Part One and Part Two explain the beginnings of currency and loans as we know it. But that truly is just the beginning. When last we left our bankers, they were just starting to loan out their depositors’ gold without their knowledge or consent. Of course, eventually people caught on, and the government stepped in to regulate exactly how much bankers could loan.
The snowball grew over time, and bankers still wanted more. They pushed the limits, and regulations eventually allowed bankers to loan out a certain multiplier of what was currently on deposit. In other words, if the banker had $10,000 in their safe, they could loan out as much as 9 times that, or $90,000.
Essentially the bankers were already creating money out of nothing with this system. However, it is all still backed with gold. In 1913, the United States left the gold standard, founded the Central Bank, and started the Federal Reserve all in one fell swoop. Now, money is not only a worthless dog, but is literally created out of thin air when you sign a loan agreement.
Of course, that would be just dandy if it weren’t for one ugly catch. That loan agreement only creates the principal amount not the interest. Think about that for a moment. The interest has to come from somewhere, and in today’s economy, that somewhere is someone else’s pocket, someone else’s loan, someone else’s ability to pay their own interest.
So when I say I’m a bad American, it’s because I don’t participate in this charade. Although, you could also say I’m a better American than most because I’m not sucking everyone else dry to pay the interest on loans. However you want to put it, in the end, everyone loses. This economy is nothing more than a game of musical chairs, but the music can only play for so long before everyone is sitting on the floor.