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Federal Reserve Notes, checking account balances, saving account balances, CD’s, etc. are simultaneously the debts of banks and are the “money” supply we use. When an economy uses bank debt for money, in order for money supply to be increased (bank debt to be increased) banks out of thin air create new checking account balances and loan them to people, businesses, and governments, thus indenturing the public. When these loans are repaid to banks the money supply decreases. This is why debt owed to banks, directly or indirectly, is a drag on economic activity.
Increases in money supply have a tendency to drive up prices as the new money enter the market and bids up prices. Decreases in money supply have the opposite effect. But at higher price levels, the buying power of existing money is reduced so higher prices drag down economic activity.
One of the major factors of the ability of a society to carry debt is income, and when the cost (in money terms and in energy terms) of acquiring energy increases a society’s income diminishes. Its debt carrying ability comes under pressure. Each sources of energy has a cost curve that exhibits compound growth at some rate, ultimately making them terminal as cost in energy terms approaches 100% of the energy acquired.
When government attempts to control markets with subsidies, their own spending, taxing and borrowing, and regulations, the tendencies of an economy to come into balance are thwarted.
Of course there are other factors, but income, debt, price levels, and government interference are quite significant. The old adage that a depression is in size proportional to the debt issued during the preceding boom, and in length is proportional to the effort of government to manage it, seems to be appropriate. But that equation leaves out the problem of energy which is a game changer since energy constraints become income constraints of a society of already indentured servants.
While there is unlikely any avenue to escape our long term fate of economic contraction, certainly (1)abandoning the predatory, unstable, unsustainable monetary system based on credit and fractional reserve banking, and (2)eliminating most of the federal government, would give us a better shot at dealing with what is to come. Of course neither of these will happen peacefully, if at all.July 24, 2012 at 3:11 am in reply to: Super Rich Stash At Least $21 Trillion In Secret Tax Havens #4824SidDAvisMember
All this tells me is that taxes are too high, i.e., we have much too much government. Of course people with the ability will seek to avoid the plunder and control of predatory institutions.
And now that the economy is in the tank partly as a result of the developing collapse of the unconstitutional, predatory, unstable, unsustainable, fractional reserve monetary system imposed on us via the Federal Reserve Act of 1913, what has government done but to seek to take even more of our wealth and control us to an even greater extent.
Government has become the destroyer of freedom, which really is its nature anyway, so I for one applaud anyone who seeks to remain free to the extent that he can by using offshore corporations, banks, and brokers to avoid the plunder of these psychopaths, sociopaths, and outright criminals who occupy the seats of power.