Home Business Finance The Explanation for Unpayable Debts

The Explanation for Unpayable Debts


That’s what we use: money based on debt. If we don’t have debt, we don’t have money. When the debt disappears, so must the ‘money’ disappear!

Additional proof that money disappears comes from Report No. 83-125E, Congressional Research Service, Library of Congress, John B. Henderson  Money and near-moneys, 1983 (available online at http://www.bookprep.com/read/uc1.b4177387). On pages 28-29, we read these words (emphasis added):

“On an even more fundamental level, there is the matter of how money is created in the modern world. If the reference is to the statistics of the Federal Reserve, money held by commercial banks, by the Federal Reserve Banks, or by the U.S. Treasury is not counted in the aggregates; in that sense, money is not manufactured, merely because coins are stamped and paper notes are printed.

Nor does the Federal Reserve System alone create money. Rather, it provides the basis on which the commercial banks (and, now, near-banks as well) are permitted to create money, and applies, through fractional reserve requirements, a limit to the quantity of money that the financial system is permitted to create.

Within that limit, it is the private banking institutions that are overwhelmingly the creators of money.

Money is created when loans are issued and debts incurred; money is extinguished when loans are repaid.

A loan from a bank creates a deposit which the borrower may draw upon for the payment of obligations; the payee is the new holder of new money.

Some existing money in circulation must be acquired by the borrower to repay the capital of the loan; when that is returned to the bank it is withdrawn from circulation.”


Let me explain to you exactly what I mean. Tomorrow, you go down to your local bank and borrow $10,000. As we’ve already seen, there is actually no money in the bank, except for a few miscellaneous savings accounts and CDs plus whatever balances exist at any given moment in the banking system’s checking accounts. So to complete your transaction, the bank creates $10,000 and credits it to your checking account (Author’s note: It is allowed to do this by statute, not by Law. Actually illegal or not, this action is totally immoral. And it is a little more brazen than what I am portraying. The bank really steals the “note” you sign at the bank and converts it to the bank’s asset).

In return for the creation of this so-called money, you execute a note for $10,000 at 10% interest, due in one year and present it to the bank. The bank creates the $10,000 by a stroke of a pen and puts it in your account, basing the $10,000 on the promissory note you turned over to the bank, which is actually the only legal tender in this transaction (Author’s note: The bank actually takes your created money, the promissory note, and loans it back to you!) Did you ever wonder why banks required you to have an account? It is the only way they can create the money! In one year to the day, you return to the bank and pay them the $10,000 back. This completes the bookkeeping on the original creation of $10,000. It was created one year ago, and it is destroyed by your return of the funds.


(Excerpts from:  David Gould series, Part VI: What the whole story is all about!)