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The Fantasy System Richard Russell Dow Theory Letters Aug 13, 2003 Extracted from the Aug 11, 2003 issue of Dow Theory Letters Debt and Inflation -Is there anything ethically or philosophically wrong with the central bank system of money as it has evolved? My answer is yes. As gold was systematically removed from the system, the system became a "fantasy system." I say fantasy because the central banks are able to create money at will, with no discipline to stop them. This I believe is immoral, even evil. The current system allows a central bank to create money out of nothing - whereas I and my fellow Americans have to work for that same money. Is it ethical, even logical, that I have to work my whole life to make say a million dollars when the Federal Reserve can, in a minute, create billions of the same fiat dollars that I work so hard for? The system defies logic and defies reality. It's a scam. But because there is no limit to the fantasy-dollars that the system has created, the system has simultaneously created a giant edifice of debt. Nobody is certain how much debt has been built into the US structure, but the accepted figure is around $38 trillion. If you figure that the average interest on this debt is 5%, then you are talking about $2 trillion a year needed to service that debt. Thus, the system now requires inflation to handle the debt. You see, inflation renders debt less onerous through time. This explains why the Fed is so terrified of deflation. In deflation, debt becomes increasingly difficult if not impossible to handle. In deflation dollars become scarcer and more potent, while the debt remains constant. This, in a nutshell, is why the Fed is so frantic to thwart the forces of deflation. The forces of deflation? What forces? During the '90s people, cities, states, the federal government, corporations - they all borrowed heavily. A huge world of "prosperity" was created. But alas, the structure toppled over starting in late-1999. We refer to that as the "bursting of the bubble." Why did the structure topple over? It toppled because "no tree grows to the sky." It's as simple and yet as mysterious as that. More follows for subscribers . . . Richard Russell Dow Theory Letters © Copyright 2003 Dow Theory Letters, Inc Russell began publishing Dow Theory Letters in 1958, and he has been writing the Letters ever since (never once having skipped a Letter). Dow Theory Letters is the oldest service continuously written by one person in the business. He offers a TRIAL (two consecutive up-to-date issues) for $1.00 (same price that was originally charged in 1958). Trials, please one time only. Mail your $1.00 check to: Dow Theory Letters, PO Box 1759, La Jolla, CA 92038 (annual cost of a subscription is $250, tax deductible if ordered through your business). Do go for the trial. I think that once you read Russell, you will sign up permanently. There is a reason he's been around for 45 continuous years. Bob Moriarty Publisher 321Gold _________________ 321gold Inc ref: 7200