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Originally published February 2 2009

The Cause of the Recession

by Arian Forrest Nevin, J.D.

(NaturalNews) Every day there is news of jobs lost and businesses closing. These lost jobs and closed businesses are not being replaced by new jobs and businesses. Unemployment is increasing. Only two years ago our situation was not like this. What has changed? Why are we heading steadily into a depression? What is the cause?

An economy is not based on money or finance, though most people believe it is. The ultimate basis of an economy is entirely physical. An economy is ultimately based on the production of physical wealth. Without first having adequate food and energy production, none of our other economic activities would even be possible.

What is the physical change causing the economy to crash? Has there been a destructive flood or drought? Have we run out of iron in the earth? Are all the trees gone? Did a massive earthquake destroy all our factories? None of the above is the cause. Nothing physical has changed to cause our economy to decline. We have all the factories we need to produce. We have the energy, materials, and the know-how to make what we want. We have plenty of people willing to work. Despite this, the economy is crumbling and unemployment is ever increasing.

The economy is going bad due to faulty financial systems and human conventions. It should be axiomatic that what is physically possible would also be financially possible. Money is not a physically limiting factor to production. Money is simply a means by which we exchange physical goods and services. It allows us to advance beyond barter. It is not a raw material used in the physical production of anything. We do not use money in the production of cars or apples. The production of both is entirely physical. Money is not built into a car seat or used to fertilize an apple tree. The economy continues to decline solely because the money and economic system are not properly understood and structured. If we had the proper systems and a correct understanding of the relationship between money and physical wealth, the economy would immediately begin to improve. Physically we are capable of improving the economy right now.

Economists claim to understand the economy. If they do, why is there a recession? People in government claim to know what they are doing. If they do, why is there a recession? Perhaps if economists and politicians knew what they were doing, we would not be in this position. Logically, the economy should improve over time as technology advances, yet it is getting worse with time.

Economists like to pretend that the economy is like the weather, sometimes good and sometimes bad. There are bad spots we just have to endure. Why? There is no physical reason. Our ability to work and produce has not changed at all. The dishonest money system causes economic instability resulting in cycles of boom and bust. The simple solution to the problems caused by the dishonest money system is an honest money system.

Since money is necessary to exchange goods and services, the flow of money is critical to the economy. When the money stops flowing, the economy stops moving. Banks control the flow of money. Banks benefit from the flow of money through the interest they charge for the money they create and lend. When banks stop lending, money stops flowing, and the economy grinds to a halt. This is exactly what has happened. This is what is meant by the term "credit crunch."

Lord Acton is best known for saying, "Power tends to corrupt, and absolute power corrupts absolutely." Banks have absolute power over the money system. Banks create and destroy money as they please. Our entire money system, which should exist for the benefit of the community, exists instead for banks to make loans and charge us interest. So long as the purpose of the money system is to allow banks to maximize their profits through the creation of debt and money, our economic decline will continue. Booms and busts are integral to a money system and an economy set up for the benefit of banks. The interests of the people and the interests of banks are in direct opposition to one another. Our way to prosperity is the elimination of the money and debt cycle banks inflict upon us.

Lord Acton also said, "The issue which has swept down the centuries, and must be fought sooner or later, is the people versus the banks." We are living in interesting times, and this issue will finally have to be fought and resolved in our lifetime. Banks clearly recognize their interests and fight to protect them. The banks have been so successful at this that the government, through the Treasury Secretary, acts in their interest. We, like the banks, must also recognize our interests and fight to protect them. We can remain debt slaves to the banks, and continue to struggle just to survive or we can demand the government provide an honest money system, and thereby become economically free.

About the author

Arian Forrest Nevin, J.D. is the author of National Economy: The Way to Abundance. National Economy presents an immediate solution the worldwide economic crisis. National Economy is the study of how a nation, rather than an individual, can be made wealthy. It explains how all manufacturing that has moved to other countries and all jobs that have been outsourced can be returned to America, how real wages can be dramatically increased, and how, at the same time, the people can have more leisure.
His website is

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