The Two-Tiered Economic System —

The Free Flowing One They Have Created for Themselves,
and the Depression and Recession Creating One They
 Have Installed for The Middle Classes

Elite Loop enjoy a Niagra of Credit -- and they set the terms on which they shall have it.  The Open Market Trading Desk at the NY Federal Reserve Bank is their Money Market Account

The Lower Loop must take the small "inflation fighting ration of credit that the Fed allows when it sets the discount rate affecting the amount of loans outstanding, our M1 money supply. 

There is only one way to fix this. 
 

Look at this brief exchange between Hogwood and Goertzen: 
 

Hogwood:   . . .    the "debt virus" fallacy that says,  "The problem is that due to the interest charge, ...the paying back the bank credit absorbs the government fiat money, leaving insufficient for real current market transactions.  
 

Goertzen:  But the banks pay this money back into trade and commerce when they pay their ordinary business expenses, their salaries and wages, and also pay interest to their depositors".

I agree that the profits are plowed back into the economy.

The fact of the matter is that when more has to be paid (monetary capital plus interest) back - in the aggregate - than is loaned into existence (monetary capita) there is has to be a bookkeeping shortfall.

That shortfall is reflected (and maintained) by the increased amount of debt carried by either or all individuals, or corporations, or governments.

If one sector pays back its debt it puts an increased burden on the other sectors.

The solution provided by the banking sector is to redefine increasingly worthless collateral as worthy of loans.

Collateral was historically land, then stock and crops, for the wholesale market, It has progressed to the point that collateral can be identified as Potential earnings, or as one economist has said, "the smell of a rose".
 

Gentlemen, 
 

Says Law -- roughly the belief that demand creates its own supply and price level adjusts/equilibrates to money supply --  is defeated in the domestic economy when the financial system, which is on a different loop but manages the loop of money token circulation we are on   -- injects a flow of new money in loans but extracts money in a flow of money equal to the principal of the loan plus compound interest, resulting in chronic deflation --which -- seeing that borrowing always precedes paying back -- can only mean destruction for those operating exclusively in the lower loop. 
 

Furthermore, problems arise when organized crime gets hold of the money supply and creates effectively two money systems, one for each loop.  The elite loop enjoys perpetual bounty of abundant purchasing power whenever they need it and interest-earning savings from securities and corporation bonds when they don't need it.  And the lower domestic economy loop which is kept on starvation rations of purchasing power, just enough to get the work done that the corporations want done -- like a nation of Wal Mart employees. 
 

The abundance of easy money and perpetual boom time for the elite loop comes in part by its engine of (M3) money creation, the open market securities market of the New York Federal Reserve, where the Fed becomes the money market account of international speculators.  When they want to plunder a nation with loans or buy-outs they sell some of their trillions of bond holdings to the Fed in exchange for a checking account which counts as fresh surplus reserves which, under the existing fractional reserve system, may be lent out except for the fraction that must be held back for reserve.  But the check that is spent is also deposited and that amount also becomes fresh reserves of which a fraction may be lent out, and that leads to new check leads to another deposit and another loan until all of the original amount has become required reserves holding a multiple amount of loans afloat.  This is the so-called multiplier effect, whereby a small an initial amount of new reserves created by an open market sale of securities to the Fed results in a multiple of new money created within the system.  However, since the elite financial sector and the international monopoly power corporations they float are all part of an elite club or crime families' syndicate  all of this multiplier effect creation of investment wealth is kept within the elite circle, within the upper loop.    Remember, in the elite loop the New York Fed is told by Wall Street and London (Rockefeller, Goldman-Sachs, Morgan and some others] how many securities will be bought or sold -- and the elite can stick  whatever corporate paper or securitized mortgage instruments they choose with the Fed and there will not be any complaint.  That is first-class accommodations on "spaceship earth."    
 

Meanwhile down here in the lower loop where, presumably, you live  and certainly where I live,  we are kept on a much stricter regimen.  We never get to see any of that free-flowing elastic Open Market money.  Instead we live or die at the pleasure of the discount window of the Federal Reserve which dishes out M1 checkbook money to the prisoners, where banks can lend their securities to the Fed for a short term loan of a small amount of reserves to keep them from going under their reserve requirement  -- but that is entirely at the discretion of the Fed.  You see they dish out the low-calorie non-nutritious  food to the prisoners, but they do not have to eat it themselves.  Ours is the loop of checkbook money created by bank loans -- bank loans that expand or contract also according to a multiplier effect that is tied to the "discount rate" which is the rate at which the Fed makes loans to banks to keep them from falling below their reserve requirement.  The Fed is free to inflate this money supply at will  -- whenever they want to steal pockets of middle class savings or wreck the system to force some new emergency financial legislation they have devised for their benefit.  Our loop gets its purchasing power from domestic commercial banks and other lending institutions.  For example the elite controllers at the Fed who manage our lower loop for the elite of the upper loop,  can lend everyone down here money for mortgages and second mortgages in one period, and then have their monopoly oil companies raise prices of gasoline so high that budgets of the lower loop households and businesses are put in disarray and a series of foreclosures occur -- after which the elite loop speculators can sell some of their bonds to the fed and with the money buy up all of the foreclosed properties at fireside prices.  And of course the public isn't told about the elite loop of elite world.   
 

So you who believe that profits are always plowed back into the economy under Say's inviolable law  -- think again.  The money we send into the Financial System as often as not never comes around our way again.
 

Elite Loop enjoy a Niagara of Credit -- and they set the terms.  The Open Market Trading Desk at the NY Federal Reserve Bank is Their Money Market Account.

The Lower Loop must take the small "inflation fighting ration of credit that the Fed allows when it sets the discount rate affecting the amount of loans outstanding, our M1 money supply. 
 

Furthermore, the elite loop like to play with the government sector and the foreign trade sectors as well.  They force the government into debt -- or rather the stooges whose elections they bankroll and promote on their monopoly Fox, CNN etc news media under the phony two party system cheerfully let the Goldman Sachs people on their staffs design the budget -- so that the National Debt is so big and growing at compound interest that what we put into government is also never comes back to us, having been diverted to service the public debt.  And in the foreign trade sector, the elite loop speculators are free to sell a few trillion of their securities to the Fed  -- they own the Fed by the way, so they don't loss the interest, in case you were worrying about that -- then lend money to us, through second mortgages etc. so we can by from China and other countries long after our manufacturing sector has fallen to ruin -- the elite loop financed the industrialization of cheap-labor China and they financed our buying from them even when were were not selling anything abroad to pay for it with.  You see, when the elite sit down for a game of Monopoly, they play to win.  So the foreign trade sector is also out of balance, taking in money that we have gone into debt to give them, and never sending any back.
 

Their privilege in monopolizing credit comes at the expense of our privation (depriving us of our God-given right to life, liberty and happiness). 

"Fix it with gold," did you say?  How can you do that.  The elite own all the gold just like they own everything else.  If we get gold from them for our economy -- which they want us to do, because then our debt obligations will have to be settled in gold (even though what we borrowed as only "paper") -- we will have to borrow the gold from them at interest to get the gold to pay them in gold.  (Everyone who is for a gold system is either ignorant and too trusting or else an agent of the gold monopolists.  Again, there is nothing they want more than to repeal legal tender laws -- which alone invests "paper" fiat money with purchasing power -- and force a metallic standard.
 

Credit is like water -- everybody should have some. 
 

Social Credit is the only program provides elite-class credit to the American Household -- a regular and never ending stream of free-and-clear social credit dividend checks to each citizen --  replacing dependence on international bankers for our circulating purchasing power. 

At any rate, here are two diagrams;  one showing the failure of Says law under the present Usury System  and the other under a system which does away with fractional reserve central bank usury and institutes in its place direct tamper-proof social credit payments, free and clear spending money, directly to households so that the bottom loop denizens can be taken off starvation rations and so that they can expect their creative endeavors and good ideas to be profitable once in a while as they finance their own way to a better future. 
 

I write in full assurance that you both will pretend not to have understood a word I have said, and am furthermore, 
 

Yours sincerely, 
 

Dick Eastman

Yakima, Washington 
 

Exeter's figures gives an idea of financial wealth magnitudes outside the confines of the lower loop.   

Below  is a hasty diagram showing the problem.  Note the spread of interest rates which the elite international loop enjoys and compare it with the high rates at which we, as prisoners of the Lower Loop must pay to borrow.
 

Diagram one:  Say's Fallacy.  This equilibrium where savings equals investment and prices adjust so that all markets clear, never happens under usury.  Usury prevents the mechanisms described by Say from reaching the evenly rotating or equilibrium state.  Just look around you and you will see that Say's Law does not obtain under a system of monopoly power in money and finance.

Say's Law roughly claims that due to market adjustment of prices in all sectors, business receipts will equal business costs -- demand will call forth equal supply.  The law is violated however when the interest component of business costs do not find their way back to domestic economy Business receipts.  (See the next diagram.) 
 

Here is what is really happening:

And here is what we can make happen:

How to Fix Everything by the Little Mailman of Bayberry Lane 
 

The things people make and the people who get to own them depends on where our  tokens for spending  come from, and on who gets to spend those tokens first , and on how much they have to pay back later for being allowed spend those new tokens today. 

Mr. Owl said to me the other day that there are so many people making different kinds of things with so many different kinds of machines and so many different kinds of things that go into the things we buy that we have to have Buying Tokens to make it all work.  The buying tokens pay people for working.  When  people spend the tokens they earn that gives messages to other people about what things people will pay the most to own.  In bigger words the entrepreneur must have the market price signals to decide which things to produce and how to make them so he can most profitably satisfy the people spending the tokens they earn. 
 

Today things are not going the way they are supposed to go and the reason has to do with a man who makes spending tokens out of thin air, as if by magic, and what that man demands back from people later on for letting them be the first spenders of the money he makes out of thin air today. 
 

Now we all can think when thinking is important and nothing is more important than everyone getting all the food and clothing and pretty houses and other nice things that they want to be happy and to help the people they love to be happy too. 

What is going wrong today and what can fix it is easy to understand if you ask the right questions and then think about the answers to these questions.  There are only three big questions that we need to answer before we can fix everything up the way it is supposed to be. 

This is how Mr. Owl explained it to me: 
 

The three great questions: 
 

1.  Who gets to do the "thin air" trick that originates purchasing power,. 

2.  Who receives the new "thin air" spending tokens to become "first spender."    

3.  What "kickback" must Mr. First Spender pay to Mr. Thin Air for conferring the privilege of spending first? 

Mr. Owl's Glossery of Terms ( In case you need to look up a word as we go along.) 
 

thin air:   sovereign power to originate spending tokens 
 

credit:  Mr. Thin Air's own best  reasons for favoring   Mr. First Spender with getting "thin air" exchange tokens for first spending over someone else who lives in the village getting them. 
 

kickback:  payments over time to Mr. Thin Air  for allowing someone to be a first spender.   This tribute to Mr. Thin Air is called usury or interest.  
 

What are the answers to these questions?   
 

Let me tell you. 
 

Mr. Thin Air, for allowing people to first-spend thin-air tokens, exacts tribute in return.  Mr. Thin Air receives for conferring immediate use of his thin-air spending tokens, tribute that must be gathered by toil and sacrifice, tribute of purchasing power equaling   the full first-spend amount plus an extra amount, to be paid over time  plus a compounding of amount as an extra-amount owed also requires a tribute payment, according to the ways of compound interest. 
 

An ancestor of Mr. Thin Air got his special  thin-air privileges from a King in return for easing the Kings debts or for giving the King some gold to buy weapons to win a war that Thin Air's ancestor actually instigated. 
 

Since that time the Thin Air tribe have gained control of the world, simply by the power of introducing thin-air spending tokens and conferring the power to be first spenders on condition of repayment in toil-money plus usury. 
 

Mr. Thin Air has lots of reasons why he should hold on to his thin-air power monopoly.   
 

One reason he gives is that he owns almost all the  gold and keeps it in his vaults and that the thin-air credit power just simply stems from that "backing."   
 

Another reason that Mr. Thin Air gives for monopolizing thin-air powers is that governments cannot be trusted not to create too much thin-air money.  Mr. Thin is against others having his  thin-air powers because he fears too much money would be pulled out of thin air, that there would  would be too many token claims to slices of the national economic pie which would mean that the slice each single token buys would become thinner and thinner  -- and that would be bad because the agreed-upon tribute First pays each month, would each passing month  represent less and  purchasing power than Mr. Thin originally envisioned when the contract with Mr. First  was signed.   Mr. Thin calls this reason, the "anti-inflationist" argument. 
 

In addition to being "anti-inflation," we should not, and for the same reason, Mr. Thin Air is also a pro-deflationist -- although he never mentions this or uses the fact as a reason for having him retain his monopoly of thin-air and credit power.  Nevertheless his policy is that it is better for him to be very stinting in the amount of first-spending of thin-air tokens he allows  since reducing the amount of thin-air tokens in the hands of first spenders means there will be more economic pie per token  -- which means that his entire stock of tribute IOUs that he hold will grow in value  -- a much bigger gain from him than he would have if he made a few more loans so purchasing power in circulation would not deflate and his pile of IOU's would not increase in value over time due to the deflation. 
 

Mr Thin Air and all of his ancestors through the centuries, like to convince people that the thin-air power should be tied to gold reserves because such an arrangement in always deflationary in the long run.  With thin-air power tied to the amount of gold in vaults (as arbitrary an arrangement as any other charlatan money scheme) there will never be deflation which to reduce the purchasing power of the future loan payments he receives from Mr. First Spender D.S..  However, as economies, being organic things, usually grown if not mistreated too badly, Mr. Thin Air can expect the benefit of continuous deflation  as the amount of economic pie will grow by a larger percent each year than the percent gold miners will be able to increase the size of the gold stock that backs thin-air money creation. 
 

Of all things in this universe Mr. Thin hates and fears the Social Credit idea that American populists are just beginning to discover from the writings men who went up against the Thin-Air Money Dynasty in past ages of economic depression brought on by Mr. Thin Airs favorite policies. 
 

Under social credit, the government takes over the thin-air function and provides first-spending power to each person of each household.  Since everybody gets the same social credit amount of thin-air purchasing power each month and since all will be affected by inflation or deflation in the same way and by the same amount -- and since no social credit is paid to the government  -- remember, the people own the government and any funds it obtains must come from the people in taxes that are set by the people's chosen representatives. 
 

Under social credit, then, there is no tribute, no debt slavery.  You don't have to pay back the amount of first spending purchasing power given or interest on that purchasing power or the amount represented by the extra toil and sacrifice needed to earn tokens more hard to come by because of Mr. Thin's deflationary policies. 
 

Now you understand social credit.   Now you can read the following correspondence on the subject  -- outlining real solution to the economic crisis -- which chisis  is a supremely  naughty escapade by Mr. Thin Air which I call "the Kleptastrophe" -- and, hopefully, you will see that there is another way that really is clearly true and superior and worth the effort of using it to skate past hell and reach the future we really always wanted. 
 

The End.
 

Note the Little Mailman of Bayberry Lane wants you to send this letter from him far and wide, so that we can all come to agreement that this is the best way of fixing the things that are wrong today. 
 

When the Debt Slavery system suddenly withholds usury credit, crashing the domestic economy, people can rescue themselves from the plunderers by chucking the Usury System and substituting Social Credit.  They will  quickly become far better off and secure in their future prosperity than they have ever been before.  We simply take back our own credit which the Rothschild interests have been monopolizing  everywhere  for  centuries.
 

Social Credit is better. 
 

Which system would you rather have?  (The War-Debt-Usury System)
 

System #1:  The international bankers have monopoly of credit.  They keep the credit tight to maximize loan income and the value of their debt portfolios.  Unfortunately keeping the money supply tight means that the corporations they invest their money in and buy stock in do not have customers.  So, hiring Israeli intelligence they pay for a false-flag attack in New York sky skrapers so they can have a war and a great need for anti-terrorism measures which their defense corporations can cater profitably, solving the problem of insufficient purchasing power to buy their products.  They also create weather disasters and other disasters with secret technologies  -- because the emergency services business and the reconstruction businesses are also lucrative  -- paid for by government which borrows the money from the bankers to pay the corporations. etc.  Meanwhile the people not involved with war industry or the disaster business continue to lose jobs and houses and standard of living  because of lack of purchasing power. 

or System #2: 

System #2:   The government has debt-free treasury money that it creates without borrowing from international bankers.  They give an amount of money to every American  --  not a redistribution of funds, but the government giving households the chance to spend the new money into existence  -- so that household demand will guide the market economy.  The entire economy will shift away from catering war and disasters -- and from making war and making disasters  --  as people receive these checks and treat them like they would a tax return or a dividend payment or a pension check.  People will still work for a living -- the social credit does not replace work, or entrepreneurship, or the market system, or earning a living  -- what it replaces is the way new money enters the economic loop.  Let housewives again decide what this country will make.  And under this system the domestic economy will get the stimulus, because  American families do not spend their money on war.    Social credit is the death knell for both finance capitalism and socialism and the welfare state.  There can be no free market system with consumer sovereignty without social credit.  Their can only be poverty and war without Social Credit.
 

Principle of economic freedom: Without Social Credit there is none.  You are just a debt slave living at the sufferance of the elite.

Here is a more formal exposition of the usury problem and the social credit solution. 
 

A friend wrote: 
 

Handing out money to average people might work if it was just done as stimulus in small to medium amounts, But too much for too long would devalue the money and stop some people from working.  
 

All it would require would be small and medium amounts of social credit dividend each month or quarter because those dollars would circulate many times  in a year.  That is, it would have velocity. 

Remember the equation  P x Q  =  M x V 
 

Totals of all payment receipts showing Price @ Quantity in a year (i.e. sum all all cash register receipts and other receipts)  EQUALS the amount dollars "M"  that have been in circulation (not being saved, i.e., unspent) at least once in the time period TIMES the average number that each of those dollars was spent to buy something from the production sector -- that number or rate is called Velocity (V).     (Don't count garage sales  -- we are talking about new produced goods. )   In other words   Receipts (PxQ) equals Total Circulating Purchasing Power which  can by described symbolically this way: 
 

 P x Q  =  M x V    which is an "identity", meaning that it is always true. (Note the triple-bar  equal sign -- which means "always equal to"   or "always true by definition") 
 

Now we add an assumption to this identity -- the assumption that velocity does not change -- then the equation, with V now a constant, becomes the famous quantity theory of money. 
 

Under the quantity theory of money  -- if you add money  -- that is, if you increase M, either more will be produced  (a rise in Q)  or prices will climb (an increase in P)  or both.  But also if you withdraw money (a removal of M from circulation) either P will go down or Q will go down.  And of course if Quantity produced goes down wages, profits,  will go down too even as failures to pay rent and debt will increase.  That is the problem of deflation.  That is the Quantity Theory of Money -- associated with the name of Irving Fisher. 

But there is something else -- another fact that comes into play. 
 

Remember that   P x Q  =  M x V  is always true  (not making any assumptions about velocity).  Velocity may increase -- if people were paid every week instead of every two weeks that would increase velocity by some.
 

Of course if dollars are saved rather than spent -- that will  decrease M  -- unless the money is saved in a bank and not in someone's mattress.  If the money is put in a local bank  -- then the bank may lend the money to build a house or to build a factory  -- in which case M would keep circulating (buying producer goods instead of household goods).    But something else comes into play that is the root of our problems. 

That something is usury. 
 

P x Q  =  M x V is always true. 
 

But let consider the nature of loans, money creation and interest.  In our system of fractional reserve banking -- if a bank gets a deposit of a dollar from someone's mattress -- the law lets them lend all of that except a fraction -- say 10 per cent.  And as soon  as the loan is made of 90 percent of the original deposit, say to a building contractor, the contractor goes and spend it and the electrician will get it and deposit it his bank.  And  the electricians bank will take that deposit of 90 cents and will be able to lend out 90 percent of that 90 cents, that is 81 percent of the original deposit, keeping 9 cents as reserve.  And do forth.  So in the end each of the new dollars from the mattress will create more purchasing power because of these additional loans -- each new loan smaller than the one before it --  so that, in fact, if the reserve requirement is 10 percent  the total amount of money created/circulated due to loan expansion  will be ten times the amount that was taken from the mattress in the first place.   
 

But what happens when money is taken out of circulation and put in a mattress --or taken out of the country.  We have the same "multiplier effect" in reverse  -- contracting the money in circulation by ten times what was taken out.  Instead of loans being made, loans will be called in, loans will be defaulted on, new loans will not be issued to replace retiring loans  -- there will be a monetary contraction leading to less spending, layoffs, firings, business failures, cuts in quality of ingredients, reduction of services and frills etc. etc. etc.  (look around you to see what I am talking about). 
 

Only now are we ready to understand the true effect of the claw of interest slavery -- the true cost of usury. 
 

While it is always true that P x Q  =  M x V  it is also always true under the usury system that regardless of velocity -- M will always tend to diminish because purchasing power is leaking -- gushing -- tsunamiing out of the system to the financial sector in the form of interest payments.    40 percent of each price you pay at the store or the car showroom is to cover interest as a cost of production to the producer that he passes on to the consumer.  Even more of each dollar in taxes goes to pay interest on the national debt  -- much of that going to the Fed which owns a lot of our debt and much of it going to foreign creditors who own United States securities and our state and local bonds etc.  The Fed is like a mattress  -- because it is not putting that money back into domestic economy circulation.  The Fed (under figurehead Bernanke) is buying up securities and paying for them with new bank deposits  -- there are no printing presses when the Fed creates money --  to the big financiers and financial institutions that sell the securites to the Fed  -- these financiers getting the new money are not using it to invest in US domestic production.  Anything but that.  Instead they are, by policy, letting deflation take its toll  domestically, while they apply their money overseas.  They buy goods of China and allow us to buy them with consumer loans -- (called second mortgages)  -- but the drain  -- the reduction of M  -- continues to take its toll. 
 

The result is the destruction of the country and the accumulation of all of our dollars in China  -- so that when the time comes --China will not have to conquer this country, they will just move in and buy it up, and evict us to the slum holding pens  (New York, L.A., Philadelphia, Detroit, Kansas City, etc.) where we, with poor food, viruses, low income, high crime will simply die off. 
 

The alternative of course is social credit.  But I can't seem to make anyone see that an alternative is necessary. 
 

The libertarians and conservatives and the people educated by high-school education disc jockey Glenn Beck and Freemason Statanist conspirator Ron Paul and Celente and Alex Jones etc.  seem to believe that we need to let the collapse happen to clear out the mal-investment (when in fact when you took out your home loan you were a good credit risk because of the job you had and the prospects we all thought you had -- before the Kleptastrophe crime cut us low.  But they talk about a collapse being the necessary cure  -- like the medieval doctors bleeding their patients and killing them while claiming they were trying to kill them.  And then after the collapse and the Chinese and Rothschild/Rockefeller/Goldman creditors own everything -- including still outstanding IOUs of yours that they hold  -- they will switch to a gold system in which you must slave all the harder to pay your debts in gold. 
 

I hope I have persuaded you of the life and death importance of this analysis and the cure. 
 

I am not an original thinker -- but I do have the gift of detecting falsehood, finding the problem in systems, evaluating solutions that others have offered to see if they really address the problem or not.  I completed two years towards the doctorate at Texas A & M -- completing the prelim exam in macro with the highest score -- however I have forgotten almost everything I learned back then -- 30 years ago --  and only give to myself the distinguished title of "student of economics"  -- a title I ask you to share with my by your diligent study and mastery of the material I have passed on to you here.  I have sacrificed my life to gain the knowledge I have -- and to reach you with it.  I beg you to take seriously the possibility that there is something good in this for all of us. 
 

Sincerely yours, 
 

Dick Eastman

Yakima, Washington

 
Post Script

No monetary reformer is on your side who is not HONEST ABOUT EVERYTHING THAT IS GOING ON IN THE WORLD.   
 

The people who made it to the top and have been rewarded with status and exposure are generally people who compromised to get in the gate. 
 

I have I think looked long and hard  at the problem we face and have come to the conclusion that all monetary reform -- including Social Credit and Treasury Money reform must fail unless it is accompanied by:

(1) total repudiation of all debt contracts to organized crime now presiding over the international financial system, and
(2) total renunciation of the usury system as a way of funding government. 

Nothing can work without first removing these monsters from our backs and throats once and for all time; and

3) total openness about the incontrovertible mountain of independent lines of evidence each proving conclusively that 9-11 was the work of Big Business and International Finance and the espionage and black-op agencies of the US, Britain and Israel tied by memberships in secret and semi-secret organizations dedicated to world domination by a criminal plutocracy.  You need to be straight on whether you are bass fishing or hunting grizzly bear.  Otherwise you might not be prepared to handle what you reel in.

 

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