FLOW CHART 1 . -ON
I
U.S. TREASURY
cI
OF BASIC D (COMMENT NUMBERS ARE KEYED TO FLOW CHART)
I 7
I
MONEY CREATING POWER I
I I I
I
1100
TOTAL DEBT
1,
UN MONETIZED
DEBT
1
ILOAN 11 ESTABLISHES INCOME
I
1
L
I
1
12-8 A
I
500
I
300
I
MONETIZED
I
1
2
I
CREATE Ml
4
5
6
7
8
LOAN NUMBER
1
TO HAKE-UP FOR INTEREST DRAIN (TO KEEP M l ) (CONSTANT
3
2 3 4 5 6
I 8
50
100
25 37.50 46.25 69.38 104.06 156.10 234.15
50 15 92.50 138.15 208.13 312.19 468.29
50
100 150 225 317.50 456.25 664.38 916.51 1444.86
15 92.50 138.75 208.13 312.19 468.29 702.44
THE FED USES MONEY CREATING POWER TO PURCHASE U.S. SECURITY, LOAN 11.
@
THE INTEREST PAYMENT (I) REMOVES HONEY FROM MI, CANCELLING THE APPROPRIATE LEDGER BALANCE.
THIS INITIAL LOAN IS AVAILABLE TO CARRY OUT
@
THE U.S. NOW HAS LESS THAN ENOUGH MONEY TO PAY PRINCIPLE (P) AND THEREFORE, LESS MONEY TO RUN THE COUNTRY. ACTUALLY, AT THIS STAGE THE U.S. IS (TECHNICALLY) BANKRUPT.
@
THE FED ALLOWS THE PRINCIPLE ($100) TO BE "ROLLED-OVER" AND MAKES A NEW LOAN TO THE U.S. TO MAKE UP FOR THE INTEREST DRAIN.
@
INCOME (FROM TAXES AND NEW LOAN Y2-8) AVAILABLE FOR EXPENDITURE. FOR THIS EXAMPLE THIS WILL BE KEPT CONSTANT AT $ 1 0 0 .
THE DUTIES OF GOVERNMENT AND BECOMES H i .
LOANED (DEBT) MONEY SPENT INTO THE ECONOMY THROUGH THE BANKING SYSTEM. IN ORDER TO PAY DEBT AND HAVE INCOME FOR EXPENSES, ASSUME THE U.S. TAXES THE ENTIRE M1 MONEY SUPPLY OUT OF CIRCULATION.
THE U.S. MAKES INTEREST PAYMENT ON LOAN. (FOR THIS EXAMPLE 50% INTEREST FOR 1 YEAR PERIOD)
W J O R CHARACTERISTICS OF THIS D E B T E Y SYSTEti MONEY IS CREATED ONLY AS
A
LOAN.
MORE MONEY IS OWED BACK (MOB) THAN MONEY CREATED (MC).
MC < MOB
WHEN PRINCIPLE AND/OR INTEREST IS PAID BACK, MONEY IS DRAINED FROM THE SYSTEM. MONEY WILL NOT RE-ENTER THE SYSTEM UNLESS IT IS BORROWED. THIS SYSTEM HAS A BUILT-IN, EXPONENTIALLY INCREASING DEBT FUNCTION BECAUSE MORE MONEY MUST BE CONTINUALLY BORROWED JUST TO KEEP THE MONEY SUPPLY CONSTANT. INFLATION (INDUCED BY LOSS OF SPENDING POWER) IS BUILT INTO THE CURRENCY. THE MONEY CREATING AUTHORITY (THE FED) INCURS NO DEBT. THE U.S.,OR ANY OTHER COUNTRY WITH SUCH A SYSTEM, INCURS AN EXPONENTIALLY INCREASING DEBT.
160