This article was originally published at americanchronicle.com on Nov. 4th, 2008.
Many average Americans, indeed many average citizens around the world, are beginning to wonder exactly what is happening with the world economy. They are worried as they see their savings shrink. They are worried as they hear about the credit crisis. They are worried as they see institutions fail financially. They are worried as they see their financial markets shrink. Some have begun demanding that government help out failing banking systems while others have questioned the wisdom of such demands. Indeed, governments worldwide have stepped in and started spending other people´s money on helping out the richest of the rich. Even as the United States government and its agents in the Federal Reserve throw hundreds of billions at the largest banks to try to "thaw the frozen credit markets," markets continue to fail most likely due to sour economic data and lack of confidence.
So why should this be? It all seems so convoluted. There´s all this talk of toxic debt, bad mortgages and unfathomable derivatives. What does it all mean? Well, there are some things that are interesting to consider. First off, when money is created as a function of debt, the interest that is needed to pay off that debt is never created. Second off, debt money is really nothing except perhaps a promise of what might be. It is not something that has already been created. It is a non existent construct, something that has yet to be brought into the world. It is nothing. When money is created from nothing, and then paid back, it fades back into nothing. It was created on a computer for a bank as an asset and when paid back is taken off the bank´s books. It cannot be loaned out again and new money must be created again from something that might be. In such a system, debt can never be completely paid off and a vicious cycle is created.
One can, in a way, sum up what is happening by making an example of one´s own personal finances. Mine would make a good example as they are extremely screwed up at the moment, just like the finances of this nation seem to be. The difference is, for me there is a light at the end of the tunnel providing I keep working hard, for the nation things may be a little different.
In the course of raising five children and trying to better my circumstances through education, I have, as you can imagine, accumulated quite a bit of debt. For years I lived beyond my means. Now that circumstances permit and my children have grown, I have scaled back on my living expenses. My income hasn´t increased in the last five years and prices have gone up, but I have found ways to live within my means and I´m starting to pay down my debt. One thing I know for sure, I will not fall into the trap of using credit again. If I can´t afford something, I will not buy it until I have saved enough money for it. In fact, I´m keeping my purchases to a minimum and paying as much as I can on my credit card debt until it´s paid off and I owe no one. Perhaps it´s time for the government to do the same.
In my situation, I basically feel like I own nothing. In fact, as long as one is in debt, one might as well own nothing. Anyone you are indebted to can come along and appeal to some "judge" to let them take possession of your things to satisfy the debt. In this way they end up owning what you once considered yours, but in fairness it was really theirs all along. Anyone you are indebted to can come along and appeal to some "judge" to let them take a portion of your pay until your debt is satisfied. In this way they can end up owning you and your labor. Debt can be just as onerous for a nation to have. I believe that just about everyone would prefer to own their stuff rather than be in debt. I believe most everyone would like to feel secure in the belief that their belongings and effects cannot be legally taken from them by any agent of the state or any other entity laying claim to said belongings. So long as one keeps oneself out of debt, so long as one is beholden to no one else, this should be so. What´s mine is mine, what´s yours is yours, what´s theirs is theirs and as long as we enter into no binding contracts no entity should be able to lay legal claim to another entity´s property.
The finances of nations can be similar. If a government spends beyond its means, say to maintain an empire, it must borrow money and go into debt. Those to whom the nation is indebted might start to feel they own anything that can be considered public. If the government defaults on its obligations, they might seek remedy by trying to lay claim to public lands, roads, buildings or other assets. Banks and other influential lending institutions to which insolvent governments are beholden can threaten to take such properties if certain demands aren´t met. These demands can include things like turning over the rights to natural resources and collecting more taxes from the populace. In this way they claim more than just public properties, they claim the labor of the populace. They claim rights to the nation´s people. If the government refuses to submit to such demands, the banks or other lenders can threaten to destroy the nation´s economy and many feel they can successfully carry out such a threat.
This is how the elite gain control, through threats and coercion. They are in control of the money, its printing, who its loaned to, how much interest will be paid, etc. This is true in not only the United States, but in every country in the world. They probably have most of the world´s gold. They probably have a good chunk of the world´s silver and other precious metals stored away. They´ve most likely hoarded as much as they can get away with. That way, as they print more and more fiat currency and drive down the value of those moneys, they maintain their own worth. These people protect only their own interests and their friends. They don´t care about the common folk and would not hesitate to lay claim to the people themselves, looking upon you as nothing more than a slave to service their needs. This is true worldwide.
One fallacy that is used against the people of the world is that wealth is something that is limited. Many believe there is only so much wealth in the world and that they must fight and scrape for their "fair" share. When one comes to realize that wealth is infinite, that it is created from resources, then one takes his first step onto a path towards independence. Real wealth isn´t the money that´s printed, real wealth is the land food is grown on, or the house on that land, or the television set in that house. Real wealth is created by human ingenuity and human ingenuity operates best when it is unregulated by government and allowed the liberty to freely innovate, market, compete and associate with others. This is true in all realms, including the realm of money and money creation.
The banks and lenders are merging their way into virtual monopolies. Our government and governments around the world have facilitated this by giving the biggest financial institutions huge amounts of money, hence indebting their people, and then calling these giveaways bailouts or rescues. This is leading to a centralization of monetary power that can amount to a ruling class in charge of the economy of the entire world. Such a situation makes it all the easier for corruption to take place. Such a situation would not be beneficial to the common man and would likely lead to greater police state tactics and greater injustices to those of us who are not politically connected. That is the nature of centralization of power, for power corrupts and absolute power corrupts absolutely.
Such a situation can be avoided if smaller banks are allowed to compete by issuing their own moneys. These moneys can be backed by precious metals or other forms of real wealth. People should be allowed to decide for themselves which moneys they want to trust and use and which they don´t. For instance, a man might decide he wants to use notes from Tinybank which is backed by copper rather than notes from the Federal Reserve which is backed by America´s credit rating. Of course, that would mean getting rid of legal tender laws. Yes, this might make it a little more difficult to determine the worth of certain pieces of paper, but it also makes it more difficult for the banks issuing the money to dupe the populace.
Alternatively, we could use the laws on the books to bring those with too much economic power to heel. We as a society could demand that those who benefit from this 700 billion dollar bailout pay back the public using gold and silver (at the market price equal to the price of gold or silver at the time it was given to the institution.) We could then use those metals to back US treasury notes in a manner consistent with the constitution. In this way we could slowly phase out the Federal Reserve and go back to constitutional money which the government could loan out and profit upon as the private owners of the Federal Reserve are now doing. The interest collected could be used to run a much scaled down federal government. The dollar would stabilize and remain strong, making saving money more practical and desirable. Such a situation would likely cause the world to follow suit.
Whichever way would be chosen, it is obvious that the current system has failed us. It continues to fail us even as we try to stem the tide. Our politicians have refused to listen to the demands of their constituents. They passed their plans despite the wishes of the people. They are most likely not going to be held accountable for their actions. They have also failed us. Yet this is the real change we need, some kind of change in the way the monetary system is run. We´ve had enough of monopoly and corruption. It´s time to demand better not only for the citizens of the United States, but for freemen around the world.