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Posts Tagged ‘compound interest’

Gary northIn his May 28, 2003 article, The Myth of the Gold Standard, Gary North poses the question, “[w]hy don’t you trust the free market?” in response to those who argue for government creation of money.

Given that Gary North’s so-called free market gold standard calls for government enforcement of contracts, I ask him, “why don’t you trust the free market?”

If, according to him, governments can’t be trusted with creating money, why does he trust them to enforce contracts, and not trust the free market?

Unless he’s against all government-built roads for the facilitation of commerce, I find it interesting that he’s so vehemently against the government creation of money, yet calls for the government to forcibly enforce contracts that allow banks to seize assets from those who will eventually default on their debts with compound interest.

This article by North is just one example of several that contain internal inconsistencies that he simply doesn’t address, having been able to rely on friendly, controlled and uncritical platforms like LewRockwell.com and mises.org.

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G. Edward Griffin

G. Edward Griffin, in providing a chapter-by-chapter summary of his 1994 book, The Creature from Jekyll Island, made this claim in the summary for chapter 8:

Fractional money is defined as paper money with precious-metal backing for part, not all, of its stated value. It was introduced in Europe when goldsmiths began to issue receipts for gold which they did not have, thus only a fraction of their receipts was redeemable. Fractional money always degenerates into pure fiat money.

The reason for this, which he doesn’t mention, is that whenever new money is created, only the principal is created, and never the interest.

Compound interest charges will always eventually outstrip the supply of new precious metal.

Griffin admits that a fractional gold standard is inherently flawed, and, therefore, the Federal Reserve wasn’t the ultimate cause of the failure of the gold standard in the U.S. in 1933.

Be wary, therefore, of anyone who does advocate a gold standard with less than 100% backing.

For more on the gold standard, see my article, The gold double standard.

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"Bankster"

In documenting the double standards of the banksters, I have shown how they value our portfolios with depressed market values, while using mark-to-model to arbitrarily inflate their depressed asset values.

Then, there’s ┬ásimple interest for child support arrears, and compound interest for banksters, because they need the money more than children do.

If that weren’t enough, another one of their double standards is to charge interest on loans on weekends, which can’t be paid back until Monday, but if you would normally owe money on the weekend, you have to make a payment on the Friday, or be charged interest all weekend.

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US national debt clock, 2008

In many jurisdictions, such as California, children who are entitled to receive child support payments are only entitled to simple interest on arrears.

The banksters, however, who create credit out of nothing, loan it out at compound interest.

Take the simple example of $10,000 owed over 10 years. With simple interest of 10%, as required in California, the child will be owed $20,000 10 years later.

With annual compound interest of 10%, the banksters will be owed $25,937.42, or 30% more. But hey, the banksters need that extra money to pay for their government lobbyists. After all, the children have the rest of their lives to pay off their individual compounding debt, and if that’s not enough, they can transfer it to their own children, as previous generations have.

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