Can the States Save the Nation?

Can the states save the nation?

Introduction

The economies of the world are failing, one by one. If you want to find out why this is happening, you don’t have to look any further than the fatally flawed debt money system in use throughout the world.

As we will discover, the problem is not with money itself but with the interest burden placed on the money at the time it is created. It is the purpose of this paper to show how the individual states can slow down and even stop the destruction of money caused by interest payments.

The problem

We are all familiar with economic swings. This happens because the money in the system increases and then decreases. Why does the money supply fluctuate like this? It is because the economy is running on temporary money, money which is coming from bank loans. Bank loans put money into circulation, but monthly loan repayments plus interest take it out even faster. In effect, banks destroy money faster than they create it.

Given this method of supplying money it can be seen that banks need to lend out more money each month to supply the economy with the money it needs. Obviously this can’t be sustained. People eventually reach their credit limits and can’t qualify for new loans. When this happens, banks can’t lend as much as before; the economy slows down; layoffs occur and even fewer people qualify for new loans. It’s an accelerating effect which always ends in a recession.

The problem of course is in the interest payments. If the loans were made at zero interest, then the system would remain stable with new loans simply taking the place of loans that are paid off.

Banks have always charged interest for making loans, but it’s only recently that bank loans have become the nation’s principal source of money. Prior to 1913, money circulated as coins, notes and certificates issued by the government itself. This new system, which burdens the money supply with interest payments, has put a huge strain on the economy of this nation.

The solution

Fortunately, it is not necessary to eliminate interest everywhere in order to put a damper on this recession cycle. All we need is another entity to create enough interest free money to offset the money destroyed by interest payments. The individual states can perform this function by licensing a non-profit bank to create long term interest free loans based on bond issues that the people vote for.

When a state borrows money at zero interest, the state can relax the tax burden on its citizens. There are no drawbacks to this system, and everyone wins. Here are the benefits to the state, to the commercial banks, and to the citizens:

The state can immediately eliminate its deficits at the state, county and city levels. No layoff of state employees is required.The state can reduce or even eliminate income taxes, sales taxes and property taxesThe state can lend money to local community business banks at zero interest. These banks are good at lending money to qualified business to help them expand and hire employees. New businesses are formed, hiring occurs and people go back to work.

When people go back to work, they become credit worthy again and can borrow personal loans from commercial banks. This takes the pressure off the commercial banks who are desperately searching for credit worthy borrowers.