Why We Can NEVER Get Out of Debt MUST READ!!!

Have you wondered how politicians can say things like "We need to spend our way to prosperity" or "Deficits dont mean anything" or even better "the only way to get out of debt is to spend more" Im going to explain it right now.

I started getting into this on another thread with someone when he couldnt figure out why I said that we NEED to have deficits and we NEED to create more and more debt. I want to point out although we NEED big debt and deficits doesnt mean I AGREE with it. Im just pointing out a major flaw in the monetary system we have. This system is MEANT to keep us in perpetual debt. So without further adieu...

Our money is debt. Yes our money has no value and in fact is only in existence because it was borrowed into existence. So the first thing someone will say is "No money comes from taxes, its not borrowed into existence." and I say to you "Where did that money come from that was taxed?" The fact is it came from the central bank known as the FED. The money is borrowed from the banks at interest and then put into circulation.

That money that is put into circulation is then used for production, goods, and services. Then once into circulation a % of this money is then taxed and put into the coffers of the federal government. That money is used to pay the interest on the money borrowed and used for the general budget. By the way this is a simplified version of it all because it is a little more complex but sometimes its best to keep things simple.

Now that I have given a basic overview of how our system works I will now point out why it is we can NEVER pay off our national debt and why we HAVE to run deficits.

Lets say I am the FED and I have just persuaded the US government to give me a monopoly on the currency. So the first thing we need to do is get some money into circulation. Lets say we start out with $10k. So I tell the US government give me a piece of paper promising me to pay back the money I lend you with interest lets say 5%. So the government issues a bond and gives it to the FED. Then I will then have $10k created and given to the government. The government then takes that money and puts it into circulation.

Here is where it gets interesting. So now the government is in debt for not only the $10k but also the 5% interest. But if only $10k in currency exists then where is the government supposed to get the money for the 5% in interest? Simple they have to borrow more money at more interest. So do you see how this cycle of perpetual debt is started? The government can NEVER pay off the national debt because if no one was in debt there would be no dollars out there. This is why they teach you that deflation is a bad thing. In a real economy however deflation is a GOOD thing.

Now lets get into the tax aspect because the government recovers some of this money via taxes. Lets say the government has a 35% tax on the $10k into existence. First I want to point out you can never tax the whole $10k because some of the money goes underground like in the drug or prostitution trade. That being said lets say we recover taxes on $8k. That is $2800 dollars. A portion of that money is used to pay the interest and the remainder put in the "general fund" which is used for the next years budget or for other spending that is needed.

So lets say our interest payment is $500 dollars. So that leaves us with $2300 to put towards the general fund. Now however there is only $7.2k money our there because we have taken $2800 from the circulation in the form of taxes. So now if we have 35% of lets say $5k (remember the underground money you have to account for) that is $1750 in taxes you get. Take $500 for your yearly interest payment and you have $1250 left. Keep in mind the $10k in debt is still in existence for we are only paying the interest on this debt and nothing towards the principal.

The end game in this is our government is forced to keep borrowing more and more money at interest to cover previous debt with interest. There is no getting around it that is our system. The hopes of paying off the national debt is a farce and will NEVER happen because no debt=no money because money is debt. Our currency is called a Federal Reserve Note. What is a Note? Note=debt. This is an over simplified version but if you disagree please let me know why.

Henry Ford "It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning."

I suspect Ford understood this scam.