A Depression is a period of time when Unpayable Debts are canceled. There are three ways to cancel Unpayable Debts. The first is through a Weimar Republic style Hyperinflation. The second is through a 1930s style wave of farm foreclosures and business and personal bankruptcies. Might I remind you that at least 3 million Americans died from starvation in the last Depression? The Babylonians invented a Third Way to cure a Depression thousands of years ago. It is through a government sponsored rational Debt Cancellation. Talk of this method of quickly and easily exiting Hard Times has been forbidden by the Banker Owned Media and our Banker Occupied Government.
It is in their opinion far better that tens of millions of us die from starvation and that our major cities are burned to the ground during Nationwide Food Riots than we be allowed to talk freely about money and banking.
If Depressions are overcome by Debt Cancellation, then it follows that they are created by the Accumulation of Unpayable Debts. In the West we have given Bankers the right to charge us interest on money they created out of nothing. We are not really borrowing the $10,000 Mrs Jones deposited in the bank when we ask a banker for a loan. What the Banker does is pay Mrs Jones 1% or $100 on her deposit. He charges us 10% interest or $10,000 on the $100,000 we borrow. Under the fractional Reserve banking system he is allowed to create $9 for every $1 he has in deposits. He creates money by electronically adding some digits to your account.
Economists who work for banks think that banking does not matter. They say that since the amount of money owed equals the amount borrowed that the two wash each other out. Steve Keen thinks otherwise. He has said we are headed to the greatest Financial Calamity in 500 years because we have more debts to cancel than at any time in five centuries. I have decided that when the current Depression hits us with full force we should call it the Greatest Starvation. MIT did a review of the literature study and concluded that half a billion people will die from starvation when the economy crashes. They also said a few billion commoners would die from a series of plagues.
Two economists at the IMF did a study of the reforms Irving Fisher and a group of other economists proposed in 1933 to stop the last Depression. They concluded he was right and that our banking system badly needs reform.
One of the benefits of ending fractional reserve banking is that we end Bank Runs. In 1933 Roosevelt did not really have to close banks. The banks had no money to pay depositors. On a fractional reserve system the Banker loans out more than he has in deposits. On the way up that works just great. That is a good way to create a Housing Bubble. But on the way down any depositor who pulls $10,000 out of a bank is forcing the banker to call in $100,000 in loans. And that is a disaster.
It is 2014. J P Morgan is limiting money being sent out of country. The other day the ATMs at Lloyds did not work. HSBC is limiting bank withdrawals. HSBC (Hong Kong Shanghai Banking Corporation) was founded in Shanghai in 1865 as an Opium bank. HSBC laundered illegal drug money for 149 years. But a recent analysis claims they have a £70 ($110) billion Black Hole of Unpayable Debts. You might wonder where all those profits went. The profits were taken out in dividends and bonuses and with additional billions being diverted into Special Investment Vehicles which are part of the Shadow Banking System. The Shadow Banking System is estimated at over $100 trillion. This money can be wired anywhere in the world in seconds. So much for financial stability.
What Irving Fisher proposed in 1933 is Full Reserve banking as opposed to fractional reserves. Those two IMF economists admitted that Bank Runs were far less likely under Full Reserves. That will be important to remember later on this year if we see Bank Runs closing our banks. In Argentina they limited bank withdrawals while they inflated the currency reducing deposits to zero value. Fractional Reserve banking inflicts great harm and has caused tens of millions to needlessly starve to death. It will be abandoned as soon as we take back the right to discuss it in the Banker Occupied Media.
We have had Depressions on a fractional reserve Gold Standard. In 1348 a Bank Run ruined the people of Venice because their bankers had lent out more checking account paper gold money than they had gold on deposit. In the modern world the bankers trade in gold on exchanges in which there are 100 ounces of paper gold for every ounce of physical. When the Germans asked for the return of gold from France and America, they initially got nothing. Not even the right to see their gold on deposit. After a year of waiting, they got their first of 7 annual installments. The American Federal Reserve was able to send a paltry 5 metric tons of recast gold.
Irving Fisher’s reforms would end a few other problems. We are entering the worst Financial Crisis in 500 years because we allowed bankers to create money by loaning us the funds to purchase homes we could not afford. What we needed were jobs that paid decent wages and a path to affordable housing. We got neither. On the way up in a Bubble those leans created a lot of demand for homes that are currently sitting unoccupied in Phoenix, Las Vegas and other cities. The majority of home mortgages are under water waiting for the next phase in the Bear market.
2013 ended with a decline in retail sales. 2014 started with awful stats in international trade. The Baltic Dry Index dropped like a rock. It measures the large shipping volumes that wind up in production in a few months. We also have enough cars stuffed into distribution channels to keep lay off auto workers all around the globe.
People all over the world are suffering from burdensome interest payments on all those Unpayable Debts. The Federal Reserve’s Balance Sheet has grown 500% to $5 trillion since 2008. The DOW Transport Index is down signaling what will happen to the DOW and the markets. In Japan Shinzo Abe has a 2 – 2 – 2 plan. Double the money supply in 2 years while increasing inflation to 2%. That has even in the early stages been a disaster. Steve Keen says Great Britain is due for a great crash because they have more debts than their neighbors. China is in worse shape than either Japan or the US.
China increased its debt from $9 trillion to $23 trillion over the past five years. Some say that half of the private loans in China are at high interest rates bordering on usury. China’s totality of debt is 3 times its GDP.
Bankers told us in 2013 we needed to practice Austerity not because they think it will heal the economy but because it continues the transfer of wealth from us to them.
Italy, France, Spain and Greece have $5 trillion dollars in bad debt to be renewed this year. The real justification for Austerity is that we must have less so Bankers can have more.
Greece’s public health budget has been cut by more than 40%. There was a malaria epidemic in Greece — the largest in 40 years — after mosquito-spraying budgets were slashed. More than 200 essential medicines have been de-stocked from some pharmacies as the state’s drug budget was reduced and pharmaceuticals companies exited the country in arrears. Infant mortality has risen 40%. Doctors and nurses have worked for months at a time without pay.
I once wrote an essay proving mathematically that cutting government spending actually cuts GDP. Some 198,900 jobs disappeared in Spain last year, and 3.5 million have vanished since the country’s crisis began in 2008. There are 1,832,300 households in Spain where nobody has a job. Some 686,600 households in Spain have now income at all — not even social security. A total of 57.7 percent of overtime hours, or 3.38 million a week are unpaid. All that human misery is solely there to benefit the Bankers.
We are often told that if we could control our spending that we would solve our problems with Depressions and inflation. This is sheer ignorance of economics. In the West we are not allowed to have money until we create it through a loan at interest. And when we pay a loan off at a bank, the money supply is cut. If we ever paid off all of our loans, it would be a disaster as we would have no money to buy things and do business.
The only way out of a Depression is to cancel debt. Nothing else will work. Ending fractional reserve banking will prevent future Bubbles and Bank Runs. But it will also help us fund our recovery. Prices are a ratio of the Money Supply to GDP or available good and services for sale. If the Money Supply is increased at the same rate as the GDP, then we can increase the Money Supply while having stable prices. We could, if only the government were allowed to create dollar bills and checking account money, add $500 billion dollars a year to the U.S. Money Supply by spending it into circulation. I have suggested that we give $100 billion to the 50 states on a per capita basis so a state with 6 million people or 2% of the citizenry would get $2 billion a year to spend on infrastructure repairs and improvements including school buildings. If matched by another $100 billion in federal spending, that would create jobs and cure America’s $4 trillion deficit of infrastructure repair.
As I have said before, the dollar will crash long before the 2016 American elections. I have mentioned that if the US military were to stage a coup to either prevent WW III or to stop a runaway Depression from destroying the country that they would be wise to invade offshore Bank havens like Lichtenstein and the Cayman Islands. They would need to seize the assets that had been stolen from us so they could finance Worldwide Debt Cancellation to ensure their popularity. I have also said that the Too Big To Jail Banks launder half a trillion dollars in political bribes and a trillion dollars a year in illegal drugs and weapons. We now know that Chinese officials and corrupt business leaders called Princelings have stashed $4 trillion in the Caribbean banks. If our military seized those assets, they could offer them directly to the Chinese people to get them out of their bad debts. This latter fact could save us all from fighting a war the bankers want but the people of all races, creeds and languages do not need.
The reality for the time being is that we have a Banker Occupied Government and a Banker Owned Media. But the economy will crash sooner rather than later. The immediate cause could be a Chinese Bank Liquidity Crisis, the collapse of the yen, a decline in trade, a fiscal crisis or a default on the debt of a major emerging nation. Anything can start it all going down hill when you are saddled with fractional reserve banking.
When the economy crashes, we will offer the only solution: Worldwide Debt Cancellation for all.
The U.S. military has had to tell the politicians several times that there will be No WW III. This could lead to a military coup. Read more here:
How And Why An American Military Coup Could Save The World
You can read about the two IMF economists who said the Bankers are wrong here:
IMF Economists: ‘We Were Wrong.’ Will Someone Please Tell The Press And The Politicians.
For the less technically minded this next article explained what Debt Cancellation would look like though some object to the race of the persons involved.
Eddie Reborn Into A World With Debt Cancellation.
Finally, the following is the article I wrote proving why Austerity cannot work. It is possible to cancel pensions by starving a few million people to death. But I am morally opposed to that.
The Mathematics Of Austerity: Proving Austerity Never Was Even Intended To Work