In a debt-backed currency system, new money is created only when the central bank lends it out at interest. The amount of money owed to the Federal Reserve will always exceed the amount in circulation, so most debts will never be repaid.
Listen to this post: Twilight Patriot - 15 April 2019
People
often speak of fiat money as if its worth were purely imaginary because, unlike
the gold-backed currency of the past, its value is not based on any physical
substance. But that is only partially true; fiat money isn’t backed by nothing,
it’s backed by debt. Everyone is scrambling to get dollars because nearly
everyone has debts that can only be paid in dollars – and the scramble will,
for most people, lead only to frustration, because there aren’t enough dollars
in circulation to pay off all the debt.
No amount
of moralizing about the need to live within our means can solve the debt
problem in a country whose economy is structured so that an increasing debt
load is a mathematical inevitability. Abolishing the Federal Reserve, and
restoring commodity-backed money, is the only way to prevent the average
American from continuing to toil away as a debt slave.

In a
debt-backed currency system like America’s, new money can only be created by
the central bank, and the central bank exchanges this money for only one thing
– a promise to pay back yet more money in the future. Debt created in this
manner will never, on the whole, be paid off. It is mathematically impossible
for it do anything but steadily grow.
America’s
current problem with debt – both personal and public – is generally blamed on a
lack of frugality. And that is indeed
part of the problem, as most modern Americans live beyond their means. But even
in the mid-twentieth century, when the old virtues of thrift and hard
work were more widespread, the middle class was kept firmly under the heel of
the banking industry and was being steadily drained of its wealth.
The
problem is ultimately structural. The minority of Americans who manage to pay
their way out of debt can only do so by selling their goods or labour in
exchange for dollars. And those dollars were ultimately borrowed, at interest,
from a bank. The debt can be shuffled around, and the most talented and
hardworking individuals can claw their way to the top of the pile, but the pile
itself will never be diminished.
And
because the amount of money owed to the Federal Reserve is always increasing,
the only way to prevent the economy from grinding to a halt entirely is to
steadily increase the money supply via inflation. And that is what the Federal
Reserve does, by lending out yet larger amounts of money in order to cover the
original debts. But central bankers know better than to set the inflation rate
so high as to lose the ability to profit off the debt already owed to them. With
the right balance, economic collapse can be staved off without the finance
industry losing its ability to enrich itself at the expense of everybody else.
All this
is not to say that individuals cannot pay out of debt if they make it a
priority to do so. They need only outperform the average American – and that’s
a pretty low bar. Nevertheless, America as a whole will keep sliding further
into bondage, as it has been doing ever since the free coinage of silver and gold
were abolished in 1873 and 1933, respectively, making bankers into the creators
of money rather than mere merchants of it.

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