractional banking system is? It is not taught in schools.

The fractional banking system is what almost all countries use as a monetary institution. By all standards it is ingenious. It is also the most subtle form of economic slavery ever devised. “Money” is debt. Let me explain. Fractional banking works in this manner:

When you borrow money for anything you are essentially creating money. It goes the same for any institution as well as individuals. Let’s say the US government wants to implement a bill that calls for 10 billion dollars. Where do they get this money? Is it from the tax payers (most people would think so)? No, it is not. It is borrowed from the Federal Reserve Bank. This is where the fractional banking system comes in. 10 billion dollars is agreed upon. The US government prints out 10 billion dollars of US bonds to sell to the Federal Reserve in exchange for 10 billion dollars which the Federal Reserve prints. The Federal Reserve “buys” these bonds. There is nothing of tangible value to back up these bonds, only the implied value of the bond itself. So, the money borrowed then gets deposited in a bank. Banks have a system that is set up by the “banking system”. For every dollar that is deposited 90% can be loaned out as “money”. So… $10 billion is deposited. 10% is kept as “reserve”. 90% is considered “excessive reserve” and is available to loan out and the whole process begins again. Theoretically this process can go on to infinity. On average about 9 times the amount of the original loan is processed in this manner. The original 10 billion has now grown to 90 billion, and in actuality the original 10 billion is also used by the bank. All the “money” just created was from out of the thin air, without any tangible asset to back it up. In reality, this is all done digitally and no real paper is printed. Only 3% of the money supply is printed money. But wait, it gets worse.

Almost all loans are paid back with accrued interest. Where does this money come from? Nowhere! That money doesn’t even exist! This is fraud. And, it means that new money always needs to be created. This inflates the money supply and devalues the current monetary supply, for the “new money” draws its value from the money already in circulation.

This has been going on since 1913. In 2008, it took a little over $21.00 to purchase what one dollar would purchase in 1913. That is a 96% devaluation in 95 years. It also means that the debt will never be paid off. This is the reason for depressions, recessions, inflation, economic bubbles and such. Now, I am just a layman and cannot fully explain the mechanics of such things, but I do know that it creates large pockets of poor people and small pockets of very wealthy.

Every dollar in your wallet or in your bank is owed somewhere, for it is all created out of debt which can never be repaid because of the interest accrued. Now consider this. 850+ billion dollars was just created for the “Rescue Plan”. That means that 9 times that amount can go through the fractional banking process creating another 7.65 trillion dollars which could be dumped into the current money supply. What kind of devaluation to the dollar will that create? What kind of inflation will we see in the products we buy? In my opinion this system is unsustainable…

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