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Here you go KFC, read and learn.
Debt: An Inescapable Concept Part 5: Central Banking
Debt is an inescapable concept. It is never a question of debt or no debt. It is always a question of which kind of debt, owed to whom, when.
The modern economy is addicted to government debt by way of central banking debt. The system is self-reinforcing. Governments spend more money and make more unfunded promises than taxes can fund. So, governments turn to debt as a way to make up the shortfall. To keep interest rates low, governments license privately owned central banks to create money in order to buy government debt. This has been the pattern ever since the creation of the Bank of England in 1694.
Central banks create money when they purchase government debt, which is mainly what they invest in. This adds new money to the economy: monetary inflation. To eliminate all government debt, as the United States did in only one year, 1835, the central bank would have to sell government debt and purchase some other asset to replace it. Otherwise, the bank’s sale of government debt to the public or to the government (debt reduction) would shrink the money supply.
For a central bank to fold up shop and go away, it would have to sell all of its assets. This would create price deflation on a massive scale. It would create a depression far worse than the Great Depression of the 1930’s. This is why, once begun, the central banking system is self-reinforcing. It is like an addictive drug. It means lifetime employment for the pushers: central bankers.
The modern system of debt-based money is therefore as close to politically inescapable as anything in the modern world – even the welfare state. The modern world is addicted to central bank debt. In theory, central bank debt is not inescapable. Once begun, however, it is politically inescapable. The organization of debt into money is politically irreversible short of what Ludwig von Mises called the crack-up boom: the breakdown of money in mass inflation. It leads to ever-greater monetary inflation.
This is a worldwide phenomenon. Around the world, central banks control national monetary systems. A free market in money is universally opposed by politicians, academics, and of course commercial bankers, who want a lender of last resort to protect them from bank runs by their depositors.
DEBT WITHOUT END
The United States government is the largest debtor in history. From all over the world, but especially from Asia, money is flowing in to buy Treasury debt. This money is from central banks, mainly – money created by government-licensed counterfeiting operations.
If this money were going into the U.S. stock market, Americans would at least be the beneficiaries of better tools of production. They would not be laying up wealth in their old age. Instead, foreign central banks would be doing that: establishing ownership of wealth-producing assets. But central bankers are not investing their own money or depositors’ money. They are investing recently counterfeited money. They buy government promises to pay. It is a gigantic con job between government-licensed counterfeiters and elected liars who know the debts will never be paid off.
You and I are caught in the middle.
Here is how the system works. Foreign central bank-produced counterfeit money is used by foreign central banks to buy Federal Reserve-produced counterfeit money, which is then used to buy a large chunk of the U.S. government’s debt. No one expects the debt to be paid off. All that anyone expects is interest payments.
http://www.lewrockwell.com/north/north532.html
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