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Dead Constitution See other Dead Constitution Articles Title: Inflation? Deflation? What is going to happen? -- FINAL AND UPDATED VERSION I have updated and finalized this paper, and will not change it from this version. It is long enough. If you truly want to start educating people, you can start with this info. Friends, family, neighbors, fellow workers, everyone should know this information, and, if they do not, they can not make informed decisions in this world today. Richard Inflation? Deflation? What is going to happen? Having read many of the stories in the major media and elsewhere over the last several weeks about inflation and pending deflation or not (the inflation is a given, as it exists), I have come to the conclusion that people simply, really, do not understand the mechanisms in place and how they work. Quite frankly, after reading many of the stories, most of the writers do not understand either! Perhaps, if we were to have a conversation, I could explain a little and help to clear up some of the confusion. Or, perhaps not, but what say we try? OK? I will be me, naturally, and, you will be you, of course! Me; So, with all of this talk about inflation and deflation, you do understand the two subjects, right? You; Of course....... maybe. Me; OK, then maybe we should start with the basics. What do you think inflation is? You; Well, too much money in circulation. Me; Not exactly. Actually, inflation is a process where more and more paper currency is placed into circulation in an economy than there are goods and services entering into the market place and because of that, the paper currency depreciates, or, goes down in value. Of course, the currency going down in value is looked at by the public as increases in prices, but that is simply a symptom of the problem, and not the cause of inflation. OK? You; I think so. You are saying that higher prices are not the cause of inflation? Me; Correct. Higher prices occur because of inflation of the amount of currency in circulation; the higher prices ARE NOT the cause of inflation. You; OK. Got that. So then the government is responsible for inflation. Me; Not necessarily. That would depend on how the currency is placed into circulation. If the government actually does print the currency AND is responsible for placing it into circulation, then, yes, it is the fault of the government. A couple of good examples of that would be the hyper inflation in Brazil a couple of decades ago, and, the hyper inflation that destroyed the Weimar Republic in Germany in the 1920s and lead to the rise of Hitler. BUT, there is another method of creating inflation, and that is by the banks, such as is done within the United States, and it is very important to understand the tremendous differences between the two methods. You; Two methods?! Two different ways of creating inflation?! That's weird! Me; Yeah, pretty much, it is. But it is a fact, and a very important one, because unless you understand the two different systems, you will never understand deflation and why it can OR CAN NOT occur. You; OK. Tell me, what are the two methods? Me; Well, the first method is when a sovereign government issues more and more paper money into circulation; much more than is wise or necessary.... oh, by the way, that is a very good test of a sovereign government; one that issues its own money into circulation. Can't be sovereign unless the government issues its own money. This excess issuance of money is generally done when the government is under pressure from within or without, AND IS ALWAYS DONE IN CAREFUL COORDINATION with the nation's bankers. Why? Because the government will protect the favored bankers (as well as permitting the favored bankers to steal any weak banks that are broken by the hyper inflation that usually results) and many times make good the favored bank's losses when the people use the flood of excess money to pay off their debts to the banks. But the end result of such inflation is always a new currency, and the destruction of the old currency, thus destroying all savings and any hordes of money held outside of the banks. This makes the surviving banks very, very happy, cause when things settle down, and the people have no money and no savings, the only options they have is to go to the banks and start borrowing. With me so far? You; Sure. That sounds like a criminal enterprise to me! Me; Very perceptive. It is indeed criminal, and is condemned in the Bible as thievery. You; Ok, and what is the second method of creating inflation? Me; The second method is when a government is no longer Sovereign and permits private commercial banks to create credit, which is then placed into circulation by the private banks as a medium of exchange. What is placed into circulation is not money, per se, but the people think of it as such, and it does circulate as money does. For instance, in the United States, this circulating medium of exchange from the private commercial banks is known as Federal Reserve Notes. A note, of course, being a form of debt. You, blinking; But what you just said means that the Untied States government is not a sovereign government! Me; Yes, that is correct, but that is a discussion for another time. This discussion is about inflation and deflation, so let's stay on point, OK? You; Alright, but that last part is hard to swallow! Me; Maybe, but you ain't heard nothing yet! Now, this second method uses Fractional Reserve Banking to create the inflation, and the inflation is a natural and necessary part of the system. Got that? You; Not really. Why is it a natural part of the system? I don't get that. I understand when they do it deliberately, but how can it be a natural part of what they do?! Me; Good question, and the answer to that will become obvious as we go along here. Just give me a few moments more on this and it will become quite clear, I promise. When a government abdicates its right to issue its own money, generally through a secret bankruptcy to the international bankers, the system that the bankers use to take over is called Fractional Reserve Banking. In this system, a private commercial bank is allowed to expand its deposits up to ten times (the amount of the expansion varies from time to time), thus creating credit with the stroke of a pen. They do this by extending credit to people/businesses. If the bank has $10,000 on deposit/held as capital, they can loan out $90,000, keeping the $10,000 as reserve. They do this for their customers by making a book-keeping entry in your bank account with them. You are then obligated to repay the loan of credit (which is basically NOTHING) to them PLUS THE INTEREST ON THE LOAN (which is interest on NOTHING); and you must remember that when you repay the loan to them, the credit disappears. In this system, THERE IS NO PERMENANT MONEY IN CIRCULATION; another term for this process is called ‘disappearing money.’ And herein lies to key to understanding inflation in this system. When you borrowed that credit, it was created, but no one created the interest that you have to repay. Therefore, unless there is a steady and ever-expanding amount of credit lent into circulation, thus creating inflation, in very short order the economy of the host nation dries up as the parasitic banks collect all of the created and outstanding loans as interest. Why? Because no one creates anything to pay the interest with; ALL OF THE INTEREST PAID IN THIS SYSTEM IS A BURDEN UPON THE HOST NATION FOREVER, BECAUSE IT CAN NOT BE EXTINGUISHED, except as the parasitic banks decide to use the accumulated interest to buy assets. BUT, why buy that which you can steal by simply manipulating the amount of credit allowed into circulation and causing boom and bust cycles? Better known as expansions and recessions. Now, the other part of this is that the host nation MUST ALWAYS run a deficit. This deficit is carefully calculated at the host nation's capital and replaces into the nation’s economy all of the taxes collected to pay the interest on the national debt, as well as a portion of the interest paid by the public to the private commercial bankers, thus nationalizing the ‘inextinguishable interest paid’ into the national debt as an excuse to continue taxing. This is called ‘farming the taxpayer.’ In the United States, for instance, all of the income tax collected is used to pay the interest on the national debt, and the figures for the interest paid on the national deficit charts pretty closely to the collections of the Income Tax. Many times, this national deficit is also used as a priming agent to boost the economy, esp. during elections or when a recession has gone on long enough to break enough businesses and individuals to serve the purposes of the private commercial bankers. A real key to understanding this system is knowing that as time passes there is ALWAYS an ever increasing bubble of debt in the host nation; debt both public and private. The speed at which this bubble expands increases the longer the bubble exists. The larger/older the bubble, the more dangerous it is. This is important to understand when we discuss deflation. Still with me? You; My head is spinning. Me; As well it should be! If the average citizen of the host nation understood these subjects, the banks could never get away with the thievery that they do! You; I’ll say! If I am keeping up here, what you just said is that the United States can never balance its budget! Me; Very good. You are listening. No, the United States CAN NOT balance the budget without forcing a recession on the nation, and, if the government pushed the issue and balanced the budget for a period of years, it would not only force the nation into a depression, it would collapse the economy. OK, let’s continue. Now, just a brief recap. Two causes of inflation. The first is when a government issues lots and lots of money into circulation, thus destroying the value of the existing money and always leading to a new issuance of a new money into circulation within the nation. Another way of looking at this is as a repudiation of all existing debts, esp. debts of the government, but of all debts of the people and businesses of the nation as well….. With this caveat; that repudiation of all of the existing debts occurs ONLY with those debts denominated in the ‘money’ being inflated/hyper-inflated. The second method is through the use of fractional reserve banking, where a continuous build-up of debt (loaned into circulation) leads to a continuing increase of debt in circulation which has the same effect as the first cause of inflation; it destroys the value of the existing money/currency in circulation, through inflation. Now, the question is, does this then lead to hyper-inflation, or, to something else? You; Well, it is pretty obvious that it must lead to hyper-inflation as the bubble gets bigger and bigger! Me; It might seem that way, but what happens when the people of the nation can no longer afford to borrow money with a reasonable expectation of repaying it? That is what happened in Japan about 12 years ago, and they lowered the interest on loans to 0% -- that’s right; 0% -- and people still could not borrow enough to make a difference in that Fractional Reserve System. What happens then? You; I don’t know! The system collapses? But they can’t let that happen! Me; Why not? Because you don’t want it too? Is that important to them? You; Of course it is! Me; Probably not. And that is a realization that you, and everyone else, need to learn to live with if you are going to be able to protect yourself in the New World Order, which, after all, is what this is all about. Look, let’s take a couple of examples from history and maybe we can begin to make sense out of what may be planned. And make no doubt about this; everything that is happening is being and has been very carefully planned. Alright? You; Sure. Me; First, a couple of examples of hyper-inflation and what happened. In México, when the value of the Peso was destroyed, they issued a new Peso, which is still in circulation. They did the same in Brazil with their currency. And in Germany, after the Mark was destroyed, a new currency took over. Same name was used for the money in each case, except in Brazil, but it was not convertible for the old style of money. In other words, all they did was print the money in different styles/colors and changed the coinage so both were obviously different. What was the result of hyper-inflation in each case; 1. The savings and influence of the middle class in each nation was destroyed and the influence of the international bankers in the affairs of each nation was greatly increased. 2. The international debts of each nation, owed to the international bankers and denominated in a different currency (Germany in Pounds Sterling and Brazil and México, in dollars) WAS NOT AFFECTED. Now, let us compare that to England, which has been using Fractional Reserve Banking for a lot longer than has the United States! In the 1920s, the Pound Sterling was under a lot of pressure. Historically, the Pound Sterling was worth $5.00 US, but that value was falling because of inflation. Most international loans were written in the Pound Sterling, and they were enormous (and inflationary), world wide, but, England did not have enough population to increase consumption to the point where enough of the internal inflation within England could be exported to third world nations. Besides which, the people of England, as well as the English government, were as loaded with debt as it was possible to be. What to do…….. what to do. It may surprise you that the Federal Reserve Bank of the United States is owned by the same bankers who own the Bank of England, which, of course, serves the same purpose in England as the Federal Reserve Bank does in the United States. (And no, the English government is not sovereign either!) All the international bankers did was start making all international loans in dollars, instead of in the Pound Sterling, BUT THEY NEVER PERMITTED REPUDIATION OF THE DEBTS DENOMINATED IN THE POUND STERLING by hyper-inflation. This gradually relieved the pressure on the Pound Sterling, and transferred the international debt creation to the dollar. A dollar backed with a lot more population of potential consumers, and with little debt both internally and externally. LOTS of room for expansion of debt. Course, that expansion would be greatly facilitated if the gold could be taken away from the people, and, most of their savings could be destroyed, leaving them with little recourse except to go to the banks owned by the internationalists. And, if all banks not a part of the system controlled by the internationalists could be destroyed/taken over. Presto! Depression. Are you with me? You; Actually, I am dumbfounded. Me; That’s perfectly alright. When your system of thought changes, it is normal to be somewhat at a loss as to why that is so. This does bring us to the question of deflation. Do you understand deflation? You; Probably not. I thought I did, but not anymore! Me; No, you probably do, but learning about the differences in inflation may have confused you. That’s Ok. Deflation is simply less money or credit in circulation. In understanding this, you should note that ALL recessions and depressions are created events. In addition, a minor deflation is called a recession. A larger deflation is called a depression. A monster deflation is called a disaster! And, it needs to be noted, deflation has two causes, just as inflation does. In the first case, it is caused by the sovereign nation in question simply not issuing enough money into circulation, or, permitting the banks to hoard what is in circulation, thus creating a recession. There are also some technical details, such as permitting banks to loan notes into circulation, but those are for another discussion. Just always remember, ALL recessions and depressions are created events. Now, the second deflation is caused in a Fractional Reserve System when the people and/or the nation hosting the Fractional System can no longer expand their debt loads. As people stop borrowing, and/or the banks severally restrict making new loans, and collections continue on all outstanding loans, thus extinguishing those funds, the economy of the nation in question begins to contract and first a recession becomes visible, but as things drag on, a depression becomes visible. This sort of depression is extremely profitable for the international bankers, and they have the opportunity to buy anything they wish for pennies on the dollar. After all, they have no lack of credit with which to do the buying. There is something else you need to note here, and it is that a Fractional Reserve Bank IS NOT A GOVERNMENT. As such, a ‘bank’ has no direct method whereby they can release funds DIRECTLY into an economy, like a government can by paying for goods and services. The Federal Reserve Bank has few employees, and buys little in the way of goods and services. The only way that the Federal Reserve Bank operates is by facilitating the creation of debt through private commercial banks. This creation of debt requires qualified borrowers. If there are none qualified to borrow, there is no new creation of debt, and the nation in question is on the way to recession-depression-deflation. And please note, there has never been an instance when a fractional reserve system permitted the repudiation of debts owed to the bankers who controlled the fractional system through hyper-inflation. I hope this makes things a little clearer? You; I don’t about that! What it did was scare the shit out of me! What you are saying is that deflation is coming?! Me; Yes, along with a severe depression. And, you need to understand why. Do you? You; No, I don’t. It makes no sense to me! Me; That is because you are looking at it from your point of view, and not the point of view of the international bankers. Who really do not care what you wish, or, think. Anyway, the following is why; THE BANKERS’ MANIFESTO OF 1934 Capital must protect itself in every way, through combination and through legislation. Debts must be collected and loans and mortgages foreclosed as soon as possible. When through a process of law, the common people have lost their homes, they will be more tractable and more easily governed by the strong arm of the law applied by the central power of wealth, under control of leading financiers. People without homes will not quarrel with their leaders. This is well known among our principle men now engaged in forming an IMPERIALISM of capital to govern the world. By dividing the people we can get them to expend their energies in fighting over questions of no importance to us except as teachers of the common herd. Thus by discrete action we can secure for ourselves what has been generally planned and successfully accomplished.
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