Bill Still made a very good documentary about the history of money, and how that gold makes a horrible money system. Also how the current debt money system is very bad for the people. In my ideal world the government needs a check and balance to create unlimited funds without requiring bonds. In reality, the government currently creates unlimited funds now, but is tied to debt.
I have come to realize with this post that it is possible that the future isn't as grim as I keep fearing. If the current monetary system just made one simple change, to create money government borrows WITHOUT requiring interest, it may unleash for a while a new prosperity. It is the very debt system the government is bound to that is causing much of the issues. For without the government paying an bankers tax on every dollar it creates, the system would be much better off.
I am concerned however with zero constraint by governments to create money, that the currency could hyper-inflate. But if you think about it, deficit spending over 1.5 trillion interest free vs with interest, how does interest to pay to the banking system make the currency more valid?
What Bill Covers in this report is 17 trillion was loaned into existence during the crisis by the Federal Reserve bank, as reported in a US GAO government report recently released. These loans were at no interest (or near zero) to support world wide the entire banking system. Bill's main point is how come the Federal Reserve bank can create 17 trillion dollars with near no interest, lend it out, and get paid back, but the US federal government - aka - the tax payer - cannot.
The source of Bill's information for 17 trillion can be found on pages 205 and 216, on this report by the US Government Accountability Office.
Lets think about this for a minute.
- USA total GDP is about 14 trillion dollars.
- Total US debt load is about 14 trillion dollars.
- Over 17 trillion dollars created by the Federal Reserve Bank - in secret - to prop up the banking system.
Above makes no sense, hence, I don't believe the 17 trillion dollar figure. It is likely to be blown up using the money multiplier quoted with regards to fractional reserve lending. I suspect the original number was the TARP, 700 Billion dollars.
For those who believe the system will collapse, in a classic deflation scenario, with the markets going to all time lows, I ask you, read above.
I agree that there are massive deflationary forces keeping the markets volatile and on the downswing. But the next time it looks like 2008, like it did Monday, I have faith in the banking system to do what it takes to ensure they remain solvent. The banking system is now on the ready to avoid 2008 or worse again, ready to create money out of thin air, to deploy to banks and leverage up 10 to 33 times the money given by the Federal Reserve Bank.
For this game will have a significant shift in the year ahead. The world is looking behind the curtain to see the Wizard of Oz is not as magical as one thought. And it is the aspect of trust and confidence, that will become the issue as the government debt load becomes unsustainable in the year ahead.
Bill Still's video report #24
Bill explains his position on changing debt money system