The current woes of the world economies is really not an unexpected occurrence. Have you ever wondered how countries can operate with huge budget deficits? Can you operate your household on a large deficit? Well, sort of with the use of credit.

Operating in the Red – Living On Borrowed Money - Money As Debt

But that raises the thought:
If governments operate on very large deficits (the United States deficit is over $1 Trillion) along with most business operating on borrowed money add in consumer debt (mortgage/auto/credit card/etc) where is all the money? All the “digital” money does not really exist. It is created digitally not physically. Money is loaned out based on money that is owed. This type of system is set to eventually fail from the start.

“Borrowing from Peter to Pay Paul” is what is actually taking place. Think about this… Let’s keep the numbers relatively small so it is easy to follow.
Total amount of money in the entire system  = $1,000,000.00 (one million USD)
Total amount of money loaned out on credit = $1,000,000.00 (one million USD)
10% Interest owed on total amount of credit  + $  100,0000.00 (one hundred thousand USD)
Total amount of money (debt) owed (P+I)       = $1,100,000.00  (one million one hundred thousand USD)

Now, let’s say the total debt = $1,1000,000.00 is called and payable right now. Is it impossible to pay? NO. Why? It’s really very simple there is only $1,000,000.00 Total Money Available, remember.
So, where will the $100,000.00 come from if it doesn’t actually exist. Think about the bigger picture.
Didn’t the Great Depression start from a “run on the banks”?

You be the judge:
A) Ponzi Scheme
B) Poor Management
C) Greed
D) All of the Above

And that is why our monetary system was doomed to fail from the very beginning and the sad fact is that the ones who oversee it – Knew It From the Beginning.

Watch this video as it will open your eyes as it sheds some light on this fragile house of cards that has been built. Something to think about. I think you’ll enjoy it.

A word about those “Banks” taking bailout money and then giving a good percentage of it away as bonuses…read more… Read the rest of this entry