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The Definitive Analysis Of The Economic Crisis
...showing why neither debt-financed stimulus, nor the gold standard, nor allowing total liquidation of all distressed businesses and households make sense, and why only the taking of money creation and credit monopoly of the hands of the financial sector and putting it in the household sector (and not the government sector) is the real solution.
By Dick Eastman
Replacing Usury Capitalism with and American version of Social Credit wherein the market economy is led by household demand with money that does not come from bank loans.
No remedy for the depression will work that does not fix this problem in the only way this problem can be fixed. 
Like an animal is a merger of biological system for reproduction and a biological system for acting in the environment for gaining sustenance and protection, so society consists of a sociological system for reproduction and nurture called the household sector and another social sociological system for production of goods and services called the business sector. Markets and the money system allow the household sector and the business sectors to cooperate. With just these two sectors operating "supply creates its own demand" in that what is paid to people by the business sector for their services of operating on the environment to produce "goods and services" is money that will be used to buy what is produced -- whether consumption goods or producer's goods. 
When there is just a household sector and a business sector there is no problem. That which is paid in production is that which is used to purchase what is produced. (Even when some people choose to save their money everything will still get sold, because either other people will borrow that money or else fewer monetary units chasing the same amount of goods will result in a rise in the purchasing power of the monetary unit to compensate for the dollars withheld from circulation by savers.
Sin and the fall of man enters the picture with the invention of usury. Usurers are people who stand apart from from production who 1) borrow purchasing power from earner-savers and re-lend the money at interest making money on the spread between the rate at which they borrow and the rate at which they lend, and 2) lending the same savers deposited money twice by simply creating a checking accounts rather than lending the actual currency and letting people write checks up to the amount credited to the checking account -- in effect making new money simply by setting up a checking account and entering whatever balance the usurer wishes it to have. This provides the usurer with the means of dominating and draining the wealth of both the household sector and the business sector. With a monopoly of the power to create bank deposits without earning the money or borrowing the money - the financial sector can extort any terms for receiving a loan that they choose. For them to create a checking account and credit a number to it -- they demand both compound interest and the power to obtain ownership of collateral that the borrower must put up in order qualify for the usurer's loan. The usurer inserts new purchasing power -- which by the way dilutes the purchasing power of everyone else's purchasing power -- simply because they are new money claims bidding against the money of the earners. But that is not the biggest trouble the usury system inflicts.
The biggest problem the usury system as described above inflicts upon the economy is the parasitic drain of interest from purchasing power in circulation. This is the key problem of our civilization, the fatal flaw that is behind all recessions and depressions, all busts and booms. 
Now here is the explanation how interest payments on the two types of money, i.e., the savings backed loans and the double lending of money deposited by savers (the second loan of a saved dollar being called "thin air" or "keystroke created" money.) Now pay close attention to the carefully worded analysis of cycles of recessions and false "stimulus" cures that merely set up conditions for a bigger recessions and bigger transfers of wealth to the usurers later on.
When the household sector earns and spend and the productive sector spends and earns there is no problem. But when usury begins lending to business and households at interest there obtains a net drain of purchasing power in the flow between households and business which causes recessions. 
The reason for this net drain of purchasing power is that the financial sector is always injecting a stream of loans -- call this flow "loans per month" (L) but it is also extracting a stream of purchasing power that is equal to the principal (L) plus interest (i). Total purchasing power is always decaying at a per month rate of new L minus old L principal paid off minus interest payments.
Ln - Lo - i = net drain of purchasing power.
In other words, new loan deposits minus old loans paid off minus interest on loans outstanding results in continuing deflation.  
In a stimulus jolt -- there L-new may temporarily exceed L-old being paid off, but eventually the steady loss of purchasing power on outstanding debt -- not bigger because of the big stimulus L-new will drain away the stimulus until the temporary net gain becomes an accelerating net loss -- deflation and contracting economy and loan calls and foreclosures once more come to the fore.
Let's go over that again.
New loans are being injected as principal on old loans plus interest on loans outstanding are being drained from circulation. This over time means a net loss of purchasing power -- it means a tendency towards deflation and recession. Thus the economy is automatically prone to bust, which sets up political demand for so-called "stimulating" of the economy. And this leads us to the fatal vicious cycle of Usury Capitalism. In order to put more purchasing power in the system, the current legal and institutional set up of society requires that any stimulus must be debt financed -- more keystroke loans. (A tax financed or savings financed stimulus would not add new purchasing power.)
Now here is the part economists have been either missing themselves or withholding from you in a conspiracy of silence:
Interest payments to usury are a net drain on purchasing power which causes insufficient purchasing power for the household sector and the business sector to buy the products they produce -- because cost of production includes the extra interest payment to the usurer in addition to money paid to households for their productive work. But when the government provides a stimulus -- either "extending unemployment benefits" or paying for export of killing services abroad in the form of a war or paying for windmills or more social workers and bureaucrats or disaster cleanups (after they create the disaster) or a war on terror (against those who the usurers deem to be terrifying, like people who understand things like what you are reading right now) -- whatever form this stimulus takes, the stimulus is debt financed.  
Stop and think what that means -- what that implies.
It means in the recession that is caused by interest payment drain, the stimulus is simply the taking on of new interest payment obligations. At first the amount of the new loan will be felt and it will pump purchasing power where purchasing power has been deficient (by the way, government pump it to their political friends - the friends of of the usurers so they can be "first spenders" before the temporary inflation diminishes per dollar purchasing power -- rather than pumping it to everyone hurt by this deflation. But we are not discussing this problem redistribution to the ruling-class now. We are after even bigger game -- the grand unified explanation of depression, followed by "stimulus" borrowings which temporarily boost purchasing power in circulation but bring yet more interest payments which will accelerate the rate of decay of purchasing power until the stimulus is eaten away by interest payments and the burden of debt is now greater than before the stimulus.  
The stimulus -- be it in the form of debt-financed export of war, or debt-finaced "stimulus tax cuts" -- which really means debt-financing what was previously tax financed, thus increasing government debt, government interest payment obligations -- which ultimately are household obligations via taxation to pay the interest on the national debt -- or be it stimulus in the form of extensions of unemployment benefits -- or in the form of big "New Deal" government spending projects which is simply having the government build what will later be privatized and given to the usurers in payment of increased debt;  or in the form of debt-financed welfare state handouts -- the result will always be a temporary jump in purchasing power that will soon be eaten up by the interest payments and new deflation which means production once again will not be able to be sold at prices that cover both production costs and financing costs - leading in more foreclosures where the usurers and their corporations friends (who have unlimited credit outside the domestic economy loop) who can buy up our bankrupt businesses adding to their own corporate monopoly power, or buy up our foreclosed houses adding to their rental properties and income -- the rent now going to foreign landlords representing yet one more drain on domestic loop purchasing power.
And so you see 1) the inevitability of deflation and depression due to the leakage of purchasing power in the form of interest payments to usury; 2) the folly of debt-financed stimulus remedy of any kind due to the fact that whatever the original boost of purchasing power by the new debt-financed spending, the interest payments will eventually eat up the stimulus and eat at an even faster rate than before the stimulus was applied; and 3) the way in which each round of debt leading to interest-drain leading to deflation leading to political pressure for "stimulus" which is self-defeating met with debt-financed stimulus which leads to eventual re-swallowing up of purchasing power by new and higher interest payment obligations which results in foreclosure transfers of more wealth from the households and producers to the usurers.
Now before getting to the only real solution -- let us discuss what is offered as a solution by economists and "forecasters" and financial advice givers and gold dealers -- namely a gold standard.
The gist of the gold-standard proposal is that if money is gold then the supply cannot be expanded and their will not be any economic stimuli by government leading to new "boom" boosts to purchasing power -- thus solving the problem of "inflation" (which you will note from above is not the problem at all -- the real problem is not inflation but rather chronic deflation that is given the quack remedy of debt-financed government largess that must eventually come to grief as the interest payments eventually eat up all of the stimulus and result in new deflationary contraction, new bankruptcies and foreclosres and new transfer of wealth from the sick patient to the quack doctor who have us the disease in the first place. A gold standard merely locks in the deflation. Depressions never end without inflation -- and the reason why booms end is because the injected purchasing power is once again eaten away by now bigger interest payment obligations as explained above. Gold merely ends the boom it does not at all address the chronic tendency to bust. Gold is merely the lock on the door to the usurers treasure house of stolen goods -- so that we can never get our wealth back, can never earn our way out of debt slavery, can never escape the problem of usury which is chronic deflation. What people borrowed as keystroke "tin air" money, the gold standard would now require them to repay in gold. And where would the government which is bankrupt get the gold for a gold monetary system? The people are bankrupt debt slaves, so the gold would have to be borrowed at interest. For the fact is that every gold system of any nation of the last few hundred years has been a system with credit expansion -- that is with lending of more money -- gold certificates payable in gold in the vault -- than there actually is gold in the vault -- and gold standard lending payable with interest carries the same fatal flaw as the present tax-backed and interest-paying government security backed fiat system. Switching to gold, then, does not even touch the problem of usury described above -- it merely makes it impossible for an economy to maintain purchasing power that is necessary to prevent ever-accelerating business failures and mortgage defaults. Remember, the usurers monopolize gold -- and to get their gold in order to have a gold standard is to make yourselves slaves to their monopoly power. Their gold would become the monetary base for all lending -- they would be the only winners in a gold standard, and their winnings would come out of our toil and suffering.
The only real solution is one that you don't hear about the economics profession -- the oldest profession in the world (prostitute) combined with the nearly as old profession of witch doctor (mumbo jumbo bamboozle science.)
The real solution to end usurer "keystroke" lending that lends more than savers save and does so at compound interest as the source of our money. As long as the financial sector is the source of our purchasing power and that it is purchasing power which disolves, decays, disappears in the form of interest drain - then we will continue to have debt leading to interest drain leading to deflation and depression leading to borrowed money stimulus leading to more interest payment drain which will overtake the stimulus and put us into an even deeper hole.
Also, the solution is not to let the deflation continue until the "mal-investment" (i.e. the spending caused by the stimulus -- before the interest on the debt-based stimulus eats away the purchasing power the stimulus temporarily provided) -- as I was saying the solution is not to let the deflation continue until everyone is bankrupt and all bankrupted assets of the former middle class are in the hands of the usurers. That is the solution of the usurers' stable of prostitutes pretending to be economists (when an economist speaks up for allowing assets to liquidate to cleans the economy of mal-investment -- they are blowing smoke in the face of the public to blind the public and conceal what is really happening -- the bust that ensues when interest drain eats up the stimulus of the last stimulus does not come about because of mal-investment in inflation -- it comes about because purchasing power is again withdrawn -- and any "economist" who fails to share that truth and instead promotes the usurers dogma of mal-investment as the cause of depression has really stopped being an economist and is merely a prostitute hired to perpetuate a gigantic scam that is the ruin of nations the destroyer of lives.
The real solution is to have money originate in the household sector -- let the housewife be the first spender of new money. And let this money not be debt money, but money that originates as fully owned by the household free and clear -- nothing to pay back. Then the purchasing power will not decay in interest payments to usurers. Then the household will direct entrepreneurs through the market signals of the householders' consumer demand. Businesses will be able to stay in business and even expand (if they satisfy consumer demand) with profits. When a business goes bankrupt it will not be because of a drain of interest to usurers, but will be because the entrepreneur simply failed to read the desires of the consumer correctly -- that kind of loss is OK, that kind of loss simply takes money out of the hands of people who waste resources making things people don't want. That is not the same kind of loss that hits both good and bad entrepreneurs alike when purchasing power is vanishing into the usurers pockets in the form of compound interest on loans.
The solution of money that originates debt-free and free-and-clear in the hands of householders goes under the name of "social credit" in Canada and Austrailia where the idea was introduced by an Englishman C. H. Douglas over the years from 1919 to 1952. Unfortunately the name "social credit" is rejected by Americans without a second look, because to them the name sounds like "socialism."
Nevertheless, I present the idea of a revolutionary change in the way our society introduces purchasing power into the economy using this problematical term "social credit."  
If you have read and understood what was explained above, then you know that only social credit can cure what ails the household and business sectors of every nation of the world today. (China is experiencing a boom now, but that is only because the purchasing power that usury withdraws from a nation must be spent somewhere else. A bust in one part of the world must accompany heavy investment in another part of the world.)
Now you understand the fundamental economic problem of our time -- the flaw in the mechanism of money and credit upon which we all rely but which is continually failing us -- failing us, not failing the usurers who benefit from the system.
Read exactly how my version of social credit system works here:  
I am not selling anything -- not gold and not a political party or a marketed reform package. I am just getting to you and everyone else who will read or listen a fundamental understanding of the monster that is eating us alive and of the true "silver bullet" that will kill the beast and allow us, the people of the household and business sectors, to take back our economy from the parasitic usurers and their pet corporations. I have no website or radio program or presence on youtube or published books. I place my hope entirely on you the chance reader -- to enlighten the world about the true nature of the disease of finance capitalism and true corrective that will restore life and a wonderful and happy future to all householders of all nations.
Dick Eastman
Yakima, Washington
Questions about social credit? Write to me here: oldickeastman@.com
Dick Eastman
Yakima, Washington
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