User 260928

Where's the Bottom? Still Anybody's Guess

Errata: The Income Tax only assists in paying the interest on the debt, not the debt itself.

Where's the Bottom? Still Anybody's Guess

I agree. Most of this problem stems from having a Central Bank (aka Federal Reserve), which produces the money for the entire country. The Central Bank controls the interest rates and the inflation (since they control the money supply). They also regulate the value of the dollar by increasing and decreasing the money supply.

They loan each dollar to the government with an attached interest. Every dollar produced is actually: a dollar + a percent of this dollar in immediate debt. Since the central bank has the monopoly on the production of the money supply, the only way to pay the debt is to borrow more money from it. This creates even more debt. This system is a self-generating debt machine.

The central bank has to continually produce money to cover the debt that is created from borrowing. This method creates even more debt. It is impossible for the government to get out of this self-induced debt.

This was why the US broke away from England. King George III outlawed the interest free and independent currency that was being used by the American Colonies. This forced the colonies to borrow money from the Central Bank of England with interest, putting the colonies into debt.

"The refusal of King George III to allow the colonies to operate an honest money system, which freed the ordinary man from the clutches of the money manipulators was probably the prime cause of the revolution."
Benjamin Franklin

"I believe that banking institutions are more dangerous than standing armies... If the American people ever allow private banks to control the issue of currency, the banks and corporation that will grow up around them will deprive the people of their property until their children wake up homeless on the continent their fathers conquered"
Thomas Jefferson

We didn't implement a Central Bank until Woodrow Wilson was in his presidency. The Federal Reserve act was created during this time, along with the Federal Income Tax. The Income Tax only assists in paying the debt, not the governments budget, as some people like to think. Prior to that, the government (and the economy) operated just fine.