Thursday, September 18, 2008

Honesty! (BJ Lawson)

BJ Lawson on the dangerous combination of fractional reserve banking and debt-based money:

Finally, tonight, as we sail towards economic catastrophe, a glimmer of hope. Honesty:

The U.S. Congress is unlikely to pass new legislation to overhaul financial regulations this year because “no one knows what to do,” Senate Majority Leader Harry Reid said today.

Well, that’s not exactly true. Ron Paul knows what to do. Michael Shedlock knows what to do. But at least we’re finally at the place where Congress is ready to admit its relative ignorance.

Not only do they not know what to do, they don’t even know what the problem is.

First, it’s time to admit the real problem — fractional reserve banking (where banks lend out more money then they have on deposit for lending) and debt-based money (where money is created through loans that must be paid back with interest). These two ingredients are amphetamines for our economic system.

Read that again — amphetamines. Easy credit is a dangerous, addictive drug. Our economy becomes hooked on easy credit. When we first get access to cheap credit the economy accelerates, but eventually we develop a tolerance. Eventually we need more and more cheap credit to get the same stimulatory effect.

Read the rest

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