Our Monetary System; a Trojan Horse

Ignorance is the enemy of the 99% and the friend of the 1%.

Our monetary system is a Trojan Horse, a “gift” given to us beginning in 1913 by  J.P. Morgan and J.D. Rockerfeller who both helped to create the Federal Reserve, the model for all central banks around the world. Through social conditioning, we have all graciously invited the central banking model into our lives, not realizing the full consequences of our actions.

We invite it in by using it blindly. These central bank notes have become so basic and ubiquitous in our everyday life that we do not even stop once to question what sequence of actions we set in motion when we use them to buy, sell, save or borrow. As long as we remain ignorant about the true nature of money, we will never discover the shocking inequities our blind use has enabled. We have all wondered how it can be that with so much resources on this planet, so many people can be sick, malnourished, starve and die. We would be shocked to find out that it is the unquestioning use of the central bank note by the 99% which makes the control by the 1% possible.

We will only be able to see this truth with our own eyes if we take personal responsibility to overcome our resistance and make a commitment to investigate and learn the true nature of the monetary system. There is no more effective a prison, than one of our own making. As long as we cannot make the effort to penetrate the apparent complexity of the monetary system, we will simultanously be both prisoner and guard of a prison of our own construction. Exploring the solutions begins here.

We must find a way out of the old dualism of capitalism vs socialism or communism and find a middle ground that incorporates the best and prevents the worst of both worlds.

Bernard Leitaer, a monetary reform advocate says that monetary crisis aren’t new, they have happened before….between 90 and 100 times throughout history. What IS new about this crisis is the level of debt.  The centuries of sustained extraction of wealth towards the 1% at the expense of the 99% has created a global debt that has been allowed to exponentially grow until now, it has almost reached the tipping point at which the interest alone cannot be serviced. At that point, the entire global system will collapse.

The monetary system has failed the 99% and the harm has escalated to a point that it can no longer be hidden. Currently, there is panic in the upper echelons of finance….a feeling of helplessness to stop the debt inertia they have created and a sense of reaching the end game. It is an irony that is analogous to a parasite / host relationship. When a parasite extracts too much nutrient from its host, it will threaten the life of the host, and by proxy, it’s own life. In the same way, the unfettered greed of the 1% will backfire on itself by destroying the very system that it feeds off of.

Unfortunately, this uncontrolled expression of greed will bring about more than just another economic meltdown though. This time, it threatens to bring about an ecological meltdown of unimaginable proportion as well. It is no accident that the economic system is under severe stress at the same time that the planet’s ecological system is. The 1% , in its unfettered goal to accumulate money, has applied the same uncritical principle of greed towards resource extraction, placing money ahead of any environmental concerns. Of course, because nature is inter-connected, the harm eventually comes back to us. Our motivations, driven by the structure of the broken economic system cannot be decoupled from the harm we have done to the environment. This implies that a solution to the global warming problem cannot be reached unless we also find a solution to our broken economic system as well.

The Continuing Cycle of Debt

Debt is something we are all familar with, yet it is also what has led the system to near collapse. There’s a very simple way to picture debt and therefore so how it has led to our predicament:

There are two ways we can pay for things we want or need:

  1. With a LARGE sum of money right NOW in the present
  2. With SMALL AMOUNTS of money spread out in the FUTURE

Most people do not have the money they need to buy a home or car so they choose option 2.

There are four other important things to know about debt before we put the pieces together:

  1. It accrues exponentially
  2. It requires more resources to service it
  3. It requires more paper money to be created to service it
  4. We live on a finite planet

Now, putting this all together we can reach a sequence of conclusions:

  1. We acquire large material objects (homes, cars, dams, roads, infrastructure, etc…) by taking out a loan because we don’t have enough money to pay for it now
  2. Taking out a loan implies that we will pay off the loan WITH INTEREST throughout the FUTURE
  3. How do we pay it off? By working and securing money
  4. Working implies doing some task that earns that money
  5. In an industrial / technological society, a large proportion of this work lay in making more things in the world
  6. To make more things requires more resource extraction
  7. In the monetary world, it also means we must print more money…there isn’t enough physical or electronic money to pay back an expanded debt pool
  8. Creating more money means inflation and devaluation of the current unit of money
  9. The pattern of exponentially more debt implies exponentially more resource extraction
  10. Exponential growth of resource extraction must meet a finite barrier in the real world
  11. Since banks only make money by loaning out money, they must continue creating debt in order to survive and prosper

Now you can see why the inherent debt built into the system had no recourse but to lead to a perfect storm of crisis that we are now experiencing.

The Central Banking System Mythology

To promote public accountability of the Federal Reserve, the US’s central bank,  US presidential candidate and longtime monetary reformist Ron Paul and Alex Grayson, former U.S. Congressman from Florida’s 8th District co-authored the GAO Audit of the Federal. He summarizes some of the findings from this large report:

  • The total lending for the Fed’s “broad-based emergency programs” was $16,115,000,000,000, more than $16 trillion. The four largest recipients, Citigroup, Morgan Stanley, Merrill Lynch and Bank of America, received more than a trillion dollars each. The 5th largest recipient was Barclays PLC. The 8th was the Royal Bank of Scotland Group, PLC. The 9th was Deutsche Bank AG. The 10th was UBS AG. These four institutions each got between a quarter of a trillion and a trillion dollars.
  • The main, if not the sole, qualification for getting help from the Fed was to have lost huge amounts of money. The Fed bailouts rewarded failure, and penalized success. The Fed helped the losers to squander and destroy even more capital.
  • The notion that this was all without risk, just because the Fed can keep printing money, is both laughable and cryable (if that were a word).
  • During all the time that the Fed was stuffing money into the pockets of failed banks, many Americans couldn’t borrow a dime for a home, a car, or anything else. If the Fed had extended $26 trillion in credit to the American people instead of Wall Street, would there be 24 million Americans today who can’t find a full-time job?

The major problem of the current global economic system of fractional reserve banking is that it is a an inherently debt-based one which loans money into existence with interest. Who prints the money and makes the loans?…Central banks. Who borrows it? The government and the citizens of the country.

The current paper money system employed throughout the world is based on the one originating in the formative years of the United States of America. Noted authorities such as Benjamin Franklin, Thomas Jefferson and Abraham Lincoln debated whether these private entities should control the money supply. They were against it, but unfortunately, the banks had so much power that they forced themselves into that position. The rest is history. Each country or group of countries are a conglomerate of a number of private banks. The central banks of the world are essentially  given carte blanche to print a country’s paper and electronic money supply. The money they create is loaned into existence.

The fundamental structural problem of a system which loans money into existence is that is that it is done so with interest.