Guest Post: Unleashing The Future: Advancing Prosperity Through Debt Forgiveness (Part 1)

Tyler Durden's picture

Submitted by Zeus Yiamouyiannis, contributor to Of Two Minds

Unleashing The Future: Advancing Prosperity Through Debt Forgiveness (Part 1)


My last article on debt forgiveness, Endgame: When Debt is Fraud, Debt Forgiveness is the Last and Only Remedy must have struck quite a chord in discussions of the future of the economy. It was re-posted on scores of websites and received over 20,000 reads on Zero Hedge. It also resulted in a reference on the Max Keiser Report and a subsequent interview with Max Keiser. This led in turn to a popularization of a term I used, “fake assets,” to denote the true nature of “toxic assets”.

The good news is that people are talking, attempting to assess the situation in real terms, and looking for an alternative to the broken system. The bad news is that this discussion has not been turned very much toward practical directions. The main contention in my original article on debt forgiveness and subsequent interview was simply that ignoring the mathematics of debt (where debt grows exponentially and real growth is limited), especially when magnified by tens, if not hundreds, of trillions of dollars of additional fraudulent debt, is a dangerous fantasy that worsens insolvency and accelerates collapse. “Extend and pretend” cannot provide an answer but can only amplify current destructive trends and delay serious preparation of an alternative.

This series outlines some of the alternatives to the current impasse.

Principles and issues in debt forgiveness administration:

Before embarking on a mission to address the standoff between people who cannot pay their debts and international economies that have been running on massive debts for the last three decades, one must do a reality check and establish sane observations and principles.

1) Debt that cannot (vs. “will not”) be practically paid is not a debt in its classical sense. It’s a default. Whether or not people want to recognize this reality is another issue. We recognize that a law that cannot be enforced is not really a law in any practical sense, so why are we dragging our feet with debt? Greece cannot pay its debt by any rational formula. It is already in default. Extending and pretending does not materially change this fact, it only delays recognition of the stark, enduring reality.

2) Debt based in fraudulent lending is also not true debt in any meaningful sense, since the loan along with its obligations originated from something (private fiat) that had no valid authority or exchange value to begin with. Much of the current worldwide debt simply stems from lending based in fraud numbering in the hundreds of trillions of dollars by institutions who did not have adequate collateral (i.e. held insufficient capital reserves, engaged in mark-to-fantasy accounting of their assets, assigned real value to fake assets like credit default swaps, etc.). A lending body cannot give effectively nothing to someone (claiming it is something) and legitimately expect to get something real back.

3) When debt systems are flooded with fraudulent currencies and claims, it is not true that someone, either the borrower or lender, will have to pay the “false value”-backed debt. You are not legally allowed to profit from crime nor legally obligated to support crime. This precludes the payment of many of the debts currently in circulation. In committing wide-scale control fraud, major financial institutions have broken laws. The laws they have broken are enforceable; they just have yet to be enforced.

However, even with successful prosecution, bankruptcy proceedings, and nationalization/receivership of offending institutions, we are left with a practical problem: Real currency has been mixed with fake currency, real debt with fake debt. Chains of title and claims to property have been so forged, electronically registered, diced up, and distorted as to make it difficult to sort valid ownership from invalid. When real money has been high-jacked and “disappeared” as with Bernie Madoff, what can be done to address this? These will be points of discussion later in this article series.

4) The mathematics of debt, even without fraud, would require periodic forgiveness or at least abatement. There must be ways for debts to be adjusted to contingencies. Economies, like families, go through good and bad times. Debt obligations are constructed as if there are only good times. Basically, the only way to pay off a debt is to outrun it in a time of relative stability. Even in eras of surplus, debt takes a big bite out productive effort, but it quickly becomes consuming as one gets behind in payments and as more and more of the fruits of effort must go to servicing debt.

At that point, loans become chains that tie people to mediocre jobs and underwater houses and no longer engines of mobile growth. Debt forgiveness recognizes this contingency and facilitates liberty, productivity, and global quality of life as the more salient indicators of vital economies. Policies and contracts ultimately must be in the interests of people’s well-being for them to be legitimate. Conversely, when debt is ring-fenced from contingency as with student loans, it will be become inherently corrupt and unjust.

5) In any rearrangement of the debt system, productivity and stakeholdership should be rewarded and parasitism should be punished. It’s easy to forget that people used to go to a banking agent to get a loan to grow their net financial worth through productive enterprise. In such a relationship the bank gained a stake in your success, not your misfortune. If we are serious about rewarding well-applied effort, then it would make sense to peg debt and debt obligations to the productivity growth curve of an enterprise or domestic product. Lending institutions, then, would essentially buy a longer term stake in the success of enterprises it funds, exert a due diligence proportional to its interest, and both benefit from and share the burden of inevitable rises and falls in growth.

In the housing-bubble debacle the incentives were exactly opposite. Irresponsibility was rewarded precisely because banks could sell off fraudulently documented loans as quickly as they could be signed. In late capitalism, bank support for productivity has been converted into support for exploitation and victimization, using repayment shortfalls to repossess assets from borrowers even though the bank loans were drawn from “money” backed by counterfeit assets. That has to be reversed—real money for real enterprise backed by real assets.

6) Things go down and not always up. “New era” rhetoric where financial gravity is suspended is a dangerous delusion. When we realize this simple fact and combine it with rewarding productivity and stakeholdership, we realize that our revenues and values will fluctuate dependent upon demand, environmental limits, and a host of other factors, some within our control and some not. Fighting this empirical fact, on the other hand, creates damaging and unsustainable living. Why not tie notions of prosperity and economic organization to optimizing our productivity, by identifying and working within the changing conditions, not distorting those conditions by taking on debt-credit to be paid by later generations?

7) The living shall not be beholden to the dead. When an individual person dies with debts, what can be collected from their remaining assets is collected and the rest is written off. Yet the opposite occurs with generational debt. Irresponsible borrowing by past generations is foisted on succeeding generations. The sins of the forefathers are preserved with interest to gouge the quality of life of younger people who neither decided upon nor benefited from irresponsible borrowing.

Certainly, we now see scorched-earth class warfare of the 1% against everyone else, but we are ignoring an even more profound unintended warfare by an entire generation of post-WWII world citizens against the wellness and interests of its own children. How could such a destructive myopia so thoroughly pervade society and bring us this critical historical inflection point? This will be examined in the next part.

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Seer's picture

Excellent observation/comment! (why the hell did this get junked? junker, what says you? I want to hear YOUR reasons)

wisefool's picture

Not the junker, but I can explain how they got it honest. It should be as simple the story of the Frog and the Scorpion swimming across the river. But since the repeal of Glass-Stegal, nobody knows which is which. Frog+scorpion hybrid = Vampire Squid.

uno's picture

Since the housing and Mortgage Equity loans were fraudulent lending, do you throw out anyone in a house and reposse the furniture, 2 SUV's, clothes, etc bought with it.

The people I know who got in over their heads were doing it assuming house prices would go to infinity and also got 2nd, 3rd etc MEW from it, they were gambling.

Boxed Merlot's picture

assuming house prices would go to infinity...they were gambling...


And they would if the fed had it's way. If not for those "irresponsible" folks that began to question the legitimacy of monetary creation, the casino games would continue forever.

It's not only casinos that have no locks on the doors or clocks on the walls, they took their cue from the fed.

uno's picture

I just heard of a real estate scamster planning on bankruptcy and decided to take 2 week vacation in St. Barths of course as a business expense.  Nice, I am sure this is far from an isolated incident.

There is bailout fatigue concerning the bankers and the irresponsible borrowers.  Also there is the anger at the corruption in the regulators, politicians, rating agencies.  The concept of debt forgiveness gets the bankers and mortgage scamsters a get out of jail free card and rewards the most irresponsible at the expense of those responsible.

Maximum security prison is the answer for the financial parasites (the morgue, citi, the squid, countrywide etc executives and board of directors) and loss of all their material possessions; bankruptcy for the masses underwater and let home prices find their own level.

Steve in Greensboro's picture

Lending money is not fraud (unless you are living in some sort of fleabagger fairyland).  Borrowing money with no intention of paying it back is.

wisefool's picture

How could such a destructive myopia so thoroughly pervade society and bring us this critical historical inflection point? This will be examined in the next part.

I'll take a crack at your question.

Phase 500 We are all in this together. Implement a progressive tax code based on the idea that high earners leverage more of the public resources (Common infra, rule of law/social stability, nessecary minimal observation by regulators.)

Phase 1000. Economy of scale. If we want henry ford to efficiently make quality widgets to improve quality of life for the entire country, we cant have him spending all of his time dealing with local potenentates with regard to taxation, class action, labor,etc. Let him make a corporation that consolidates the same economy of scale principles for his paperwork.

Phase 2000. Wow, this is working out pretty good! If it works well for widgets, lets start doing it for other groups of humans. Lets encourage social certain behaviors. Deductions for chuches. Deductions for married people with 3.5 kids. (see Keynes on taxation)

Phase 10000. We are over 9000! We are the smartest! How about deductions for certain types of small businesses? what about the dying horseshoe manufacturers, on the other hand, what about agriculture that now requires lots of risk and massive capitol outlays? Lets do a balanced approach for this problem, and get some lessons learned.

Phase 20000. Still trucking! But the thing is, religion/church based deductions should not be exclusive to faith types. We should make rules for secular charities.

Phase 30000. Knowledge is a gift too! This is a cool toy we got here, but we need more players in the game. Stogey old politicians using their soap boxing is too transitory. Lets create some incentives for organizations to advocate on behalf of every idea that is out there. From corporations, to labor, from people against the unethical treatment of animals.

Phase 40k Street. We work hard so you dont have to. We need to wear gucci and hang out in our gultch, these politicians are busy and quality clothes mean you value the short ammount of time they grant to us. We will make sure that the people get imitation clothes cheap.

Phase 50000. Let them eat I-Cake. That whole bringing imitation, imported, "designer" clothes to masses worked out really good. (Nike) How about all manufacturing? Not just let natural capitol formation move to cheaper labor, but make it double super reverse tarrif good. Pelosi is a fan of Apple orchards. Buddy Romer's Harvard MBA was just honorary, cause he is plain spoken caujun and all, so dont listen to him. To pull this divide and conquer off properly, Lets get somebody in the national spotlight that people will wholesale reject 'cause he advocates sound money, but also has certain libertarian leanings. (see Ron Paul)

Phase 55000. The Knights of (nee) Norquist. Al Haig had it all wrong. As was pointed out to him on the day Regan was shot. But the true power behind the throne was germinated in that administration. Others learned the lesson too. Anybody can be a tax free NGO, if you dont want to take the "people are corporations too route"

Phase 60000. Lets get the economy moving! Housing, Moving, and anything else that is "for business" or "for good of the family" is deductable in some way or form. You need this stuff to be a productive member of society, Student Loans to PhDs in Economics. As long as you borrow excessively to do it, you can write it off your taxation. 

Phase 65000.  Was it Atlas that actually shrugged? Or did hercules play a trick? John, truth is, we dont really need you to work on boring electrical components for an efficient grid. We at G.E. are diversified and have a fiduciary duty to our shareholders. We can make more money tax free financing homes and autos. You see, the perfect employee we'd like you to be is a combination of Mitt Romney and Paul Krugman.

Phase 70000. More free time for politicians. All we have to get votes is create some tax tweak on the stump speech. Meanwhile, Rome burns, in the exact same way it did 1600 years ago. Multi Generational Debt. Foriegn Wars. Absurd tax code. Debased currency. Lack of social cohesion because everybody assumes that their neighbor got a better deal out of their work product than they would get, but there is no way of knowing, so just sign up for the food stamps and ride it out.

Phase ? or Ron Paul 2012. The choice is ours. Fiat, Debt, Taxation are all tools in the tool box, neither good nor evil, unless they are configured the way they are now. Thats how we got here and Dr. Paul is one of the ways we will get out.

Downtoolong's picture

I'm all for debt forgiveness if it works. But, I would like some advance notice before we do it on a mass scale so that I can borrow some money again and buy a bunch of gold with it which I will then hide somewhere safe.


topshelfstuff's picture

I did some research, though I have no idea what to believe, in a way its really not debt foriveness "IF" the Funds were actually given to The People, that accoding to these Sites claim we are due. I also found past instances of debt forgiveness "Jubilee", and also a Saint Germain Trust. Here is a paste, and there is a lot more, Youtubes also, just can't look at all


The World Global Settlement Funds, referenced on this page, should not be confused with the SG World Trust. The World Global Settlement Funds have in excess of $47 trillion to disburse to 140 nations across the globe. This due and lawful disbursement has been blocked by the Washington DC private corporation for more than three decades. The SG World Trust is much bigger, and older, than The World Global Settlement Funds.)

On this page, we deal with The World Global Settlement Funds (WGSF) at the top here. Lower down the page, we offer some background comments about the related Iraqi Dinar Revaluation story. Another closely related and urgent issue, Global Debt Forgiveness, is addressed on a separate page here. And some geopolitical background to the recent securance of the codes for the Global Collateral Accounts is outlined here (12.09.11).

Whoa Dammit's picture

With debt forgiveness the economy will clear and new growth will occur that will ultimately benefit everyone that wants the opportunity to make money in a trustworthy manner. 

Or we can remain like crabs in a bucket to pacify the "responsible ones" who can't stand it if someone other than themselves may initially benefit, but then we all suffer for a very long time. And only the fraud creators will prosper.

Disclosure: I am debt free.

Gamma735's picture

I am training my kids to be Machiavelian world dictators.   I see this as a future growth industry. 

Conax's picture

Had they passed out that 7.7 trillion to the taxpayers in '08, instead of throwing it into the maw of the banks, people would have used it to clear credit, it would have found its way to the banks after providing some relief to the people who will end up paying for it. This is precisely why it didn't happen.

edit: 7.7 tril/165 million taxpayers= 46.7 k apiece. That should help the the McMansion crowd a bit, and help the rest to buy a modest home. It would be more fair than 'forgiving' debts, which are wildly variable.

AndrewCostello's picture

They will inflate the debt away and then move to a new currency.  They've been planning it for a century.  Of course, YOUR debts won't be inflated away - they will merely be converted to the new currency, while your wealth is inflated away.



michael_engineer's picture

Lets examine the premise of the title of this article, with a consideration of whether society as a whole has or will soon reach any limits to growth due to resource depletion or due to a possible reduction in energy flows or a reduction in energy returned on energy invested (EROEI).

"Unleashing The Future: Advancing Prosperity Through Debt Forgiveness"

Even getting rid of the debt might not affect whether there is decreasing or increasing real GDP per year.  Does forgiving the debt of a drought stricken farm in Texas, increase any crop production there?  If there is not enough rain, then there is not enough crop, or none at all.  If structural limitations to energy and other natural resources structurally limit the production of goods and services, then advancing prosperity might not even occur under a debt forgiveness scenario.  Debt going away due to being paid off, defaulted on, or being forgiven might not really unleash or change things much at all.

From   :

The economy is closely linked with the physical resources that underly it. Looking at the economic system as an engineer would, the natural resources are inputs to the system, and the outputs are jobs, food, services, finished goods, and a growing population. If one increases the inputs (as was done in general in the years from lets say 1900 to 2000) then one can expect an increase in the outputs and that is exactly what happened in general throughout those years. However, if one decreases the resource inputs, then it would reasonably be expected that there would be a decrease in the outputs.



OurCynic's picture

Debts that cannot be repaid .... will NOT be repaid.


It comes down to that. Plan accordingly.

mikejody's picture

When people say things like, "it's game over" and "we're all finished", what do you think they mean? What does that mean practically speaking? Does it mean inflation, so that none of us can afford to buy a gallon of milk? Or does it mean no jobs, so that there are no taxes coming in, no way to run government, etc.? Does it mean food lines? 

What, practically speaking, does "game over" mean, for the average American?

flacorps's picture

Food lines were replaced by food stamps, which in turn were replaced by cards.

Nobody can see exactly who's on the dole anymore.

gojam's picture

Zeus, first of all, thank you.

I've just watched your interview with Max Keiser, I've read your articles, and I think you guys at oftwominds are ahead of the game on this issue.

And I absolutely agree.

My one concern with debt forgiveness as a solution is that I find it difficult to imagine that any one nation will unilaterally adopt it and I think the multilateral international adoption of debt forgiveness to be unlikely.

I can see that the collapse of the current system is inevitable. A small window of opportunity will open when the global domino default begins and it will be necessary for an international finance conference to meet primarily to resolve open market issues. With the complete collapse of trust in fiat currencies and with few if any self sufficient countries, an open market agreement, atleast between friendly nations and allies, will be extremely important, otherwise all import/export transactions of important commodities like oil and gas, will be in gold, protectionist policies will prevail, and extremist political forces, on the left and authoritarian right, will start to rise.

How, under those circumstances, can we expect our democratically elected leaders  (who owe their power to the very system that needs changing) be expected to institute debt forgiveness in anything but the very narrowest way which will benefit themselves (ie forgive sovereign and bank debt) ??

I've got more questions but I don't know if you'll read this or think it worthy of reply.




gnomon's picture

Does anyone doubt that as the nature of this unpayable debt becomes more widely recognized that Gold will be declared an Enemy of the State?

Gold is a Death Star aimed at the last shreds of the illusion.  And Gold's rise is hated vehemently by all of those weak, dependent, and in debt as it is the harbinger of hard times, old times in which the welfare state did not exist.

The old verities reinstating themselves will be fought with a frenzied fervor by the top and the bottom of society.  The middle, able, agile, prudent cohort is ready to go, to get on with the future, to shuck the leeches wherever they have attached themselves whether in the Beltway, the Boardrooms, or the Barrios.

Maj. Lee Stoned's picture

2) Debt based in fraudulent lending is also not true debt in any meaningful sense, since the loan along with its obligations originated from something (private fiat) that had no valid authority or exchange value to begin with.

Currency lent by private institutions to the public with compound interest is the fraud that needs to be corrected. It is the starting point for the new system. Until more people understand and are willing to act on this we will continue the circle jerk.


jmc8888's picture

The remedy has always been simple, because both were once the law of the land here in the USA.

1. Glass-Steagall

2. American (Hamiltonian) Credit System


Of course someone actually has to DO it, but what they do, are the above.


The countries of the world will eventually act, because those institutions that don't, are royally fucked.  You just need one to break the ice, and the dominoes of the fascist monetarists control of the financial levers of the world and all it extends to, will start tumbling.


deepsouthdoug's picture

It is the 'greatest generation' that has benefited from Social Security and Medicare so far - not the post WWII boomer generation. 


It is the greatest generation who have gotten the bennies at the expense of their children. 

Paul67's picture

The core of the problem is that our money ‘is’ debt.  Thus the system is ultimately set up for failure from the beginning.


The only question at this point is will the money system implode (too little currency via a cascading default, i.e. what we faced in 2008) or explode (too much currency, let the printing presses fly paying off debt with increasingly worthless paper).  BTW these scenarios are not mutually exclusive, one can precede the other; an implosion followed by an explosion, just like a super nova.  Come to think of it there are a number of parallels between the dynamics of a debt monetary system and a super nova.


Anyway, long story short we must get off of the ‘Austerity’ vs. ‘Printing’ debate train before it takes both sides over the cliff.  Remember that what is ‘debt’ for somebody (i.e. mortgage) is held as an asset (i.e. pension fund) for someone else.  It’s like watching a debate over the best means of suicide while the basic question of whether we should commit suicide at all goes unquestioned.


The solution is to replace this debt based monetary system operated unconstitutionally by an international banking cartel for the primary benefit of the same for almost 100 years, with a sovereign ‘debt’ free currency.  Congress ‘cannot’ legally grant the power to create currency via simple majority vote to a second party, which it did therefore illegally in 1913.  Thus the entire legal basis for the FED is unconstitutional.


One mechanism to introduce this new debt free sovereign currency would be to issue it to every citizen equally.  Those with lower debt levels would benefit ‘more’ than those with higher debt levels but we would ‘all’ get back to more sustainable debt level overall.  Important for both those that have mortgages and those depending on that steady stream of income for retirement.  The Federal government would no longer need to print geometrically increasing amounts of currency in order to pay the interest on its own money supply.


Think of that for a minute…………., the current monetary system requires us to pay interest on the ‘entire’ money supply ‘forever’.  Were does this geometrically increase interest come from?  Why you have to print more money (i.e. go into debt) which will also requires interest ‘forever’.  Complete crazy talk.


Anyway our money supply would eventually be a debt free currency controlled via super majority law.  Add gold/silver coins as ‘legal’ tender at market prices to the paper currency as well if you like (i.e. zero tax for exchange at any point in time).


As this new debt free currency replaces the debt based money the banking reserve levels will also be increased keeping the overall money supply close to what it is now and significantly increasing bank system stability.


So in sum this isn’t a great give away; those that have saved rather than spent will still be better off than those that didn’t (ie more excess money to save, invest or spend).  Ditto for those the work vs. those that don’t.  Hypothetically, this fixed payment to every citizen could just be done annually thereby consolidating the entire social welfare system (young to old) and providing a progressive twist to the tax system.  With this ‘progressive’ offset the entire tax system could then be simple consumption based + trade tariffs (ie. no more IRS).  The trade tariffs would also be matched, so if a nation puts a 15% tax on our exports than we have 15% tax on their exports, 5%/5%, 0%/0% etc.  If a nation wants to be protectionist, so be it, but don’t expect us to open up if they don’t.


Anyway, what we will have accomplished though is we will have avoided all the horrors associated with the complete and chaotic collapse of the biggest Ponzi scheme ‘ever’.


So we’ve got that going for us……..which is nice.

AE911Truth's picture

re: "the current monetary system requires us to pay interest on the ‘entire’ money supply ‘forever’. Were does this geometrically increase interest come from? Why you have to print more money (i.e. go into debt) which will also requires interest ‘forever’. Complete crazy talk.

The solution is to replace this debt based monetary system operated unconstitutionally by an international banking cartel for the primary benefit of the same for almost 100 years, with a sovereign ‘debt’ free currency. Congress ‘cannot’ legally grant the power to create currency via simple majority vote to a second party, which it did therefore illegally in 1913. Thus the entire legal basis for the FED is unconstitutional.

So let's make this happen!

Zola's picture

@paul67 very good points, i see you have read Zarlenga . The big question is what will the exchange rate be between this "printable at will" currency (hopefully if congress is smart enough not too much) and the gold price OVER TIME. Some argue that the clowns in CONgress are unworthy of such a priviledge and the question of value vs Gold is the primary concern with such scheme (will people immidaitely dispose of the printed fiat into gold ? - probably - so gold price goes up on issuance- but then is production and prodcutivity sufficent to restore value to the notes?- will congress hsow restrain and stabilize the value vs gold?). The KEY is will this issue behave like a STOCK ISSUANCE by a corp that can be accretive or dilutive. A stock issuance can be a GOOD thing for a corp , it could be the same for the government but this would required very SKILLFUL management. This is where is am standing right now, i have not decided this debate yet. Thoughtful commentary by ZHers welcome.

Paul67's picture

Remember the new Constitutional dollars will just be replacing the old Unconstitutional dollars (FED notes) already in circulation or part of the ‘debt is money’ credit system.  So as bonds/interest come due we don’t roll them over but just pay them off with this new debt free money.  The FED notes, Constitutional dollars, and Gold/Silver coins will all circulate as money all at the same time for a number of years.  As long as we the destroy debt based money/credit (deflation) at the same rate we are adding debt free money (inflation) the total money supply should remain the same as it is now.  Thus the risk of inflation should be low.


So a key part of the Constitutional amendment will be the total authorized money supply (New Sovereign + Old FED dollars).  The US treasury will also be required to continue to coin Gold/Silver coins for a slight markup over the current price for the metals.  You can also exchange FED dollars for the New Constitutional dollars 1/1 at anytime.  


For citizens that still think the system above could still be abused (i.e. printing money faster than population and commerce increases) they should offset their holdings of paper dollars (whether New or FED) with gold & silver dollars.


The key change/protection here is that US minted Gold/Silver coins are free from ‘any’ tax what so ever.  Since by definition any gain/loss in the price per paper dollar must be due to imbalances in the paper money supply.  In fact this is why I think ‘all’ capital gain taxes should be eliminated.


When you take a step back and understand that our income is taxed from dollar 1 (which includes the 15% payroll tax Hanity, SS+Med is Ponzi scheme therefore ‘everyone’ pays income tax, even the most poor wage earners).  Then what we manage to invest is then taxed for capital gains (most if not all of which is due to printing money, ie no real gain).  Then when we die most of our accumulated wealth goes back to the government.  So in sum all the money we earn above what we need to survive is taken away for us in one form or another in the end, not unlike slavery.  It’s just that some slaves have better lifestyles than others.  This is why I believe all taxation should be based on ‘consumption’ not property/income/investment/savings etc.

Zola's picture

@Paul67 . I see your point, the question is why would a person hold the Fiat over Gold ? My hunch is that when the real interest rate (rate given under a free banking but non fractional reserved by competiting banks- depends on the supply and demand of savings) in the Govt Fiat is greater than 5pct , this would draw capital away from the gold coin into the fiat notes. Another question is would the issuance of constitutional fiat (debt free) by the congress (at their discretion- a bit like a QE program...) for example to rebuild the roads and bridges add value or substract value to the currency ? (like for example if a corporation issues shares to buy out a competitor, the share price initially falls, but as the market recognizes the value of thr transaction, it can surpass its previous high). What would rpevent then all activity to become dependent on the government as they will be the ones creating money pretty much whenever they wanted so they would be the Customer of choice, as opposed to private players. Doesnt that hold in itself the germs of a decline to a more centralized system?

Zola's picture

any answer to my latest post?

hannah's picture

"My last article on debt forgiveness,....."


CRAP...!...WHEN I READ THE FIRST PART OF THE ARTICLE, I THOUGHT HE ACTUALLY MEANT THIS was the last time he would write about debt forgiveness....!

SillySalesmanQuestion's picture

An excellent, thought provoking, article that neatly sums up debt by fiat...or is that death by fiat...ty TD.

SwingForce's picture

FAKE DEBT because the fake (redundent) ASSETS have been POOFED!

indio007's picture

You forgot Odious Debt Tyler. That is a debt incurred by the public authorities , not for the public benefit but for private parties.


Point 2 though is spot on.

When is the last time a dollar "redeemed in lawful money"?


The FED has an awesome scam going. 


No one ever redeems their bills so their collateral (if they have any) is never really at risk.



Also thumbs up to point 7


Lysander Spoonr says:

The Constitution has no inherent authority or obligation. It has no authority or obligation at all, unless as a contract between man and man. And it does not so much as even purport to be a contract between persons now existing. It purports, at most, to be only a contract between persons living eighty years ago. And it can be supposed to have been a contract then only between persons who had already come to years of discretion, so as to be competent to make reasonable and obligatory contracts. Furthermore, we know, historically, that only a small portion even of the people then existing were consulted on the subject, or asked, or permitted to express either their consent or dissent in any formal manner. Those persons, if any, who did give their consent formally, are all dead now. Most of them have been dead forty, fifty, sixty, or seventy years. And the Constitution, so far as it was their contract, died with them