EXCESSIVE  DEBT  and  MONEY-PRINTING


The  nation  is  facing  many  pressing  problems ,  now  culminating simultaneously.  
But  
irresponsible  incumbents  within  government are ignoring the voters and our many pressing problems as they grow in number and severity.  
One major problem is a dishonest fiat-funny-money-system (
777 please watch the 47 minute video and/or this 777 123 minute video). 
Education is required.
No  reforms are  possible  until  there  is,  first,  a  fundamental  change  in  government:

RECOMMENDATION:

Currently, at this instant,  the total federal debt is over $15 Trillion (as of late 2011), consisting of:

  1. $Loading...  National Debt
  2. Non-marketable I.O.U.s (essentially worthless) in the Social Security and Medicare Trust funds, leaving it pay-as-you-go (and requiring more borrowing), with a 78 million baby-boomer bubble approaching. Those I.O.U.s represent more massive debt, new money created out of thin air, potential hyper-inflation, continued deterioration of the U.S. Dollar, and a potential national security problem.
  3. trillions of dollars for the wars in Iraq and Afghanistan, Katrina, bail-outs for corporations and welfare for the wealthy (i.e. rewarding failure), etc.

Altogether, the total current U.S. debt (nation-wide) is about $57 trillion (in 2008 dollars), which has never been worse ever, including as a percentage of GDP ($13.86 Trillion in year 2007; significantly less today due to economic decline).

There are a number of abuses and economic conditions that have never been worse ever and/or since the 1930s and 1940s.

The total federal debt over $15 Trillion National Debt per-capita (about $47.6K per-person in 2011 U.S. dollars) has never been larger in size, and per-person.
As of DEC-2010, the $14 Trillion federal National Debt per-capita was $45,161, which is 2.02 times larger than the previous record-high (which was $21,348 in year 1945 in 2010 dollars, after World War II).
As of DEC-2010, the $14 Trillion federal National Debt per-capita was $45,161, which is 8.23 times larger than the it was near the end of the Great Depression (which was $5,481 in year 1941 in 2010 dollars).
 



After 1976 (or about) is when many things started to unravel.

Now, with a total of over $15 Trillion of total federal debt (as of DEC-2011), and a GDP of less than $15 Trillion (as of year 2011), the total federal debt is greater than the nation's GDP!
The fiscal outlook is not good.
And the timing for all this massive debt could not be worse, with 78 billion baby boomers that will start drawing from Social Security and Medicare.
The aging of American is a factor too.
So, the total current (this day) federal debt is now about $15+ Trillion, and growing ever larger to nightmare proportions (as does the size and intrusiveness of federal government).

The interest alone on the $15+ Trillion National Debt is over $1 billion per day, and the National Debt is growing by about  $6 billion per day! 
The interest alone could exceed $43 trillion (in 2005 dollars), if we stopped borrowing and started paying $1.05 billion per day (which would take 153 years, provided interest rates did not go any higher than 4.5%).

And, there is another ever-present, incessant, insidious scheme at work too:  Inflation
This is over-looked by many that do not understand how it hurts most, but benefits a few.
Our fiat-funny-money monetary system especially hurts savers and those on fixed incomes, who find the value of their dollars steadily being eroded by the Federal Reserve's (a quasi-government controlled /  privately owned bank system) irresponsible, intentional, non-stop printing presses. 

Year-to-year inflation has been rising:



However, the federal government changed the way it measures inflation in 1983 and 1998.
Remember the double-digit inflation of the late 1970s and early 1980s ?
Based on the pre-1983 measurement method, inflation today is really 15.6% !

 

On top of that, taxes and fuel costs are not included in the CPI (Consumer Price Index) calculations, despite federal taxes as high as 31% for some people.
Consider the following:

Based on that, what do you really think the real inflation rate is ?
What ever it is, it is too high, and it is likely to get worse.
Already, inflation has been positive for 58 consecutive years:


Incessant inflation, year after year, for 58 consecutive years, is exponential inflation.
For example,  see what $100.00 shrinks to for the current (as of AUG-2008) 5.37% inflation, after N years:

INFLATION= 1.00% 2.00% 3.00% 4.00% 5.00% 5.37% 6.00% 7.00% 8.00% 9.80% 15.60%
YEAR $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00
1 $99.00 $98.00 $97.00 $96.00 $95.00 $94.63 $94.00 $93.00 $92.00 $90.20 $84.40
2 $98.01 $96.04 $94.09 $92.16 $90.25 $89.55 $88.36 $86.49 $84.64 $81.36 $71.23
3 $97.03 $94.12 $91.27 $88.47 $85.74 $84.74 $83.06 $80.44 $77.87 $73.39 $60.12
4 $96.06 $92.24 $88.53 $84.93 $81.45 $80.19 $78.07 $74.81 $71.64 $66.20 $50.74
5 $95.10 $90.39 $85.87 $81.54 $77.38 $75.88 $73.39 $69.57 $65.91 $59.71 $42.83
6 $94.15 $88.58 $83.30 $78.28 $73.51 $71.81 $68.99 $64.70 $60.64 $53.86 $36.15
7 $93.21 $86.81 $80.80 $75.14 $69.83 $67.95 $64.85 $60.17 $55.78 $48.58 $30.51
8 $92.27 $85.08 $78.37 $72.14 $66.34 $64.30 $60.96 $55.96 $51.32 $43.82 $25.75
9 $91.35 $83.37 $76.02 $69.25 $63.02 $60.85 $57.30 $52.04 $47.22 $39.52 $21.73
10 $90.44 $81.71 $73.74 $66.48 $59.87 $57.58 $53.86 $48.40 $43.44 $35.65 $18.34
20 $81.79 $66.76 $54.38 $44.20 $35.85 $33.16 $29.01 $23.42 $18.87 $12.71 $3.36
30 $73.97 $54.55 $40.10 $29.39 $21.46 $19.09 $15.63 $11.34 $8.20 $4.53 $0.62

The value of the money erodes year after year, which is why the U.S. Dollar is falling like a rock.
The inflation is compounded exponentially (like the interest on debt).
Eventually, you have what we have today, where a U.S. Dollar from year 1950 is now worth less than 11 cents.


Also, notice the GDP (Gross Domestic Product) in the following graph.
Do you remember people telling us that GDP has been growing, and that we can't be in recession without negative GDP growth?
GDP in nominal (current dollars) has stagnated (and probably fallen), but only recently.
But look at the down-turn of the GDP in 2005 Dollars (blue diamonds; near top of graph).
And look at the down-turn of the GDP in 1950 Dollars (green diamonds; near bottom of graph).
GDP, measured in BOTH 2005 and 1950 Dollars, has been FALLING sharply since year 2006 (see below) !
That is, inflation masks the down-turn, until it is viewed relative to previous Dollar values (as shown below):


Note (above) that the dip in GDP is the largest dip since year 1900, and possibly the largest dip ever.

Which period (below) looks more stable (
A or B)?
Some assert that elimination of the Gold Standard and switching to the fiat-money-system stabilized the economy.
It is quite possible that we would have had fewer and less severe recessions since 1913 if we had not abandoned the Gold Standard.
And, while many think the Federal Reserve solved everything, did it ? 



Are things much more stable now?  
We certainly have more inflation now (since 1913).
For example, the M3 Money Supply grew from $135 billion in 1950 to $10.154 trillion in 2005, representing a increase by a factor or 75.2 !
But, the nation did NOT become 75.2 times wealthier in 55 years.



The excuse is often used that the Gold Standard caused or contributed the Great Depression of 1929. 

While it may have contributed, and return to a Gold Standard is not recommended, there were many other contributing factors for periods of economic instability (such as wars, mismanagement of banking systems, lack of banking laws, transparency, and regulations, lack of Stock-Market laws and regulations, unscrupulous speculation, and major changes in government policies).  The mismanagement of the monetary system was a major contributing factor; not the Gold Standard, as often alleged.  Again, there were many causes, but the Federal Reserve clearly had no idea what it was doing, and as of today, that has not changed.  After all, no one can tell us where the money will come from to pay merely the interest on over $54 Trillion of nation-wide debt, much less the money to reduce the principal of $54 Trillion of nation-wide debt in order to keep it from growing ever larger, when that money does not yet exist.   
 
 England:  United States: Significant Events:
 ___ 1785-1788 the panic of 1785; caused by post American Revolutionary War problems; speculation; currency confusion and mismanagement of banking and currency system; over-expansion and debts, competition in the manufacturing sector from Great Britain, lack of significant interstate trade; the British refused to conclude a commercial treaty; the panic among business and propertied groups led to the demand for a stronger federal government;
 ___ 1792 the panic of 1792; caused by banking mismanagement and speculation; the panic of 1792 arose from speculative activity following the adoption of the Federal Constitution, the founding of the First Bank of the United States (BUS), and the emergence of securities markets for bank shares and other government securities in New York City;  almost immediately after its establishment in 1791, the BUS over-extended notes and discounts, and then sharply reversed course; speculators holding bank's shares quickly sold their holdings, which had risen markedly over previous months, creating the nation's first true securities market panic;
1815 1814,1818,1819 the panic of 1819; caused by post War of 1812 problems;
1825  ___
1826  ___
1836 1836 the panic of 1836; caused by banking and currency mismanagement; excessive money-printing;
1837 1837-1843 the panic of 1837; caused by banking and currency mismanagement; excessive money-printing; speculation and inflation; a six year depression resulted;
1847  ___
1857 1857 the panic of 1857; caused by a downturn in agricultural exports brought on by the end of the Crimean War in Europe and reduced U.S. exports, the failure of the Ohio Life Insurance and Trust Co., panic selling, over-speculation in railroads and real estate, and banking mismanagement;
1866 1861-1865 American Civil War
   ___ 1869-1871 the panic of 1869-1871; caused by post war problems; banking mismanagement (not on the Gold Standard); unscrupulous speculation (James Fisk, Jr. and Jay Gould, attempted to corner gold market 24-SEP-1869);
1873 1873 the panic of 1873; caused by banking mismanagement, over-expansion, over-production (particularly in railroad construction), Jay Cooke and Company (bank), which helped the U.S. Government finance the Civil War and also underwrote the construction of the Northern Pacific Railroad declares bankruptcy 08-SEP-1873, which precipitates the "Panic of 1873" and the ensuing three year depression during which more than 10,000 businesses fail;  European investors, where a depression is already underway in Europe, begin to call in American loans, and the The New York Stock Exchange closes its doors for 10 days;
1890 1893 the panic of 1893; caused by banking mismanagement and speculation in industrial stocks;  Reading Railroad files bankruptcy 10 days before Grover Cleveland takes office. The chief fear among Eastern financiers and businessmen is that in a panic the United States could easily be forced off the Gold Standard.  Railroads go broke; many of the great financial trusts begin to collapse; European banks begin selling their American stocks and bonds, and a huge run on banks ensues, until more than 500 Banks have failed;  the mistake of businesses was trying to do too big a business on insufficient working capital; they borrowed until borrowing became impossible, through the general contraction of credits forced on the banks, and then came the crash;
1914 1914-1918 World War 1
 ___ 1929 Great Depression & Crash of 1929; banking mismanagement; speculation; excesses of the Roaring 1920s
1940 1941-1945 World War 2
 ___ 1950-1953 Korean War  
 ___ 1961-1975 Vietnam War  
 ___ 1985-1995 Savings and Loan Bail-Out
 ___ 1990 Gulf (Iraq) War (1)
 ___ 2001-present Afghanistan
 ___ 2003-present Iraq War (2)

There are also many reasons why a Great Depression has not occurred again since after World War II:

If the Federal Reserve was so wonderful, why did the Great Depression of 1929 follow 16 years later?
If the Federal Reserve was so wonderful, why do we now have more inflation than before (especially since 1950)?
Perhaps the Federal Reserve merely used the Great Depression as an excuse to eliminate the Gold Standard?
The Federal Reserve wanted a fiat-funny-money system because the dishonest fiat-funny-money system is very popular among bankers and government officials, because it gives them the money to spend FIRST, early in the circulation cycle, BEFORE the currency loses its value due to inflation. This dishonest system shifts the losses to others that don't understand how they are being cheated.

There are three types of depressions:
n Deflationary
n Hyper-inflationary
n A combination of the Deflation and Hyper-inflation

The results are bad either way. BOTH erode value.
So, to say there hasn't been a depression since 1933 is NOT really true.
The double-digit inflation, price controls, and instability of the late 1970s and early 1980s was devastating too.

So, you don't have to be a rocket scientist to see how this could all culminate to create an economic melt-down.

The culprit is:  inflation . . .  



Notice above how the National Debt increased along with the M3 Money Supply.

The best analogy regarding fiat-funny-money systems is like playing the game of Monopoly, and one player can print all the money they want.



Before long, that player has all the money and property, and everyone else is broke or in debt.  That's how the game is won!

Now consider what is happening in this nation (for some time now).

The banks and government print money out of thin air, and then try to loan it to everyone under the sun (including your dog; literally, some people get credit card applications for their pets and children, exemplifying how eager the banks are to lend money to everyone possible). 

They prefer to loan it to people that have some hard assets/collateral, because it's hard to get blood out of a turnip.

Then, when some people default on their loans, the banks confiscate real assets and property;  thus, converting money (printed from thin air) into real assets and property.

There is a moral issue here.

How can these inflationist practices be rationalized?

To really understand why the dishonest fiat monetary system is so popular among some economists, the business community, bankers, and government officials, it is necessary to understand how it gives those that receive the money FIRST an advantage, early in the circulation cycle, BEFORE the currency loses its value due to inflation.
This dishonest system shifts the losses to others that don't understand how they are being cheated.

Thus, our money system is essentially a PYRAMID scheme, and all PYRAMID schemes collapse, eventually.

Here's how it works (they don't teach this in any public schools).
The Federal Reserve loans money (with interest) to member banks (which charge more interest).
Up to 90% of each new bank loan is money created out of thin air.
But it gets worse.
For each dollar re-deposited into the fractional (9:1 ratio) bank system (a closed loop monopoly bank system), 9 times more new money can be created out of thin air. 
Depending on the size of each loan, that PYRAMID scheme can continue until 90 times more money has been created out of thin air.  However, the bank is required to have 10% of their loans in reserves.

For example, let's say the bank has $1111.11 in reserves.
That means the bank can make a loan of 9 times that initial $1111.11, which is $10,000.00 .
90%
of each subsequent deposit can then be used for another loan of money created out of thin air . . .

(001) 90% of that $10,000.00 can be loaned again, to create a new loan of $9,000.00
(002) if deposited, 90% of that $9,000.00 can be loaned again, to create a new loan of $8,100.00
(003) if deposited, 90% of that $8,100.00 can be loaned again, to create a new loan of $7,290.00
:               :               :                :                  :                          :
(088) if deposited, 90% of that $1.16 can be loaned again, to create a new loan of $1.045
(089) if deposited, 90% of that $1.045 can be loaned again, to create a new loan of $0.94
:               :               :                :                  :                          :
(131) if deposited, 90% of that $0.013 can be loaned again, to create a new loan of $0.011
(132) if deposited, 90% of that $0.011 can be loaned again, to create a new loan of $0.01
_________________________________________________________
TOTAL SUM = $99,888.89 (of money created out of thin air from initial $1111.11 in reserves).

Thus, from the initial $1111.11 in the bank reserves, $98,888.89 (98.89% of $100,000.00) of more new money could be created out of thin air.
However, the Federal Reserve and member banks are supposed to maintain at least 10% outstanding debts in their bank reserves.
If the nation-wide debt is $57 Trillion, then the banks should all have at least $5.7 Trillion in reserves.  Right?
Where will the money come from for that $57 Trillion of nation-wide debt, when only 10% (if not less) of it exists in the bank reserves?

But it still gets worse, because a LOAN = PRINCIPAL + INTEREST.
And since the bank creates only the PRINCIPAL for each new loan, where does the INTEREST come from?
One of several things must happen:

  1. create more new money out of thin air to delay the inevitable collapse of the PYRAMID when the debt finally becomes too large, such as the recent government $152 Billion in economic stimulus checks delivered started in May-2008 and the trillions in bail-outs for failing banks, insurance companies, and corporations; and the federal government is already discussing the possibility of more economic stimulus checks; however, this simply creates more inflation, which explains why the U.S. Dollar has been falling for many years against all major international currencies, which also have inflation of their own too;
  2. those with money must spend more money to allow more new money to be created out of thin air;
  3. increase products and/or natural resources (e.g. oil, steel, etc.) to sell to other nations to bring money back;
  4. the wealthy share their wealth (not likely to any significant extent);
  5. increase taxes on the wealthy (however, if the wealthy are taxed too much, they might up and move their wealth and businesses to another country);
  6. increase productivity via increased population (which has already been growing by 5 million per year; mostly illegal aliens);
  7. increase productivity via illegal immigration (cheap labor);
  8. reduce taxes to encourage more spending;
  9. reduce interest rates to encourage more spending (but this creates more debt);
  10. the government prints up more new money and gives it back to people to stimulate more spending (such as the $152 Billion in economic stimulus checks delivered starting in May-2008);
  11. foreclosures;
  12. plunder pensions and other systems (e.g. Social Security surpluses);
  13. the PYRAMID finally collapses when there is finally too much debt and inflation to delay the inevitable collapse. Between year 1950 and 2005, the M3 Money Supply increased from $135 billion to $10.15 trillion (i.e. 75.2 times more money);

It is a PYRAMID scheme, and all pyramid schemes eventually collapse.
It did not have to be that way, but greed and selfishness prevailed, and the Federal Reserve and the federal government failed to target ZERO percent inflation.
Instead, we have had positive inflation for 52 consecutive years since year 1956 !
As time goes on, this problem can only get worse.
Also, the FDIC (which insures depositors upto $100K per person) only has about $44 Billion in reserves, which is only 1.47% of the $3 Trillion in nation-wide deposits, there currently are 90 troubled banks on the FDIC's watch list, and IndyMac wasn't even on the watch list when it failed.
Note the banks below that have collapsed in 2008:

Bank Name,   Closing Date,   Updated Date:
[01] First Priority Bank, Bradenton, FL August 1, 2008, August 1, 2008
[02] First Heritage Bank, NA, Newport Beach, CA July 25, 2008,  July 25, 2008
[03] First National Bank of Nevada, Reno, NV July 25, 2008,  July 25, 2008
[04] IndyMac Bank, Pasadena, CA July 11, 2008, July 11, 2008
[05] First Integrity Bank, NA, Staples, MN May 30, 2008, July 25, 2008
[06] ANB Financial, NA, Bentonville, AR May 9, 2008, July 25, 2008
[07] Hume Bank, Hume, MO March 7, 2008, July 25, 2008
[08] Douglass National Bank, Kansas City, MO January 25, 2008, July 25, 2008
[09] Miami Valley Bank, Lakeview, OH October 4, 2007, July 25, 2008
[10] NetBank, Alpharetta, GA September 28, 2007, July 25, 2008
[11] Metropolitan Savings Bank, Pittsburgh, PA February 2, 2007, July 25, 2008
[12] Bank of Ephraim, Ephraim, UT June 25, 2004, April 9, 2008
[13] Reliance Bank, White Plains, NY March 19, 2004, April 9, 2008
[14] Guaranty National Bank of Tallahassee, Tallahassee, FL March 12, 2004, July 25, 2008
[15] Dollar Savings Bank, Newark, NJ February 14, 2004, April 9, 2008
[16] Pulaski Savings Bank, Philadelphia, PA November 14, 2003, July 22, 2005
[17] The First National Bank of Blanchardville, Blanchardville, WI May 9, 2003 July 25, 2008
[18] Southern Pacific Bank, Torrance, CA February 7, 2003, July 25, 2008
[19] The Farmers Bank of Cheneyville, Cheneyville, LA December 17, 2002, October 20, 2004
[20] The Bank of Alamo, Alamo, TN November 8, 2002, March 18, 2005
[21] AmTrade International Bank of Georgia, Atlanta, GA September 30, 2002, September 11, 2006
[22] Spanish Version September 30, 2002, September 11, 2006
[23] Universal Federal Savings Bank, Chicago, IL June 27, 2002, April 9, 2008
[24] Connecticut Bank of Commerce, Stamford, CT June 26, 2002, July 25, 2008
[25] New Century Bank, Shelby Township, MI March 28, 2002, March 18, 2005
[26] Net 1st National Bank, Boca Raton, FL March 1, 2002, April 9, 2008
[27] NextBank, N.A., Phoenix, AZ February 7, 2002, July 25, 2008
[28] Oakwood Deposit Bank Company, Oakwood, OH February 1, 2002, July 25, 2008
[29] Bank of Sierra Blanca, Sierra Blanca, TX January 18, 2002, November 6, 2003
[30] Hamilton Bank, N.A., Miami, FL, Spanish Version January 11, 2002, July 25, 2008
[31] Sinclair National Bank, Gravette, AR September 7, 2001, February 10, 2004
[32] Superior Bank, FSB, Hinsdale, IL July 27, 2001, July 25, 2008
[33] The Malta National Bank, Malta, OH May 3, 2001 November, 18, 2002
[34] First Alliance Bank & Trust Company, Manchester, NH February 2, 2001, February 18, 2003
[35] National State Bank of Metropolis, Metropolis, IL December 14, 2000, March 17, 2005
[36] Bank of Honolulu, Honolulu, HI October 13, 2000, March 17, 2005

Also, look at this unofficial list of 186 banks with negative or near-zero assets.
The only thing stopping the collapse of this debt-pyramid is the time-lag by creating more debt and creating more money out of thin air.
But that time-lag is shrinking every day, as the ability to repay debt becomes more difficult.
Debt will grow larger and larger.
The time it takes to finally collapse fools people.
Creating more money out of thin air to delay the collapse will make inflation get worse and worse.
It could take decades or centuries, but the inevitable collapse is a mathematical certainty.
Eventually, the debt and inflation will become impossible to deal with.
Eventually, you will need a truck load of dollars to buy a mere loaf of bread.
We will not be able to create more debt to create more money.
We will not be able to spend our way out of the collapse.
We will not be able to print (money) our way out of the collapse (due to inflation).
We will not be able to immigrate our way out of the collapse.
We will not be able to procreate our way out of the collapse.
We will not be able to increase productivity enough to avoid the collapse.
We will not be able to tax (or un-tax) our way out of the collapse.
Look at our current situation and results of this PYRAMID scheme:

"Highly placed sources in banking and business circles in Europe and South America warn that unless the U.S. government moves quickly to control the spending which is ballooning its deficit, America is in imminent danger of South American Banana Republic style hyperinflation." - Jack Anderson

Hyperinflation will be more devastating than a credit crunch.  Hyperinflation will wipe out the middle-class by destroying the value of cash, savings, incomes, bonds, Social Security, and other paper instruments. 

And how will it affect the stock markets? 

Recently:

  1. the federal government provided $5.2 Trillion for protecting Fannie/Freddie liabilities of which about $600 billion will likely default;
  2. the Federal Reserve having now polluted its balance sheet by some $700 Billion worth of toxic mortgage bonds with a 41.6% default rate ($291 billion in likely defaults);
  3. the federal government provided $85 billion and then another $38 Billion in bailouts for AIG;
  4. and now (SEP-2008), the Federal Reserve and federal treasury are asking for some $700+ billion more (passed via BILL H.R. 1424) to bail out more financial firms.

It seems clear that the winds of hyperinflation are upon us.  What will be the comparative effect of this addiction to money-printing, borrowing, and the resulting hyperinflation upon index funds, like DIA, QQQ, and SPY, versus bonds and cash?

Hyperinflation has happened before and it can happen again.
Today, we have the perfect ingredients for hyperinflation.
Hyperinflation is not uncommon and has occurred in the following countries in the last 150 years:

  • Weimar Republic of Germany 1920 – 1923 (1/466 billionth of starting value),
  • Zimbabwe 2003 - present (6 quadrillionth of the starting value and continuing to fall),
  • Former Soviet Union 1993 – 2002 (1/14th of starting value),
  • Argentina 1975 – 1983 (1/1,000th of starting value),
  • Austria 1921 – 1923 (about 1/4 of starting value),
  • Bolivia 1984 - 1986 (1/1,000 of starting value);
  • Bosnia-Herzegovina 1992 – 1993 (1/100,000th of starting value),
  • Brazil 1960 – 1994 (1 trillionth of starting value), Chile 1971 – 1973 (1/3rd of starting value),
  • China 1947 – 1955 (1/10,000th of starting value),
  • Greece 1943 – 1953 (1/50 trillionth of starting value),
  • Hungary 1945 – 1946 (100 quintillionth of the starting value),
  • Hungary 1922 – 1923 (1/4 of starting value),
  • Israel 1976 – 1986 (1/16th of starting value),
  • Japan 1934 – 1951 (1/362nd of starting value),
  • Poland 1990 – 94 (1/10,000th of starting value),
  • U.S.A. (Confederate States of America) 1861 – 1865 (1/90th of starting value, and then, by the end of the Civil War, the Confederate Dollar depreciated to zero).
  • It also happened in the ancient Roman Empire, when the silver and gold coinage of that day was progressively debased with base metals, in order to fund wars, giveaways to the Plebeians, and various other adventures. There are many additional examples that I have not bothered to cover here.
For anyone who thinks it is bad now, they quite possibly haven't seen anything yet.
But this is not taught in public schools (see 47 minute video or this 123 minute video), and probably not in many (if any) universities either.

All of the above are the many manifestations of unchecked greed, and there will eventually be painful consequences for most people when the inescapable mathematical certainty that dooms all PYRAMID scheme finally comes to the end of the cycle.


One potential SOLUTION - Reform the Monetary System:

  1. The federal government controls the monetary system; creates the money it needs (interest free), and controls the money-supply.
     
  2. The federal government shall prohibit usury (interest) by government and member banks.  Private banks are still free to lend money with interest, but usury will be less of a problem.  If a lot of interest is bad (i.e. usury is immoral), how can a little interest be good?  If inflation is bad, how is a little inflation good?
      
  3. This creates a stable money supply with the flexibility for small fluctuations.  If inflation is too high, some money in circulation can be removed. If there is deflation, or the population increases, the government can create and spend some money.  If they do a bad job of it, the voters know exactly who to hold accountable. Currently, the Federal Reserve is a quasi-government controlled / privately owned bank, and the voters have little (if any) control over it.  Why would people borrow from a bank (with interest) when they can borrow from the government, interest free?  Thus, there would be little (if any) usury.  Usury, predatory lending, and other manifestations of unchecked greed and the other numerous negative side effects would be greatly reduced. 
    If
    properly managed, without profit and usury as a motive, the U.S. currency would become superior to any other world currency.
     
  4. Theoretically, if managed responsibly, with the central bank in control of the monetary policy (instead of the current quasi-government controlled/privately owned bank system), there may also be no need for any tax system?  That is, inflation and deflation would affect everyone's money an equal percentage (better than the current regressive tax system).  Of course, such a vast change in the monetary and tax systems would require new ways of thinking about money, interest, borrowing, taxation, and monetary policy, and there are many (e.g. politicians and bankers; a.k.a. puppets and puppeteers) that will resist such changes.  This is unlikely to happen, but the gargantuan debt-bubble of nightmare proportions may provide sufficient motivation to consider such a monetary reform?  But, since this way of funding the federal government is unlikely any time soon, the least we can do now is to greatly simplify the current, ridiculously complex and regressive tax system (e.g. make it a more fair, flat 17% income tax on all types of income above the poverty level).
     

The current dishonest and usurious pyramid-scheme monetary system explains why the nation is swimming in massive debt, which has NEVER been worse (including as a percentage of GDP):

  1. Total Domestic Financial Sector Debt = $17.2 Trillion
  2. Total Household Debt = $13.8 Trillion (for year 2007)
  3. Total Business Debt = $11.1 Trillion
  4. Total Other Foreign Debt = $1.9 Trillion
  5. Total Federal Government National Debt = $15+ Trillion
  6. Total State and Local Government Debt = $2.2 Trillion
    __________________________________________________
    Total = over $57+ Trillion

The total nation-wide $57+ Trillion has never been larger ever, both in size and as a percentage of the $15 Trillion GDP; 
$57+ Trillion it is over $184K of debt per person (U.S. population=310 Million as of 2009), but only a tiny 2% of the U.S. population owns most of the wealth in the U.S. (a wealth disparity gap that never worse since the Great Depression).

Where will the money come from to repay $57 Trillion of nation-wide debt, much less the interest on that debt (which could be larger than the original principal debt of $57 Trillion itself)?

Why has the nation-wide debt (see below) been growing for over 52 years (not only in magnitude, but as a percentage of GDP ($13.86 Trillion in 2007))?



Hence, the nation is enslaved to massive, growing debt that is inherent with a usurious, 9-to-1 fractional lending pyramid scheme.

The excessive debt and money-printing helps to explain one of the ways vast wealth has shifted in the last 30 years (see below).

The 1% of the total U.S. population that once had 20% (in year 1976) of all wealth now has 40% of all wealth.

Hence, the saying:  The rich get richer, and the poor get poorer:

And median incomes have been falling since 1999 . . .


If we started now trying to pay back only the $11.4 Trillion National Debt, at only a 2.5% interest rate, it could take centuries to merely pay down 33% of the total National Debt:

The total interest and debt would be over $74.8 Trillion!
It's could take literally centuries to pay down the total federal debt.
And that is for only 2.5% interest.
The actual interest on the National Debt in year 2007 was already higher ($432 Billion) than the 279.6 Billion scenario above.
What's the likelihood of our Do-Nothing Congress ever having the discipline to do that?

The nation-wide debt is over $57 Trillion  (as of MAR-2009):

  1. Total Domestic Financial Sector Debt = $17.2 Trillion
  2. Total Household Debt = $13.8 Trillion (for year 2007)
  3. Total Business Debt = $11.1 Trillion
  4. Total Other Foreign Debt = $1.9 Trillion
  5. Total Federal Government National Debt = $15+ Trillion
  6. Total State and Local Government Debt = $2.2 Trillion
    __________________________________________________
    Total = over $57 Trillion

If we started now trying to pay back the total $57 Trillion nation-wide debt (at 2.0% interest rate), it could take over 262 years, and that would require that we stop borrowing $3 billion per day, and start paying back more than the daily interest of $3.125 billion:

The total interest and debt would be over $301 Trillion!

This should all be very alarming to Americans.
No one can answer the question: 

Where will the money come from?

Those that understand must help to energize their friends, family, and associates, and help to spread the word.  No one knows what the future holds,  but doing nothing will accomplish nothing.  Especially if voters still choose to (despite the many compelling reasons) repeatedly re-elect, reward, and empower the very same irresponsible, bought-and-paid-for, look-the-other-way, incumbent politicians that use and abuse the voters, and continue to ignore the nation's pressing problems, growing in number and severity, threatening the future and security of the nation.

And, our education is already in the pipeline.

The question is:
(a)  Will we learn the smart, less painful way?
(b)  Or, will we learn the HARD, painful way?

Are we now facing a recession, and with so much debt (and interest due daily on that debt), will likely see more inflation.
Even though we have been brainwashed to believe 3% to 4% inflation is OK, it isn't. 
Not when inflation is incessant, year after year (since year 1956), becoming exponential, like reverse compound interest.
Also, the wars in Iraq and Afghanistan are causing inflation.
Some of the consequences are from a trend that started around 1976:



Look at all the graphs above (after 1976).
Look at the National Debt in 2005 dollars (the black line with black squares).
Also, look at the Debt-to-GDP ratio (after 1976).

Also look at the GDP for in both 1950 dollars (green diamonds at bottom of graph) and 2005 dollars (blue diamonds; see ZOOMed graph).
Both have been falling since year 2006 when measured in both 1950 and 2005 dollars.
That has never happened before.

With the growing debt, the Federal Reserve and government may have NO choice but to print MORE money.
That will cause inflation, and that can cause recessions and bubbles.
But, to make the matter even worse, is this:   more borrowing too!
Why?  
(1) Because the borrowing will create a snow ball effect, in which it creates more pressure to print more money.
(2) The government and Fed have not demonstrated fiscal discipline since 1976 (or earlier).
(3) The government is FOR SALE.  Politicians are more bought-and-paid-for and irresponsible.
(4) The Do-Nothing Congress will still refuse to pass many badly-needed, no-brainer, common-sense reforms.
Congress is where good ideas and solutions go to die in a sea of corruption,  influence peddling, rank favor-trading,  graft,  pork-barrelwaste, and look-the-other-way/bought-and-paid-for incumbent politicians.   That goes for BOTH parties.

Also, foreclosures are on the rise,  . . .


 
Consider the following issues related to excessive debt and money-printing:

We've been crappin' in our own nest for decades, and it may now only be a matter of time before the bough it rests upon finally snaps.



Obviously, that's  not too smart is it?
If we all keep crappin' in our own nest, how long before the bough it all rests upon finally snaps, and this house of cards comes crashing down?
Yet, too many voters continue to repeatedly reward THEIR incumbent politicians with 85%-to-90% re-election rates.
Obviously, too many voters care more about THEIR party than their country?
Oh well, that's the voters' choice.
In a voting nation, an educated electorate is paramount, and voters are going to get their education one way or another.

At any rate, the voters have the government that they voters elect (and re-elect, and re-elect, and re-elect, . . . , at least until that becomes too painful).


 


Notable Notes and Quotes:


Videos:  
The inevitable collapse of the dollar (all pyramid-schemes are doomed to collapse)
Falling U.S. Dollar (click here to see charts of U.S. Dollar falling against all major currencies for over 7 years)
Glenn Beck - Economic Disaster is Not Far Fetched
David Walker Part 1 - America's Financial Future
David Walker Part 2 - America's Financial Future
David Walker - U.S. Government Immorality Will Lead to Bankruptcy 
Economic Concerns - CNN Reports
Heading For Disaster
Thom Hartmann - The Economy Is About To Collapse
Reckless Expansion of Credit and the Impending Recession
100% Chance of Recession & Stock Market to Plunge 50-60%
A Suicide Economy China threatens to cripple U.S. by sell-off of U.S. Securities
United States For Sale
David Walker - 60 Minutes Summary by Steve Kroft
GAO: "USA is living beyond its means"
List1 of Failing Banks . . .
List2 of Failing Banks and Banks with negative or close to ZERO assets . . .
List3 - FDIC list of failed banks . . .
Housing Bubble
BANKS OF AMERICA-Federal Reserve Bank KILLING America PT 2
BANKS OF AMERICA-Federal Reserve Bank KILLING America PT 1
NATIONAL DEBT on Lou Dobbs. It's much higher than you think!
Zeitgeist - The Movie: Federal Reserve (Part 1 of 5)
Zeitgeist - Addendum - How Money is Created as Debt
National Debt Exploding under Bush (now over $10 TRILLION!)
A message from DonHarold.net
Money, Banking and the Federal Reserve
http://www.IOUSATheMovie.com
 

Links: 
What you should know about fiat-funny-money (47 minute video)
The Growing Disparity Trend (these did not all come about by mere coincidence over the last 30+ years)
The Problem and the Solution (account for the human factor)
CONGRESS' To-Do List (see what Congress has done since the NOV-2006 election)
Irresponsible Incumbents (what irresponsible incumbent politicians do while troops risk life and limb)
PROs and CONs (why to stop re-electing irresponsible incumbent politicians)
National Debt (it will take 143 years to pay off the National Debt)
Consider the Following Scenario (must we always learn the hard way?
Plunder of the Environment (population, arable land, over-fishing)
Solutions (common-sense, no-brainer reforms that politicians resist)
Help Educate Others (peacefully force government to be responsible and accountable too!)
Congress is denying the voters' right to an Article V Convention
Badly-Needed, Common-Sense Reforms
The Cheater's Philosophy (learn to recognize their manipulation)
Frequently Asked Questions
   

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