by Bill Parks

Created on: November 29, 2008

The national debt is testimony to our ignorance and confused thinking. Lost in a fog of intellectual noise and deliberate obfuscation is the real reason behind the debt.

If you have ever asked yourself, "Why do we have a national debt?", then you probably came up with the stock answers about excessive government spending, pork barrel projects, etc. So allow me to rephrase the question. Why do we have a national debt when the government has the power and authority to issue all the money it needs or wants? The government need not issue interest-bearing bonds; it can choose to issue its own debt free money as well.

Two major monetary systems have been used at various times in the US: the British Banking System and the American Banking System. The problem of the debt stems from our use of privately issued currency and the British Banking system.

Since its adoption in 1914, the US has employed the British Banking System with its privately owned central bank, the Federal Reserve and private banks that make up the system. With the exception of coins, the entire US money supply is created as fiat money by this system, the money created out of nothing and delivered into the economy as bonds and loans that must be repaid with interest. Shortly after the adoption of the British Banking system, the US government amended the Constitution allowing the enactment of income tax legislation, needed to guarantee sufficient money to pay the interest on government bonds. The national debt is a direct consequence of using money created by this private central bank. The interest on the debt is the third largest expenditure in the federal budget, amounting to nearly $500 billion this year; it is only slightly less than the budget for the nation's military.

According to the US Treasury Dept., in 1988 the debt was $2,602,337,712,041.16 and in 2007 it was $9,007,653,372,262.48. So we added $6,405,315,660,221.32 to the debt in those 20 years.

In the same period, we paid $6,518,480,984,764.11 in interest on our debt. We paid $113 billion ($113,165,324,542.79) more interest than we borrowed in that period.

Most important, The British Banking is fatally flawed: it only creates money as debt. Attached. Because it creates only the principal of the debt but does not create additional money needed to pay interest, the system creates contracts that are impossible to fulfill, when they are considered as a collective whole. Two actions can be used to cover this deficiency: paying the interest with existing

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