congress Ron Paul has stated years ago about the FED: “it’s an immoral institution, because we have delivered to a secretive body the privilege of creating money out of thin air; if you or I did it, we'd be called counterfeiters, so why have we legalized counterfeiting?”[12]
That is why Ron Paul is right: If any citizen prints money it is called a forgery and punished with the full force of the law. If central bank does it, it is called “increasing the money supply”.
Interestingly, the printing of a $100 bill only costs the FED a few cents. The state in turn accepts a loan from the FED over the value of $100. Furthermore, the state and along with it its citizens are responsible for paying back this loaned sum along with the accumulated interest.
There were times when politicians showed remorse over their wrong decisions, if only shortly before their death. President Woodrow Wilson, who helped introduce the Federal Reserve System, later regretted when he said: “A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men.”[13]
Shortly before his death he was reported as having said that he was deceived and had betrayed his country.“[14]
The servitude through the credit system that Wilson spoke of, rests on compound interest and therefore on exponential growth.
EXPONENTIAL GROWTH – IS INTEREST UNCONSTITUTIONAL?
„ Now, money was invented chiefly for the purpose of exchange, and, consequently, the proper and principal use of money is its consumption or alienation, whereby it is sunk in exchange. Hence, it is by its very nature unlawful to take payment for the use of money lent, which payment is known as interest.“
Saint Thomas Aquinas (1225-1274)
Our monetary system is based on the principle of interest and compound interest and only very few ask themselves the question as to what implications this system has on them personally. When we look at the exponential interest growth model, we will soon realize that it cannot grow to immeasurable proportions. Further still, such a system by definition will inevitably experience a total collapse.
Let us illustrate this with an example: If Joseph had deposited for Jesus in the year 0 A.D. $0.01 at an interest rate of 5 percent p.a., he would have gathered a grand total of $10,000 after only 297 years. In the year 439 A.D. it would have been $10m dollars. After 1466 A.D. the deposited sum could have only been measured by an amount of gold with a mass equal to the entire sphere of our planet. After the year 1749, it would already have come to 1 million times the sphere of our planet and today his inheritance would amount to 2 billion times of our planet’s volume in gold.[15]
We realize that every system based on interest can work for some time, but also that it through the compound interest effect eventually leads to an exponential build-up of the amount of money in circulation in the late phases of this system. This is true for both, wealth and debt. Since the development tends toward the direction of infinity while there cannot be infinite debt, a collapse of the system is inevitable. The fact that a system based on interest leads to a crash, crises or wars - which is sufficiently documented in our history books. Paul C. Martin details an impressive summary of this phenomenon in the appendix of his book with the title “3000 years of history – 3000 years of revolution and crash”.[16]
Another example of illustrating this exponential growth better is the following:
Let us assume that the amount of water lilies in a lake, starting with only one, had doubled every year.
After 30 years a quarter of the lake’s surface is covered by water lilies.
When will the water lilies cover the entire lake? The answer is: After only two years! When the number is doubled every time, then after one year half of the lake is covered and a further year later all of it.
For 30 years the water lilies could be seen as an adornment of the lake, but after only two further years there is no more free space on the lake’s surface.
By using this example we are able to observe the immense explosiveness inherent to exponential growth. Unfortunately, most economists do not accurately assess this.
An exponential curve develops, which is only slow in the beginning and then picks up pace very rapidly. This is why compound interest must be seen as dangerous.
The time for a doubling of a debt due to compound interest is (at least approximately) easy to calculate: One only needs to divide the number 72 by the current interest rate to get to a time specification. At 6 percent interest, debt doubles every 12 years. After 24 years the original debt has already quadrupled. The American economic historian John L. King for example called interest “the invisible wrecking machine” of the so-called free market system.[17]
Interest in its truest sense of the word is a heavy burden on any national budget. We are able to see this in the interest payments that Germany has to pay on its debt which have become the second largest item on the federal budget.[18] Good for the creditor banks, but bad for the taxpayer.
The tax promises given by politicians – usually before the election – about the reduction of debt, or the proposed lowering of the budget deficit are nothing more than lip service that are, due to the described compound interest effect, impossible to put into action. As long as the monetary and economic structures are not changed significantly, they are doomed to fail. The relentless growth of interest and capital normally overtake them and gobble them up.
Prof. Dr. Dieter Suhr, professor for public law, legal philosophy and computer law, judge at the Bavarian Constitutional Court, researched the question of whether interest is unconstitutional. He presented suggestions that significantly swayed from mainstream thinking. He continued in the economic theories by Pierre-Joseph Proudhon, Silvio Gesell and John Maynard Keynes.[19]
Professor Suhr investigated the question as to whether the fact that property is transferred from the debtor to the creditor (bank), the guarantee of ownership written into German basic law is violated. Our constitution however, especially protects that property that arises from personal work and effort. This is why the current interpretation of § 950 BGB is by implication no longer compliant with our constitution.[20]
It positively turns the protective priorities on their heads since it grants more protection to that property which is created from ownership through interest than the one created through hard work.
Professor Dr. Margrit Kennedy summarized the revolutionary achievements of Professor Suhr as follows:
„If a constitution guarantees equal access of individuals to all services of the government – and the monetary system can be seen as such – then it is illegal, when in this system 10 percent of the population continue to receive more out of this service than they pay into it while at the same time 80 percent of the population continue to receive less of it than they pay into it.”[21]
Since high finance shows no interest in changing the prevailing monetary and economic system, whose beneficiaries they are, the theses of Professor Suhr are heavy attacks against the foundations of their profits.
Professor Dieter Suhr was not able to pursue his theses further because he just so happened to die a rather strange death during a hiking and sightseeing holiday in Crete on August 28th, 1990 at the age of 51. It is interesting to note that other important business leaders like Mr. Herrhausen and Rohwedder between 1989 and 1991 also “happened to die”. There is one connecting thread linking the three, it is the fact that they after the fall
