Alan Greenspan, former chairman of the Federal Reserve Bank, admits that the current system of runaway debt cannot be stopped and there is no way to default on the debt because the Federal Reserve can always print more money and increase the national debt, “guaranteeing” treasury bonds that can never mathematically be paid back, which are not backed by any commodity or gold standard.
As the U.S. national debt exceeds 21.15 trillion and as global debt exceeds $164 trillion, Greenspan says “there is zero probability of default.” This means that inflation will continue to destroy the dollar’s purchasing power — a tax into perpetuity. What exactly have we enslaved ourselves to? How do we exit a system that can inflate itself forever, without accountability or recourse?
Governments are no longer interested in paying down debt because it is no longer feasible to do so. In fact, this system of central banking and fractional reserve borrowing was never intended to create true wealth. It was only created to satiate the demands for a fictitious fiat currency — a currency of debt that can never mathematically be repaid. This runaway system of currency creation allowed the U.S. to quickly build its military, its industries, and create social welfare programs, but the purchasing power of the currency continues to diminish for individuals, enslaving an individual’s true wealth (their time) to these industries and social welfare programs. The elite rich get richer. The workers toil for less, and the poor are perpetually enslaved by this system.
Here’s how the system works:
The government of the United States comes up with a spending bill. The spending amount matters in principle, but doesn’t really matter because the government doesn’t have the money anyway. To fund all its promises and military endeavors, the government creates a glorified I.O.U. in the form of bonds. These bonds, issued to the U.S. Treasury, increase the national debt, – burdening future generations with interest, inflation, and accumulating debt.
These bonds (debt) are sold to the big banks, in exchange for the bank’s currency. The banks then sell the bond IOUs to the Federal Reserve Bank in exchange for a check that is backed by no commodity, no gold standard, or no real money whatsoever. This check (essentially an IOU) is given to the banks so they can generate a fictitious fiat currency supply. This currency is then used by the banks to purchase more bonds from the treasury to fund the U.S. government. Over and over again, the bonds are cycled to the Federal Reserve as the central bank prints money for the banks, the U.S. treasury, and the different agencies and programs of the government.
After the government spends the currency on its promises, public works, and military investments, the currency finds its way back to the banks in the form of deposits. From there, the banks magically invent more I.O.U.s through fractional reserve lending, whereas a portion of each deposit is stolen to guarantee loans to businesses and individuals. This multiplies the currency exponentially, inflating the value of the dollar further. In fractional reserve lending, the banks are allowed to reserve only a fraction of your deposit, so they can loan the rest out. In this way, the banks create checkbook money every time they grant a loan, replacing your deposited currency with an I.O.U. A $10,000 deposit into a bank’s vault can multiply exponentially, as banks lend it out, and “guarantee” that the cash is still the depositor’s. In this way, banks create money out of thin air, flooding the economy with currency that destroys the true purchasing power of earned money.
Under this fundamentally evil, cursed system, there is never enough real currency to pay the debt. On top of that, the currency isn’t even backed by real money, commodity, or standard. If there can never be a default on the debt, then what will it take to end the corrupt financial system? See NationalDebt.news for more news on the growing debt problem.