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The coming depression blog | June 24, 2018

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How FED works?

The way that the US economy gets money to function is through a loan from the FED. On a personal level, it’s like never getting a paycheck, only a limit increase on one’s line of credit at the bank. This method of creating cash to function only creates the money that represents the principle, not the interest.
Assume an Island government is loaned $1 Trillion dollars to run its economy for ten years, but with an interest rate of 10% per year. The first year the “lifestyle” of the economy represents the full trillion dollars but the following year, 100 Billion is taken out of the economy to pay the interest. Clearly at the end of ten years, all the money that was originally loaned is now used to service the debt, and nothing left to run the island economy. Massive deflation is the result of a debt generated form of currency.
In the real world, two things mitigate the massive deflation that debt service mandates. One is inflation, and the second is tweaking the interest rates to stimulate and then throttle the heat of the economy. If the island nation has a growing population, it will also need more loans, as is the case if a lot of the money in circulation is used to fund purchases made off shore (balance of payments deficit). These three factors add complexity to the actions of the central agency that creates loans to liquidate the economy.
Obviously, even with interest rates in the 2-3% range, the day comes where the exponential component of compound interest becomes unsustainable when the worlds supply of money demands funding island nations that pose a smaller risk.
In the case of the the USA the FED funds our economy with loans to the government, and the FED is basically a cartel of international bankers. In essence, thru loans and the long term effects of compound interest, they own our government, and can demand actions favorable to their survival. {Note the demands being made on Greece for example}
In 1960 Nixon was the wired to become President, supported by the global elite. He lost. In 1963, JFK wrote EO 11,110 authorizing the Secretary of Treasury to print gold/silver backed Treasury Certificates, which would have eventually chased all Federal Reserve Notes out of circulation. When Castro took power he nationalized the sugar plantations in Cuba, and torqued a lot or world bankers who had investments in these plantations.
John J. McCloy known then as the Father of the American Establishment had even more power than any president of any country, had been a world banker and was well connected in high circles. He had a lot to be gained by being appointed as a director on the Warren Commission by ensuring that the selected Patsy stayed the selected Patsy, because implicating a conspiracy (coup de ‘Etat) would not be in the best interest of the world bankers.
Several books, released last fall enable one to put all this together in a clear connect the dots format. Had JFK lived we would have virtually no inflation, no significant jobs problem, and no Federal Income Tax.
It can be shown that it is possible to create, out of thin air, Treasury Certificates to the tune of $5 Trillion a year in today’s economy, that would not be inflationary. Essentially that is about what the world bankers are able to skim from us each year. Obviously people who get in the way of diverting that kind of cash get dealt with, hence the fear on the part of politicians to go back to creating Treasury Money as EO 11,110 would have done.

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