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Exploring The Impossible – Debt Used As Money

The Privateer
By The Privateer / October 5, 2010

There are two ways to acquire wealth. One can produce it or one can take it from those who have produced it. The first method has often been called the economic method. The second method has many names. It has been called stealing, or usurpation, or expropriation, or “eminent domain”. Whatever, the description, there is one constant. It has always been called the political method. A government cannot produce but must consume in order to function. It must extract the means from the people it governs. That is true even of a government pared back to its essential services of the protection of life and property. But when government IS pared back to those limits, its costs are minute by modern standards and the burden of paying for it is easily bourne. A government which protects against criminal acts is cheap at twice the price. A government which indulges in them becomes, over time, impossible to afford.

And because it is impossible to afford, a new method must be found to “pay” for it. When taxes and charges prove insufficient, government can no longer live off the wealth its subjects have already created. It must live today off the wealth they are expected to create tomorrow. It must BORROW.

“Money” created in the act of incurring a debt is UNSOUND by definition. It cannot function as a medium of exchange because no exchange has taken place. It cannot cancel a debt because it is itself a debt. It is said to be based on the “full faith and credit” of the nation which issues it. But neither faith nor credit has ever brought an atom of REAL economic wealth into the world. What unsound money literally does is to put the future “in hock” to the present. Sooner or later, the present catches up. That is what is happening all over the world today. And it is unsound money which has done it.

Nobody would accept a promise of indentured servitude for themselves and their progeny in return for something of no value. Yet that is what unsound money promises, and nobody has any choice in the matter of taking it in exchange for their goods. That is bad enough in itself, but when prices become increasingly distorted as the amount of debt “money” increases, the “art of the possible” falls on its face.

About the author

The Privateer

The Privateer is an essential, must-read journal published and edited by Australian William "Bill" Buckler:

"We are fundamentally concerned with the underlying ideas which shape the way nations interact, the way economies and markets work, and the way individuals prosper or decline on the basis of their ability to choose and act.

We hold that the fundamental reason behind the present chaos in global relations, in trade, in financial interactions, and in markets themselves is an "absence". What is absent, or missing, is the freedom to choose and act, the security of private property, and the use of sound money. That is the fundamental premise on which The Privateer bases all its analysis."

Every issue of the Privateer is 12 pages of unequaled geopolitical, historical and economic acumen from which the above excerpt was used.

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