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From my blog -http://kempion.blogspot.com/

By now, readers of my blog should know I am a proponent of re-establishing the Bank of the United States. I have laid out many reasons for my support of a central bank which is governed by “We the People” and I have advocated it should be the only source of income for the United States (i.e., no federal taxes). I have also explained why I have absolutely oppose continuing to allow the Federal Reserve to enslave not only Americans but, indeed, all of humanity.

I’m going to condense my arguments into one blog entry which I hope most people will be able to follow with little to no difficulty.

Let’s get started. For simplicity’s sake, I’m going to refer to both the Bank of the United States and the Federal Reserve as one entity called “the central bank.”

The central bank creates money by issuing loans. These loans are made to other banks, corporations (this generically refers to any business for this example) and other countries – as well as a few other entities. The central bank then profits by collecting interest on the loans it makes.

Here’s how our overall economy is affected by the actions of a central bank.

First, the loans a central bank issues are usually at a low interest rate. This allows other banks to be competitive, affords corporations the opportunity to repay their loans without causing a significant amount of inflation on the goods and/or services they produce, and allows other countries to pay back their loans without going into deeper debt. (This is part of the monetary theory anyway.)

Corporations which receive loans are able to invent, expand and/or create new jobs which may offer higher wages and more benefits. Citizens then can find better employment, more income and additional benefits.

Citizens can in turn afford to purchase more and better goods and services – which generates more revenue for producers. The cycle between producer and consumer, theoretically, can expand indefinitely. In fact, it does. The rate of growth is gradual and sustainable over long periods of time… truly to infinity.

OK, there has to be a catch. Our economy is not currently growing exponentially. Why?

The catch is our current central bank. The Federal Reserve is a private corporation (I don’t care what their website says – mafia.org says the mafia is a community organizing operation) which loans money to the United States. The borrowed money is then used to create more money through a process called “fractional reserve lending.” In essence, a reserve (or security deposit) is held, usually 10%, while the remainder of the borrowed money is re-loaned to other borrowers. All of the money in circulation is supported by a reserve of some sort – theoretically.

However, there is yet another catch here. While every dollar in circulation is supported by a reserve, the interest on each loan created is not. This means there is sufficient currency in circulation to repay every loan made in the fractional reserve lending process excluding the interest on those debts.

If every outstanding loan’s principle, the initial loan amount, were repaid, there would be no money in circulation, AND there would still be an outstanding debt equal to the total amount of accrued interest on those loans. Does that make sense? Feel free to reread that part. It’s important to fully understand the consequences of interest on our economy.

I’m going to sidetrack this discussion for a second to introduce a critical concept in monetary policy. This is something few people talk about, but I feel it too needs to be fully understood. All money flows upstream. This means wherever the money is created, it must return to that source. When you think about it, this makes perfect sense. If you repay a loan, the bank gets your money (which was really their money to begin with since the bank created it). It’s important to understand the concept of money returning to its source because that source is ultimately going to be the central bank – whichever version it may be.

Getting back to monetary theory, under the Federal Reserve system, we now understand our debt can never be satisfied because there is not enough money in circulation to repay every debt plus interest. Interest will continue to accumulate and, eventually, interest upon interest will bury us alive. This is certainly part of our current economic “crisis.” (Also, we can never truly have a balanced budget for interest must be compiled on the liability side of the balance sheet. it is perpetual debt.)

If we can never repay the interest on our debt, how are ever going to be out of debt? How will we ever truly have a surplus? Can we fix this system in some way which will allow us to somehow get out of debt? The answer is a resounding “yes!”

If we scrap the current monetary model, the Federal Reserve System, and re-establish the Bank of the United States we can not only get out of debt but we can also generate enormous revenue while not levying any federal taxes.

I can prove this very simply.

Take the example I gave using the Federal Reserve. Now, move the interest on our debt out of the liability column and place it into the income column as a credit. You see, very clearly, what we now pay in interest and debt to the Federal Reserve (their bank) would translate into interest and income on loans made by the Bank of the United States (our bank). Does that make sense? Instead of paying debt service as borrowers, we would be collecting interest and income from borrowers.

The third catch here? There exists a point of no return. If our debt payments exceed federal revenue for an extended period of time, then there is no way out of this cycle we are in. We will default on our debt as a nation, lose our credit rating and our economy would collapse when the dollar is devalued to zero and inflation skyrockets to 100%.

We are getting very close to that point. In fact, it might be too late.

To avoid defaulting on our debt and risking our economy, and our livelihoods, we must take bold action. The last thing we needed to do was to acquire monstrous amounts of new debt – ala the spending bill known as “Porkzilla.” This ridiculous bill might be the straw which breaks the camel’s back.

The action which is required by us is multi-faceted and will be difficult to manage, but I know we can make it happen. I know we can endure.

First, we need to end the partisan divide. Republicans spent like fiends when they were in charge as have Democrats. Both parties are guilty of running up deficits and interest we cannot repay. Let’s accept we are all guilty - the partisanship must end. Now more than ever, we must be Americans. We must be united in this cause.

Next, we need to demand that our government stop spending. All discretionary spending and non-essential operational spending must stop. The only exceptions to this rule are laid out in our Constitution: “…in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity..” There is no interpretation needed here.

Once spending is under control, we must do away with the Federal Reserve. It will take an act of Congress to end this tyranny. The Fed will not go quietly into the night. The international banking cartel will seek to entangle us in foreign affairs, force us to borrow even more money with incumbent debt far beyond our means to ever repay it. And, ultimately in sheer desperation, they will seek to collapse our economy... to punish us. We must persevere. We will be presented with hard times like never before. When we emerge from this turbulent time, (and I am not saying this to get you to stand up and cheer… unlike someone else) we will be a stronger nation and people - with an economy solidly in place which will be the envy of all nations combined.

Other nations won’t be envious for long though. We will spread the wealth. That’s what we do – we are Americans after all.

When the Federal Reserve is finally ousted from power, we will need to replace it with the Third Bank of the United State. We will have to plan ahead for this since we know our enemies behind the international banking cartel will fight to the bitter end to prevent this action. In fact, we could operate OUR bank in opposition to the Federal Reserve. It’s something to consider at least.
There are two important considerations here. First, the central bank cannot fall under the jurisdiction of either the Executive or Legislative branches of government. We can never allow elected officials to get their hands on our money ever again.

Second, however we choose to proceed, I recommend creating a fourth branch of government, the financial branch, by Constitutional amendment (simply called the Bank of the United States). This will give more power to We the People and allow us to control our government to a stricter degree. "The Bank's" board of governors should consist of nine members who would be appointed by the President, confirmed by the Congress and would be limited to one term of nine years with one new member being added every other year. This means a president can, at most, appoint (with confirmation) four of the nine members, preventing a single president from appointing a majority.

I will conclude by adding a warning. (I hope everyone who reads this will “get it.”) ALWAYS FOLLOW THE MONEY.

What say you?


~Kemp

Edit: I'm still editing. Hang in there.

Anonymous replies are welcome!