## Tuesday, May 6, 2008

### Formula for Debt

It is possible to create a formula that proves beyond all doubt that debt is the result of every dollar circulating within our economy. The formula holds true not only in our country - Canada - but for every country where interest is charged on money. Today that is basically every country in the world.
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In creating this formula we need to remember that all money circulating within our economy has been borrowed from a private bank (yes, the Bank of Canada is a private bank) and must be returned to this private lender at some specific future date. If these were the only factors involved the result of this transaction would be zero. A loan of any amount repaid in full equals a debt of zero. If I were to borrow \$10.00 from you today and repay you the \$10.00 next year, I would then owe you nothing. A formula for this were "L" represents the Loan and "D" represents any residual Debt associated with this Loan would look like this:
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L - L = D
\$10.00 borrowed minus \$10.00 repaid = o
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One hundred percent of what was borrowed has been repaid and the result is zero debt. Now if we were to add an interest charge the result must change. The revised Formula for Debt that adds this interest charge would look like this:
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(L - I) - L = D
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The "I" in this formula represents the Interest charged on the loan. It is placed with the first "L". The first "L" is the only positive in this formula and represents the original Loan. Any interest must be paid out of this positive amount. It is placed within parentheses because it must be calculated first.
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[Many who have written about the debt creation mechanism within our present economic system state that the interest can never be paid because the private banks never lend the money to pay it. Although it does not change the result my claim is that the interest is always paid. You will know this if you have ever made payments on a mortgage. On a mortgage you will make payments for years but the principle owed will be reduced hardly at all. The reason for this is that an extremely high percentage of your payments have gone to pay the interest. As the interest is paid the total amount of funds available to repay the original loan is reduced well below the amount needed to repay the total original loan.]
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If I borrowed \$10.00 from you today and had to repay it with 10% interest next year our Formula for Debt would look like this:
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(L - I) - L = D
(\$10.00 - \$1.00) - \$10.00 = D
\$9.00 - \$10.00 = D
-\$1.00 = D
The result is a debt of \$1.00.
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Interest charges guarantee that a debt will result from any and all loans. This formula applies to our economy because every dollar circulating within it has been borrowed from a private bank. Every one of these dollars has an interest charge levied against it, and debt is a guaranteed result. Our use of a private bank's money has created all the un-payable debt found today within our society. Our continued use of this source for money will guarantee that this debt increases year by year. And the higher the interest, the faster this debt increases.
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With this formula it is possibly to calculate the amount of debt created from the money we earn. Even these dollars have been borrowed by someone and carry an interest charge. Here are three examples.
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Example one: Let's take someone earning \$25,000 per year when interest is 5%.
(L - I) - L = D
(\$25.000 - \$1,250) - \$25,000 = D
\$23,750 - \$25,000 = D
- \$1,250 = D
The result is, Debt = negative \$1,250
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Example two: Let's take a CEO earning \$5,000,000 per year when interest is 5%.
(L - I) - L = D
(\$5,000,000 - \$250,000) - \$5,000,000 = D
\$4,750,000 - \$5,000,000 = D
- \$250,000 = D
The result is, Debt = negative \$250,000
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Example three: Let's take someone on welfare receiving \$12,000 per year when interest is 5%.
(L - I) - L = D
(\$12,000 - \$600) - \$12,000 = D
\$11,400 - \$12,000 = D
- \$600 = D
The result is, Debt = negative \$600
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The debt created always equals the interest charged. Always, always, always.
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We have been taught that those on welfare or some other form of social assistance are a drain on our economy. Here we see the truth. They create the smallest amount of debt for the private banks. Insert your income into this formula and learn how much you contribute to the global debt.
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On a global scale this formula is operating in every country. That means that every country is operating under a debt created by the interest charged on their use of a private Bank's money. The difficulty we have in visualizing this system at work can be attributable to its enormous size. We can simplify our view considerably by just looking at a single dollar.