Beliefs matter. Profoundly.
Whenever you embrace a particular belief, it becomes a premise in your life. Based on that premise, your logic will compel you to act in one way or another.
For example, depending on whether you believe in God or believe there is no god, your conduct in life will be profoundly different. Based on the fundamental premise of belief, an atheist has a completely different set of logical goals, values, inhibitions and even compulsions as compared to a Christian. Actions which atheists find logically compelling can be anathema for Christians.
As another example, consider negative interest rates. That concept seems absurd to most, but to those who understand and embrace the premise of debt-based monetary system, negative interest rates are a reasonable, rational and even necessary concept. The logic of the first premise (debt-based money) compels the consequence of negative interest rates.
This logical compulsion can take some time to manifest. We embraced the premise of debt-based money at least 40 years ago. The logical consequence of negative interest rates is only now beginning to be recognized and considered.
Based on our fundamental premises (core beliefs), our logic (being true to our beliefs/premises) will compel our actions. Wisdom might be defined as a man’s capacity to anticipate the consequences of his beliefs far into the future.
• The Washington Examiner recently posted an article entitled “White House Demands Debt Ceiling Hike ‘Without Drama’.” Excerpts follow:
“The White House on Thursday called on congressional Republicans to raise the debt ceiling quickly so the government can borrow more money and maintain its current level of spending, and asked that the GOP deliver this ‘without drama.’”
Thus, the Obama Administration wants to:
1) “raise the debt ceiling quickly”;
2) “so the government can borrow more money”;
3) “and maintain its current level of spending”; and
4) do so “without drama” (publicity or public awareness).
According to Obama, “There’s no drama, here. Nothing to see. You folks, just keep moving along.”
I disagree. I think there’s much drama in our national debt and the debt ceiling. In fact, if you care to contemplate the subject, you just might see something scary.
“White House spokesman Josh Earnest spoke hours after the Treasury Department announced that the U.S. would bump up against the legal debt ceiling by Nov. 3, and said failing to lift the debt ceiling would put the U.S. at risk of ‘not being able to pay our bills.’“
That’s a lie. If the government was “able to pay [its] bills,” it wouldn’t need to borrow any currency.
The fact that government must borrow more currency is irrefutable evidence that government can’t pay all of its bills.
“There’s no reason for us to engage in that kind of irresponsible brinksmanship; and it’s why Republican leaders in Congress need to accept the responsibility that they have to act without drama and not delay raising the debt limit,” he said.
Average Americans might disagree. That is, most of us might say, “Wait a second, there’s plenty of reason to resist raising the debt-ceiling—the government is broke and therefore shouldn’t be borrowing more money and leaving a growing debt for the next generation. The government should live within its means and not spend more than it collects in taxes.”
• However, most Americans naturally assume that debt is bad. They don’t understand that, thanks to our fearless leaders and economists, we live in a new-and-improved, debt-based monetary system. Within the context of that system, debt (a mere promise to pay) is deemed to be an asset and our principle form of wealth.
Ergo, based on that premise, it logically follows that the more debt government creates, the wealthier we become—see?
Therefore, based on the premise of a debt-based monetary system, Obama is doing a good (“logical”) thing by trying to create more debt.
Unfortunately, the public doesn’t understand the debt-based monetary premise. Therefore, the Republicans can threaten to refuse to raise the debt-limit and make Obama look like the bad guy since he intends to borrow and spend more currency and create more debt.
In a real world where “assets” are something tangible (like land, gold or silver) the public would be right. Going deeper into debt is bad. Treating intangible promises to pay (debt instruments) as if they were tangible assets is crazy (illogical) in an economy based on the premise that real assets must be tangible. .
However, once we accepted the premise of a debt-based monetary system that intangible promises can be treated as assets, creating more debt is not only good, it’s logically essential.
• The whole thing is nuts. We have a conflict of premises and therefore a conflict of consequences and what constitutes good and bad.
Central banks and governments accept the premise of a debt-based monetary system. The logic of that premise compels government to want to create more “wealth” by creating more debt. Government tries to “stimulate” the economy by creating more debt.
The public can’t understand and accept the creation of ever more debt because the public has been taught the premise that wealth is based on assets; that debt is not an asset; and therefore debt is bad. The public can’t understand government’s persistent creation of more debt because they’ve been taught the premise that it’s important that they pay their debts (which is true in an economy based on the premise that assets must be tangible). They have not been taught that paying their debts is comparatively optional and sometimes even undesirable since it destroy debt in a debt-based economy.
I.e., there are instances where, if a debtor repays his bank loan faster than he originally agreed, the bank will impose a penalty for fast payment. The bank values the debt–instrument (the loan agreement) more highly than the payment. Why? Because the bank has accepted the premise of a debt-based monetary system. The logic following that premise compels the bank value debt-instruments more than payments. It’s crazy–at least to those of us who believe that assets should be tangible rather than intangible debts.
• We have a conflict in premises similar to the struggle between the “irresistible force” and the “immovable object”. The premise behind that force is that it’s “irresistible”. The premise behind that object is that it’s “immovable”. Both premises can’t be true. When those premises come head-to-head, one will not only be defeated, but destroyed.
Today, the people are trying to pay and thereby destroy their debts. The government is trying to create more debt and, to significant degree, never pay that debt.
Once government accepted the premise of a debt-based monetary system, debt became desirable. You can’t create more debt by paying any of the existing debt. In order to create more and more debt, you must refuse to repay some or all of your existing debt–which is exactly what our government has been doing for most of my lifetime. They don’t pay their debts. They use inflation to avoid paying some of their debts. They’ve let deficit spending become the rule. They’ve let the national debt grow to at least $18 trillion and by some accounts, over $200 trillion. They use a fiat currency that never pays but only “discharges” the debt. Thanks to the use of fiat currency (Federal Reserve Notes that have no intrinsic value), debt is never destroyed–only discharged.
Those of you seek a resumption of a gold-, silver- or asset-based monetary system are compelled to do so by the premise that debt is bad. Government’s war against precious metals and asset-based currency is based on the premise that debt is good.
Premise wars, hmm?
• The nature of this premise war might be fundamentally spiritual.
You and I operate under the premise that debts should be paid and thereby destroyed. The government operates under the premise that debts should be created and perhaps discharged, but never actually destroyed.
The difference between paying and preserving debt is especially interesting in light of the LORD’s Prayer which, in some versions, asks God to “forgive us our debts, as we forgive our debtors”. It might be argued that that portion of the Prayer asks that God “discharge our debts,” but I doubt that’s true. Given that the Prayer asks God to “forgive us our debts, as we forgive our debtors,” I doubt that ordinary people who first prayed the LORD’s Prayer 2,000 years ago understood the concept of debt “discharge”. I’d bet that whenever an ordinary man “forgave” a debt due him, that debt was not simply discharged, but was extinguished forever. It really makes no spiritual sense that I can understand for people to pray that God “forgives” their debts to God as they “discharge” the debt owed them by other people. If we want our Father YHWH ha Elohiym to completely forget our debts Him, we must also completely forget the debts due to us from other men and women. To completely forget a debt is to extinguish a debt rather than keep a “secret” ledger of all of the debts that were once due to us, but were “discharged” and (so far) uncollected. The implication of the secret ledger is that the discharged debt might still be somehow collected. The implication of a debt that’s been completely forgiven is a debt that’s been forgotten and thereby utterly extinguished. The forgiven debt no longer exists.
By praying the LORD’s Prayer and asking that our debts be forgiven, we implicitly admit that:
1) debts are undesirable and potentially “bad”; and,
2) debts can be forgiven.
Insofar as the debt-based monetary system:
- treats debt as “good,” and,
- tends to discharge but never actually pays/extinguishes a debt, and thereby preserves debt forever—
It would appear that the debt-based monetary system is contrary to fundamental principles/premises of the LORD’s Prayer and perhaps the Christian faith.
If so, the debt-based monetary system might be viewed as fundamentally “satanic”.
I could reach a similar conclusion by comparing the debt-based (sin-based?) monetary system to the sacrifice paid by the Christ when he gave up his life to save our souls. The Christ’s one death paid for all Christians’ debts/sins. He didn’t discharge our debts/sins so they could be kept on a secret ledger and someday still collected. He paid for our debts/sins and thereby extinguished them forever.
The idea that the Christ paid for all of the debts/sins of all Christians is the fundamental premise of the Christian faith.
As I perceive the “debt-based monetary system,” debt (sin) is believed to be “good” and may be subject to “discharge” but never to payment and extinguishment. If the “debt-based monetary system” truly celebrates debts and never extinguishes debt, then the debt-based monetary system’s premises would seem to contradict and oppose the fundamental premise of the Christian faith–that all sinners’ and debtors’ debts/sins can be extinguished by faith the Christ.
Again, those observations suggests that the debt-based monetary system may be fundamentally un-Christian and might even be satanic in nature.
• Once government accepted the premise of debt-based currency, the logic of that premise prevented government from stopping the creation of more debt. If government stops creating more new debt that can be used to roll over and seemingly “pay” the existing debt, government will have to admit that it’s insolvent, that it can’t pay its existing debt, that some or all of its previously-issued US bonds are now worthless and the government is technically bankrupt. In short, the “emperor” would be seen to be nude.
Once government accepted the premise of a “debt-based monetary system,” it could never climb off without collapsing the economy.
The leaders of both political parties know that they must authorize a higher debt limit or crash the economy. Therefore, the debt limit will rise—but perhaps not until after the Republicans have exploited Obama’s “obligation” to create more debt.
“An increase in the debt ceiling is a sore point for Republicans, but the last few times the U.S. has been in this situation, the GOP managed to authorize more borrowing “without a lot of drama,” the White House spokesman said.”
Indeed. Top Republican leaders understand that, given the premise of a debt-based monetary system, the only way to keep kicking the can down the road and postponing the inevitable collapse, is to authorize the issue of more debt. Long-term, all that extra debt will eventually strangle the national economy. But, short term, issuing more debt will keep the Ponzi-scheme going and allow incumbent politicians to be reelected rather than lynched.
From the perspective of national survival, more debt is bad—but, from the perspectives of the two major political parties and their politician’s survival, more debt is great.
• “Without raising the debt ceiling, the government would be forced to spend only the money it takes in, and thus would likely have to cut back a range of federal programs. Many Republicans have wanted to use the debt ceiling as a point of leverage to negotiate more spending cuts.”
Yep. Just like I said. Government needs to borrow more because it’s too broke to actually pay all of its existing bills. If government couldn’t borrow more, then it would have to “cut back a range of federal programs.”
Imagine government having to spend only as much as it takes in in taxes! As the character Kurtz said in Heart of Darkness: “The horror! The horror!”
The reality is that government’s need to borrow to pay existing bills is evidence that the government is broke.
Government’s persistent need to borrow for the past several decades is evidence that government has been persistently broke during those several decades. The debt-ceiling problem is not due to a temporary lack of funds. The government’s persistent debt problem is evidence that government has been technically insolvent and even bankrupt for at least two generations.
• The debt ceiling issue isn’t simply about spending.
It’s more about borrowing. It’s primarily about the creation of more debt instruments (US bonds; mere promises to pay) that can be legally used as collateral by banks.
In a world of fractional reserve banking, whether government borrows and spends another $1 trillion is, in itself, almost irrelevant to stimulating the economy.
However, thanks to fractional reserve banking, once government creates another $1 trillion in debt and memorializes that debt with another $1 trillion in US bonds, some or all of those bonds can be sold to private banks where they can be used as collateral for more loans to American or even to foreign borrowers.
Under fractional reserve banking, American banks can lend $9 for every $1 they have in collateral in their bank vaults.
So, it’s not the $1 trillion in new government debt that primarily stimulates the economy. It’s the resulting $9 trillion that private banks can create under fractional reserve banking to lend to US and foreign borrowers that stimulates the US and foreign economies. Fractional reserve banking thus magnifies the economic stimulus of $1 trillion into $9 trillion—and maybe, a lot more.
• In theory, if government’s debt ceiling isn’t raised and government is prevented from borrowing another $1 trillion, there’ll be $9 trillion less created by private banks for the purpose of stimulating the US and world economies. Could those economies survive without the $9 trillion in stimulation? Probably not.
Thus, it’s not just the US economy that depends on the Ponzi scheme we call the “debt-based monetary system”—even the global economy is, to large degree, dependent on the US continuing to embrace and implement the debt-based monetary system.
If we quit that system, the whole Ponzi scheme that we call the “global economy” could collapse. Which is probably why foreign governments and banks have allowed the US government to go deeper and deeper into debt–they have also embraced the premise of a debt-based monetary system, the logic of which compels them to celebrate the creation of all new debt..
The combination of two premises:
1) a debt-/promise-based monetary system; and,
2) fractional reserve banking—
has caused an unprecedented growth in the US and global economies.
But that combination is fundamentally irrational in the natural world of asset-based wealth and the payment/destruction of debt rather than the creation and preservation of debt–because it’s all based on:
1) intangible promises (government debts) rather than tangible assets; and
2) the loan of imaginary, fractional-reserve dollars that have no tangible reality or tangible support.
More, the combination is debt-based currency and fractional-reserve dollars is worse than irrational. It’s also fundamentally immoral because it’s based on the fraud of lending currency that has no tangible reality or intrinsic value. In the world based on the premise that debt is good, the banks truly loan “nothing” in that they loan nothing tangible.
A modern bank loan is not merely illusory or immoral–it’s a lie. The bank actually loaned “nothing” (“no thing”). That’s fraud. If you’re inclined to accept my previous arguments on the spiritual nature of the debt-based monetary system, you might recall that if modern bank loans are, in fact, lies–who does the Bible declare to be the “father of all lies”?
When our irrational, immoral, debt-based monetary system finally fails, the US and global economies will shatter. The world will suddenly see that our entire financial system is built of nothing but intangible, irredeemable, promises that ultimately can’t be kept. The collapse will vaporize those intangible promises and teach the world, once again, that the only real “assets” that should be used for collateral are tangible assets like gold or silver.
“But [Obama spokesman] Earnest argued that raising the debt ceiling wouldn’t authorize any new spending, an argument Democrats have made in favor of another increase beyond the current ceiling of $18.1 trillion. ‘It simply allows the Treasury to pay for expenditures that Congress themselves already have approved and we want to make sure that those expenditures are paid in full and on time,’ he said.”
Congress may have “already approved” of the government’s expenditures. Special interests and entitlement groups must’ve cheered those approvals. However, Congress did not also perform its correlative obligation to fully fund all of those expenditures. Without fully funding those expenditure, there are only three options:
1) Repeal some government expenditures and incur the wrath of special interests and entitlement groups who were counting on some more “free money” from Uncle Sam;
2) Raise taxes and incur the wrath of taxpayers and perhaps also precipitate an economic collapse; and
3) Borrow more currency to seemingly “fund” the unfunded expenditures, hopefully stimulate the economy, and leave the debt problem to future generations of taxpayers and politicians.
Do you think Congress will risk angering special interests (by cutting spending) or taxpayers (by raising taxes)? Or will they take the easy way out and raised the debt-ceiling limit so they can borrow more funds? The answer’s obvious.
“‘I think people on both sides of the aisle have acknowledged the significant economic risk of failing to do so, that it would throw the U.S. economy and the U.S. financial system and potentially the global economy into chaos for Congress not to handle this basic fundamental responsibility,’ Earnest said.”
Q: And what, exactly, is the Congress’ “basic fundamental responsibility”?
A: To keep the debt-based, Ponzi scheme going as long as possible before it inevitably implodes and “throws the US economy and the US financial system and potentially the global economy into chaos.”
Q: What, exactly, did Mr. Ernest mean by the word “chaos”?
A: He meant massive unemployment, global poverty, starvation, pandemics, domestic violence, the deaths of millions of people around the globe, a 20% decline in life expectancy, regional wars and perhaps even WWIII. He meant Hell on Earth.
Will it happen? Almost certainly not to that extreme.
Could it happen? Yes.
In this threat of “chaos,” you can see why, once we accepted a debt-based monetary system, we were condemned to support it “forever”. To quit riding that tiger is tantamount to signing the death warrants for millions of people and perhaps resetting our standard of living back by decades.
• You can also begin to see why, when Republicans or the American people whine about the immorality of increasing the debt load on future generations, the Obama administration scoffs. I.e., if you had an opportunity to get $1 today for every $1 dollar’s worth of debt you created and left for your own children—you’d be a rotten, greedy, irresponsible parent if you did so.
But what if, under fractional reserve banking, you could get $9 today for every $1’s worth of debt you left to your kids? What if you could saddle your 5-year old with $20,000 in debt today in order to produce $180,000 for his college education? What if you could saddle your kid with another $20,000 in debt today so he could grow up in a family home worth $180,000 instead of an apartment? Wouldn’t the “magical” (supernatural?) creation of a new $180,000 family home and a $180,000 college education for the kid be sufficient justification to leave your child with $40,000 in debt?
Wouldn’t you be confident that the next generation (your 5-year old son when he became an adult) would do the same by placing his child (your grandchild) into another $40,000 in debt in return for his own new $180,000 family home and another $180,000 for your grandson’s college?
If you didn’t look at this money-tree miracle too closely, wouldn’t you also be convinced that each future generation could get rich just by leaving a modest debt to the next generation?
Just think of it!
For every one-dollar’s worth of debt your child unwittingly “promised” to pay, you could have $9 today! Who could resist the deal?
And, if any Debbie-downer tried to explain that all this debt would inevitably grow until it was so great that it couldn’t possibly be paid, had to be repudiated, and the result would be “chaos” (millions dead, civilization set back decades, possible WWIII, etc.)—wouldn’t you politely invite her to take her pessimistic crap elsewhere?
Of course you would.
So has Congress, the Senate and the White House. The combination of debt-based (promise-based) currency and fractional reserve banking creates the most pleasurably irresistible, intoxicating, addicting drug the world has ever seen. Compared to that combination, crack is about as addictive as castor oil.
• Sure, debt-based currency and fractional reserve banking may be addictive and ultimately self-destructive. But who can resist all the fun, wealth and power you can enjoy before the chaos comes to balance the books?
Most people can’t.
Clearly, government couldn’t resist. So, we’ve had at least 40 years of a hot, unearned economy. It was fun while it lasted. By not paying our debts, we nearly ruled the world. But now, it’s just about time for the chaos. Too bad. Too bad for our kids and grandkids. Too bad for us, too.
Once we embraced the premises of debt-based money and fractional reserve banking, the logic of those two premises put us on a path to:
1) a great economic high (which we’ve had);
2) an enormous, unpayable debt (which we’ve got); and, finally,
3) chaos (which we’re about to get).
If we’d paid attention at the beginning—if we’d behaved responsibly—we could’ve seen the ultimate result of debt-based currency and fractional-reserve banking would be chaos. But who could say the chaos was sure to happen? Who could say for sure when it might happen? How could we weigh the threat of the chaos that might happen someday against the immediate promise of an economic “high” that we’d get if we accepted debt-based money and fractional banking now?
The temptations of: 1) debt-/promise-based currency; and 2) fractional reserve banking were too great for the Congress or the people to resist.
That’s too bad because, once we accepted those two premises, their logic pushed the whole nation towards a moment of chaos which now seems more imminent than remote.
But that’s what happens when you turn control of the world over to political “speculators” who only worry about the next quarterly report, the next election and the next economic “high,” rather than to political “investors” who think in terms of what’s good for future decades and future generations. That’s what happens when you turn your monetary system from asset-based to debt-based.
Like I said, it’s too bad.
For all of us.