Essential history: ‘Forever debt’ Federal Reserve system invented to pay interest without ever ever ever repaying debt – definition of ‘Ponzi scheme’

Ponzi scheme: criminal fraud of paying existing “investors” only and always from new “investors.” Collapse occurs without new “investors” and/or existing “investors” panic to cash-in.

The US Federal Reserve is based on the 1694-created Bank of England because this model allows government finance with debt that is never meant to be repaid. It is an “investment” model that pays interest guaranteed through tax collection. Its invention was to finance England’s government and military in a history of continuous centuries of war.

It’s cleverness allowed British finance to fund a short-term empire over rival European powers.

Although we can appreciate this historical manipulation, this is a Ponzi scheme because the system collapses without new “investors” of government debt securities.

This Ponzi scheme model is our US Federal Reserve System today:

US Treasury securities of bills, notes, and bonds continuously mature and must be repaid if the owner chooses to cash-in rather than renew the debt security. The US federal government debt is now $19 trillion, having risen over a trillion each year of the Obama administration.

This amount of total debt compared with ~100 million US households means that the average US household of ~$50,000 annual income owes ~$190,000 each should investors withdraw from this US government funding scheme. If your household income is more than $50,000, then use this ratio to estimate your share for repayment; for example, a $150,000 annual family income would owe $570,000 if US Treasury holders requested repayment rather than continue rolling-over their loans to the US government.

Obviously, this system is at risk to at least devalue family’s existing savings to the degree the public reverses considering this Ponzi scheme as a “wise investment strategy.”

The great news is that the top three benefits each of monetary reform and public banking total ~$1,000,000 for the average American household, and would be received nearly-instantly.

Please read the above sentence a second time, then verify the following factual claims to confirm its objective accuracy.

Monetary reform is the creation of debt-free money by government for the direct payment of public goods and services. Creating money as a positive number is an obvious move from our existing Robber Baron-era system of only creating debt owed to privately-owned banks (a negative number) as what we use for money. Our Orwellian “non-monetary supply” of adding negative numbers forever causes today’s tragic-comic increasing and unpayable total debt. You learned these mechanics of positive and negative numbers in middle school, and already have the education and life experience to conclude with Emperor’s New Clothes absolute certainty that accelerating total debt is the opposite of having money. As a National Board Certified and Advanced Placement Macroeconomics teacher, I affirm this is also exactly what is taught to all economics students.

The public benefits of reversing this creature of Robber Barons are game-changing and nearly-instant. We the People must demand these, as .01% oligarchs have no safe way to do so without admission of literal criminal fraud by claiming that debt is its opposite of money.

The top 3 game-changing benefits of monetary reform:

  1. We pay the national debt in proportion to removing private banks’ ability to create what we use for money as debt in order to prevent inflation. We retire national debt forever.
  2. We fully fund infrastructure that returns more economic output than investment cost for triple upgrades: the best infrastructure we can imagine, up to full-employment, and lower overall costs.
  3. We stop the ongoing Robber Barons who McKinsey’s Chief Economist documents having ~$30 TRILLION in tax havens, and the Fed finding the US top seven banks creating shell companies to hide $10 trillion. This amount is about 30 times needed to end all global poverty, which has killed more people since 1995 than all wars and violence in all human history.

Public banking creates at-cost and in-house credit to pay for public goods and services without the expense and for-profit interest of selling debt-securities. North Dakota has a public bank for at-cost credit that results in it being the only state with annual increasing surpluses rather than deficits.

Top 3 game-changing benefits of public banking:

  1. a state-owned bank could abundantly fund all state programs and eliminate all taxes with just a 5% mortgage and credit card.
  2. a state-owned bank could create in-house and at-cost credit to fund infrastructure. This cuts nominal costs in half because, as you know, selling debt securities typically doubles the cost. For example, where I live we’re still dismantling the old Bay Bridge in NoCal from the upgrade that cost $6 billion, but the debt-service costs will add another $6 billion when it’s all paid.
  3. CAFRs (Comprehensive Annual Financial Reports) stash “rainy day” funds no longer required with a credit line from a public bank. In addition, the so-called “retirement funds” currently deliver net returns of just a few percent on good years, and negative returns on bad years (herehere). California’s ~14,000 various government entities’ CAFRs have a sampled-data total estimate of $8 trillion in surplus taxpayer assets ($650,000 non-disclosed assets per household, among California’s ~12.5 million households).

$1,000,000 of benefits per US household:

  • California’s CAFR data of ~$650,000 of assets per household is evidence of huge cash assets of similar magnitude in every state.
  • Paying the US national debt of ~$18 trillion saves ~$180,000 per household.
  • Ending state taxes in California to pay a budget of ~$170 billion saves each household ~$15,000, with similar savings in every state.
  • ~$30,000 per household savings annually: the American public would no longer pay over $400 billion every year for national debt interest payments (because almost 30% of the debt is intra-governmental transfers, this is a savings of ~$300 billion/year). If lending is run at a non-profit rate or at nominal interest returned to the American public (for infrastructure, schools, fire and police protection, etc.) rather than profiting the banks, the savings to the US public is conservatively $2 trillion (1). If the US Federal government increased the money supply by 3% a year to keep up with population increase and economic growth, we could spend an additional $500 billion yearly into public programs, or refund it as a public dividend (2). This savings would allow us to simplify or eliminate the income tax (3). The estimated savings of eliminating the income tax with all its complexity, loopholes, and evasion is $250 billion/year (4). The total benefits for monetary reform are conservatively over three trillion dollars every year to the American public. Three trillion is $3,000,000,000,000. This saves the ~100 million US households an average of $30,000 every year. Another way to calculate the savings is to figure those amounts per $50,000 annual household income (for example, if your household earns $100,000/year, you save ~$60,000 every year with these reforms). This savings represents a 60% raise for every US household’s income.
  • Related, if the ~$30 trillion hidden in tax havens by the .01% have $10-$15 trillion from Americans, and we count the Federal Reserve report that the US top seven banks have over $10 trillion stored, then the average US household could clawback ~$200,000 to ~$250,000.

Famous Americans already on record for these reforms:

Please understand that I represent likely hundreds of thousands of professionals making factual claims with objective evidence anyone with a high school-level of education can verify.

The Emperor’s New Clothes obvious pathway out of these mechanics of our “debt system” is to start creating debt-free money (a positive number) for the direct payment of public goods and services, and create public credit for at-cost loans (a negative number). I have three academic papers to walk any reader through these facts; an assignment for high school economics students, one for Advanced Placement Macroeconomics students, and a paper for the Claremont Colleges’ recent academic conference:

Teaching critical thinking to high school students: Economics research/presentation

Debt-damned economics: either learn monetary reform, or kiss your assets goodbye

Seizing an alternative: Bankster looting: fundamental fraud that “debt” is “money”

Let’s examine just some of the facts of the current US economy that demonstrates its criminal status:

For Americans still zombiefied to “believe” in America, please embrace the reality that 40% of US children live at least one year of their lives in under-measured poverty, while oligarchs most responsible literally laugh in grandiose glee of the poverty they euphemise as “income inequality.” Please absorb this 1-minute reality check:

More game-changing economic data that confirm what we receive for economic leadership is literal criminal fraud:

6-minute video of wealth inequality in the US (now dated):

I could go on to literally ~100 areas of crucial concern; most showing obvious criminal acts requiring arrests to lawfully stop ongoing horrific damages and deaths.

Earth economics is upside down.

15-minute video of obvious solutions: Mark Anielski and Ellen Brown’s powerful 15-minute response to an interview at the Seizing an Alternative conference (and here, with videos here) with former World Bank economist Herman Daly and co-author John B. Cobb of For the Common Good (video should start at 1:04:43):


1) Of $60 trillion total debt, a conservative current interest cost of 5% is $3 trillion every year. Two trillion dollars of savings if the profits are transferred to the American public rather than to the banking industry is probably low. St. Louis Federal Reserve Bank:

2) The US GDP is ~$17 trillion. Three percent growth is moderately conservative.

3) Of the US Federal government’s ~$4 trillion annual budget, about $1.7 trillion is received from income tax.

4) Tax Foundation. Hodge, S, Moody, J, Warcholik, W. The Rising Cost of Complying with the Federal Income Tax. Jan. 10, 2006:


Note: I make all factual assertions as a National Board Certified Teacher of US Government, Economics, and History, with all economics factual claims receiving zero refutation since I began writing in 2008 among Advanced Placement Macroeconomics teachers on our discussion board, public audiences of these articles, and international conferences. I invite readers to empower their civic voices with the strongest comprehensive facts most important to building a brighter future. I challenge professionals, academics, and citizens to add their voices for the benefit of all Earth’s inhabitants.


Carl Herman is a National Board Certified Teacher of US Government, Economics, and History; also credentialed in Mathematics. He worked with both US political parties over 18 years and two UN Summits with the citizen’s lobby, RESULTS, for US domestic and foreign policy to end poverty. He can be reached at

Note: has blocked public access to my articles on their site (and from other whistleblowers), so some links in my previous work are blocked. If you’d like to search for those articles other sites may have republished, use words from the article title within the blocked link. Or, go to, paste the expired link into the box, click “Browse history,” then click onto the screenshots of that page for each time it was screen-shot and uploaded to webarchive. I’ll update as “hobby time” allows; including my earliest work from 2009 to 2011 (blocked author pages: herehere).


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  • diogenes

    “Humankind cannot bear much reality.” Easier to close our eyes, go back to sleep. Shame on you, Carl, let the sheeple peep — although, I must say, they seem to be having bad dreams.

    • Carl_Herman

      Those of us awake must travel as the historical Diogenes: a pain in the ass to the asleep as we walk with our lanterns. Well… kind of like that… I guess only when we choose to speak the facts.

      That said, I feel strongly our role is to offer choice. There’s a “fleecing” of sorts coming, a separation among the flock of those willing to graze in nicer pastures versus those who care to remain being farmed and used.

      Perhaps the “bad dreams” will continue until God/Life is satisfied the time of choosing has been completely fair.

      • diogenes

        “fleecings” is a word with a long history in American discussion of Wall Street predation — I think it goes back to Laurence Gronlund’s Cooperative Commonwealth (Boston, 1884). It’s overdue for a revival, so, good work again, Carl.

        Gronlund’s book takes its epigraph from another founder of American progressive thought (like all of them, erased from the Rockefeller version of American history since 1950 — Henry George; it reads:

        “The masses of men are robbed of their fair earnings — they have to work much harder than they ought to work for a very much poorer living than they ought to get.” Gronlund called the spoils of this robbery “fleecings.” Wall Street calls them “profits” and “interest income” and instead of calling it robbery or fleecing it calls it “freedom” and “the American economy” and the like.

  • hvaiallverden

    Amen to it all.
    Well, in a world where people whines and debates “religious delutions” as something idotic, they will never admitt this fraud, never ever untill it simply collapses.
    The level of sheer scams are mindboggeling/boiling, and of course the sheeps will never belive this, since the MSM says this is “conspiracy” theorys.

    And to mutch hollywood on it all as an topping of the kake, spirncled with belife on anyone will invade their country, if not NorthCoreans then Russians or China, if not any of the, the sky will fall or maggots will take it.
    Christ what a f…. mess, and they talk about manipulating people, huh, they are manipulated, to sutch an extent its difficould to even start talking to anyone about the monetary policy, witch is a scam, an old fasion pyramidic sceem.
    Our Tax is Their income, sheeps, gett it into your head.

    There will be no peace nor prosperety until the last banker is hanged with the entrails of the last prest/mulah/rabbie.
    Not a second before.


    • Carl_Herman

      We hope demand for arrests will come rather than destructive revolution, with as much peace as possible.

    • diogenes

      Such comments as this, frothing at the mouth with incoherent violent rage and forwarding understanding not one bit (in fact, tending to make the line of discussion they purport to endorse appear wild, unhinged, incoherent, repellant), make me wonder about the identity and motives of the speaker. “hehe”.

  • LeseMajeste

    The USA pays around 500 BILLION a year in interest to these con artists, paying a fee to use out money, which has been hijacked by criminals.
    We’re so broke, we have to BORROW the money we use to pay off the interest currently accruing.

    To make matters worse, the MSM outlets refuse to publish any ‘Letter to the Editor’ that points out this insanity.

  • Mike Meyer

    ….an eternal indebtedness model that pays interest guaranteed through tax collection….
    Its invention was to finance England’s government and military in a history of continuous centuries of war.
    IS THIS NOT the same model used to design the UNITED NATIONS SYSTEM of NATIONAL ACCOUNTS ? []

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