How Recessions are Created

Useful Information for the Citizen

An article by

Stephen Cook

by Stephen Cook

The subject of recession is very topical right now for the very good reason that we (and by “we” I mean just about the entire planet) are in one and a scary thing it is too.

The important thing to remember is that a recession is not a natural event, an act of God or a calamity that periodically just sort of happens and about which “nothing can be done” except by you having a hard time.

A recession does not have to happen. It is created by the actions of human beings and by choice, evidently with malice aforethought. I thought you might like to know how this is done.

Trickery It is a difficult thing to explain in a few words and is based on a piece of trickery so repellent the mind is kind of repelled but I will do my best. So please bear with me.

Put very simply and basically. It works like this.

Where does all the money in circulation come from? People assume that it is created by their government, which somehow gets it into circulation. This is not the case.

Government long ago handed to private-profit corporations (the banking cartels) the right to create money. This mind-boggling act of stupidity on the part of government is not broadly advertised. Successive governments collude in keeping the idiocy in place and in hiding it behind a smoke screen of complexity.

Banking corporations create money out of nothing. They simply have a license to “print” it.

But having printed it, how do they get it into circulation? The answer is: they lend it to borrowers.

The borrower can be you, me, a business or government itself but the basic fact is that the bank creates money out of thin air and then lends it to someone. When that someone spends what he has borrowed, the new money thereby enters circulation.

How Recessions are Created

Worse however, when the bank lends them money it has created, it lends at interest. The interest it charges is the profit it makes form lending you money it created by a “stroke of the pen” or the mere act of entering numbers into computers.

But look at this: if you borrow, say £5000, from the bank, the bank creates it out of nothing and lends it to you by crediting your bank account - by the simple act of entering the numbers. But if it adds, say 10% interest (£500), you now owe £5500.

In other words, more DEBT has been created than money! Every time new money is created and gotten into circulation in this way, a greater debt is created.

Consequences There are many catastrophic consequences that result from this method of money creation, some of which I will attempt to summarise here.

As this is the current means by which virtually all the money in circulation is created, the existence of money depends upon someone being in debt.

There is more debt in existence (far more) than there is money, therefore all the debts in existence cannot be paid off.

If all the debts owed to the banks were paid off, there would be no money in circulation and there would still be a vast ocean of debt that cannot be repaid.

For an economy to expand, more money must be entered into circulation. Under the current system, to increase the supply of circulating money, the levels of debt must be increased by an even greater amount. Thus, every economic expansion is accompanied by greater levels of debt.

For someone to pay off the debts, reduce their debts or even receive a pay packet, someone else somewhere has to go deeper into debt because debt must exist in order for money to circulate.

Under this system, he who controls the money supply and can turn on or off the tap of money controls all economic life.

Under this system, all wealth gradually accrues to he who creates money and charges us a tax or toll for its use (the interest). And the rest of us wind up as his slaves.

Someone has to carry the debt that supports the existence of our money stock. That can be the citizen, industry or government or any combination of the three.

If (say) government decides to reduce its debt, the debt burden that supports the money stock is then thrown upon the citizen or industry.

A credit squeeze or an attempt by government to “pay off its debts” would be quite sensible if we had a sane system of money (which we don’t) but with the system we have, the effect is catastrophic.

Why? Because “paying off the debt” decreases the amount of money in circulation. A decrease in the amount of money in circulation, a scarcity of money with which we can express demand for goods and services, is what is known as a recession.

It is very nice of the goverment to shove us all into poverty and penalise us for something that was not our fault in the first place so that their pals in the banking cartels can rake in the interest on money they created out of thin air. However this “frugality,” whether born of inpetitude or duplicity, throws us into recession and hardship while the banking sector creams off more of the nation’s wealth. We experience a “drop in demand,” which is not actually a drop in our demand or desire for goods and services but a decrease in that which we use to express our demand - money.

Thus one can predict that at the end of the government’s attempts to “pay off the debt” and the austerity measures appended thereto (as if all this were somehow our fault) will be economic stagnation and ruin and the debt will hardly have been dented. In fact I will make you a prediction: the debt will go on increasing.

Solution So what then is the solution?

Well, one might be to elect a government that understands how the money system works; or if it understands it, is honest about it while persuading the rest of us to endure needless hardship.

The other is to knock off a system that requires debt in order for money to exist, restore to elected and accountable government the sole duty of creating new money and have that government spend it into circulation (for example by public works, increasing state pensions, reducing taxation and so forth) and never lend it.

Smoke Screen All this, as I mentioned, is hidden under a smoke screen of complexity that will make your head spin and deny you access to the underlying truth and simple principles of it but it is the reason you are having a hard time and why the economy never seems to run right.

But don’t take my word for it, check it out for yourself!

Professional Copywriting Services Stephen Cook

Contact: copywriter1@mail.com