The National Debt , The Federal Reserve & the State of the Monetary System

I've had many conversations on Facebook about our government's spending and the indebtedness of Americans. The most common point people bring up is that the government should start spending less and reducing the debt. Unfortunately, this reflects a very superficial view of the how the economy operates. Most people think getting out of debt would solve the world's problems. The reality is no so simple to explain and I will barely scratch the surface here.

The real issue isn't what the government owes or how much money it spends. It is the fact that ALL money is created by creating debt. New money is created in the amount of the debt, but interest is still owed. Therefore, if every person & nation paid off all debt, the global economy would still be in the red by trillions, because the money to repay it doesn't exist. Even much of the debt would go unpaid as well, due to the "multiplier affect" (another topic). By design, new money—debt—must always be created so that interest can continue to be paid, ad infinitum. It's a trillion dollar Ponzi scheme conceived by a small group of influential men on Jekyll Island in 1910.

At the moment, the increased spending is keeping things somewhat stable—softening the blow for the entire world. The US dollar is the currency standard for the entire global economy, therefore, it is the US who must bear the burden of debt. Our consumer economy has created wealth (and poverty) around the globe at our own expense.

The gap between the wealthiest 10% and the rest of the world is increasing exponentially because of the debt-based system. The middle class is getting poorer and more indebted, while the rich are getting richer. This is a direct result of our debt-based economy. If you are wealthy, you have no need for debt. Instead (for example), the wealthy will put 1,000,000 in the bank to draw interest, making them even richer. Where does the money come from to pay the interest? Those of us who are not wealthy and must borrow money just to survive. When you get an auto loan, a mortgage, or a credit card, you pay interest on the debt. That interest pays the interest of the wealthy man's investment. The ones getting richer are the very same who control the global economy.

Did you ever notice that the interest you earn is very low, while the interest you pay is very high? If you manage to save money, you will still be in the red, because you can never earn enough interest to cover the interest on your debt. In reality, there is no such thing as savings. A savings account is an illusion. You are just saving money now to pay your debt later.

So, you see, people must become increasingly debt-ridden in order to sustain the current system. If everyone were able to buy a home or a car without debt, there could be no economic growth. The money supply could not expand to serve a growing population. The higher the price of real estate, the more interest is paid to the very wealthiest by the very poorest. Economic growth is driven by making debt a requirement for our survival. Until the system is reformed, middle class incomes will continue to stagnate and its numbers will continue shrinking.

When a money system is based on debt, the Fed has no choice but to perpetuate the system to keep it going. Otherwise, the entire house of cards will collapse. Unfortunately, a monetary system based on debt is unsustainable. It will collapse regardless of our national debt. People in the United States have an innate loathing for socialism. Nevertheless, it will be socialism to which our nation must resort to prevent a total collapse of society when the economic bomb hits.

The Federal Reserve (a privately held company whose true owners remain anonymous) and our government are not stupid—they know more than we do about the state of things. They know the system has reached its peak. You can bet a drastic change is in the works. Unfortunately, it will be another global system which preserves the wealth of those who control the money and it will continue to create poverty. That fact will not change until society is awakened from their complacency to see the system for what it is. As poverty increases, more eyes will be opened. The more people become aware of this, the sooner we can fight to change the system. Real change can only happen from the bottom up.

I am personally excited to be living at this pivotal point in history. My generation will witness a global shift the likes of which have never been seen in history. It will be a time of pain and suffering, but people will endure. Out of the human suffering will come a new age of global enlightenment, spurred on by the digital age and technological progress. If you are prepared and keep free of debt, you will fair better in the coming storm than those who refuse to understand reality.

If you want to know more about how the system works, check this video.

Also see The Venus Project: beyond politics, poverty & war .