Governments are creating money and credit out of thin air

Bob Chapman wrote in the International forecaster of September 29 2010:"All the government has to do is request that the Fed purchase their debt and they do so by creating money and credit out of thin air. This is monetization and it’s inflationary. This is how government pays for mandated services. The taxes for such were already extracted from the public, but unbeknownst to most of the public these funds have already been spent. This is how Social Security, Medicare and all those other bailout services are being funded. Foreigners are buying only 25% of US government debt. The slack is and has been assumed by the Fed, which the people eventually get to pay for. Today we are in a lull, a sort of magical time, when the very superstructure of the system is being destroyed, but it is not particularly noticeable. The economy, we might add, is going sideways, with the assistance of $2.5 trillion a year. That can last for several years but in the end inflation goes rampant and sometimes becomes hyperinflation as we have seen in the Weimar Republic and most recently in Zimbabwe. Inflation, as consumers can attest to, is already climbing and the roar of higher inflation is not far off. One of the events that will kick that off will be bank lending of the funds they hold, some $1.5 trillion, which presently are sterilized, but become monetized once they are lent or spent. We can assure you that day is just over the horizon. This, once raging, will cause political, social and perhaps military conflict. If you look back in history when such problems existed those in power create another war or they subject their own people. Historically this hasn’t been difficult, but today is different, because talk radio and the Internet have allowed people to know and understand what has been and will be forced upon them and by whom."
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