Consumers Cut Borrowing by $12 Billion in August
Oct 07, 2009
The average person does not really understand the implications of this headline. It sounds good that people might reduce their debt loads by $12 billion in a single month, after dropping $9 billion in July.
However, because the economy functions on debt money, it is actually BAD NEWS for the economy. How? Because every dollar in circulation has been borrowed in order to put it into circulation. If there were no debt, there would be no dollars in circulation. When there are too few dollars in circulation, we have recessions and depressions, because no one has enough money to buy anything.
It is only when people borrow money and spend it to buy a house, for instance, that money circulates.
So as the people cut down on debt, the money supply shrinks. In fact, the shrinkage is actually TEN TIMES as much, because banks use all money to loan out the same dollars ten times. So a drop of $12 billion in August means that banks have to contract their credit by about $120 billion, and that means it keeps getting harder and harder for people to get loans to start up businesses or get any credit.
So in July and August, the debt shrank by $21 billion, and this results in a decreasing money supply by $210 billion!
Such is the reality of a debt-money system that the Fed created in 1913. This is how we are enslaved and why it is impossible to EVER pay back the debts we owe, public or private. We are hooked on debt, and we can never get rehabilitated as long as the Fed is in operation. When the people reduce their personal debts, the government must borrow more to replace the money supply. That is why the government is going TRILLIONS of dollars into debt now. It is picking up the slack after the people reduce their personal debt load.
We need to abolish the Fed. The government needs to take back its power to create money, so that it can create POSITIVE money that is not a debt. The only way to do this is to push the reset button and start over. The Bible calls it a Jubilee.