THE TITHE HE NEVER EARNED

Two Tapeworms — Part 2 of 5 by theplummer

THE TITHE HE NEVER EARNED

Two Tapeworms — Part 2 of 5

If you have not read Part 1, start there. This series builds on itself.

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In Part 1, I described two organisms feeding on the American economy. The intelligent tapeworm — the Federal Reserve — which calibrates its extraction to keep the host alive. And the dumb tapeworm — the transnational asset managers — which strip-mines the host because it has already planned its exit.

Today I want to take you inside the intelligent tapeworm’s feeding mechanism. Not at the geopolitical level. At the transaction level. Where the extraction actually happens. Where your tax dollars are collected by an institution that paid nothing for the right to collect them.

I need to warn you. What I am about to describe is not complicated. It is not hidden behind jargon or advanced mathematics. It is simple. And the simplicity is what makes it so difficult to believe. Because once you see it, you will wonder how it was ever allowed to happen in the open.

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How the Government Actually Borrows

The federal government spends more than it collects in taxes. It has done this nearly every year for decades. The gap between what it spends and what it collects is called the deficit. Last year the deficit was roughly two trillion dollars.

To cover that gap, the Treasury Department issues bonds. A bond is a promise. The government says: give me money today, and I will pay you back in ten years, or twenty years, or thirty years, with interest along the way.

Real investors buy these bonds. Pension funds. Foreign governments. Banks. Individual Americans with retirement accounts. These are real people and real institutions handing over real money they really earned. The government gets the cash to cover the deficit. The investor gets a piece of paper that says the government will pay them back with interest.

So far, this is actual borrowing. Legitimate borrowing. A real lender lends real money to a real borrower. The lender gave up something he had. The borrower received it and promised to return it. You may not like the amount of borrowing the government does, but the transaction itself is straightforward. Both sides contributed something real.

Now I need you to pay very close attention. Because what happens next is where the magic trick begins.

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The Fed Enters

The Federal Open Market Committee — twelve people, seven of whom are appointed by the President, none of whom are elected by you — decides to buy those bonds.

Not from the government. From the investors who already hold them. On the secondary market. The same way you might buy a used car from someone who bought it new.

But the Fed does not use money it has sitting in a vault somewhere. It does not use deposits from savers. It does not use profits from previous investments.

It creates credit from nothing.

The same ex nihilo mechanism I will describe in greater detail later in this series. A ledger entry. A keystroke. Credit that did not exist until the moment the Fed decided to make the purchase. One second it was not there. The next second it was. Created from nothing, for the purpose of buying a bond that a real investor bought with real money.

Now think about what just happened.

The real investor is out of the picture. He got paid. He got his money back from the Fed’s newly created credit. He walks away whole. No complaint from him. He lent real money, he got real money back. Transaction closed.

But the bond still exists. The government’s obligation still exists. Except now the government does not owe a real investor who lent real money.

It owes the Fed.

And the Fed bought that bond with credit it created from nothing.

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The Collection

Now the United States government — meaning you, the taxpayer — makes interest payments on that bond. Real interest payments. Paid with real tax dollars. Collected from real citizens who earned those dollars through real work. Real hours at real jobs producing real goods and services in the real economy.

Those interest payments flow to the Federal Reserve. An institution that paid nothing for the bond it holds.

Let me say that again in plain English so there is no confusion.

You go to work. You earn a paycheck. The government takes a portion of that paycheck in taxes. A portion of those taxes goes to pay interest on the national debt. A portion of that interest goes to the Federal Reserve. The Federal Reserve acquired the bond that generates that interest payment by creating credit from nothing.

Your labor. Your taxes. Their income. Their cost: zero.

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The Part That Should Make You Angry

Now here is the detail that almost nobody talks about.

The government did not ask the Fed to do this.

Congress issues the bonds through the Treasury. That is Congress’s decision. But once those bonds are in the secondary market, the Fed acts on its own authority. The Federal Open Market Committee decides when to buy, how much to buy, and at what price. Congress does not vote on it. The President does not authorize it. There is no public referendum. There is no town hall. Twelve people in a room make the decision, and three hundred and forty million Americans service the resulting debt with their labor.

The Fed independently chose to insert itself into a legitimate lending relationship — between the government and real investors who lent real money — and replaced those real lenders with itself. Using credit that did not exist until the moment of purchase.

The real investors had a legitimate claim. They lent real money. They really gave up something they had. They really could not invest that money elsewhere while the government held it. When they collected interest, they were being compensated for a real sacrifice.

The Fed made no sacrifice. It gave up nothing. It had nothing to give up. The credit did not exist before the purchase. There was nothing to sacrifice.

And yet it collects the same interest payments.

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Two Words You Need to Know

I want to teach you two terms that come from the Catholic Church’s greatest theologians. They spent centuries trying to figure out when it was fair to charge someone for the use of money and when it was not. These two terms are the answer they arrived at. They are Latin, which means they sound intimidating. But the concepts behind them are something any American can understand.

Damnum emergens. It means “emerging damage.” Real loss actually suffered.

Your neighbor has a lawnmower. You ask to borrow it. While you are using it, the blade hits a rock and cracks the housing. You owe your neighbor a lawnmower. He had a real thing. He lent you the real thing. The real thing got damaged. You compensate him for the real damage to the real thing he really had. That is damnum emergens. The compensation matches the loss because there was a real loss to compensate.

Lucrum cessans. It means “profit ceasing.” Real money the lender would have earned if he had not lent to you.

Same neighbor. Same lawnmower. Except this time, your neighbor was about to rent that lawnmower to someone else for twenty dollars when you asked to borrow it. He said yes to you and lost the twenty-dollar rental. You might owe him that twenty dollars. He gave up a real opportunity to help you instead. That is lucrum cessans. The charge compensates him for the real profit he really missed out on.

Those are the only two justifications the greatest minds in Western civilization ever accepted for charging on a loan. You can charge for real damage you suffered. You can charge for real profit you missed. Both require the lender to have actually had something, actually given it up, and actually lost something in the process.

That is it. Two reasons. Nothing else.

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The Test

Now apply those two tests to the Federal Reserve buying a Treasury bond.

Damnum emergens: Did the Fed suffer real damage? Did it lose something it had?

No. The credit it used to buy the bond was created at the moment of purchase. Nothing existed before the transaction. Nothing was lost because there was nothing to lose.

Real damage suffered: zero.

Lucrum cessans: Did the Fed miss out on real profit? Did it have money sitting somewhere that could have earned a return elsewhere?

No. The credit did not exist until the Fed created it to make the purchase. There was no pile of money that could have been invested in something else instead. There was no opportunity to miss because there was no capital to deploy.

Real profit foregone: zero.

Both justifications — the only two justifications that centuries of the most rigorous moral philosophy ever produced for charging on a loan — are absent.

Not reduced. Not small. Not arguable.

Absent.

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The Unelected King

In Part 1, I told you about the fight between the intelligent tapeworm and the dumb tapeworm. The Fed versus Blackrock. The parasite that needs the host alive versus the locust that is already planning to leave.

Now you can see how the intelligent tapeworm actually feeds.

It does not feed through inflation alone, although inflation is part of it. It does not feed through the boom-bust cycle alone, although that is part of it too. It feeds by inserting itself into the lending relationship between the American government and the American people, using credit created from nothing, and collecting interest paid by the labor of every taxpaying citizen.

The person who presides over this mechanism is the Chair of the Federal Reserve. Fourteen-year term. Appointed, not elected. Removable only for cause, which has never been successfully done. Not accountable to voters. Not accountable to Congress in any real sense. Not accountable to the President once appointed.

Fourteen years. That is three and a half presidential terms. An entire generation coming of age under the same monetary ruler.

Compare that to the President, who cannot spend a dime without congressional appropriation, who faces election every four years, who can be impeached, who must answer to the press and the public and the opposition party every single day.

The Fed Chair just decides. Then holds a press conference where the questions are soft and the answers are vague.

Most Americans cannot name the current Fed Chair. They have no idea who this person is or what they do. And yet this person presides over an institution that collects a tithe on the labor of every American — a tithe that was never earned, never sacrificed for, never justified by any principle of fairness that the greatest moral philosophers in history could identify.

Simon Dixon, in the conversation I referenced in Part 1, described the Fed as operating in fiscal dominance — a situation where Treasury policy overwhelms monetary policy and the only option left is to print. Dave Collum asked whether the Fed is afraid to cut rates for fear of looking powerless.

They are both right. But the deeper truth is simpler.

The Fed is not just managing a crisis. It is collecting rent on the crisis. Every bond it holds generates interest from your labor. Every dollar it creates from nothing to buy another bond is another claim on your future. The more the government borrows, the more bonds the Fed can buy, the more interest it collects. The crisis is not a problem for the Fed. The crisis is the business model.

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The Rothschild Proof

There is an old quote, often attributed to Amschel Rothschild: “Give me control over a nation’s money, and I care not who makes its laws.”

Whether he actually said it does not matter. What matters is whether it is true.

The Fed controls the money. Congress makes the laws. Congress cannot fund its laws without borrowing. Borrowing creates bonds. The Fed buys the bonds with credit created from nothing. The Fed collects interest on the bonds from your labor.

The people who make the laws need the money. The people who control the money do not need the laws. They just need the laws to keep generating the borrowing that feeds the machine.

Rothschild was right. The proof is in your tax return.

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What Comes Next

In Part 1, I asked a question. What if the machine itself could be rebuilt? Not reformed. Not regulated. Rebuilt. From the transaction level up.

Now you can see why the rebuilding has to start here. At the bond market. At the place where the Fed inserts itself between the government and the people using credit that cost it nothing. If you do not sever this mechanism, every other reform is just rearranging deck chairs. You can change the interest rate. You can change the debt ceiling. You can change the party in power. None of it matters as long as an unelected institution can create credit from nothing, buy your government’s debt with it, and collect interest from your labor.

The tool that severs this mechanism is already in the Constitution. It has been there since 1787. And I will get there before this series is over.

But first, in Part 3, we need to look at the other tapeworm. The one that does not need the host to survive. The one that is already leaving.

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Beyond the Big Cycle: How Credit Enslaves Us — And the Amendment That Sets Us Free is my forthcoming book. It lays out three specific mechanisms — the Reverse CD Loan, the Population Principle, and the 28th Amendment — that together dismantle the extraction machine from the transaction level to the sovereign level. Subscribe to this Substack to be notified when it drops.

Part 3 drops in two days: “The Locusts.” Blackrock. State Street. Vanguard. Twelve and a half trillion dollars. Twenty thousand board seats. One piece of software running the risk models for most of the world’s central banks. The dumb tapeworm does not need America to survive. It just needs America to hold still long enough to finish the harvest.

Missed Part 1? Start here:

The Dixon/Collum conversation that sparked this series:

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theplummer is a retired law enforcement officer and plumber who has spent seventeen years studying monetary policy. He is the author of the forthcoming book Beyond the Big Cycle: How Credit Enslaves Us — And the Amendment That Sets Us Free. Follow him on X: @theplummer