Here’s a blog post by Reggie Middleton (one of my favorite bloggers) on BoomBustBlog:
http://boombustblog.com/20090301853/Banking-out-of-Control.html

It is a bit dense but contains a clear description of the problem of an economy that is based on debt, fractional reserve banking, and fiat currency.

Here are my observations:

  • The current financial crisis is NOT a liquidity crisis but a solvency crisis.
  • The crisis is built into the system; i.e. it was bound to happen at some point due to escalating debt relative to savings.
  • The current political leaders are NOT solving the root problems but bailing out their Wall Street friends and donors.

In summary, the system will collapse due to debt that cannot be repaid.

My hope is for serious monetary reform in the U.S. starting with an END to:

  • Debt-based money
  • The Federal Reserve
  • The bubble economy
  • “Financial engineering” (as opposed to real productivity) consuming the “best and brightest” minds

Unfortunately, we have just the opposite system. Until the system changes we are slaves to our monetary masters.

President Abraham Lincoln said it best over 200 years ago:

“The Government should create, issue, and circulate all the currency and credit needed to satisfy the spending power of the Government and the buying power of consumers.”

“The privilege of creating and issuing money is not only the supreme prerogative of Government, but it is the Government’s greatest creative opportunity.”

“By the adoption of these principles, the taxpayers will be saved immense sums of interest. Money will cease to be master and become the servant of humanity.”