- ...showing why neither debt-financed stimulus,
nor the gold standard, nor allowing total liquidation of all distressed
businesses and households make sense, and why only the taking of money
creation and credit monopoly of the hands of the financial sector and putting
it in the household sector (and not the government sector) is the real
- By Dick Eastman
- Replacing Usury Capitalism with and American version
of Social Credit wherein the market economy is led by household demand
with money that does not come from bank loans.
- No remedy for the depression will work that does not
fix this problem in the only way this problem can be fixed.
- Like an animal is a merger of biological system for reproduction
and a biological system for acting in the environment for gaining sustenance
and protection, so society consists of a sociological system for reproduction
and nurture called the household sector and another social sociological
system for production of goods and services called the business sector.
Markets and the money system allow the household sector and the business
sectors to cooperate. With just these two sectors operating "supply
creates its own demand" in that what is paid to people by the business
sector for their services of operating on the environment to produce "goods
and services" is money that will be used to buy what is produced --
whether consumption goods or producer's goods.
- When there is just a household sector and a business
sector there is no problem. That which is paid in production is that which
is used to purchase what is produced. (Even when some people choose to
save their money everything will still get sold, because either other people
will borrow that money or else fewer monetary units chasing the same amount
of goods will result in a rise in the purchasing power of the monetary
unit to compensate for the dollars withheld from circulation by savers.
- Sin and the fall of man enters the picture with the invention
of usury. Usurers are people who stand apart from from production who
1) borrow purchasing power from earner-savers and re-lend the money at
interest making money on the spread between the rate at which they borrow
and the rate at which they lend, and 2) lending the same savers deposited
money twice by simply creating a checking accounts rather than lending
the actual currency and letting people write checks up to the amount credited
to the checking account -- in effect making new money simply by setting
up a checking account and entering whatever balance the usurer wishes it
to have. This provides the usurer with the means of dominating and draining
the wealth of both the household sector and the business sector. With
a monopoly of the power to create bank deposits without earning the money
or borrowing the money - the financial sector can extort any terms for
receiving a loan that they choose. For them to create a checking account
and credit a number to it -- they demand both compound interest and the
power to obtain ownership of collateral that the borrower must put up in
order qualify for the usurer's loan. The usurer inserts new purchasing
power -- which by the way dilutes the purchasing power of everyone else's
purchasing power -- simply because they are new money claims bidding against
the money of the earners. But that is not the biggest trouble the usury
- The biggest problem the usury system as described above
inflicts upon the economy is the parasitic drain of interest from purchasing
power in circulation. This is the key problem of our civilization, the
fatal flaw that is behind all recessions and depressions, all busts and
- Now here is the explanation how interest payments on
the two types of money, i.e., the savings backed loans and the double
lending of money deposited by savers (the second loan of a saved dollar
being called "thin air" or "keystroke created"
money.) Now pay close attention to the carefully worded analysis of cycles
of recessions and false "stimulus" cures that merely set up conditions
for a bigger recessions and bigger transfers of wealth to the usurers later
- When the household sector earns and spend and the productive
sector spends and earns there is no problem. But when usury begins lending
to business and households at interest there obtains a net drain of purchasing
power in the flow between households and business which causes recessions.
- The reason for this net drain of purchasing power is
that the financial sector is always injecting a stream of loans -- call
this flow "loans per month" (L) but it is also extracting a stream
of purchasing power that is equal to the principal (L) plus interest (i).
Total purchasing power is always decaying at a per month rate of
new L minus old L principal paid off minus interest payments.
- Ln - Lo - i = net drain of purchasing power.
- In other words, new loan deposits minus old loans paid
off minus interest on loans outstanding results in continuing deflation.
- In a stimulus jolt -- there L-new may temporarily exceed
L-old being paid off, but eventually the steady loss of purchasing power
on outstanding debt -- not bigger because of the big stimulus L-new will
drain away the stimulus until the temporary net gain becomes an accelerating
net loss -- deflation and contracting economy and loan calls and foreclosures
once more come to the fore.
- Let's go over that again.
- New loans are being injected as principal on old loans
plus interest on loans outstanding are being drained from circulation.
This over time means a net loss of purchasing power -- it means a tendency
towards deflation and recession. Thus the economy is automatically prone
to bust, which sets up political demand for so-called "stimulating"
of the economy. And this leads us to the fatal vicious cycle of Usury
Capitalism. In order to put more purchasing power in the system, the current
legal and institutional set up of society requires that any stimulus must
be debt financed -- more keystroke loans. (A tax financed or savings financed
stimulus would not add new purchasing power.)
- Now here is the part economists have been either missing
themselves or withholding from you in a conspiracy of silence:
- Interest payments to usury are a net drain on purchasing
power which causes insufficient purchasing power for the household sector
and the business sector to buy the products they produce -- because cost
of production includes the extra interest payment to the usurer in addition
to money paid to households for their productive work. But when the government
provides a stimulus -- either "extending unemployment benefits"
or paying for export of killing services abroad in the form of a war or
paying for windmills or more social workers and bureaucrats or disaster
cleanups (after they create the disaster) or a war on terror (against
those who the usurers deem to be terrifying, like people who understand
things like what you are reading right now) -- whatever form this stimulus
takes, the stimulus is debt financed.
- Stop and think what that means -- what that implies.
- It means in the recession that is caused by interest
payment drain, the stimulus is simply the taking on of new interest payment
obligations. At first the amount of the new loan will be felt and it will
pump purchasing power where purchasing power has been deficient (by the
way, government pump it to their political friends - the friends of of
the usurers so they can be "first spenders" before the temporary
inflation diminishes per dollar purchasing power -- rather than pumping
it to everyone hurt by this deflation. But we are not discussing this
problem redistribution to the ruling-class now. We are after even bigger
game -- the grand unified explanation of depression, followed by "stimulus"
borrowings which temporarily boost purchasing power in circulation but
bring yet more interest payments which will accelerate the rate of decay
of purchasing power until the stimulus is eaten away by interest payments
and the burden of debt is now greater than before the stimulus.
- The stimulus -- be it in the form of debt-financed export
of war, or debt-finaced "stimulus tax cuts" -- which really means
debt-financing what was previously tax financed, thus increasing government
debt, government interest payment obligations -- which ultimately are household
obligations via taxation to pay the interest on the national debt --
or be it stimulus in the form of extensions of unemployment benefits --
or in the form of big "New Deal" government spending projects
which is simply having the government build what will later be privatized
and given to the usurers in payment of increased debt; or in
the form of debt-financed welfare state handouts -- the result will always
be a temporary jump in purchasing power that will soon be eaten up by the
interest payments and new deflation which means production once again will
not be able to be sold at prices that cover both production costs and financing
costs - leading in more foreclosures where the usurers and their corporations
friends (who have unlimited credit outside the domestic economy loop) who
can buy up our bankrupt businesses adding to their own corporate monopoly
power, or buy up our foreclosed houses adding to their rental properties
and income -- the rent now going to foreign landlords representing yet
one more drain on domestic loop purchasing power.
- And so you see 1) the inevitability of deflation and
depression due to the leakage of purchasing power in the form of interest
payments to usury; 2) the folly of debt-financed stimulus remedy of any
kind due to the fact that whatever the original boost of purchasing power
by the new debt-financed spending, the interest payments will eventually
eat up the stimulus and eat at an even faster rate than before the stimulus
was applied; and 3) the way in which each round of debt leading to interest-drain
leading to deflation leading to political pressure for "stimulus"
which is self-defeating met with debt-financed stimulus which leads to
eventual re-swallowing up of purchasing power by new and higher interest
payment obligations which results in foreclosure transfers of more wealth
from the households and producers to the usurers.
- Now before getting to the only real solution -- let us
discuss what is offered as a solution by economists and "forecasters"
and financial advice givers and gold dealers -- namely a gold standard.
- The gist of the gold-standard proposal is that if money
is gold then the supply cannot be expanded and their will not be any economic
stimuli by government leading to new "boom" boosts to purchasing
power -- thus solving the problem of "inflation" (which you
will note from above is not the problem at all -- the real problem is
not inflation but rather chronic deflation that is given the quack remedy
of debt-financed government largess that must eventually come to grief
as the interest payments eventually eat up all of the stimulus and result
in new deflationary contraction, new bankruptcies and foreclosres and new
transfer of wealth from the sick patient to the quack doctor who have us
the disease in the first place. A gold standard merely locks in the deflation.
Depressions never end without inflation -- and the reason why booms end
is because the injected purchasing power is once again eaten away by now
bigger interest payment obligations as explained above. Gold merely ends
the boom it does not at all address the chronic tendency to bust. Gold
is merely the lock on the door to the usurers treasure house of stolen
goods -- so that we can never get our wealth back, can never earn our way
out of debt slavery, can never escape the problem of usury which is chronic
deflation. What people borrowed as keystroke "tin air" money,
the gold standard would now require them to repay in gold. And where would
the government which is bankrupt get the gold for a gold monetary system?
The people are bankrupt debt slaves, so the gold would have to be borrowed
at interest. For the fact is that every gold system of any nation of the
last few hundred years has been a system with credit expansion -- that
is with lending of more money -- gold certificates payable in gold in the
vault -- than there actually is gold in the vault -- and gold standard
lending payable with interest carries the same fatal flaw as the present
tax-backed and interest-paying government security backed fiat system.
Switching to gold, then, does not even touch the problem of usury described
above -- it merely makes it impossible for an economy to maintain purchasing
power that is necessary to prevent ever-accelerating business failures
and mortgage defaults. Remember, the usurers monopolize gold -- and to
get their gold in order to have a gold standard is to make yourselves slaves
to their monopoly power. Their gold would become the monetary base for
all lending -- they would be the only winners in a gold standard, and their
winnings would come out of our toil and suffering.
- The only real solution is one that you don't hear about
the economics profession -- the oldest profession in the world (prostitute)
combined with the nearly as old profession of witch doctor (mumbo jumbo
- The real solution to end usurer "keystroke"
lending that lends more than savers save and does so at compound interest
as the source of our money. As long as the financial sector is the source
of our purchasing power and that it is purchasing power which disolves,
decays, disappears in the form of interest drain - then we will continue
to have debt leading to interest drain leading to deflation and depression
leading to borrowed money stimulus leading to more interest payment drain
which will overtake the stimulus and put us into an even deeper hole.
- Also, the solution is not to let the deflation continue
until the "mal-investment" (i.e. the spending caused by the stimulus
-- before the interest on the debt-based stimulus eats away the purchasing
power the stimulus temporarily provided) -- as I was saying the solution
is not to let the deflation continue until everyone is bankrupt and all
bankrupted assets of the former middle class are in the hands of the usurers.
That is the solution of the usurers' stable of prostitutes pretending
to be economists (when an economist speaks up for allowing assets to liquidate
to cleans the economy of mal-investment -- they are blowing smoke in the
face of the public to blind the public and conceal what is really happening
-- the bust that ensues when interest drain eats up the stimulus of the
last stimulus does not come about because of mal-investment in inflation
-- it comes about because purchasing power is again withdrawn -- and
any "economist" who fails to share that truth and instead promotes
the usurers dogma of mal-investment as the cause of depression has really
stopped being an economist and is merely a prostitute hired to perpetuate
a gigantic scam that is the ruin of nations the destroyer of lives.
- The real solution is to have money originate in the household
sector -- let the housewife be the first spender of new money. And let
this money not be debt money, but money that originates as fully owned
by the household free and clear -- nothing to pay back. Then the purchasing
power will not decay in interest payments to usurers. Then the household
will direct entrepreneurs through the market signals of the householders'
consumer demand. Businesses will be able to stay in business and even
expand (if they satisfy consumer demand) with profits. When a business
goes bankrupt it will not be because of a drain of interest to usurers,
but will be because the entrepreneur simply failed to read the desires
of the consumer correctly -- that kind of loss is OK, that kind of loss
simply takes money out of the hands of people who waste resources making
things people don't want. That is not the same kind of loss that hits
both good and bad entrepreneurs alike when purchasing power is vanishing
into the usurers pockets in the form of compound interest on loans.
- The solution of money that originates debt-free and free-and-clear
in the hands of householders goes under the name of "social credit"
in Canada and Austrailia where the idea was introduced by an Englishman
C. H. Douglas over the years from 1919 to 1952. Unfortunately the name
"social credit" is rejected by Americans without a second look,
because to them the name sounds like "socialism."
- Nevertheless, I present the idea of a revolutionary change
in the way our society introduces purchasing power into the economy using
this problematical term "social credit."
- If you have read and understood what was explained above,
then you know that only social credit can cure what ails the household
and business sectors of every nation of the world today. (China is experiencing
a boom now, but that is only because the purchasing power that usury withdraws
from a nation must be spent somewhere else. A bust in one part of the
world must accompany heavy investment in another part of the world.)
- Now you understand the fundamental economic problem of
our time -- the flaw in the mechanism of money and credit upon which we
all rely but which is continually failing us -- failing us, not failing
the usurers who benefit from the system.
- Read exactly how my version of social credit system works
- I am not selling anything -- not gold and not a political
party or a marketed reform package. I am just getting to you and everyone
else who will read or listen a fundamental understanding of the monster
that is eating us alive and of the true "silver bullet" that
will kill the beast and allow us, the people of the household and business
sectors, to take back our economy from the parasitic usurers and their
pet corporations. I have no website or radio program or presence on youtube
or published books. I place my hope entirely on you the chance reader
-- to enlighten the world about the true nature of the disease of finance
capitalism and true corrective that will restore life and a wonderful and
happy future to all householders of all nations.
- Dick Eastman
- Yakima, Washington
- Questions about social credit? Write to me here: oldickeastman@.com
- Dick Eastman
- Yakima, Washington