The Biggest Pyramid Scheme Ever Devised!

[evoorhees]

Okay I'm confused.  I understand the US Federal Government is mired is massive debt. I understand how this translates into future taxes to be paid by the populace. I understand the Fed creates money out of thin air.

But how is the USD "based on debt." I don't get that... I don't even know what that means?

The USD isn't "based on" anything. It's just a fiat currency, created at whim and a certain amount each year.  Someone please educate me

[MatthewLM]

A ponzi scheme is not (At least necessarily) a pyramid scheme.

I suppose in a way it is a ponzi scheme, yes.

[Vladimir]

Okay I'm confused.  I understand the US Federal Government is mired is massive debt. I understand how this translates into future taxes to be paid by the populace. I understand the Fed creates money out of thin air.

But how is the USD "based on debt." I don't get that... I don't even know what that means?

The USD isn't "based on" anything. It's just a fiat currency, created at whim and a certain amount each year.  Someone please educate me

http://www.youtube.com/watch?v=Dc3sKwwAaCU

[cypherdoc]

Okay I'm confused.  I understand the US Federal Government is mired is massive debt. I understand how this translates into future taxes to be paid by the populace. I understand the Fed creates money out of thin air.

But how is the USD "based on debt." I don't get that... I don't even know what that means?

The USD isn't "based on" anything. It's just a fiat currency, created at whim and a certain amount each year.  Someone please educate me

its not entirely based on debt, but the great majority of it is.

think of the Feds balance sheet which theoretically is guaranteed by the American people.  the right side, liabilities, is simple; composed of all FRN's (USD's) to the tune of 3 trillion.  BTW, it used to be 800 billion in 2007.  the left side, assets, USED to consist entirely of gold when we were on a full gold std.  hence every USD was backed by a hard asset, not debt.

when the Fed was created, both sides of the balance sheet started expanding enormously in USD terms.  the right side in FRN's, and the left side from the issuance of US TREASURIES (debt).  thus we began the unpegging to gold and replaced it with debt guaranteed by the American people.  you could think of the ratio of UST's to gold as the leverage ratio.

of course this has now gotten out of hand with the debt (UST's) vastly exceeding the gold portion on the asset side. we can't practically pay this back and hence the enslavement of the US taxpayer.

[dennis_sweden]

I don't have a broader definition of pyramid scheme in mind. Maybe people do use the term in a broad sense. Why not just call the broader term "scam"?

I would call fiat currencies, in particular fiat currencies that expand the monetary base/supply far greater than the increase of goods and services created, for "wealth appropriation schemes"; which with a very simplistic explanation appropriates the "wealth" of workers who receive wages in a depreciating currency, whereas bankers and the financial class do not suffer due to earning interest on the expanded monetary base/supply and thus although their "wealth" in the shape of currency also depriciates, their "wealth" is also expanded.

[evoorhees]

http://www.youtube.com/watch?v=Dc3sKwwAaCU

Yeah Vladmir I've seen this already, and am unconvinced because the premise forgets that money circulates... ie - there can be $100m of "debt" in an economy and only $10m of dollars, yet the debt can still be paid off. A dollar which pays debt is not destroyed, and continues floating around as it's traded.

And so I still think this "dollars are based on debt" concept is misleading. TREASURIES are based on debt - the holder of them relies on payment of the debt. Dollars are not based on debt - the holder doesn't rely on payment from anyone (the dollar has value in and of itself - though we know this is foolish fiat value but that's beside the point).

If I own $10,000 then I have assets of precisely that much. I am not "in debt" in any way. The fact that the Gov is in debt, and may try to tax me, is a separate issue, and doesn't suggest that dollars are "based on" debt. Basically, I think it's a misnomer... it's a  misuse of the term "based on." A gold-standard dollar is "based on" gold, in that you can trade it for gold at a set rate. A treasury bill is "based on" debt, because you can trade it for repayment of credit which you've extended.

There are a million reasons to condemn the dollar... claiming it's "based on debt" doesn't seem to be one of them, or am I totally misguided?

[dennis_sweden]

http://www.youtube.com/watch?v=Dc3sKwwAaCU

Yeah Vladmir I've seen this already, and am unconvinced because the premise forgets that money circulates... ie - there can be $100m of "debt" in an economy and only $10m of dollars, yet the debt can still be paid off. A dollar which pays debt is not destroyed, and continues floating around as it's traded.

And so I still think this "dollars are based on debt" concept is misleading. TREASURIES are based on debt - the holder of them relies on payment of the debt. Dollars are not based on debt - the holder doesn't rely on payment from anyone (the dollar has value in and of itself - though we know this is foolish fiat value but that's beside the point).

If I own $10,000 then I have assets of precisely that much. I am not "in debt" in any way. The fact that the Gov is in debt, and may try to tax me, is a separate issue, and doesn't suggest that dollars are "based on" debt. Basically, I think it's a misnomer... it's a  misuse of the term "based on." A gold-standard dollar is "based on" gold, in that you can trade it for gold at a set rate. A treasury bill is "based on" debt, because you can trade it for repayment of credit which you've extended.

There are a million reasons to condemn the dollar... claiming it's "based on debt" doesn't seem to be one of them, or am I totally misguided?

Maybe you are correct in that it is a misuse of the term "based on", however much of the the money supply, as opposed to the money base is created via debt. As only a fraction of the the value of the loans are held in reserve, much of of the money supply exists purely by loans exceeding the reserve. In this sense, parts of the money supply is "based on debt".

[evoorhees]

Maybe you are correct in that it is a misuse of the term "based on", however much of the the money supply, as opposed to the money base is created via debt. As only a fraction of the the value of the loans are held in reserve, much of of the money supply exists purely by loans exceeding the reserve. In this sense, parts of the money supply is "based on debt".

Valid point, Dennis. However, when I get a bank loan to buy a house, we know the bank creates the money at that point and credits my account with it. But when I pay the owner of the house from whom I buying, he then gets the dollars. When he has them, his dollars are not "based on debt." Nobody has a claim to his dollars except him. Properly defined, I'd say the dollars are "based on" market supply and demand for funny green paper. You could say the loan itself is "based on debt," or even that the housing industry is "based on debt," or that the US Gov is "based on debt."  All those things are true, but I think dollars are not based on anything but supply/demand.

But we can all agree Bitcoins are not based on debt, in any sense of the term.

[Litt]

If you can't figure out the fact that fiat based currencies are nothing but a giant monopolistic pyramid scams after all that has happened in the world, you should just crawl back into the hole you live in and just not say anything to make yourself look stupid here.

[cypherdoc]

. However, when I get a bank loan to buy a house, we know the bank creates the money at that point and credits my account with it. But when I pay the owner of the house from whom I buying, he then gets the dollars. When he has them, his dollars are not "based on debt." Nobody has a claim to his dollars except him.

to create those dollars to allow you to buy the home, the debt in the system has to be increased by the amt of the mortgage.  those extra debt based dollars have now devalued the dollars the seller of the house received so yes, they are debt based.  in addition there is interest to be paid on those new debt based dollars by you, the new mortgage holder.

[bitrebel]

Here is why the US dollar is based in debt.

Each dollar, must be borrowed into circulation, through the Federal Reserve. When the Federal Reserve prints dollars, they are not creating wealth, they are creating debt.

If you take out a Federal Reserve Note from your pocket and read it, it states, "This Note shall be used as legal tender for all "DEBTS" public and private. It does not say, to be used "as credit" to purchase or acquire anything. It specifically states, "for all debts" public and private. Well what does this mean?

It means you can take that "Dollar" and discharge debt with it. If a debt is created, that dollar will discharge that debt, it WILL NOT PAY IT OFF, those debts are never paid off and never will be and never can be, unless or until, actual "CREDIT" is injected into the system in the form of a real person's signature which extends their own credit, instead of using a borrowed Federal Reserve Note, (Nothing but a promise to pay that debt).

You can take 5 million federal reserve notes and you cannot pay off a 1$ debt, you can only discharge it dollar for dollar.

That $20 Federal Reserve Note in your pocket is not wealth or money, it is the Prima Facie EVIDENCE that you hold debt, and you are not worth $20 Dollars, you in fact, OWE that $20, because it's borrowed to begin with, it's NOT YOUR FUCKING MONEY, it's THEIRS!!!!

Get it?

Got it?

Good!

[bitrebel]

I missed the part where it was actually explained how the US dollar is a pyramid scheme.

You have bought into a mountain of lies, and that mountain of lies is a giant mountain of debt. It requires an ever increasing supply of suckers to be born into and use the fraudulent reserve notes, in order to maintain the facade called the American Dream. The American Dream, you see, is the giant pyramid scheme, it was just "too big to fail", so they never bothered to tell you about it.

[bitrebel]

Okay I'm confused.  I understand the US Federal Government is mired is massive debt. I understand how this translates into future taxes to be paid by the populace. I understand the Fed creates money out of thin air.

But how is the USD "based on debt." I don't get that... I don't even know what that means?

The USD isn't "based on" anything. It's just a fiat currency, created at whim and a certain amount each year.  Someone please educate me

I just posted your answer, in this thread.

[MatthewLM]

You have bought into a mountain of lies, and that mountain of lies is a giant mountain of debt. It requires an ever increasing supply of suckers to be born into and use the fraudulent reserve notes, in order to maintain the facade called the American Dream. The American Dream, you see, is the giant pyramid scheme, it was just "too big to fail", so they never bothered to tell you about it.

I missed the part where it was actually explained how I "bought into a mountain of lies".

[bitrebel]

You have bought into a mountain of lies, and that mountain of lies is a giant mountain of debt. It requires an ever increasing supply of suckers to be born into and use the fraudulent reserve notes, in order to maintain the facade called the American Dream. The American Dream, you see, is the giant pyramid scheme, it was just "too big to fail", so they never bothered to tell you about it.

I missed the part where it was actually explained how I "bought into a mountain of lies".

Well, I did not mean you personally, unless you don't understand the nature of debt. If you believe Federal Reserve Notes are money and not debt, then that is the mountain of lies. Well, that's the peak at least.

[MatthewLM]

US Dollars are, by themselves, a fiat currency which are devalued massively by the reckless increase of the money supply.

[bitrebel]

US Dollars are, by themselves, a fiat currency which are devalued massively by the reckless increase of the money supply.

Yes, but there is a big difference between a fiat currency and a debt based currency.
A fiat currency does not require it to be debt based, but you cannot really have a debt based currency with it being a fiat currency.

Just because government regulates it does not make it all that bad or a pyramid scheme. The fact that it is "debt based" is what makes it a pyramid scheme.

The US Treasury BORROWS from the Federal Reserve, a for profit, private corporation. Each dollar borrowed, is then a debt in anyone's hand who holds it. If it were just a fiat currency, then it would actually have value, but something that represents "debt" cannot, at the same time, have "value", unless you value debt, and the only people who value debt are the bankers and debtor institutions built up around them. Debt=Death
Mortgage=Mortuary

[MatthewLM]

The fact that it is "debt based" is what makes it a pyramid scheme.

This makes no sense. What on earth has debt got to do with pyramid schemes?

To be honest with everyone the US monetary system is so insane I don't really want to understand it all.

[bitrebel]

The fact that it is "debt based" is what makes it a pyramid scheme.

This makes no sense. What on earth has debt got to do with pyramid schemes?

To be honest with everyone the US monetary system is so insane I don't really want to understand it all.

People are actually buying into the dollar in hopes and knowledge that others will come into it, accumulate debt as well, eventually spend that debt with others who have accumulated debt, as therefore offset the debt of the others who bought in early.

Consumer (a) decides he wants to make money, but first he must go into debt to start a business. He becomes producer (a). He borrows debt in hopes of making enough debt to offset the initial debt, and have more debt than is needed. Then that debt can be spent. Consumer (b) then comes in and spends borrowed debt with consumer (a) and enriches consumer (a), only when that debt is paid off and there is spendable debt.

[cypherdoc]

review this:

http://www.khanacademy.org/video/federal-reserve-balance-sheet?playlist=Banking%20and%20Money

and then this:

http://www.federalreserve.gov/releases/h41/current/h41.htm#h41tab9

and then tell me if you still don't understand.