The description below is frank, direct, honest, and forthright.   It may also Too Much Truth for some people to handle.  ^**ff12   Unfortunately, if humanity is going to survive at any level of social order, we must face the truth and solve our problems before they reach the point of being unsolvable by human action.   If we refuse to face and solve our problems, Mother Nature, in the form of Global Climate Change will solve them for us.  ^**ff1   

    Setting The Stage 

    What's Wrong with the Present System

We don't intend to bore you or dwell on what's wrong, but unless you know where you are, you are never going to reach your destination.

    It's All About Borrowing

    Knowing The Difference Between Real Money and Make-believe Money

    The Purpose of the Existing Monetary System

    The Economic System is Fundamentally Flawed

    The Present State of the Economy -- October 2008

If you already know what's under the surface in the financial industry, please skip to the solutions.

    Offering Solutions

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Question:    You are suggesting a major overhaul of the American monetary system.   That's a huge order.  

Rev. Coté:    Actually, it's not that hard to do.   The tools for change are readily available.   It's the willingness to change that's missing. 

Question:    Then why are you proposing these changes?

Rev. Coté:    Because we really  don't have any other choice.    We are being pushed into change by two powerful forces.

Question:    What forces?

Rev. Coté:    The first motivator for change is money?

Question:    Why is money that important?  

Rev. Coté:    Because money is at the core of every social activity on the planet.  

Question:    Why do we need to re-structure the way the financial institutions are managed 

Rev. Coté:    Because there are serious flaws in the way banks and financial institutions run their businesses.   The entire financial system is obsolete, fundamentally flawed, dysfunctional, grossly unfair, filled with ethically questionable loan practices, and riddled with conflicts of interest.  

The infrastructures, themselves, are sound, extremely valuable, essential, and fully functional.   The problem is in the way these organizations are managed.   Fortunately, most of them have the potential  to recreate themselves by adopting The New Corporate World's Win-Win Business Structure.  ^**ff9   The structural changes are relatively simple to implement.   

Question:    What's the other force?  

Rev. Coté:    Mother Nature.   Unless we make significant changes immediately, Global Climate Change will kill most of humanity. ^**ff1    In order to resolve our environmental crisis, we must start by resolving our economic crisis.

Question:    Why do you say that?  How is resolving our environmental problems tied to economic stability?

Rev. Coté:    Reversing Global Climate Change is going to take a huge effort and will require the cooperation of the entire population.   It will also require the active participation of hundreds of thousands of individuals each working in the context of his or her own life -- each working to fulfill this common goal.   People will not be able to make the effort required if they are seriously financially distressed.

Question:    What are you suggesting?

Rev. Coté:    The suggested, new system has independent non-profit Foundations as a major participant in both corporate and government financial management.   Because the new business format is far superior to the existing system,  the suggested changes will produce results that will revolutionize much more than just the financial system.   

Question:    I'm full of questions.   Where do we start?

Rev. Coté:    By seeing, understanding, and accepting where we are right now.   

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Question:    OK,  where are we?

Rev. Coté:   We are in a financial crisis based upon borrowing and lending money for profit at the expense of everything else.   Government deficit spending and unregulated private lending institutions have triggered a huge financial crisis.   The government leaders have deficit financed hundreds of billions of dollars and they are now  proposing to do more of the same and do it on an even larger scale.   They say that they are just borrowing the money.                                 ª¹ 

Question:    What's wrong with borrowing money?

Rev. Coté:    In and of itself, there's nothing wrong with borrowing money.   There are, however, four factors to consider in any lending agreement.

Question:    And those factors are . . . ?

Rev. Coté:    First, there must be a willing lender.   If the government was actually borrowing money from someone who had money to loan that would be fine.   But they're not.   There's no person or corporation or government that has billions of dollars to loan.    

Question:    Are you saying that there is no willing lender?

Rev. Coté:    That's correct.

Question:    Then where is all that money coming from ?

Rev. Coté:    From deficit spending.   The Bush administration is pumping billions of dollars of make-believe money into the economy.   Excessive deficit spending is the primary cause of our present financial crisis.   The financial leaders are proposing to solve the deficit spending problem with more deficit spending.    This is treating its symptom and ignoring its cause.   In the short-term, this appears to be a good thing, but in the long run, it actually makes matters much worse.   It's like an alcoholic taking another drink to get over his hangover.  It's just one more turn in a downward spiral into disaster.

Question:    But the government couldn't just allow the financial system to collapse!

Rev. Coté:   You're right.  Once it reached the crisis stage, action was required.   But, one might ask,  "Why was it allowed to reach the crisis stage?"   They saw it coming.   Many people sounded the alarm way ahead of time.   Why were the warnings ignored? 

Question:    What do you mean when you say, "Treating the symptoms?"

Rev. Coté:   Many working class people are running out or money.   The money they have is no longer enough to cover all their bills.  The lending institutions don't have enough money of service their loans.   Everywhere you look, the symptom is "not enough money."  

The two causes of this symptom are excessive deficit spending by the Bush administration and wild, speculative borrowing and lending  by unregulated financial institutions.   These two actions have stolen the value out of the money already in the economy producing the symptom, "not enough money."  The only solution thus far offered is to increase deficit spending, which will come back to the people in the form of still higher prices for everything the people buy.   The working class and the entire economy will then be even worse off than they are now.

The proposed solutions have nothing to do with correcting what's wrong with the financial system.   Every solution thus far proposed is about treating the symptoms, and it's about treating the symptoms with more of what caused the problem in the first palace.   

Question:    Clearly state the bottom line underlying cause for me in one sentence.

Rev. Coté:   The present financial crisis was created by the spending, lending, and borrowing of make-believe money in an economy where fraudulent lending practices replaced honest lending  and where fairytale beliefs replaced reality.  

This has created a huge financial bubble in which things appear to be much more valuable than they actually are.   Sooner or later these bubbles burst.   It's inevitable.   It's only a question of when it happens.

Question:    What happens when the bubble bursts?

Rev. Coté:    The financial system takes a downward spiral and some people get hurt.   The bigger the bubble, the bigger the crash.    At the moment, (October 2008)  we are in a huge bubble, and the financial leaders are still not willing to face the truth and solve the problem at the level of its core causes.

Instead of reaching for the solution, the financial leaders are at least doubling the rate of deficit spending and calling that the solution.    

Question:    But the leaders are also proposing that the government regulate the financial institutions.  Isn't that solving the problem?

Rev. Coté:    It's a significant step in the right direction, but it still ignores the core problems that plague the financial industry.   

Question:    What are those problem?

Rev. Coté:  We'll get to them in a moment, but first, consider this.    One of the main problems is the government itself.   Do you here anybody proposing regulations to restrict the government from future deficit spending?

It doesn't take Einstein or Sherlock Holmes to figure out what will be the long-term result of amplifying the problem by more deficit spending.

Question:    What will be the result?

Rev. Coté:    The crisis will return at an amplified level.   I'll let your own imagination tell you where that will take us.

Question:    This sounds like a "catch twenty-two."   Damned if you do.   Damned if you don't.   Are there any alternatives?

Rev. Coté:    Yes, there are at least four vital steps to lessen the negative impact of this crash.   

Question:    What are they?

Rev. Coté:   First, instead of treating  symptoms only, we must be totally honest and solve our financial problem by also going to it's core and  removing the root causes. ^**ff13    Second, most of the deficit spending to curb this crash must go to the people and not just to the financial institutions.   Third, there must be a large round of debt forgiveness in which the over-priced portions of the debts are forgiven.   Fourth, the excessive, usury-level interest rates on credit cards should be reduced so that the lending institution follow the same lending laws regarding interest rates that you and I must follow.  Collectively, millions of Americans are losing billions of dollars in their retirement moneys.   This issue must also be addressed.

Thus far, all the money is going to the major financial institutions, no money is going to the people,  the core problems are being ignored and the thought of lending institutions charge reasonable and fair interest rates has never even been mentioned.   When Senator McCain proposed spending 300 billion on direct relief to the home owners facing foreclosure, his proposal was treated like rain at a picnic.  It was labeled as unfair and too expensive.  

Question:    Wait a minute!   What do you call giving billions of dollars to the financial institutions?

Rev. Coté:    Unfair and too expensive.

Question:    OK. let's move on.   What's are the root causes?

Question:    OK, what are they?

Rev. Coté:    

Second,  Lending and borrowing must be done in moderation,   
Third,   Both lender and borrower must be honest,  and 
Fourth, The lender's money must be taken with the lender's consent. 

Question:    What do you mean when you say the lender's money must be taken with the lender's consent?   Is there any other way?

Rev. Coté:   Yes,  governments regularly take money from the people without their consent.   It's called taxation.   When the government deficit finances, it's actually taking money from the working class without their consent.  Deficit spending is a hidden tax. ^**ff3  

Question:    It sounds like this is more that just a hidden tax?   The government took money without the people even knowing that that money was being taking from them.   

Rev. Coté:    Yes, that's the nature of deficit spending.   It violates the fourth principle because there is no willing lender. 

Question:    If I took money out out of your wallet and out of  bank account  without your knowledge,  what would that be called?

Rev. Coté:    Let's not go there.  You know what that is.   I know what that is and so do our readers.  

Question:    OK.   Are you telling me that the four criteria for healthy borrowing and lending  are not being met?

Question:    Please give me some examples.

Rev. Coté:   Moderation is obviously being violated, primarily by the government;  480 billion dollars here,  85 billion there,  700 billion for this, another 37 billion for that.   The government appears to have infinitely deep pockets, but in reality it doesn't have any pockets at all.   Every dollar the government spends by deficit financing is taken from the working class without their permission.   It's taken  by way of inflation which show up as higher prices for everything people buy.

Question:    What about honesty?

Rev. Coté:    Here' s your answer by example.    While the 700 billion dollar bailout was being hotly debated in September and October 2008, the public talk was about helping the people.   In Response to the question, "What are your goals?"  we heard generalized answers like: "A stable economy."   "To take care of the people."   BUT . . .   There is a hidden agenda.

Question:    What's the hidden agenda?

Rev. Coté:    Making a profit from lending money.  

When one gets specific, it's all about borrowing money:  for people to be able to borrow money to buy cars and homes;   for small businesses to be able to borrow money to keep their businesses running;   for banks to be able to borrow money from each other;   for students to be able to borrow money to attend college.   Borrow,  borrow,  borrow!   They ignore the fact that excessive lending and borrowing  are at the core of our financial problems?   

George Bush has borrowed about a trillion dollars to fight a war in Iraq that his father could have completed in 1991 at a small fraction of the present cost, to say nothing about the cost in terms of death and destruction.   The AIG bail out cost the taxpayers initially 85 billion dollars.   The latest bail out of the banking and financial system will cost the taxpayers still another 700 billion dollars.   The proposed budget for the next year includes about a trillion dollars in deficit financing.   They've recently given another 37 billion to AIG.   And now they are deficit spending another 150 billion bailing our the banking industry.  

Why is everything based on borrowing money?  

Question:    I don't know, but I'd guess that I'm about to find out.

Rev. Coté:    The system is based on borrowing because some people are raking in huge profits by lending money.   Being paid interest on borrowed money is the core source of income for the super wealthy.   It's the underlying reason why the world's financial institutions even exist.  Of course the financial institutions provide a service, but in the eyes of those who own them, that service is secondary to their real purpose, and that real purpose is making money.

Question:    Let me see if I've got this right.    By way of  deficit financing the government declares itself to have money to loan.   It's agent, the Federal Reserve, loans that make-believe money to the lending institutions.   The lending institutions loan out this non-existent money to the public.   The lending institutions charge the borrowers interest on the loans this make-believe money.   The borrowers pay for the loans with real money, with money that is actually a form of the goods and services that they produced by their labor.  The super-wealthy who own the lending institutions take that real money and live in opulence and excess, while the producers of the wealth live at the survival or poverty level.

Rev. Coté:   That's it!   Now you have the answers to the two main questions about this financial crisis -- 

     Where are those thousands of billions of dollars that everybody is borrowing come from?  --The working class.

     Whose taking in almost all of that interest money that the borrowers are paying?  -- The super-wealthy.

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Question:    This's too much to swallow in one bite.  Please explain this to me again.   Who has all the money that everybody is borrowing?

Rev. Coté:    Nobody!   

Question:    If nobody has money to loan, how can the government bureaucrats borrow money?

Rev. Coté:    They can't.  

Question:    But they are?

Rev. Coté:    Actually they are not borrowing money, they are taking it without permission from the people through the manipulative technique called "inflation."   Inflation is a hidden tax which takes the value out of the money that is already in the economy.  It's a variation of the theme of  shoplifting, only instead of stealing merchandise they steal the value out of the money you use to buy goods and services.    

Question:    I'm not quite sure I understand what  you are telling me.

Rev. Coté:    Then let me talk to you about money.    Money is one thing and one thing only.  Money is a convenient form of goods and services. ^**ff2    

Question:    So you are saying that when the government spends money, it' really spending goods and services that have been converted into the form we call money?

Rev. Coté:    That's it.

Question:    Then where does the government get all the goods an services it's spending?

Rev. Coté:    The working class people  produce of all the goods and services.    What the government does is print receipts for those goods and services, in the form of paper dollars, and then pretends that those essentially worthless receipts are actually the equivalent of  goods and services.    When a private individual creates fake receipts, it's called "counterfeiting."  and those caught printing fake, make-believe money, go to jail.   When the government does it, we are supposed to ignore the criminal activity because . . .   because . . .  well . . .  just because!

The paper dollar bills in your wallet are fake receipts for goods and services.   In and of themselves, they are all but useless.   The only reason they hold value is because of our collective agreement to accept them in exchange for goods and services.

In the physical world, something cannot be created out of nothing.   Goods and services cannot be created out of nothing.   Fake receipts in the form of newly printed dollars get their value by taking their value out of the other receipts, other dollars, that already exist in the monetary system.   This is why the prices for everything you buy are rising rapidly.   

Question:    Are you saying that adding more money to the economy reduces the value of the existing money?

Rev. Coté:       Yes.  Here's another way to say that.   It's taking goods and services from everybody who holds their assets in the form of dollars or promises to pay  dollars.   

Question:    You mean cash, bank accounts, stocks, bond and the like?

Rev. Coté:   Yes, anything where the promise to pay is to be paid in dollars.   Goods and services are taken from those existing dollar holders and given to whomever receives the government's newly created dollars.

Question:    Are you saying that deficit financing is a secret way of taking wealth from the people and giving that wealth to whomever the government bureaucrats choose to give it to?

Rev. Coté:   Yes, that's it.  The goods and services are transferred to the corporations that do business with the government.  And the bailout money is being given to the lending institutions that participated in creating the financial crisis. 

Question:    Please explain the cycle of what really happens when the government spends all that make-believe money?

Rev. Coté:   Deficit spending creates a huge self-propelling downward cycle for everyone.    

Question:    What do you mean?

Rev. Coté:    When the government spends money that it doesn't have, it's not simply pushing a debt onto future generations.   The price is paid almost immediately by everyone.    When the government deficit  spends money,  money seems to disappear out of the economy.   Actually what happens is that the buying power of the money disappears.  

When paying their bills or buying something that they want or need, a significant portion of  the working class come up short.   When the prices rise and their incomes do not, there's just not enough money.   This shortage is reflected in less money coming into the  businesses that sell goods and services to the public.   As a  result, the businesses buy fewer goods and services.   Manufactures sell fewer products and  buy  fewer goods and services.   Businesses need fewer employees and jobs are lost.  This results in the working class having even less money.   The downward cycle repeats itself, and each cycle is worse that the cycle before it.

Also, the state and local governments find their incomes reduced.   They can't pay their bills.   Services are slashed or eliminated and fees rise.   This amplifies the downward cycle.   The overall quality of life also goes down in a parallel negative spiral.

Question:    Then where do we go to re-create the upward cycles?

Rev. Coté:    To the  engine of the economy, to the working class.  

Question:   What about the banks and financial institutions?

Rev. Coté:    Banks and financial institutions are not the drivers of the economy, the people are.   The banks, financial institutions and the major corporations that were supposed to be service organizations have turned into leaches bleeding off bigger and bigger portions of what the working class produces.

To re-create the upward cycle, one cannot simply give money to those who already have more than they need.  It must go to those who need it --  to the  engine of the economy, to the working class.  

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Question:    Let me see if I've got this right.  The money comes from a hidden tax on the working class.  The government spends it buying goods and services from the major corporations such as those who product military hardware.   Or in the case of the present bailout, October 2008,  they give the people's money to those who ran the financial institutions into bankruptcy.   

Rev. Coté:    That's correct.   None of these corporate executives  are in need of financial aid to buy food, gasoline, medicine, or fuel to heat their homes this winter, but millions of people in or retired from the working class are in desperate need of financial assistance.   

Question:    They say the money given to the banks is only a loan.

Rev. Coté:    I hope you don't really believe that's the sum total of the truth.

Question:    So their proposal to fix the problem is to take the money from the working class and give it to the wealthy?

Rev. Coté:    Yes.  They give just enough of the money back to the public to keep them from rebelling.    As another appeasement gesture, they also make huge unfunded promises that will have to be paid for by future deficit financing.

Question:   When the government spends money on the people, the people get paid with their own money and the wealthy keep a big chunk  of the money.   Then they tell the public that more deficit financing will solve the deficit financing problem.

Rev. Coté:    You've got it.

Question:    That doesn't make sense!   There's something seriously wrong here.  

Rev. Coté:    You're right.   You and I know that but  the public is being told that they are getting a service for their money.   

Question:    Who created this system?

It was initially designed centuries ago by the wealthy land owner, kings, princes and the like.   The core of the original system was debt.  It was designed to keep the people obligated to the landowners so that the landowners could extract goods and services from the people under their control.   It has evolved into the what we have today, a system designed by the wealthy, for the wealthy at the expense of everything and everyone else.   

Question:    Are you saying that the financial system is not what its promoters claims that it is?

Rev. Coté:    The evidence indicates that it actually functions completely counter to its publicly stated intention of providing services to the people.    

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Question:    How can that be?  What's wrong with the system?

Rev. Coté:   Everything in the existing system has been and still is based on producing short-term profits for the money lenders at the expense of everyone and everything else.   That's the fundamental problem that must be changed in order to permanently resolve the lending crisis.

Question:    Can you be more specific?

Rev. Coté:   There are two main problems.   One is inflation.   Inflation is not some monster that just happened upon the world.   It's a financial tool of the super-wealthy intentionally built into the financial structure many years ago for the express purpose of taking money from the working class and putting that money into the pockets of the wealthy.  ^**ff3       

Question:    And it's done through deficit spending?

Rev. Coté:   Yes.   Deficit spending steals the value out of the money.

Question:    What's the second major problem?

Rev. Coté:   Fractional reserve lending  is another, major, money-making tool of those who control the financial industry.   It's commonly knows as "leverage."   It allows the banks and other professional lenders to charge the public hard-earned money for the loan of make-believe money.   ^**ff4   

Inflation and leverage sound innocent enough as long as you don't know what they are, where they come from, what their hidden purpose is, what the price is that we pay for them, who is paying that price, and who are the beneficiaries. 

 Question:    I'd like to hear the answer to those six questions.

Rev. Coté:    That would derail our conversation.    We do focus on them on another of the TLC-Life-Center websites. ^**ff5    For the moment, let's stay with our goal of resolving the financial crisis.

 Question:    OK.   A moment ago you mentioned "stated intention."  Are there other intentions?

Rev. Coté:    Slowly over the years, the United States government has been, step by step, turned into a gigantic, service organization for the benefit of the super-wealthy.   Most major corporations are owned and controlled by the a very small group of investors.   Those corporations now dominate and control the government.                                                                                      ª¹ 

Question:    So the hidden intention is to serve the super-wealthy?                ª¹ 

Rev. Coté:    Yes.   The people have been turned  into servants.  This  has been accomplished by mis-education and by the manipulation and misuse of borrowing and lending money.                                                                   ª¹ 

For years, the financial system worked well for the super-wealthy because they took only a small percentage of what the working class produced.   Unfortunately for the wealthy, under the both the Ronald Reagan and George Bush administrations, the legal restraints were taken off, and a financial, feeding frenzy developed.   Lack of restraint has, in essence, killed  the goose who laid all those golden eggs.  

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Question:    Is that why the world is in such financial chaos?

Rev. Coté:    Yes.    Because of greed and mismanagement, the financial system is in the process of collapsing.  The super-wealthy are no longer in charge of the money machines that they created.   They have set into motion, forces over which they no longer have control.   Thousands of hot-shot wheelers and dealers have taken the exploitation system of the super-wealthy  and refined it,  expanded it,  and manipulated the economy with it to the level that the entire system is about to collapse.  Borrowing money has moved from  borrowing to produce goods and services to  borrowing to lend to someone else at a higher interest rate.    The excessive borrowing and lending turned into a large scale variation of the old pyramid scheme. ^**ff7  

The money manipulators  have given out thousands of questionable loans.   They borrowed huge sums  for high-risk investments that failed.  They  leveraged as high as sixty to one.   They ripped off billions of dollars and walked away from collapsing companies.   They engaged in numerous shady and illegal activities.   They  manipulated the rules in order to extract billions of dollars from corporate retirement funds.   It's gotten so bad that without major changes, the system is about to self-destruct.   And the bottom line is that many of the people responsible for the unethical an deceptive loans didn't care what happened to the loans their employees  made.   

Question:    What do you mean?   Why don't they care?

Rev. Coté:    When their lending practices made a profit, they keep the money.   When a lending scam went bust, they had their cronies in Washington  bail them out with tax payer money. ^**ff8 

Here's the ignored bottom line:   The working class always pays the bills. ^**ff6    When a financial crisis comes along, such as we are in right now, where do our so-called leaders look for the financial solution?  They look to the working class, to those who actually produce the goods and service.  They raise taxes, raise user fees, reduce service, deficit finance, and apply more of the same or the same thing harder.   

Infrastructure        Infrastructure          ...

 Infrastructure          Infrastructure      ...