Money As Debt II: Promises Unleashed Page #6

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to be earned by borrowers enabling

them to extinqushed their debts.

Quite the opposite, banks invest

these profits to make further profits.

And it's not just the banks

that cause the problem.

Anyone who takes their ball of money and starts

rolling it like a snowball to make it bigger,

does so with the expence of borrowers

who will not find that money available...

to pay their debts except as more debt.

And of course, those rolling the

biggest snowballs pick up the more snow.

As the same goes, the rich get

richer and the poor get poorer.

Money needed by borrowers in the lower

realms of working and productive economics,

moves upstairs to play in the casino

world of abstract financial profit...

and that's a world where transactions

are little more than gabling on numbers...

in an effort to achieve higher numbers.

They've little or nothing to do with

providing the necessities of life.

Today the largest volume of

money by far is changing hands...

in where as best described

as the gabling economy.

The foreign exchange markets, the derivatives

market and the rest of the financial instruments...

being played by banks and investment

funds for as much profit as possible.

For example the volume of trade on

the world's foreign exchange markets...

In just one week exceeds the total volume of world

trade in real goods and services during an entire year.

This money is in continous

play by speculators...

looking to make winful profits

on currency fluctuations.

It exists but only in

the gabling economy.

So how unpayable is the ubiquitous

interest burden in actual fact?

That could only be deternaned with certainty

by tracking all of the money in the world.

With over six billion people earning,

spending, borrowing and lending...

the world's money flows are at least

as complex as the flows of the ocean.

They are impossible to know.

But the direction is

pretty clear and simple.

And it's the same old story,

the rich are taking increasingly

more money into the gabling economy...

where ordinary borrowers have

almost no chance to obtain it.

And the only way the system can stay

solvent is to create more money...

and as money is created as debt,

the only way to create more money is to

create more debt in every way possible.

Including ridicously easy credit for unquelifed borrowers,

massive government expendures on security and war

and bailouts of insolvent banks.

What are you going to do about it?

How does the individual loan cycle relate to the

boom and bust phenomena known as the business cycle?

The individual loan cycle

can be described like this:

First there is economic stimulation

because of initial spending,

this is followed by inflation because new

money basically just dilute the money supply...

and eventually inflation

is followed by deflation...

as loan repayments grantually extinguish the

principal removing that money from circulation.

As long as the individual loan cycle dont

match up, these cycles can smooth each other out.

This creates a fairly stable money

supply that leads to fairly stable prices.

Although continous growth of the money

supply is required at least in part...

because as you recall the money to

cover the interest was never created.

This is the model on which

our economy is currently based.

Avoiding deflationary spirals and keeping inflation

at a level that doesn't upset people's applecards

constitutes the art of

managing the economy...

which is rather narrowly defined as

achieving so-called price stability.

However a look at the purchasing power of US

dollar in real goods over the last century...

instantly reveals what the so-called

price stability has really meant.

The dollar has clearly lost

almost all its value (96%)

...and is continuing to

do so at a rapid pace.

So, price stability is

not being achieved...

and one hardly needs a degree in psychology

to understand how human nature itself...

would turn the individual loan cycle into the

collective phenomena of the business cycle.

The simple reason being that if

one person sees great prospects...

and is doing well borrowing and expanding,

others would have a confidence to do the same.

Beyond the merely psychological effects, if one

business is expanding on the basis of credit,

its suppliers and distributers will

find it necessary to do so as well...

or lose that business

to someone who will.

The same herd effect would occur for a gloomy

look and a company in credit contraction.

Thus, is entirely predictable that individual loan cycles

would have a built in propensity to line themselves up...

rather than be randomly distributed and when they do,

we see largest scale cycle called the business cycle...

emerging directly from the cummulative

of effects of individual loan cycles.

So to sum up, one could say that out of the exchange

of promises made by the bank and the borrower...

society gets chronic inflation and interdependency

on banks for increasing infusions of money...

to pay ultimately

impossible interest payments.

This results in an inescepable treadmill

of accelerating debt and depriciating money.

The only alternative being a deflationary collapse

of the economy followed by social chaos or war.

This eminently unhealthy situation filters down

through society weaking harm on every level.

We are like addicts...

but the fix is not more and more

heroin, it's more and more credit money.

And eventually our collective ability to borrow

and repay so much credit becomes exhausted.

This then creates the need for constant

expansion of credit into new markets.

In essence creating a fiscal imperative to drive everyone

in the world further and further into debt for ever.

In US this constant debt expansion has

led to a total credit market debt in 2008

of more than 53 trillion dollars which is about five

times the total annual income of the entire country.

So is the world at large happy about

its end of the loan transaction?

Probably not.

But the world at large has very little

awareness of where these problems originate.

The illusive system of counterfeiting

and hidden control that is modern banking.

And how about the banks? How of the

bank's fair has resulted of the system?

Well first, by putting up only a

small fraction of the money they lend

the banks have obtained a river of income from

interest payments on consumer loans and mortgages.

Second by using their credit powers to acquire a

large portofolios of corporate and government bonds

banks collectively appropriate

control over government and industry.

And thirdly, due to the inevitable

defaults and foreclosures,

the banks gain legal title to a

lot of real property the world over.

And finally, if the worst happens.

If borrowers default on mass

causing the banks large losses

the government is forced to rescue the

banks with multi-billion dollar bailouts...

to save the financial system.

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