Gary North takes a look at the big picture: Somebody’s going to have to pay the piper soon, and it’s not going to be pretty.
A lobster trap lures a lobster in. The more he pushes forward to get at the bait, the less able he is to back out. A lobster trap is a forward-only device. The lobster thinks he will get the bait. In fact, the trap gets him. It doesn?t kill him. It immobilizes him. Then the person who set the trap comes back, hauls the trap out of the water, and extracts the lobster. Then he re-uses the trap.
Central banking is a gigantic lobster trap. It is set by the commercial banking industry and the government, which grants the central bank a monopoly over the control of the monetary reserves (government debt) that are used by commercial banks to issue loans.
The trap?s bait is a two-part promise: (1) establishing an economy that does not suffer from economic depressions; (2) establishing price stability.
The Federal Reserve Act was passed in 1913 in the aftermath of the recession of 1907. Its success can be measured by (1) the recession of 1921, the Great Depression of 1929?39, the recessions of 1957, 1970, 1975, 1980, 1981, 1990, and 2001; and (2), the decline in the value of the dollar ? approximately 95% since 1913.
North says the main reason we haven’t suffered a collapse already is China’s booming economy as it makes the transition from communism to a modified form of capitalism. The China Boom is being financed by American debt as T-bills flow into China’s central bank like the Yangtze River into its flood plain during the rainy season.
But the boom won’t last forever.