Some of the biggest men in the United States, in the field of commerce and manufacture, are afraid of somebody, are afraid of something.
Yesterday I said I'd try and explain how our monetary system works, and why the Chinese are becoming afraid of the dollar. The short answer is our dollar has become based on debt. We've allowed the creation of a monetary system that isn't based on gold, silver or even chickens anymore, but on debt. Money is created, based on debt, when you borrow money, the money is created to loan you.. Your promise to repay the debt allows the bank or Federal Reserve to put more money into the economy.
If you have a fistful of dollars, what you really have is a fistful of someone else's debt, If debt is repaid, the money, no longer backed by debt, becomes worthless.
The Chinese, who once considered US Dollars a safe way to back their own currency have figured this out. As the dollar supply expands, it not only means that the dollar is worth less, it means we, collectively as a country have gone deeper into debt. That would make me nervous, and it's causing them some concern as well. That's why they want to see the dollar replaced as the Worlds Reserve Currency..
Completely confused? You're supposed to be, bankers and government economists wouldn't have it any-other way. Hopefully this five part video will help clear your head. The first three explain the problem, you can go directly from one to the next. The last two aren't so helpful, they get into possible solutions. The solutions are at best Utopian, instead of solving the problem, they'd simply transfer it from the current bad guys, The big banks, to a new set of crooks
Anyone who believes exponential growth can go on on forever is either an economist or like Paul Krugman, a madman-- Kenneth Bouiding, economist (I added the reference to Krugman. sorry)
My more progressive liberal readers will undoubtably jump on this, they've been talking about the greedy bankers for years.. Everyone knows that only Republicans are Bankers, right? Dosen't this prove that all Republicans are out to destroy the middle class?
The answers are No and No respectively.
The Federal Reserve, which makes all this possible, was created under Woodrow Wilson, a very Liberal Democrat. He did express regret, after the fact.
We can credit two Democrats, Franklin Roosevelt and Lyndon Johnson for removing the requirement that dollars be backed by gold or silver.
Barack Obama, hasn't missed an opportunity to borrow money or expand the money supply, could be one reason three of the biggies, Goldman Sachs, Bank America and Citi have started slanting their campaign donations in favor of the democrats. Last October, when Barney Franks, author of the Obama's Banking Reform Bill got into trouble trying to get re-elected, those three banks were happy to help.
Have the Repubicans been active participants, You Betcha
So now what do we do about it, now?