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Stefan Claudiu
The Zeitgeist Movement - Orientation Guide
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Monetary Contraction (
money
removed) and Expansion (new
money
added) have on the Business Cycle. When
money
is added to the
money
supply, that
money
is then typically put to use for some reason. Very often these reasons include starting a business, buying a home, investing in the stock market, etc. This application of
money
often translates into so called "economic growth". Credit Expansion, in the form of personal and business loans, is really the hidden force behind economic growth. This is basically the `Boom' period of the Boom and Bust cycle. If you examine prior trends of economic
expansion
in the United States, you will find a lockstep correlation to the
expansion
of credit. (ie. 1990-2000 stock market bubble) Unfortunately,
money
cannot be added into the economy infinitely, for the Debt and Inflation caused by the
expansion
will eventually overcome the "growth" benefits. This is due to the reality that new
money
is always needed to cover the outstanding debt, largely due to the need to pay back the
interest
on the loans (which does not respectfully exist in the
money
supply). What this means is that after a period of growth (boom) with the economic indicators now pointing towards a weakening economy, a choice can be made by the financial regulators/government to either: [1] Continue the
expansion
by infusing even more
money
, often by lowering the
interest
rates (such as the `prime' or `discount' rate) or by simply moving large sums of
money
to certain sectors (such as the 2008 700 Billion dollar bank bailout). or [2] Let the contraction (recession) run its course, raise the
interest
rates, and bring the economy back to some kind of equilibrium, thus preparing it for another
expansion
. As far as history is concerned, the pattern has been to do both, basically with the idea being to "ease" the recession by increasing liquidity. The reasoning is simple. It is politically unpopular for the ruling class to have unemployed, poor citizens. This can lead to contempt for the leadership and perhaps revolution. Therefore, there is always the game of placating the public with false security in order to avoid the truth coming out about the inherent dysfunctionality and corruption of the Ponzi scheme known as the Monetary System Now, the result of this "easing" of the contraction simply delays the inevitable and since the US Government has "eased" virtually every contraction we have seen in the last 70 years by infusing
These are generalized, summary examples. It is not in the
interest
of this booklet to detail all components and attributes. In a system where
money
is created on top of
money
out of debt, with
interest
charged, creating more debt owed back than is even in circulation- this system is a textbook pyramid scheme. The tool is called the "Fractional Reserve System". Read Web of Debt, chapter 2, by Ellen Brown, for more about this monetary
expansion
policy. 25
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