Monday, October 24, 2011

How FED Works?

The way that the US economy gets money to function is through a loan from the FED. On a personal level, it's like never getting a paycheck, only a limit increase on one's line of credit at the bank. This method of creating cash to function only creates the money that represents the principle, not the interest.
Assume an Island government is loaned $1 Trillion dollars to run its economy for ten years, but with an interest rate of 10% per year. The first year the "lifestyle" of the economy represents the full trillion dollars but the following year, 100 Billion is taken out of the economy to pay the interest. Clearly at the end of ten years, all the money that was originally loaned is now used to service the debt, and nothing left to run the island economy. Massive deflation is the result of a debt generated form of currency. More Here..

2 comments:

  1. "HOW THE FED WORKS?" THAT'S THE PROBLEM, IT DON'T WORK!!!! ANDREW JACKSON IS SPINNIN IN HIS GRAVE!

    ReplyDelete
  2. Oh it works alright. It works for the scammers.

    ReplyDelete

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