In a monetary system in which all value of a currency is nothing
more than debt, if all debts were to be repaid, the monetary system
would disappear. In other words, there would no longer be any money at all.
(This is a reproduced statement from the Fed. Reserve itself)
In this system, growth therefore equals increasing debt. This is seen in the
banking practice in which fractional banking allows banks to create money
by a mere book entry as they loan out $9 for every $1 they actually have
on hand. Each of the $9 becomes the basis for other loans of $9 by other
banks as the dollars are deposited throughout the banking system, creating
ever more "money" which is nothing more than debt. There is nothing of
real value backing it up.
Banks, therefore, make more money by creating more debt. It is not in their
interest to see debts repaid because a repaid debt reduces the money supply
(erases the phantom money/debt). Rather, they want the interest payments
on debt - this is their ever-expanding wealth because the debt they produce
It is difficult to imagine a more lucrative business than banking. For producing
nothing real, and for printing fiat money to loan, banks demand payments in interest
for essentially doing nothing more than creating the illusion of value. The only real
value is in the labor and creativity of those who obligate themselves to repay
the loans. Hence, banks are repaid in dollars earned by human work and ingenuity,
the banks then take that value and dilute it 10 to one in order to loan out more
book entry money on which to make their ever-increasing interest payments.
Add to this the banks' ability to leverage up to 20-30 to one and invest in their
various ingenious forms of "paper" such as default swaps, and the wealth generated
can be staggering. Of course, it is phantom wealth, based only on the continuing
labor of the working masses who actually create something of use every day.
With such ever-expanding money supply via debt, the value of the labor that sustains it via taxes
and real work/production cannot expand fast enough to keep up, and people find they must pay
more and more for the same things.
Therefore, the money-as-debt system inevitably must fail because the debt creation
has to eventually so outpace the real value of work and production by human beings
as to make the money worthless.
A general malaise sets in because the working public becomes convinced the only way
to have the good things of life is to go into debt. Saving money is a losing game because the
value of the money saved is falling daily via the system's debt creation which equals hidden inflation.
As they watch the money they earn decline in purchasing power so mysteriously, requiring
more hours of work just to have what earlier generations were able to purchase, faith in
the national life as a whole declines.
But those who create money by loaning it out do very well. They are not concerned about
the weakening value of money because they are able to print whatever the system needs.
As the number of dollars increases for people to live, the number of dollars printed by
banks increases bringing in an increasing number in interest payments. In this way,
bankers know they will always have an ever-expanding income. The banking/monetary
system is set up to insure this.
The debt, however, eventually has to destroy the system because it has no restraints.
Banks keep expanding the debt in order to expand their incomes with ever-weakening money.
The system reaches the point where no one really expects any debt to be repaid, but just
the continuing re-financing of debt to keep up the illusion that the society/government/business
activity of life is creating value ("growing") when in fact it is only generating debt.
The idea that a nation can "grow itself out of debt", therefore, is another illusion. All "growth"
under this system is only more debt. Therefore, increases in production and consumption
are nothing more than an increase in the creation of more debt - putting lipstick on the pig.
Wealth will continue to be based entirely on debt and therefore must eventually collapse
under a requirement that interest be paid on all of it -
There simply is not enough real work being done by enough people to sustain the interest
payments on the ever-expanding debts owed to the world banking establishment.
And this is the crisis point the world has now reached. The reason the EU cannot concoct
a way to re-finance the banks and the governments is they do not have enough people creating
value through work to keep the illusion of wealth going - the illusion that is at the basis of
the world's financial/monetary system : fiat money.
Our money is a fiction. Debt cannot be value, but we have a system that says it can.
Therefore, the "growth" we long for is only more illusion. It creates more debt than any
real production of value can ever justify or sustain.
This is the castle of cards that must fall completely to provide the motivation for creation of
a monetary system based on value and not in the hands of the banking cartel which
\cares only for the creation of its unlimited wealth via the creation and control of debt -
in which they are the only ones enjoying interest and therefore are determined not to
allow debts to be repaid.