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Forum Post: Poverty in the midst of plenty

Posted 2 years ago on May 20, 2012, 5:20 a.m. EST by webb5 (36)
This content is user submitted and not an official statement

Will we ever learn from our past?

In 1931 the world found itself in trouble. The depression was now at its worst. All industrial nations were facing the sad, starving faces of the unemployed. With such a shortage of money, people soon stopped buying goods. As a result, the factories that made these goods soon stopped producing and even closed down altogether further increasing job loses. Small farmers could no longer keep up their interest payments from the dramatically reduced prices they received on their produce. Many surrendered their farms to the banks only to swell the ranks of the unemployed. In fact by 1932, the world was in the grip of a depression.

The Great Depression in Australia

The population of little over six million people in Australia at that time, could produce enough wheat to feed thirty million, enough wool to clothe one hundred million, and enough food, minerals, metals and raw materials to supply more than twice the populations size. There was no shortage of any kind, yet all this came to a sudden holt. People lost their homes, their farms, their jobs, and their livelihood.

What was missing? Money! The stock market crash of 1929 was the culprit, which drained the money supply the economy needed. As money became scarce people went without even though everything they ever needed was at hand. There was no real disaster and there was no flood, drought or war to create such problems. In fact it was a problem they could overcome quite easily. Obviously the missing money enforced on the world, must be replaced, but did it have to be replaced as debt?

There should never be a shortage of money. The money supply must be continually monitored to maintain a correct balance to the supply and demand needs of a nation.

The role of money

It must be stated here, that money is only a tool; it is used as a means to exchange goods of value. Its value is only recognised by the accepted faith, the people have on money– without this, it is worthless. Money therefore has no real value. The real things of value are in the land and what we make of it. Everything around us, the land, trees, water ect, was created for our use, it is God’s creation.

Therefore if we use money as an exchange, it must be produced in correct quantities without cost. What man is physically able to produce, grow, build, and invent, must not be limited by lack of money but rather by the lack of resources. Trade need not be restricted by lack of money.

Below is a fictional story that we can relate to and learn from. It’s about an island that came up with a solution, to the money problem.

In a remote island in the South Pacific, thousands of people could feed themselves, clothe them selves in fact supply everything they ever needed. The people lived in almost paradise and never went without. This was the case until a dark day arrived in their lives. It was discovered that almost two thirds of the island’s supply of shells (money) had disappeared and also it seems their chief banker. A crisis meeting was held with all the important chiefs in attendance. It was declared that the main supply of shells had disappeared which would put the economy in a perilous position. New shells were needed desperately or trading would come to a halt.

Bankers from Europe offered the islanders printed-paper (money). But this came at a great cost, Interest would be charged at a rate of ten percent and one third of the island’s assets were needed as insurance for the banker’s big risk. They were told this would bring them up to date with the modern world.

The islanders thought long and hard about this and almost agreed with the banks to borrow the printed-paper. Luckily a man from another island had seen this very thing happen to his own island. He told them that the banks now owned their island because they did not have the money to pay them back. They found too late that only the banks could supply this printed paper (money).

The banks forced them to give up their property and required that one third of the food they grew would now go to the banks for the next twenty years. There was much bloodshed lost over this until the united islands came in and ordered them to fulfill their agreements. The world islands bank offered them more money but this action made things worse (the interest was killing them!) The people no longer have a home, island or any possessions. They now owe more printed paper (money) than they did before.

The islanders took note of this and decided to revert back to bartering for six months until all the shells needed were collected. Although bartering was very cumbersome they thought it was a much better thing to do. A ton of wood for example was used as an exchange for six weeks supply of meat. After the shells were collected everything went back to normal. The islanders in this story were self-sufficient and had every thing they could ever need. The shells they used for trade could easily of been replaced by rare feathers. They could also of printed their own debt-free money (If they had a printing press!) There was never any need to go into debt.

4 Comments

4 Comments


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[-] 1 points by DemandTheGoodLifeDotCom (3213) from New York, NY 2 years ago

Your claim about the business cycle is just not accurate.

The problem with our current system, and the problem that we experienced during the great depression, is not a shortage of money in the money supply. Nobody destroyed any of the money they had. The problem is the money stopped circulating.

When you have a large number of business failures all at once, it can derail the circulation of money. Businesses that fail don't pay their employees. Those employees now can no longer spend money as consumers.

That lack of consumer spending causes even more businesses to fail which causes even more employees to lose their job which causes even less consumer spending.

That lack of consumer spending causes even more businesses to fail which causes even more employees to lose their job which causes even less consumer spending.

That lack of consumer spending causes even more businesses to fail which causes even more employees to lose their job which causes even less consumer spending.

That lack of consumer spending causes even more businesses to fail which causes even more employees to lose their job which causes even less consumer spending.

And on and on and on.

So it is a vicious cycle that keeps feeding on itself and spirals the entire economy into a depression.

But the money supply has not changed. The money still exists. The people who have it are not spending it. It is all being saved and not invested because every business is going bankrupt and nobody wants to invest in a failing business in a failing economy.

Money is no longer circulating. But the money supply is the same.

So your hypothetical economy who uses debt free money will not be immune to an economy whose money stops circulating. And if your response to that is to just print new money, once the economy got kickstarted again and money was circulating again, all the people who were saving and not investing will begin to invest again and you will be left with inflation. Because you will still have all the original money plus now all the new money you printed being spent into circulation.

[-] 1 points by webb5 (36) 2 years ago

Do you know that the majority of the world's money supply has been created as debt?

Do you know that every debt paid in full is removed from the money supply reducing whats in circulation?

That it is impossible for an economy to pay both its debt and interest payments in full because the interest part was not created?

That every country must continually borrow more money just to maintain its money supply or it will go into a recession?

I feel you do not know what you are talking about, a credit squeeze literally shuts down an economy.

The economic stimulas packages used around the world have ran out and now it's time to pay. The austerity measures are the next stage.

We are bleeding in debt!

It's time we changed the system. Social Credit Is the solution to this crisis. See link below

www.bleedingindebt.com

[-] 1 points by DemandTheGoodLifeDotCom (3213) from New York, NY 2 years ago

"Do you know that the majority of the world's money supply has been created as debt?"

That is false. If you are getting your economics information from books like Money as Debt, you are getting inaccurate information.

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"Do you know that every debt paid in full is removed from the money supply reducing whats in circulation?"

The majority of loans is from people's savings. When I lend you money and you pay me back, I do not destroy the money! The money is not removed from the money supply.

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"That it is impossible for an economy to pay both its debt and interest payments in full because the interest part was not created?"

That is another fairytale reported in books like Money as Debt which have no clue how the banking system operates.

This country produces $15 trillion in income each year. Debt payments are just a tiny fraction of that $15 trillion. And when you make a debt payment, the money isn't taken out of the money supply, it just goes from borrower's pocket to the lender's pocket.

So there is more than enough money to pay back every loan and all its interest.

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"I feel you do not know what you are talking about"

I took graduate economics classes in order to get my biz degree and worked for the Fed and as an investment banker. I know how the banking system works as well as anyone. Books like Money as Debt are just plain wrong.

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"a credit squeeze literally shuts down an economy"

That is correct. That is what caused the Great Depression and that is what is causing our current recession as I explained in my comment above. But the reason why people are not lending is NOT because there is no money in the money supply, it is because nobody wants to lend the money that is already in the money supply to failing companies in a failing economy.

.

"It's time we changed the system. Social Credit Is the solution to this crisis"

I agree we need to change the system. But the solution is to guarantee everyone a job, raise the minimum wage to $115k and reduce the work week to 20 hours. That would put a permanent end to the business cycle since people will always be guaranteed an income to spend; money will never stop circulating. See my link below:

http://occupywallst.org/forum/1-replace-capitalism-with-democracy/

[-] 1 points by webb5 (36) 2 years ago

The banks have created this shortage of money. The sooner we understand how the banks create money the faster we will come with workable solutions.

Those who still do not undertand can go to this link below

http://www.michaeljournal.org/myth.htm