Posted by
ML Smith on Tuesday, February 03, 2009 5:48:24 PM
Ellen Brown, economic theorist and author of Web of Debt is not optimistic about the approach being taken to right our failing economy. While her theories contrast sharply with conventional thinking on the issue of money in general, her opinions bear noting. Web of Debt is a legitimate and logical debunking of myths about money. According to Brown, "Our money system is not what we have been led to believe. The creation of money has been privatized; taken over by a private money cartel. Except for coins, all of our money is now created as loans advanced by private banking institutions - including the 'private' Federal Reserve. Banks create the principal but not the interest to service their loans. To find the interest, new loans must continually be taken out, expanding the money supply, inflating prices - and robbing people of the value of their money."
Brown theorizes that "virtually all of the money supply is created privately by a mere handful of large banking institutions that have introduced a massive investment scheme known as "derivatives," which now tallies in at hundreds of trillions of dollars." The system has been manipulated so that the big banks are "always bailed out by the taxpayers when their high risk ventures fail." However, the derivatives market is reaching its mathematical limits. There isn't enough money in the entire global economy to bail out the banks from a massive derivatives default. When investors realize that the "insurance" against catastrophe that they have purchased in the form of derivatives may become worthless, they are likely to bail out en masse, "bringing the whole shaky edifice crashing down."
Brown's take on the Economic Stimulus Plan is not optimistic. "I don't think it will work. We'll be underwriting a quadrillion dollars in toxic derivatives debt."
Web of Debt
was published in 2007. While Ellen Brown's theories are not embraced by Federal Reserve or Treasury officials, her predicted scenario for collapse is now reality. Whether or not there will be eventual reform of our monetary system and the derivatives market is a question that will hang in the balance for the time being, as Americans and global investors hope for the best in what is currently a frightening situation.