PROVERBS 11:1 A FALSE balance is abomination to the LORD: but a just weight is his delight.
This next post will explain the basics of our modern currency system.
Our current system is what at least I refer to as a debt-usury-fiat currency system. Now this term is a mouth full! But I found throughout my life that in order to understand complex systems, you have to break it down into its constituents. To wit:
DEBT (well we sure know what that is! It is when you owe something to someone)
USURY (usury is a fee that you pay for the use of someone else's money. The interest that you pay on a loan is synonymous to this term)
FIAT (an authoritative decree, sanction, or order)
So, lets put it back all together: Our currency is actually DEBT to the central bank that issues them (hence the term FEDERAL RESERVE NOTE) that must be paid back with USURY (interest) and by FIAT is "legal tender for all debts, public and private".
This means that someone, namely the US government and the US banks, have to borrow every single dollar that comes into existence, of which it must be paid back with interest. "With interest" is in italic because you need to catch the significance of this phrase! Now if the borrowed funds draw interest, then I, or someone up the "food chain", need to borrow even MORE to cover the interest! Therefore, loans need to be constantly made and thus currency constantly created to cover the interest.
If not enough loans are made, then currency is constantly being drained from the system, and we get the economic condition that dominated the 1930's, a deflationary depression! On the other hand, over the past 70 years, we have been in a period where currency is being created and spent faster than the currency can be taxed and taken via interest out of the people's hands. This process is what is called inflation and is the primary cause for all the increase in prices.
That is the basics of how this system works.
Central Bank policy is not the only factor but it is a major factor in whether the economy expands or contracts. The other one is the government and how much it taxes and regulates. The higher the taxes and the more cumbersome the regulation, the more hindered the economy becomes when attempting to mount a recovery. What things the government is doing in this reguard is beyond the scope of this posting.
Until those in power stop blaming the wrong things and doing the wrong things, our situation is only going to get worse until a really bad collapse takes place (I am talking way worse than 1929 or 2008). Then our ability to rise from the ashes form that are going to depend on how much we learn from this experience and what we do about reforming the system.
