Zeitgeist: Addendum Page #2

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 banks reserves.

Ten percent is isolated and in

turn 90 percent of the nine billion,

or 8.1 billion is now availlable 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 defines 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?

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 is 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:
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, the quick glance of the

historical values of the US dollar,

versus the money supply,

reflects this point of definitively.

For inverse relationship is obvious.

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

That is a 96 percent 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 to 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 in to 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 Eccies - 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 that 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 deluded into

a perpetuation of this institution

or, the establishment of another like it."

Unfortunately this message was short lived.

And the international bankers succeeded

to install another central bank in 1913,

the Federal Reserve. And as long as this institution exists

perpetual debt is guaranteed.

Now, so far we have discussed the reality

that money is created out of debt through loans.

These loans are based on a banks reserves,

and reserves are derived from deposits.

And through this fractional reserve system,

any one deposit can create 9 times its original value.

In turn, debasing the existing

money supply raising prices in society.

And, since all this money is created out of debt,

and circulated randomly through commerce,

people become detached from their original debt.

And a disequilibrium exists where

people are forced to compete for labor

in order to pull enough money out of the money supply

to cover their costs of living.

As dysfunctional and backwards

as all of this might seem,

there is still one thing we

have omitted from this equation.

And it is this element of the structure

which reveals the truly fraudulent

nature of the system itself.

The application of interest.

When the government borrows money from the FED,

or when a person borrows money from a bank,

it almost always has to be payed

back with a crude interest.

In other words,

almost every single dollar that exists

must be eventually returned to a

bank with interest payed as well.

But,

if all money is borrowed from the Central Bank,

and is expanded by commercial banks through loans,

only what would be refered to as the "principal"

is been created in the money supply.

So then, where is the money to cover

all of the interest that is charged?

Nowhere.

It doesn't exist.

The ramifications of this are staggering.

For the amount of money owed back to the banks

will always exceed the amount of

money that is available in circulation.

This is why inflation is a constant in the economy.

For new money is always needed to help

cover the perpetual deficit build in to the system.

Caused by the need to pay the interest.

What this also means, is that

mathematically the defaults and bankruptcy

are literally built into the system.

And there will always be poor pockets of

society that get the short end of the stick.

An analogy would be a game of musical chairs:

For the once music stops, somebody is left out to dry.

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