to rabid nationalist fervor are beginning not to work."

"The business of who I am and whether I'm good or bad, or achieving or not,

all that's learned along the way."

"It's just a ride

and we can change it anytime we want.

It's only the choice. No effort, no work, no job, no savings of money."

"I realised I had the game wrong.

The game was to find out what I already was."

"We were seeing

how very important it is

to bring about, in the human mind,

the radical revolution.

The crisis is a crisis in consciousness.

A crisis that cannot, anymore,

accept the old norms,

the old patterns,

the ancient traditions.

And, considering what the world is now,

with all the misery,

conflict,

destructive brutality,

aggression,

and so on...

Man

is still as he was.

Is still brutal,

violent,

aggressive,

acquisitive,

competitive.

And, he's built a society

along these lines."

It is no measure of health to be well adjusted to a profoundly sick society. J. Krishnamurti

Society today,

is composed of a series of institutions.

From political institutions,

legal institutions,

religious institutions.

To institutions of social class,

familiar values,

and occupational specialization.

It is obvious, the profound influence these traditionalized structures have

in shaping our understandings and perspectives.

Yet, of all the social institutions, we are born into,

directed by and conditioned upon,

there seems to be no system as taken for granted,

and misunderstood,

as the monetary system.

Taking on nearly religious proportions,

the established monetary institution exists as one of the most unquestioned forms of faith there is.

How money is created,

the policies by which it is governed,

and how it truly affects society,

are unregistered interests of the great majority of the population.

In a world where 1% of the population owns 40% of the planets wealth.

In a world where 34.000 children die every single day

from poverty and preventable diseases,

and, where 50% of the world's population lives on less than 2 dollars a day...

One thing is clear.

Something is very wrong.

And, whether we are aware of it or not, the lifeblood of all of our established institutions,

and thus society itself,

is money.

Therefore, understanding this institution of monetary policy

is critical to understanding why our lives are the way they are.

Unfortunately, economics is often viewed with confusion and boredom.

Endless streams of financial jargon, coupled with intimidating mathematics,

quickly deters people from attempts at understanding it.

However, the fact is:

The complexity associated with the financial system is a mere mask.

Designed to conceal one of the most socially paralyzing structures,

humanity has ever endured.

None are more hopelessly enslaved than those who falsely believe they are free. - Johann Wolfgang von Goethe - 1749-1832

A number of years ago, the central bank of the United States, the Federal Reserve,

produced a document entitled "Modern Money Mechanics".

This publication detailed the institutionalized practice of money creation

as utilized by the Federal Reserve and the web of global commercial banks it supports.

On the opening page the document states its objective.

"The purpose of this booklet is to describe the basic process of money creation

in a 'fractional reserve' banking system."

It then precedes to describe this fractional reserve process

through various banking terminology.

A translation of which goes something like this:

The United States government decides it needs some money.

So it calls up the Federal Reserve and requests, say, 10 billion dollars.

The FED replies saying: "sure, we'll buy ten billion in government bonds from you".

So the government takes some pieces of paper,

paints some official looking designs on them and calls them treasury bonds.

Then it puts a value on these bonds to the sum of 10 billion dollars

and sends them over to the FED.

In turn the people of the FED drop a bunch of impressive pieces of papers themselves.

Only this time, calling them Federal Reserve notes.

Also designating a value of ten billion dollars to the set.

The FED than takes these notes and trades them for the bonds.

Once this exchange is complete,

the government then takes the ten billion in federal reserve notes,

and deposits it into an bank account.

And, upon this deposit the paper notes officially become legal tender money.

Adding ten billion to the US money supply.

And there it is, ten billion in new money has been created.

Of course, this example is a generalization.

For, in reality, this transaction would occur electronically. With no paper used at all.

In fact, only three percent of US money supply exists in physical currency.

The other 97 percent essentially exists in computers alone.

Now, government bonds are by design instruments of debt.

And when the FED purchases these bonds

with money it essentially created out of thin air,

the government is actually promising to pay back

that money to the FED. In other words, the money was created out of debt.

This mind numbing paradox, of how money or value

can be created out of debt,

or liability, will become more clear as we further this exercise.

So, the exchange has been made. And now, ten billion dollars sits in a commercial bank account.

Here is where it gets really interesting. For, as based on the fractional reserve practice,

that ten billion dollar deposit

instantly becomes part of the bank's reserves.

Just as all deposits do.

And, regarding reserve requirements as stated in "Modern Money Mechanics":

"A bank must maintain legally required reserves

equal to a prescribed percentage of its deposits".

It then quantifies this by stating:

"Under current regulations,

the reserve requirement against most transaction accounts is 10 percent".

This means that with a ten billion dollar deposit,

ten percent, or one billion,

is held as the required reserve,

while the other nine billion is considered an excessive reserve,

and can be used as the basis

for new loans.

Now, it is logical to assume, that this nine billion

is literally coming out of the existing ten billion dollar deposit.

However, this is actually not the case. What really happens, is that the nine billion

is simply created out of thin air

on top of the existing 10 billion dollar deposit.

This is how the money supply is expanded.

As stated in "Modern Money Mechanics":

"Of course they" - the banks - "do not really pay out loans for the money, they receive as deposits.

If they did this, no additional money would be created.

What they do when they make loans

is to accept promissory notes"

- loan contracts -

"in exchange for credits" - money - "to the borrowers' transaction accounts."

In other words, the nine billion can be created out of nothing.

Simply because there is a demand for such a loan,

and that there is a 10 billion dollar deposit to satisfy the reserve requirements.

Now let's assume that somebody walks into this bank and

borrows the newly available nine billion dollars.

They will then most likely take that money and deposit it

into their own bank account.

The process then repeats.

For that deposit becomes part of the bank's reserves.

Ten percent is isolated and in turn 90 percent of the nine billion,

or 8.1 billion is now availlable as newly created money for more loans.

And, of course, that 8.1 can be loaned out and redeposited creating an additional 7.2 billion

to 6.5 billion... to 5.9 billion... etc...

This deposit money creation loan cycle can technically go on to infinity.

The average mathematical result is that about 90 billion dollars can be created on top of the original 10 billion.

In other words, for every deposit that ever occurs in the banking system, about nine times that amount can be created out of thin air.

Money-Jitters. Ask the obliging Bank of America for a jar of

soothing instant money.

M-O-N-E-Y in the form of a convenient personal loan.

So, now that we understand how money is created by this fractional reserve banking system.

A logical yet illusive question might come to mind:

what is actually giving this newly created money value?

The answer: the money that already exists.

The new money essentially steals value from the existing money supply.

For the total pool of money is being increased irrespective to demand for goods and services.

And, as supply and demand defines equilibrium,

prices rise, diminishing the purchasing power of each individual dollar.

This is generally referred to as inflation.

And inflation is essentially a hidden tax on the public.

What is the advice that you generally get? And that is, inflate the currency.

They don't say: debase the currency. They don't say: devalue the currency.

They don't say: cheat the people who are safe. They say: lower the interest rates.

The real deception is when we distort the value of money.

When we create money out of thin air, we have no savings. Yet there is so called "capital".

So, my question boils down to this: how in the world can we expect to solve the problems of inflation?

That is: increase in the supply of money, with more inflation."

Of course, it can't.

The fractional reserve system of monetary expansion is inherently inflationary.

For the act of expanding the money supply, without there being a

proportional expansion of goods and services in the economy,

will always debase a currency.

In fact, the quick glance of the historical values of the US dollar, versus the money supply,

reflects this point definitively

for inverse relationship is obvious.

One dollar in 1913 required $21.60 in 2007 to match value.

That is a 96% devaluation since the Federal Reserve came into existence.

Now, if this reality of inherent and perpetual inflation seems absurd and economically self defeating.

Hold that thought, for absurdity is an understatement in regard to how our financial system really operates.

For in our financial system money is debt,

and debt is money.

Here is a chart of the US money supply from 1950 to 2006.

Here is a chart to the US national debt for the same period.

How interesting it is, that the trends, are virtually the same.

For the more money there is the more debt there is.

The more debt there is the more money there is.

To put it a different way, every single dollar in your wallet is owed to somebody by somebody.

For remember : the only way the money can come in to existence is from loans.

Therefore, if everyone in the country were able to pay off all debts including the government,

there would not be one dollar in circulation.

"If there were no debts in our money system, there wouldn't be any money."

- Marriner Eccles - Governor of the Federal Reserve September 30th, 1941

In fact, the last time in American history the national debt was completely paid off

was in 1835 after president Andrew Jackson shut down the central bank that preceded the Federal Reserve.

In fact, Jackson's entire political platform essentially revolved

around his commitment to shut down the central bank.

Stating that one point: "The bold efforts the present bank has made to control the government... are but premonitions of the fate that awaits the American people

should they be deluded into a perpetuation of this institution

or, the establishment of another like it." Unfortunately this message was short lived.

And the international bankers succeeded to install another central bank in 1913,

the Federal Reserve. And as long as this institution exists

perpetual debt is guaranteed.

Now, so far we have discussed the reality that money is created out of debt through loans.

These loans are based on a banks reserves,

and reserves are derived from deposits. And through this fractional reserve system,

any one deposit can create 9 times its original value.

In turn, debasing the existing money supply raising prices in society.

And, since all this money is created out of debt,

and circulated randomly through commerce,

people become detached from their original debt.

And a disequilibrium exists where people are forced to compete for labor

in order to pull enough money out of the money supply

to cover their costs of living.