Things No One Ever Tells You About The Economy

by / October 15, 2007

It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning. – Henry Ford

EACH day we are told that we must obey as the economy – or rather, her priests, the economists – dictates. It is claimed our wellbeing as a nation mainly rests upon our economic health. But almost no one understands how the economy works. The proof of this is simple: if everyone understood how the economy actually works, it would stop working instantly – because we would refuse to continue doing as we are, and the economy relies upon our belief in it to function.

Money Out of Nothing

Money is created out of nothing. This right was stolen from governments by the international bankers to whom they became indebted in wartime – wars in which the bankers funded both sides. Economies can be expanded or contracted by controlling the money supply. Amschel Rothschild, head of the richest banking family ever, declared in 1790 that he did not care who made the laws of the land – so long as he had the right to print the money.

Money is created by the purchase of government bonds, which are a “promise to pay”. Bonds are paid for electronically by the Federal Reserve (and the Reserve Bank in New Zealand) completely out of nothing – the money exists because they say it does. This money is then transferred to banks, who lend it out at interest. However, due to fractional reserve lending, the bank can lend ten times as much money as they hold. (If you tried to do this, however, you would be arrested for fraud.) Banks thus create money when they lend it.

Now, if a bank has $1m worth of bonds, it can lend ten million dollars (none of which has any material reality). Say it lends at ten per cent. So a year later, it gets back $11m. But the first $10m never really existed, and the extra million that gets paid back represents real productive labour which has been co-opted by the banks. They did nothing for this except steal the monopoly over the creation of money.

Money does not have to bear interest. There is no necessity for this. It is simply theft. There’s a reason Jesus threw out the money-changers from the temple. Interest free money can be issued, and has been done often throughout history (e.g. Abraham Lincoln did during the US civil war). Actually, anyone can print money, as it is just a promise to pay. All that backs money is the belief that the issuer will eventually pay.

The Economics of Illusion

Essentially, we are enslaved by debt to money created out of nothing. Money used to mean such and such an amount of gold or silver but, in the 70s, the US dollar – the currency every other currency is measured against – went off the gold standard. Now, money is a tradeable commodity. This happened around the same time as the era of deregulation, and the removal of restrictions to movement of capital across borders began.

Trillions of dollars worth of speculative capital travels the world each week, seeking to turn a quick profit on fluctuations in exchange rates. These sums of money dwarf the world’s GDP. Organised attacks on a currency by enormous hedge funds can sink a country’s currency.

Money is worth only what we believe it is worth. The methods by which this belief is established have increasingly little to do with any physical reality.

Barring a plague or drought, what is the difference in material resources – people and raw materials, physical stuff that exists – between a depression and a boom? Absolutely none. The only difference lies in our beliefs about what is happening, or in the availability of capital. But the availability of capital depends only on how much is arbitrarily created. This is controlled by central banks.

Ain’t that a bit weird? Think about it for a minute. What is actually being made, the real stuff that people are doing – this no longer runs the world. The financial markets – speculation on speculation about what does not exist, and those unaccountable private individuals who control the money supply – are running the real things.

The Biggest Con Job Ever

The con is the individualisation of profit and socialisation of risk. An easy example is the government (or, rather, the public) paying billions for research and development costs for military, pharmaceutical and biotechnology companies, who then make private profits from discoveries based on that research. But that’s all small fry compared to the real con. Speculative capital can go almost anywhere, and it will be invested wherever it will get the highest return – which is likely as not the place with the highest risk. As you can imagine, that can have major destabilising effects on a local economy which may already be volatile.

At some point, investors lose confidence in a country (or a currency) and panic, trying to get their money out before it collapses. This worsens whatever crisis the country’s economy faces. The currency devalues, and they end up in massive debt to their overseas creditors. The IMF offers to bail them out, but only if they follow the prescription set out for them. Now, part of the trick is the IMF is funded by taxpayers from its member nations – the public. Remember that.

The IMF is run by market fundamentalists – people who believe that markets run brilliantly and should be left to run without “interference” from government. And they have one prescription, based on their Faith: Fiscal and monetary austerity, privatise everything, and remove restrictions on capital flow.

Monetary austerity means using the billions received in IMF loans to artificially prop up the local currency long enough for the creditors to be paid back at a better rate, a lot of which is done with the money received from the IMF. So, when you look at it, the IMF loan was for the benefit of the international financiers, since they get the money. And if the IMF loan doesn’t get repaid, then the taxpayer bailed out the financiers who made a bad decision. But why wouldn’t they make a risky decision if they knew they’d get bailed out?

Fiscal austerity means raising taxes and cutting spending, which lowers aggregate demand – that is, the total demand from all sectors. When it’s high, it’s good for workers’ wages and production, but less good for profit.

When it’s low, there is less employment and production which, in theory, combats inflation. In practice, austerity demolishes social programs and increases the ability for creditors to be repaid. This all makes more sense if you take the intentional stance, so to speak, to the policy, and read it as if it is designed to make sure the lenders get repaid. This isn’t the IMF’s job, but it has been acting like it is.

Meanwhile, local companies are going broke. Then, since the privatisation and financial liberalization prescription requires rules about foreign ownership and investment to be lifted, overseas finance – from a certain point of view, the same money – can come in freely and buy up assets at a fraction of their value, in a way that would never be allowed normally. The scale this is on is huge. Banks, corporations, land, infrastructure, bought up for nothing. The entire shape of the world changes in the hour of the wolf before dawn, a new form of colonialism that most of the colonised are barely aware has occurred.

Why No One Ever Tells You These Things About The Economy

In the New York Times of March 27, 1922, former US President Theodore Roosevelt said:
“These international bankers and Rockefeller-Standard Oil interests control the majority of newspapers and the columns of these papers to club into submission or drive out of public office officials who refuse to do the bidding of the powerful corrupt cliques which compose the invisible government.”

In the New York Times of March 26, 1922, the Mayor of New York, John Hylan said: “The warning of Theodore Roosevelt has much timeliness today, for the real menace of our republic is this invisible government which like a giant octopus sprawls its slimy length over city, state and nation… It seizes in its long and powerful tentacles our executive officers, our legislative bodies, our schools, our courts, our newspapers, and every agency created for the public protection…

To depart from mere generalizations, let me say that at the head of this octopus are the Rockefeller-Standard Oil interest and a small group of powerful banking houses generally referred to as the international bankers. The little coterie of international bankers virtually run the United States for their own selfish purposes. They practically control both parties, write political platforms, make catspaws of party leaders, use the leading men of private organisations, and resort to every device to place in nomination for high public office only such candidates as will be amenable to the dictates of corrupt big business. These international bankers and Rockefeller-Standard Oil interests control the majority of newspapers and magazines in this country.”

Interesting how, 80 years ago, this could be spoken of openly by respected men in positions of power, whereas nowadays those words are only spoken by people stigmatised in the media as “conspiracy nuts”. Maybe the international bankers bought the rest of the media, too? Check out the latest edition of The Media Monopoly by Ben Bagdikian for details on how a handful of people own over 90 per cent of the world’s media.

There is so much more to this. Please check out “The Money Masters”, an astonishing history of banking and economics, available free to download online if you look for it. Try Google Video.

And, of course, the real reason no one tells you these things about the economy is that if everyone knew this stuff, there would be a revolution.

So go tell someone.

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Comments (28)

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  1. Elijah Lineberry says:

    What a bizarre article, Bill the dancing Moose.

    You would have been better off checking some fairly basic facts and doing your own research before just copying and pasting some rantings from the likes of Bill Still and Patrick Carmack.

    An indication you and your article have no credibility is that former US President Theodore Roosevelt died in January 1919, and unless they had a ouija board I doubt the New York Times were quoting him over 3 years later!

    If you are unable to check such a basic fact it does not exactly make anything you write (or copy from elsewhere) very credible.

    Perhaps there are “Things No One Tells You About The Economy” ….because they are false?

  2. IO says:

    For once you make sense Elijah.

  3. Elijah Lineberry says:

    Thank you, IO …you are most welcome.

  4. Elijah: your doubt as to the practices of the New York Times is your business.

    I imagine the New York Times found something relevant in Roosevelts words – much the same way that Eisenhower’s warning about the “military-industrial complex” is still quoted decades after his death – it was obviously topical as the then-current mayor of New York was saying essentially the same things as Roosevelt on the front page of the New York Times.

    By the way, a lot of the article was summarising the work of Nobel Prize winner in Economics Joseph Stiglitz. I don’t know who Patrick Carmack is. Bill Still, however, seems to have done his research pretty damn well in my opinion.

  5. Just Pointing Out says:

    Shit girl. It’s enough to make you vote….Libertarianz….

  6. Helen's Balls says:

    This article’s great. Hopefully its inclusion in final issue of 2007 is an indication of the direction in which the magazine will go next year.

  7. thehams321 says:

    I think that the criticism of IMF bailouts is rather unwarranted. True that they do help investors recoup their losses and to some extent encourage risky investments. However the fed and the imf did let Russia crash in the 90′s, so investors aren’t the puppeteers behind this system. And you neglect to talk about what happens when these bailout packages aren’t drawn up, namely, financial panic that can possibly spread elsewhere.

  8. Tomas says:

    Though, I have no mastery over these matters; I do have a degree of common sense. While I do not wish to contest the whole of your paper; I do question some of the facts you state here. I.E. I take acception to this statement and it’s proceeding paragraph, posed to support it’s premise.

    “… due to fractional reserve lending, the bank can lend ten times as much money as they hold.”

    From wikipedia.org “Fractional-reserve banking refers to a financial system where the bank uses a fraction of its deposits to finance borrowers. 1. ^ ”

    The term “Fractional reserve” is self explanatory, thus it stands upon it’s own merit, as a general principle. Your statement suggesting Banks violate that principle does not negate the principle itself. Lending from the reserve simply, and plainly violates that principle. On the surface of thing, the principle appears to me to be a sound one.

    I gave up half way through your paper as it becomes evident, that your arguments attempt to drawl sufficient conclusions with insufficient evidence.

    On the whole, I dislike being so critical of another persons opinions.

  9. Ewok says:

    nobody ever told me to do as the economy dictates

  10. Ewok says:

    The economy doesn’t even dictate

  11. Ewok says:

    what are you, some srupid

  12. I will fight you says:

    The economy is very rude

  13. Ewok says:

    some sauropod

  14. Brandy says:

    Overall, I found this to be a well-written article documenting many topics that are not generally taught in Economics 101. As for others’ criticism on the article, I have not found them to be very well thought out at all. To discredit the article because of one factoid (like the year the Times quoted Teddy Roosevelt) or to attempt to argue facts using reference to a terribly biased, unreliable source such as wikipedia is, in my opinion, just reaching for any reason to not accept the information presented as well as very unscholarly.

    It is amazing to me that people need absolute iron-clad proof to even begin to question that those in power might be using us for their own selfish gain. From my perspective, after seeing the myriad of abuses by governments and entities in positions of money and power, I need iron-clad proof to even begin to believe that these institutions are NOT out to get me. In a nutshell, it takes a lot to prove to me that a powerful institution is ethical, instead of the other way around.

    I think the public’s inability and reluctance to question the way things operate is based on the self-absorption and general feelings of helplessness felt by your average citizen. They cannot admit to these things because they believe they barely have control over their own humble lifestyles, they cannot comprehend the actions that would be necessary to throw off the shackles of the false economy.

    Your article is very good, but I think in the long run it will only reach a few people. The rest will remain in blissful ignorance, and become very angry that you dare attempt to try and penetrate their mind’s protective bubble with something as offensive as the truth.

  15. Junior says:

    You make some valid points and flop on others. Overall, it’s a bit of a flop, sorry. I appreciate the effort to make the point, however.

  16. Yeah, I hope this doesn’t taint the otherwise pristine image of Billy… sigh… the Dancing Moose.

  17. Billy the dancing moose says:

    I know all about flopping. I did quite a bit of it when I was learning to fly. It’s not as easy as they claim it to be.

  18. billy the dancing moose

  19. J Matthew T says:

    This is an atrociously written article. Billy you need to be careful ripping off youtube videos like Zeitgeist Addendum, America: Freedom to Facism and Esoteric Agenda. A whole bunch of us have seen them and can tell that you don’t really know what you’re saying, rather you’re parroting. Much of what you said is true although if I asked I know you couldn’t prove it. because your only source was these videos. What you should do is start a discusion based on topics raised in these videos. kudos for raising it in some form, many are still unaware. But if you really wanna have some fun look up UCC Uiniform Commercial Code. And notice that when you recieve letters regarding your student loan your name appears in capitals, which is leaglly a corperation not a person (you). And Thus you DONT have to pay back your loan, or mortgage or any other debt. And the fact that the money they leant you does not EXIST the contract is immediatley nulified. But before you go to court make sure you ‘buy back’ your birth certificate first. In fact when you go to court don’t ‘enter your name for the record’ by doing so you enter into contract with the court and are subject to its rulings. You want change? Then render the ‘weapons’ impotent. You will succeed and where there is one there is another.

  20. J Matthew T says:

    and, ‘Thomas’ I fail to understand the point of your comment?
    Do you agree that a bank that can lend out money it doesn’t have is a good thing?

  21. Peter Manglethwaite says:

    J Matthew T: You’re a fucking idiot.

  22. Henry says:

    That’s not fair, Peter Mungrelfuck please elaborate…no point pissing on someone with no reasons. That’s weak.

  23. Peter Manglethwaite says:

    One thinks that the reasons are quite clear you nincompoop.
    One: The column was written in late 2007.
    Two: The column was written by “Billy the dancing moose”
    Three: The thing about your name being in capitals is a load of crap. I’d just like to see you argue that in court. Oh wait you won’t argue it in court because you refused to sign the register. Fucking moron.
    Four: No one even reads this site, let alone the comments. I suspect that you are J Matthew T under another pseudonym.
    Five: Henry: You’re a fucking idiot.

  24. Henry says:

    Dear Peter Mangledtwat.
    one. The date of the document is irrelevant.
    two. JMT already said Billy’s article was bad.
    three. Where is YOUR evidence? JMT said that the according to the UCC it is true. Did you look that up? As for the court thing I am from California and believe it or not that DOES work, usually the judge will throw you in jail for a few days to soften you up and your lawyer will advise against it, but I have heard of cases that were thrown out due to this action. Some have made the TV news. The same goes for income tax in America, you dont have to pay it, many people argue that the tax is unconstitutional some people get away with it, others get sent to prison. I apologize I don’t know about NZ.
    four. well you read it my friend. Are you no one?
    five: please explain why, this first year garbage of “shit is true because I belive it or shit ain’t true because I think it’s bullshit” don’t fly. This is college my friend and you need to back up your claims. Otherwise your argument is tossed aside as an angry first year rant. ” My name is Mangledtwat and I’m first year commerce hear me roar” lol

  25. Henry says:

    ..and who the hell says “Nincompoop” anymore? Me thinks that perhaps you are not a young student here, but just some angry geriatric pissing in the wind.