1. If you spend more than 50% of your credit limit every month, this indicates to the Credit Bureau that you do NOT have enough cash on hand to meet your monthly expenses. This will identify you as a high credit risk and will actually reduce your credit score by 60 - 70 points overnight (Fair
2. If you miss 1 or 2 payments on your credit card debt, the issuing company will skyrocket your interest rate to a whopping 27% -
3. Out of a random sample of 3 million American consumers (included in Experian's National Score Index), 51% of them have at least 2 credit cards and 14% of them have 10 or more credit cards.
The History of Money
Money originated as a convenient way to conduct trade without
the need for barter. At first, monetary systems required that
the currency be backed up by something of intrinsic value such
as gold or silver. In order to facilitate economic expansion, a
means of obtaining credit was established by goldsmiths who
possessed significant quantities of gold.
The first banks originated with goldsmiths who had vaults that
could be used to store gold owned by other people. In exchange,
these people were given claim checks that represented the value
of the gold they had deposited. These claim checks represented
legal tender that could be sold and traded in the marketplace as
a means of transferring ownership of the underlying gold assets.
As the demand for credit grew, the goldsmiths issued claim
checks for gold that exceeded their reserves, under the
assumption that not all the owners would claim their gold at the
same time. They made money by charging interest on these loans,
even though they did not possess sufficient gold to back them
up. They created money by lending to borrowers with a promise
for them to repay.
When claim check holders determined what
was happening, they demanded their gold in exchange for their
claims. When there wasn’t sufficient gold to satisfy their
demands, confidence in the system plummeted and credit dried up.
At this point the fledgling banks agreed to a limit on how much
money they could lend that was not actually backed up by
gold, which effectively regulated their ability to leverage. If
there was a run on any one bank, the central banks would infuse
gold into the system to cover the shortfall.
Video: Money As Debt - Part I
The Present Monetary System
Banks can essentially create as much money as we all can borrow.
So, the total amount of money that can be created is equal to
the total level of debt. When we sign for a loan and pledge
repayment, that is the only thing of real value and that value
can be sold and traded to anyone that believes that we will make
payment. Privately created bank credit is convertible to
national currencies like the U.S. dollar. Citizens must accept
this money in payment for any legal debts.
In the artificial world of money, a bank’s promise to loan money
it doesn’t have is accepted and it can only practice this
monetary system with active government participation and
cooperation. In order to facilitate this process, the
Passes legal tender laws to make us use the national
Allows private bank credit to be paid out in this currency.
Enables courts to enforce debts.
Passes regulations to protect the money system’s
functionality and credibility, without telling the public where
the money really comes from.
There is a statutory limit for fractional reserve requirements,
which is the amount of money required in reserve in relation to
the amount available for new debt. Today’s reserves equal the
amount of government-issued cash or equivalent that the bank has
deposited with the central bank, and the amount of already
existing debt money the bank has on deposit. Bank credit money
is being created and destroyed every day as new loans are made
and old ones are paid off.
Video: Money As
Debt - Part II
How can we all be in debt?
How can there be enough money out there to account for the
astronomical levels of indebtedness? The answer is that there
isn’t; it’s created through borrowing. As loans are granted
banks create money. The problem is that banks only create the
principal amount of money, not the interest, so the money pool
only contains the principal. Since the interest on a mortgage is
far greater than the principal, more and more debt money must be
created to pay down the interest.
This phenomenon puts us in a never-ending spiral, requiring
more and more money creation. It’s only the time lag between
money’s creation as new
loans, and its repayment, that keeps the overall shortage of money
from catching up and bankrupting the entire system. The supply
of money can grow as long as the volume of production and trade
is growing at the same rate, or the money will become worthless.
It has to keep feeding on itself or it would collapse.
Different concept of money
Many believe that the system must be replaced, and that new ways
to create money through debt must be found without creating
interest. Some have called for a return to the gold or silver
standard. In this light, these questions are raised:
Why do governments choose to borrow money from private banks
at interest when government can create all the interest-free
money it wants?
Why create money as debt; why not create money that
circulates permanently without relying on more debt?
How can a money system that relies on perpetually
accelerating growth be used to build a sustainable economy?
What is it about our system that makes it totally dependent
on perpetual growth?
essentially created as the value of what was created with that
money. If trade and production increase proportionally with the
money supply, no inflation will result. Since inflation is
equivalent to a flat tax on money, a reasonable level of
inflation could be allowed in place of taxation. Or, in order to
counter the effects of inflation, tax collection receipts
represent money that is taken out of use, keeping the relative
value of money the same. Conversely, to control deflation, we
would spend more money into existence.
Governments rise and fall on their ability to preserve the value
of their currency, but they are now victims of perpetual
servitude to the banks. If no interest were paid to private
bankers, tax revenues would go much farther and there would be
no national debt if government created only the money it needed.
We now possess a perpetually growing debt that can never be paid
off. Is this an accident or a conspiracy?