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The Myth of Personal Frugality

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Scott Baker
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Yes, you can pay off all your personal debts -- as I have, with 100% of my mortgage paid off and zero credit card or any other debts.  But that won't save you from the ravages of bailout-based inflation.  When money loses its value due to inflation -– as it will very shortly -- it's almost as bad as paying interest, or high taxes.

We have been sold a bill of false goods by being told that we are all profligate spenders, unable to restrain ourselves.  While that may be true for many people –- even leaving aside the fact that the government spends unearned money in a way that would make an Enron accountant blush -- the problem is not the subprime borrower, or even the person with perpetual credit card debt.  The problem is with the fractional banking system that lets billions, even trillions, of dollars be created out of nothing, nothing, that is, EXCEPT an obligation from debt. 

Without monstrous personal, corporate and government debt, our so-called wealth would literally disappear.  Money = Debt now, thanks to the Bankers’ master plan first formulated on Jekyll Island and finalized by the 1913 Federal Reserve Act (and the near simultaneous Federal Income Tax Act, which up until then, had been ruled unconstitutional by the Supreme Court, and which may not even have been passed by the required three-fourths of states).  For banks to make money, there MUST be debt in order to create the fictional money to make the loan.  The banks then prematurely count the debt as an asset, which it most certainly is not.  The banks WANT us to be in debt.  The more debt we run up, the richer they get, instantly, and always.

We need to go back to the Constitution, or to Lincoln.  The Constitution gives Congress, and only Congress, not some quasi-private body, under the misnomer "The Federal Reserve," the power to print money.  Congress should return to printing money, U.S. Notes, as it did under Lincoln when that great man decided that paying 24% interest to finance the Civil War was too much and he simply bypassed the banks by printing money at the direction of the treasury.  Lincoln later lost partial control of the production of currency toward the end of the Civil War –- and, perhaps not coincidentally, towards the end of his life.

In addition, we need to set up state banks the way North Dakota did, which collect state revenues and then disperse them to other private banks, without the meddling, or need for, Wall Street and its packaged toxic derivatives.  North Dakota, by the way, is running a surplus -- one of only four states to do so last year.  Its unemployment rate is among the lowest in the nation too.

As for the derivative bombs waiting to go off, the President needs to declare these arrangements as fraudulent, and therefore null and void.  The Justice Department and the SEC need to start doing their job -– not only to protect American consumers, but to ensure the continuation of the American Economy itself.

Today, we learned that America is in danger of losing its Triple-A status, even from easy-to-please ratings agencies like Moody’s, who were so late to downgrade AIG and other insurers that it became moot.  If we lose that rating, lenders, including China, which is already pulling back from purchasing our Treasury obligations, will cease buying our treasuries altogether.  Then, we will either have to go back to U.S. Notes, which are used to pay off our debts and then inflated just enough to keep up with population growth, or we will officially become Argentina, or Zimbabwe, printing worthless money to pay off the Money Changers.

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Scott Baker is a Managing Editor & The Economics Editor at Opednews, and a former blogger for Huffington Post, Daily Kos, and Global Economic Intersection.

His anthology of updated Opednews articles "America is Not Broke" was published by Tayen Lane Publishing (March, 2015) and may be found here:

Scott is a former and current President of Common Ground-NY (http://commongroundnyc.org/), a Geoist/Georgist activist group. He has written dozens of (more...)

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