Iceland Facing Meltdown as the Credit Crunch Sinks its Currency

The Problem -

This is an attempt to state it simply, because if you understand the problem, then you're going to see the solution clearly as well. If it doesn't make sense the first time you read it, try reading it again. Eventually, the whole picture will sink in...

A quick history of money

1) Once, gold and silver were considered the only ''real'' money, but it was heavy and risky to carry around...

2) So people paid goldsmiths to store the money, and got paper receipts for it...

3) After a while, people used the receipts like money, and left the gold in the bank most of the time. So the bankers got clever and came up with a scam...

4) The banks printed off receipts for more gold than they actually had, and ''loaned'' those receipts out to charge interest on it. As long as everyone didn't redeem their receipts gold at the same time, this let them make a lot of money charging interest, because they could charge interest on MONEY THEY DIDN'T HAVE.

An analogy can be made using property and titles. Here's the scam in another way:

Step 1: Acquire a vacation home,

Step 2: Sell the title to the home to one person,

Step 3: Sell the title to the home to a DIFFERENT person,

Step 4: Hope they both don't show up on the same weekend!

Fractional reserve banking lets a bank say to a depositor that all his money is safe and sound at the bank, while at the same time they get to loan most of it out to someone else to charge interest on it. So there are two people with a legitimate claim to the same pile of money. So whose is it, really? And where is it?

It gets stranger: When you receive your loan, if you deposit it into a bank, this bank can loan your loan money out again. This process can be repeated indefinitely, and if you do the math you find that much more money is on deposit in all the banks than existed in the first place. This begs the question... where did all this extra money come from? It had to come from somewhere, right? This would be true if all money were physical objects, but today money is a concept, an idea, a number. The answer is... it is created by the bank!

What does this mean?

1) Loaning money while claiming it is still on deposit increases the money supply, essentially creating more money (otherwise deposits would vanish). In essence, for the bank to have your cake and loan it too, it must create more cake. This increase in money supply is the cause of inflation.

2) Almost every dollar that exists is owed to a bank somewhere, because at some time in history, it was created when it was "loaned" out by a bank.

3) The amount of money owed to banks is more than all the money in existence! So we cannot possibly get out of debt under this system. The bulk of this debt is in the form interest, which is an arbitrary amount of money banks demand in return, but never gave.

4) There is no money, in the real sense. Just checks, data stored on computers, and promises. It is all created by typing on a keyboard, and signing signatures. The only tangible assets in regard to money anymore is the collateral we pledge when we ask for a loan. The money they loan you comes from nowhere, but the assets you lose in foreclosure are real!

5) Because the US government borrows from the Federal Reserve, bankers have the power to influence our society and government by controlling finance. They decide to create (or not create) money depending on who's asking, and for what. They choose what projects get funded, and let other needs wither on the vine by starving them of working capital. This subtle yet immense power is more than enough to undermine democracy, and guide the course of a nation's history.

So what's the solution?

Simple. The public must demand that money must not be created and issued as loans from private banks. It must be something that is openly and publicly controllable, issuable, accountable, and interest-free.

Otherwise, a class of parasites will rise to power in society by cleverly disguising the fact that the money they are creating, spending, and buying the world up with is money that isn't even real.

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"Banks lend by creating credit. They create the means of payment out of nothing."

- Ralph M. Hawtery, British Secretary of Treasury

"When you or I write a check there must be sufficient funds in our account to cover the check, but when the Federal Reserve writes a check there is no bank deposit on which that check is drawn. When the Federal Reserve writes a check, it is creating money."

- "Putting it Simply", Boston Federal Reserve Bank

"By this means government may secretly and unobserved, confiscate the wealth of the people, and not one man in a million will detect the theft."

- Lord John Maynard Keynes, "Economic Consequences of Peace"

"The eyes of our citizens are not sufficiently open to the true cause of our distress. They ascribe them to everything but their true cause: the banking system... a system which if it could do good in any form is yet so certain of leading to abuse as to be utterly incompatible with the public safety and prosperity."

- Thomas Jefferson

"The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was ever invented."

- Major L.B.Angus

"Of course, banks do not really pay out loans from the money they receive as deposits. If they did this, no additional money would be created. What they do when they make loans is to accept promissory notes in exchange for credits to the borrowers' transaction accounts. Loans (assets) and deposits (liabilities) both rise by the same amount."

- Chicago Federal Reserve booklet "Modern Money Mechanics"

"The regional Federal Reserve banks are not government agencies, but are independent, privately owned and locally controlled corporations."

- Lewis vs. United States, 680 F. 2d 1239 9th Circuit 1982

"All the perplexities, confusions, and distresses in America arise, not from defects in the Constitution or confederation, not from want of honor or virtue, as much as from downright ignorance of the nature of coin, credit, and circulation."

- John Quincy Adams

"I am afraid that ordinary citizens will not like to be told that the banks can, and do, create and destroy money; and they who control the credit of the nation direct the policy of governments and hold in the hollow of their hands the destiny of the people."

- R. McKenna, Chairman, Midland Bank London

"The actual process of money creation takes place primarily in banks. Bankers discovered that they could make loans merely by giving their promise to pay, or bank notes, to borrowers. In this way banks began to create money. Transaction deposits are the modern counterpart of bank notes. It was a small step from printing notes to making book entries crediting deposits of borrowers, which the borrowers in turn could 'spend' by writing checks, thereby 'printing' their own money."

- Modern Money Mechanics, Federal Reserve Bank of Chicago.

"The one aim of these financiers is world control by the creation of inextinguishable debts."

- Henry Ford

"See if the law takes from some persons what belongs to them; and gives it to persons to whom it does not belong. See if the law benefits one citizen at the expense of another by doing what the citizen cannot do without committing a crime. Then abolish this law without delay, for it is not only an evil in itself, but also is a fertile source for further evils, for it invites reprisals. If such a law is not abolished immediately, it will spread, multiply and develop into a system."

- Frederic Bastiat

"Injustice anywhere is a threat to justice everywhere."

- Martin Luther King

"He that would make his own liberty secure, must guard even his enemy from oppression; for if he violates this duty he establishes a precedent that will one day reach himself."

- Thomas Paine

"I have never yet had anyone who could, through the use of logic and reason, justify the Federal Government borrowing the use of its own money . . . I believe that the time will come when people will demand that this be changed. I believe the time will come in this country when they will actually blame you and me and everyone else connected with Congress for sitting idly by an permitting such an idiotic system to continue."

- Wright Patman, Democratic Congressman 1928-76, Chairman, Committee on Banking & Currency 1963-75

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