Understanding the $38.7 Trillion National Debt: A Legal Fraud Behind the Numbers

The $38.7 trillion national debt often sparks fear and concern. Many worry about how the government will ever pay it off and what it means for the economy. I share this concern, but not for the usual reasons. My worry lies in the system that created this debt—a system that is legally allowed but fundamentally flawed and, in every way a form of legal fraud.

When the government borrows money from the Federal Reserve, it’s not borrowing money that already exists. They are not borrowing someone else's deposits. Instead, the Fed creates new money out of thin air when they purchase government bonds/debt. This process is identical to how commercial banks create money when they issue loans to individuals and businesses. Understanding this system is key to grasping why the national debt can NEVER be paid off.

Any political discussion about "paying off the national debt" is either ignorance on the part of the politicians, or deceit by those who know the system.

How Money is Created in the Modern Economy

Most people think banks lend money that others have deposited. This is not the case. When you take out a loan for a car or a house, the bank doesn’t hand you someone else’s money. Instead, it creates new money digitally and credits your account. This new money did not exist before the loan. The very act of you, or the government, taking out a loan is how money gets created, and it is created from thin air.

The Federal Reserve works similarly but on a much larger scale. When the government issues bonds to cover its spending, the Fed buys these bonds with money created from nothing. This newly created money enters the economy, increasing the total money supply, and is the source of inflation. The very word "inflation" means an "inflation of the money supply", which leads to rising prices.

This system is one where debt and money supply are closely linked. Every dollar borrowed adds to the total money circulating in the economy.

Why the Debt Can Never Be Fully Paid Off

Here’s the tricky part: when the government borrows money, it must pay back the principal plus interest. But the interest is not created alongside the principal.

Imagine the very first dollar ever created, the first dollar ever borrowed into existence. Now Imagine the bank creates and lends that $1 to you at 5% interest. At the end of the year, you owe bank $1.05. When only $1 was created and that is all that exists, how can you possibly pay back $1.05?. Even if you buy something with the dollar, there is still only $1 in existence! If 100% of the money supply were taxed from the system and handed back to the bank, all they could ever tax is $1. The nickel of interest was never created!

Now if someone else in the system borrows another dollar into existence, you could sell a product to them and earn the nickel, and pay back your personal debt. Systemically however, the economy (we the people) are using $2 and have $2, but we now owe collectively $2.10 after a year. Again, the 10-cent interest doesn't exist, and its impossible to pay that back without someone borrowing even more!

This means there is never enough money in the system to pay the interest without borrowing more. To cover the interest, the government must issue more debt, which creates more money. This cycle causes the debt to grow continuously. It is mathematically impossible to pay off the national debt, not to mention all the private debt owed by everyone in the system!

If the bank or the Fed stops lending more money, the economy will shrink, leading to recessions or depressions. The debt grows because the system depends on continuous borrowing to pay interest and grow the money supply. This also implies continuous inflation, which is exactly what we have seen since this current debt-based monetary system came into existence after the gold standard was abandoned.

When you do pay interest after selling a product to someone else, that is usually earned via your productivity. So you get to pay REAL interest on the banking system's FAKE money! In a nutshell, being earning a real profit off a fake product is the essence of counterfeiting....a well established fraud. If you or I were to print money from thin air, we would be prosecuted and imprisoned.

The Role of the Federal Reserve and Commercial Banks

The Federal Reserve and commercial banks control the flow of credit. They decide how much money to create and lend into the economy. Not the government, and not you and I. This power means they can, and do, influence economic growth or contraction.

When credit flows freely, the economy can grow, and debts increase but remain manageable. When credit tightens, economic activity slows, and debts become harder to service.

Despite this control, the blame for economic downturns often falls on elected officials like the President, not the central banks that control money creation. Controlling the supply of money means that the banks can install or remove elected officials!

What This Means for You and the Economy

Understanding this system changes how we think about the national debt, along with the entire banking system as it exists today. The debt is not just a number to be scared of. It’s a reflection of a system that mandates constant borrowing to function. It's also a system that hands control of the United States government to the banks!

Here are some key takeaways:

• The national debt will never be fully paid off because the interest on that debt requires more money than exists. Paying off the national debt under the current rules is mathematically impossible.

• Money creation by banks and the Fed is legal, albeit fraudulent, but creates a cycle of growing debt.

• Economic stability depends on continuous credit expansion.

• Money supply is controlled by the unelected members of the Federal Reserve Board, not by any government entity.

• Economic downturns often result from credit tightening, not just government policy. They also usually result in a political turnover.

  
  

This system benefits banks and central banks, who control money creation, while ordinary citizens bear the consequences of economic instability.

Moving Forward: What Can Be Done?

Fixing this system requires rethinking how money is created and managed. Some ideas include:

• Separating money creation from debt issuance, so money can exist without corresponding debt. Money must have intrinsic value from its start, meaning it cannot be created from thin air, but rather from labor, materials, creativity, and investment.

• Increasing transparency about how the Federal Reserve and banks create money.

• Exploring alternative monetary systems that do not rely on endless debt growth. The gold standard without a "fractional reserve" component is one option. Certain cryptocurrencies such as Bitcoin are another option.

  
  

Until these changes happen, understanding the system helps us see beyond the scary headline numbers and recognize the real issues at play.

At the end of the day, if we all wanted to get serious about truly paying off this $38.7 trillion dollar fake money debt, there is absolutely nothing that prevents the U.S. Treasury from creating their own fake money to pay off the fake principal and interest owed to the fraudulent banks! We would just simply use our fake money to pay the interest on their fake money!

In fact, this is precisely what two previous Presidents of the United States attempted! Their names: Abraham Lincoln and John F. Kennedy. And that's not the only thing those two had in common soon after they attempted such policy!

Never underestimate the influence and power of the banks on....literally everything! As Thomas Jefferson and others have said, the bankers are corrupt to the bone!