1. Pay Taxes! INFLATION !! Government We the People
The Effect is: High Prices!
Mal-investments
Boom and Bust Cycles
Recessions
1913
Fiat
Money
(Paper)
IOU’s ( Bonds )
Federal Reserve
INFLATION !!
$ 16 Trillion
Can only spend what
it takes from it’s citizens
Government
$ Spend Trillions
$ Government Payroll
$ Federal Programs
$ War
We the People
Keynesian Economics
The General Theory, 1936
Pay Taxes!
All Spending = Income

2. Fractional Reserve Banking
- 10%
Sets Fed Fund Rate
Buys the Bonds
(Credits Reserve
Account by
$1 million)
Discount Rate
Federal
Reserve
Sells IOU’s: BONDS
($1 MILLION)
Excess Reserves
Above 10% of
Deposits
Deficit Reserves
Below 10% of
Deposits
Overnight
Commercial
Bank
Fed
Fund Rate
Can Not
Extend
Credit /
Loans
Commercial
Bank
TOTAL: $10MILLION
IN CHECK
BOOK MONEY!!
Businesses
Expands
Credit / Loans
Prime
Rate
Individuals

3. OPEN MARKET OPERATIONS
Inflation Process
OPEN MARKET OPERATIONS
$1 Million Purchase of Gov’t. Bonds
Sells
Buys
Federal
Reserve
Securities Firm
Wall Street
Writes a check
----- Fed Bank
Deposits
$1 Million
Check with
Fed
========
Reserves
increase by
Deposits Fed’s
Check $1 Million
Commercial Bank
TOTAL:
$10 Million Money
Supply Increase!
via Check Book
Deposits
Money Multiplier 10 / 1
$9 Million in New Loans

4. U.S. Competitive Banking System
Bank-to-Bank Inflation Process
U.S. Competitive Banking System
Formula
(1 Minus the Minimum Reserve Requirement)
Bank #A = $1 Million x .90 = $900,000
Bank #B = $900,000 x .90 = $810,000
Bank #C = $810,000 x .90 = $729,000
Eventually over 100 banks pyramid $9M
on $1 Million in Reserves:
Federal
Reserve
TOTAL $10 MILLION
Lends
$9M
check book
deposit to
Macy’s
Buys $9 Million
in furniture from
XYZ Company
$1 Million
Reserves
Check from # A
Macy’s
Commercial Bank # A
Bankrupts Bank # A
Deposits $9M
Check into
Bank # B
Bank # B
Presents $9M check for
redemption from Bank #A
Commercial Bank # B

5. THE PROBLEM
The Commercial banking System has Excess Reserves of about ($)1.5- Trillion Dollars!
Legally they can create ($) 15-Trillion Dollars in new loans (inflate the quantity of money)!
Already the National Debt at 16 Trillion is out of control.
2. The pressure on U.S. Treasuries and the Dollar is threatening.
Prices on everything are continually increasing and now poised to soar (including interest rates)!