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***THE MAIN BOARDS - Welcome to the Prison Planet Educational Forum and Library*** => Very Important Threads / Most important issues / Basic Information on the New World Order => : Geolibertarian April 09, 2009, 06:49:31 PM

: Monetary Reform!
: Geolibertarian April 09, 2009, 06:49:31 PM
There are quite a number of important political issues that are virtually screaming out for true reform, but if I had to pick the two most important, they would be (a) election reform (http://forum.prisonplanet.com/index.php?topic=81509.0), and (b) the subject of this thread -- monetary reform.

If I had the power, I would simultaneously

*  put all derivatives (http://www.webofdebt.com/articles/its_the_derivatives.php)-infected mega-banks (http://www.prisonplanet.com/96-of-credit-derivative-risk-held-by-5-banks.html) through Chapter 11 bankruptcy and, in the reorganization proceedings, legally void all of their derivatives contracts;

*  liquidate all of the ill-gotten assets of criminal scam artists such as Henry Paulson, Lloyd Blankfein and Jamie Dimon, and use the resultant proceeds to help replenish whatever retirement funds they raided;

*  replace our current debt-based money system (http://www.webofdebt.com/articles/ponzi.php) with a debt-free "Greenback" money system, whereby all new money -- instead of being loaned into circulation at interest -- is spent into circulation at no interest to fund both (a) the production and repair of public goods everyone can see and benefit from (e.g., roads and bridges (http://www.wealthmoney.org/articles/what-would-happen-with-debt-free-money/)) and (b) a "National Dividend (http://forum.prisonplanet.com/index.php?topic=161315.msg958482#msg958482)" -- all at a rate pegged by law to the general price level; and

*  institute a new round of international agreements modeled on the Bretton Woods (http://www.schillerinstitute.org/economy/nbw/nbw.html) Accords, with an aim towards replacing the current “floating (http://en.wikipedia.org/wiki/Floating_exchange_rate)” exchange rates for national currencies with a fixed rate that, as such, is pegged to the value of either an agreed-upon standardized price index or an agreed-upon “basket” of diverse, widely available, everyday commodities (more on this here (http://forum.prisonplanet.com/index.php?topic=98465.msg982706#msg982706)).

Now, since derivatives are just glorified gambling bets, and since the derivatives bubble (http://www.siliconvalleywatcher.com/mt/archives/2008/10/the_size_of_der.php) dwarfs not only the most liberal estimate of the U.S. money suppply (http://www.shadowstats.com/alternate_data/money-supply-charts), but the annual productive output of the entire planet, I think it's important to stress that the monetary issue is actually composed of two logically distinct sub-issues: (a) derivatives, and (b) fractional reserve banking.

In my next two posts I'll address each of those sub-issues in turn.
: Re: Monetary Reform!
: Geolibertarian April 09, 2009, 06:50:25 PM
Of all the artricles I've read concerning derivatives, I've yet to see one in which the issue of "consideration" is specifically addressed.

For those unfamiliar with the concept of "consideration" as it relates to finance, allow me to provide a brief introduction.

First there's the following video clip:

       http://www.youtube.com/watch?v=xSqi1N_RrUs (http://www.youtube.com/watch?v=xSqi1N_RrUs) (Daly v First National Bank of Montgomery)

Then there's the following written explanation (which, although excerpted from a web site based in India, is nevertheless the most straightforward explanation I've seen yet):

----------------------------------

http://www.archive.india.gov.in/business/manage_business/contracts_elements.php (http://www.archive.india.gov.in/business/manage_business/contracts_elements.php)

Essential Elements of a Contract

Minimum two parties:  At least two parties are needed to enter into a contact. One party has to make an offer and other must accept it. The person who makes the 'proposal' or 'offer' is called the 'promisor' or 'offeror'. While, the person to whom the offer is made is called the 'offeree' and the person who accepts the offer is called the 'acceptor'....

Lawful consideration:  A contract is basically a bargain between two parties, each receiving 'something' of value or benefit to them. This 'something' is described in law as 'consideration'. Consideration is an essential element of a valid contract. It is the price for which the promise of the other is bought. A contract without consideration is void. The consideration may be in the form of money, services rendered, goods exchanged or a sacrifice which is of value to the other party. This consideration may be past, present or future, but it must be lawful....

Lawful object:  The object of the agreement must be lawful. An agreement is unlawful, if it is: (i) illegal (ii) immoral (iii) fraudulent (iv) of a nature that, if permitted, it would defeat the provisions of any law (v) causes injury to the person or property of another (vi) opposed to public policy.

[Continued... (http://www.archive.india.gov.in/business/manage_business/contracts_elements.php)]
 
----------------------------------

As some of you already know, an airtight case could be made for invalidating virtually all bank loans on the ground that no "lawful consideration" was made on the part of the banks, since the "money" they offer as consideration for the borrower's promise to repay doesn't really exist. (Ellen Brown explains this more thoroughly here (http://www.webofdebt.com/articles/dollar-deception.php).)

I oppose invalidating traditional bank loans, however, because doing so would cause the entire money supply to collapse and the economy along with it. That's where "converting the existing volume of bank credit into actual money having an existence independent of debt (http://www.monetary.org/review-of-robert-de-fremerys-rights-vs-privileges/2010/12)" (while simultaneously abolishing fractional reserve banking) comes in.

Derivatives, however, are another story. Allow me to explain, as best I can, why derivatives contracts are more fraudulent -- and many times more parasitic and destructive -- than even fractional reserve lending, and why they should be invalidated accordingly.

When a regular bank loan is made, the collateral-backed IOU offered by the borrower becomes an "asset" of the bank, while the money offered by the bank becomes an "asset" of the borrower.  Granted, the so-called "money" offered by the bank doesn't even exist until the very moment the loan is extended, and even then exists only as a bookkeeping entry; but at least each party is going through the pretense of offering one legitimate financial asset as "lawful consideration" for another.

Such is not the case with derivatives, because these are mere bets as to whether a given asset will go up in market value.

Ellen Brown explains it this way (all emphasis original):

----------------------------------

In a 1998 interview, John Hoefle, the banking columnist for EIR [Executive Intelligence Review], clarified the derivatives phenomenon using another colorful analogy. He said:


What has broken the connection between "the blood available and the amount you can trade" is that derivatives are not assets. They are just bets on what the asset will do, and the bet can be placed with very little "real" money down. Most of the money is borrowed from banks that create it on a computer screen as it is lent. The connection with reality has been severed so completely that the market for over-the-counter derivatives has now reached many times the money supply of the world. Since these private bets are unreported and unregulated, nobody knows exactly how much money is riding on them; but the Bank for International Settlements reported that in the first half of 2006, their "notional value" had soared to a record $370 trillion. The notional value of a derivative is a hypothetical number described as "the number of units of an asset underlying the contract, multiplied by the spot price of the asset."  Synonyms for "notional" include "fanciful, not based on fact, dubious, imaginary." Just how fanciful these values actually are is evident in the numbers: $370 trillion is 28 times the $13 trillion annual output of the entire U.S. economy. In 2005, the total annual productive output of the world was only $44.4 trillion....

How are these astronomical derivative sums even possible? The answer, again, is that derivatives are just bets, and gamblers can bet any amount of money they want. Gary Novak is a scientist with a website devoted to simplifying complex issues. He writes, "It's like two persons flipping a coin for a trillion dollars, and afterwards someone owes a trillion dollars which never existed." He calls it "funny money." Like the Mississippi Bubble (http://www.americanheritage.com/articles/magazine/ah/1978/2/1978_2_28.shtml), the derivatives bubble is built on something that doesn't really exist; and when the losers cannot afford to pay up on their futures bets, the scheme must collapse. Either that, or the taxpayers will be saddled with the bill for the largest bailout in history.

-- Web of Debt (http://www.webofdebt.com), pp. 195-97

----------------------------------

In light of the above, may I correctly assume that the person reading this will agree with me when I say that Webster Tarpley was absolutely spot on when he wrote the following?


-- http://www.rense.com/general83/deriv.htm (http://www.rense.com/general83/deriv.htm)
: Re: Monetary Reform!
: Geolibertarian April 09, 2009, 06:51:46 PM
For those who haven't already done so, please take 47 minutes of your time and watch the documentary film, Money As Debt (http://www.moneyasdebt.net):

     http://www.youtube.com/watch?v=e6LWqgohO4E (http://www.youtube.com/watch?v=e6LWqgohO4E)

Since it's possible that, by the time you read this, the Money As Debt documentary will no longer be viewable at the above link (videos get taken down all the time), I will now -- for the benefit of any relative newcomers who may be learning about all this for the first time -- attempt to explain in my own words how our debt-based money system actually works.

Under the current system, all money is created out of nothing by a private banking cartel and then loaned into circulation at interest -- first by the Federal Reserve, via its purchase of government bonds; and second by commercial banks, via fractional reserve lending.

There are two critical problems with this process.

First, when banks loan (and thereby create) money, they create only the principal, not the interest. This is why the overall indebtedness of the economy is always many times greater than even the most liberal estimate of the money supply. Granted, if no one borrowed, there would be no interest to pay; but there would also be no money supply, and thus no economy.

Second, because all money is created as a loan, whenever the principal of a loan is paid back, the money supply is reduced by that amount.

Allow me to clarify with an example. For the sake of simplicity, let's assume the money supply is currently zero, and that there are only two people in the economy -- Person A and Person B.

Next, let's assume that a newly chartered local bank -- which I'll call Bank X -- has $200 in "excess reserves" (presumably loaned to it by a central bank through a "discount window").

If Bank X loans Persons A & B $100 each and charges them 10% interest, then the money supply increases to $200, total indebtedness increases to $220, and Bank X's excess reserves are exhausted (meaning it can't create additional money by monetizing debt).

Now, if you're Person A, the question arises: since you owe Bank X $110, yet have only $100 to your name, how can you get the extra $10 you need to get out of debt?

Not by going to work for the bank, because Bank X hasn't even received its first interest payment yet, and so has no interest to spend back into the economy.

Thus, the only way you can obtain the $10 you need is by producing a good or service with your labor and offering it to Person B for that very amount. In this way, you "capture" -- through the process of production-and-exchange -- the necessary portion of Person B's loan principal to pay the interest you owe.

Even though money has "circulated" as a result of this transaction, the money supply is still $200. The only thing that has changed is the distribution of that supply, because you now have $110, while Person B has only $90.

Now, here is where we get to the heart of the matter.

When you go to Bank X and pay the $110 you owe, the principal portion of that loan -- $100 -- vanishes back into the nothing from which it was created, while your $10 interest payment goes into Bank X's capital assets. Thus, the most that Bank X can spend back into the economy is $10. Let's assume it does so by paying Person B $10 to wax its floors.

This brings the money supply back up to $100, thereby leaving Person B with $10 of unpayable interest debt –- a debt that will now proceed to compound over time (see http://www.wealthmoney.org/economic-slavery/ (http://www.wealthmoney.org/economic-slavery/)).

Since the average reader usually concludes at this point of the illustration that the interest debt generated by fractional reserve lending is, by definition, "unpayable" -- and that there is thus a built-in shortage of money -- it is at this same point that debt-money apologists attempt to impress everyone with their knowledge of mathematics.

They do so by asserting that the interest income received by Bank X can be recirculated over and over again -- via "amortization (http://www.wisegeek.com/what-is-amortization.htm)" -- until only a tiny fraction (less than one-half of one percent) of outstanding interest debt remains.

Now, in a purely abstract construct, Person B can, indeed, pay back all but a tiny fraction of the interest he owes, if...

(a) he pays it back a little at a time over the course of, say, five years, with one part of each payment going to pay down the principal, and the other part going to pay down the interest;

(b) Bank X automatically spends all (rather than some) of the interest income it receives from Person B back into the economy; and

(c) this recirculated interest always winds up in Person B's hands and not someone else's.

Thus, if Person B's first payment (assuming a five-year payment plan) is $2.12, $.83 of that goes toward paying off the interest, while the other $1.29 goes towards paying off the principal. Bank X then pays its teller $.83 as wages. Person B mows the bank teller's lawn for $.83, thereby "recapturing" the interest portion paid so far. Person B now possesses $98.71.

In the second payment, Person B pays $2.12 as before, only this time $.82 goes toward paying off the interest, while $1.30 goes toward paying off the principal. Thus, the most Bank X can pay its teller this time around is $.82, which means that, no matter how hard Person B works, the most he can recapture from the bank teller is $.82. Let's assume he does so by mowing her lawn again. Person B now possesses $98.41.

You see how it works? The reason Person B must accept increasingly lower wages for the same work is that, after each payment, there is literally that much less recirculated interest in the economy for him to recapture through production-and-exchange.

That's how it works in a purely abstract construct.

In a real-world construct, however, this theory of Person B paying off his interest debt through amortized payments simply doesn’t work, because real-world constraints have to be assumed out of existence.

There's an old economics joke that goes:


What is being falsely "assumed" in this case are two things:

Assumption 1: as Person B’s wages decrease (not because his labor is “valued” less, but because there is literally less money in existence with which to pay him for that labor), his basic cost of living will decrease right along with them -- i.e., grocery store owners will conveniently ask for less money in exchange for the same food; clothing store owners will conveniently ask for less money in exchange for the same clothes; and apartment building owners will conveniently ask for less money exchange for the same apartments.

Assumption 2: as the money supply contracts, employment opportunities (the very thing Person B relies upon to recapture recirculated interest) will remain constant.

The first assumption is absurd, because as any experienced businessman will tell you, there’s a break-even point (between operating costs and sales revenue) below which business owners simply cannot lower prices without bankrupting themselves in the process.  

The second assumption is even more absurd, because history (http://www.monetary.org/lostscienceofmoney.html) has shown over and over again that money supply contractions not only cause unemployment, but severe unemployment -- the most obvious case in point being the depression-inducing contraction of the early 1930s (http://www.youtube.com/watch?v=AoG8R1s59Po).

It therefore follows that amortization does not solve the money-shortage problem, because there are simply too many critical aspects of daily reality that must be assumed out of existence in order for it to work.

So, to summarize, under the current debt-based money system there is a built-in shortage of money, due to


That more than anything else is what creates our dog-eat-dog, musical chairs economy -- an economy in which millions of people work frantically to capture other people's loan principal; and in which virtually everyone works (to one extent or another, and whether they realize it or not) as indentured servants to the banking elite.

Austrian School (http://monetary.org/refute.htm) propagandists routinely suggest or imply that a necessary ingredient to solving this problem is to simply halt or slow the creation (or "printing") of money, but as any objective observer can now see, not only would that not solve anything -- since it would neither hault nor even slow the compounding of the countless billions in unpayable interest debt that hangs over our heads -- it would, by increasing the built-in money shortage, merely excelerate the speed by which the banking elite could foreclose on countless properties and businesses nationwide (a fraud-based looting of the real economy that Austrian School (http://www.youtube.com/watch?v=tuHCAXtjZ6Q) cranks like to euphemistically call a market-based “correction” or “adjustment”).

Now, does that mean more “spending” is the answer? No, because at present, more government spending means either more debt or more tax hikes (or both), and we can no more borrow our way out of a debt-caused depression than we can tax an already overtaxed economy into prosperity.

The solution is to go to the root of the problem by instituting a debt-free money system in place of the current debt-based system!

If you understand and agree with me thus far, you may now be asking: "How can we institute such a system without creating either runaway hyperinflation or a depression-inducing money supply contraction in the process?”

I'll address that question in my next post.
: Re: Monetary Reform!
: Geolibertarian April 09, 2009, 06:56:36 PM
Many proposals have been made over the years on how to switch from a debt-based money system to a debt-free money system.

IMHO, the most sensible and desirable proposal is the one put forth by Robert De Fremery in his book, Rights vs. Privileges (http://www.monetary.org/review-of-robert-de-fremerys-rights-vs-privileges/2010/12).

To understand why, please read the following excerpts (all emphasis original):

----------------------------------

"There are those who believe that once bank credit has been allowed to expand, nothing can be done to prevent a collapse (that is, nothing economically sound and consistent with a free economic system). The Austrian school -- best represented by the writings of Ludwig von Mises -- takes this stand as evidenced in the following statement: 'There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.' (Human Action, p. 570).

"Dr. von Mises believes that the expansion of bank credit causes malinvestment and squandering of scarce factors of production that will inevitably lead to a crash and ensuing depression. But a more plausible theory is that all economic activity is continually reaching a new equilibrium between the total circulating medium of exchange and the goods and services being offered for it. In other words, an expansion of bank credit leads to a collapse not because of mis-directions in production but rather because of the operation of Gresham's Law (http://en.wikipedia.org/wiki/Gresham's_Law). The use of bank credit as a medium of exchange gives us what Bishop Berkeley called a 'double money.' Even though bank credit is supposedly convertible into money on demand, nevertheless it is not as good as money. It is a short sale of money. And as the volume of these shortsales increases it is inevitable that Gresham's Law will eventually operate, i.e., the undervalued money (gold or legal tender 'fiat' money) will be exported or hoarded -- thus causing a collapse of bank credit.

"According to this theory, it is possible to avoid a collapse following a period of credit expansion simply by converting the existing volume of bank credit into actual money having an existence independent of debt, and at the same time take away the banking system's privilege of creating any more credit, i.e., force banks to confine their lending operations to the lending of existing funds."

-- Robert De Fremery, Rights vs. Privileges (http://www.monetary.org/review-of-robert-de-fremerys-rights-vs-privileges/2010/12), pp. 49-50


"There are some people who look with distrust upon 'printing press' or 'fiat' money. But they overlook one of the basic facts about money. It is true that we need a 'hard' money. But we should not make the mistake of associating 'hardness' with convertibility into gold (http://www.monetary.org/goldnewsletter.htm). The essence of a hard money is not determined by the material of which it is composed -- or the material into which it is convertible. The essence of a hard money is that its supply is fairly stable and there are precise limits to it. In other words, gold itself is a comparatively hard money because the supply of gold is inelastic. Bank credit convertible into gold is a very soft money because it is elastic and there are no precise limits to its supply, i.e., it expands and contracts. And a purely paper or 'fiat' money can be a hard money if we set precise limits to its supply, or it can be a soft money if we set no limits to its supply."

-- Ibid., pp. 54-5


"Soothing words about the effectiveness of 'government mechanisms' to deal with a liquidity crisis will not allay the fears of those who know its cause. There is only one thing that will allay those fears and that is to put our depository intermediaries on a sound basis. To do this we must convert the existing volume of bank credit into actual money and require banks to stop the unsound practice of borrowing short to lend long.

"Under this stabilized system banks would have two sections: a deposit or checking-account system and a savings-and-loan section. The deposit section would merely be a warehouse for money. All demand deposits would be backed dollar for dollar by actual currency in the vaults of the bank. The savings-and-loan section would sell Certificates of Deposit (CDs) of varying maturities—from 30 days to 20 years—to obtain funds that could be safely loaned for comparable periods of time. Thus money obtained by the sale of 30-day, one-year and five-year CDs, etc., could be loaned for 30 days, one year and five years respectively—not longer. Banks would then be fully liquid at all times and never again need fear a liquidity crisis."

-- Ibid., pp. 84-5


"Since the objective is to have a 100% cash reserve (legal tender) behind all demand deposits, the U.S. Treasury would be ordered by Congress to have printed and then loaned to the banks sufficient new currency to fulfill that objective. In determining the amount to be borrowed, banks would treat their legal reserves at their local Federal Reserve Bank as cash. Those reserves will become actual cash as explained later.

"The debt incurred by each commercial bank to the Treasury could be immediately reduced by the amount of U.S. securities each bank held—simply a cancellation of mutual indebtedness. Henceforth the commercial banks would be prohibited from using the cash reserves behind their demand deposits for their own interest and profit. Those cash reserves belong to the depositors. They are funds against which the depositors wish to draw checks.

"On the day the cash reserves of banks are brought up to 100% of their demand liabilities, they would have outstanding loans which I shall call 'old loans' as distinguished from the new loans that will be made in the future. As these old loans are paid off, each bank would be required to use these funds to pay off their savings and time depositors, and offer them, as an alternative, negotiable CDs. There would be no restriction of any sort on the issuance of such CDs. The maturity dates, the amounts, and the rate of interest would be set by each bank. But banks would not be allowed to lend the funds so obtained for a longer period of time than those funds were available to them; i.e., they would be required to maintain the back-to-back relation suggested by George Moore.

"After each bank had paid off its time depositors, it would still have a sizable amount of 'old' loans outstanding. As the rest of these old loans were paid off, these funds would be used to further reduce the banks’ indebtedness to the Treasury. The treasury, in turn, would be required to use these funds to retire U.S. obligations held by investors outside the banking system. And as the Treasury did this, these investors would presumably buy negotiable CDs offered by the banks.

"Any remaining indebtedness of the banks to the Treasury could be paid off with funds derived from the sale of their 'Other Securities.' Indeed, a good argument can be made for having the Treasury figure in advance how much of each bank’s securities are going to have to be sold and require them to start selling those securities gradually, the day the changeover is made.

"As for the Federal Reserve Banks, they too should borrow from the Treasury sufficient new currency to bring their cash reserves up to 100% of their demand deposits (funds deposited by their member banks for safekeeping plus all government funds against which checks are being drawn by the government). The indebtedness of the Federal Reserve Banks to the Treasury could immediately be canceled by a mutual cancellation of indebtedness as was done by the commercial banks, i.e. by canceling an equivalent amount of U.S. obligations held by the Federal Reserve Banks. The remaining U.S. obligations held by the Federal Reserve Banks should also be canceled in view of the fact that they had originally been bought by the mere creation of bookkeeping entries. That practice would be abolished.

"The supply of money would now consist of the total coin and currency in existence, i.e., the amount previously existing plus the amount newly printed and loaned to the commercial banks and the Federal Reserve Banks. There would no longer be any confusion about what was meant by the supply of money. And the money supply would no longer be altered by such things as the lending activities of banks, or the decisions of individuals to switch funds from a checking account to CDs, or the payment of taxes to the U.S. Treasury, or the disbursement of funds by the Treasury, etc. Whenever an increase in the money supply was needed according to whatever rule of law was adopted (a strong case can be made for a 'population dollar', i.e., a constant per capita supply of dollars), the increase could be made with absolute precision by simply retiring that much of the remaining National Debt with the new money.

"S&Ls and MSBs [money services businesses] should be made to operate as they were originally intended, i.e., those who place their funds in such institutions must be reminded that they are shareholders and that they can draw their funds out only when those funds are available for withdrawal. A run on such institutions would no longer be a threat to the banking world. Nor would the failure of bankruptcy of any large bank, corporation, or municipality be the threat to the banking world that it is today. Any such poorly managed entity could, and should, be allowed to go through bankruptcy. There would be no danger of precipitating the type of financial stringency or credit crisis that is feared so much under our present financial system, and justifiably so.

"The multitude of governmental lending agencies that have arisen since the early ‘30s should be dismantled. The lending of money is not a proper function of government. It has been sanctioned so far because banks operated in such a way as to imperil a continuous flow of funds to areas that needed it. With banks now operating on a sound basis, free market forces should be relied upon to keep money flowing in the most healthful manner for all.

"Having corrected the destabilizing element of our monetary system, we should reject the concept of deficit financing and a compensatory budget. Those concepts arose under the old system because when the business and investment world lost confidence—thus leading to a contraction in the supply and/or velocity of money—the government was forced to indulge in deficit financing to try to keep the supply and/or velocity of money from contracting too far. Under the new system the supply of money is non-collapsible and therefore changes in the velocity of money (caused by changes in liquidity preference) would be minimal and self-regulating.

"Government supervision or regulation of banks would now be greatly simplified. In place of all the governmental agencies with overlapping functions that are busily engaged in regulating various activities of banks, we need have only one agency. Its sole function would be to make certain each bank is keeping its cash reserves at 100% of its demand deposits, and that the maturity profile of its outstanding CDs meshes with the maturity profile of its loan portfolio. Except for these restrictions, banks would be free to set the amounts, the maturity dates, and the rates of interest on the CDs they issued. They would also be free to make loans for any purpose they pleased, secured by any collateral they deemed adequate."

-- Ibid., pp. 117-121

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The reform I advocate is the same as De Fremery's, but with two exceptions:

1.  We should mandate by law that new money be issued to fund only (a) the production and repair of public goods that everyone can see and benefit from, and that add to the productive capacity of the economy (roads & bridges (http://www.wealthmoney.org/articles/what-would-happen-with-debt-free-money/) and maglev rail (http://www.youtube.com/watch?v=weWmTldrOyo) would qualify as public goods; prisons and military weapons would not), and (b) a "National Dividend" (see this (http://www.globalresearch.ca/index.php?context=va&aid=11397) and this (http://forum.prisonplanet.com/index.php?topic=161315.msg958482#msg958482)).

2.  Instead of instituting what I consider to be an overly-rigid "population standard" -- whereby the money supply is allowed to expand only to the extent necessary to keep the per capita supply of dollars constant -- we should mandate by law that the debt-free expansion rate of our money supply be such that (a) the per capita supply of money never falls (thus guarding against depression-inducing contractions, such as the 1/3 contraction that caused the Great Depression (http://www.youtube.com/watch?v=AoG8R1s59Po)), (b) the money supply never increases by more than 1/3 in any given year (thus guarding against runaway hyperinflation), and (c) new money issuance is moderately adjusted inversely with the rise or fall of the general price level.

The third requirement is what would keep prices relatively stable, while the first two are fail-safe measures to ensure that no adjustment to the money supply expansion rate is ever so extreme in either direction as to cause economic chaos. No Yugoslavian (http://www.sjsu.edu/faculty/watkins/hyper.htm#YUGO)-style hyperinflation (or anything close to it); no Great Depression-style deflation (or anything close to it).
: Re: Monetary Reform!
: Geolibertarian April 09, 2009, 06:59:13 PM
For anyone new to this, below are some additional monetary reform measures, any one of which would be an enormous improvement over the current system:

Ellen Brown's Monetary Proposal

       http://webofdebt.wordpress.com/monetary-proposal/ (http://webofdebt.wordpress.com/monetary-proposal/)

Richard C. Cook’s “Greenback and National Dividend” Proposal

       http://www.globalresearch.ca/video-the-solution-to-the-economic-crisis-credit-as-a-public-utility/12932 (http://www.globalresearch.ca/video-the-solution-to-the-economic-crisis-credit-as-a-public-utility/12932)

The American Monetary Act

       http://www.infowars.com/?p=4174 (http://www.infowars.com/?p=4174)
       http://jurisvodcast.com/2008/08/30/the-american-monetary-act/ (http://jurisvodcast.com/2008/08/30/the-american-monetary-act/)    
       http://www.monetary.org/amacolorpamphlet.pdf (http://www.monetary.org/amacolorpamphlet.pdf) <--- .pdf file!

The American Transportation Act

       http://www.wealthmoney.org/articles/american-transportation-act/ (http://www.wealthmoney.org/articles/american-transportation-act/)
       http://www.wealthmoney.org/articles/a-solution/ (http://www.wealthmoney.org/articles/a-solution/)
       http://www.wealthmoney.org/articles/what-would-happen/ (http://www.wealthmoney.org/articles/what-would-happen/)
       http://www.youtube.com/user/TheByronDaleChannel (http://www.youtube.com/user/TheByronDaleChannel)

The Monetary Reform Act

       http://www.themoneymasters.com/monetary-reform-act/ (http://www.themoneymasters.com/monetary-reform-act/)
       http://www.youtube.com/watch?v=nNumEm2NzQA (http://www.youtube.com/watch?v=nNumEm2NzQA)
: Re: Monetary Reform!
: Geolibertarian April 09, 2009, 07:07:17 PM
Below is another key excerpt from Ellen Brown's book, Web of Debt:

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http://www.webofdebt.com/excerpts/chapter-37.php (http://www.webofdebt.com/excerpts/chapter-37.php)

Chapter 37

THE MONEY QUESTION:
GOLDBUGS AND GREENBACKERS DEBATE



You shall not crucify mankind upon a cross of gold.


At opposite ends of the debate over the money question in the 1890s were the "Goldbugs," led by the bankers, and the "Greenbackers," who were chiefly farmers and laborers. The use of the term "Goldbug" has been traced to the 1896 Presidential election, when supporters of gold money took to wearing lapel pins of small insects to show their position. The Greenbackers at the other extreme were suspicious of a money system dependent on the bankers' gold, having felt its crushing effects in their own lives. As Vernon Parrington summarized their position in the 1920s:


The Goldbugs countered that currency backed only by the national credit was too easily inflated by unscrupulous politicians. Gold, they insisted, was the only stable medium of exchange. They called it "sound money" or "honest money." Gold had the weight of history to recommend it, having been used as money for 5,000 years. It had to be extracted from the earth under difficult and often dangerous circumstances, and the earth had only so much of it to relinquish. The supply of it was therefore relatively fixed. The virtue of gold was that it was a rare commodity that could not be inflated by irresponsible governments out of all proportion to the supply of goods and services.

The Greenbackers responded that gold's scarcity, far from being a virtue, was actually its major drawback as a medium of exchange. Gold coins might be "honest money," but their scarcity had led governments to condone dishonest money, the sleight of hand known as "fractional reserve" banking. Governments that were barred from creating their own paper money would just borrow it from banks that created it and then demanded it back with interest. As Stephen Zarlenga notes in The Lost Science of Money:


The debate between these two camps still rages. However, today the Goldbugs are not the bankers but are in the money reform camp along with the Greenbackers. Both factions are opposed to the current banking system, but they disagree on how to fix it. That is one reason the modern money reform movement hasn't made much headway politically. As Machiavelli said in the sixteenth century, "He who introduces a new order of things has all those who profit from the old order as his enemies, and he has only lukewarm allies in all those who might profit from the new." Maverick reformers continue to argue among themselves, while the bankers and their hired economists march in lockstep, fortified by media they have purchased and laws they have gotten passed, using the powerful leverage of their bank-created fiat money.

Congressman Ron Paul of Texas is one of the few contemporary politicians to boldly challenge the monetary scheme in Congress. He is also a Goldbug, who argued in a February 2006 address to Congress:


Modern-day Greenbackers, while having the highest regard for Congressman Paul's valiant one-man crusade, would no doubt debate the details; and one highly debatable detail is his assertion that it is the government that now has monopoly control over money, and it is the government that is counterfeiting the money supply.  Greenbackers might say that the government should have monopoly control over money creation, but it doesn’t. Wars are fought, not to preserve the dollars of the U.S. government, but to preserve the Federal Reserve Notes of a private banking cartel. It is this private cartel that has monopoly control over money, and its monopoly grew out of a shell game called "fractional reserve banking," which grew out of the very "gold standard" the Goldbugs seek to reinstate. We have been deluded into thinking that what is wrong with the system is that the government has a monopoly over creating the money supply. The government lost its monopoly when King George forbade the colonies from printing their own money in the eighteenth century. Banks have created most of the national money supply for most of our national history. The government itself must beg from this private cartel to get the money it needs; and it is this mounting debt to an elite class of banker-financiers, not profligate government spending on social goods, that has brought the United States and most other countries to the brink of bankruptcy. If Congress had used its Constitutional power to create money to fund its own operations, it would not have needed to pursue imperialistic foreign wars to extort money from its neighbors.

[Continued... (http://www.webofdebt.com/excerpts/chapter-37.php)]

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: Re: Monetary Reform!
: Geolibertarian April 09, 2009, 07:10:57 PM
Since Ellen Brown, Richard C. Cook, Byron Dale, Stephen Zarlenga, and the makers of both The Money Masters (http://www.infowarsshop.com/The-Money-Masters_p_78.html) and the recently-released sequel, The Secret of Oz (http://www.infowarsshop.com/The-Secret-Of-Oz-Solutions-For-a-Broken-Economy_p_295.html), all advocate instituting a modern-day "Greenback" system, and since "Goldbugs" usually cry foul whenever this is proposed, it's worth considering the following excerpt (all emphasis original) from pages 453-65 of monetary historian Stephen Zarlenga's masterwork, The Lost Science of Money (http://old.monetary.org/lostscienceofmoney.html):

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Thanks to over a century of relentless propaganda, the image of the Greenbacks comes down to us as worthless paper money. But upon more careful examination, on balance they were probably the best money system America has ever had....Demonstrating how far monetary history has been distorted, readers may be surprised to learn that every Greenback printed was ultimately as valuable as its gold equivalent, and became redeemable for gold coinage at full value. Today the Greenback supporters are erroneously presented as merely being pro-inflation or against sound money. What they really wanted was a more honest money system, controlled by government, instead of banks....

They [Greenbacks] were receivable for all dues and taxes to the U.S., except import duties, which still had to be paid in coin. The Greenbacks were payable for all claims against the U.S. except interest on bonds which was still payable in coin. The Greenbacks were declared a legal tender for all other debts, public and private....

Greenback critics argue that they were inflationary and mistakenly measure the inflation against gold, starting at equal to a gold dollar in early 1862, and falling to 36 cents against a gold dollar by mid 1864. So one gold dollar exchanged for nearly $2.50 in Greenbacks. That is often the whole of their analysis and it is very misleading. Actually the Greenbacks did drop against gold; first to 58 cents at the end of 1862, then back up to 82 cents in mid 1863 and then down to a brief low of 36 cents on July 16, 1864.

From that point they moved up steadily, averaging 39 cents for August; 45 cents for September; and 48 cents for October, 1864. They retreated to $0.44 in December, and averaged $0.68 for December 1865. From there they gradually rose to $1.00, at par with gold in December 1878. Greenbacks became freely convertible into gold, dollar for dollar, in January 1879....

Economists mistakenly argue that it was only because the Greenbacks were eventually made convertible into gold by law, that made them hold and increase their value. However, that law was a hard fought political struggle, dependent on the 1868 presidential election. The battle could have gone either way and the actual "resumption" law could not get passed by Congress until 1874, for implementation in 1879. This could not have kept the Greenback from further declines, and start moving it upward back in mid-1864.

What did occur in July 1864 was that our government put a limit of $450 million on the Greenbacks and from that month they started rising (i.e. gold began falling in terms of Greenbacks)....

While the Greenbacks lost substantial value for a period, the nation was engaged in the bloodiest war in its history, in which 13% of the population served in the armed forces and 625,000 died....Is it reasonable to expect that any government in those circumstances could completely protect its citizens from financial and other hardships?

[Economic historian Irwin] Unger (http://en.wikipedia.org/wiki/Irwin_Unger) has noted that:


And comparing a wartime inflation under a government run money system (the Civil War) to wartime inflation under a private banker run system (WW I), Civil War historian [J.G.] Randall wrote:


The fact that the Greenbacks were not accepted for import duties may also have been an important negative factor against the currency:

"Hence it has been argued that the Greenback circulation issued in 1862 might have kept at par with gold if it, too, had been made receivable for all payments to the Government," wrote financial historian [Davis Rich] Dewey.

Also, if interest payments on government bonds had been paid in Greenbacks instead of gold, a large part of the demand for gold would have disappeared.

(http://www.moneyreformparty.org.uk/images/lostscienceofmoney.jpg) (http://old.monetary.org/lostscienceofmoney.html)

----------------------------------

So the bottom line is that, contrary to popular myth, Greenbacks actually performed quite well (particularly given the extreme circumstances in which they were issued), and would have functioned even better if they had been made receivable for the payment of both import duties and interest on government bonds, and would have functioned better still if they had been issued for the production, rather than destruction, of public goods (http://www.wealthmoney.org/articles/what-would-happen/).
: Re: Monetary Reform!
: Geolibertarian April 09, 2009, 07:15:58 PM
Two more essential excerpts (all emphasis original) from The Lost Science of Money (http://old.monetary.org/lostscienceofmoney.html):

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[Andrew] Jackson and Van Buren removed the monetary power from the private bankers but did not re-establish it in the hands of the nation. Instead, Van Buren organized the Independent Treasury System, establishing 15 sub branches of the Treasury to handle government moneys in 1840. From December 1836 the government moved toward making and receiving all payments in coinage, or truly convertible bank notes....Once the state bank notes were no longer accepted by the government, their circulation was cut back dramatically.

This was the closest our nation has ever come to implementing a real gold/silver standard. Operating under the commodity theory of money, Van Buren, who truly cared for the Republic, helped bring on the worst depression the Nation had ever seen, starting in 1837. It was reportedly even worse than that caused by the 2nd Bank of the U.S. in 1819. Bad as the state bank notes were, they had still been functioning as money!

Those who proclaim that no gold and silver money system has ever failed should consider that whether you are a laborer, farmer, or industrialist, the money system's success or failure is not measured by the value of a piece of metal. When your job, your farm, or factory has disappeared in a monetarily created depression, the system has failed!

-- Stephen Zarlenga, The Lost Science of Money (http://old.monetary.org/lostscienceofmoney.html), p. 426


The great German hyper-inflation of 1922-1923 is one of the most widely cited examples by those who insist that private bankers, not governments, should control the money system. What is practically unknown about that sordid affair is that it occurred under the auspices of a privately owned and controlled central bank.

Up to then the Reichsbank had a form of private ownership but with substantial public control; the President and Directors were officials of the German government, appointed by the Emperor for life. There was a sharing of the revenue of the central bank between the private shareholders and the government. But shareholders had no power to determine policy.

The Allies' plan for the reconstruction of Germany after WWI came to be known as the Dawes Plan, named after General Charles Gates Dawes, a Chicago banker. The foreign experts delegated by the League of Nations to guide the economic recovery of Germany wanted a more free market orientation for the German central bank.

[Hjalmar] Schacht relates how the Allies had insisted that the Reichsbank be made more independent from the government:

"On May 26, 1922, the law establishing the independence of the Reichsbank and withdrawing from the Chancellor of the Reich any influence on the conduct of the Bank's business was promulgated."

This granting of total private control over the German currency became a key factor in the worst inflation of modern times.

The stage had already been set by the immense reparations payments. That they were payable in foreign currency would place a great continuing pressure on the Reichsmark far into the future.

HOW IS A CURRENCY DESTROYED?

In a sentence, a currency is destroyed by issuing or creating tremendously excessive amounts of it. Not just too much of it but far too much. This excessive issue can happen in several ways, for example by British counterfeiting as occurred with the U.S. Continental Currency, and with the French Assignats. The central bank itself might print too much currency, or the central bank might allow speculators to destroy a currency through excessive short selling of it, similar to short selling a company's shares, in effect allowing speculators to "issue" the currency.

The destruction of an already pressured national currency through speculation is what concerns us in this case. A related process was recently allowed to destroy several Asian currencies, which dropped over 50% against the Dollar in a few months time, in 1997-98, threatening the livelihood of millions.

It works like this: First there is some obvious weakness involved in the currency. In Germany's case it was World War One, and the need for foreign currency for reparations payments. In the case of the Asian countries, they had a need for U.S. dollars in order to repay foreign debts coming due.

Such problems can be solved over time and usually require national contribution toward their solution, in the form of taxes or temporary lowering of living standards. However, because currency speculation on a scale large enough to affect the currency's value is still erroneously viewed as a legitimate activity, private currency speculators can make a weak situation immeasurably worse and take billions of dollars in "profits" out of the situation by selling short the currency in question. This doesn't just involve selling currency that they own but making contracts to sell currency that they don't own -- to sell it short.

If done in large amounts, in a weak situation, such short selling soon has self-fulfilling results, driving down the value of the currency faster and further than it otherwise would have fallen. Then at some point, panic strikes, which causes widespread flight from the currency by those who actually hold it. It drops precipitously. The short selling speculators are then able to buy back the currency that they sold short, and obtain tremendous profits, at the expense of the producers and working people whose lives and enterprises were dependent on that currency.

The free market gang claim that it's all the fault of the government that the currency was weak in the first place. But by what logic does it follow that speculators take this money from those already in trouble? Currency speculation in such large amounts should be viewed as a form of aggression, no less harmful than dropping bombs on the country in question.

Industrialists should realize that when they allow such activity to be included under the umbrella of "business activity," they are making a serious error. They should help isolate such speculation and educate the populace on how destructive it is, so that it can be stopped through law.

Limitations could easily be placed on speculative currency transactions without limiting those that are a normal part of business and trading, while stopping the kind of transactions that are thinly disguised attacks on the country involved. Placing a small tax on such transactions would be a healthy first move.

TOO MANY GERMAN MARKS ISSUED

By July 1922 the German Mark fell to 300 marks for $1; in November it was at 9,000 to $1; by January 1923 it was at 49,000 to $1; by July 1923 it was at 1,100,000 to $1. It reached 2.5 trillion marks to $1 in mid November, 1923, varying from city to city.

In the monetary chaos Hamburg, Bremen and Kiel established private banks to issue money backed by gold and foreign exchange. The private Reichsbank printing presses had been unable to keep up and other private parties were given the authority to issue money. Schacht estimated that about half the money in circulation was private money from other than Reichsbank sources.

CAUSE OF THE FIRST INFLATION: SCHACHT'S FIRST "EXPLANATION"

There is often a false assumption made that the government allowed the mark to fall, in order to more easily pay off the war indemnity. But since the Versailles Treaty required payment in U.S. Dollars and British Pounds, the inflationary disorder actually made it much harder to raise such foreign exchange.

Hjalmar Schacht's 1967 book, The Magic of Money, presents what appears to be a contradictory explanation of the private Reichsbank's role in the inflation disaster.

First, in the hackneyed tradition of economists, he is prepared to let the private Reichsbank off the hook very easily and blame the government's difficult reparations situation instead. He minimized the connection of the private control of the central bank with the inflation as mere co-incidence....

THEN SCHACHT GIVES THE REAL EXPLANATION

Schacht was a lifelong member of the banking fraternity, reaching its highest levels. He may have felt compelled to give his banker peers and their public relations corps something innocuous to quote. But Schacht also had a streak of German nationalism, and more than that, an almost sacred devotion to a stable mark. He had watched helplessly as the hyper-inflation destroyed "his mark."

For whatever reasons, after 44 years he proceeded to let the cat out of the bag, with some truly remarkable admissions, which shatter the "accepted wisdom" the Anglo-American financial community has promulgated on the German hyper-inflation....

SCHACHT'S REVELATION

It was in describing his 1924 battles in stabilizing the Rentenmarks that Schacht made his revelation, giving the private mechanism of the hyper-inflation. Schacht was obviously very upset when the speculators continued to attack the new Rentenmark currency. By the end of the November 1923:

"The dollar reached an exchange rate of 12 trillion Rentenmarks on the free market of the Cologne Bourse. This speculation was not only hostile to the country's economic interests, it was also stupid. In previous years such speculation had been carried on either with loans which the Reichsbank granted lavishly, or with emergency money which one printed oneself, and then exchanged for Reichsmarks.

"Now, however, three things had happened. The emergency money had lost its value. It was no longer possible to exchange it for Reichsmarks. The loans formerly easily obtained from the Reichsbank were no longer granted, and the Rentenmark could not be used abroad. For these reasons the speculators were unable to pay for the dollars they had bought when payment became due (and they) made considerable losses."

Schacht is telling us that the excessive speculation against the mark -- the short selling of the mark -- was financed by lavish loans from the private Reichsbank. The margin requirements that the anti-mark speculators needed and without which they could not have attacked the mark was provided by the private Reichsbank!

This contradicts Schacht's earlier explanation, for there is no way to interpret or justify "lavishly" loaning to anti-mark speculators as "helping to keep the government's head above water." Just the opposite. Schacht was a bright fellow, and he wanted this point to be understood. He waited until he wrote the Magic of Money in 1967. His earlier book, The Stabilization of the Mark (1927), discussed inflation profiteering but did not clearly identify the private Reichsbank itself as financing such speculation, making it so convenient to go short the mark.

Thus it was a privately owned and privately controlled central bank, that made loans to private speculators, enabling them to speculate against the nation's currency. Whatever other pressures the currency faced (and they were substantial), such speculation helped create a one way market down for the Reichsmark. Soon a continuous panic set in, and not just speculators, but everyone else had to do what they could to get out of their marks, further fueling the disaster. This private factor has been largely unknown in America.

-- Ibid., pp. 579-87

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: Re: Monetary Reform!
: Geolibertarian April 11, 2009, 09:01:37 AM
REVIVE LINCOLN’S MONETARY POLICY:
AN OPEN LETTER TO PRESIDENT OBAMA


Ellen Brown, April 8th, 2009
http://www.webofdebt.com/articles/lincoln_obama.php (http://www.webofdebt.com/articles/lincoln_obama.php)


Dear President Obama:

The world was transfixed on that remarkable day in January when, to poetry, song, and dance, you gazed upon Abraham Lincoln’s likeness at the Lincoln Memorial and searched for wisdom to navigate these difficult times. Indeed, you have so many things in common with that venerable President that one might imagine you were his reincarnation in different dress. You are both thin and wiry, brilliant speakers, appearing on the national stage at pivotal times. Fertile imaginations could envision you coming back dressed in that African heritage you freed, to help heal the great scar of slavery and prove once and for all the proposition that all men are created equal and can achieve great things if given a fighting chance.

As Wordsworth said, however, our birth is but a sleep and a forgetting; and if that is true, you may have forgotten a more subtle form of slavery from which Lincoln tried less successfully to free his countrymen.  You may have forgotten it because it has been omitted from our popular  history books, leaving Americans ill-equipped to interpret the lessons of our own past.  This letter is therefore meant to remind you.

President Obama, we are now met on another battlefield of that same economic war that visited Lincoln and the Founding Fathers before him.  For you to finish the work Lincoln started would be a poetic triumph no American could miss.  The fate of our economy and the nation itself may depend on how well you understand Lincoln’s monetary breakthrough, the most far-reaching “economic stimulus plan” ever implemented by a U.S. President.  You can solve our economic crisis quickly and permanently, by implementing the same economic solution that allowed Lincoln to win the Civil War and thus save the Union from foreign economic masters.

Lincoln’s Monetary Breakthrough

The bankers had Lincoln’s government over a barrel, just as Wall Street has Congress in its vice-like grip today. The North needed money to fund a war, and the bankers were willing to lend it only under circumstances that amounted to extortion, involving staggering interest rates of 24 to 36 percent. Lincoln saw that this would bankrupt the North and asked a trusted colleague to research the matter and find a solution. In what may be the best piece of advice ever given to a sitting President, Colonel Dick Taylor of Illinois reported back that the Union had the power under the Constitution to solve its financing problem by printing its money as a sovereign government. Taylor said:


The Greenbacks actually were just as good as the bankers’ banknotes. Both were created on a printing press, but the banknotes had the veneer of legitimacy because they were “backed” by gold. The catch was that this backing was based on “fractional reserves,” meaning the bankers held only a small fraction of the gold necessary to support all the loans represented by their banknotes. The “fractional reserve” ruse is still used today to create the impression that bankers are lending something other than mere debt created with accounting entries on their books.1

Lincoln took Col. Taylor’s advice and funded the war by printing paper notes backed by the credit of the government. These legal-tender U.S. Notes or “Greenbacks” represented receipts for labor and goods delivered to the United States. They were paid to soldiers and suppliers and were tradeable for goods and services of a value equivalent to their service to the community. The Greenbacks aided the Union not only in winning the war but in funding a period of unprecedented economic expansion. Lincoln’s government created the greatest industrial giant the world had yet seen. The steel industry was launched, a continental railroad system was created, a new era of farm machinery and cheap tools was promoted, free higher education was established, government support was provided to all branches of science, the Bureau of Mines was organized, and labor productivity was increased by 50 to 75 percent. The Greenback was not the only currency used to fund these achievements; but they could not have been accomplished without it, and they could not have been accomplished on money borrowed at the usurious rates the bankers were attempting to extort from the North.

Lincoln succeeded in restoring the government’s power to issue the national currency, but his revolutionary monetary policy was opposed by powerful forces. The threat to established interests was captured in an editorial of unknown authorship, said to have been published in The London Times in 1865:


Lincoln was assassinated in 1865. According to historian W. Cleon Skousen:


The institution that became established instead was the Federal Reserve, a privately-owned central bank given the power in 1913 to print Federal Reserve Notes (or dollar bills) and lend them to the government. The government was submerged in a debt that has grown exponentially since, until it is now an unrepayable $11 trillion. For nearly a century, Lincoln’s statue at the Lincoln Memorial has gazed out pensively across the reflecting pool toward the Federal Reserve building, as if pondering what the bankers had wrought since his death and how to remedy it.

Building on a Successful Tradition

Lincoln did not invent government-issued paper money. Rather, he restored a brilliant innovation of the American colonists. According to Benjamin Franklin, it was the colonists’ home-grown paper “scrip” that was responsible for the remarkable abundance in the colonies at a time when England was suffering from the ravages of the Industrial Revolution. Like with Lincoln’s Greenbacks, this prosperity posed a threat to the control of the British Crown and the emerging network of private British banks, prompting the King to ban the colonists’ paper money and require the payment of taxes in gold. According to Franklin and several other historians of the period, it was these onerous demands by the Crown, and the corresponding collapse of the colonists’ paper money supply, that actually sparked the Revolutionary War.2

The colonists won the war but ultimately lost the money power to a private banking cartel, one that issued another form of paper money called “banknotes.” Today the bankers’ debt-based money has come to dominate most of the economies of the world; but there are a number of historical examples of the successful funding of economic development in other countries simply with government-issued credit. In Australia and New Zealand in the 1930s, the Depression conditions suffered elsewhere were avoided by drawing on a national credit card issued by publicly-owned central banks. The governments of the island states of Guernsey and Jersey created thriving economies that carried no federal debt, just by issuing their own debt-free public currencies. China has also funded impressive internal development through a system of state-owned banks.

Here in the United States, the state of North Dakota has a wholly state-owned bank that creates credit on its books just as private banks do. This credit is used to serve the needs of the community, and the interest on loans is returned to the government. Not coincidentally, North Dakota has a $1.2 billion budget surplus at a time when 46 of 50 states are insolvent, an impressive achievement for a state of isolated farmers battling challenging weather.3 The North Dakota prototype could be copied not only in every U.S. state but at the federal level.

The Perennial Inflation Question

The objection invariably raised to government-issued currency or credit is that it would create dangerous hyperinflation. However, in none of these models has that proven to be true. Price inflation results either when the supply of money goes up but the supply of goods doesn’t, or when speculators devalue currencies by massive short selling, as in those cases of Latin American hyperinflation when printing-press money was used to pay off foreign debt. When new money is used to produce new goods and services, price inflation does not result because supply and demand rise together. Prices did increase during the American Civil War, but this was attributed to the scarcity of goods common in wartime rather than to the Greenback itself. War produces weapons rather than consumer goods.

Today, with trillions of dollars being committed for bailouts and stimulus plans, another objection to Lincoln’s solution is likely to be, “The U.S. government is already printing its own money – and lots of it.” This, however, is a misconception. What the government prints are bonds – its I.O.U.s or debt. If the government did print dollars, instead of borrowing them from a privately-owned central bank that prints them, Uncle Sam would not have an eleven trillion dollar millstone hanging around his neck. As Thomas Edison astutely observed:


A Wake-up Call

Henry Ford observed at about the same time:


Today we the people are starting to understand our banking and monetary system, and we are shocked, dismayed, and furious at what we are discovering. The wizard behind the curtain turns out to be a small group of men pulling levers and dials, creating an illusory money scheme that, behind all the talk and bravado, is mere smoke and mirrors. These levers are controlled by a privately-owned, unaccountable central bank called the Federal Reserve, which has recently dispensed billions if not trillions in funds to its banker cronies, without revealing where these monies are going even under Congressional inquiry or in response to Freedom of Information Act (FOIA) requests. As Chris Powell pointed out recently in conjunction with an FOIA request brought by Bloomberg News, which the Fed declined to comply with:

“Any government that can disburse $2 trillion secretly, without any accountability, is not a democratic government. It is government of, by, and for the bankers.”4

There was a time when private central bankers were the heavyweights in control, able to run their ultra-secret agenda with impunity; but that era is coming to an end. The bankers are scrambling, trying to patch up their crumbling creations with schemes, bailouts and sleight of hand. That effort, however, must ultimately prove futile. As investment adviser Rolfe Winkler said in a recent article:

“The great Ponzi scheme that is the Western World’s economy has grown so big there’s simply no ‘fixing’ it. Flushing more debt through the system would be like giving Madoff a few billion to tide him over. Or like adding another floor to the Tower of Babel. To what end? The collapse is already here. The question is: How much do we want it to hurt? Using the public’s purse to finance ‘confidence’ in a system that is already kaput may delay the Day of Reckoning, sure, but at the cost of multiplying our losses. Perhaps fantastically.”5

The bankers are on the run, feverishly trying to use the collapse of the current system to steer us toward an “Amero”-style North American currency, or a one-world private banking system and privately-issued global currency that they and only they control. We the people will not accept those solutions, however, no matter how bad things get. We demand real solutions that empower us, not further enslave us.

Abraham Lincoln had such a solution. President Obama, you can finally bring his monetary solution to fruition. Manifest the vision of Lincoln, Jefferson, Madison and Franklin, and we the people will make sure you are placed in the pantheon of our greatest leaders and are revered for all time. America’s greatest days can still be ahead of us; but for this to happen, we need to expose and root out the deceptive banking scheme that would enslave us to a future of debt and increasing homelessness in this great country our forefathers founded. The time has come for democracy to rise superior to a private banking cartel and take back the power to create money once again. Such a transformation would represent the most epochal and empowering shift that humanity has ever seen. As you recently said:


Your words are a timely reminder of our long legacy of action and bold solutions in the face of adversity. Can we do this? Yes we can.

------------------------

1.  See Ellen Brown, “Borrowing from Peter to Pay Paul: The Wall Street Ponzi Scheme Called Fractional Reserve Banking,” www.webofdebt.com/articles (December 29, 2008).
 
2.  Congressman Charles Binderup in a 1941 speech, “How America Created Its Own Money in 1750: How Benjamin Franklin Made New England Prosperous.” Binderup quotes historian John Twells on this point.
 
3.  E. Brown, “Turning the Tables on Wall Street: North Dakota Shows Cash-starved States How They Can Create Their Own Credit,” www.webofdebt.com/articles (March 11, 2009).
 
4.  Chris Powell, “Fed Refuses to Disclose Recipients of $2 Trillion,” GATA (December 12, 2008).
 
5.  Rolfe Winkler, “More Debt Won’t Rescue the Great American Ponzi,” Option Armageddon (March 9, 2009).
: Re: Monetary Reform!
: Geolibertarian April 19, 2009, 06:18:05 PM
From http://www.globalresearch.ca/the-tower-of-basel-secretive-plans-for-the-issuing-of-a-global-currency/13239 (http://www.globalresearch.ca/the-tower-of-basel-secretive-plans-for-the-issuing-of-a-global-currency/13239):

---------------------------------

The Tower of Basel: Secretive Plans for the Issuing of a Global Currency
Do we really want the Bank for International Settlements (BIS) issuing our global currency

by Ellen Brown
Global Research
April 18, 2009


In an April 7 article in The London Telegraph titled “The G20 Moves the World a Step Closer to
 a Global Currency,” Ambrose Evans-Pritchard wrote:


Indeed they will.  The article is subtitled, “The world is a step closer to a global currency, backed by a global central bank, running monetary policy for all humanity.”  Which naturally raises the question, who or what will serve as this global central bank, cloaked with the power to issue the global currency and police monetary policy for all humanity?  When the world’s central bankers met in Washington last September, they discussed what body might be in a position to serve in that awesome and fearful role.  A former governor of the Bank of England stated:


And if the vision of a global currency outside government control does not set off conspiracy theorists, putting the BIS in charge of it surely will.  The BIS has been scandal-ridden ever since it was branded with pro-Nazi leanings in the 1930s.  Founded in Basel, Switzerland, in 1930, the BIS has been called “the most exclusive, secretive, and powerful supranational club in the world.”  Charles Higham wrote in his book Trading with the Enemy that by the late 1930s, the BIS had assumed an openly pro-Nazi bias, a theme that was expanded on in a BBC Timewatch film titled “Banking with Hitler” broadcast in 1998.  In 1944, the American government backed a resolution at the Bretton-Woods Conference calling for the liquidation of the BIS, following Czech accusations that it was laundering gold stolen by the Nazis from occupied Europe; but the central bankers succeeded in quietly snuffing out the American resolution.
 
In Tragedy and Hope: A History of the World in Our Time (1966), Dr. Carroll Quigley revealed the key role played in global finance by the BIS behind the scenes.  Dr. Quigley was Professor of History at Georgetown University, where he was President Bill Clinton’s mentor.  He was also an insider, groomed by the powerful clique he called “the international bankers.”  His credibility is heightened by the fact that he actually espoused their goals.  He wrote:



Quigley wrote of this international banking network:


The key to their success, said Quigley, was that the international bankers would control and manipulate the money system of a nation while letting it appear to be controlled by the government. The statement echoed one made in the eighteenth century by the patriarch of what would become the most powerful banking dynasty in the world.  Mayer Amschel Bauer Rothschild famously said in 1791:


Mayer’s five sons were sent to the major capitals of Europe – London, Paris, Vienna, Berlin and Naples – with the mission of establishing a banking system that would be outside government control.  The economic and political systems of nations would be controlled not by citizens but by bankers, for the benefit of bankers.  Eventually, a privately-owned “central bank” was established in nearly every country; and this central banking system has now gained control over the economies of the world.  Central banks have the authority to print money in their respective countries, and it is from these banks that governments must borrow money to pay their debts and fund their operations.  The result is a global economy in which not only industry but government itself runs on “credit” (or debt) created by a banking monopoly headed by a network of private central banks; and at the top of this network is the BIS, the “central bank of central banks” in Basel.      

Behind the Curtain

For many years the BIS kept a very low profile, operating behind the scenes in an abandoned hotel.  It was here that decisions were reached to devalue or defend currencies, fix the price of gold, regulate offshore banking, and raise or lower short-term interest rates.  In 1977, however, the BIS gave up its anonymity in exchange for more efficient headquarters.  The new building has been described as “an eighteen story-high circular skyscraper that rises above the medieval city like some misplaced nuclear reactor.”  It quickly became known as the “Tower of Basel.”  Today the BIS has governmental immunity, pays no taxes, and has its own private police force.  It is, as Mayer Rothschild envisioned, above the law.

The BIS is now composed of 55 member nations, but the club that meets regularly in Basel is a much smaller group; and even within it, there is a hierarchy.  In a 1983 article in Harper’s Magazine called “Ruling the World of Money,” Edward Jay Epstein wrote that where the real business gets done is in “a sort of inner club made up of the half dozen or so powerful central bankers who find themselves more or less in the same monetary boat” – those from Germany, the United States, Switzerland, Italy, Japan and England.  Epstein said:


In 1974, the Basel Committee on Banking Supervision was created by the central bank Governors of the Group of Ten nations (now expanded to twenty).  The BIS provides the twelve-member Secretariat for the Committee.  The Committee, in turn, sets the rules for banking globally, including capital requirements and reserve controls.  In a 2003 article titled “The Bank for International Settlements Calls for Global Currency,” Joan Veon wrote:


The Controversial Basel Accords

The power of the BIS to make or break economies was demonstrated in 1988, when it issued a Basel Accord raising bank capital requirements from 6% to 8%.  By then, Japan had emerged as the world’s largest creditor; but Japan’s banks were less well capitalized than other major international banks.  Raising the capital requirement forced them to cut back on lending, creating a recession in Japan like that suffered in the U.S. today.  Property prices fell and loans went into default as the security for them shriveled up.  A downward spiral followed, ending with the total bankruptcy of the banks.  The banks had to be nationalized, although that word was not used in order to avoid criticism.

Among other collateral damage produced by the Basel Accords was a spate of suicides among Indian farmers unable to get loans.  The BIS capital adequacy standards required loans to private borrowers to be “risk-weighted,” with the degree of risk determined by private rating agencies; and farmers and small business owners could not afford the agencies’ fees.  Banks therefore assigned 100 percent risk to the loans, and then resisted extending credit to these “high-risk” borrowers because more capital was required to cover the loans.  When the conscience of the nation was aroused by the Indian suicides, the government, lamenting the neglect of farmers by commercial banks, established a policy of ending the “financial exclusion” of the weak; but this step had little real effect on lending practices, due largely to the strictures imposed by the BIS from abroad.

Similar complaints have come from Korea.  An article in the December 12, 2008 Korea Times titled “BIS Calls Trigger Vicious Cycle” described how Korean entrepreneurs with good collateral cannot get operational loans from Korean banks, at a time when the economic downturn requires increased investment and easier credit:


In a May 2002 article in The Asia Times titled “Global Economy: The BIS vs. National Banks,” economist Henry C K Liu observed that the Basel Accords have forced national banking systems “to march to the same tune, designed to serve the needs of highly sophisticated global financial markets, regardless of the developmental needs of their national economies.”  He wrote:


Ironically, noted Liu, developing countries with their own natural resources did not actually need the foreign investment that trapped them in debt to outsiders:  

 

When governments fall into the trap of accepting loans in foreign currencies, however, they become “debtor nations” subject to IMF and BIS regulation.  They are forced to divert their production to exports, just to earn the foreign currency necessary to pay the interest on their loans.  National banks deemed “capital inadequate” have to deal with strictures comparable to the “conditionalities” imposed by the IMF on debtor nations: “escalating capital requirement, loan writeoffs and liquidation, and restructuring through selloffs, layoffs, downsizing, cost-cutting and freeze on capital spending.”  Liu wrote:


The Last Domino to Fall

While banks in developing nations were being penalized for falling short of the BIS capital requirements, large international banks managed to escape the rules, although they actually carried enormous risk because of their derivative exposure.  The mega-banks succeeded in avoiding the Basel rules by separating the “risk” of default out from the loans and selling it off to investors, using a form of derivative known as “credit default swaps.”  

However, it was not in the game plan that U.S. banks should escape the BIS net.  When they managed to sidestep the first Basel Accord, a second set of rules was imposed known as Basel II.  The new rules were established in 2004, but they were not levied on U.S. banks until November 2007, the month after the Dow passed 14,000 to reach its all-time high.  It has been all downhill from there.  Basel II had the same effect on U.S. banks that Basel I had on Japanese banks: they have been struggling ever since to survive.

Basel II requires banks to adjust the value of their marketable securities to the “market price” of the security, a rule called “mark to market.”  The rule has theoretical merit, but the problem is timing: it was imposed ex post facto, after the banks already had the hard-to-market assets on their books.  Lenders that had been considered sufficiently well capitalized to make new loans suddenly found they were insolvent.  At least, they would have been insolvent if they had tried to sell their assets, an assumption required by the new rule.  Financial analyst John Berlau complained:


Imposing the mark-to-market rule on U.S. banks caused an instant credit freeze, which proceeded to take down the economies not only of the U.S. but of countries worldwide.  In early April 2009, the mark-to-market rule was finally softened by the U.S. Financial Accounting Standards Board (FASB); but critics said the modification did not go far enough, and it was done in response to pressure from politicians and bankers, not out of any fundamental change of heart or policies by the BIS.  

And that is where the conspiracy theorists come in.  Why did the BIS not retract or at least modify Basel II after seeing the devastation it had caused?  Why did it sit idly by as the global economy came crashing down?  Was the goal to create so much economic havoc that the world would rush with relief into the waiting arms of the BIS with its privately-created global currency?  The plot thickens . . . .  

---------------------------------
: Re: Monetary Reform!
: Geolibertarian April 22, 2009, 10:09:22 PM
From http://www.monetary.org/a-refutation-of-mengers-theory-of-the-origin-of-money-abridged/2010/12 (http://www.monetary.org/a-refutation-of-mengers-theory-of-the-origin-of-money-abridged/2010/12):

---------------------------------

A REFUTATION OF MENGER'S THEORY OF THE ORIGIN OF MONEY

Here below is a two page summary plus communication with the Austrian School

A challenge to the Austrian School (http://forum.prisonplanet.com/index.php?topic=105934.0) of Economics and the Ludwig Von Mises Institute. Of much more general importance than it sounds, obeisance is universally paid to Menger's 19th century re-incarnation of John Law's theory of money, by present day Austrian economists. Menger's origin theory is also at the base (often explicitly) of much so-called libertarian thinking and writing today. For example Robert Nozick uses it to launch his book Anarchy, State, And Utopia, (p.18) one of the Libertarian's "bibles".

This paper most likely deals a "death blow" to this core thesis of the Austrian School, as formulated by Carl Menger, the school's founder. In effect the Austrian's are left without a viable theory of money. It would be difficult to imagine that one could be provided by Von Mises a more confused and self contradictory book than THE THEORY OF MONEY AND CREDIT. The understandable reluctance of "Austrian gatekeepers" to address this issue is documented below.

SYNOPSIS:
The paper challenges Menger on three grounds:

METHODOLOGICAL GROUNDS:
Though it is generally assumed that Menger's theory is at least in part derived from historical evidence, the paper demonstrates that its derivation is entirely theoretical, by showing that all the historically based evidence cited by Menger, is 180 degrees counter to his theory. The paper points out the inappropriateness of attempting to divine an historical event or process with only deductive logic.

RATIONAL GROUNDS:
The paper points out that even within the framework of Menger's scheme, there are two fatal flaws. First the circularity of his reasoning in determining his causes of liquidity, which arises from his use of the "development of the market and of speculation in a commodity" as a cause of liquidity, when in fact it is a definition of liquidity and even Menger uses it as such. The paper explains the crucial difference. This is not quite an example of what has been called "Weiser's Circle". Second, the paper points out that within Menger's scheme, it is not liquidity, but volatility (or lack of it) which is much more important.

FACTUAL GROUNDS:
The paper shows that some of Menger's closely held general views of the stability of gold and silver and their universal use as money, are simply false. In addition the existence of the millennia long dichotomy in the gold-silver ratio between east and west, which Menger seems to be unaware of, appears sufficient to doom his theory.The paper presents some of the factual evidence gathered by William Ridgeway, in the ORIGIN OF METALLIC WEIGHTS AND STANDARDS; by A.H. Quiggin in A SURVEY OF PRIMITIVE MONEY; by Paul Einzig in PRIMITIVE MONEY; and by Bernard Laum in HEILEGES GELD; all as an indication that an institutional origin of money, whether religious or social, is much more likely to have occurred than Menger's assumed market origin.

[Continued... (http://www.monetary.org/a-refutation-of-mengers-theory-of-the-origin-of-money-abridged/2010/12)]

---------------------------------
: Re: Monetary Reform!
: Geolibertarian May 07, 2009, 03:11:29 PM
http://www.globalresearch.ca/democratizing-the-us-monetary-system-urgency-of-the-american-monetary-act/13520 (http://www.globalresearch.ca/democratizing-the-us-monetary-system-urgency-of-the-american-monetary-act/13520)

Democratizing the US Monetary System: Urgency of the American Monetary Act
A monetary system which serves the American people

by Richard C. Cook
Global Research
May 6, 2009
 
On Thursday, April 23, 2009, Stephen Zarlenga, director of the American Monetary Institute (http://monetary.org) (AMI), delivered two briefings on Capitol Hill on the American Monetary Act that AMI drafted and that may be introduced as legislation during the current congressional session. This single measure has the potential of bringing together the tens of millions of people who have realized it’s our bank-run debt-based monetary system that lies at the center of the financial rot that is destroying our republic and its values.

Attending the briefings were congressional staffers and members of the public. Zarlenga was introduced by Congressman Dennis Kucinich (D-OH), who has spoken in favor of wholesale reform of the monetary system on the floor of the U.S. House of Representatives. Kucinich is also sponsor of H.R. 7260, the “Transparency in the Creation of Wealth Act of 2008.” This act would require the Federal Reserve to resume reporting on the quantity of M3 in the economy (mega-money accessible only to large financial institutions), along with several other economic indicators it now keeps to itself, such as total credit market debt and the holding of Federal Reserve notes by foreign interests.

Stephen Zarlenga is author of The Lost Science of Money (http://www.monetary.org/lostscienceofmoney.html) (American Monetary Institute, 2002), a monumental 736-page book that shows how money has served socially beneficial purposes throughout history only when created by governments as an instrument of law and not as the private preserve of the rich.

Hugh Downs, an unusually well-informed media personality with a strong social conscience, said of The Lost Science of Money, that it “has some stunning historical vistas of the whole concept of media of exchange.” Renowned progressive economist Dr. Michael Hudson said, “The history of money is critical to understanding the greatest problem the third millennium will face. Stephen Zarlenga's Lost Science of Money provides the needed background for seeing the basic structural issues at work."

Since Zarlenga published The Lost Science of Money, the American Monetary Institute has grown, with chapters in Boston , New York , Chicago , Iowa , Seattle , and other locations. He conducts an annual monetary reform conference at Roosevelt University in Chicago and has a busy travel and speaking schedule. He has addressed audiences at the U.S. Treasury Department in Washington , D.C. , and the British House of Lords in London.

The American Monetary Act may be viewed and downloaded from the AMI website at http://www.monetary.org/American_Monetary_Act_version_10_feb_06.htm (http://www.monetary.org/American_Monetary_Act_version_10_feb_06.htm).

The main thrust of the act is to replace the bank-centered debt-based monetary system with the direct creation of money by the federal government which would spend it into circulation as was done with the Greenbacks (http://forum.prisonplanet.com/index.php?topic=98465.msg581292#msg581292) of the latter part of the 19th century.

The money would be spent on all types of legislated government requirements but would focus on infrastructure improvements, including education and health care. The act not only would create a new monetary supply denominated in U.S. Treasury notes, but would rebuild our job base which has been outsourced to other nations by the globalist corporations and big financial interests.

The critical role of the Greenbacks in U.S. history has been distorted and downplayed by the establishment interests that control the writing of history textbooks. The Greenbacks originated during the Civil War when the government printed and spent them to meet wartime needs. Contrary to mythology, the Greenbacks were not inflationary. They continued to serve as a key part of the nation’s monetary supply into the early 20th century. As late as 1900 they formed a third of the nation’s circulating currency, with coinage, along with gold and silver certificates, forming another third, and national bank notes the remainder.

Later the value of both the Greenbacks and metallic-based currency were destroyed by the inflation caused by the introduction of Federal Reserve Notes after the approval of the Federal Reserve System by Congress in 1913. From that point on, the creation of money in the U.S. became a monopoly of the private banking system. This led to the Great Depression when the banking system crashed the economy through its deflationary policies (http://www.youtube.com/watch?v=IPGOkPL1pKM).

The nation recovered from the Depression through the New Deal (http://dyn.politico.com/printstory.cfm?uuid=6CF51F59-18FE-70B2-A858CD862CDC69EA) and the adoption of Keynesian economic policies during and after World War II. But now, in the early years of the 21st Century, the financial system again has collapsed through the gigantic speculative bubbles of the last 30 years. The Bush-Obama bailouts that are costing taxpayers trillions of dollars are benefiting the financial controllers but are not doing anywhere near enough for the producing economy. Even though officials are starting to forecast an economic recovery, there is every indication it will be another “jobless” recovery like the one from 2002-2005.

The American Monetary Act would put a stop to the travesties of the bank-controlled monetary system that has wrecked what was once the world’s greatest industrial democracy. In addition to reintroducing the Greenbacks, the act would eliminate fractional reserve banking by requiring banks to borrow money from the U.S. Treasury to bring their cash reserves up to the level of their lending portfolio rather than allowing them to continue to create money “out of thin air.” The banks would no longer be able to create trillions of dollars of credit, backed by nothing, which they use to fuel the speculative equities, hedge fund, and derivative markets.

The act also contains a provision for a citizens’ dividend through direct payment of cash to individuals. While it does not authorize a dividend at the level Stephen Shafarman and I have proposed in our respective books, Peaceful, Positive Revolution (http://www.amazon.com/Peaceful-Positive-Revolution-Economic-Security/dp/0980219019) and We Hold These Truths: The Hope of Monetary Reform (http://www.amazon.com/We-Hold-These-Truths-Monetary/dp/098021906X), it is a major step in the right direction. In what I have called the "Cook Plan (http://www.globalresearch.ca/index.php?context=va&aid=11397)" I advocate a dividend of $12,000 a year per capita for adults who apply with the money, once spent, being used to capitalize a new network of community savings banks.

With the 2008-2009 collapse of the financial system, the deep recession we are now suffering through, and the injustice of the government’s bank bailouts currently being administered by Secretary of the Treasury Timothy Geithner, millions of people in the U.S. and around the world have had enough of government policies that enrich the financial oligarchy and destroy the livelihood of everyone else. The world today is headed for a dark age of debt-slavery and ruinous poverty for much of the world’s population, including working people in the U.S.

The only way a catastrophe can be averted is for mankind to wake up and demand the creation of a new monetary system where money and credit are treated as a public utility. This means that money and credit should serve the needs of the producing economy while assuring a decent living and sufficient income for everyone.

To reach this goal, it is counterproductive for people simply to complain about what is happening or support half-measures like the call to embrace a gold standard (http://www.youtube.com/watch?v=9E0UPBtmTb0). Any attempt to impose a new gold standard would play into the hands of those who control the gold; i.e., the bankers. Creating a new gold standard appears to be the objective of movements like “End-the-Fed.”

The key is not whether money is backed by gold or any other commodity but whether it serves the needs of real people, allows the trade and productivity of the nation to move, restores our job base, and supports consumer purchasing power. The American Monetary Act would meet these objectives. With the financial disasters of the last two years, millions of people realize the system is rigged against them. Jobs and savings continue to disappear while debt and the power of the banking millionaires increase. The time for Congress to act is now.
: Re: Monetary Reform!
: Geolibertarian May 07, 2009, 04:05:43 PM
http://www.globalresearch.ca/web-of-debt-the-inner-workings-of-the-monetary-system/13510 (http://www.globalresearch.ca/web-of-debt-the-inner-workings-of-the-monetary-system/13510)

" Web of Debt": The Inner Workings of the Monetary System
A review of Ellen Brown's book

by Stephen Lendman
Global Research
May 6, 2009

(http://www.globalresearch.ca/wp-content/uploads/2009/05/113510.jpg)

This is the first of several articles on Ellen Brown's superb 2007 book titled "Web of Debt (http://www.webofdebt.com/)," now updated in a December 2008 third edition. It tells "the shocking truth about our money system, (how it) trapped us in debt, and how we can break free." Given today's global economic crisis, it's an appropriate time to review it and urge readers to digest the entire work, easily gotten through Amazon or Brown's webofdebt.com site. Her book is a remarkable achievement - in its scope, depth, and importance.

In the forward, banker/developer Reed Simpson said:

"I have been a banker for most of my career, and I can report that even most bankers (don't know) what goes on behind (top echelon) closed doors....I am more familiar than most with the issues (Brown covered, and) still found it an eye-opener, a remarkable window into what is really going on....(Although many banks follow high ethical practices), corruption is also rampant, (especially) in the large money center banks, in one of which I worked."

"Credible evidence (reveals) a world (banking) power elite intent on gaining absolute control over the planet and its natural resources, including its subservient human (ones)." Money is their "lifeblood," and "fear (their) weapon." Ill-used, they can "enslave nations and ensure perpetual wars and bondage." Brown exposes the scheme and offers a solution.

Debt Bondage

What president Andrew Jackson called "a hydra-headed monster...." entraps entire nations in debt. Financial commentator Hans Schicht listed how:

-- by making concentrated wealth invisible;

-- "exercising control through leverage(d) mergers, takeovers" or other holdings "annexed to loans;" and

-- using a minimum of insider front-men to exercise "tight personal management and control."

Powerful bankers want to rule the world by creating and controlling money, the very lifeblood of world economies without which commerce would cease. Professor Henry Liu calls the monetary system a "cruel hoax" in that (except for government issued coins) "there is virtually no 'real' money in the system, only debts" - to bankers "for money they created with accounting entries....all done by a sleight of hand," only possible because governments empowered them to do it.

The solution is simple but untaken. As the Constitution mandates, money-creation power must "be returned to the government and the people it represents." Imagine the possibilities:

-- the federal debt could be eliminated, at least a more manageable amount before it mushroomed to stratospheric levels;

-- federal income taxes could as well; entirely for low and middle income people and at least substantially overall;

-- "social programs could be expanded....without sparking runaway inflation;" and

-- financial resources would be available to grow the nation economically and produce stable prosperity.

It's not pie-in-the-sky. It happened successfully under Abraham Lincoln and early colonists. More on that below.

Brown's book explains that:

-- the Federal Reserve isn't federal; it's a private banking cartel owned by its major bank members in 12 Fed districts;

-- except for coins, they "create" money called Federal Reserve notes, in violation of the Constitution under Article I, Section 8 that gives Congress alone the right "To coin (create) money (and) regulate the value thereof....;"

-- "tangible currency (coins and paper money comprise) less than 3 percent of the US money supply;" the rest is in computer entries for loans;

-- money that banks lend is "new money" that didn't exist before;

-- 30% of bank-created money "is invested for their own accounts;"

-- banks once made productive loans for industrial development; today they're "a giant betting machine" using countless trillions for high-risk casino-type operations - through devices like derivatives and securitization scams;

-- since Andrew Jackson's presidency (1829 - 1837), the federal debt hasn't been paid, only the interest - to private bankers and other owners of US obligations;

-- the 16th Amendment authorized Congress to levy an income tax; it was done "to coerce (the public) to pay interest to the banks on the federal debt;"

-- the amount has mushroomed to about $500 billion annually and keeps rising;

-- creating money doesn't cause inflation; it's "caused by banks expanding the money supply with loans;"

-- developing nations' inflation was caused "by global institutional speculators attacking local currencies and devaluing them on international markets;"

-- it could happen in America or anywhere else just as easily; and

-- escaping this trap is simple if Washington reclaims its money-issuing power; early colonists did it; so did Lincoln.

As long as bankers control our money, we'll remain in a permanent "web of debt" and experience cycles of boom, bust, inflation, deflation, instability and crisis. Yet none of this has to be nor repeated and inevitable bubbles - created by design, not chance, to advantage empowered "moneychangers," much like today with its fallout causing global havoc.

Prior to the Fed's creation, the House of Morgan was dominant in contrast to the early colonists' model. Operating out of Philadelphia, the nation's first capital, it favored state-issued and loaned out money, collecting the interest, and "return(ing) it to the provincial government" in lieu of taxes.

Lincoln used the same system to finance the Civil War, after which he was assassinated and bankers reclaimed their money-issuing power. Wall Street's "silent coup (was) the passage of the (1913) Federal Reserve Act," the most destructive ever congressional legislation, thereafter extracting a huge toll amounting to permanent debt bondage with national wealth transference from the public to private bankers - with most people none the wiser.

From Gold to Federal Reserve Notes

After the 1862 Legal Tender Act was rescinded (the so-called Greenback law letting the government issue its own money), new legislation replaced it empowering bankers by making all money again interest-bearing. Here's the problem. "As long as the money supply (is an interest-bearing) debt owed back to private bankers....the nation's wealth (will) continue to be drained off into private vaults, leaving scarcity in its wake."

Dollars should belong to everyone. Early colonists invented them as "a new form of paper currency backed by the 'full faith and credit' of the people." Today, a private banking cartel issues them by "turning debt into money and demanding" due interest be paid.

Ever since, it's controlled the nation and public by entrapment in permanent debt bondage, and they do it through the Federal Reserve that's neither federal nor has reserves. It doesn't have money. It creates it with  electronic entries, any amount at any time for any purpose, the main one being to enrich its owner banks.

This body is a power unto itself, secretive, unaccountable, and independent of congressional oversight or control. It's a money-creating machine by turning debt into money, but only a small fraction of the total money supply. Individual commercial banks create most of it.

A 1960s Chicago Fed booklet (called Modern Money Mechanics) explained how - through "fractional reserve" alchemy. It states:

"(Banks) do not really pay out loans from the money they receive as deposits. If they did this, no additional money would be created. What they do when they make loans is to accept promissory notes in exchange for credits to the borrowers' transaction accounts."

Money is created by "building up" deposits in the form of loans. They, in turn, become deposits, not the reverse. "This unique attribute of banking" goes back centuries, the idea being that paper receipts could be issued and loaned out for the same gold (in those days) many times over, so long as enough gold was held in "reserve" so depositors had access to their money. "This sleight of hand (became known) as 'fractional reserve' banking," using money to create multiples more of it.

As for credit market debt, William Hummel (on the web site Money: What It Is, How It Works) explains that banks create only about 20% of it. The rest is by other non-bank financial institutions, including finance companies, pension and mutual funds, insurance companies, and securities dealers. They "recycle pre-existing funds, either by borrowing at a low interest rate and lending at a higher (one) or by pooling (investor) money and lending it to borrowers." In other words, just like banks, "they borrow low and lend high, pocketing the 'spread' as their profit."

But banks do more than borrow. They also "lend the deposits they acquire....by crediting the borrower's account with a new deposit." Banks thus increase total bank deposits that grow the money supply. It amounts to a sleight of hand like "magically pull(ing) money out of an empty hat."

The US "money supply is the federal debt and cannot exist without it. (To) keep money in the system, some major player has to incur substantial debt that never gets paid back; and this role is played by the federal government." It's why the nation's debt can't be repaid under a banker-controlled system. Today's size and debt service compounds the problem, around double the amount Brown cited, growing exponentially to unimaginable levels.

Colonial Paper Money - Another Way Predating the Republic's Birth

In 1691, three years before the Bank of England's creation, Massachusetts became "the first local government to issue its own paper money...." in the form of a "bill of credit bond or IOU....to pay tomorrow on a debt incurred today." This money "was backed by the full 'faith and credit' of the government."

Other colonies then did the same, some as IOUs redeemable in gold or silver or as "legal tender" money to be legally accepted to pay debts. Cotton Mather, a famous New England minister, later redefined money - not as gold or silver, but as a credit: "the credit of the whole country."

Benjamin Franklin so embraced the "new medium of exchange" that he's called "the father of paper money," then called "scrip." It made the colonies independent of British banks and let them "finance their local governments without" taxation. It was done in two ways, and most colonies used both:

-- direct issue "bills of credit" or "treasury notes;" essentially government-backed IOUs to be repaid by future taxes, with no interest owed bankers or foreign lenders; "they were just credits issued and sent into the economy on goods and services;" and

-- a system of generating "revenue in the form of interest by taking on the lending functions of banks; a government loan office called a 'land bank' (issued) paper money and (loaned) it to residents (usually farmers) at low interest rates....the interest paid....went into the public coffers, funding the government;" it was the preferred way to assure a stable currency rather than by issuing "bills of credit."

Pennsylvania did it best. It's 1723-established loan office showed "it was possible for the government to issue new money (in lieu of) taxes without inflating prices." For over 25 years, it collected none at all. The loan office provided adequate revenue, supplemented by liquor import duties. Throughout the period, prices remained stable.

Prior to this system, Pennsylvania lost "both business and residents (for) lack of available currency." With it, its population grew and commerce prospered. The "secret was in not issuing too much, and in recycling the money back to the government in the form of principal and interest on government-issued loans."

Colony-based British merchants and financiers objected strongly to Parliament. Enough so that in 1751, King George II banned new paper money issuance to force colonists to borrow it from UK bankers. In 1764, Franklin petitioned Parliament to lift the ban. In London, Bank of England directors asked him to explain colonial prosperity at a time Britain experienced rampant unemployment and poverty. It's because Colonial Scrip was issued, he stated, "our own money" with no interest owed to anyone. He added:

"You do not have too many workers, you have too little money in circulation, and that which circulates, all bears the endless burden of unrepayable debt and usury."

With banks loaning money into the economy, more was "owed back in principle and interest than was lent in the original loans (so) there was never enough in circulation to pay interest and still keep workers fully employed." Unlike banks, government can both lend and spend money in circulation - enough to pay "interest due on the money it lent, (keep) the money supply in 'proper proportion' and (prevent) the 'impossible contract' problem (of having) more money owed back on loans than was created (from) the loans themselves."

Franklin's efforts notwithstanding, the Bank of England got Parliament to pass a Currency Act making it illegal for the colonies to issue their own money. It turned prosperity into poverty because the money supply was halved with not enough to pay for goods and services. According to Franklin:

"the poverty caused by the bad influence of the English bankers on the Parliament" got colonists to hate the British enough to spark the Revolutionary War. "The colonies would gladly have borne the little tax on tea and other matters (if) England (hadn't taken their money), which created unemployment and dissatisfaction." So much that outraged people again issued their own money in spite of the ban. As a result, they successfully financed a war against a major power - with almost no hard currency and no taxation. Thomas Paine called it the Revolution's "corner stone."

However, British bankers responded by attacking its "competitor's currency," the Continental, driving down its value by flooding the colonies with counterfeit scrip. It was "battered but remained stable." Where Britain failed, speculators succeeded - "mostly northeastern bankers, stockbrokers and businessmen, who bought up the revolutionary currency at a fraction of its value after convincing people it would be worthless after the war." It had "to compete with states' paper notes and British bankers' gold and silver coins....The problem might have been avoided by making the Continental the sole official currency, but the Continental Congress (didn't have) the power to enforce" such an order - with no courts, police or authority to collect taxes "to redeem the notes or contract the money supply."

Having just rebelled against British taxation, colonists weren't about to let Congress tax them. Speculators took advantage and traded Continentals at discounts enough to make them worthless and give rise to the expression "not worth a Continental."

How the Government Was Persuaded to Borrow Its Own Money

John Adams once said: "there are two ways to conquer and enslave a nation. One is by the sword. The other is by debt." The latter method is stealth enough so people don't know what's happening and submit to their own bondage. Openly, nothing seems changed, yet a whole new system becomes master "in the form of debts and taxes" that people think are for their own good, not tribute to their captors. That's today's America writ large.

After the Revolutionary War, "British bankers and their Wall Street vassals" pulled it off by acquiring a controlling interest in the new United States Bank. It discredited paper scrip through rampant Continental counterfeiting and so disillusioned the Founders that they omitted mentioning paper money in the Constitution. Congress was given power to "coin money (and) regulate the value thereof, (and) to borrow money on the credit of the United States...." It left enough wiggle room for bankers to exploit to their advantage - but only because Congress and the president let them.

Alexander Hamilton bears much blame, the nation's first Treasury Secretary and Tim Geithner of his day (1789 - 1795). He argued that America needed a monetary system independent of foreign control, and that required a federal central bank - to handle war debts and create a standard form of currency. In 1791, it was created, hailed at the time as a "brilliant solution to the nation's economic straits, one that disposed of an oppressive national debt, stabilized the economy, funded the government's budget, and created confidence in the new paper dollars....It got the country up and running, but left the bank largely in private hands" - to be manipulated for private gain, much like today. Worse still, "the government ended up in debt for money it could have generated itself."

Instead, it had to pay interest on its own money in lieu of creating it interest free. Today, Hamilton is acclaimed as a model Treasury Secretary. For Jefferson, he was a "diabolical schemer, a British stooge pursuing a political agenda for his own ends." He modeled the Bank of the United States on the Bank of England against which colonists rebelled. It so angered Jefferson that he told Washington he was a traitor. It fostered a bitter feud between them with Jefferson ultimately prevailing.

Hamilton's Federalist Party disappeared after 1820 while Jefferson and Madison's Democratic-Republicans became the forerunner of today's Democrats after the party split into two factions, the Whigs no longer in existence and Jacksonians that by 1844 officially became the Democratic Party. Shamefully they veered far from Jacksonian and Jeffersonian principles.

For his part, Hamilton wasn't entirely bad. He stabilized the new economy and got the country on its feet. He restored the nation's credit, established a national currency, and made it economically independent. However, his legacy has a dark side - a "privileged class of financial middlemen (henceforth able) to siphon off a perpetual tribute in the form of interest." He delivered money power into private hands, "subservient to an elite class of oligarchical financiers," the same Wall Street types today holding the entire nation hostage - in permanent debt bondage.

From Abundance to Debt

Charging excessive interest is called "usury," but originally it meant charging anything for the use of money. The Christian Bible banned it, and the Catholic Church enforced anti-usury laws through the end of the Middle Ages.

Old Testament scripture was more lenient, prohibiting it only between "brothers." Charging it to foreigners was allowed and encouraged, which is why Jews unfairly were called "moneychangers." They, like others, suffered greatly from money-lending schemes. For centuries, they were "persecuted for the profiteering of a few," then scapegoated to divert attention from the real offenders.

Fiat money is legal tender by government decree - a simple tally representing units of value to be traded for goods and services. Paper money was invented in 9th century Mandarin China and successfully used to fund its long and prosperous empire. The same was true in medieval England. The tally system worked well for over five centuries before banker-controlled paper money began demanding payment in the form of interest.

History portrays the Middle Ages as backward, impoverishing, and a form of economic enslavement only the Industrial Revolution changed. In fact, the era was entirely different, characterized by 19th century historian Thorold Rogers as a time when "a labourer could provide all the necessities for his family for a year by working 14 weeks," leaving nearly nine discretionary months to work for himself, study, fish, travel, or do what he pleased, something today's overworked, over-stressed, underpaid workers can't imagine.

Some attribute Middle Age prosperity to the absence of usurious lending. Instead of paying tribute in the form of interest, "people relied largely on interest-free tallies." They avoided depressions and inflation since the supply and demand for goods and services grew in proportion to each other, thus holding prices stable. "The tally system provided an organic form of money that expanded naturally as trade (did) and contracted (the same way) as taxes were paid."

No bankers set interest rates or manipulated markets to their advantage. The tally system kept Britain stable and thriving until the mid-17th century, "when Oliver Cromwell (1599 - 1658)....needed money to fund a revolt against the Tudor monarchy."

The Moneylenders Take Over England

In the 19th century, the Rothchild banking family's Nathan Rothchild said it well:

"I care not what puppet (sits on) the throne of England to rule the Empire on which the sun never sets. The man who controls Britain's money supply controls the British empire, and I (when he ran the Bank of England) control the British money supply."

Centuries early, moneylender power was absent. But after the 1666 Coinage Act, money-issuing authority, once the sole right of kings, was transferred into private hands. "Bankers now had the power to cause inflations and depressions at will by issuing or withholding their gold coins."  

King William III (1672 - 1702), a Dutch aristocrat, financed his war against France by borrowing 1.2 million pounds in gold in a secret transaction with moneylenders, the arrangement being a permanent loan on which debt would be serviced and its principle never repaid. It came with other strings as well:

-- lenders got a charter to establish the Bank of England (in 1694) with monopoly power to issue banknotes as national paper currency;

-- it created them out of nothing, with only a fraction of them as reserves;

-- loans to the government were to be backed by government IOUs to serve as reserves for creating additional loans to private borrowers; and

-- lenders could consolidate the national debt on their government loan to secure payment through people-extracted taxes.

It was a prescription for huge profits and "substantial political leverage. The Bank's charter gave the force of law to the 'fractional reserve' banking scheme that put control of the country's money" in private hands. It let the Bank of England create money out of nothing and charge interest for loans to the government and others - the same practice central banks now employ.

For the next century, banknotes and tallies circulated interchangeably even though they weren't a compatible means of exchange. Banker money expanded when "credit expanded and contracted when loans were canceled or 'called,' producing cycles of 'tight' money and depression alternating with 'easy' money and inflation." In contrast, tallies were permanent, stable, fixed money, making banknotes look bad so they had to go.

For another reason as well - because of King William's disputed throne and fear if he were deposed, moneylenders again might be banned. They used their influence to legalize banknotes as the money of the realm called "funded" debt with tallies referred to as "unfunded," what historians see as the beginning of a "Financial Revolution." In the end, "tallies met the same fate as witches - death by fire."

They were money of the people competing with moneylending bankers. After 1834 monetary reform, "tally sticks went up in flames in a huge bonfire started in a House of Lords stove." Ironically, it got out of control and burned down Westminster Palace and both Houses of Parliament, symbolically ending "an equitable era of trade (by transferring power) from the government to the" central bank.

Henceforth, private bankers kept government in debt, never demanding the return of principle, and profiting by extracting interest, a very lucrative system always paying off "like a slot machine" rigged to benefit its operators. It became the basis for modern central banking, lending its "own notes (printed paper money), which the government swaps for bonds (its promises to pay) and circulates as a national currency."

Government debt is never repaid. It's continually rolled over and serviced, today with no gold in reserve to back it. Though gone, tallies left their mark. The word "stock" comes from the tally stick. Much of the original Bank of England stock was bought with these sticks. In addition, stock issuance began during the Middle Ages as a way to finance businesses when no interest-bearing loans were allowed.

In America, "usury banks fought for control for two centuries before" getting it under the 1913 Federal Reserve Act. An issue that once "defined American politics," today is no longer a topic for debate. It's about time it was reopened.

Jefferson and Jackson Sound the Alarm

Moneylenders conquered Britain, then aimed to entrap America - by provoking "a series of wars. British financiers funded the opposition to the American War for Independence, the War of 1812, and both sides of the American Civil War." They caused inflation, heavy government debt, the chartering of the Bank of the United States to fund it, thus giving private interests the power to create money.

Jefferson opposed the first US Bank, Jackson the second, and both for similar reasons:

-- distrust of profiteers controlling the nation's money; and

-- concern about the nation's banking system falling into foreign hands.

Jefferson got Congress to refuse to renew the first US Bank charter in 1811 and learned on liquidation that two-thirds of its owners were foreigners, mostly English and Dutch and none more influential than the Rothschilds. Later, Madison signed a 20-year charter. However, when Congress renewed it, Jackson vetoed it.

The Powerful Rothschild Family

The House of Rothschild was British in name only. In the mid-18th century, it was founded in Frankfort, Germany by Mayer Amschel Bauer, who changed his name to Rothschild, fathered 10 children, and sent his five sons to open branch banks in major European capitals. Nathan was the most astute and went to London. "Over the course of the nineteenth century, NM Rothschild would become the biggest bank in the world, and the five brothers would come to control most of the foreign-loan business of Europe."

Belatedly, Jefferson caught on to the scheme - that "private debt masquerading as paper money....owed to bankers" placed the nation in bondage. In his words, "deliver(ing) itself bound hand and foot to bold and bankrupt adventurers and bankers...." Jefferson's idea for a national bank was a wholly government-owned one issuing its own credit without having to borrow it from private interests.

Jackson believed the same thing in calling the Bank of the United States "a hydra-headed monster." When the bank charter was renewed, he promptly vetoed it, yet understood that the battle was just beginning. "The hydra of corruption is only scotched, not dead," he said.

He was right. The Bank's second president, Nicolas Biddle, retaliated "by sharply contracting the money supply. Old loans were called in and new ones refused. A financial panic ensued, followed by a deep economic depression." However, Biddle's victory was short-lived. In April 1834, the House rejected re-chartering the Bank, then January 1835 became Jackson's "finest hour."

He did something never done before or since. He paid off the first installment of the national debt, then reduced it to zero and accumulated a surplus. In 1836, the Bank's charter expired. Biddle was arrested and charged with fraud. He was tried and acquitted but spent the rest of his life in litigation over what he'd done. "Jackson had beaten the Bank." Imagine today if Obama defeated the Fed and its Wall Street puppeteers instead of embracing them with limitless riches.

Lincoln Foils the Bankers and Pays with His Life

Like Jackson, Lincoln faced assassination attempts, before even being inaugurated. "He had to deal with treason, insurrection, and national bankruptcy" during his first days in office. Considering the powerful forces against him, his achievements were all the more remarkable:

-- he built the world's largest army;

-- "smashed the British-financed insurrection,"

-- took the first steps to abolish slavery; it became official on December 6, 1865 when the 13th Amendment was ratified, eight months after Lincoln was assassinated;

-- during and after his tenure, the country became "the greatest industrial giant" in the world;

-- "the steel industry was launched; a continental railroad system was created; the Department of Agriculture was established; a new era of farm machinery and cheap tools was promoted;"

-- the Land Grant College system established free higher education;

-- the Homestead Act gave settlers ownership rights and encouraged new land development;

-- government supported all branches of science;

-- "standardization and mass production was promoted worldwide;"

-- labor productivity increased by 50 - 75%; and

-- still more was accomplished "with a Treasury that was completely broke and a Congress that hadn't been paid" as a result.

It was because the government issued its own money. "National control was reestablished over banking, and the economy was jump-started with a 600 percent increase in government spending and cheap credit directed at production." Roosevelt did the same thing with borrowed money. Lincoln did it with United States Notes called Greenbacks (http://forum.prisonplanet.com/index.php?topic=98465.msg581292#msg581292). They financed the war, paid the troops, spurred the nation's growth, and did what hasn't been done since - let the government print its own money, free from banker-controlled debt slavery, the very system strangling us today the way Lincoln feared would happen.

His advisor was Henry Carey, a man historian Vernon Parrington called "our first professional economist." Lincoln endorsed his prescription:

-- "government regulation of banking and credit to deter speculation and encourage economic development;"

-- its support for science, public education and national infrastructure development;

-- "regulation of privately-held infrastructure to ensure it met the nation's needs;"

-- government-sponsored railroads and "scientific and other aid to small farmers;"

-- "taxation and tariffs to protect and promote productive domestic activity;" and

-- "rejection of class wars, exploitation and slavery, physical or economic, in favor of a 'Harmony of Interests' between capital and labor."

Leaders like Jefferson, Jackson and Lincoln are sorely missed, but for Lincoln it was costly.

He Loses the Battle with "the Masters of European Finance"

German Chancellor Otto von Bismark (1815 - 1898) called them that in explaining how they engineered the "rupture between the North and the South" to use it to their advantage, then later wrote in 1876:

"The Government and the nation escaped the plots of the foreign bankers. They understood at once that the United States would escape their grip. The death of Lincoln was resolved upon." The last Civil War battle ended on May 13, 1865. Lincoln was assassinated on April 15.

European bankers tried but failed to trap him "with usurious war loans," at 24 - 36% interest had he agreed. Using government-issued Greenbacks shut them out entirely, so they determined to fight back - eliminate the thorn, then get banker-friendly legislation passed, achieved through the National Bank Act reversing the Greenback Law. It was "only a compromise with bankers, (but) buried in the fine print," they got what they wanted.

Although the Controller of the Currency got to issue new national banknotes, it was just a formality. In fact, the new law "authorized the bankers to issue and lend their own paper money." They "deposited" bonds with the Treasury, but owned them so "immediately got their money back in the form of their own banknotes." It was an exclusive franchise to control the nation's money forcing government back into debt bondage where it never had to be in the first place. A whole series of private banks were then chartered, all empowered to create money in lieu of debt free Greenbacks.

One other president confronted bankers and paid dearly as well - James Garfield. In 1881, he charged:

"Whoever controls the volume of money in any country is absolute master of all industry and commerce....And when you realize that the entire system is very easily controlled, one way or another, by a few powerful men at the top, you will not have to be told how periods of inflation and depression originate."

Garfield took office on March 4, 1881. On July 2, he was shot. He survived the next two and half months, then died on September 19. It was a time of depression, mass unemployment, poverty, and starvation with no safety net protections. "The country was facing poverty amidst plenty," because bankers controlled money and kept too little of it in circulation - an avoidable problem if government printed its own.

Gold v. Inflation - Debunking Common Fallacies

The classical "quantity theory of money" holds that "too much money chasing too few goods" causes inflation, excess demand over supply forcing up prices. The counter argument is that if paper money is tied to gold, an inflation-free stable money supply will result. Another fallacy is that adding money (demand) raises prices only if supply remains fixed.

In fact, if new money creates new goods and services, prices stay stable. For thousands of years, the Chinese kept prices of its products low in spite of their money supply being "flooded with the world's gold and silver, and now with the world's dollars....to pay for China's cheap products."

What's important is not what money consists of but who creates it. "Whether the medium of exchange (is) gold or paper or numbers in a ledger," when created by and owed to private lenders with interest, "more money would always be owed back than was created...spiraling the economy into perpetual debt....whether the money takes the form of gold or paper or accounting entries."

Today's popularism is associated with the political left. However, 19th century Populists saw "a darker, more malevolent force....private money power and the corporations it had spawned, which was threatening to take over the government unless the people intervened."

Lincoln also feared it saying:

"I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. Corporations have been enthroned, an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until the wealth is aggregated in the hands of a few and the Republic is destroyed."

Today's America is the reality he feared. A tiny elite own the vast majority of the nation's wealth in the form of stocks, bonds, real estate, natural resources, business assets and other investments. In contrast, 90% of Americans have little or no net worth. Of all developed nations, concentrated wealth and inequality extremes are greatest here with powerful bankers sitting atop the pyramid, now more than ever with their new riches extracted from public tax dollars and Fed-created money.

A follow-up article will discuss how "bankers capture(d) the money machine."
: Re: Monetary Reform!
: jofortruth May 07, 2009, 07:27:29 PM
Ellen Brown's "WEB OF DEBT" book is here:
http://www.scribd.com/doc/8342360/Brown-Web-of-Debt-The-Shocking-Truth-About-Our-Money-System-3e-2007
: Re: Monetary Reform!
: Geolibertarian May 10, 2009, 11:52:02 AM
http://www.globalresearch.ca/america-s-money-machine/13548 (http://www.globalresearch.ca/america-s-money-machine/13548)

America's "Money Machine"
Reviewing Ellen Brown's "Web of Debt (http://www.webofdebt.com):" Part II

by Stephen Lendman
Global Research
May 9, 2009

This is the second of several articles on Ellen Brown’s remarkable book titled “Web of Debt….the shocking truth about our money system, (how it) trapped us in debt, and how we can break free.” It’s a multi-part snapshot. Reading the entire book is strongly recommended – easily obtainable through Amazon or Brown’s www.webofdebt.com (http://www.webofdebt.com) site.

(http://www.globalresearch.ca/wp-content/uploads/2009/05/113548.jpg)

Bankers Capture the Money Machine - Fighting for the Family Farm

In the 1890s, "keeping the family homestead was a key political issue" given that foreclosures and evictions "were occurring in record numbers," much like today. The "Bankers Manifesto of 1892 (http://www.wholetruthcoalition.org/2009/02/26/the-bankers-manifesto-of-1892-history-repeated/)" spelled it out - a willful plan "to disenfranchise farmers and laborers of their homes and property," again like today except that now our very freedom and futures are at stake as sinister forces aim to steal them by turning America into Guatemala and lock it down by police state repression.

The panic of 1893 caused an earlier depression - severe enough to establish a precedent of street protests, the result of the first ever march on Washington. Businessman/populist Jacob Coxey led his "Coxey's Army (of around 500) from Massilon, Ohio (beginning March 25, Easter Sunday) to the nation's capital to demand jobs and a return to debt and interest-free Greenbacks. Local police intervened. The marchers were disbanded. Coxey was arrested. He spent 20 days in jail for disturbing the peace and violating a local ordinance against walking on the grass. However, he was never charged, then released, and is now remembered for his heroics.

He began a tradition later sparking suffragist marches; unemployed WW I veterans for their "Bonus Bill" money; numerous anti-war and earlier civil rights protests; in 2004, one million in the nation's capital for women's rights, and the previous day thousands protesting IMF-World Bank policies.

The late 19th century Populist movement was the last serious challenge to private bankers' monopoly power over the nation's money. Journalist William Hope Harvey wrote a popular book titled "Coin's Financial School" that explained the problem in simple English - that restricting silver coinage was a conspiracy to enrich "London-controlled Eastern financiers at the expense of farmers and debtors." He called England "a money power that can dictate the money of the world, and thereby create world misery."

He referred to the "Crime of 73" that limited free silver coinage and replaced it with British gold. It forced America to pay England $200 million annually in gold in interest on its bonds and inspired William Jennings Bryan's "Cross of Gold" speech. He nearly became president, but lost in a close (big-monied financed) race to William McKinley, but he, too, paid a price. He was later assassinated, likely for his protectionism, very much disadvantaging British bankers. With him gone, the Morgans and Rockefellers dominated US banking, and arranged for friendly leaders to run the country, Teddy Roosevelt included, a man with more bark than bite.

"The trusts and cartels remained the puppeteers with real power, pulling the strings of puppet politicians" who were bought and paid for like today.

The Secret Government

Various presidents suggested the worst of what's now clear. By signing the Federal Reserve Act, Woodrow Wilson was a tool of big money. Yet he belatedly expressed regret, said "I have unwittingly ruined my country," and called America "one of the worst ruled....most completely controlled governments in the civilized world (run by) a small group of dominant men."

Franklin Roosevelt was as clear in saying "The real truth (is that) a financial element in the large centers has owned the government since the days of Andrew Jackson." Other officials said the same thing, and so did Matthew Josephson (in his 1934 book) calling bankers and business titans "Robber Barons" - men who "lived for market conquest, and plotted takeovers like military strategy."

They sought monopolies for market dominance and trusts - concentrated wealth in a few hands to be manipulated for maximum profits and power. During the Gilded Age (http://books.google.com/books?id=Ps92AAAAMAAJ&pgis=1), trusts became strong enough to plant "their own agents in the federal commissions, (use) government regulation (for) greater control....protect themselves from competition," and keep prices high.

Four names (among others) stand out - Andrew Carnegie, John D. Rockefeller, Henry Ford, and JP Morgan running finance with the power of a potentate. "He didn't build, he bought. He took over other people's businesses, and he hated competition" so he eliminated it. Together with Rockefeller, they dominated business and finance through interlocking directorates, the same way as today throughout industry, commerce and finance.

For his part, Morgan was so dominant, financial writer John Moody called him "the greatest financial power in the history of the world" even before the establishment of the Federal Reserve. Morgan died months before its creation, but his influence made it possible.

His long arm favored the fortunate - with enough funding to monopolize their industries. "But where did (he and other bankers get their money)?" Congressman Wright Patman explained that they created it "out of an empty hat." They held the ultimate credit card, limitless accounting-entries to buy out competitors, corner raw materials markets, control politicians, and after the birth of public relations, popular opinion the way distinguished author/psychogist and activist Alex Carey explained in his seminal book titled "Taking the Risk out of Democracy:"

"The 20th century has been characterized by three developments of great political importance: The growth of democracy, the growth of corporate power, and the growth of propaganda as a means of protecting corporate power against democracy." It came into its own during WW I, then grew, became dominant, and remains near-omnipotent today, even with fissures appearing with enough promise to challenge it.

The Jekyll Island Affair - Establishing the Federal Reserve

In 1910, seven financial titans met secretly on this privately-owned island off the coast of Georgia and created the Federal Reserve:

-- established three years later on December 23, in the middle of the night, by an act of Congress;

-- its most outrageous action ever that few legislators, if any, even read or would have understood if they did because the text was so intentionally vague;

-- it enfranchised powerful bankers to hold the nation hostage in permanent debt bondage by giving them the right to create money, in violation of Article I, Section 8 of the Constitution that states Congress alone has the power "To coin (create) money (and) regulate the value thereof...."

Woodrow Wilson made it possible, "Morgan's man in the White House" with an administration staffed with his cronies. This act was so publicly harmful it had to be shepherded through a carefully arranged Conference Committee, scheduled for between 1:30 - 4:30AM three days before Christmas when many lawmakers had left town and many others were asleep. It was then enacted the next day - one that will live in infamy for the damage it caused.

"The bill was so obscurely worded that no one really understood its provisions." The nation's money would be printed by the US Bureau of Engraving and Printing, then issued as a government obligation (or debt) to the private Federal Reserve with interest.

Nominally, Congress and the president appoint Fed governors, but they operate secretly with no government oversight or control. As a privately owned banking cartel, they're a power unto themselves. The chairman sits at its helm, but he's a mere tool of the bankers who control him.

The 1913 Federal Reserve Act "was a major coup" for them. The Fed exists to serve them, not the government or public interest. Therein lies its problem and why it must be abolished.

For over a century, powerful international bankers wanted a private central bank giving them "the exclusive right to 'monetize' the government's debt (that is, print their own money and exchange it for government securities or IOUs.)" The entire Act was written in obscure Fedspeak so no one but its creators knew its purpose.

"In plain English, the Federal Reserve Act authorized a private central bank to create money out of nothing, lend it to the government at interest, and control the national money supply, expanding or contracting it at will." Nothing has been the same since.

Who Owns the Federal Reserve?

Contrary to common belief, it's a private banking cartel owned by its member banks in each of its 12 Fed districts (http://www.themoneymasters.com/faqs.htm#q1). "The amount of Federal Reserve stock" each one holds "is proportional to its size." The New York Fed is most dominant (like a mother bank) owning 53% of the System's shares because the nation's largest commercial banks are located there, on Wall Street, of course, with names like JP Morgan Chase, Citigroup, Goldman Sachs, and Morgan Stanley prominent and familiar. Bank of America was founded in California and remains concentrated heavily in Western and Southwestern states, yet operates globally like the others.

The largest banks are financial superpowers with interests in commercial and investment banking, insurance, real estate, home mortgages, credit cards, and virtually all things financial - nationally and globally.

Financial commentator Hans Schicht refers to Wall Street's "master spider" controlling a powerful inner circle of men, headed by him. Their business is done secretly behind closed doors by what he calls "spider webbing." It exercises "tight personal management and control, with a minimum of insiders and front-men who themselves have only partial knowledge of the game. They also have "leverage" over mergers, takeovers, chain store holdings where one company holds shares of others, conditions annexed to loans, and so forth.

Further, they make concentrated wealth "invisible. The master spider studiously avoids close scrutiny by maintaining anonymity, taking a back seat, and appearing to be a philanthropist."

Post-WW II, the center of power shifted from the House of Rothschild to Wall Street with David Rockefeller Sr. (John D's grandson) becoming "master spider," a sort of boss of bosses, much like the underworld but much more deadly and powerful.

All the more so because "the Robber Barons (used) their monopoly over money to buy up the major media, educational institutions," and other means of communications. They got all this but Morgan wanted more - to "secure the banks' loans to the government with a reliable source of taxes, (gotten directly from) the incomes of the people. There was just one snag." The Supreme Court "consistently" declared federal income taxes unconstitutional. So how were they instituted and why are they willingly paid?

The Federal Income Tax

The Constitution omits any mention of a federal income tax because the Founders "considered the taxation of private income, the ultimate source of productivity, to be economic folly." They also decided that the States and federal government shouldn't impose the same tax at the same time. Congress was to have responsibility "for collecting national taxes from the States' " tax revenues.

Direct taxes were to be apportioned according to each State's population. "Income taxes were considered unapportioned direct taxes in violation of this provision of the Constitution."

Except in times of war, no federal income tax existed until the 16th Amendment was ratified on February 13, 1913 empowering Congress to levy one - unapportioned among the states. Even without one, the economy grew impressively for nearly a century and a half, adequately funded by customs and excise taxes.

For a brief period, Congress enacted an income tax in 1894 when the nation was at peace. On April 8, 1895, in Pollock v. Farmers' Loan and Trust Company, the Supreme Court held that unapportioned income taxes were unconstitutional. "That ruling has never been overturned." To get around it, Wall Street packaged the 16th Amendment with the Federal Reserve Act, both in 1913. It applied only to annual incomes over $4000, well above the average level at the time.

The original tax code was simple enough to be covered in 14 pages. It's now a 17,000 page monster, filled with obscure provisions professionals struggle to understand or even know about. It also has "whole pages devoted to private interests," including loopholes exempting powerful corporations from paying rightfully owed taxes.

Before WW II, income taxes affected few people. However, from 1939 - 1944, Congress passed various ones, including to fund the war effort, and began letting workers (voluntarily) pay them in installments. Thereafter, "withholding" became mandatory.

"Today the federal income tax has acquired the standing of a legitimate tax enforceable by law, despite longstanding (Supreme Court rulings) strictly limiting its constitutional scope." Numerous other taxes were also added, including on capital gains, real estate, corporate income, FICA, sales, luxury, and IRS interest and penalties. With all hidden ones included (dozens in all), up to 40% of an average worker's income goes for taxes.

Enough for some tax protesters to challenge the 16th Amendment's legitimacy on grounds that it was improperly ratified. However, US courts rejected the argument and now it's "beyond review" - even though no tax would be needed if the federal government printed its own money interest-free instead of taking ours to defray banker-imposed charges.

After signing the Federal Reserve Act, Woodrow Wilson called himself "a most unhappy man. I have unwittingly ruined my country." Yet he knew precisely what he did. He was a lawyer, a Ph. D, a historian and political scientist, and former Princeton University president before entering politics.

Reaping the Whirlwind - The Great Depression

In theory, the Federal Reserve was established to stabilize the economy, smooth out the business cycle, manage a healthy, sustainable growth rate, and maintain stable prices. It failed dismally on all counts - most noticeably in the 1930s after a depression followed the crash. The Fed wasn't the solution. It was the problem.

As in recent years, it kept interest rates low and money plentiful - not money, in fact, but "credit" or "debt," the same problem creating havoc today. In the 1920s, production rose faster than wages, but (again like today) people could borrow on credit. Then as stocks soared in "value," Wall Street promoted buying them on margin (namely, leverage on credit) on the premise that higher prices could repay loans. It turned "investing" into a "speculative pyramid scheme" based on money that didn't exist.

The Fed caused the whole scheme with easy and plentiful money (credit). It assured the inevitable crash, and late in the game Fed officials saw it coming. New York Fed governor, Benjamin Strong, warned wealthy industrialists, politicians, and high foreign officials to sell stocks, then began reducing the money supply and raising bank-loan rates to correct the bubble "naturally." It caused a huge liquidity squeeze. Stock purchases declined. Prices fell. Margins were called causing the crash over three days - so-called Black Thursday (on October 24), Monday and Tuesday.

The subsequent fallout was disastrous. From 1929 - 1933, "the money stock fell by a third (http://www.youtube.com/watch?v=IPGOkPL1pKM), and a third of the nation's banks closed their doors....It was dramatic evidence of the dangers of delegating the power to control the money supply to a single autocratic head of an autonomous agency."

It resulted in a "vicious cyclone of debt....dragging all in its path into hunger, poverty and despair" - the very process repeating today, including insiders being tipped off, selling high, profiting from the collapse at fire sale prices, and letting the public pay for the dirty scheme they had in mind in the first place. Then, like today -  shifting huge wealth amounts from "the Great American Middle Class to Big Money."

Instead of shutting the Fed and prosecuting its conspirators, Congress enacted the Federal Deposit Insurance Corporation (FDIC), "ostensibly to prevent" another collapse. It insured deposits up to $5000 at the time and rescued some banks, but not all. It was for "rich and powerful" ones, the equivalent of prominent names today and considered then like now, "too big to fail" run by officials too important to offend.

Milton Friedman blamed the Great Depression on the contraction of the money supply, but others disagreed. Chairman Louis McFadden of the House Banking and Currency Committee said it "was not accidental. It was a carefully contrived occurrence....The international bankers sought to bring about a condition of despair here so that they might emerge as rulers of us all."

The "Bankers Manifesto of 1934" suggested the same thing, and some observers today believe it's again playing out, this time on a global scale for much greater stakes for both winners and losers.

Roosevelt, Keynes and the New Deal

Roosevelt addressed the collapse straightaway, starting impressively in his first 100 days with the passage of 15 landmark acts, covering:

-- emergency banking;

-- Glass-Steagall and the FDIC;

-- empowering the Reconstruction Finance Corporation that was toothless under Hoover;

-- the Securities Act of 1933, then the Securities  Exchange Act of 1934;

-- the Home Owners' Loan Corporation to refinance homes and prevent foreclosures; and

-- an alphabet soup of development agencies in charge of constructing national infrastructure and producing jobs for the unemployed.

In all, it was a whirlwind of achievement in a few short months unlike anything before or since - so much in such a short time. This writer's late April article said:

Despite its flaws and failures, FDR's New Deal (http://dyn.politico.com/printstory.cfm?uuid=6CF51F59-18FE-70B2-A858CD862CDC69EA) was remarkable in what it accomplished. It helped people, put millions back to work, reinvigorated the national spirit, built or renovated 700,000 miles of roads, 7800 bridges, 45,000 schools, 2500 hospitals, 13,000 parks and playgrounds, 1000 airfields, and various other infrastructure, including much of Chicago's lakefront where this writer lives. It cut unemployment from 25% in May 1933 to 11% in 1937, then it spiked before early war production revived economic growth and headed it lower.

Challenging Classical Economic Theory - Keynesianism

Post-WW II, it dominated economic policy, the idea being that deficit spending could propel nations to prosperity unlike the classical economic belief that money supply increases weren't needed. Its theory was that when the supply contracts, so do prices and wages naturally leaving everything in balance like before.

It didn't work at a time people wanted jobs, but there were few around. Factories could produce, but there was little demand, and resources were available but unused - for the lack of enough pump priming to reinvigorate a collapsed economy.

Enough, but not too much because as long as bankers print money, added liquidity means more debt and a greater amount to service. In addition, doing it crowds out social services, sacrifices industrial growth, and increases inflation hugely over time. The 5 cent ice cream cone and candy bars this writer remembers as a boy today cost around $2.50. If government printed its own money, they might still be a nickel or pretty close.

Congressman Wright Patman suggested it in 1933 by asking: "Why is it necessary to have Government ownership and operation of banks? The Constitution of the United States says that Congress shall coin money and regulate its value," not hand it over to predatory private bankers.

Instead of returning money-creation power to the government, Roosevelt let "moneychangers" keep it under an overhauled Federal Reserve - a still powerful private banker-controlled "citadel, run from the top down (by) a small cartel of appointed banking representatives (operating) behind a curtain of secrecy," more powerful than government itself. Had Roosevelt acted like Jackson and Lincoln, it would have been his greatest achievement.

Even so, in his first few months in office, he got enacted tough reformist legislation, very much impacting bankers. He also "took aim at the trusts and monopolies that had returned in force" in the anything-goes 1920s. By 1929, consolidation left around 200 companies "in control of over half of all American industry."

FDR reversed the trend with new legislation, reviving earlier trust-busting efforts. He also imposed banking regulations as cited above - enough to get him to call financiers "unanimous in their hatred of me, and I welcome their hatred." Lucky for him he survived. Big money plays for keeps, wins more often than it loses, and generally on what matters most.

Wright Patman Exposes the Money Machine

A Texas Democrat, he served in Congress from 1929 - 1976 where from 1963 - 1975 he headed the House Banking and Currency Committee until his death. Unlike his counterparts today in the House and Senate, he was called an "economic Populist," one way being for how he exposed Fedspeak to reveal the scheme behind it.

In an August 5, 1964 Committee document titled "A Primer on Money," he concluded:

"The Federal Reserve is a total moneymaking machine. It can issue money or checks. And it never has a problem of making its checks good because it can obtain the $5 and $10 bills necessary to cover (them) simply by asking the Treasury Department's Bureau of Engraving to print them."

Although the Fed now returns most interest on its government bonds to the Treasury, of far greater importance is the windfall its member banks get. "The bonds that have been acquired essentially for free become the basis of the Fed's 'reserves" - the phantom money that is advanced many times over by commercial banks in the form of loans."

Virtually all money in circulation comes from the Fed and its member banks, expanded by a factor of about 10 (through fractional reserve lending) for every federal debt dollar monitized. It all "consists of loans on which the banks have been paid interest." This interest (http://www.wealthmoney.org/wonder.html), not what the Fed gets, is the real windfall to the banks.

The limitless money-creation machine is kept hidden "in obscure Fedspeak," even undecipherable to people who think they understand the process. In The Creature from Jekyll Island, Ed Griffin states that:

"modern money is a grand illusion conjured by the magicians of finance and politics. (The Fed's function) is to turn debt into money. It's just that simple....if one remembers that the process is not intended to be logical but to confuse and deceive." It has to be. Would the public ever put up with it if they realized they'd be had - that their tax money was being used to enrich bankers, and Washington made it possible.

"Magical(ly) multiplying reserves is called fractional reserve banking" that seems more like a con or "shell game." Each dollar deposited "magically" becomes about 10 in the form of loans or computer-generated funds. As explained below, "reserves" are being phased out so the 10 - 1 multiple is actually higher but the principle is the same.

So if $1 million deposited becomes $10 million, and $900,000 can be loaned out (the other $100,000 required for reserves), "money created out of thin air (at 5% interest) is doubled in about two years."

The Fed claims it returns 95% of its profits to the Treasury. In fact, it's only the interest on federal securities held as reserves. Far more important is the windfall afforded banks, the Fed's owners, that "use the securities as the 'reserves' that get multiplied many times over in the form of loans" that generate huge profits for them.

Wright Patman wanted to abolish the Open Market Committee and nationalize the Fed, thus giving Congress control of it as a "truly federal agency" issuing interest-free money.

The Fed is now heading for a zero percent reserve requirement meaning they'll be "no limit to the number of times deposits can be relent." There's effectively no limit now as if banks exhaust their reserves, they can borrow freely from the Fed - today at zero percent interest.

Inside the Fed's Playbook

"Banks don't have to have the money they lend before they make loans, because the Fed will 'provide' the necessary reserves by making them available at the federal funds rate" - today amounting to limitless free money at zero percent interest to be loaned out at higher rates for profit. The "slight of hand" is that the Fed "creates reserves out of thin air."

Loans then become deposits that banks can freely re-lend many times over - the more deposits, the greater the amount of lending. It's a process of multiplying the money supply and charging interest for doing it, a very profitable business when working well in a healthy economy.

So, the process works as follows:

-- banks "lend money (they) don't have;"

-- loans become deposits on their books;

-- when borrowers spend their money, banks raise their reserves back to the required 10% (or less) "by borrowing from the Fed or other sources;" and

-- the Fed never runs out of reserves because its "open market operations" create more of them; it simply manufactures whatever amounts it wishes out of thin air, and the public is none the wiser or that they're being taxed to pay for this shell game.

Reserves don't comprise safe money to pay claimants. They're accounting entries at Federal Reserve banks letting commercial banks "make many times those sums in loans." In plain English, "reserve accounts are a smoke and mirrors accounting trick concealing the fact that banks create the money they lend out of thin air, borrowing any 'reserves' they need from the Fed, which also creates the money out of thin air." What a business, especially given how secretive it is under the protection and auspices of the federal government that sanctions the con.

There's more as well. Besides what they loan out, banks "create their own investment money" to use for their own purposes. Traditionally, commercial banks invested conservatively, but not investment banks. They raise money for their clients through stock issuances and sales. But more important is their "proprietary trading" that involves using their own money to buy or sell stocks, bonds, currencies, commodities, or any other financial instrument or derivative thereof no matter how risky.

Since investment and commercial banks may be one in the same, limitless sums are available through magical money creation and open-ended Fed borrowing, then leveraged multiple times through more borrowing. The game worked "magically" until it no longer did the old way, so alternatives are used.

Bear Raids and Short Sales

The 1929 "Crash" happened on three "Black" days but "continued for nearly four years, stoked by speculators who made huge profits not only on the market's" ascent but during its plunge to 11% of its peak value.

Called a "bear raid," it targets vulnerable stocks for "take-down" quick profits or corporate takeovers at fire sale prices. When done on a large scale, short selling can impact markets greatly on the downside just like heavy "program buying" can rocket it up. The whole business amounts to blatant manipulation for quick profits.

Short sellers actually do it with borrowed (not owned) stock, then sell it into the market. If it declines (it may also rise, of course), it's re-bought at the lower price, returned to the seller, with short-sellers pocketing the difference as profit. It's not investing. It's gambling with someone else's stock, without permission to borrow it, and as a result harms its owner by driving down the price when it works.

"Short selling is sometimes justified as being necessary to keep a brake on (over-exuberance) that might otherwise drive popular stocks into dangerous 'bubbles.' (However,) Any alleged advantages to a company from the liquidity afforded by short selling (and supposedly keeping markets honest) are offset by the serious harm (this causes) companies targeted for take-down(s) in bear raids." When done with enough force, it can destroy companies if that's the intent.

"Short selling is the modern version of the counterfeiting (that brought) down the Continental in the 1770s." Currencies, bonds, and commodities can be shorted just like stocks - to manipulate them for profit.

Worse still, and illegal, is so-called naked short-selling without first borrowing the security shorted, assuring it can be borrowed, or arranging to borrow it as required by law - the reason being that it's an even easier way to manipulate stock prices so SEC regulations ban it.

Even so, the idea that markets move randomly is rubbish. So is believing that companies or nations don't target competitors for destruction by attacking their worth through short selling or other manipulative ways.

Hedge funds and Derivatives

"Hedge funds are private funds that pool the assets of wealthy investors with the aim of making 'absolute returns' - making a profit whether (markets go) up or down" on whatever financial assets they invest in. Leverage is used for maximum profitability, the more of it the greater gain or loss. In futures trading, it's called the margin - placing "many more bets than if they had paid the full price."

Originally, hedge funds were to "hedge (investment) bets....against currency or interest rate fluctuations (but) they quickly became instruments for manipulation and control." At their peak, they controlled over half of daily equity market trading because of their numbers, size, amount of capital, and frequency of their buying or selling.

Derivatives are one of their key tools - essentially making "side bets that some underlying investment will go up or down" to insure against the risk. "All derivatives are variations on futures trading (and like it) is inherently speculation or gambling." Familiar examples include puts and calls - on whether assets will go down or up.

"Over 90% of the derivatives held by banks....are 'over-the-counter' (ones) specially tailored to financial institutions (with) exotic and complex features, not traded on standard exchanges." They're unregulated, hard to trace, and "very hard to understand," quite often impossible. In a 1998 interview, banking columnist John Hoefle called them "the last gasp of a financial bubble." More recently Warren Buffett said they were "financial weapons of mass destruction" even though he owns a sizable amount of them and incurred considerable losses as a result.

Derivatives aren't assets. They're "just bets" on how assets will perform using very little real money. Most is borrowed to make private unreported, unregulated bets that have soared to a "notional value" of around $370 trillion, according to the Bank for International Settlements as of 2006. Notional value is "the number of units of an asset underlying the contract, multiplied by the spot price of the asset." In other words, "fanciful, dubious or imaginary" assets.

The amount gets so large because when unregulated "gamblers can bet any amount of money they want," and when markets work well for them, the sky's the limit. In mid-2006, the Office of the Controller of the Currency reported that around 97% of US bank-held derivatives were owned by five major US banks, including JP Morgan Chase and Citigroup. In November 2005, Bloomberg reported that the credit derivatives market was "vulnerable to a crisis if one (of their major bank holders) fails to pay on contracts that insure creditors from companies defaulting...." John Hoefle warned we were "on the verge of the biggest financial blowout in centuries, bigger than the Great Depression...."

Since banks can create money out of thin air, how can they go bankrupt? Because under accounting rules, commercial banks have to balance their books so their assets equal liabilities. "They can create all the money they can find borrowers for, but" if loans default, banks must record a loss.

[Continued... (http://www.globalresearch.ca/america-s-money-machine/13548)]
: Re: Monetary Reform!
: Geolibertarian May 17, 2009, 09:33:56 AM
http://www.globalresearch.ca/the-rise-and-fall-of-the-international-gold-standard/13559 (http://www.globalresearch.ca/the-rise-and-fall-of-the-international-gold-standard/13559)

The Rise and Fall of the International Gold Standard
Reviewing Ellen Brown's "Web of Debt (http://www.webofdebt.com):" Part III

by Stephen Lendman
Global Research
May 13, 2009

This is the third in a series of articles on Ellen Brown’s superb 2007 book titled “Web of Debt,” now updated in a December 2008 third edition. It tells “the shocking truth about our money system, (how it) trapped us in debt, and how we can break free.” This article focuses on global debt entrapment.

(http://www.globalresearch.ca/wp-content/uploads/2009/05/113559.jpg)

Global Debt Enslavement - From Gold Reserves to Petrodollars

"The gold standard (while it lasted) was a necessary step in giving bankers' 'fractional reserve' legitimacy, but the ruse could not be sustained indefinitely" because exiting gold to defray foreign debts results in money backing it to be withdrawn from circulation. The result - contraction, recession, or depression, the very problem that forced FDR to drop the gold standard to prevent an even greater collapse. In 1971, Nixon did it permanently "when foreign creditors threatened to exhaust US gold reserves by cashing in their paper dollars for gold."

John Kennedy was the last president to challenge Wall Street, contends Donald Gibson in one of his two books about him. In "Battling Wall Street: The Kennedy Presidency," he said that Kennedy opposed "free trade," believed industry should serve the nation, and that America should sustain its independence by developing cheap energy. That "pitted him against the oil/banking cartel," intent on "raising oil prices to prohibitive levels in order to" entrap the world in a "web of debt."

Evidence also suggests that "Kennedy crossed the bankers by seeking to revive a silver-backed currency," independent of the Fed. In fact, on June 4, 1963, he issued Executive Order (EO) 11110 giving the president authority to issue currency. He then ordered the Treasury to print over $4 billion of "United States Notes" in place of Federal Reserve Notes. Some believe that he intended to replace them all when enough of the new currency was in circulation - to return money-creation power to the government where it belongs.

Five and a half months later, he was assassinated. In his second book on the president, "The Kennedy Assassination Cover-up," Gibson contends that a private network of wealthy individuals did it - not the FBI, CIA, Mafia, LBJ, the oil cartel, or anti-Castro extremists. Whatever the truth, bankers regained their power in short order when Johnson rescinded Kennedy's EO and fully restored their money-creation authority. They've had it ever since.

Bretton Woods - The Rise and Fall of the International Gold Standard

In mid-1944, the Bretton Woods monetary management system was established, about a year before WW II ended but when its outcome was clear. It created a postwar international monetary system of convertible currencies, fixed exchange rates, free trade, the US dollar as the world's reserve currency linked to gold, and those of other nations fixed to the dollar. It also designed an institutional framework for market-based capital accumulation to ensure that newly liberated colonies would pursue capitalist economic development beneficial to the victorious powers, most of all America.

In August 1971, the system unraveled when Nixon closed the gold window - ending the last link between gold, the dollar, and sound money. Thereafter, currencies would float and compete with each other in a casino-like environment, easily manipulated by powerful insiders, hedge funds, giant international banks, or governments at times in their own self-interest.

According to F. William Engdahl: "Market forces now could determine the dollar (entirely without gold). And they did it with a vengeance."

Bretton Woods was to ensure stability along with the IMF and World Bank's original missions - to establish exchange rates for the former and provide credit to war-torn Third World countries for the latter. Both bodies are, in fact, hugely exploitative while David Rockefeller ostensibly convened Bretton Woods to ensure gold-backed currencies would "justify a massive expansion of US dollar debt around the world."

The scheme worked until Vietnam war debt unraveled it. It might have continued (for a while at least) by raising the gold price. Instead it was kept at $35 an ounce forcing Nixon to close the gold window permanently, then take "the brakes off the printing presses" to generate as many dollars as there were willing takers. After that, Wall Street financiers "proceeded to build a worldwide financial empire based on a 'fractional reserve' banking system (using) bank-created paper dollars in place of the time-honored gold. Dollars became the reserve currency for a global net of debt to an international banking cartel."

Skeptics said they planned it that way to pull off "the biggest act of bad faith in history." True or not, gold failed as a global reserve currency because there isn't enough of it to go around. Inevitably shortages result forcing something to change.

Flawed as it is, however, "floating" exchange rates are much worse, especially for developing nations at the mercy of giants, like America, able to devalue currencies by attacking them through short selling. Manipulative power is so great, it can extract painful concessions that are hugely profitable to bankers.

Earlier in the 1930s, floating exchange rates proved disastrous, yet most countries agreed to them post-1971. Ones that resist are very vulnerable and can be coerced as a condition of debt relief, much like what happened after oil quadrupled in price in 1974. Suspicions about it at the time were justified.

It was a Kissinger - Saudi royal family scheme to revive dollar dominance by recycling petrodollars into US investments and weapons in return for guaranteeing the kingdom's safety - mainly from America had they turned us down. In a word, it was protection money like the underworld extracts on a smaller scale with oil now backing dollars instead of gold. Henceforth, countries need dollars to buy it and require exports for enough of them.

As for oil producers, Wall Street and London bankers profited from windfall petrodollar deposits - recyclable as developing nation loans to buy oil but at the same time to be entrapped in permanent debt bondage. Pre-1973, Third World debt "was manageable and contained....financed mainly through public agencies (for projects) promising solid economic success." That changed when commercial banks took over. Their business isn't development. It's "loan brokering (or) loan sharking," preferably with dictator/strongmen able to cut deals on their own.

Later the IMF got involved. At the behest of giant bankers, as "debt policemen" instituting rigorous structural adjustments, including slashed wages and social benefits as well as state asset sales on favorable terms to private investors.

At the same time, America got deeply indebted. It's now the world's largest by far and needs hundreds of billions annually to keep the dollar recycling game going - in the last 12 months alone, far more than that after the national debt doubled. Today, the nation is "hopelessly mired in debt to support the banking system of a private international cartel." Ordinary people pay the price.

Germany Finances a War without Money

The 1919 Versailles Treaty imposed onerous post-WW I terms on Germany. In May 1921, it got a six-day ultimatum to accept them or have the industrial Ruhr Valley militarily occupied. Even worse, it lost its colonies, all their resources, and the population had to pay the cost of war, amounting to three times the value of all property in the country. At the same time, German mark speculation caused it to plummet causing hyperinflation that by 1923 was catastrophic.

In January, the mark dropped to 18,000 to the dollar. By July, it was 353,000, by August 4,620,000, and by November an astonishing 4,200,000,000,000 - effectively worthless from the greatest ever hyperinflation, ravaging the nation's savings and making later calamitous events inevitable.

Loss of German assets compounded the problem. Britain took its colonies along with Alsace-Lorraine and Silesia with its rich mineral and agricultural resources. Lost was 75% of the country's iron ore, 68% of zinc ore, 26% of coal as well as Alsatian textile industries and potash mines. In addition, Germany's entire merchant fleets were taken, a portion of its transport and fishing fleet plus locomotives, railroad cars and trucks - all justified as legitimate war debts that were fixed at an impossible to pay 132 billion gold marks at 6% interest.

The 1923 Dawes Plan (named for US banker Charles Dawes) imposed fiscal control to continue the looting and assure reparations were paid. A huge debt pyramid resulted that collapsed after the 1929 crash along with radical political elements gaining prominence.

How to cope was the key question. Like the earlier American Greenbackers, Germany issued its own money after Hitler came to power. He had two choices, and like Lincoln, did it right. He freed the country from debt bondage and at the same time implemented vast infrastructure development - what Roosevelt as well did, but in his case by indebtedness to bankers.

Hitler issued $1 billion interest-free, "non-inflationary bills of exchange, called Labor Treasury Certificates." He put millions back to work, paid them with the Certificates that were used for goods and services to create more jobs and revive prosperity. Within two years, Germany was "back on its feet....with a solid, stable currency, no debt, and no inflation, at a time" America and Western economies were still struggling.

Hitler, however, diverged from the Greenbackers by equating bankers with Jews and launching a reign of terror against them. Greenbackers knew the real enemy - private bankers imposing debt bondage with onerous terms.

Beyond that and his imperial aims, Hitler reinvigorated the Third Reich in a few years, became hugely popular, and achieved it even before undertaking large-scale military spending. It impressed Pastor Sheldon Emry to write:

"Germany issued debt-free and interest-free money from 1935 and on, accounting for its startling rise from the depression to a world power in 5 years. Germany financed its entire government and war operation from 1935 to 1945 without gold and without debt, and it took the whole Capitalist and Communist world" to bring him down and restore the power of bankers.

Had Germany created debt and interest-free money post-Versailles, it could have escaped its disastrous inflation, later ravages, and rise of a tyrant like Hitler. In the 1920s, the privately-owned Reichsbank, not the government, caused havoc by flooding the economy with money compounded by foreign investor speculators shorting the mark and betting on its decline - because the Reichsbank printed massive currency amounts to be loaned "at a profitable interest to the bank. When (it couldn't keep up with demand), other private banks were allowed to create marks out of nothing and lend them at interest as well."

According to Hitler's Reichsbank president, Hjalmar Schacht, the government regulated the Bank, ended speculation by eliminating "easy access to loans of bank-created money," and solved the previous decade's hyperinflation problem as a result.

Reexamining the Inflation Humbug

Old theories die hard. It's not money creation that causes inflation. It's because merchants have to raise prices to cover costs, the result of "a radical (currency) devaluation" stemming usually from it being manipulated by its floating exchange rate.

Case in point - post-Soviet Russia's ruble collapse. It had nothing to do with rampant money creation. As F. William Engdahl explained in his Century of War:

"In 1992, the IMF demanded a free float of the Russian ruble as part of its 'market-oriented' reform. The ruble float led within a year to (a 9900%) increase in consumer prices, and a collapse in real wages of 84 percent. For the first time since 1917, at least during peacetime, the majority of Russians were plunged into existential poverty."

American-imposed "shock therapy" was the economic equivalent of military conquest, and most Russians have paid dearly to this day. With the IMF in charge, the nation and its former republics were weakened and made dependent "on Western capital and dollar inflows for their survival." A tiny elite got "fabulously rich" while most Russians experienced deep poverty and despair.

In 1993 - 1994, it was even worse for Yugoslavia and Ukraine, by some estimates an even greater hyperinflation than in Weimar Germany. Again the textbook explanation was rubbish.

Yugoslavia collapsed because the IMF "prevented the government from obtaining the credit it needed from its own central bank." Unable to create money and issue credit, social programs couldn't be financed or the provinces kept in place as one country.

Yugoslavia's problem was its success under a mixed free-market socialist model that threatened Western capitalism once the Soviet Union disbanded. It was feared that other former republics would emulate it, free from IMF shock therapy. As a result, the country had to be dismembered and its model destroyed, especially because of its strategic location - its "critical path" to potential Central Asian oil and gas.

In the 1980s, its imports exceeded exports, and it borrowed huge foreign sums for unprofitable factories. With too few dollars for repayment, IMF debt relief was requested under its usual terms. The result was 20% unemployment after 1100 companies went bankrupt. Worse still, inflation rose dramatically to over 150% in 1991. With still too little money to retain the provinces, "economic chaos followed causing each (one) to fight for its own survival" lasting a decade and causing tens of thousands of deaths and destruction.

Washington-imposed policies made it worse - a total embargo causing hyperinflation and 70% unemployment while blaming it on Milosevic. Ukraine met the same fate the result of IMF diktats. The currency collapsed, inflation soared, and state industries unable to get credit went bankrupt - as planned.

It's an ugly scheme to let Western predators buy assets on the cheap. Once Europe's breadbasket, Ukraine was reduced to begging the US for food aid, which then dumped its excess grain on the country, further exacerbating its self-sufficiency. Predatory capitalism is ruthless. This is how it works with bankers in the lead role.

Argentina is another example - "swallowed (by) the same debt monster" as the others. In the late 1980s, inflation rose 5000 percent, but money creation had nothing to do with it.

Post-WW II, the country was troubled by inflation, but it wasn't critical until after Juan Peron's 1974 death. Over the next eight years, it increased seven-fold to 206 percent - not by printing pesos but by radically devaluing the currency combined with a 175 percent rise in oil prices. One source said it was done intentionally to benefit exporters, speculators, and capitalists to prove free-market policies work best.

Nonetheless, high inflation and speculation became "hallmark(s) of Argentine financial life," the result of disastrous government policies. Even worse was that Argentina was "targeted by international lenders for massive petrodollar loans." When interest rates rocketed in the 1980s, repayment became impossible, and obtaining concessions came at the expense of IMF demands.

In the 1990s, they were implemented. The peso was pegged to the dollar. Currency devaluations ceased. The country lost its international competitiveness. The "money supply was fixed, limited and inflexible," and as a result national bankruptcies occurred in 1995 and again in 2001, but government reaction wasn't as expected. Argentina defied its creditors, defaulted on its debt, and began its road to recovery - with no foreign help or intervention. Post-2001, the economy grew by 8% for two successive years. Exports increased. The currency stabilized. Investors returned. The IMF was paid off, and unemployment eased.

Numerous other examples are similar. Professor Henry CK Liu calls foreign capital a "financial narcotic that would make the (19th century) Opium War(s) look like a minor scrimmage." In the late 1990s, Asian Tiger economies got a taste.

America's Economic War on Asia

Today's Japan evolved out of its feudal past once a modern central government was formed. Its 20th century economic model "has been called 'a state-guided market system.' The (government) determines the priorities and commissions the work, then hires private enterprise to carry it out."

America's military-industrial complex resembles it, but differs in one major respect. Post-WW II, Japan developed its economy without war. America practically worships it to the detriment of everyone at home and abroad.

At the end of the 1980s, "Japan was regarded as the leading economic and banking power in the world," and thus a challenge to US supremacy as the country that could say no. Its model was so successful that Asian "Tiger" economies copied it - in South Korea, Malaysia, Taiwan, Thailand, and elsewhere. Washington determined to undercut them as early as the 1985 James Baker-engineered Plaza accord and Baker-Miyazawa agreement.

He got Toyko to exercise monetary and fiscal measures to expand domestic demand and reduce Japan's trade surplus. At the same time, the Bank of Japan cut interest rates to 2.5% in 1987 and held that level until May, 1989. The idea was for lower rates to stimulate US goods purchases, but instead, cheap money went into Japanese stocks and real estate fueling two colossal bubbles.

The yen was also affected. Within months, it shot up 40% against the dollar, and overnight Japan became the world's largest banking center. At its twin bubble peaks, Tokyo real estate (in dollars) exceeded all of America's and its stock market represented 42% of world valuations - but not for long.

In 1990, Japan proposed financing former Soviet republics on its model and drew strong US opposition for two reasons. It might exclude US companies, and it would rely on the successful model that fueled Japanese and Asian Tiger growth. It had to be stopped and was.

Pressure was applied with threats of drastic US troop cuts that might endanger Japan's security. The scheme was drop your economic plans or defend yourself. At the same time, the country's twin bubbles imploded, and within months its Nikkei index lost $5 trillion in value, the result of predatory Wall Street short selling intervention. It left Japan severely hurt and no longer a challenge to America.

Confronting Asia's Tiger economies came next. In a Century of War, F. William Engdahl explained:

These economies "were a major embarrassment to the IMF and free-market model. Their very success in blending private enterprise with a strong state economic role" threatened IMF exploitation. "So long as the Tigers appeared to succeed with a model based on a strong state role, the former communist states and others could argue against taking the extreme IMF course. In east Asia during the 1980s, economic growth rates of 7 - 8 per cent per year, rising social security, universal education and a high worker productivity (free from debt) were all backed by state guidance and planning under market-based rules."

In 1993, Washington demanded changes - deregulate, open financial markets, and allow free foreign capital flows. Easing followed along with trouble. From 1994 - 1997, hot money flooded in and created speculative real  estate, stock, and other asset bubbles ripe for imploding.

Hedge fund predators like George Soros took full advantage, attacking the weakest regional economy and its currency - Thailand and its baht. The aim: forced devaluation, and it worked. Thailand floated its currency and needed first-time ever IMF help.

Next came the Philippines, Indonesia, and South Korea with much the same result and fallout. Prosperous Asian Tigers were forced into IMF debt bondage as their populations sank into economic chaos and mass poverty, the result of a liquidity crisis severe enough to plunge the region into depression. Within months, over $100 billion shifted to private hands, and within a year $600 billion in stock market valuations were lost.

East Asia was effectively looted. Real earnings plummeted. Unemployment soared with the International Labor Organization estimating around 24 million lost jobs along with the region's remarkable miracle - its prosperous middle class. People literally were thrown overboard - small farmers and business owners, unions, and millions of ordinary people made human wreckage, the result of Wall Street-designed predation, the same scheme wrecking havoc today on a global scale.

China Awakens and Prospers

Under Deng Xiaoping, China changed from a centrally-planned economy to its own market-based model under government-owned banks able to issue credit for domestic development. Until the global economic crisis emerged, it grew impressively at double-digit rates.

Key is its banking system, its government-issued currency, and a system of state-owned banks. Henry CK Liu distinguishes between "national" and "central" banks - the former serves the national and public interest; the latter, private international finance at the expense of the nation and people.

In 1995, China's Central Bank Law gave the People's Bank of China (PBoC) central bank status, but more in name than form in that it still follows government policies by directing money for internal development, not bank profits. In addition, China is debt free and thus unemcumbered by IMF mandates and predatory banking cartel interests. It also protected its currency by refusing to let it float (beyond a minor adjustment) and be vulnerable to speculative predators.

The proof is in the results. China's independent monetary policy works, much like colonial America, government under Lincoln, and Nazi Germany under Hitler. They printed their own money, debt free, and prospered - impossible under today's American model of indebtedness to predatory bankers.

Even worse are New World Order and WTO rules for a global government run by powerful international bankers and corporations - "oppressing the public through military means and restricting individual freedoms." Financial terrorism as well by shifting wealth hugely to the top at the expense of beneficial social change to be abandoned.

A follow-up article focuses on America captured in a "web of debt."
: Re: Monetary Reform!
: Geolibertarian May 17, 2009, 09:40:28 AM
http://www.globalresearch.ca/the-financial-storm/13599 (http://www.globalresearch.ca/the-financial-storm/13599)

The Financial Storm
Reviewing Ellen Brown's "Web of Debt:" Part IV

by Stephen Lendman
Global Research
May 15, 2009

This is the fourth in a series of articles on Ellen Brown’s superb 2007 book titled “Web of Debt,” now updated in a December 2008 third edition. It tells “the shocking truth about our money system, (how it) trapped us in debt, and how we can break free.” This article focuses on America’s “web of debt” entrapment.

The Debt Spider Captures America - American Workers Consigned to Debt Serfdom

America has been trapped for over two centuries, with today's debt level way exceeding developing nations. Like bankrupt people staying "afloat by making the minimum payment(s) on (their) credit card(s), the government (avoids) bankruptcy by paying just the interest on its monster debt" - now double in size since Brown's first edition and onerous enough for Controller of the Currency David Walker to warn earlier of its unaffordability by this year. If America can't service the amount, it's officially bankrupt and the economy will collapse. If it happens, IMF austerity will follow and turn America into Guatemala. Other vulnerable economies as well - permanent debt bondage and worker serfdom.

Catherine Austin Fitts was a former high-level Wall Street and government insider. She points to a "financial coup d'etat" conspiracy between the two to hollow out America, centralize power and knowledge, shift wealth to the top, destroy communities and local infrastructure, create new wealth by rebuilding them, and leave human wreckage in its wake.

She also calls today's crisis "a criminal leveraged buyout of America (meaning) buying (the) country for cheap with its own money and then jacking up the rents and fees to steal the rest." She calls it the "American Tapeworm" model:

It's "to simply finance the federal deficit through warfare, currency exports, Treasury and federal credit borrowing and cutbacks in domestic 'discretionary' spending...This will then place local municipalities and local leadership in a highly vulnerable position - one that will allow them to be persuaded with bogus but high-minded sounding arguments to further cut resources. Then to 'preserve bond ratings and the rights of creditors,' our leaders can be persuaded to sell our water, national resources and infrastructure assets at significant discounts of their true value to global investors" - masquerading as a plan to "save America by recapitalizing it on a sound financial footing."

In fact, it's to loot the country by shifting wealth offshore and to the top. Also, to destroy the country's middle class, consign US workers to serfdom, then meet expected civil disobedience with military force, followed by mass internment in over 800 FEMA detention camps in every state.

Today, the rich are getting richer while millions of Americans struggle daily to get by and live perilously from paycheck to paycheck, a mere one away from insolvent disaster.

Given where we're heading, Warren Buffett warns that America is changing from an "ownership society" to a "sharecroppers' " one, no different than feudal serfdom. Economist Paul Krugman calls it "debt peonage," much like the post-Civil War South that forced debtors to work for their creditors.

Make no mistake, it's a corporate America scheme for a plentiful reserve army of labor no better off than in developing countries - at low wages, no benefits, weak unions if any, and government engineering the whole scheme. Even personal bankruptcy protection eroded under the Bankruptcy Abuse Prevention and Consumer Protection of 2005 - benefitting lenders at the expense of borrowers by keeping them chained to their debts.

It requires many more people "to file under Chapter 13, which does not eliminate debts but mandates that they be repaid under a court-ordered payment schedule over a three to five year period." Homes, in some cases, may be seized and even owe a "deficiency, or balance due" if its sales price doesn't cover it. This Act "eroded the protection the government once provided against (various) unexpected catastrophes (like job loss and high medical expenses) ensuring that working people (henceforth) are kept on a treadmill of personal debt."

Even worse are loopholes in the law letting "very wealthy people and corporations....go bankrupt....and shield(ing) their assets from creditors..." This bill was written at the behest of credit card companies that entrap consumers in debt, charge usurious interest, and demand repayment no matter what besets them. In one respect, debt bondage is worse than slavery. As property, slaves had to be cared for. Debt slaves have to fend for themselves and pay tribute (interest) to their captors.

The Illusion of Home Ownership

In 2004, household home ownership rates were "touted" to be nearly 69%. In fact, only 40% of homes are debt-free, but that percentage fell given the amount of refinancing in recent years. As a result, "most mortgages on single-family properties today are less than four years old" meaning they're many years away from free and clear ownership.

"The touted increase in home ownership actually means an increase in debt (and) Households today owe more relative to their disposable income than ever before," although in recent months they've been repaying it and saving more.

Earlier, and still now, low "teaser rates" entrapped households in onerous debt, fueling the housing bubble as another Federal Reserve/lender ploy to pump "accounting-entry money into the economy," set it up for trouble, then let financial predators exploit it for profit. The same strategies for Third World countries are playing out in America with too few people the wiser.

The 19th century "Homestead Laws that gave settlers their own plot of land (cost and debt free) have been largely eroded by 150 years of the 'business cycle,' in which bankers have periodically raised interest rates and called in loans, creating successive waves of defaults and foreclosures" - worst of all for subprime and other risky mortgage holders defaulting in record numbers with millions still ahead in what's playing out as the nation's worst ever housing crisis showing no signs of ending.

The Perfect Financial Storm

It looms in the form of inflation and deflation given the enormity of newly created money at the same time borrowers can't repay loans that then default. When that happens, "the money supply contracts and deflation and depression result."

When the housing market corrected between 1989 - 1991, "median home prices dropped by 17%, and 3.6 million mortgages" defaulted. The equivalent 2005 decline "would have produced 20 million defaults, because the average equity-to-debt ratio....had dropped dramatically" - from 37% in 1990 to 14% in 2005, a record low as a result of equity extracted refinancings.

"What would 20 million defaults do to the money supply?" Two trillion dollars would evaporate or about one-fifth of M3. The fallout would cause huge stock and home value declines, income taxes needing to be tripled, Social Security, Medicare and Medicaid benefits halved, and pensions and comfortable retirements gone for the vast majority of workers. And that's assuming a modest housing price decline when it's already far more severe and continuing, giving pause to the virtually certain calamity ahead and devastation for the millions affected.

Policy changes in 1979 - 1981 laid the groundwork for today's crisis by "flood(ing) the housing market with even more new money," and much more. They let Fannie and Freddie speculate in derivatives and mortgage-backed securities and by so doing assume enormous risk.

In June 2002, writer Richard Freeman warned of the impending dangers in an article titled: "Fannie and Freddie Were Lenders - US Real Estate Bubble Nears Its End." He cited the largest housing bubble in history made all the greater by Fannie and Freddie manipulation and stated: ...."what started out as a simple home mortgage has been transmogrified into something one would expect to find at a Las Vegas gambling casino. Yet the housing bubble now depends on (highly speculative derivatives as new) sources of funds," made all the riskier through leverage.

In 2003, Freddie was caught cooking its books to make its financial health look sound. In 2004, Fannie did the same thing. Meanwhile, housing peaked in 2006, then steadily imploded, bringing the economy down with it.

Derivatives in the Eye of the Cyclone

In November 2006, financial expert and investor safety advocate Martin Weiss called the derivatives crisis:

"a global Vesuvius that could erupt at almost any time, instantly throwing the world's financial markets into turmoil....bankrupting major banks....sinking big-name insurance companies....scrambling the investments of hedge funds (and) overturning the portfolios of millions of average investors."

Gary Novak's web site explains the derivatives crisis as follows: the banking system gridlocked because "pretended assets are fake and fake assets" consumed real ones. Deregulation, beginning in the 1980s, caused the problem. Once eliminated, "funny money became the order of the day (in the form) of very complex vehicles (called) derivatives, which were often made intentionally obscure and confusing." Even financial experts don't understand them, and that was the whole idea - to sell junk to the unsuspecting, profit hugely as a result, and let buyers handle the problems.

It was a Ponzi scheme disappearing money "down the derivatives hole." Holders are now stuck with "pretend" values. They can't sell and no one will buy. A global liquidity shortage resulted. "The very thing derivatives were designed to create - market liquidity - has been frozen to immobility in a gridlocked game." Ironically, derivatives are sold as insurance "against something catastrophic going wrong." The solution is now the problem writ large.

Something gone wrong makes counterparties (on the other side of the bet) "liable to fold their cards," take losses, "and drop out of the game."

In May 2005, early signs of a crisis emerged after GM and Ford debt was downgraded to junk. Dire warnings followed of "a derivatives crisis 'orders of magnitude beyond LTCM" in 1998. To head it off, the Fed and other central banks covertly flooded the market with liquidity by no longer reporting M3 - "the main staple of money supply management and transparent disclosure for the last half-century, the figure on which the world has relied in determining the soundness of the dollar."

Even worse is that the government isn't doing it interest and inflation-free. The private Federal Reserve and banks are creating a massive amount of government debt, debasing the currency, and risking a future hyperinflation even though none is around today. When the Fed buys government bonds with newly issued money, they stay in circulation, "become the basis for generating many times their value in new loans; and the result is highly inflationary."

Catherine Austin Fitts describes an Orwellian (pump and dump) scheme letting "the powers that be steal money by manipulation (then) keep this thing going, but in a way that leads to a highly totalitarian government and economy - corporate feudalism" with workers as serfs. Another observer said: "The only way government can function and maintain control in an economically collapsed state is through a military dictatorship," where it looks like we're heading with police state laws enacted and hundreds of concentration camps (http://www.prisonplanet.com/glenn-beck%E2%80%99s-lame-attempt-to-%E2%80%9Cdebunk%E2%80%9D-fema-camps.html) nationwide to handle expected civil disobedience disruptions (http://www.globalresearch.ca/index.php?context=va&aid=12793) once people realized they've been had.

Financial Market Rigging

The notion that markets move randomly and reflect investors' sentiment is rubbish. There's a "mechanism at work, like the Wizard of Oz behind a curtain, pulling on strings and pushing buttons." Indeed there is with names.

In 1989, Reagan's EO 12631 created the Working Group on Financial Markets (WGFM) in response to the 1987 market crash. It's more commonly known as the Plunge Protection Team (PPT), including the president, Treasury secretary, Fed chairman, SEC chairman, and Commodities Futures Trading Commission (CFTC) chairman. Its purpose: to enhance "the integrity, efficiency, orderliness, and competitiveness of our Nation's financial markets and (maintain) investor confidence."

The plain truth is that the PPT rigs market performance up or down at Wall Street's discretion because insiders profit both ways. Money used to manipulate markets is "Monopoly money, funds created from nothing and given for nothing" just to move markets as insiders wish.

In a June 2006 article titled "Plunge Protection or Enormous Hidden Tax Revenues," Chuck Austin wrote bluntly stating:

"....Today the markets are, without a doubt, manipulated on a daily basis by the PPT. Government controlled 'front companies' such as Goldman Sachs, JP Morgan and many others collect incredible revenues through market manipulation. Much of this money is probably returned to government coffers, however, enormous sums....are undoubtedly skimmed off by participating companies and individuals."

They're no different from Mafia crime families but far larger and more profitable. Further, these banks are global crimes syndicates writ large, and, unlike the Mafia, have limitless Fed-supplied funds, free from accountability, investigation, and prosecution.

"The PPT not only cheats investors out of trillions of dollars, it also eliminates competition that refuses to be 'bought' through mergers. Very soon now, only global companies and corporations owned and controlled by the NWO (New World Order) elite will exist." Wall Street giants sit atop that pyramid.

Along with the PPT, the "Exchange Stabilization Fund (ESF) exists - "authorized by Congress to keep sharp swings in the dollar's exchange rate from 'upsetting' financial markets." In a word, like the PPT, it operates by rigging markets for insiders, the usual suspects being major Wall Street firms - getting inside information on how to invest or the equivalent of tomorrow's Wall Street Journal today.

Another organization exists for the same purpose - the so-called Counterparty Risk Management Policy Group (CRMPG), established in 1999 to handle the LTCM crisis and protect against future ones. According to one account, it was "set up to bail out its members from financial difficulty by combining forces to manipulate markets" with US government approval.

One of its devices is for the nation's giant banks to collude in large-scale program trading, amounting to over half of all daily New York Stock Exchange volume and on some days much more. Knowing which way to bet puts them at odds with smaller firms and ordinary investors, vulnerable to losing out by a scam designed to defraud them - supported, however, by the full faith, credit, and muscle of the government.

But is an eventual day of reckoning coming? Hans Schicht believes so and says:

"In 2003, master spider David Rockefeller was 88 years old, so today," he'll be 94 in June. "(W)herever we look, his central command is seen to be fading. Neither is there a capable successor in sight to take over the reigns....Corruption is rife....Rivalry is breaking up the empire."

"What has been good for Rockefeller, has been a curse for the United States. Its citizens, government and country indebted to the hilt, enslaved to his banks...The country's industrial force lost to overseas in consequence of strong dollar policies (pursued for bankers not the country....)"

With Rockefeller leaving the scene, sixty years of dollar imperialism (is ending)....The day of financial reckoning is not far off any longer....With Rockefeller's strong hand losing its grip and the old established order fading, the world has entered a most dangerous transition period, where anything could (and may) happen."

Consider also the possibility that the "spider" moved to London where a "navy of pirate hedge funds....rule the world out of Cayman Islands" - an "epicenter for globalization and financial warfare" run by "Anglo-Dutch oligarchy" chosen officials allied with major global banks and shadow financial system players.

But even best laid plans at times fail, given how vulnerable even major banks are from their derivatives bets. As gold expert Adrian Douglas observed:

The system is so corrupted that if huge bets go wrong, the giants "have no other choice (than) to manipulate the price of underlying asset prices to prevent financial ruin....Instead of stopping this idiotic sham business from growing to galactic proportions, they've let it spin out of control (placing them) all on the hook....(This) sham is coming unglued because the huge excess liquidity (in the system ballooned to) asset bubbles all over the place."

He concluded that when derivatives buyers catch on to the scam and "quit paying premiums for insurance that doesn't exist, (they'll be) a whole new definition of volatility....the financial equivalent of a hurricane Katrina hitting every US city on the same day....When the bubble(s collapse), the banking empire....built on (them) must collapse as well."

To fend it off, Wall Street and its European partners are using desperate measures, "including a giant derivatives bubble that is jeopardizing the whole shaky system." In a February 2004 article called "The Coming Storm," the London Economist warned that "top banks around the world are now massively exposed to high-risk derivatives (posing a systemic) risk of an industry-wide meltdown."

John Hoefle believes that "the Fed has been quietly rescuing banks ever since. (He) contends that the banking system went bankrupt in the late 1980s, with the collapse of the junk bond market and the real estate bubble." The S & L crisis was "just the tip of the iceberg."

The Fed secretly took over Citicorp in 1989," arranged shotgun mergers for other giant banks, back door bailouts, and "bank examiners were ordered to ignore bad loans. These measures, coupled with a headlong rush into derivatives and other forms of speculation gave banks a veneer of solvency while actually destroying what was left of the US banking system."

It got in trouble because big gambles failed, including Third World debt defaults as well as Enron and other corporate bankruptcies. Giant US banks "are masters at....counting trillions of dollars of worthless IOUs (like derivatives) on their books at face value (to make it look like they're) solvent."

Between 1984 - 2002, takeovers papered over failures by reducing bank numbers nearly in half and consolidating the top seven into three - Citigroup, JP Morgan Chase, and Bank of America. According to Hoefle:

"The result of all these mergers is a group of much larger, and far more bankrupt giant banks. (A) similar process played out worldwide." He added that "zombies have now taken over the asylum" and writer Michael Edward agreed in a 2004 article titled: "Cooking the Books - US Banks Are Giant Casinos (engaging in) smoke and mirror accounting," then merging with each other to conceal their derivatives losses with "paper asset" bookkeeping. It means that "US banks have become (a giant) Ponzi scheme paying account holders with other account holder assets or deposits" - robbing Peter to pay Paul but promising to end very badly.

Does this "mark the inevitable end times of a Ponzi scheme that is inherently unstable?" Perhaps private banking as well, replaced by pension and mutual funds, and others able to operate efficiently at low cost.

Battling back, giants expanded into investment banking with repeal of Glass-Steagall (http://www.globalresearch.ca/index.php?context=va&aid=10588), but profits continued to fall as the economic downturn accelerated, resulting in investment banks converting to commercial ones and retrenching temporarily from core businesses like M & A and corporate lending. "Meanwhile, banking as a public service has been lost to the all-consuming quest for profits," the very strategy getting giants in trouble and needing periodic government bailouts.

Very few of their services involve "taking deposits, providing checking services, and making consumer or small business loans." Instead, they concentrate on "dubious practices" responsible for a giant Ponzi scheme with "the entire economy in its death grip." They created a "perilous derivatives bubble that has generated billions of dollars in short-term profits but has destroyed the financial system in the process."

The "too big to fail" concept resulted from the S & L crisis when many of them collapsed and Citibank lost half its value. In 1989, Congress passed the Financial Institutions Reform, Recovery and Enforcement Act, bailing S & Ls out with taxpayer money. It was a brushfire compared to today's global conflagration, making it far harder to contain and effectively teetering all banks on bankruptcy. Considering the damage they've done, it's time to cut them loose and let them survive or fail on their own. And if the latter, it will be a major step toward restoring economic health overall.

Banking services can more efficiently be provided than by parasites using us as their food source."The irony is that our economic system is built on an illusion. We have been tricked into believing we are inextricably mired in debt, when the 'debt' was for an advance of 'credit' that was ours all along." It's high time we reclaimed it.

The next article focuses on taking back our money power.
: Re: Monetary Reform!
: Geolibertarian May 19, 2009, 07:21:02 PM
http://www.globalresearch.ca/global-economic-crisis-recapturing-what-is-ours-and-turning-scarcity-into-abundance/13647 (http://www.globalresearch.ca/global-economic-crisis-recapturing-what-is-ours-and-turning-scarcity-into-abundance/13647)

Global Economic Crisis: "Recapturing What is Ours and Turning Scarcity into Abundance"
Review of Ellen Brown's "Web of Debt:" Part V

by Stephen Lendman
Global Research
May 19, 2009

This is the fifth of several articles on Ellen Brown's superb 2007 book titled "Web of Debt (http://www.webofdebt.com)," now updated in a December 2008 third edition. It tells "the shocking truth about our money system, (how it) trapped us in debt, and how we can break free." This article focuses on taking back our money power.

Recapturing What's Ours and Turning Scarcity to Abundance

In 1952, Norman Vincent Peale (1898 - 1993) first published his most famous book - "The Power of Positive Thinking." It sold about five million copies and was a New York Times bestseller for 186 consecutive weeks delivering messages like: "Never talk defeat. Use words like hope, belief, faith, victory." FDR struck the same theme in saying: "The only thing we have to fear is fear itself."

In 1900, Frank Baum's The Wizard of Oz was first published, conveying "the notion that a life of scarcity could be transformed in an instant into one of universal abundance...." In real life, the secret is by taking back our money power from the private bankers who stole it in 1913, in the middle of the night, two days before Christmas, and kept it ever since.

Today's real cause of scarcity is that "somebody is paying interest on most of the money in the world all of the time," and by so doing enslaves nearly everyone in perpetual debt bondage. Meeting America's huge debt burden requires the money supply to keep expanding, "and for that to happen, borrowers must continually go deeper into debt, merchants must continually raise their prices, and the odd men out in the bankers' game of musical chairs must continue to lose their property to the banks."

The result - inevitable wars, competition, strife, inflation, deflation, recessions, depressions, debt bondage, poverty, and despair, while at the same time bankers get fabulously richer and more powerful. The obvious solution is to stop "parasitic" banks from "feeding on the world's prosperity," but the "Witches of Wall Street" don't yield easily. Dethroning them will take the process Francis Fox Piven explained in her 2006 book, "Challenging Authority." She quoted Thomas Jefferson responding to the repressive 1798 Alien and Sedition Acts saying:

"A little patience, and we shall see the reign of witches pass over, their spells dissolve, and the people, recovering their true sight, restore their government to its true principles."

Disruptive social actions have done it as Piven explained:

"ordinary people (have) power....when they rise up in anger and hope, defy the rules....disrupt (state) institutions....propel new issues to the center of political debate (and force) political leaders (to) stem voter defections by proferring reforms. These are the conditions that produce" democratic change.

Sidestepping the Debt Web with "Parallel" Currencies

Community currencies, for example, that historically rose "spontaneously when national (ones) were scarce, unobtainable," or in the case of Weimar Germany (http://forum.prisonplanet.com/index.php?topic=98465.msg581305#msg581305) worthless because of hyperinflation. "Hundreds of communities in the United States, Canada and Europe did the same thing during the Depression" when hard times forced creative solutions. "Like the medieval tally, these currencies were simply credits (letting bearers) trade (them) for an equivalent value in goods and services...."

Today, community currencies "operate legally in more than 35 countries...." and in North America over 30 are available in places like Ithaca, New York where Ithaca HOUR scrip is used, saying on the back:

"This is money (entitling) the bearer to receive one hour of labor or its negotiated value in goods and services. Please accept it, then spend it...."

Another example is corporate credits like airline frequent flyer miles entitling holders to free flights and other benefits like lodging, rental cars, restaurant meals and even groceries.

Computer technology provides other alternatives as well, without currencies, by facilitating trades electronically. In 1981 after IBM released its XT computer, the first electronic currency system was devised - a Local Exchange Trading System (LETS) for recording transactions and keeping accounts by simply having "an information system for recording human effort." It tallied credits in and debits out, tax and interest free, and stored electronically.

Check out these sites for more information:

-- ithacahours.com;

-- madisonhours.org;

-- communitycurrency.org; and

-- geog.le.ac.uk/ijccr.

The main drawback to these systems is they're small, local, and fail to address the greater problem - "the mammoth debt spider that is sucking the lifeblood from the national economy" and our well-being. Solving that requires national currency reform - returning money creation power to the people who own it from bankers who stole it.

Goldbugs v. Greenbackers

In 1896 at the Democratic National Convention, William Jennings Byran railed against Goldbugs and their moneyed interests backers in support of Greenbacker farmers and laborers saying: "You shall not crucify mankind upon a cross of gold." The arguments went like this:

-- Bankers claimed gold was a stable medium of exchange; "sound" or "honest" money in relatively fixed supply that couldn't be inflated by irresponsible governments out of proportion to the demand for goods and services;

-- Greenbackers called scarcity a drawback letting governments condone "dishonest" money through fractional reserve banking; they'd be harmed too many previous times not to know it; also, during the 1850s Gold Rush, its supply and consumer prices rose sharply, did again from 1917 - 1920, and during the 1970s when gold rose from $40 an ounce to $800 and inflation along with it.

The debate still continues, but today's goldbugs are money reformers, not bankers who have it all going their way so why change.

As a medium of exchange, gold has serious drawbacks. In the Great Depression, it left the country, exacerbating deflation that caused the money supply and demand to contract. Another problem is that productivity is linked to its availability, but more practical matters are also relevant like needing gold bars for large purchases, something avoided by paper, checkbook and electronic money.

In the 1990s, Harvey Barnard proposed a new currency reform idea that included a national sales tax in lieu of the federal income tax with the aim of zero inflation and a stable economy. The National Economic Stabilization and Recovery Act (NESARA) he called it. His idea was for the government to issue currency in three forms - standard silver coins, standard gold ones, and Treasury credit notes or Greenbacks. Treasury notes would replace Federal Reserve ones with the Federal Reserve abolished.

NESARA was never introduced in Congress and might work if enacted. But why bother when the central problem is more simply addressed by returning money creation power to the government as the Constitution mandates. Paper currency isn't the problem. A private banking cartel controlling it is what's at issue to fix. By doing it, "the water of a free-flowing money supply can transform an arid desert of debt into the green abundance envisioned by our forefathers." It's there for the taking by simply "eliminating the financial parasite that is draining our abundance away," and there's nothing complicated about doing it.

The Federal Debt

How to pay it off is the question Congress one day must address. We can't grow our way out, but here's another way - pay it off "by turning (government) bonds into what they should have been all along, legal tender."

Economic analyst Al Martin cites a 2001 US Treasury study showing that US debt service may force the government to raise the personal income tax to 65% by 2013, and if interest can't be paid, bankruptcy and economic collapse will follow as well as for global economies within five days. The only alternative at that point would be "through currency (and) military might, or internal military power...."

However, two centuries ago, Alexander Hamilton showed "that Congress could dispose of the federal debt by 'monetizing' it, but Congress made the mistake of delegating that function to a private banking system." It can fix it by "buying back its own bonds with newly-issued US Notes" it can print in limitless amounts - debt and interest free.

It's being done now - "not by the government but by the private Federal Reserve." However, doing it leaves the bonds in circulation, with two sets of securities (bonds and cash) instead of one. "This highly inflationary (scheme) could be avoided" if the government just bought back its own bonds and voided them out - a win-win arrangement for the nation and public with only bankers losing out as they should.

It's simple to do and would be able to "extinguish the national debt with the click of a mouse." In January 2004, the Treasury did it when it "called" (paid off) a 30-year bond issue prior to its due date. Paying "in book-entry form" eliminated doing it with paper currencies or checks and turned securities from interest-bearing to non-interest bearing ones. Bondholders had a choice. They could take their redemption amount in cash or not sell and get no interest.

By this method, the Treasury "can pay off the entire federal debt....It just has to announce that it is calling its bonds and other securities, and that they will be paid 'in book-entry form.' " No cash is involved and funds received can be otherwise reinvested. The process can be accomplished gradually as securities come due. It's just a matter of doing it along with restoring money creation power to the government and making America democratic again, unbeholden to bankers.

Federal Debt Liquidation without Inflation

"Inflation results when the money supply increases faster than goods and services, and replacing government securities with cash would not change the size of the money supply." If government buys its own bonds, they simply convert from interest-bearing notes into non-interest-bearing legal tender (cash). The money supply remains unchanged, and there's no inflationary impact.

That's "very different from what happens today" with the Fed buying bonds, not voiding them out, and creating "reserves" for issuing "many times their value in new loans." It adds new cash to the money supply - a "highly inflationary (scheme simply avoided by having) the government buy back its own bonds and (take) them out of circulation."

It's also a way to solve the "Social Security crisis." Resolve it by "simply cashing out (of) federal bond holdings (in exchange for) newly-issued US notes" with no inflationary effect because no new money would be created. Bonds would become cash, remain in the fund, and be used for future pay-outs.

Fed-held securities could be cashed out the same way and just as benignly. Cash would replace bonds. They'd be voided out. The money supply would be unchanged, and inflation would be avoided. It would work no differently for foreign central bank held debt since bonds and cash are the same thing and either can be held in reserve to support their own currencies or to buy oil per the 1974 OPEC agreement.

Already sovereign debt holders are cutting back, reducing their US securities reserves but doing it discretely so as not to be disruptive. However, "the tide is rolling out, and US bonds will be coming back to (our) shores whether we like it or not." At issue is who'll buy them and whether an inflationary or non-inflationary path will be taken. So far it's the former with all the dangers involved.

Federal Reserve-Issued "Helicopter" Money

Early in the new millennium, deflationary concerns were great enough for Ben Bernanke to deliver a Washington 2002 speech titled: "Deflation: Making Sure 'It' Doesn't Happen Here." He explained that lowering interest rates isn't the sole way to inject new money into the economy. The "US government has a new technology, called a printing press (an electronic one), that allows it to produce as many US dollars as it wishes at essentially no cost." The government could reflate the economy and buy hard assets at the same time. At issue again is whether government or private bankers do it (or local communities acting independently) and the positive or negative effects of each choice.

Today we're banking cartel controlled, and it's "brought the system to the brink of collapse. The privately-controlled Federal Reserve, which was chartered specifically to 'maintain a stable currency,' has allowed the money supply to balloon out of control. The Fed manipulates the money supply and regulates its value behind closed doors, in blatant violation of the Constitution and the antitrust laws" with the full faith and blessing of the administration, Congress and courts. It "can't be held to account; it doesn't even have to explain its rationale or reveal what is going on."

Imagine the difference if the "banking spider....could be decapitated, returning national (money creation) sovereignty to the people themselves." In other words, the rightful owner.

A final article addresses a people-oriented banking system.
: Restoring National Sovereignty with A Truly National Banking System
: Geolibertarian May 24, 2009, 06:29:35 AM
http://www.globalresearch.ca/restoring-national-sovereignty-with-a-truly-national-banking-system/13713 (http://www.globalresearch.ca/restoring-national-sovereignty-with-a-truly-national-banking-system/13713)

Restoring National Sovereignty with A Truly National Banking System
Reviewing Ellen Brown's "Web of Debt:" Part VI

by Stephen Lendman

(http://www.globalresearch.ca/wp-content/uploads/2009/05/113713.jpg)

Global Research
May 23, 2009

This is the sixth and final article on Ellen Brown's superb 2007 book titled "Web of Debt (http://www.webofdebt.com)," now updated in a December 2008 third edition. It tells "the shocking truth about our money system, (how it) trapped us in debt, and how we can break free." This article focuses on establishing a people-oriented banking system. It's high time we had one and reclaimed what's rightfully ours.

Restoring National Sovereignty with A Truly National Banking System
 
One serving everyone, not powerful moneychangers alone, the so-called Money Trust cartel of Wall Street bankers looting the national wealth for themselves and heading the country for bankruptcy, tyranny and ruin. Stopping them is Job One, and only mass activist outrage can do it.
 
At the Chicago Democratic National Convention, William Jennings Bryan won the nomination saying:
 

No Fed existed at that time. If one did and operated like today, Bryan would have said abolish it or make it truly federal. As a US government agency, money created would go directly to the Treasury. But that's only 3% of the money supply. What about the other 97% in the form of commercial loans? Would that put government in the commercial lending business?
 
"Perhaps, but why not. As Bryan said, banking is the government's business, by Constitutional mandate" - at least the part of it involved in creating new money. The rest could be in private hands, like today - through banks and other financial institutions, such as finance companies, pension and mutual funds, insurance companies, and securities dealers. "These institutions do not create the money they lend but merely recycle pre-existing funds." With government printing money, banks would become more equitable recyclers - "borrowing money at a low rate and lending it at a higher one," except for one downside. Some would go bankrupt, but start-ups would replace them under a more stable and equitable system.
 
In 1946, the Bank of England was nationalized in name only and retained its (privately-controlled) money printing power. In 2003, James Robertson and John Bunzl proposed changing it their book titled: "Monetary Reform: Making It Happen." They advocated making it illegal for banks to create new money as loans. Only a central bank should do it with commercial banks having to borrow it for relending.
 
Government officials, however, balked at the idea saying the nation would be harmed as banks would go broke having been stripped of their "credit multiplier" capacity - the British version of fractional reserve lending. London banks are second only to Wall Street so rather than risk this fate they'd likely relocate "en masse to the Continent" and force the British economy to collapse.
 
In the 1940s, Representative Jerry Voorhis proposed a similar plan to Congress called "the 100 Percent Reserve Solution," his idea being "to require banks to establish 100 percent reserve backing for their deposits" - done by borrowing from the Treasury to supply what they needed.
 
In "The Lost Science of Money (http://www.monetary.org/lostscienceofmoney.html)," Stephen Zarlenga wrote:
 


True enough but at a cost so great that (in 1946) it launched Richard Nixon's political career with a vicious red-baiting (http://en.wikipedia.org/wiki/Red-baiting) campaign accusing Voorhis of Communist Party links.
 
His plan was later revived but never enacted into law. One of its advocates is Zarlenga's American Monetary Institute. It drafted an American Monetary Act (http://www.infowars.com/money-and-politics-in-america-democrats-at-denver-should-read-the-american-monetary-act/) to eliminate fractional reserve banking and impose a 100% reserve requirement on all demand deposits, making them unavailable to loan and only for "a (fee-based) warehousing and transferring service." The Fed would be incorporated into the Treasury with the government solely authorized to create new money - to be circulated inflation and deflation-free for purposes such as: infrastructure development, education, health care, job creation, financing local economies, and funding government at all levels. For their part, banks would function traditionally - as intermediaries for deposits loaned out to borrowers.
 
 A Monetary Reform Act goes further by requiring:
 
 -- 100% reserve requirement on all bank deposits, including savings; deposits wouldn't be counted as reserves against which to make loans; they'd be held in trust solely for their depositors' use;
 
 -- banks servicing depositors could only lend their own money; and
 
 -- doing it with depositors' funds would require they establish separate institutions, not called banks.
 
If Congress reclaims its money-creation power, banks will have to maintain 100% reserve requirements (available for withdrawals), to "avoid the electronic duplication that is the source of" money supply growth today. It would require them to raise enough money to "fund" all outstanding loans. "The 'credits' (or loans then) become 'deposits' that represent 'liabilities' of the banks, money (they) owe to the depositors." It would be secured (by borrowing) around $6 trillion or more in real money, not the fictitious kind they create today.
 
In turn, they'd have to raise interest rates, pay depositors less, operate on thinner margins, and likely drive customers to more competitive non-bank institutions, already controlling 80% of the market.
 
In December 2006, William Hummel proposed an alternative in an article titled "A Plan for Monetary Reform" under which banks could sell their existing loans to investors with ready cash if the federal debt was paid off by monitizing it with government-issued currency. Federal bond holders would need a new home for their savings with a rate of return making up for what they lost. Investment funds would likely create new vehicles for it. They could buy bank loans with investors' money and bundle them as securities for resale with interest.
 
Selling the loans would let banks avoid incurring substantial new debt to meet the new 100% reserve requirement. Bank "balance sheets could be wiped clean and they could start fresh with new loans" - operating traditionally by borrowing low and lending higher. However, these new limitations could prove harmful, "imposing an unfair burden on unsuspecting shareholders, warranting some equitable division of the sale proceeds in compensation."
 
Consider also that if these type restrictions existed, banks "would have little incentive to service the depository needs of the public." A solution would be to transfer its "depository role to a system of (nationwide) bank branches acting as one entity under the (government-run) Federal Reserve." In other words, a government-run public utility (http://www.globalresearch.ca/index.php?context=va&aid=12932).
 
It would make the Fed "the sole depository and only its branches would be called 'banks.' " Others would close down or become private financial institutions in whatever form they'd choose.
 
Robert Guttman explains that basic banking is fairly simple - to provide a safe place to store money and transfer it to others. A government agency could handle it easily. It did earlier through the US Postal System (until shut down in 1967) and can do it again.
 
With the restoration of traditional banks, servicing credit cards would also have to be addressed as banks might be unable to do it. One solution would be to turn credit extension "over to a system of truly national banks (authorized to operate with) the 'full faith and credit of the United States' as agents of Congress," newly empowered to create money. In addition, government banks wouldn't be profit driven enough to charge exorbitant rates. They'd be "reasonable, predictable and fixed."
 
Consider also that old banks (namely existing branches) could be bought to become government-run ones, or if insolvent banking giants were nationalized, their branches alone might do the job. The FDIC could hire new management or have existing ones operate under new guidelines. The difference would be that interest would accrue to the government (and the) 'full faith and credit of the United States' would become an asset of the" country.
 
There's one other limitation as well - 100% reserve requirements would restrict money growth so it would have to expand to meet demand by other means. One way in a system with no federal debt or interest is to let consumer debt be self-regulated as under the LETS system in which "money is created whenever someone pays someone else with 'credits,' and it is liquidated when the outstanding credits are used up."
 
Nationwide, "money would come into existence when it was borrowed from the community-owned bank, (then) extinguished as the loans were repaid." It's no different than how money is created now except that communities, not bankers (siphoning off interest in windfall profits), will do it. None of the above systems are perfect, but they're far better than the current corrupted one benefitting bankers, not people.
 
The Question of Interest - Solving the "Impossible Contract" Problem
 
Money controlled by banks only creates the "principle and not the interest" to repay loans. Governments, on the other hand, can "not only lend but spend money into the economy, covering the interest shortfall and keeping the money supply in balance."
 
However, "returning all the interest collected on loans to the government would require nationalizing" all forms of lending at interest, including banks. In the real world, a semi-private, semi-public system might work better as follows:
 
 -- governments would create money and be its initial lender;
 
 -- private financial institutions, including banks, "would recycle this money as loans;"
 
 -- they'd still earn interest, but not as much;
 
 -- as a result, the money supply would need to expand to cover it, but not as much as now; and
 
 -- overall it would expand proportionally to demand keeping inflation contained.
 
Vilified today as socialism, it's the very system colonists used successfully to jump-start the country, make it grow, and do it without taxes or inflation. Franklin and Jefferson championed it. So did Jackson, Lincoln, and perhaps Kennedy later on.
 
Early 20th century Australia's Commonwealth Bank created money, made loans, and collected interest at a fraction of what private bankers charged. It worked well enough for the country to have one of the highest standards of living in the world at that time. Once private banks printed money, Australia became heavily indebted, and its living standard fell to a 23rd place ranking.
 
In the 1930s, the Fed printed money. However, FDR empowered the Reconstruction Finance Corporation to provide plenty of cheap credit to build infrastructure, create jobs, and provide emergency loans to states. The US Postal Savings System, Small Business Administration (SBA), Fannie and Freddie initially worked the same way outside the private banking system.
 
After being privatized, these mortgage lenders became corrupted, then bankrupt proving government can be the solution, not the problem, and a cheaper, more efficient one besides. From her own experience as Assistant HUD Secretary, Catherine Austin Fitts states:
 

It's the same argument used against privatized health care as opposed to cheaper, more efficient universal coverage (http://www.pnhp.org/facts/singlepayer_faq.php#socialized) leaving out insurer middlemen, letting government buy drugs at lower cost, and still leaving lifelong, high quality, comprehensive, and affordable choices in consumers' hands. It's a system begging to be instituted but won't be under Obama.
 
Once again, fear of big government is misguided. It should protect and serve everyone equally - impossible with the Money Trust running it, the way it works now with bankers creating money and extracting the national wealth for themselves.
 
Masquerading as "free enterprise today is a system in which giant corporate monopolies (use) their affiliated banking trusts to generate unlimited funds to buy up competitors, the media, and the government itself, forcing truly independent private enterprise out" - the very system Adam Smith (http://www.pcdf.org/corprule/betrayal.htm) and other classical economists abhorred.
 
Private banks have America and most other nations by the throat. They force governments to pay interest on their own money as well as "advance massive loans to their affiliated cartels and hedge funds, which use the money to raid competitors and manipulate markets." Its Darwinism in the extreme giving power brokers the right to choose who survives and who doesn't with ordinary people faring worst of all.
 
The solution is "publicly-operated police, courts and laws to keep corporate predators at bay" under a nationalized banking system, creating its own money, and serving people, not bankers - a truly equitable, sustainable, efficient and democratic system freed from parasitic financiers.
 
Beating the Robber Barons at Their Own Game
 
Using accepted business practices, the Rockefellers, Morgans, Carnegies, and Vanderbilts et al "deprived their competitors of property" by buying it on the open market through takeovers. Their "slight of hand" was how they funded them - through their own affiliated banks able to create money out of thin air, the same way it's done today for even larger stakes.
 
What banking cartels can do, so can governments - but through a much smaller, fairer and more efficient nationalized banking system operating as a public utility. Private financial institutions could still recycle loans but in the way described above.
 
Another choice would be for government to buy out all banks - a more equitable but unnecessary choice even though it would be quite affordable with the power to create money. What better time than now given the gravity of today's economic crisis leaving world economies close to collapse.
 
According to Murray Rothbard, the entire commercial banking system is bankrupt. It belongs in receivership and their managements jailed for embezzlement. Taxpayers would save a lot of money, and nations would be on the road to recovery and prosperity.
 
One observer says too-big-to-fail banks are already stealth nationalized since taxpayer bailouts stand ready whenever they get in trouble - the idea being that costs are socialized and profits privatized, a process begging to be halted. Taxpayer-supported banks "can and should be made public institutions operated for the benefit of" everyone. Given that major banks today are corrupted and bankrupt, now is the time to do it - not as a temporary measure but irrevocably under a totally restructured system.
 
The Quick Fix - Government that Pays for Itself
 
How much newly created government money would be inflation free? Could income and other taxes be eliminated? Would it "avoid the 'impossible contract' problem by furnishing the money necessary to cover the interest (not) advanced in commercial loans?"
 
If government and not banks created money, the amount needed would be less - "without cutting government programs or adding to a burgeoning federal debt." Inflation would be avoided and income taxes eliminated without sacrificing growth and prosperity in proportion to a larger population. More people would be employed as well compared to over 20% out of work today according to economist John Williams when all excluded and distorted categories are included.
 
Imagine an inflation-tax-free economy with enough government-created money for health care, education, infrastructure development, other productive growth, environmental cleanup, scientific research, development of alternative energy sources, and much more. It would be utopian compared to today's unsustainable system devouring people for profits and heading world economies for ruin.
 
Under today's "impossible contract" system, 99% of the money supply is borrowed, all at interest (http://www.wealthmoney.org/wonder.html) to lenders. It means more of it is owed back in principle and interest than was borrowed. The money supply must continue to expand to keep up and prices along with it. The latter could be avoided if a proportional amount of goods and services are created, not at all the case in America with growing amounts of manufacturing offshored under a financialized economy paying tribute to bankers - "for lending money they never had to lend" in the first place.
 
Roger Langrick solves the "impossible contract" this way: let government "issue enough new money to match the outstanding collective interest bill of the nation" even though it's prohibitive at around $500 billion annually for government debt service alone. Today's public and private debt comes to many tens of trillions so servicing that burden is staggering, yet innovative solutions may handle it, and once done, a brighter tomorrow awaits.

Ending Third World Debt
 
Today most of it is held by giant US-based banks like Citigroup and JP Morgan Chase. If they're placed in receivership, the "US government could declare a 'Day of Jubilee' " of debt forgiveness, and if done, it "would not be an entirely selfless act." For America to pay off its international debt, it needs all the goodwill it can get. Forgiving other debts would encourage our creditors to forgive ours as world nations have no interest in seeing major economies collapse. What affects one, harms others.
 
"Our shiny new monetary scheme, rather than appearing to be a slight of hand, could unveil itself as a millennial model for showering abundance everywhere" for the mutual benefit of everyone. It's simple to do - just void out debts on banks' books with a click of a mouse. "No depositors or creditors would lose money, because (none) advanced their own money in the original loans." They were created out of thin air through accounting entries. On banking financial statements, they're liabilities because accounting rules say books must balance.
 
Once old debts are gone, new ones can be avoided by stabilizing national currencies to prevent devaluation by speculators. Bretton Woods protected against this. A new system is now needed, one that "retains the virtues of the gold standard while overcoming its limitations."
 
One now in use is to peg currencies to the dollar but with it comes loss of flexibility to compete in international markets or be able to budget enough for domestic needs - with a fixed money supply. Argentina's "currency board" in the 1990s forced its eventual bankruptcy in 1995 and again in 2001 as earlier mentioned.
 
A global currency is another proposal - one that creates more problems than it solves. The world "is not one nation or one region," and who's to be boss and in charge. Further, if all governments issued the same currency, "the global money supply (would be) vulnerable to irresponsible governments (issuing) too much." Strong ones would end up dominating the weak, and national sovereignty would be weakened, perhaps ended. A "fully dollarized" world is a prescription for trouble enough to make scarcity "the order of the day."
 
Rather than one currency, "a single global yardstick" is needed "against which governments can value their currencies - some independent measure (by) which merchants can negotiate their contracts and be sure of getting what they bargained for." How to do it is the question.
 
A New Bretton Woods
 
Michael Rowbotham picked up on John Maynard Keynes idea of pegging currencies to a basket of commodities, calling it "a profoundly democratic idea." He states:
 
"Today, wheat grown in one country may, due to a devalued currency, cost a fraction of wheat grown in another. This leads to (cheap wheat producers) becoming (heavy exporters) regardless of need, or the capacity to produce better quality wheat in other locations. In addition, currency values can change dramatically and the situation can reverse. Critically, such wheat 'prices' bear no relation to genuine comparative advantage of climate, soil type, geography and even less to indigenous/local/regional needs." Nor does it stabilize production in relation to need. By "imputing value to a nation's produce, and allowing this to determine the value of (its) currency, one is imputing value to its resources, its labourers and acknowledging its own needs."
 
An international trade unit could be established based on a basket of commodities representative enough to fend off speculators - just a "yardstick for pegging currencies and negotiating contracts." Exchange rates would be fixed everywhere but not forever. Changes would "reflect the national market for real goods and services," not currencies. They'd be "no room for speculation or hedging."
 
Various proposals involve "private international currency exchanges, but the same (type) reference unit (could) stabilize exchange rates among official national currencies." One calls for:
 
 -- a new fixed exchange rate system;
 
 -- a treaty banning speculation in derivatives;
 
 -- canceling or reorganizing international debt; and
 
 -- having governments issue enough "credit" to create full employment, then used for technical innovation and infrastructure development.
 
The plan is for exchange rates to be "based on an international unit of account pegged against the price of an agreed-upon basket of hard commodities."
 
Other plans are around as well, all stressing the same idea - "the urgent need for change" because the current system is corrupted and broken.
 
How then to stabilize national currencies? "The simplest and most comprehensive....international currency yardstick (measure) seems to be the Consumer Price Index....modified to reflect" real consumer expenditures, not the quantity of currencies traded in international markets by speculators. Henceforth, currencies "would just be coupons for units of value recognized globally" - stable enough for "commercial traders (to) 'bank' on them."
 
National currencies "would become what (they) should have been all along - (contracts) or promise(s) to return value in goods and services of a certain worth, as measured against a universally recognized yardstick for determining value."

Government without Taxes or Debt
 
Only a "radical shift in our concepts of money and banking will save us from the cement wall looming ahead" - an abyss otherwise named. Letting bankers hold "an illusory sum of gold," to be multiplied many times over by fractional reserve alchemy, entraps everyone in debt bondage. "The result was a (giant) Ponzi scheme that has pumped the global money supply into a gigantic credit bubble" now imploding.
 
Everything of value is at risk, including our futures and that of our loved ones - unless we can reverse the corrupted system entrapping us, and think of the benefits: expanded government services and prosperity, inflation and tax free.
 
Today's "web of debt" is based on fraud, deceit, and manipulative sleights of hand, including:
 
 -- fractional reserve alchemy - pure hocus-pocus witchcraft hokum;
 
 -- the gold standard of an earlier time letting bankers dangerously inflate the money supply "on the same gold reserves;"
 
 -- the private banking cartel Federal Reserve owned by major banks in each of 12 Fed districts empowered to create money and charge the government, business, and individuals interest on it - the result being everyone put in permanent debt bondage to world-class predators;
 
 -- the federal debt and money supply; both continually expand under a highly inflationary scheme;
 
 -- the federal income tax to pay interest to bankers;
 
 -- the FDIC and IMF to ensure mega-banks get bailed out no matter what unwarranted risks they take; the IMF is also a sort of knee-cap breaking enforcer for the monied interests - extracting multiple pounds of flesh in as part of a giant extortion racket;
 
 -- a "free market" for those who own it under a corrupted, manipulated system of socialized risks and privatized profits, enforced by the Pentagon's long arm;
 
 -- the Plunge Protection Team (PPT) and Counterparty Risk Management Policy Group (CRMPG) - created to rig and manipulate markets along with colluding Wall Street bankers bailed out whenever they get in trouble; the notion that markets move randomly is rubbish - about as real as the tooth fairy or Mother Goose;
 
 -- "floating" exchange rates - for more manipulation and collusion in international currency markets;
 
 -- short selling - for speculators in all type assets; when used against currencies, it can artificially force them down enough to cause economic havoc the way it was done to Asian Tiger countries in 1997 and many others as well;
 
 -- "globalization" and "free trade" - a predatory system benefitting America and the West under WTO rules; countries also become vulnerable to speculative assaults when their currencies are convertible and economies opened to "free trade;"
 
 -- inflation myths - money creation isn't the problem; speculative currency attacks force destructive devaluations, meaning prices rise as a result; American inflation is "caused by private banks inflating the money supply with debt," not by printing money; also by productive growth not keeping up;
 
 -- the "business cycle" - responsible financial managements produce stable prosperity; when irresponsibly done by a private banking cartel, booms and busts result; it's an unnatural "monetary scheme in which money comes into existence as a debt to private banks for 'reserves' of something lent many times over;"
 
 -- the home mortgage boondoggle - monetizing home mortgages today creates most money; borrowers think they're using "pre-existing funds, when the bank is just turning one's promise to pay into an 'asset' secured by real property;" when paid off, the interest usually exceeds the original loan, and in cases of default, banks seize the homes;
 
 -- the housing bubble - it was caused by easy credit in the 1990s and post-2000 by an irresponsible Fed and Wall Street bankers' plan, including massive fraud like issuing up to 10 mortgages on a single home when its owner had only one;
 
 -- adjustable rate mortgages (ARMs) - affecting about half of all US ones, it was a scam through subprime lending and low "teaser" rates, later ratcheted to unaffordable levels and catching buyers unawares;
 
 -- the secret bankruptcy of banks - they gambled hugely on risky derivatives and housing loans, far afield from traditional banking of borrowing low and lending higher for modest, stable profits; the result - all major banks are insolvent with only government bailouts keeping them afloat;
 
 -- "vulture capitalism (http://www.hermes-press.com/capitalism_afford.htm)" and derivatives - the former amounts to predatory banks and hedge funds "buying out shareholders and bleeding businesses of profits, using loans of 'phantom money' created on a computer screen" out of thin air; the latter turned banks into casinos making huge bets that went sour; and
 
 -- moral hazard, once called the "Greenspan put;" substitute Bernanke and Geithner now for the maestro of misery; it lets banking giants take outsized risks knowing bailout backups await any that go sour.
 
Conclusion - private commercial banking practices are corrupted, destructive and obsolete, and vulture capitalist investment banks are parasites on productivity, serving their interests at public expense. Congress should and must either close down insolvent banks or put them in receivership as step one. Then "claim them as public assets, and operate them as agencies serving" public depository and credit needs.
 
The federal debt is another problem - at "its mathematical limits, (it's) forcing another paradigm shift if the economy is to survive." We have a choice: let a debt-based house of cards collapse or have it be a wake-up call for radical change. Again, imagine the possibilities:
 
 -- ending personal income taxes and stimulating stable economic growth at the same time;
 
 -- eliminating the federal debt entrapping us and future generations in permanent bondage;
 
 -- returning money creation power to the government as the Constitution mandates with a cornucopia of benefits to follow;
 
 -- strengthening universal Social Security for everyone in place of disappearing private pensions;
 
 -- fostering stable, inflation-free prosperity with no booms and busts;
 
 -- keeping borrowing costs fair and affordable, not subject to private bank manipulation; and
 
 -- ending destructive currency devaluations and economic warfare for private gain; with stable exchange rates, the "dollar becomes self-sustaining, and the United States and other countries become self-reliant," free from foreign creditors and one-way market rules benefitting the strong over the weak.
 
Impossible? Only for non-believers, but it won't happen magically. It's for organized people to challenge organized money enough for government to reclaim its money creation power.
 
Nothing short of a populist revolution for radical change is needed - bubbling up from the grassroots to an unstoppable force. "Reviving the 'American system' of government-issued money" would return us to our colonial roots, and like Dorothy in the Wizard of Oz, "we the people would finally have come home."
 
More on that topic in a follow-up article.
: Re: Monetary Reform!
: Revolt426 May 24, 2009, 08:01:47 AM
Excellent Article, thank you.
: Re: Monetary Reform!
: Geolibertarian May 28, 2009, 12:00:47 PM
http://www.globalresearch.ca/ending-today-s-economic-crisis-simply-and-easily-in-america-and-globally/13757 (http://www.globalresearch.ca/ending-today-s-economic-crisis-simply-and-easily-in-america-and-globally/13757)

Ending Today's Economic Crisis Simply and Easily, in America and Globally

by Stephen Lendman

(http://www.globalresearch.ca/wp-content/uploads/2009/05/113757.jpg)

Global Research
May 27, 2009

Some of the best ideas are often the simplest. When applied to the global economic crisis, the solution is easier than imagined. What's hard, in fact a Gordian Knot, is the political will to embrace it. But even matters that great can be solved by a bold stoke, and according to legend, Alexander the Great's "Alexandrian solution" was achieved with one stroke of his sword, cutting the Knot in half. Applied to the global economic crisis, it means addressing it with effective policies, not ones wrecking America and other troubled nations worldwide.

Economist Michael Hudson explains that "debt leveraging is what caused our economic collapse," so piling on more ("The Recovery Plan from Hell" he calls it) makes things worse, especially the way it's done:

-- in America, by a private banking cartel Federal Reserve bailing out its members to enrich them - the key giant ones referred to as Wall Street; and

-- the US Treasury doing the same thing; it let the federal debt skyrocket to stratospheric levels and affirmed Adam Smith's dictum in The Wealth of Nations that no country ever repaid its debts, surely not huge ones in a private banking cartel run state, and therein lies the problem - easily solved with a bold stroke, thus far not taken nor will it without mass public action demanding it.

Which is why this article is written, inspired by the work of others. Economist Michael Hudson for one. Global Research.ca editor Michel Chossudovsky another, and noted author and writer Ellen Brown for her extraordinary book titled "Web of Debt (http://www.webofdebt.com)" and her explanation of how "Cash-Starved States Need to Play the Banking Game" the same way as North Dakota.

If done at state and federal levels, it can save the economy from Wall Street's predation - by removing the debt overhang through debt write-downs as well as funding sustainable, inflation-free prosperity. It's not a pipe dream. It's real. It happened before and can again. Short of that, according to Hudson:


Eventually the economy will collapse, but Wall Street will profit hugely - aided and abetted by corrupted public officials allied with the private parasitic Federal Reserve turning America into what Hudson calls a "zombie economy" and banana republic (http://www.hermes-press.com/banana_rep.htm).

What Works for North Dakota Can Work for the Other States, America, and Everywhere

On March 2, Brown explained North Dakota's "Banking Game" and asked:

"What does the State of North Dakota have that other states don't....its own bank" - and therein lies its uniqueness and strength. When only four of the 50 states are solvent, North Dakota runs surpluses, and according to the Center on Budget and Policy Priorities, it's expected to have them in FY 2009 and 2010.

In his January 2009 State of the State address, governor John Hoeven explained:


On May 23, The Bismark Tribune and other state papers reported that North Dakota has the nation's lowest unemployment rate at 4%. Clearly, it has a leg up on the other states, something all their governors and legislators should note along with federal officials in Washington. What works for North Dakota can work everywhere.

The Bank of North Dakota is the only state-owned bank in the nation - established in 1919 by its legislature "to free farmers and small businessmen from the clutches of out-of-state bankers and railroad men," according to Brown quoting management consultant Charles Fleetham in a February 2009 article published in his home state, Michigan. Brown continues:

"Three elected officials oversee the bank: the governor, the attorney general, and the commissioner of agriculture. The bank's mission is to deliver sound financial services that promote agriculture, commerce and industry (and operate) as a bankers' bank, partnering with private banks to loan money to farmers, real estate developers, schools and small businesses." Also to students and private individuals in the state at low affordable rates.

Key though is how it operates and stays solvent when so many of the nation's banks are financially strapped and face bankruptcy. As Brown explains:

"Certified, card-carrying bankers are allowed to do something nobody else can do....create 'credit' with accounting entries on their books." It turns money into credit by what's called "fractional reserve banking" that multiplies each dollar deposited magically into about 10 in the form of loans or computer-generated funds. It's literally money created out of thin air so that banks can re-lend it many times over, and the more deposits, the greater the amount of lending.

At issue is whether credit should be private or public, and as Brown wrote in a December 29 article titled "Borrowing from Peter to Pay Paul: The Wall Street Ponzi Scheme called Fractional Reserve Banking:"

"Readily available credit has made America 'the land of opportunity' ever since the days of the American colonists," with more on that below. "What has transformed this credit system into a Ponzi scheme that must continually be propped up with bailout money is that the credit power has been turned over to private bankers who always require more money back than they create" because they charge high interest rates to make a profit. When governments lend their own money, profit isn't at issue so rates can be low and affordable to businesses, farmers, and private individuals, and for their own and municipality needs, it's interest-free.

Brown and others have explained that "fractional reserve banking" dates from the 17th century, done then mainly in gold and silver coins. Early bankers soon realized it was simpler to use deposit receipts (called notes) as a means of payment. They then began creating money by making loans through promises to pay, and more could be issued than the amount of coins on hand as only enough were needed to service redemptions - today's idea of a reserve requirement.

What began earlier as notes, today are accounting entries that literally create money out of thin air. And it works the same for government as for privately-owned banks, except for the following.

As publicly-run institutions, their mandate is entirely different:

-- they don't have to earn profits;

-- they're not beholden to Wall Street or shareholders; and

-- only the state's creditworthiness matters, and so far, in over 230 years, no state ever went out of business and virtually none ever default on their debt, even when poorly governed.

Further, they can lend to themselves and municipalities interest-free, and to businesses, farmers, and individuals at low affordable rates to create internal growth and sustainable prosperity. And the more often loans are rolled over, the more debt-free money is created - without fear of inflation.

As long as new money produces goods and services, inflation can't occur. Only imbalances cause problems - "when 'demand' (money) exceeds 'supply' (goods and services)." Price stability is assured when both increase proportionally, and that's exactly how it worked in colonial America and under Lincoln during the Civil War as Brown explained in "Web of Debt."

In 1691, Massachusetts became "the first local government to issue its own paper money...." called scrip. Other colonies followed, Pennsylvania most effectively by issuing new money without inflation or need for taxes. For over 25 years, it collected none, and at the same time, its population grew and commerce prospered. The "secret was in not issuing too much (credit), and in recycling the money back to the government in the form of principal and interest on government-issued loans."

In other words, keeping everything proportionally in balance and not having to pay interest to predatory private lenders - the very system wrecking America today and other economies run by private central banks.

Lincoln did the same thing in spite of assassination threats before his inauguration as well as "treason, insurrection, and national bankruptcy" during his first year in office. Considering what he faced, his accomplishments were remarkable, including:

-- building the world's largest army;

-- defeating the South;

-- turning the country into the world's "greatest industrial giant;"

-- launching the steel industry, a continental railroad system, and a new era of farm machinery and cheap tools;

-- establishing free higher education;

-- giving settler ownership rights and encouraging land development through the Homestead Act;

-- having government support all branches of science;

-- standardizing methods of mass production;

-- increasing labor productivity by 50 - 75%; and

-- still more "with a Treasury that was completely broke and a Congress that hadn't been paid."

He did it by nationalizing control over banking so government could print its own money - interest free without paying usurious rates that private bankers demanded, from 24 - 36%. As a result, "the economy was jump-started with a 600 percent increase in government spending and cheap credit directed at production" - done with government-issued Greenbacks. They financed the war, paid the troops, and spurred the nation's growth - free from the system wrecking the country today to let parasitic private banks prosper.

In "Web of Debt," Brown explained that early 20th century Australia operated under a publicly-run bank as well - its Commonwealth Bank that created money, made loans, and collected interest at a fraction of what private bankers charge. It worked well enough for the country to have one of the highest living standards in the world at the time. Once private bankers took over, Australia became heavily indebted, and its living standard fell to a 23rd place ranking - clearly showing the destructive power of private bank-created money and overwhelming benefits possible when governments print their own.

America today can have the same advantages instituted by:

-- its colonists;

-- Lincoln;

-- early 20th century Australia;

-- the Middle Ages, falsely portrayed as a backward and impoverishing era only saved by industrial capitalism; in fact, under its banker-free tally system, it prospered for hundreds of years; and

-- China for thousands of years before the era of private banking, and today because Beijing directs The People's Bank of China (its semi-independent central bank) to grow the nation's economy and create millions of jobs for its burgeoning population.

America and world economies can be just as prosperous but only with determined effort enough to replace their corrupted systems with one that's fairest and works best.

A publicly-run banking system benefits everyone by using deposits for sustainable internal growth and government needs - at the state and local levels. And for the federal government, by printing its own money interest-free for the same purpose.

This writer and Brown believe that credit should be a public utility under a nationalized banking system, creating its own money at the federal level and with deposits into state-run banks - to serve people, not predator bankers. It would be the most equitable, sustainable, efficient and democratic system, free from parasitic lenders, and it would work equally well at the federal, state and community levels with local branches of government banks serving municipalities, their businesses, and residents at affordable costs.

Under the privately-run Federal Reserve and parasitic giant banking system, corporate monopolies (http://video.google.com/videoplay?docid=989840793835447288) run America and use "their affiliated banking trusts to generate unlimited funds to buy up competitors, the media (http://www.corporations.org/media/), and the government itself, forcing truly independent private enterprise out" - the very system classical economists abhorred.

Private banks hold nations hostage by making them pay interest on their own money as well as "advanc(ing) massive loans to their affiliated cartels and hedge funds, which use the money to raid competitors and manipulate markets."

In America, it's an extreme form of Darwinism with the federal government and 46 of the 50 states insolvent - and small businesses and ordinary people faring worst. Another way is essential to keep the nation, individual states, local communities, and most people from becoming "zombies" and America transformed into Guatemala.

With federal, state, and community banks made a public utility under a nationalized banking system, consider the benefits:

-- personal and payroll taxes could be eliminated;

-- stable, sustainable economic growth could be generated;

-- America's manufacturing base could be rebuilt;

-- vital infrastructure projects could be undertaken on a scale never before imagined, including cleaning up the environment and developing alternate, sustainable, clean, safe, and affordable energy sources;

-- many millions of new good-paying jobs could be created, putting an end to unemployment for everyone willing and able work; and for those willing but unable, aid could be provided;

-- home foreclosures would end, and the dream of home ownership would be in reach for everyone because mortgages would be plentiful, cheap, and not designed to scam the unwary;

-- inflation could be ended;

-- booms and busts would be a thing of the past;

-- destructive currency devaluations and economic warfare for private gain would no longer be a threat;

-- private pensions, savings, and investments would be secure; and

-- federal, state, and local debt could be eliminated.

Imagine the following:

Weeks back, Bloomberg and others reported that from $12 - 14 trillion in bailouts and stimulus have been allocated or spent, while the Fed can't account for $9 trillion in off-balance sheet transactions. Why? Because of unprecedented willful fraud given a wink and nod by the highest officials in Washington partnered with criminal bankers to loot the Treasury and fleece the public.

[Continued... (http://www.globalresearch.ca/ending-today-s-economic-crisis-simply-and-easily-in-america-and-globally/13757)]
: WHY DEFLATION, NOT INFLATION, IS THE ORDER OF THE DAY
: Geolibertarian June 18, 2009, 08:18:50 PM
THE RETREAT OF THE SHADOW LENDERS:
WHY DEFLATION, NOT INFLATION, IS THE ORDER OF THE DAY


Ellen Brown, June 18th, 2009
http://www.webofdebt.com/articles/quantitative_easing.php (http://www.webofdebt.com/articles/quantitative_easing.php)



On June 3, 2009, Federal Reserve Chairman Ben Bernanke assured Congress, “The Federal Reserve will not monetize the debt.” Bill Bonner, writing in The Daily Reckoning (http://dailyreckoning.com/monetizing-debt-the-grandest-of-larcenies/), said it had a ring to it, like President Nixon’s “I am not a crook” and President Clinton’s “I did not have sex with that woman.” Monetizing the debt is precisely what the Fed will do, says Bonner, because it has no other choice. The Chinese are growing reluctant to lend, the taxpayers are tapped out, and the deficit is at unprecedented levels. “Even good people do bad things when they get in a jam. The Feds are already in pretty deep . . . and they’re going a lot deeper.”

But Mr. Bernanke denied it (http://www.washingtontimes.com/news/2009/jun/04/escalating-debt-threatens-recovery-fed-chief-warns/). “Either cuts in spending or increases in taxes will be necessary to stabilize the fiscal situation,” he said.

Both alternatives will be vigorously opposed, leaving Congress in the same deadlock California has been in for the last year. That makes the monetization option at least worth a look. What is wrong with it? Bill Bonner calls it “larceny on the grandest scale. Rather than honestly repaying what it has borrowed, a government merely prints up extra currency and uses it to pay its loans. The debt is ‘monetized’ . . . transformed into an increase in the money supply, thereby lowering the purchasing power of everybody’s savings.”

So say the pundits, but in the past year the Fed has “monetized” over a trillion dollars worth of debt, yet the money supply is not expanding. As investment adviser Mark Sunshine (http://www.firstcapital.com/blogs/mark_sunshine/) observed in a June 12 blog:


The Fed is no longer reporting M3, the largest measure of the money supply, but according to Sunshine:


All of this flap about the Fed driving the economy into hyperinflation because it is creating money on its books reflects a fundamental misconception about how our money and banking system actually works. In monetizing the government’s debt, the Fed is just doing what banks do every day. All money is created by banks on their books, as many authorities (http://www.webofdebt.com/articles/creditcrunch.php) have attested. The Fed is just stepping in where the commercial banking system has failed. Except for coins, which are issued by the government and compose only about one ten-thousandth of the money supply (M3), our money today is nothing but bank credit (http://www.webofdebt.com/articles/dollar-deception.php) (or debt); and we’re now laboring under a credit freeze, which means banks aren’t creating nearly as many loans as they used to. In February, the Bank for International Settlements published research showing that European banks could not settle their debts because of a $2 trillion shortage (http://www.bis.org/publ/qtrpdf/r_qt0903f.pdf?noframes=1) of U.S. dollars. Proposals for alternative reserve currencies followed. And in March, Blackstone Group CEO Stephen Schwarzman (http://www.huffingtonpost.com/2009/03/11/stephen-schwarzman-45-per_n_173747.html) reported that up to 45% of the world’s wealth has been destroyed by the credit crisis. The missing “wealth” cannot be restored without putting the missing “money” back into the system, and that means getting the credit engine going again.

Congress, the Treasury and the Federal Reserve have therefore been throwing money at the banks, trying to build up the banks’ capital so they can make enough loans to refuel the economy. At a capital requirement of 8%, $8 in capital can be leveraged into $100 in loans. But lending remains far below earlier levels, and it’s not because the banks are refusing to lend. The banks insist that they are making as many loans as they’re allowed to make with their existing deposit and capital bases. The real bottleneck is with the “shadow lenders” (http://seekingalpha.com/article/123750-shadow-banking-system-death-from-nowhere) – those investors who, until late 2007, bought massive amounts of bank loans bundled up as “securities,” taking those loans off the banks’ books, making room for yet more loans to be originated out of the banks’ capital and deposit bases. In a Washington Times (http://bulletin.aarp.org/states/hi/articles/banks_still_standing_amid_credit_rubble.html) article titled “Banks Still Standing Amid Credit Rubble,” Patrice Hill wrote:


Seventy percent of the system isn’t there anymore because the traditional bond markets and securitized loan markets have dried up. Writes Hill:


The retreat of the shadow lenders has created a credit freeze globally; and when credit shrinks, the money supply shrinks with it. That means there is insufficient money to buy goods, so workers get laid off and factories get shut down, perpetuating a vicious spiral of economic collapse and depression. To reverse that cycle, credit needs to be restored; and when the banks can’t do it, the Fed needs to step in and start “monetizing” debt.

So why don’t Fed officials just say that is what they are up to and put our minds at ease? Probably because they can’t without exposing the whole banking game. The curtain would be thrown back and we the people would know that our money system is sleight of hand. The banks never had all that money they supposedly lent to us. We’ve been paying interest for something they created out of thin air! Indeed, their credit money is less substantial than air, which at least has some molecules bouncing around in it. Bank credit exists only in cyberspace.

Ben Bernanke’s predecessor Alan Greenspan was sometimes compared to the Wizard of Oz, the little man who hid behind a curtain pulling levers and twisting dials, maintaining the smoke and mirrors illusion that an all-powerful force was keeping things under control. Early in his term, Chairman Bernanke was criticized for revealing too much. “If you’re going to play the Wizard,” said one TV commentator, “you have to stay behind the curtain.” The Chairman has evidently learned his lesson and is now playing the role, wrapping his moves in that veil of mystery expected of the man considered the world’s most powerful banker, the Wizard who moves markets with his words.

The problem with the Wizard playing his cards close to the chest is that investors don’t know how to play theirs. The Chinese have grown so concerned about the soundness of their dollar investments that the head of China’s second-largest bank recently said the U.S. government should start issuing bonds in China’s currency, the yuan (http://www.telegraph.co.uk/finance/financetopics/financialcrisis/5473491/Top-Chinese-banker-Guo-Shuqing-calls-for-wider-use-of-yuan.html). What do we want with yuan? We need dollars; and we would be better off getting them from our own central bank than borrowing them from foreign rivals. We could then spend them on projects aimed at internal domestic development – as the Chinese themselves have been doing – and get the wheels of production turning again.

If Ben Bernanke stands by his word and refuses to monetize the federal debt, Congress should consider issuing the money itself, as the U.S. Constitution provides. The “full faith and credit of the United States” is an asset of the United States, and it should properly be issued and lent by the United States rather than by unaccountable private banks and shadow lenders.  The true path to economic recovery – the path from an economy strangled in debt to one blooming in prosperity – is to reclaim money and credit as public resources, transforming money from private master to public servant.
: Re: Monetary Reform!
: bigron June 24, 2009, 07:42:15 AM
Obama's Financial Reform Proposal: A Stealth Scheme for Global Monetary Control


by Stephen Lendman

http://www.uruknet.info/?p=m55416&hd=&size=1&l=e

June 23, 2009

When politicians plan reform, it's wise to be skeptical and hold on to your wallets. So fixing the economy by bailing out Wall Street is wrecking it, and Obama's proposed health care reform taxes more, provides less, places profits above human need, avoids the most vital solutions, and leaves a broken system in place.

Now there's "Financial Regulatory Reform, A New Foundation: Rebuilding Financial Supervision and Regulation" - announced June 17 with Obama saying he'll send Congress a plan to create new government agencies, give the private banking cartel Federal Reserve more power, and address five major problems needing regulatory and legislative measures to fix.

Addressing business executives in the White House East Room, he said:

"A culture of irresponsibility took root from Wall Street to Washington to Main Street" with no mention that months of it worsened on his watch. "A regulatory regime basically crafted in the wake of a 20th century economic crisis - the Great Depression - was overwhelmed by the speed, scope and sophistication of a 21st century global economy." In fact, 30 years of deregulation since the late 1970s, not technology, caused speculative excesses, market bubbles, and inevitable collapses that always follow.

Of course, these problems are endemic under a system that's crisis-prone, unstable, anarchic, ungovernable, and self-destructive through repeated cycles of booms creating bubbles, then busts, followed by recessions or depressions with today's collapse grave enough for Michel Chossudovky to call it "far more serious than the Great Depression (because all) major sectors of the global economy are affected."

Proposed Financial Reforms

An 89-page Treasury Department pdf is available online for those inclined to read it. Along with an introduction and summary of recommendations, its five major objectives are to:

I. "Promote Robust Supervision and Regulation of Financial Markets

II. Establish Comprehensive Regulation of Financial Markets

III. Protect Consumers and Investors from Financial Abuse

IV. Provide the Government with the Tools it Needs to Manage Financial Crises (and)

V. Raise International Regulatory Standards and Improve International Cooperation"

The introduction cites "the most severe financial crisis since the Great Depression," admits that its "roots....go back decades (and states that) the government could have done more to prevent many of" them. Proposed reforms include:

-- a new regulatory "Financial Services Oversight Council;"

-- more power to the Fed over "all firms that could pose a threat to financial stability, even those that do not own banks" such as insurance companies;

-- stronger capital standards for all financial firms;

-- a new "National Bank Supervisor" over all federally chartered banks;

-- registering hedge fund advisors;

-- new regulation of securitization and derivatives markets;

-- increased market transparency and the effectiveness of credit ratings agencies;

-- originators of loans packaged into securities to retain some of the credit risk;

-- broker and loan originator compensation changes away from income up front to spreading it out over time and making it dependent on the performance of loans they make;

-- a new "Consumer Financial Protection Agency" to safeguard them from potentially harmful complex financial products, including securities, mortgages and credit cards;

-- "stronger regulations to improve the transparency, fairness, and appropriateness of consumer and investor products and services;"

-- new ways to "resolve nonbank financial institutions whose failure could have serious systemic effects;"

-- changing the Fed's "emergency lending authority to improve accountability;"

-- establishing "wind down" authority to take over large financial firms like AIG, Fannie and Freddie; and

-- international reforms, including greater oversight of global financial markets and more control through a process whereby G-20 countries cooperate in regulating transnational companies. This looks like the most insidious, outlandish, and dangerous provision. More on it below and its likely importance.

The report suggests other proposals may follow and that "More can and should be done in the future." So what to make of it all given that it's still a plan, congressional and other critics are attacking some of its provisions, whatever emerges is still a ways off, and large banks, insurers and other influential financial firms have final say on new laws and regulations affecting them, so likely changes coming may further taint an already deeply corrupted system.

America has a legacy of failed public agencies as well as regulatory and legislative reform - for lack of teeth, oversight, and most important because financial and other industries end up self-regulating, consolidating, and growing more powerful at the expense of the public interest. Giving the Federal Reserve more power lets banking giants make their own rules, decide how and whether to enforce them, and thus mainly operate as they wish because no one in Washington dares challenge them.

Michael Hudson agrees in his new article titled: "Instead of Real Financial Reform, Obama's Plan capitulates to Wall Street." He explains that supposed reforms promote "Wall Street's 'product,' debt creation, at the expense of the economy at large, and lets financial chieftains continue to self-regulate the debt industry - and by the way, to keep all their gains from the past decade's worth of fraudulent lending, scot-free....(He) achieved what no Republican could have: rescuing the Bush administration's pro-creditor policies that fostered the Bubble Economy in the first place."

The plan is laden with a "false diagnosis" and "fatal flaws," so clearly what's proposed are "wrong-headed cures (but hardly) by accident." If it's largely accepted as is, Wall Street will get precisely what it wants - a veneer of regulatory cover to keep wrecking the economy and stealing the public blind.

Simon Johnson is also critical. He's a former IMF chief economist, now teaching at MIT's Sloan School of Management. After reviewing Obama's plan, he expressed great skepticism. Even though large banks and other financial institutions caused the global crisis, no wrongdoing on their part is cited nor are punitive measures proposed. He states:

"There appears to be no mention that corporate governance within these large banks failed totally. How on earth can you expect these banks to operate in a responsible manner unless and until you address the reckless manner in which they (a) compensate themselves, (b) destroy shareholder value, and (c) treat boards of directors as toothless wonders? The profound silence on this point from the administration - including some of our finest economic, financial, and legal thinkers - is breathtaking...."

"Based on what we see so far, there is little reason to be encouraged. The reform process appears to have been captured at any early stage - by design the lobbyists were let into the executive branch's (planning process), so we don't even get to have a transparent debate or to hear specious arguments about why we really need big banks."

Johnson (like Hudson) added that financial giants are pleased with Obama's plan, and why not. They or their lobbyists wrote it. On June 16, even The New York Times suggested it in Stephen Labaton article headlined: "Obama Sought a Range of Views on Finance Rules." Over several weeks, "executives from an array of industries caught up in the financial crisis came to Washington....to make their case for how the new regulatory landscape should look. They came from big banks and small ones, insurance companies, stock exchanges, hedge funds and mutual funds" as well as consumer groups and labor for appearance sake only.

"Now lobbyists....will head to Congress to try to influence the final product" with no doubt they will so once again consumer interests will be shortchanged - perhaps globally given events reported earlier this year and discussed below.

Steps Toward Global Money and Banking Control

In her April 18, 2009 article titled "The Tower of Basel: Do We Really Want the Bank for International Settlements Issuing Our Global Currency," Ellen Brown quoted Ambrose Evans-Pritchard in the London Telegraph (April 7) saying:

On April 2, "A single clause in Point 19 of the communique issued by the G-20 leaders amounts to a revolution in the global financial order."

"We have agreed to support a general SDR allocation which will inject $250 (billion) into the world economy and increase global liquidity...SDRs are Special Drawing Rights, a synthetic paper currency issued by the International Monetary Fund that has lain dormant for half a century."

"In effect, the G-20 leaders have activated the IMF's power to create money and begin global 'quantitative easing.' In doing so, they are putting a de facto world currency into play. It is outside the control of any sovereign body."

Brown agrees and highlighted the article's subtitle: "The world is a step closer to a global currency, backed by a global central bank, running monetary policy for all humanity." What might it be, she asked? The Bank of International Settlements (BIS) - the secretive 55-member nation, central bank of central bankers. Based in Basel, Switzerland, it's run by the monetary authorities of six dominant nations - America, Germany, Switzerland, Italy, Japan and Britain.

Objective V in Obama's financial reform plan addresses "Rais(ing) International Standards and Improving International Cooperation" by promoting global control in a single paragraph:

"The United States is playing a strong leadership role in efforts to coordinate international policy through the G-20, the Financial Stability Board, and the Basel Committee on Banking Supervision. We will use our leadership position in the international community to promote (an) initiative compatible with the domestic regulatory reforms described in this report."

Near the end of the plan, it recommends "Strengthen(ing) the Financial Stability Board....complet(ing) its restructuring and institutionaliz(ing) its new mandate to promote global financial stability by September 2009." It also urges "work(ing) with the Bank for International Settlements (BIS) and standard setters to develop macroprudential tools" with Obama asking other nations to follow America's lead.

What is the FSB, and why is it important?

The Financial Stability Forum (FSF) Becomes the Financial Stability Board (FSB)

Founded at a Bonn, Germany meeting in 1999 when Bundesbank president, Hans Tietmeyer, recommend it to G-7 finance ministers and central bank governors, the FSF consists of central bankers and finance ministers of about a dozen key nations working together for their mutual self-interest.

A decade later at the G-20's April 2 London Summit, these nations agreed to let a new Financial Stability Board (FSB) regulate their economies henceforth as stated in a concluding communique:

"In particular we agree:

-- to establish a new Financial Stability Board (FSB) with a strengthened mandate, as a successor to the Financial Stability Forum (FSF), including all G-20 countries, FSF members, Spain, and the European Commission;

-- that the FSB should collaborate with the IMF to provide early warning of macroeconomic and financial risks and the actions needed to address them; (and)

-- to extend regulation and oversight to all systemically important financial institutions, instruments and markets."

The G-20's same day's press release headlined: "Financial Stability Forum re-established as the Financial Stability Board (with an) expanded membership (and) a broadened mandate to promote financial stability."

It "consists of a Chairperson, a Steering Committee, the Plenary with member countries, SSBs (standard setting bodies) and international financial institutions, and a Secretariat. The Chair oversees the Steering Committee, the Plenary and the Secretariat. The FSB Plenary is the decision making organ of the FSB." It has a "full-time Secretary General and an enlarged Secretariat based in Basel (to) support the FSB." Membership also obligates countries to "implement international financial standards (including 12 International Standards and Codes)...." with no elaboration about them except in broad terms left for outsiders to imagine what's meant.

Plenary members include G-20 nations, Spain and the European Commission - represented by their central bankers, immediate deputies, heads of their main regulatory agency, deputy finance ministers, SSB chairs, central bank committees, and representatives of the IMF, World Bank, BIS and OECD - together the world's monetary movers and shakers.

The FSB appears to be a step closer toward global monetary control under the direction of the G-7 dominated BIS, IMF and other international lending agencies. Given its inclusion in Obama's financial reform proposal makes the entire package suspect and perhaps just cover for the above-outlined sinister scheme - as well as letting Wall Street be self-regulating.

In her June 21 article titled "Big Brother in Basel: Have We Traded Our National Sovereignty for Financial Stability," Ellen Brown cites Internet rumors "that the new agency benignly called the Financial Stability Board (FSB) is the latest sinister development in the covert consolidation of global financial power in a few private hands," - namely dominant G-7 central bankers controlling the BIS, IMF, and other international lending agencies.

She and this writer believe that Orwell was "25 Years Too Early," but might not have imagined the scenario now playing out as a way to "pull off a private global dictatorship (by): (1) creat(ing) a global crisis; (2) appoint(ing) an 'advisory body' to retain and maintain 'stability;' and (3) 'formaliz(ing)' the advisory body as global regulator" - supposedly to fix a broken system but in fact to be a "bloodless coup" with the public none the wiser until it's too late.

So far, there's still time to prevent it provided enough concerned people know the danger, spread the word to others, and urge them to pass it on. Otherwise, holding on to your wallets won't matter because everything in them will be emptied the result of (banker-controlled) regulatory bodies pulling off the greatest ever financial heist - a global coup d'etat. The time to stop it is now and expose Obama as a frontman for grand theft and power.

Stephen Lendman is a Research Associate of the Centre for Research on Globalization. He lives in Chicago and can be reached
at lendmanstephen@sbcglobal.net.

Also visit his blog site at sjlendman.blogspot.com and listen to The Global Research News Hour on RepublicBroadcasting.org Monday - Friday at 10AM US Central time for cutting-edge discussions with distinguished guests on world and national issues. All programs are archived for easy listening.

 

: Re: Monetary Reform!
: Revolt426 July 01, 2009, 03:12:47 AM
http://www.globalresearch.ca/index.php?context=va&aid=14180

California's Empty Wallet: Turning Crisis into Opportunity
by Ellen Brown

bal Research, June 30, 2009
webofdebt.com  

California State Controller John Chiang has warned that without a balanced budget in place by July 1, he will begin using IOUs to pay most of the state’s bills. On June 25, California Governor Arnold Schwarzenegger rejected a plan that would save the state $3 billion by cutting school spending, saying he would rather see the state issue IOUs than delay the funding problem with a piecemeal approach. The state’s total budget deficit is $24.3 billion.  

 

Meanwhile, other funding doors are slamming closed. The Obama administration has said it will not use federal stimulus money to prop up California; and Fitch Ratings, a bond rating agency, announced that it was downgrading the credit rating of the state, which already has the lowest in the nation. Once downgraded, California’s rating is likely to fall below the minimum level legally required for most money market funds, forcing the funds to sell their California bonds. The result could be a cost of millions of additional dollars in higher interest rates for the state.

 

What to do? Perhaps California could take a lesson from the island state of Guernsey, located in the English Channel off the French Coast, which faced similar funding problems in the 19th century. Toby Birch, an asset manager who hails from there, tells the story in Gold News (http://goldnews.bullionvault.com/guersney_experiment_credit_creation_gold_standard_051920083):

 
“As weary troops returned from a protracted foreign war [the Napoleonic Wars ending in 1815], they encountered a land racked with debt, high prices and a crumbling infrastructure, whose flood defenses were about to be overwhelmed . . . . While 1815 brought an end to the conflict on the battlefront, . . . severe austerity ensued on the home front. The application of the Gold Standard meant that loans issued over many years were then recalled to balance the ratio of money to precious metals. This led to economic gridlock as labor and materials were abundant, but much-needed projects could not be funded for want of cash.

“This led to a period of so-called ‘poverty amongst plenty’. . . . The situation seemed insoluble; existing borrowing costs were consuming 80% of the island’s revenues. What was already an unsustainable debt burden would need to be doubled to fund the two most essential infrastructure projects. This was when a committee of States members was formed . . . . The committee realized that if the Guernsey States issued their own notes to fund the project, rather than borrowing from an English bank, there would be no interest to pay. This would lead to substantial savings. Because as anyone with a mortgage should understand, the debtor ends up paying at least double the amount borrowed over the long-term.”



To prevent an unwanted inflation of the money supply, the Guernsey States issued the notes with a date due, and on that date the bearer was paid in gold. The money came from rents on the finished infrastructure, supplemented with a tax on liquor. Birch goes on:
 

“The end result of the Guernsey Experiment was spectacular – new roads, sea defenses and public buildings were established, fostering widespread trade and prosperity. Full employment was achieved, no deficits resulted and prices were stable, all without a penny paid in interest. What started as a trial led to a string of construction projects, which still stand and function to this day. Money was used in its purest form: as a convenient mechanism for oiling the wheels of commerce and development.”
 

Like Guernsey, California is facing “poverty amidst plenty.” The state has the eighth largest economy in the world, larger than Russia’s, Brazil’s, Canada’s and India’s.  It has the resources, labor, and technical expertise to make just about anything its citizens put their minds to.  The only thing lacking is the money to do it.  But money is merely a medium of exchange, a means of getting suppliers, laborers and customers together so that they can produce and exchange products.  

 
As has been explained elsewhere (http://www.webofdebt.com/articles/dollar-deception.php), today money is simply credit. All of our money except coins is created by banks when they make loans. The current crisis stems from a credit freeze that began on Wall Street in the fall of 2007, when banks were required to revalue their assets due to a change in accounting rules, from “mark to fantasy” to “mark to market.” Banks that were previously considered in good shape, with plenty of capital for making loans, suddenly came up short. Lending fell off, and so did the available money supply.  

 

Just understanding the problem is enough to see the solution. If a private bank can create credit on its books, so can the mighty state of California. It merely needs to form its own bank. Under the “fractional reserve” lending system, banks are allowed to extend credit – or create money as loans – in a sum equal to many times their deposit base. Congressman Jerry Voorhis (http://www.sonic.net/~doretk/ArchiveARCHIVE/ECONOMICSPOLITICS/FEDERAL%20RESERVE/Jerry%20VoorhisFedReserve.html), writing in 1973, explained it like this:

 

“[F]or every $1 or $1.50 which people – or the government – deposit in a bank, the banking system can create out of thin air and by the stroke of a pen some $10 of checkbook money or demand deposits. It can lend all that $10 into circulation at interest just so long as it has the $1 or a little more in reserve to back it up.”

 

The 10 percent reserve requirement is now largely obsolete, in part because banks have figured out how to get around it. What chiefly limits bank lending today is the 8 percent capital requirement (http://www.webofdebt.com/articles/creditcrunch.php) imposed by the Bank for International Settlements, the head of the private global central banking system in Basel, Switzerland. With an 8 percent capital requirement, a state with its own bank could fan its revenues into 12.5 times their face value in loans (100 ÷ 8 = 12.5). And since the state would actually own the bank, it would not have to worry about shareholders or profits. It could lend to creditworthy borrowers at very low interest, perhaps limited only to a service charge covering its costs; and on loans the bank made to the state, the state would ultimately get the interest, making the loans essentially interest-free.  

 

Precedent for this approach is to be found in North Dakota, one of only three states currently able to meet its budget. North Dakota is not only solvent but now boasts the largest surplus it has ever had. The Bank of North Dakota (http://www.webofdebt.com/articles/state_bank_option.php), the only state-owned bank in the nation, was established by the legislature in 1919 to free farmers and small businessmen from the clutches of out-of-state bankers and railroad men. By law, the state must deposit all its funds in the bank, and the state guarantees its deposits. The bank’s surplus profits are returned to the state’s coffers. The bank operates as a bankers’ bank, partnering with private banks to loan money to farmers, real estate developers, schools and small businesses. It makes 1% loans to startup farms, has a thriving student loan business, and purchases municipal bonds from public institutions.

 

Looking at California’s budget figures (http://www.ebudget.ca.gov/BudgetSummary/BSS/BSS.html), projected state revenues for 2009 are $128 billion. At a reserve requirement of 10%, if California deposited all $128 billion in its own state-owned bank, it could issue $1.28 trillion in loans, far more than it would need to cover its $23 billion budget shortfall. To lend itself the money to cover the shortfall, it would need only $2.3 billion in

deposits and about $2 billion in capital (assuming an 8% capital requirement). What Sheldon Emry (http://www.justiceplus.org/bankers.htm) wrote of nations is equally true of states:

 
“It is as ridiculous for a nation to say to its citizens, ‘You must consume less because we are short of money,’ as it would be for an airline to say, ‘Our planes are flying, but we cannot take you because we are short of tickets.’”


As a card-carrying member of the banking elite, California could create all the credit it needs to fund its operations, with money to spare.  
: Re: Monetary Reform!
: Geolibertarian July 06, 2009, 02:44:17 PM
Here is the simple truth that Austrian Schoolers depend on everyone remaining blissfully unaware of (lest their economic snake-oil be recognized as such):

The fact that, if the power of money creation is turned entirely over to private interests (in this case, to the privileged aristocrats who own most the world's gold), those interests end up becoming the "government."


-- attributed to Sir Josiah Stamp, Director of the Bank of England (appointed 1928)

Austrian Schoolers (and royal libertarians (http://geolib.com/essays/sullivan.dan/royallib.html) in general) also depend on everyone remaining blissfully ignorant of how oppressive governments come to exist in the first place:

----------------------------------------

http://www.lysanderspooner.org/NaturalLaw.htm (http://www.lysanderspooner.org/NaturalLaw.htm)

In process of time, the robber, or slaveholding, class -- who had seized all the lands, and held all the means of creating wealth -- began to discover that the easiest mode of managing their slaves, and making them profitable, was not for each slaveholder to hold his specified number of slaves, as he had done before, and as he would hold so many cattle, but to give them so much liberty as would throw upon themselves (the slaves) the responsibility of their own subsistence, and yet compel them to sell their labor to the land-holding class -- their former owners -- for just what the latter might choose to give them.

Of course, these liberated slaves, as some have erroneously called them, having no lands, or other property, and no means of obtaining an independent subsistence, had no alternative -- to save themselves from starvation -- but to sell their labor to the landholders, in exchange only for the coarsest necessaries of life; not always for so much even as that.

These liberated slaves, as they were called, were now scarcely less slaves than they were before. Their means of subsistence were perhaps even more precarious than when each had his own owner, who had an interest to preserve his life. They were liable, at the caprice or interest of the landholders, to be thrown out of home, employment, and the opportunity of even earning a subsistence by their labor. They were, therefore, in large numbers, driven to the necessity of begging, stealing, or starving; and became, of course, dangerous to the property and quiet of their late masters.

The consequence was, that these late owners found it necessary, for their own safety and the safety of their property, to organize themselves more perfectly as a government and make laws for keeping these dangerous people in subjection; that is, laws fixing the prices at which they should be compelled to labor, and also prescribing fearful punishments, even death itself, for such thefts and tresspasses as they were driven to commit, as their only means of saving themselves from starvation.

These laws have continued in force for hundreds, and, in some countries, for thousands of years; and are in force today, in greater or less severity, in nearly all the countries on the globe.

The purpose and effect of these laws have been to maintain, in the hands of the robber, or slave holding class, a monopoly of all lands, and, as far as possible, of all other means of creating wealth; and thus to keep the great body of laborers in such a state of poverty and dependence, as would compel them to sell their labor to their tyrants for the lowest prices at which life could be sustained.

The result of all this is, that the little wealth there is in the world is all in the hands of a few -- that is, in the hands of the law-making, slave-holding class; who are now as much slaveholders in spirit as they ever were, but who accomplish their purposes by means of the laws they make for keeping the laborers in subjection and dependence, instead of each one's owning his individual slaves as so many chattels.

[Continued... (http://www.lysanderspooner.org/NaturalLaw.htm)]

----------------------------------------

The key point here is that a group of private individuals presuming to "own" all the land (http://geolib.com/sullivan.dan/commonrights.html) comes first, and the "government" (or, more accurately, the State (http://www.barefootsworld.net/nockoets2.html)) into which they organize out of common interest comes second. (Whether they actually call it such is irrelevant). That's the inevitable result of allowing the concept of "private property" to be applied to the Earth on which all must live yet which none produced in the same unlimited, unconditional sense that it's applied to the products of human labor.

With regard to all the fearmongering engaged in by Austrian Schoolers about the presumed evils of government-issued currency (http://www.youtube.com/watch?v=nNumEm2NzQA), the bottom line is that one could just as easily posit all sorts of ridiculous fearmongering scenarios concerning government-controlled police and government-controlled armies as a way of scaring well-meaning yet gullible readers into embracing the stateless utopian fantasy world of the Austrian School (http://www.youtube.com/watch?v=tuHCAXtjZ6Q), wherein -- according to those who promote this delusional, quasi-religious fairy tale -- a mystical, God-like entity euphemistically called the "free market" magically keeps privately controlled police and privately controlled armies from terrorizing, oppressing and enslaving the masses.

Fortunately, most of the people in this forum aren't quite so gullible. They know that keeping the police and military in public rather than private hands is, if nothing else, the far lesser of two evils; and that the reason certain public institutions have become so corrupt and oppressive is that they've been, in effect, "privatized" to one extent or another (case in point: the "Federal" Reserve (http://www.themoneymasters.com/faqs.htm#q1)), and that the solution to this is not to mindlessly throw the baby out with the bathwater but to reclaim (http://forum.prisonplanet.com/index.php?topic=81509.0) from these private interests our rightful control over our own government.

I don't know about anyone else, but I, for one, say "no" to the privatized tyranny that anarcho-capitalists (http://www.infoshop.org/faq/secFcon.html) would have us all living under if they had their way, and "yes" to the liberty and freedom that can only be experienced in a truly Democratic Constitutional Republic:

       http://www.youtube.com/watch?v=DioQooFIcgE (http://www.youtube.com/watch?v=DioQooFIcgE)
: Re: Monetary Reform!
: Geolibertarian July 13, 2009, 07:16:37 PM
FROM SUNSHINE STATE TO SUBPRIME STATE?
THE SUN COULD SHINE AGAIN ON CALIFORNIA


Ellen Brown, July 13th, 2009
http://www.webofdebt.com/articles/sunshine_state.php (http://www.webofdebt.com/articles/sunshine_state.php)


Four Wall Street banks, which received $15-25 billion each from the taxpayers, have rejected California’s IOUs because the State is supposedly a bad credit risk. The bailed out banks would seem to have a duty to lend a helping hand, but they say they don’t want to delay an agreement on further austerity measures. State legislators are not bowing quickly to the pressure, but what is the alternative?

In the latest twist to the California budget saga, Citigroup, Wells Fargo, and JPMorgan Chase (which each got $25 billion in bailout money from the taxpayers) and Bank of America (which got $15 billion) have refused California’s request for a loan to tide it over until October. Until the State can get things sorted out, it has started paying its creditors in IOUs (“I Owe You’s” or promises to pay bearing interest, technically called registered warrants). Its Wall Street creditors, however, have refused to take them. Why? The pot says the kettle is a poor credit risk!

California expects to need to issue only about $13 billion in IOUs through September, and all its Governor has asked for in the way of a loan from the federal government is a guarantee for $6 billion. Total loans, commitments and guarantees to rescue the financial sector and stem the credit crisis have been estimated at $12.8 trillion (http://www.bloomberg.com/apps/news?pid=20601087&sid=armOzfkwtCA4). But California has not been invited to the banquet. The total sum California needs to balance its budget is $26.3 billion. That is about the same sum given to Citigroup, Wells Fargo and JPMorgan in bailout money; and it is only about one-tenth the sum given to AIG, a mere insurance company. Corporations evidently trump States and their citizens in the eyes of the powers controlling the purse strings. California has a gross domestic product of $1.7 trillion annually and has been rated the world’s eighth largest economy. Its 38.3 million people are one-eighth of the nation’s population and a key catalyst for U.S. retail sales. When the California consumer base falters, businesses are shaken nationwide. If AIG and the other Wall Street welfare recipients are too big to fail, California is way too big to fail.

Fitch Rating Agency has downgraded California’s municipal bonds to junk bond status,triple B. Why? AIG and Lehman Brothers had A ratings right up until they declared bankruptcy. California has never defaulted on its bonds, and it cannot arbitrarily decide to default; the State Constitution mandates that debt principal and interest must be paid as promised. California bonds lost their triple A rating only when the municipal bond insurers (Ambac and MBIA) lost theirs. It was these insurers, not the State of California, that got into hot water gambling in derivatives. The State Attorney General has opined that California’s IOUs are valid and binding obligations of the State. In rejecting them, however, Wall Street may have ulterior motives. A lower credit rating can justify investors in demanding higher interest rates. The interest offered on the IOUs is substantially lower than the interest banks can get on triple B rated municipal bonds.

There may be deeper motives than that. Considering the enormous importance of the California economy to the country, and the relatively small sum it needs in loans, the refusal to support the State financially seems highly suspicious, especially when much more has been given to less creditworthy private institutions. The banks say they want to keep the pressure on California legislators to work it out among themselves, but what does that mean? The options are even higher taxes, even more cuts in services, or even more fire sales of public assets; in short, the sort of austerity measures expected of supplicants reduced to Third World debtor status. State legislators are understandably reluctant to crawl into that debt pit. Governor Schwarzenegger has refused to approve higher taxes, while Democratic leaders say further cuts in services could leave some Californians starving in the streets.

The Sun Could Shine Again on the Sunshine State

There is an alternative to that dark future, and perhaps it is to keep the public from waking up to it that arms are being twisted to accept the new burdens quickly. If Wall Street and the Feds won’t extend credit to California on reasonable terms, the State could simply walk away and create its own credit machine. California could put its revenues in its own state-owned bank and fan these “reserves” into many times their face value in loans, using the same “fractional reserve” system that private banks use. Many authorities (http://www.webofdebt.com/articles/newdeal.php) have attested that banks simply create the money they lend on their books. Congressman Jerry Voorhis, writing in 1973, explained it like this:


President Obama himself has acknowledged this “multiplier effect.” In a speech at Georgetown University on April 14, 2009, he said:


If private banks can leverage deposits into multiple amounts of “credit” on their books, a state-owned bank could do the same thing, and return the profits to the public purse. One State already does this. North Dakota boasts the only state-owned bank in the nation. It is also one of only two states (along with Montana) that are currently able to meet their budgets (http://www.cbpp.org/cms/?fa=view&id=711). The Bank of North Dakota (http://www.webofdebt.com/articles/state_bank_option.php) was established by the legislature in 1919 to free farmers and small businessmen from the clutches of out-of-state bankers and railroad men. By law, the State must deposit all its funds in the bank, and the State guarantees its deposits. The bank’s surplus profits are returned to the State’s coffers. The bank operates as a bankers’ bank, partnering with private banks to lend money to farmers, real estate developers, schools and small businesses. It makes 1% loans to startup farms, has a thriving student loan business, and purchases municipal bonds from public institutions.

North Dakota is not suffering from unemployment or feeling the pinch of the economic downturn. Rather, it sports the largest surplus it has ever had. If this isolated farming State can escape Wall Street’s credit crisis, the world’s eighth largest economy can do it too!
: Re: Monetary Reform!
: zeke105 July 15, 2009, 12:09:55 PM
This response is an honest inquiry into the merit of the monetary reform proposed by the original poster and his sources.

: Geolibertarian
“FOR RECOVERY, WIPE OUT, SHRED, DELETE ALL DERIVATIVES
 
J.P. Morgan Chase, therefore, performs no useful or productive social function, and there is absolutely no reason in the world why the people of the United States should want to bail out this pernicious and socially destructive institution. It has probably been several decades since J.P. Morgan Chase created a single modern productive job. J.P. Morgan Chase's strategic commitment in favor of the derivatives bubble means essentially that we can easily dispense with most of the functions of this self-styled "bank," really a casino. Instead of being bailed out, J.P. Morgan Chase ought therefore to be seized by the Federal Deposit Insurance Corporation, and put through chapter 11 bankruptcy. In the course of that bankruptcy reorganization, the entire derivatives book of J.P. Morgan Chase must be deleted, shredded, used as a Yule log, or employed to stoke a festive bonfire of the derivatives. The world did much better when there were no derivatives, and will get along just fine without them.”

Is it accurate to say that this would entail wiping out the loan, the future, and all the money that exists due to the loan (velocity of money)?  Would the original borrower get his money back or would the bank keep the down payment.  If the banks keep the down payments, they would definitely be the winner in this proposition. If the money went back to the original borrower, this sounds like a logistical nightmare, but in the end, the fairer approach. Wouldn’t it make more sense to just let the chips fall where they may, and the banks could be penalized for their bad behavior.
Furthermore, it sounds a bit ludicrous to arbitrarily (without a legal rationale) tear down J.P. Morgan Chase. When people have talked about other banks being “too big to fail” those banks are like Yugo or Fiat compared to Chase being a Rolls Royce (size comparison). It would be much less disastrous for Chase to fail naturally if it is necessary so that other banks can pick up the pieces and thereby helping to rebuild the economy.

Do we really need more government intervention in the banking business? Haven’t they helped the bankers enough?

: Geolibertarian
"There are some people who look with distrust upon 'printing press' or 'fiat' money. But they overlook one of the basic facts about money. It is true that we need a 'hard' money. But we should not make the mistake of associating 'hardness' with convertibility into gold. The essence of a hard money is not determined by the material of which it is composed -- or the material into which it is convertible. The essence of a hard money is that its supply is fairly stable and there are precise limits to it. In other words, gold itself is a comparatively hard money because the supply of gold is inelastic. Bank credit convertible into gold is a very soft money because it is elastic and there are no precise limits to its supply, i.e., it expands and contracts. “

You had me until this sentence:

: Geolibertarian
“And a purely paper or 'fiat' money can be hard money if we set precise limits to its supply, or it can be a soft money if we set no limits to its supply."

Who sets the limits? Government ? The same people that keep selling us out to private bankers? Absurd. Do you really think a law will stop congress from deficit spending when they make the laws? They don’t obey the supreme law of the land; why would they obey a new bill passed, and why would they pass it? How does it benefit government to spend less money or balance the budget?

: Geolibertarian
"Soothing words about the effectiveness of 'government mechanisms' to deal with a liquidity crisis will not allay the fears of those who know its cause. There is only one thing that will allay those fears and that is to put our depository intermediaries on a sound basis. To do this we must convert the existing volume of bank credit into actual money and require banks to stop the unsound practice of borrowing short to lend long.”

So, tear up the monopoly money and give them real money? It seems we have a trend here of helping out the banks instead of the people. I can go along with this if the associated debt is wiped as well. Otherwise, we would just be giving the banks free money.

: Geolibertarian
“Modern-day Greenbackers, while having the highest regard for Congressman Paul's valiant one-man crusade, would no doubt debate the details; and one highly debatable detail is his assertion that it is the government that now has monopoly control over money, and it is the government that is counterfeiting the money supply.  Greenbackers might say that the government should have monopoly control over money creation, but it doesn’t. Wars are fought, not to preserve the dollars of the U.S. government, but to preserve the Federal Reserve Notes of a private banking cartel. It is this private cartel that has monopoly control over money, and its monopoly grew out of a shell game called "fractional reserve banking," which grew out of the very "gold standard" the Goldbugs seek to reinstate. We have been deluded into thinking that what is wrong with the system is that the government has a monopoly over creating the money supply. The government lost its monopoly when King George forbade the colonies from printing their own money in the eighteenth century. Banks have created most of the national money supply for most of our national history. The government itself must beg from this private cartel to get the money it needs; and it is this mounting debt to an elite class of banker-financiers, not profligate government spending on social goods, that has brought the United States and most other countries to the brink of bankruptcy. If Congress had used its Constitutional power to create money to fund its own operations, it would not have needed to pursue imperialistic foreign wars to extort money from its neighbors.”

Congress does create money when it wants. It also creates as much as it wants. Just because the money created is also debt doesn’t change the fact that the government still creates money. The government is the reason we have a yearly deficits, massive debts, and unfunded liabilities; we can’t blame the bankers for that. Letting congress create money without penalty isn’t the answer. It would just make the situation worse, because there would be no reason for restraint. The debt is very little reason now, but it is better than nothing. The ideal solution would be to allow competing currencies against the Federal Reserve and let the Fed sink itself. If it had to compete with banks that actually attempted to thwart off inflation, it wouldn’t be around for long.

: Geolibertarian
“Today the Greenback supporters are erroneously presented as merely being pro-inflation or against sound money. What they really wanted was a more honest money system, controlled by government, instead of banks....”

A monopoly of money by the government is even worse than a monopoly by the banks. At least bankers comprehend economics. In the end, we all should understand that monopolies are bad regardless of who controls them. Competition is the only solution.

: Re: Monetary Reform!
: Geolibertarian July 15, 2009, 01:10:12 PM
Is it accurate to say that this would entail wiping out the loan, the future, and all the money that exists due to the loan (velocity of money)? Would the original borrower get his money back or would the bank keep the down payment.

In an earlier post to this thread I specifically said:

As some of you may already know, an airtight case could be made for invalidating virtually all bank loans on the ground that no "lawful consideration" was made on the part of the banks, since the "money" they offer as consideration for the borrower's promise to repay doesn't really exist. (Ellen Brown explains this more thoroughly here (http://www.webofdebt.com/articles/dollar-deception.php).)

I oppose invalidating traditional bank loans, however, because doing so would cause the entire money supply to collapse and the economy along with it. That's where "converting the existing volume of bank credit into actual money having an existence independent of debt (http://monetary.org/rights.htm)" (while simultaneously abolishing fractional reserve banking) comes in.

Derivatives, however, are another story. Allow me to explain, as best I can, why derivatives contracts are more fraudulent -- and many times more parasitic and destructive -- than even fractional reserve lending, and why they should be invalidated accordingly.

When a regular bank loan is made, the collateral-backed IOU offered by the borrower becomes an "asset" of the bank, while the money offered by the bank becomes an "asset" of the borrower.  Granted, the so-called "money" offered by the bank doesn't even exist until the very moment the loan is extended, and even then exists only as a bookkeeping entry; but at least each party is going through the pretense of offering one legitimate financial asset as "lawful consideration" for another.

Such is not the case with derivatives, because these are mere bets as to whether a given asset will go up in market value.

Ellen Brown explains it this way (all emphasis original):

What part of the above excerpt do you not understand?

Furthermore, it sounds a bit ludicrous to arbitrarily (without a legal rationale) tear down J.P. Morgan Chase.

On the contrary, it sounds more than a bit ludicrous to blindly oppose "tearing down" these overprivileged, parasitic, derivatives-infected mega-banks considering that they are the ones who've been "tearing down" the U.S. economy for the past two years -- just as they've done to the economies of countless Third World nations:

-------------------------------------

“The Third World War has already started -- a silent war, not for that reason any less sinister. This war is tearing down Brazil, Latin America and practically all the Third World. Instead of soldiers dying there are children, instead of millions of wounded there are millions of unemployed; instead of destruction of bridges there is the tearing down of factories, schools, hospitals, and entire economies….It is a war over the foreign debt, one which has as its main weapon interest (http://www.wealthmoney.org/wonder.html), a weapon more deadly than the atom bomb, more shattering than a laser beam.”

-- Luis Ignacio Silva, as quoted on page 238 of A Fate Worse Than Debt (http://books.google.com/books?id=jQDIAAAACAAJ) by Susan George


http://www.youtube.com/watch?v=-is9t2BP7og (http://www.youtube.com/watch?v=-is9t2BP7og) (A pertinent clip from The Money Masters)
http://www.youtube.com/watch?v=R6WstddMJZQ (http://www.youtube.com/watch?v=R6WstddMJZQ) (Interview with John Perkins, author of Confessions of an Economic Hit Man)

-------------------------------------

Do we really need more government intervention in the banking business? Haven’t they helped the bankers enough?

Like every other monetary flat-earther  (http://monetary.org/refute.htm) from the Austrian School (http://forum.prisonplanet.com/index.php?topic=112560.msg704066#msg704066) I've encountered, you've got it completely backwards. It was the reduction of "government intervention" in the banking business that got us into this mess in the first place:

------------------------------------------

http://www.globalresearch.ca/index.php?context=va&aid=10588

Global Financial Meltdown: Sweeping Deregulation of the US Banking System

by Michel Chossudovsky
Global Research
October 17, 2008

The 1999 financial sector reforms had set the stage for the current financial crisis.  

"The 1999 legislation had repealed the Glass-Steagall Act of 1933, a pillar of President Roosevelt’s "New Deal" which was put in place in response to the climate of corruption, financial manipulation and "insider trading" which led to more than 5,000 bank failures in the years following the 1929 Wall Street crash.  Effective control over the entire US financial services industry (including insurance companies, pension funds, securities companies, etc.) had been transferred to a handful of financial conglomerates – which are also the creditors and shareholders of high tech companies, the defense industry, major oil and mining consortia, etc. Moreover, as underwriters of the public debt at federal, state and municipal levels, the financial giants have also reinforced their stranglehold on politicians, as well as their command over the conduct of public policy.

Rather than taming financial markets in the wake of the storm, Washington was busy pushing through the US Senate legislation, which was to significantly increase the powers of the financial services giants and their associated hedge funds. Under the Financial Modernization Act adopted in November 1999, US lawmakers had set the stage for a sweeping deregulation of the US banking system.

In the wake of lengthy negotiations, all regulatory restraints on Wall Street’s powerful banking conglomerates were revoked "with a stroke of the pen". Under the new rules – ratified by the US Senate and approved by President Clinton – commercial banks, brokerage firms, hedge funds, institutional investors, pension funds and insurance companies can freely invest in each others businesses as well as fully integrate their financial operations.

The "global financial supermarket" is to be overseen by the Wall Street giants; competing banking institutions are to be removed from the financial landscape. State level banks across America will be displaced or bought up, leading to a deadly string of bank failures. In turn, the supervisory powers of the Federal Reserve Board (which are increasingly under the direct dominion of Wall Street) have been significantly weakened."

The following text reviews, in a historical context, the 1987, 1997 and 1998 stock market meltdowns.
 
The article was written nine years ago in November 1999, following the adoption of the 1999 Financial Services Modernization Act.

It was subsequently published as a chapter in the Second Edition of The Globalization of Poverty and the New World Order, Global Research, Montreal, 2003.


Michel Chossudovsky, October 17, 2008

See complete text below

-------------------

A new global financial environment has unfolded in several stages since the collapse of the Bretton Woods system of fixed exchange rates in 1971. The debt crisis of the early 1980s (broadly coinciding with the Reagan-Thatcher era) had unleashed a wave of corporate mergers, buy-outs and bankruptcies. These changes have, in turn, paved the way for the consolidation of a new generation of financiers clustered around the merchant banks, the institutional investors, stock brokerage firms, large insurance companies, etc. In this process, commercial banking functions have coalesced with those of the investment banks and stock brokers.

While these "money managers" play a powerful role on financial markets, they are, however, increasingly removed from entrepreneurial functions in the real economy. Their activities (which often escape state regulation) include speculative transactions in commodity futures and derivatives, and the manipulation of currency markets. Major financial actors are routinely involved in "hot money deposits" in "the emerging markets" of Latin America and Southeast Asia, not to mention money laundering and the development of (specialized) "private banks" ("which advise wealthy clients") in the many offshore banking havens. Within this global financial web, money transits at high speed from one banking haven to the next in the intangible form of electronic transfers. "Legal" and "illegal" business activities have become increasingly intertwined, vast amounts of unreported private wealth have been accumulated. Favoured by financial deregulation, the criminal mafias have also expanded their role in the spheres of international banking.

[Continued... (http://www.globalresearch.ca/index.php?context=va&aid=10588)]

------------------------------------------

Note: Lest silent onlookers misunderstand me, I'm not saying that government intervention is thus always a good thing. Far from it. Whether the law or policy measure in question is good or bad depends on a variety of factors, and so must be assessed on a case-by-case basis.

As Robert De Fremery put it:

"I distinguish sharply between the government's legitimate function of providing our country with an adequate supply of money and the banks' legitimate function of acting as financial intermediaries. Because we have allowed banks to interfere with the government's function, the government has been forced to interfere with the banks in a multitude of ways." -- Rights vs. Privileges (http://monetary.org/rights.htm), pp. 95-6

Who sets the limits? Government?

Not in the sense that you mean. The reason many state governments have a "balanced budget" each year is not because state politicians balance it voluntarily, because they're required to by law.

Same principle here.
 
What I advocate is making the money supply expansion rate a matter of law (by pegging it to objective criteria such as population growth and the general price level (http://www.youtube.com/watch?v=nNumEm2NzQA)), that way it's not subject to the arbitrary dictates of either bankers or politicians.

Congress does create money when it wants. It also creates as much as it wants.

False. If that were true, it wouldn't have to borrow it all the time from a private (http://www.globalresearch.ca/index.php?context=va&aid=10489) institution.

Just because the money created is also debt doesn’t change the fact that the government still creates money.

Yes it does. The "Federal" Reserve is not part of the "government."

       http://www.globalresearch.ca/index.php?context=va&aid=10489 (http://www.globalresearch.ca/index.php?context=va&aid=10489)

Period. End of story. Get over it.

A monopoly of money by the government is even worse than a monopoly by the banks.

Wrong again, because if one leaves the power of money creation in the hands of private bankers, those bankers end up becoming (http://www.prisonplanet.com/leading-democrats-congress-senate-owned-and-run-by-bankers.html) the government:


-- attributed to Sir Josiah Stamp, Director of the Bank of England (appointed 1928)

At least bankers comprehend economics.

Another laughable statement that only an Austrian Schooler could make, particularly in view of who created a derivatives bubble that dwarfs the annual productive output of the entire planet:

       http://www.webofdebt.com/articles/its_the_derivatives.php (http://www.webofdebt.com/articles/its_the_derivatives.php)

Competition is the only solution.

This is yet another Austrian School mantra, and here's the fatal flaw that those who parrot it either cannot or will not see: once the government declares commodity-backed currencies A, B & C good for the payment of taxes and commodity-backed currencies X, Y & Z not good for such payment, then automatically the value that the former three have relative to the latter will be based in large measure on government "fiat," thereby discrediting the Austrian School's fairy-tale notion of their value being determined entirely (or even primarily) by the "free market."

http://www.monetary.org/gold-is-not-the-answer/2000/10 (http://www.monetary.org/gold-is-not-the-answer/2000/10)
: Re: Monetary Reform!
: zeke105 July 15, 2009, 04:33:41 PM
I really wish you would have attempted to respond to my inquiry, but I will have to assume either A. you don't really understand what you're talking about or B. you refuse to counter my refutations because you cannot. I will attempt one more time to provoke some real thought and debate.

: Geolibertarian
In an earlier post to this thread I specifically said:

What part of the above excerpt do you not understand?

On the contrary, it sounds more than a bit ludicrous to blindly oppose "tearing down" these overprivileged, parasitic, derivatives-infected mega-banks considering that they are the ones who've been "tearing down" the U.S. economy for the past two years -- just as they've done to the economies of countless Third World nations:

-------------------------------------

“The Third World War has already started -- a silent war, not for that reason any less sinister. This war is tearing down Brazil, Latin America and practically all the Third World. Instead of soldiers dying there are children, instead of millions of wounded there are millions of unemployed; instead of destruction of bridges there is the tearing down of factories, schools, hospitals, and entire economies….It is a war over the foreign debt, one which has as its main weapon interest (http://www.wealthmoney.org/wonder.html), a weapon more deadly than the atom bomb, more shattering than a laser beam.”

I don't blindly oppose anything, but I do oppose someone supporting an illegal dismantling of an organization if that organization didn't break any laws.

: Geolibertarian
-- Luis Ignacio Silva, as quoted on page 238 of A Fate Worse Than Debt (http://books.google.com/books?id=jQDIAAAACAAJ) by Susan George


http://www.youtube.com/watch?v=-is9t2BP7og (http://www.youtube.com/watch?v=-is9t2BP7og) (A pertinent clip from The Money Masters)
http://www.youtube.com/watch?v=R6WstddMJZQ (http://www.youtube.com/watch?v=R6WstddMJZQ) (Interview with John Perkins, author of Confessions of an Economic Hit Man)

-------------------------------------

Like every other monetary flat-earther  (http://monetary.org/refute.htm) from the Austrian School (http://forum.prisonplanet.com/index.php?topic=112560.msg704066#msg704066) I've encountered, you've got it completely backwards. It was the reduction of "government intervention" in the banking business that got us into this mess in the first place:
Nice strawman. I never once gave an indication that I was an Austrian school advocate. Sorry, but I was giving my own opinions. I don't agree with the current Austrian beliefs either.

: Geolibertarian
------------------------------------------

http://www.globalresearch.ca/index.php?context=va&aid=10588

Global Financial Meltdown: Sweeping Deregulation of the US Banking System

by Michel Chossudovsky
Global Research
October 17, 2008


The 1999 financial sector reforms had set the stage for the current financial crisis.  

"The 1999 legislation had repealed the Glass-Steagall Act of 1933, a pillar of President Roosevelt’s "New Deal" which was put in place in response to the climate of corruption, financial manipulation and "insider trading" which led to more than 5,000 bank failures in the years following the 1929 Wall Street crash.  Effective control over the entire US financial services industry (including insurance companies, pension funds, securities companies, etc.) had been transferred to a handful of financial conglomerates – which are also the creditors and shareholders of high tech companies, the defense industry, major oil and mining consortia, etc. Moreover, as underwriters of the public debt at federal, state and municipal levels, the financial giants have also reinforced their stranglehold on politicians, as well as their command over the conduct of public policy.

Rather than taming financial markets in the wake of the storm, Washington was busy pushing through the US Senate legislation, which was to significantly increase the powers of the financial services giants and their associated hedge funds. Under the Financial Modernization Act adopted in November 1999, US lawmakers had set the stage for a sweeping deregulation of the US banking system.

In the wake of lengthy negotiations, all regulatory restraints on Wall Street’s powerful banking conglomerates were revoked "with a stroke of the pen". Under the new rules – ratified by the US Senate and approved by President Clinton – commercial banks, brokerage firms, hedge funds, institutional investors, pension funds and insurance companies can freely invest in each others businesses as well as fully integrate their financial operations.

The "global financial supermarket" is to be overseen by the Wall Street giants; competing banking institutions are to be removed from the financial landscape. State level banks across America will be displaced or bought up, leading to a deadly string of bank failures. In turn, the supervisory powers of the Federal Reserve Board (which are increasingly under the direct dominion of Wall Street) have been significantly weakened."

The following text reviews, in a historical context, the 1987, 1997 and 1998 stock market meltdowns.
 
The article was written nine years ago  in November 1999,  following the adoption of the 1999 Financial Services Modernization Act.

It was subsequently published as a chapter in the Second Edition of The Globalization of Poverty and the New World Order, Global Research, Montreal, 2003.


Michel Chossudovsky, October 17, 2008

See complete text below

-------------------

A new global financial environment has unfolded in several stages since the collapse of the Bretton Woods system of fixed exchange rates in 1971. The debt crisis of the early 1980s (broadly coinciding with the Reagan-Thatcher era) had unleashed a wave of corporate mergers, buy-outs and bankruptcies. These changes have, in turn, paved the way for the consolidation of a new generation of financiers clustered around the merchant banks, the institutional investors, stock brokerage firms, large insurance companies, etc. In this process, commercial banking functions have coalesced with those of the investment banks and stock brokers.

While these "money managers" play a powerful role on financial markets, they are, however, increasingly removed from entrepreneurial functions in the real economy. Their activities (which often escape state regulation) include speculative transactions in commodity futures and derivatives, and the manipulation of currency markets. Major financial actors are routinely involved in "hot money deposits" in "the emerging markets" of Latin America and Southeast Asia, not to mention money laundering and the development of (specialized) "private banks" ("which advise wealthy clients") in the many offshore banking havens. Within this global financial web, money transits at high speed from one banking haven to the next in the intangible form of electronic transfers. "Legal" and "illegal" business activities have become increasingly intertwined, vast amounts of unreported private wealth have been accumulated. Favoured by financial deregulation, the criminal mafias have also expanded their role in the spheres of international banking.

[Continued... (http://www.globalresearch.ca/index.php?context=va&aid=10588)]

I don't completely agree nor disagree with this article, but it's obvious the government has as much responsibility in this crash as the banks do, which is implied in this article via deregulation.

: Geolibertarian
Note: Lest silent onlookers misunderstand me, I'm not saying that government intervention is thus always a good thing. Far from it. Whether the law or policy measure in question is good or bad depends on a variety of factors, and so must be assessed on a case-by-case basis.

As Robert De Fremery put it:

"I distinguish sharply between the government's legitimate function of providing our country with an adequate supply of money and the banks' legitimate function of acting as financial intermediaries. Because we have allowed banks to interfere with the government's function, the government has been forced to interfere with the banks in a multitude of ways." -- Rights vs. Privileges (http://monetary.org/rights.htm), pp. 95-6

Not in the sense that you mean. The reason many state governments have a "balanced budget" each year is not because state politicians balance it voluntarily, because they're required to by law.

Right, because no one is going to buy state treasury bonds, because the Federal Government has all the real assets. That, and the states don't create money.

: Geolibertarian
Same principle here.
 
What I advocate is making the money supply expansion rate a matter of law (by pegging it to objective criteria such as population growth and the general price level (http://www.youtube.com/watch?v=nNumEm2NzQA)), that way it's not subject to the arbitrary dictates of either bankers or politicians.
Right, and back to the question you completely ignored "why would the government be inclined to make such a law in the first place?" The government has never been able to restrain itself when it comes to money or anything else for that matter.

 
: Geolibertarian
False. If that were true, it wouldn't have to borrow it all the time from a private (http://www.themoneymasters.com/faqs.htm#q1) institution.

Yes it does. The "Federal" Reserve is not part of the "government."

       http://www.themoneymasters.com/faqs.htm#q1 (http://www.themoneymasters.com/faqs.htm#q1)

Period. End of story. Get over it.
 
Ok, maybe you don't quite understand how money is created. I know that he doesn't completely explain it in that movie. The government literally prints money when they need it, then they sell treasury bonds quarterly to match their debt(after the fact). Then, if the Fed chooses to take on some of that debt, it must buy it from the secondary bond market. The government doesn't even interact with the Fed to create money. It created money does become debt, but how much of that debt are we paying off? The answer would be zero. We simply pay the interest and roll over the bonds when they expire.

: Geolibertarian
Wrong again, because if one leaves the power of money creation in the hands of private bankers, those bankers end up becoming (http://www.prisonplanet.com/leading-democrats-congress-senate-owned-and-run-by-bankers.html) the government:

    “Banking was conceived in iniquity and was born in sin. The bankers own the earth. Take it away from them, but leave them the power to create money, and with the flick of the pen they will create enough deposits to buy it back again. However, take it away from them, and all the great fortunes like mine will disappear and they ought to disappear, for this would be a happier and better world to live in. But, if you wish to remain the slaves of bankers and pay the cost of your own slavery, let them continue to create money."

-- attributed to Sir Josiah Stamp, Director of the Bank of England (appointed 1928)

I'm not sure what's worse: international bankers colluding with the government, or the government running it themselves. Either way you end up with too much power in one groups hands. A Monopoly of money is the worst kind of monopoly.

: Geolibertarian
Another laughable statement that only an Austrian Schooler could make, particularly in view of who created a derivatives bubble that dwarfs the annual productive output of the entire planet:

       http://www.webofdebt.com/articles/its_the_derivatives.php (http://www.webofdebt.com/articles/its_the_derivatives.php)

This is yet another Austrian School mantra, and here's the fatal flaw that those who parrot it either cannot or will not see: once the government declares commodity-backed currencies A, B & C good for the payment of taxes and commodity-backed currencies X, Y & Z not good for such payment, then automatically the value that the former three have relative to the latter will be based in large measure on government "fiat," thereby discrediting the Austrian School's fairy-tale notion of their value being determined entirely (or even primarily) by the "free market."

http://www.monetary.org/goldnewsletter.htm (http://www.monetary.org/goldnewsletter.htm)

*waves at strawman argument* Sorry, no Austrian here. Wake up, and read what I posted. Please respond seriously with your own ideas this time. It's sad that we can't have a serious debate on such a monstrous issue.
: Re: Monetary Reform!
: Geolibertarian July 23, 2009, 12:19:54 PM
I really wish you would have attempted to respond to my inquiry, but I will have to assume either A. you don't really understand what you're talking about or B. you refuse to counter my refutations because you cannot.

As everyone is about to see, both assumptions are wrong.

I don't blindly oppose anything, but I do oppose someone supporting an illegal dismantling of an organization if that organization didn't break any laws.

Hello? That's the whole point of passing new laws, because it's obvious that not everything that's "legal" is morally or ethically (http://forum.prisonplanet.com/index.php?topic=50916.0) defensible. Not by a long shot. If America had always taken your approach to evil institutions, then the institution of chattel slavery would never have been "dismantled." Because after all, it's not like the average slave owner in 1850 was "breaking the law" or anything.  ::)

I never once gave an indication that I was an Austrian school advocate. Sorry, but I was giving my own opinions. I don't agree with the current Austrian beliefs either.

I'm sure the Austrian School trolls are as interested as I am to know which of those beliefs you disagree with, because everything you've said up to this point comes right out of their playbook.

I don't completely agree nor disagree with this article, but it's obvious the government has as much responsibility in this crash as the banks do, which is implied in this article via deregulation.

Then you're contradicting what you implied earlier:

Do we really need more government intervention in the banking business? Haven’t they helped the bankers enough?

Make up your mind: do you think that eliminating "government intervention" in the form of Glass-Steagall (http://www.counterpunch.org/kaufman09192008.html) was a good thing or not?

Right, because no one is going to buy state treasury bonds, because the Federal Government has all the real assets. That, and the states don't create money.

Actually that's not entirely true in the case of North Dakota:

       http://www.webofdebt.com/articles/state_bank_option.php (http://www.webofdebt.com/articles/state_bank_option.php)

And, surprise surprise, North Dakota just so happens to be one of only four states that aren't having serious financial problems.

Right, and back to the question you completely ignored "why would the government be inclined to make such a law in the first place?"

*sigh* Look, I've said over and over again in this forum that the only way we're ever going to get meaningful reform on any issue is for "we the people" to agree to disagree on the diversionary wedge issues (e.g., gay marriage) that partisan hacks in the "news" media soooo love to obsess over, and -- following the example set last September (http://youtube.com/watch?v=zYALxUfEmfQ) by three of the 3rd party presidential candidates when they united behind four points of agreement (http://www.lewrockwell.com/orig7/walsh6.html) -- to join forces in a non-partisan, cross-ideological coalition to exert aggressive, non-stop, round-the-clock pressure on Congress to implement public policy reforms on which the vast majority of us agree.

As Henry George put it:

"Social reform is not to be secured by noise and shouting; by complaints and denunciation; by the formation of parties, or the making of revolutions; but by the awakening of thought and the progress of ideas. Until there be correct thought, there cannot be right action; and when there is correct thought, right action will follow. Power is always in the hands of the masses of men. What oppresses the masses is their own ignorance, their own short-sighted selfishness." [Emphasis original] -- Social Problems (http://www.schalkenbach.org/store.php?crn=66&rn=325&action=show_detail), p. 242

If enough of us take the "right action" I described above, then Washington politicians won't have any choice but to be so "inclined." If we instead sit around making excuses for doing otherwise, then it'll be business as usual for the international bankers (http://www.themoneymasters.com/).

The government has never been able to restrain itself when it comes to money or anything else for that matter.

That is precisely the argument that anarcho-capitalists (http://www.infoshop.org/faq/secFcon.html) incessantly make for turning everything (including police and military) over to private interests, hoping all the while that no one will question the validity of their laughably naive, quasi-religious assumption that a mystical, God-like entity euphemistically called the "free market" will magically keep privately controlled police and privately controlled armies from terrorizing, oppressing and enslaving the masses.

Fortunately, most of the people in this forum aren't quite so gullible. They know that keeping the police and military in public rather than private hands is, if nothing else, the far lesser of two evils; and that the reason certain public institutions have become so corrupt and oppressive is that they've been, in effect, "privatized" to one extent or another (case in point: the "Federal" Reserve (http://www.globalresearch.ca/index.php?context=va&aid=10489)), and that the solution to this is therefore not to mindlessly throw the baby out with the bathwater but to reclaim (http://forum.prisonplanet.com/index.php?topic=81509.0) from these private interests our rightful control over our own government.

As I have said before and will undoubtedly have to say again: I, for one, say "no" to the privatized tyranny that anarcho-capitalists would have us all living under if they had their way, and "yes" to the liberty and freedom that can only be experienced in a truly Democratic Constitutional Republic:

       http://www.youtube.com/watch?v=DioQooFIcgE (http://www.youtube.com/watch?v=DioQooFIcgE)

Ok, maybe you don't quite understand how money is created.

On the contrary, I understand it all too well. It's your own understanding that I question.

The government literally prints money when they need it,

Again, no it doesn't, otherwise it wouldn't have to borrow it all the time.  

What the government "prints" is currency, but that currency does not become "money" (legal tender) until it's been issued by the private banking system.

And how does the banking system "issue" money?

By loaning it out at interest (http://www.wealthmoney.org/wonder.html).

I'm not sure what's worse: international bankers colluding with the government, or the government running it themselves.

History has shown over and over again that the former is far worse, in large part because politicians can at least be "voted" out of power by the people, whereas international bankers cannot.

       http://monetary.org/briefusmonetaryhistory.htm (http://monetary.org/briefusmonetaryhistory.htm)

A Monopoly of money is the worst kind of monopoly.

That's why I've stated repeatedly in other threads that, once the current debt-based money system has been completely replaced by a debt-free system, I'll at least be open -- particularly if certain election reforms remained unimplemented -- to reforming the legal tender law so that U.S. currency is good merely for the payment of all public debts (as opposed to both public and private), since this would allow for an assortment of competing private currencies to rise up alongside the national currency, thereby keeping those in charge of the latter in check.

But not until then.

The first order of business is to keep civilization itself from completely collapsing under the crippling weight of the ever-worsening, banker-engineered economic collapse.
: Re: Monetary Reform!
: Geolibertarian July 23, 2009, 11:51:40 PM
HOW CALIFORNIA COULD TURN ITS IOU’S INTO DOLLARS

Ellen Brown, July 22nd, 2009
http://www.webofdebt.com/articles/california_iou.php (http://www.webofdebt.com/articles/california_iou.php)


California has over $17 billion on deposit in banks that have refused to honor its IOUs, forcing legislators to accept crippling budget cuts. These austerity measures are unnecessary. If the state were to deposit its money in its own state-owned bank, it could have enough credit to solve its budget crisis with funds to spare.

 “We make money the old-fashioned way,” said Art Rolnick, chief economist of the Minneapolis Federal Reserve. “We print it.” That works for the federal government’s central bank, but states are forbidden by the Constitution to issue “bills of credit,” a term that has been interpreted to mean the state’s own paper money. “Sacramento is not Washington,” said California Governor Arnold Schwarzenegger in May. “We cannot print our own money.” When legislators could not agree on how to solve the state’s $26.3 billion budget deficit, the Governor therefore did the next best thing: he began paying the bills with IOUs (“I Owe You’s,” or promises to pay bearing interest).

The problem was that most banks declined to honor the IOUs, at least after July 24. “They said something about not wanting to enable the dysfunctional state legislature,” observed a San Diego Union-Tribune (http://www3.signonsandiego.com/stories/2009/jul/11/1c11talkm191924/?uniontrib) staff writer, “which is kind of funny as the federal government has been enabling the dysfunctional financial sector for almost a year.”

On July 21, California legislators were strong-armed into a tentative agreement (http://seekingalpha.com/article/150158-is-the-california-budget-crisis-really-over) on budget cuts, a forced move that was called “painful” by the Speaker of the Assembly and “devastating” by the executive director of the California State Association of Counties. The cuts involve more job losses, more bleeding of school funds, more closing of facilities. Worse, they will not solve the budget crisis long-term. The state’s economy is expected to continue to deteriorate along with its revenues. But without banks to honor the state’s IOUs, California has no time to negotiate or explore alternatives. There is no “quick fix (http://www.bakersfieldnow.com/news/business/51363952.html),” says UCLA Professor Daniel Mitchell.

Or is there?

More Than One Way to Solve a Budget Crisis

Among the banks rejecting California’s IOUs are six of particular interest: Citibank, Union Bank, Bank of America, Wells Fargo, U.S. Bank, and Westamerica Bank. These banks are interesting because they are six of the seven depository banks in which the state of California currently deposits its money. (The seventh is Bank of the West, which loyally said it would accept the IOUs indefinitely.)

Banks operate under federal or state charters that grant them special rights and privileges. Chartered banks are endowed with a gift that keeps on giving: they can “leverage” the value of their deposits into anywhere from ten to thirty times that sum in interest-bearing loans. This “multiplier effect” is attested to by many authorities (http://www.webofdebt.com/articles/newdeal.php), including President Obama himself. He said in a speech at Georgetown University on April 14:


The website of the Federal Reserve Bank of Dallas (http://www.dallasfed.org/educate/everyday/ev9.html) explains:


Combine this with another interesting fact: according to the California Treasurer’s report (http://www.treasurer.ca.gov/pmia-laif/reports.asp), as of May 2009 the state had aggregate deposits and investments exceeding $55 billion. Of this sum, $1.1 billion was held in demand deposit accounts (non-interest-bearing accounts allowing unlimited deposits and withdrawals) and $16.5 billion was in NOW accounts (interest-bearing accounts allowing unlimited deposits and withdrawals). According to the Treasurer’s office, the non-interest-bearing demand deposits are held at the seven depository banks named earlier, while the NOW accounts are held at Citibank and Union Bank. Applying a “multiplier effect” of ten to the total sum on deposit at these seven banks ($17.6 billion), the banks collectively have the ability to make $176 billion in loans. At 5%, $176 billion can generate $8.8 billion in interest for the banks.

Rather than showing their gratitude by reciprocating, however, six of the seven depository banks have refused to honor California’s IOUs. Worse, three of these six actually received federal bailout money from the taxpayers, something that was supposedly done to keep credit flowing to the states and their citizens. Citibank got $45 billion in bailout money (http://www.dailymarkets.com/stocks/2009/01/16/bank-of-america-gets-138-billion-bailout-as-merrill-takeover-backfires/), Wells Fargo got $25 billion, and Bank of America got $45 billion, not to mention guarantees of $300 billion for Citibank and $118 billion for Bank of America. When Governor Schwarzenegger asked for a loan guarantee for a mere $6 billion (http://www.nytimes.com/2009/06/17/us/politics/17calif.html) to bolster California’s credit rating, on the other hand, he was turned down. Californians compose one-eighth of the nation’s population.

When the state’s appeal for aid was rejected by the banks, California State Treasurer Bill Lockyer said he was “disappointed.” He and other state leaders should show their disappointment with their feet. California could pull its deposits out of those depository banks refusing its IOUs and put them instead in its own state-owned bank, following the lead of North Dakota, which now has the only state-owned bank in the country. Set up in 1919 to escape Wall Street predators, the Bank of North Dakota (http://www.webofdebt.com/articles/state_bank_option.php) has been generating low-interest credit for the state and its residents for nearly a century. North Dakota is one of only two states (http://www.cbpp.org/cms/?fa=view&id=711) (along with Montana) currently able to meet their budgets.

A state-owned bank could be fast-tracked into operation in a matter of weeks. With over $17 billion available to deposit in its own bank, California could create $170 billion or more in credit -- enough not only to meet its budget shortfall but to fund many other much-needed projects; and rather than feeding an ungrateful Wall Street, the bank’s profits would return to the state and its people.
: Re: Monetary Reform!
: Nailer October 07, 2009, 08:12:05 PM
I know what we need .

Ron Paul  and  Ross Perot  to become a team and take over the monetary structure of the USA .

I would estimate that within 1 year  the USA would be in better shape than it is now.  Of course you would have to get rid of Obama and his Czars, pelosi, biden, and all other corrupt politicians for it to work properly.


It is funny that the only two presidential candidates that I ever considered voting for had the same Initials  RP: Ron Paul, Ross Perot.

They both follow within the same guidelines , you have to make it ( government) like a business and the sectors that spend too much and show little profit or a loss gets axed.   
: Re: Monetary Reform!
: Geolibertarian April 01, 2010, 10:48:37 AM
Schacht is telling us that the excessive speculation against the mark -- the short selling of the mark -- was financed by lavish loans from the private Reichsbank. The margin requirements that the anti-mark speculators needed and without which they could not have attacked the mark was provided by the private Reichsbank! ....

Thus it was a privately owned and privately controlled central bank, that made loans to private speculators, enabling them to speculate against the nation's currency. Whatever other pressures the currency faced (and they were substantial), such speculation helped create a one way market down for the Reichsmark. Soon a continuous panic set in, and not just speculators, but everyone else had to do what they could to get out of their marks, further fueling the disaster. This private factor has been largely unknown in America.

-- Stephen Zarlenga, The Lost Science of Money

In the interest of preventing history from repeating itself at our expense, I offer the following two excerpts from Ellen Brown's Web of Debt (http://www.webofdebt.com) -- the first from Chapter 21, the second from Chapter 46.

(Note: So that relative newcomers don't get confused, it should be stressed that, in the context of international trade, the "gold standard" refers merely to an agreed-upon unit of account, whereas, in the context of domestic monetary policy, it refers to a gold-"backed" currency, whereby a nation's currency is "redeemable" in gold, and whereby a nation's entire money supply is hence limited to the physical supply of gold. The U.S. rightfully abandoned the domestic gold standard in 1933, but it was not until 1971 that it was forced to abandon the international gold standard. The latter is often referred to as the gold "exchange (http://financial-dictionary.thefreedictionary.com/Gold+Exchange+Standard)" standard to distinguish it from both the gold specie (http://en.wikipedia.org/wiki/Gold_standard#The_gold_specie_standard) and gold bullion (http://en.wikipedia.org/wiki/Gold_standard#The_gold_bullion_standard) standards.)

-----------------------------------

Chapter 21
GOODBYE YELLOW BRICK ROAD: FROM GOLD RESERVES TO PETRODOLLARS


”Once,” began the leader, “we were a free people, living happily in the great forest, flying from tree to tree, eating nuts and fruit, and doing just as we pleased without calling anybody master. . . .[Now] we are three times the slaves of the owner of the Golden Cap, whosoever he may be.”

-- The Wonderful Wizard of Oz,
“The Winged Monkeys”


The Golden Cap suggested the gold that was used by international financiers to colonize indigenous populations in the nineteenth century. The gold standard was a necessary step in giving the bankers’ “fractional reserve” lending scheme legitimacy, but the ruse could not be sustained indefinitely. Eleazar Lord put his finger on the problem in the 1860s. When gold left the country to pay foreign debts, the multiples of banknotes ostensibly “backed” by it had to be withdrawn from circulation as well. The result was money contraction and depression. “The currency for the time is annihilated,” said Lord, “prices fall, business is suspended, debts remain unpaid, panic and distress ensue, men in active business fail, bankruptcy, ruin, and disgrace reign.” Roosevelt was faced with this sort of implosion of the money supply in the Great Depression, forcing him to take the dollar off the gold standard to keep the economy from collapsing. In 1971, President Nixon had to do the same thing internationally, when foreign creditors threatened to exhaust U.S. gold reserves by cashing in their paper dollars for gold.

Between those two paradigm-changing events came John F. Kennedy, who evidently had has own ideas about free trade, the Third World, and the Wall Street debt game.

Kennedy’s Last Stand

In Battling Wall Street: The Kennedy Presidency, Donald Gibson contends that Kennedy was the last President to take a real stand against the entrenched Wall Street business interests. Kennedy was a Hamiltonian, who opposed the forces of “free trade” and felt that industry should be harnessed to serve the Commonwealth. He felt strongly that the country should maintain its independence by developing cheap sources of energy. The stand pitted him against the oil/banking cartel, which was bent on raising oil prices to prohibitive levels in order to entangle the world in debt.

Kennedy has been accused of “reckless militarism” and “obsessive anti-communism,” but Gibson says his plan for neutralizing the appeal of Communism was more benign: he would have replaced colonialist and imperialist economic policies with a development program that included low-interest loans, foreign aid, nation-to-nation cooperation, and some measure of government planning. The Wall Street bankers evidently had other ideas. Gibson quotes George Moore, president of First National City Bank (now Citibank), who said:


The great British financial institutions played the role of subjugating underdeveloped countries to the position of backward exporters of raw materials. It was the sort of exploitation Kennedy’s foreign policy aimed to eliminate. He crossed the banking community and the International Monetary Fund when he continued to give foreign aid to Latin American countries that failed to adopt the bankers’ policies. Gibson writes:


There is also evidence that Kennedy crossed the bankers by seeking to revive a silver-backed currency that would be independent of the banks and their privately-owned Federal Reserve. The matter remains in doubt, since his Presidency came to an untimely end before he could play his hand; but he did authorize the Secretary of the Treasury to issue U.S. Treasury silver certificates, and he was the last President to issue freely-circulating United States Notes (Greenbacks). When Vice President Lyndon Johnson stepped into the Presidential shoes, his first official acts included replacing government-issued United States Notes with Federal Reserve Notes (http://www.wealthmoney.org/articles/History.html), and declaring that Federal Reserve Notes could no longer be redeemed in silver. New Federal Reserve Notes were released that omitted the former promise to pay in “lawful money.” In 1968, Johnson issued a proclamation that even Federal Reserve Silver Certificates could not be redeemed in silver. The one dollar bill, which until then had been a silver certificate, was made a Federal Reserve Note, not redeemable in any form of hard currency. United States Notes in $100 denominations were printed in 1966 to satisfy the 1878 Greenback Law requiring their issuance, but most were kept in a separate room at the Treasury and were not circulated. In the 1990s, the Greenback Law was revoked altogether, eliminating even that token issuance.

Barbarians Inside the Gates

Although the puppeteers behind Kennedy’s assassination have never been officially exposed, some investigators have concluded that he was another victim of the invisible hand of the international corporate/banking/military cartel. President Eisenhower warned in his 1961 Farewell Address (http://www.history.com/audio/eisenhowers-farewell-address#eisenhowers-farewell-address) of the encroaching powers of the military-industrial complex. To that mix Gibson would add the oil cartel and the Morgan-Rockefeller banking sector, which were closely aligned. Kennedy took a bold stand against them all.

How he stood up to the CIA and the military was revealed by James Bamford in a book called Body of Secrets, which was featured by ABC News in November 2001, two months after the World Trade Center disaster. The book discussed Kennedy’s threat to abolish the CIA’s right to conduct covert operations, after he was presented with the secret military plans code-named “Operation Northwoods (http://whatreallyhappened.com/WRHARTICLES/northwoods.html)” in 1962. Drafted by America’s top military leaders, these bizarre plans included proposals to kill innocent people and commit acts of terrorism in U.S. cities, in order to create public support for a war against Cuba. Actions contemplated included hijacking planes, assassinating Cuban emigres, sinking boats of Cuban refugees on the high seas, blowing up a U.S. ship, orchestrating violent terrorism in U.S. cities, and causing U.S. military casualties, all for the purpose of tricking the American public and the international community into supporting a war to oust Cuba’s then-new Communist leader Fidel Castro. The proposal stated, “We could blow up a U.S. ship in Guantanamo Bay and blame Cuba,” and that “casualty lists in U.S. newspapers would cause a helpful wave of national indignation."

Needless to say, Kennedy was shocked and flatly vetoed the plans. The head of the Joint Chiefs of Staff was promptly transferred to another job. The country’s youngest President was assassinated the following year. Whether or not Operation Northwoods played a role, it was further evidence of an “invisible government” acting behind the scenes. His disturbing murder was a wake-up call for a whole generation of activists. Things in Emerald City were not as green as they seemed. The Witch and her minions had gotten inside the gate.

Bretton Woods: The Rise and Fall of an International Gold Standard

Lyndon Johnson was followed in the White House by Richard Nixon, the candidate Kennedy defeated in 1960. In 1971, President Nixon took the dollar off the gold standard internationally, leaving currencies to “float” in the market so that they had to compete with each other as if they were commodities. Currency markets were turned into giant casinos that could be manipulated by powerful hedge funds, multinational banks and other currency speculators. William Engdahl, author of A Century of War, writes:


It was not the first time floating exchange rates had been tried. An earlier experiment had ended in disaster, when the British pound and the U.S. dollar had both been taken off the gold standard in the 1930s. The result was a series of competitive devaluations that only served to make the global depression worse. The Bretton Woods Accords were entered into at the end of World War II to correct this problem. Foreign exchange markets were stabilized with an international gold standard, in which each country fixed its currency’s global price against the price of gold. Currencies were allowed to fluctuate from this “peg” only within a very narrow band of plus or minus one percent. The International Monetary Fund (IMF) was set up to establish exchange rates, and the International Bank for Reconstruction and Development (the World Bank) was founded to provide credit to war-ravaged and Third World countries.

The principal architects of the Bretton Woods Accords were British economist John Maynard Keynes and Assistant U.S. Treasury Secretary Harry Dexter White. Keynes envisioned an international central bank that had the power to create its own reserves by issuing its own currency, which he called the “bancor.” But the United States had just become the world’s only financial superpower and was not ready for that step in 1944. The IMF system was formulated mainly by White, and it reflected the power of the American dollar. The gold standard had failed earlier because Great Britain and the United States, the global bankers, had run out of gold. Under the White Plan, gold would be backed by U.S. dollars, which were considered “as good as gold” because the United States had agreed to maintain their convertibility into gold at $35 per ounce. As long as people had faith in the dollar, there was little fear of running out of gold, because gold would not actually be used. Hans Schicht notes that the Bretton Woods Accords were convened by the “master spider” David Rockefeller. They played right into the hands of the global bankers, who needed the ostensible backing of gold to justify a massive expansion of U.S. dollar debt around the world.

The Bretton Woods gold standard worked for a while, but it was mainly because few countries actually converted their dollars into gold. Trade balances were usually cleared in U.S. dollars, due to their unique strength after World War II. Things fell apart, however, when foreign investors began to doubt the solvency of the United States. By 1965, the Vietnam War had driven the country heavily into debt. French President Charles DeGaulle, seeing that the United States was spending far more than it had in gold reserves, demanded that it convert 300 million of France’s U.S. dollar holdings into gold. That request was honored, but it was followed by one that would have “broken the bank.” Great Britain, having incurred the largest monthly trade deficit in its history, had been turned down by the IMF for a $300 billion loan and had tried to cash in its gold-backed dollars for the gold they supposedly represented. The sum amounted to fully one-third the gold reserves of the United States. The problem might have been alleviated in the short term by raising the price of gold, but that was not the agenda that prevailed. The gold price was kept at $35 per ounce, forcing President Nixon to renege on the gold deal and close the “gold window” permanently. To his credit, Nixon did not take this step until he was forced into it, although it had been urged by economist Milton Friedman in 1968.

The result of taking the dollar off the gold standard was to finally take the brakes off the printing presses. Fiat dollars could now be generated and circulated to whatever extent the world would take them. The Witches of Wall Street proceeded to build a worldwide financial empire based on a “fractional reserve” banking system that used bank-created paper dollars in place of the time-honored gold. Dollars became the reserve currency for a global net of debt to an international banking cartel. It all worked out so well for the bankers that skeptical commentators suspected it had been planned that way. Professor Antal Fekete wrote in an article in the May 2005 Asia Times that the removal of the dollar from the gold standard was “the biggest act of bad faith in history.” He charged:


Whether unpegging the dollar from gold was a deliberate act of bad faith might be debated, but the fact remains that gold was inadequate as a global yardstick for measuring value. The price of gold fluctuated widely, and it was subject to manipulation by speculators. Gold also failed as a global reserve currency, because there was not enough gold available to do the job. If one country had an outstanding balance of payments because it had not exported enough goods to match its imports, that imbalance was corrected by transferring reserves of gold between countries; and to come up with the gold, the debtor country would cash in its U.S. dollars for the metal, draining U.S. gold reserves. It was inevitable that the U.S. government (the global banker) would eventually run out of gold. Some proposals for pegging currency exchange rates that would retain the benefits of the gold standard without its shortcomings are explored in Chapter 46.

The International Currency Casino

If the gold standard was flawed, the system of “floating” exchange rates that replaced it was much worse, particularly for Third World countries. Currencies were now valued merely by their relative exchange rates in the “free” market. Foreign exchange markets became giant casinos, in which the investors were just betting on the relative positions of different currencies. Smaller countries were left at the mercy of major players -- whether other countries, multinational corporations or multinational banks -- which could radically devalue national currencies just by selling them short on the international market in large quantities. These currency manipulations could be so devastating that they could be used to strong-arm concessions from target economies. That happened, for example, during the Asian Crisis of 1997-98, when they were used to “encourage” Thailand, Malaysia, Korea and Japan to come into conformance with World Trade Organization rules and regulations….

The foreign exchange market became so unstable that crises could result just from rumors of economic news and changes in perception. Commercial risks from sudden changes in the value of foreign currencies are now considered greater even than political or market risks for conducting foreign trade. Huge derivative markets have developed to provide hedges to counter these risks. The hedgers typically place bets both ways, in order to be covered whichever way the market goes. But derivatives themselves can be very risky and expensive, and they can further compound market instability.

The system of floating exchange rates was the same system that had been tried briefly in the 1930s and had proven disastrous; but there seemed no viable alternative after the dollar went off the gold standard, so most countries agreed to it. Nations that resisted could usually be coerced into accepting the system as a condition of debt relief; and many nations needed debt relief, after the price of oil suddenly quadrupled in 1974. That highly suspicious rise occurred soon after an oil deal was engineered by U.S. interests with the royal family of Saudi Arabia, the largest oil producer in OPEC (the Organization of the Petroleum Exporting Countries). The deal was evidently brokered by U.S. Secretary of State Henry Kissinger. It involved an agreement by OPEC to sell oil only for dollars in return for a secret U.S. agreement to arm Saudi Arabia and keep the House of Saud in power. According to John Perkins (http://www.johnperkins.org) in his eye-opening book Confessions of an Economic Hit Man (http://www.economichitman.com), the arrangement basically amounted to protection money, insuring that the House of Saud would not go the way of Iran’s Prime Minister Mossadegh, who was overthrown by a CIA-engineered coup in 1954 (http://www.gwu.edu/~nsarchiv/NSAEBB/NSAEBB8/nsaebb8i.htm).

The U.S. dollar had formerly been backed by gold. It was now “backed” by oil. Every country had to acquire Federal Reserve Notes to purchase this essential commodity. Oil-importing countries around the world suddenly had to export goods to get the dollars to pay their expensive new oil import bills, diverting their productive capacity away from feeding and clothing their own people. Countries that had a “negative trade balance” because they failed to export more goods than they imported were advised by the World Bank and the IMF to unpeg their currencies from the dollar and let them “float” in the currency market. The theory was that an “overvalued” currency would then become devalued naturally until it found its “true” level. Devaluation would make exports cheaper and imports more expensive, allowing the country to build up a positive trade balance by selling more goods than it bought. That was the theory, but as Michael Rowbotham observes, it has not worked well in practice:


If the benefits of letting the currency float were minor, the downsides were major: the currency was now subject to rampant manipulation by speculators. The result was a disastrous roller coaster ride, particularly for Third World economies. Today, most currency trades are done purely for speculative profit. Currencies rise or fall depending on the quantities traded each day. Bernard Lietaer writes in The Future of Money:


The alternative to letting the currency float is for a national government to keep its currency tightly pegged to the U.S. dollar, but governments that have taken that course have faced other hazards. The currency becomes vulnerable to the monetary policies of the United States; and if the country does not set its peg right, it can still be the target of currency raids. In the interest of “free trade,” the government usually agrees to keep its currency freely convertible into dollars. That means it has to stand ready to absorb any surpluses or fill any shortages in the exchange market; and to do this, it has to have enough dollars in reserve to buy back the local currency of anyone wanting to sell. If the government guesses wrong and sets the peg too high (so that its currency will not really buy as much as the equivalent in dollars), there were be “capital flight” out of the local currency into the more valuable dollars. (Indeed, speculators can induce capital flight even when the peg isn’t set too high, as we’ll see shortly.) Capital flight can force the government to spend its dollar reserves to “defend” its currency peg; and when the reserves are exhausted, the government will either have to default on its obligations or let its currency be devalued. When the value of the currency drops, so does everything valued in it. National assets can then be snatched up by circling “vulture capitalists” for pennies on the dollar.

Following all this can be a bit tricky, but the bottom line is that there is no really safe course at present for most small Third World nations. Whether their currencies are left to float or are kept tightly pegged to the dollar, they can still be attacked by speculators. There is a third alternative, but few countries have been in a position to take it: the government can peg its currency to the dollar and not support its free conversion into other currencies. Professor Henry C. K. Liu, the Chinese American economist quoted earlier, says that China escaped the 1998 “Asian Crisis” in this way. He writes:


But China too has been under pressure to let its currency float. Liu warns the country of his ancestors:


There is no real solution to this problem short of global monetary reform….

Setting the Debt Trap:  “Emerging Markets” for Petrodollar Loans

When the price of oil quadrupled in the 1970s, OPEC countries were suddenly flooded with U.S. currency; and these “petrodollars” were usually deposited in London and New York banks. They were an enormous windfall for the banks, which recycled them as low-interest loans to Third World countries that were desperate to borrow dollars to finance their oil imports. Like other loans made by commercial banks, these loans did not actually consist of money deposited by their clients. The deposits merely served as “reserves” for loans created by the “multiplier effect” out of thin air. Through the magic of fractional-reserve lending, dollars belonging to Arab sheiks were multiplied many times over as accounting-entry loans. The “emerging nations” were discovered as “emerging markets” for this new international financial capital. Hundreds of billions of dollars in loan money were generated in this way.

Before 1973, Third World debt was manageable and contained. It was financed mainly through public agencies including the World bank, which invested in projects promising solid economic success. But things changed when private commercial banks got into the game. The banks were not in the business of “development.” They were in the business of loan brokering. Some called it “loan sharking.” The banks preferred “stable” governments for clients. Generally, that meant governments controlled by dictators. How these dictators had come to power, and what they did with the money, were not of immediate concern to the banks. The Philippines, Chile, Brazil, Argentina, and Uruguay were all prime loan targets. In many cases, the dictators used the money for their own ends, without significantly bettering the condition of the people; but the people were saddled with the bill.

The screws were tightened in 1979, when the U.S. Federal Reserve under Chairman Paul Volcker unilaterally hiked interest rates to crippling levels. Engdahl notes that this was done after foreign dollar-holders began dumping their dollars in protest over the foreign policies of the Carter administration. Within weeks, Volcker allowed U.S. interest rates to triple. They rose to over 20 percent, forcing global interest rates through the roof, triggering a global recession and mass unemployment. By 1982, the dollar’s status as global reserve currency had been saved, but the entire Third World was on the brink of bankruptcy, choking from usurious interest charges on their petrodollar loans.

That was when the IMF got in the game, brought in by the London and New York banks to enforce debt repayment and act as “debt policeman.” Public spending for health, education and welfare in debtor countries was slashed, following IMF orders to ensure that the banks got timely debt service on their petrodollars. The banks also brought pressure on the U.S. government to bail them out from the consequences of their imprudent loans, using taxpayer money and U.S. assets to do it. The results were austerity measures for Third World countries and taxation for American workers to provide welfare for the banks. The banks were emboldened to keep aggressively lending, confident that they would again be bailed out if the debtors’ loans went into default.

Worse for American citizens, the United States itself ended up a major debtor nation. Because oil is an essential commodity for every country, the petrodollar system requires other countries to build up huge trade surpluses in order to accumulate the dollar surpluses they need to buy oil. These countries have to sell more goods in dollars than they buy, to give them a positive dollar balance. That is true for every country except the United States, which controls the dollar and issues it at will. More accurately, the Federal Reserve and the private commercial banking system it represents control the dollar and issue it at will. Since U.S. economic dominance depends on the dollar recycling process, the United States has acquiesced in becoming “importer of last resort.” The result has been to saddle it with a growing negative trade balance or “current account deficit.” By 2000, U.S. trade deficits and net liabilities to foreign accounts were well over 22 percent of gross domestic product. In 2001, the U.S. stock market collapsed; and tax cuts and increased federal spending turned the federal budget surplus into massive budget deficits. In the three years after 2000, the net U.S. debt position almost doubled. The United States had to bring in $1.4 billion in foreign capital daily, just to fund this debt and keep the dollar recycling game going. By 2006, the figure was up to $2.5 billion daily. The people of the United States, like those of the Third World, have become hopelessly mired in debt to support the banking system of a private international cartel.

-- Ellen Brown, Web of Debt, pp. 205-216

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: Re: Monetary Reform!
: Geolibertarian April 01, 2010, 10:49:30 AM
Chapter 46
BUILDING A BRIDGE: TOWARD A NEW BRETTON WOODS


Suddenly they came to another gulf across the road. . . .[T]hey sat down to consider what they should do, and after serious thought the Scarecrow said, “here is a great tree, standing close to the ditch. If the Tin Woodman can chop it down, so that it will fall to the other side, we can walk across it easily.”
      “That is a first-rate idea,” said the Lion. “One would almost suspect you had brains in your head, instead of straw.”


-- The Wonderful Wizard of Oz,
“The Journey to the Great Oz”


John Maynard Keynes had an idea. Instead of pegging currencies to the price of a single commodity -- gold -- they could be pegged to a “basket” of commodities: wheat, oil, copper, and so forth. He did not elaborate much on this idea, perhaps because the world economy was not then troubled by wild devaluations from speculative currency trading, and the statistical calculations for such a standard would have been hard to make on a daily basis in the 1940s. But Michael Rowbotham has elaborated on the proposal, calling it “a profound and democratic idea” that is “vital to any future sustainable and just world economy.” He writes:


An international trade unit could be established that consisted of the value of a basket of commodities broad enough to be representative of national products and prices and to withstand the manipulations of speculators. “With today’s sophisticated trading data,” says Rowbotham, “we could, literally, have a register of all globally traded commodities used to determine currency values.” Although this unit for measuring value would include the price of gold and other commodities, it would not actually be gold or any other commodity, and it would not be a currency. It would just be a yardstick for pegging currencies and negotiating contracts. A global unit for pegging value would allow currencies to be exchanged across national borders at exact conversion rates, just as miles can be exactly converted into kilometers, and watches can be precisely set when crossing date lines. Exchange rates would not be fixed forever, but they would be fixed everywhere. Changes in exchange rates would reflect the national market for real goods and services, not the international market for currencies. Like in the Bretton Woods system, in which currencies were pegged to gold, there would be no room for speculation or hedging. But the peg would be more stable than in the Bretton Woods system; and because it would not trade as a currency itself, it would not be in danger of becoming scarce.

Private Basket-of-Commodities Models

To implement such a standard globally would take another round of Bretton Woods negotiations, which might not happen any time soon. In the meantime, private exchange systems have been devised on the same model, which are instructive in the meantime for understanding how such a system might work.

Community currency advocate Tom Greco has designed a “credit clearing exchange” that expands on the LETS (http://www.transaction.net/money/lets/) system. It involves an exchange of credits tallied on a computer, without resorting to physical money at all. Values are computed using a market basket standard. The system is designed to provide merchants with a means of negotiating contracts privately in international trade units, which are measured against a basket of commodities rather than in particular currencies. Greco writes:


In determining what commodities should be included in the basket, Greco suggests the following criteria. They should be (1) traded in several relatively free markets, (2) traded in relatively high volume, (3) important in satisfying basic human needs, (4) relatively stable in price over time, and (5) uniform in quality or subject to quality standards. Merchants using the credit clearing exchange could agree to accept payment in a national currency, but the amount due would depend on the currency’s value in relation to this commodity-based unit of account. Once the unit had been established, the value of any circulating currency could be determined in relation to it, and exchange rates could be regularly computed and published for the benefit of traders….

Valuing Currencies Against the Consumer Price Index

Money reform advocate Frederick Mann, author of The Economic Rape of America, had another novel idea. Writing in 1998, he suggested that a private unit of exchange could be valued against either a designated basket of commodities, or the Commodity Research Bureau Index (CRB), or the Consumer Price Index (CPI). Using standardized price indices would make the unit particularly easy to calculate, since the figures for those indices are regularly reported around the world.

Mann called his currency unit the “Riegel,” after E.C. Riegel, who wrote on the subject in the first half of the twentieth century. For the “basket” option, Mann proposed using cattle, cocoa, coffee, copper, corn, cotton, heating oil, hogs, lumber, natural gas, crude oil, orange juice, palladium, rough rice, silver, soybeans, soybean meal, soybean oil, sugar, unleaded gas, and wheat, in proportions that worked out to about $1 million in American money. This figure would be divided by $1 million to get 1 Riegel, making the Riegel worth about $1 in American money.

Another option would be to use the Commodity Research Bureau Index, which includes gold along with other commodities. But Mann noted that the CRB would give an unrealistic picture of typical prices, because individuals don’t buy those commodities on a daily basis. A better alternative, he said, was the Consumer Price Index, which tallies the prices of things routinely bought by a typical family. In the United States, CPI figures are prepared monthly by the U.S. Bureau of Labor Statistics. Prices used to calculate the index are collected in 87 urban areas throughout the country and include price data from approximately 23,000 retail and service establishments, and data on rents from about 50,000 landlords and tenants.

When Mann was writing in 1998, the CPI was about $160. He suggested designating 1 Riegel as the CPI divided by 160, which would have again made it about $1 in 1998 prices. Converting the cost of one Riegel’s worth of goods in American dollars to the cost of those goods in other currencies would then be a simple mathematical proposition. The CPI’s “core rate,” which is used to track inflation, currently excludes goods with high price volatility, including food, energy, and the costs of owning rather than renting a home. But to be a fair representation of the consumer value of a currency at any particular time, those essential costs would probably need to be factored in as well.

A New Bretton Woods?

These proposals involve private international currency exchanges, but the same sort of reference unit could be used to stabilize exchange rates among official national currencies. Several innovators have proposed solutions to the exchange rate problem along these lines. Besides Michael Rowbotham in England, they include Lyndon LaRouche in the United States and Dr. Mahathir Mohamad in Malaysia, two political figures who are controversial in the West but have large followings and substantial influence internationally.

LaRouche shares the label of “perennial candidate” with Jacob Coxey, having run for U.S. President eight times. He also shares a number of ideas with Coxey, including the proposal to make cheap national credit available for putting the unemployed to work developing national infrastructure. LaRouche has launched an appeal for a new Bretton Woods Conference to reorganize the world’s financial system, a plan he says is endorsed by many international leaders. It would call for:

1.  A new system of fixed exchange rates,

2.  A treaty between governments to ban speculation in derivatives,

3. The cancellation or reorganization of international debt, and

4. The issuance of “credit” by national governments in sufficient quantity to bring their economies up to full employment, to be used for technical innovation and to develop critical infrastructure.

LaRouche’s proposed system of exchange rates would be based on an international unit of account pegged against the price of an agreed-upon basket of hard commodities. With such a system, he says, it would be “the currencies, not the commodities, [which are] given implicitly adjusted values, as based upon the basket of commodities used to define the unit.”

Dr. Mahathir is the outspoken Malaysian prime minister credited with sidestepping the “Asian crisis” that brought down the economies of his country’s neighbors....The Middle Eastern news outlet Al Jazeera describes him as a visionary in the Islamic world, who has proven to be ahead of his time. As noted earlier, Islamic movements for monetary reform are of particular interest today because oil-rich Islamic countries are actively seeking alternatives for maintaining their currency reserves, and they may be the first to break away from the global bankers’ private money scheme. In international conferences and forums, Islamic scholars have been vigorously debating monetary alternatives.

In 2002, Dr. Mahathir hosted a two-day seminar called “The Gold Dinar in Multilateral Trade,” in which he expounded on the Gold Dinar as an alternative to the U.S. dollar for clearing trade balances. Islamic proposals for monetary reform have generally involved a return to gold as the only “sound” currency, but Dr. Mahathir stressed that he was not advocating a return to the “gold standard,” in which paper money could be exchanged for its equivalent in gold on demand. Rather, he was proposing a system in which only trade deficits would be settled in gold. A British website called “Tax Free Gold” explains the proposed Gold Dinar system like this:


At the 2002 seminar, Dr. Mahathir conceded that gold’s market value is an unsound basis for valuing the national currency or the prices of national goods, because the value of gold is quite volatile and is subject to manipulation by speculators just as the U.S. dollar is. He said he was thinking instead along the lines of a basket-of-commodities standard for fixing the Gold Dinar’s value. Pegging the Dinar to the value of an entire basket of commodities would make it more stable than if it were just tied to the whims of the gold market. The Gold Dinar has been called a direct challenge to the IMF, which forbids gold-based currencies; but that charge might be circumvented if the Dinar were actually valued against a basket of commodities, as Dr. Mahathir has proposed. It would then not be a gold “currency” but would be merely an international unit of account.

The Urgent Need for Change

Other Islamic scholars have been debating how to escape the debt trap of the global bankers. Tarek El Diwany is a British expert in Islamic finance and the author of The Problem with Interest (2003). In a presentation at Cambridge University in 2002, he quoted a 1997 United Nations Human Develop Report underscoring the massive death tolls from the debt burden to the international bankers. The report stated:


El Diwany commented, “The UNDP does not say that the bankers are killing the children, it says that the debt is. But who is creating the debt? The bankers of course. And they are creating the debt by lending money that they have manufactured out of nothing. In return the developing world pays the developed world USD 700 million per day net in debt payments.” He concluded his Cambridge presentation:


We the people of the West can sit back and wait for the revolt, or we can be proactive and work to solve the problem at its source. We can start by designing legislation that would disempower the private international banking spider and empower the people worldwide. To be effective, this legislation would need to be negotiated internationally, and it would need to include an agreement for pegging or stabilizing national currencies on global markets.

A Proposal for an International Currency Yardstick That Is Not Currency

That brings us back to the question of how best to stabilize national currencies. The simplest and most comprehensive measure for calibrating an international currency yardstick seems to be the Consumer Price Index proposed by Mann, modified to reflect the real daily expenditures of consumers. To show how such a system might work, here is a hypothetical example. Assume that one International Currency Unit (ICU) equals the Consumer Price Index or some modified version of it, multiplied by some agreed-upon fraction.

On January 1 of our hypothetical year, a computer sampling of all national markets indicates that the value of one ICU in the United States is one dollar. The same goods that one dollar would purchase in the United States can be purchased in Mexico for 20 Mexican pesos and in England for half a British pound. These are the actual prices of the selected goods in each country’s currency within its own borders, as determined by supply and demand. When you cross the Mexican border, you can trade a dollar bill for 10 pesos or a British pound for 20 pesos. On either side of the border, one ICU worth of goods can be bought with those sums of money in their respective denominations.

Carlos, who has a business in Mexico, buys 10,000 ICUs worth of goods from Sam, who has a business in the United States. Carlos pays for the goods with 2,000,000 Mexican pesos. Sam takes the pesos to his local branch of the now-federalized Federal Reserve and exchanges them at the prevailing exchange rate for 10,000 U.S. dollars. The Fed sells the pesos at the prevailing rate to other people interested in conducting trade with Mexico. When the Fed accumulates excess pesos (or a positive trade balance), they are sold to the Mexican government for U.S. dollars at the prevailing exchange rate. If the Mexican government runs out of U.S. dollars, the U.S. government can either keep the excess pesos in reserve or it can buy anything it wants that Mexico has for sale, including but not limited to gold and other commodities.

The following year, Mexico has an election and a change of governments. The new government decides to fund many new social programs with newly-printed currency, expanding the supply of pesos by 10 percent. Under the classical quantity theory of money, this increase in demand (money) will inflate prices, pushing the price of one ICU in Mexico to around 22 Mexican pesos. That is the conventional theory, but Keynes maintained that if the new pesos were used to produce new goods and services, supply would increase along with demand, leaving prices unaffected….Whichever theory proves to be correct, the point here is that the value of the peso would be determined by the actual price on the Mexican market of the goods in the modified Consumer Price Index, not by the quantity of Mexican currency traded on international currency markets by speculators.

Currencies would no longer be traded as commodities fetching what the market would bear, and they would no longer be vulnerable to speculative attack. They would just be coupons for units of value recognized globally, units stable enough that commercial traders could “bank” on them. If labor and materials were cheaper in one country than another, it would be because they were more plentiful or accessible there, not because the country’s currency had been devalued by speculators. The national currency would become what it should have been all along -- a contract or promise to return value in goods in services of a certain worth, as measured against a universally recognized yardstick for determining value.

-- Ellen Brown, Web of Debt, pp. 443-451


(http://www.webofdebt.com/images/web.jpg) (http://www.webofdebt.com)
: Re: Monetary Reform!
: trailhound April 09, 2010, 12:53:03 PM
Let's not forget that the constitution points to gold AND silver as lawful money. 
: Re: Monetary Reform!
: donnay April 09, 2010, 12:56:06 PM
Let's not forget that the constitution points to gold AND silver as lawful money. 

QFT!
: Re: Monetary Reform!
: lazarus April 09, 2010, 01:44:57 PM
Regardless on any monetary reform that comes our way, there will always be people that want gold, and so it will go up in price. Unless they can electroshock those people or convince them to not want it against their will in some way.
: Re: Monetary Reform!
: Geolibertarian April 09, 2010, 02:20:12 PM
Let's not forget that the constitution points to gold AND silver as lawful money.

QFT!

Let's not also forget:

(a) that, as great as the Constitution is, it was nevertheless written not by God, but by fallible human beings, and can therefore be changed (http://en.wikipedia.org/wiki/Article_Five_of_the_United_States_Constitution) by human beings in accordance with an enhanced understanding as to what is necessary to secure a truly just, prosperous and free society;

(b) that, as anyone who's seen the first hour of The Money Masters (http://video.google.com/videoplay?docid=6076118677860424204) knows, banking oligarchs were well aware of the enormous threat that debt-free paper money posed to their privilege (http://savingcommunities.org/issues/) -- and hence to the unearned fortunes this privilege afforded them -- and so used their powerful influence to ensure (http://www.monetary.org/a-brief-history-of-money-in-the-usa/2009/08/) that Congress was given the power to borrow paper money at interest from a private bank instead of the power to issue such money itself at no interest;

(c) the fact that these oligarchs have been exploiting this Constitutional loophole ever since, and that the American people are consequently suffering through yet another banker-engineered depression because of it; and

(d) just how disastrous the gold/silver standard has proved to be in the past:

----------------------------------

"[Andrew] Jackson and Van Buren removed the monetary power from the private bankers but did not re-establish it in the hands of the nation. Instead, Van Buren organized the Independent Treasury System, establishing 15 sub branches of the Treasury to handle government moneys in 1840. From December 1836 the government moved toward making and receiving all payments in coinage, or truly convertible bank notes....Once the state bank notes were no longer accepted by the government, their circulation was cut back dramatically.

"This was the closest our nation has ever come to implementing a real gold/silver standard. Operating under the commodity theory of money, Van Buren, who truly cared for the Republic, helped bring on the worst depression the Nation had ever seen, starting in 1837. It was reportedly even worse than that caused by the 2nd Bank of the U.S. in 1819. Bad as the state bank notes were, they had still been functioning as money!

"Those who proclaim that no gold and silver money system has ever failed should consider that whether you are a laborer, farmer, or industrialist, the money system's success or failure is not measured by the value of a piece of metal. When your job, your farm, or factory has disappeared in a monetarily created depression, the system has failed!" [Emphasis added]

-- Stephen Zarlenga, The Lost Science of Money (http://www.monetary.org/lostscienceofmoney.html), p. 426

----------------------------------

Please let's not use the horrible problems of the present as an excuse to repeat the equally horrible mistakes of the past.
: Re: Monetary Reform!
: Geolibertarian May 01, 2010, 10:12:11 AM
http://www.infowars.com/greeces-financial-crisis-and-the-myth-of-modern-america/ (http://www.infowars.com/greeces-financial-crisis-and-the-myth-of-modern-america/)

Greece’s Financial Crisis and the Myth of Modern America

Damon Vrabel
Canada Free Press
February 20, 2010

I have been hearing a lot of chatter recently in coffee shops and lunch restaurants about the financial crisis in Greece. As I eavesdrop, the impression I get is that people are trying to convince themselves the problem is “over there.”  They discuss how Greece could have avoided the situation and debate what they should do now.  So naturally it is an isolated, country-specific problem “over there,” right?

But isn’t this déjà vu?  Haven’t we seen this before?

Indeed.  It is the same situation that has occurred in Iceland, Ukraine, Argentina, Indonesia, Malaysia, Mexico, England, and countless other countries.  It is not a problem of individual countries, but rather the global monetary system that is built on debt and rules most countries.  So the problem is very much “over here.”  Most of the world, especially the United States, is just as vulnerable as Greece.  It is only a matter of time.

Debt-Based Money and Financial Predators

Countries are vulnerable to attack because their currencies are nothing but floating debt instruments controlled by bankers.  This means they are not countries as much as administrative districts for the banks that rule them.  This is why Thomas Jefferson said “banking institutions are more dangerous than standing armies.”  Bankers and their Ivy League servants can overthrow a country more completely than an army can.

Financial predator George Soros has demonstrated this repeatedly.  He is lauded in the Financial Times of London and the Wall Street Journal as free market jihadis from the Chicago School and Harvard Business say he is just playing on a rational, fair, free market playing field.  Really?  So the Asian currency crisis of 1997 that impoverished many countries was a fair market transaction between several million poor peasants in rice fields and this billionaire predator working in conjunction with even more powerful debt lords behind the IMF?  That’s a “free market?”  Absolutely, and you are Batman.

Ivy League theory can spin any fiction into fact.  These economists are lost in their abstruse academic journals, insanely detached from real life.  They would no doubt think that a neighborhood kid stealing a pair of jeans from the local store is wrong, but a billionaire participating in a transaction that “steals” much more from millions of people and loots their country is just a shrewd free market investor.  They are advocating the equivalent of letting your kids sleep in a tent in your backyard just after a serial killer who has murdered twenty other kids moves into the neighborhood.  Why would we leave ourselves open to such a threat?  The United States is in this situation.  Literally, the door is unlocked and it is just a matter of time before the financial predators decide to enter.  Will we wakeup before it is too late?

The Myth of Modern America

We must recognize that our monetary system is nothing but bank credit, i.e. debt, so it is entirely open to attack.  Even if you are not personally in debt, any savings you have is just a measure of how much another person, business, or government is in debt.  In our current system, no money gets into circulation except by borrowing from banks.  There is no other source!  The United States issues no sovereign money! That is not freedom ladies and gentlemen. We are hostage to the “illuminated” debt lords who enrich themselves by putting everyone else in debt servitude, which makes us vulnerable to predators like Soros.

The United States government has failed to do its job as dictated in Article 1 Section 8 of the Constitution for 100 years—control and defend the value of our money.  Therefore, the United States is not a sovereign country, and the American people are not free.  It is time to admit the truth and either do something about it, or stop blowing up stuff on the 4th of July believing a myth.  If your Democrat and Republican politicians do not talk about this issue, they are either too ignorant to have the job, or they are getting banker kickbacks and staying quiet on purpose.  Either way, kick them out, stop voting for corporate puppets, and demand real leaders who will do their job...No other issue matters at this point.  Most of politics is a ruse to distract you from the fact that your country and your economy are hostage to banks and financial predators.

The Unstable Mathematical Flaw of Our Economic Model

The only way for this system to keep running is for us to collectively go deeper in debt to the bankers.  That is why the US government continues increasing the debt ceiling.  They have no choice as long as they refuse to do their constitutional job and provide sovereign money that is not an interest-bearing debt to banks. Why must we go deeper in debt?  Our economic model is built upon fundamentally unstable math: P < P+I (http://www.wealthmoney.org/articles/critical-math-flaw/).  P is all the money in the economy at any given time (principal). I is the interest that compounds on top of P that must be paid back. So the economy is constantly running faster and faster to generate more P in order to payback P+I. That creates perpetual exponential growth, perpetual increasing velocity, and deeper servitude over time. I grows faster than P, and since production has been sent offshore, there is no way out of the black hole without borrowing more. This is precisely what people like George Soros prey upon—currencies stuck with an impossible debt load. This system guarantees an eventual attack. To repeat: we have no money unless we borrow. We have no way to pay it back unless we borrow more. Borrowing more is precisely what eventually kills the economy and allows predators to become billionaires while the rest of the population loses their life savings. What can be done about this?

Austerity (http://www.webofdebt.com/articles/fiscal_responsibility.php):  What the Oligarchs Want to do

Typically when countries get attacked in these ways, they leave it up to the financial powers to tell them what to do.  The IMF comes in and protects capital holders by requiring the government to shutdown social services, thereby cutting off the lifeline of the lower classes.  This is class warfare in its most vicious form.  It literally results in starvation just to protect the cashflow of rich financiers who hold the country’s debt.  We also see Greece being required to outlaw cash for some transactions.  This is a strategic goal the financial powers have for the world.  A cashless society makes people completely hostage to electronic debit/credit cards controlled by the banks. Austerity is a bad plan for everyone except the upper class (http://forum.prisonplanet.com/index.php?topic=162212.msg976258#msg976258).

Premature Move:  End the Fed

Some say the solution is to end the Federal Reserve, thereby cutting off the financial powers at the top.  While it is the head of the monopolistic banking cartel which has no place in a free republic, eliminating it before any real monetary reform might only be the opening for the IMF to takeover.  It could also give the top predatory institutions like JP Morgan Chase more power over the people than they already have.  The Fed is to some degree a brake on these firms.  As long as Wall Street has a money monopoly, thanks to the government’s unbelievable response to the crash of 2008 shutting down smaller banks and consolidating Wall Street into a far more powerful group, I think we want a pseudo governmental organization providing some form of control.  At a minimum, we need real money first from a source other than this monopoly.

False Solution:  The Gold Standard

Many people say the gold standard would solve this problem.  But it only lasted 33 years and resulted in the banking system vacuuming up much of the gold into its own vaults!  The gold standard was a ruse.  It just required bank reserves to be gold, which demonetized silver and made people completely dependent on interest-bearing loans from the rich people who had the gold.  This is not a solution.  Gold held in our own hands is indeed debt-free money, which is why everyone reading this article should acquire some, but there is not enough gold to make it a useful medium of exchange in the current economy.  It would create a massively constrained money supply, which means we would be as dependent as ever on bank debt.  At this point the gold standard would be a step backward.

Real Solution:  Asset or Wealth Money

The solution is to create money that is not debt.  This would reduce the servitude relationship to bankers and the exponential growth of compound interest—the P < P+I problem. We the people need to make this happen. Expose the fraud of national elections by not voting until you find a leader willing to address this issue. But find such a leader!

The ultimate fix must come at the federal level, but until real leaders replace the corrupt ones there now, efforts can be made at the state (http://www.webofdebt.com/articles/campaigning_state-owned_banks.php) and local (http://www.ratical.org/many_worlds/cc/) level....Turnoff the TV news dominated by zombie candidates and their political ads full of irrelevant talking points pumped out by the central PR machine in DC. Push your state legislatures to spend money into circulation, rather than borrowing from banks, for infrastructure projects approved by the people (see the Minnesota Transportation Act (http://www.webofdebt.com/articles/minnesota-bank-proposal.php)). Call your legislators, call them again, and have others call them. Take action on this issue! States would then be able to recover some of their constitutional autonomy rather than being unconstitutional hostages to the debt lords. You can also start local community networks that are based simply on serving others (see themoneyfix.org). In such a system, providing a good or service for your neighbor earns you a credit and your neighbor an equal debit, which gives her the incentive to do something for you or someone else in the community ledger.  This is not a macro solution, but it is at least a step toward recovering our humanity and bringing our communities together again instead of pitting everyone against each other fighting for limited bank credit.

We do not need to be in debt to mega international banks to have an economy and create value!  Debt extracts value.  It is just a claim on someone else’s labor.  We would be far better off without much of the elite financial industry that enriches itself off our debt (though some deeply flawed economic statistics, e.g. GDP, would drop). The notion that we cannot work together without an oligarchy of banker middlemen is pure propaganda that has been pounded into our heads for years.  We must rise above it and start the process of eliminating debt and moving on a trajectory toward a more holistic life as sovereign communities and free individuals once again.  This is the only hope to begin the process of restoring the American Republic before a crisis far worse than Greece hits home.
: Re: Monetary Reform!
: lord edward coke May 04, 2010, 11:45:24 PM
http://www.theopensource.tv/the-money-masters/the-secret-of-oz-video_82fa50cc4.html

Thirteen years ago, in a documentary called "The MoneyMasters", we asked the question why is America going broke. It wasn't clear then that we were, but it is today. Now the question is how can we get out of this mess. Foreclosures are everywhere, unemployment is skyrocketing - and this is only the beginning. America's economy is on a long, slippery slope from here on. The bubble ride of debt has come to an end.

What can government do? The sad answer is - under the current monetary system - nothing. It's not going to get better until the root of the problem is understood and addressed. There isn't enough stimulus money in the entire world to get us out of this hole.

Why? Debt. The national debt is just like our consumer debt - it's the interest that's killing us.

Though most people don't realize it the government can't just issue it's own money anymore. It used to be that way. The King could just issue stuff called money. Abraham Lincoln did it to win the Civil War.

No, today, in our crazy money system, the government has to borrow our money into existence and then pay interest on it. That's why they call it the National Debt. All our money is created out of debt. Politicians who focus on reducing the National Debt as an answer probably don't know what the National Debt really is. To reduce the National Debt would be to reduce our money - and there's already too little of that.

No, you have to go deeper. You have to get at the root of this problem or we're never going to fix this. The solution isn't new or radical. America used to do it. Politicians used to fight with big bankers over it. It's all in our history - now sadly - in the distant past.

But why can't we just do it again? Why can't we just issue our own money, debt free? That, my friends, is the answer. Talk about reform! That's the only reform that will make a huge difference to everyone's life - even worldwide.

The solution is the secret that's been hidden from us for just over 100 years - ever since the time when author L. Frank Baum wrote "The Wonderful Wizard of Oz."

: Re: Monetary Reform!
: Geolibertarian June 26, 2010, 10:06:24 AM
To the relative newcomers reading this, if you ever hear a self-appointed know-it-all from either the controlled "Left" or controlled "Right" arrogantly dismiss out of hand the claim that the bulk of our money supply is created by private banks via fractional reserve lending, show him or her the following quotes:

------------------------------

"The Wahoo bank has acquired an interest-earning asset (the promissory note which it files under 'Loans') and has created demand deposits (a liability) to 'pay' for this asset. Grisley has swapped an IOU for the right to draw an additional $50,000 worth of checks against its demand deposit in the Wahoo bank....All this looks simple enough. But a close examination of the Wahoo bank's balance statement will reveal a startling fact: When a bank makes loans, it creates money. The president of Grisley went to the bank with something which is not money--her IOU--and walked out with something that is money--a demand deposit....By extending credit the Wahoo bank has 'monetized' an IOU....If commercial banks create demand deposits--money--when they make loans, is money destroyed when loans are repaid? Yes." [Emphasis original]

--  Campbell R. McConnell & Stanley L. Brue, Economics, 14th ed., pp. 294-5


"The bulk of the money in the U.S. economy is checkable deposits of commercial banks and thrifts, not currency." [Emphasis original]

-- Ibid., p. 287


"Banks are unique among financial intermediaries in that only they can create money. When banks make loans, they put the proceeds of such loans in the borrowers' checking accounts. Insofar as demand deposits are part of the money supply, these newly created deposits constitute 'new money' that did not exist before."

-- Roy J. Ruffin & Paul R. Gregory, Principles of Economics, 7th ed., p. 549


"When a commercial bank makes a loan to a business or an individual, it credits the checking account of that business or person with the amount loaned....Banks manufacture money through this loan process because they create money by monetizing debt."

-- The Appraisal Institute, The Appraisal of Real Estate, 11th ed., p. 100


"In the course of their lending activity, banks create money." [Emphasis original]

-- Marcia Stigum, The Money Market, 3rd ed., p. 17

------------------------------
: Re: Monetary Reform!
: freedom_commonsense June 26, 2010, 11:36:06 AM
Geo, do you support Ron Paul's motion for competing currencies?
: Re: Monetary Reform!
: Geolibertarian June 26, 2010, 11:44:14 AM
Geo, do you support Ron Paul's motion for competing currencies?

No, and here's why:

----------------------------------

http://globalresearch.ca/index.php?context=va&aid=16572 (http://globalresearch.ca/index.php?context=va&aid=16572)

Congressman Ron Paul’s “Free Competition in Currency Act” Won’t Solve the Problem But Still Raises Vital Issues

by Richard C. Cook
Global Research
December 15, 2009

While Congressman Ron Paul’s Free Competition in Currency Act is not a workable proposal, it points to a deeply serious problem with the Federal Reserve System that must be faced if the U.S. economy is to have a future.

Over the last 40 years the Federal Reserve, with the acquiescence of Congress and the executive branch, has become the primary regulator of the economy. The prevailing philosophy is called monetarism (http://forum.prisonplanet.com/index.php?topic=160459.msg1025433#msg1025433), and it’s based on the raising and lowering of interest rates.

This period has been marked by the successive creation and destruction of several gigantic investment bubbles. After the Federal Reserve brought on the recession of 1979-83 by raising interest rates to over 20 percent, we had a bubble during the Reagan/G.H.W. Bush years based on business mergers and acquisitions. It was then that the fulcrum of the U.S. economy shifted from manufacturing to finance. This bubble collapsed in a recession that brought Bill Clinton to the presidency in 1992.

Then, using the strong dollar to attract foreign investment, the Federal Reserve and the Clinton administration floated the U.S. economy throughout the 1990s on what was called the dot.com or "tech" bubble. This bubble collapsed in 2000-2001 with an enormous loss of asset value to U.S. and foreign investors, including massive loss of pension funds.

In 2000 George W. Bush was elected president. Instead of taking steps to rebuild the U.S. manufacturing economy, the Federal Reserve under Chairman Alan Greenspan slashed interest rates and removed the regulatory controls, resulting in a huge inflation of home prices through the housing bubble. Cash entering the economy through mortgage lending was the economic engine for the Bush presidency. Taxes from the housing bubble paid for much of the Afghanistan and Iraq wars.

Other investment bubbles in equities, hedge funds, derivatives, and commodities also took off. All this collapsed in the financial crash of October 2008. Now, President Barack Obama is trying to restart the U.S. economy by a huge infusion of federal government money through the largest increase in the national debt since World War II.

The policy of creating economic growth through credit bubbles is speculation-based and highly inflationary. It’s why the U.S. dollar has lost 85 percent of its value since 1965. But credit will have to be tightened soon, and the federal deficit will have to be reduced to keep the value of the dollar from declining further. This is likely to lead to a very weak recovery from the current recession and will leave households, businesses, and government at all levels still deeply in debt if not bankrupt.

So Congressman Paul is saying, quite logically, that the Federal Reserve needs to be attacked in its very ability to create these destructive inflationary bubbles. The Free Competition in Currency Act would attempt to do this by introducing gold and silver as a legal currency along with Federal Reserve Notes.

Unfortunately, there is not enough gold and silver in existence to fund the monetary requirements of modern economies. Trying to restore a metallic currency that never really existed in sufficient quantity since this nation was founded would only replace control of the economy by the banking system with control by gold and silver speculators.

Congressman Paul’s solution is largely ideology (http://www.youtube.com/watch?v=tuHCAXtjZ6Q)-driven to satisfy his libertarian (http://forum.prisonplanet.com/index.php?topic=165679.msg985551#msg985551) constituency. That’s why legislation like this which has no chance of passing and wouldn’t work if it were implemented is more a political protest than a genuine attempt to solve the problem.

A metallic-based currency, one of whose purposes is to uphold the value of money due to its scarcity, is based on a flawed concept. Money, even based on gold and silver, does not derive its value from being scarce nor is an abundance of money itself inflationary.

Actually, money should exist in sufficient quantity and availability to move all the legitimate trade that is waiting to be moved. Money is a medium of exchange and should be nothing more than that. When used by the banking system for wanton speculation, as money is today, it's an abuse. But to artificially restrict the availability of money when people need it to trade and earn a living is also an abuse.

The underlying purpose of the proposed Free Competition in Currency Act is actually to support the private minting of metallic coinage such as the "Liberty Dollar" and free such coinage from the sales and capital gains taxes that reduce its value. But a serious proposal to make privately-minted money usable in trade should also standardize its gold and silver content and fix its value, which this legislation fails to do. Therefore the only value of the Act would be to give the Liberty Dollar special privileges as an investment option.

Nevertheless, something must be done about the disastrous state of monetary policy, and none of the current proposals to restructure the financial regulatory system or reform the Federal Reserve would address the underlying issue of the inflationary nature of a monetary system based on federal government debt, financial speculation, and the supremacy of banking over the manufacturing sector.

A better solution would be to look at the dozens of local currency systems that are springing up around the nation, as private cooperatives begin to print and distribute their own local currencies. These currencies do what money is supposed to do. They act as a medium of exchange that monetizes the labor and resources of localities and regions.

These currencies consist of alternative paper notes and computer entries. As this movement continues, it is conceivable that someday different currencies could begin to be knitted together by computer databases and networks, so that their value would reach across jurisdictional lines and become a new type of national or even international monetary supply.

This is what governments should be promoting, Think what would happen if first cities, then states, then the federal government began to accept these currencies in payment of taxes, fees, or utility bills. Such currencies would be based on the value of production within the economy and very well could replace Federal Reserve Notes in many instances.

This is already happening in business bartering networks and with the use of other forms of value, such as airline frequent flyer miles, exchanged in trade. Of course the same thing is happening in many other parts of the world. Local currencies owned and distributed by producer cooperatives rather than dictatorial central banks allied with central governments deeply in debt may very well be the wave of the future.

Of course local currencies take us in the opposite direction of the tyranny of the international financiers and their desire to consolidate world currencies into the handful they can effectively control. Congressman Ron Paul is to be commended in challenging the legitimacy of the Federal Reserve money monopoly and getting people to look in the direction of a monetary system that serves rather impoverishes us.

----------------------------------
: Re: Monetary Reform!
: Geolibertarian June 28, 2010, 10:37:01 AM
We are routinely told that "inflation" is the sole source of all monetary evils. However, we had deflation between 1929 and 1933 -- see: http://www.youtube.com/watch?v=AoG8R1s59Po (http://www.youtube.com/watch?v=AoG8R1s59Po) -- yet, contrary to what Austrian School propagandists would have everyone believe, the average American was consequently worse off in '33 than in '29.

The monetary flat-earthers (http://www.monetary.org/a-refutation-of-mengers-theory-of-the-origin-of-money-abridged/2010/12) from the Austrian School are often so desperate to avoid this inconvenient fact of history that they'll laughingly turn reality on its head by trying to convince anyone foolish enough to listen that the avereage American was actually better off in '33 than he was several years beforehand (or at least no worse off than before).

Whenever they do this, I'm always reminded of the following:

----------------------------------

…the Fed actually accelerated money growth so that, in one four-week period, M-1 expanded at a startling annual rate of 27 percent. The President’s men did not object. The Federal Reserve was abandoning its monetarist principles, but so was the Reagan White House.

The White House senior officials were wise to ignore the monetarists, because none of their dire warnings came true. The most visible public embarrassment was reserved for the father of modern monetarism—Milton Friedman. The acerbic little professor would announce two stark predictions for the economy in subsequent months and both would be spectacularly wrong. First, Friedman declared, a new run-up of price inflation, perhaps approaching double digits, was now inevitable in the next year or so, given the explosive money growth the Federal Reserve was allowing. (Instead, inflation would decline even further.) Next, when Friedman analyzed a slowdown that developed in M-1 growth in late 1983, he boldly predicted that a recession would unfold in the election of 1984. (That didn’t happen either.)

"Now I was wrong, absolutely wrong," Friedman said of his predicted recession. "And I have no good explanation as to why I was wrong."

William Poole offered an explanation for the gross miscalculations by himself and Milton Friedman and the other monetarists. "I think it’s fair to say," Poole suggested, "that those of us who have developed strong theories tried to fit the world into the theory rather than the other way around." [Emphasis added]

-- William Greider, Secrets of the Temple (http://books.google.com/books?id=JxSU5I58L-wC&printsec=frontcover&source=gbs_navlinks_s#v=onepage&q=&f=false), p. 543

----------------------------------

With regard to inflation, have you ever seen people at a store or shopping mall with "too much money" in their pockets and "too few goods" to spend it on?

Me neither.

Yet I continually hear well-meaning people parrot the Austrian School myth that, anytime a new paper dollar is added to the money supply, the dollars already in existence automatically become worth less, resulting in inflation ("too much money chasing too few goods").

This is misleading at best. Allow me to explain why.

If, over the course of a given year, economic output increases 3%, yet the money supply increases only 1%, then that 1% increase will be deflationary, not inflationary, because there will consequently be less money in circulation relative to the amount of goods and services available for sale.

If the expansion rate of the money supply merely keeps pace with economic output, then there is neither inflation nor deflation.

It's only when money creation dramatically outpaces the production of new goods and services that one has inflation, and even then only if there isn't an offsetting decrease in money velocity (http://en.wikipedia.org/wiki/Velocity_of_money) (such as we've seen since 2008 due to plummeting consumer confidence (http://abcnews.go.com/print?id=9442466)).

And the above applies merely to overhyped "demand-pull" inflation.

What almost never gets talked about is cost-push inflation; and even when it is talked about, virtually no one ever mentions the primary causative roles that are played by (a) compound interest (http://www.wealthmoney.org/compound-interest-8th-world/) on bank loans, and (b) land speculation (http://www.progress.org/fold43.htm).

For a better understanding of what I mean, consider the following three excerpts (the first from Ellen Brown's Web of Debt, the second from The Truth In Money Book, the third from the web site henrygeorge.org):

----------------------------------

The gold standard (http://www.youtube.com/view_play_list?p=C1BDC7CCD8684C7F) and the inflation argument that was used to justify it were based on the classical "quantity theory of money."  The foundation of classical monetary theory, it held that inflation is caused by "too much money chasing too few goods." When "demand" (the money available to buy goods) increases faster than "supply" (goods and services), prices are forced up. If the government were allowed to simply issue all the Greenback (http://forum.prisonplanet.com/index.php?topic=98465.msg581271#msg581271) dollars it needed, the money supply would increase faster than goods and services, and price inflation would result. If paper money were tied to gold (http://www.monetary.org/goldnewsletter.htm), a commodity in limited and fixed supply, the money supply would remain stable and price inflation would be avoided.

A corollary to that theory was the classical maxim that the government should balance its budget (http://www.wealthmoney.org/articles/Budget.html) at all costs. If it ran short of money, it was supposed to borrow from the bankers rather than print the money it needed, in order to keep from inflating the money supply. The argument was a "straw man" argument -- one easily knocked down because it contained a logical fallacy -- but the fallacy was not immediately obvious, because the bankers were concealing their hand. The fallacy lay in the assumption that the money the government borrowed from the banks already existed and was merely being recycled. If the bankers themselves were creating the money they lent, the argument collapsed in a heap of straw. The money supply would obviously increase just as much from bank-created money as from government-created money. In either case, it was money pulled out of an empty hat. Money created by the government had the advantage that it would not plunge the taxpayers into debt; and it provided a permanent money supply, one not dependent on higher and higher levels of borrowing to stay afloat.

The quantity theory of money contained another logical fallacy, which was pointed out later by British economist John Maynard Keynes. Adding money ("demand") to the economy would drive up prices only if the "supply" side of the equation remained fixed. If new Greenbacks were issued to create new goods and services, supply would increase along with demand, and prices would remain stable. When a shoe salesmen with many unsold shoes on his shelves suddenly got more customers, he did not raise his prices. He sold more shoes. If he ran out of shoes, he ordered more from the factory, which produced more. If he were to raise his prices, his customers would go to the shop down the street, where shoes were still being sold at the lower price. Adding more money to the economy would inflate prices only when the producers ran out of the labor and materials needed to make more goods. Before that, supply and demand would increase together, leaving prices as they were before.

-- Ellen Brown, Web of Debt (http://www.webofdebt.com/), pp. 100-101


Inflation in a debt-dominant money system, such as the system administered by the Federal Reserve, is correctly defined as: debt-induced currency devaluation. In fact, it is only in a debt-dominant money system that inflation has ever occurred, from the first recorded inflation that destroyed ancient Babylonia over 4,000 years ago, to the present day.

Inflation is characterized by the loss of purchasing power of the dollar (or any other monetary unit). Steadily rising prices are a symptom of this loss of purchasing power. It is the devaluation of the dollar that forces general price increases.

The dollar's devaluation, in turn, is caused by the inherent flaw in the debt-dominant money system, namely, the creation of most money as debt. This locks the system into a vicious cycle of escalating borrowing in a futile effort to pay both interest and principal. A debt-dominant money system is naturally deflationary, due to the built-in shortage of money to pay interest. The shortage forces continually increasing borrowing, which requires continually increasing prices to cover the cost of business borrowing.

The devaluation of the dollar leads to a valid demand for growth of the money supply. More money is borrowed into existence to meet this demand, but the amounts are never enough to keep pace with the growing cost of debt which triggered the cycle in the first place.

The growth of the money supply which occurs during times of inflation is simply the result of businesses and individuals escalating their borrowing. They do this in order to pay higher interest costs, either their own or their own plus the higher interest costs reflected in the rising prices of goods, services, and overhead. The primary cause of this escalation is a chronic shortage of money. The money shortage is equal to the uncreated, unpayable interest due on the escalating debt.

This growth of the money supply is widely mistaken to be the cause of inflation, whereas in fact it is only another symptom of inflation. The mistake of calling an increase in the money supply the cause of inflation is based on the belief that money is like a commodity which becomes more valuable when it is scarce and less valuable when the quantity available increases.

If inflation really is a condition of too much money in the system, it would be reasonable to ask every citizen to burn a $20 bill daily in order to bring down the money supply.

Also, if the theory that money is like a commodity is true, money borrowed at high rates of interest ought to be very valuable and buy more goods than money borrowed at low interest. However, recent experience has shown that money borrowed at 20% interest bought far less in 1981 than money borrowed at 8% interest several years earlier.

In the debt-dominant money system, prices increase as a reflection of the escalating interest charges being incurred by producers. The term "price inflation" clearly identifies the process of rising prices. However, the term "inflation," when applied to the economy as a whole, fails to identify the phenomenon in operation which causes prices to rise, and is therefore misleading. The more accurate and descriptive term for the mis-called "inflation" phenomenon is debt-induced currency devaluation.

-- Theodore R. Thoren & Richard F. Warner, The Truth In Money Book (http://www.amazon.com/Truth-Money-book-Theodore-Thoren/dp/0960693815/ref=sr_1_1?ie=UTF8&s=books&qid=1249392525&sr=1-1), revised 2nd ed., pp. 204-6


http://web.archive.org/web/20090509102114/http://www.henrygeorge.org/bust.htm (http://web.archive.org/web/20090509102114/http://www.henrygeorge.org/bust.htm)

(http://www.henrygeorge.org/images/bust.gif)

A theory of economic boom and crash is one of Henry George's (http://schalkenbach.org) two great purposes in Progress and Poverty. What is the root cause of the "paroxysms of industrial depression"?

The root cause, says Henry George, is the speculative rise of land prices, which cuts into the earnings of labor (http://www.progress.org/2003/fold315.htm) and capital (http://www.henrygeorge.org/cap.htm). Land rents and prices rise at a faster rate than general economic growth, because of two unavoidable facts:


When sufficient numbers of workers and capitalists cannot afford to produce at the higher rents (http://www.progress.org/fold221.htm) brought about by growth and speculation (http://www.progress.org/fold43.htm), production begins to stop.

Let us examine some of the implications of this fact for modern economies:

New Construction is Limited. If builders must pay too much for building sites, it takes from their profit by raising their costs. Their profit on investing in the building itself is what stimulates investing, which in turn is what makes jobs and incomes.

Business Costs Go Up. Businesses that rent their premises also get squeezed by rising rents. Here's an example: A merchant goes into a new shopping center with a long term lease. His rent is often too high, but he pays it to hold his position for the later term when he hopes the rent will be a bargain. Landlords writing long-term leases get used to this, and hold out for high rentals.

Nonproductive Investments Become More Profitable than Productive Ones. Let’s say that you own some land, which you might decide to improve. But, you have the option of selling the land to a speculator. Why improve the land if the profits on your improvements would yield little more than merely collecting the speculation-hyped value of the vacant site? Landowners will "site-sit" and wait, if they believe future development will be much more gainful than development for the current market. When the workaday facts of today begin looking dull and prosaic next to the gleaming expectations of tomorrow, look out.

Banking and Credit is Destabilized. Builders needing land borrow to buy it, even though the price is too high, gambling that future rises in rents will let them repay the loan. If these rent rises fail to happen, they go bankrupt. Their buildings are not destroyed, but the capital they used to build on them was misdirected, so much of it is economically lost: the buildings lose their market value.

Unlike items of wealth, which are priced according to their cost of reproduction at the present time, land is not produced -- so it has no cost of production. Yet it is bought and sold, like articles of wealth. The selling price of land is determined by comparing its income potential with that of an equivalent value of wealth, through a process called capitalization. Here's how that works (http://www.henrygeorge.org/mike.htm). However, the capitalization of current rent is only the beginning. With land, there is nearly always an added premium reflecting expected price increases in the future.

Speculation raises land prices beyond the sites' current use values. Credit is extended farther in order to accommodate this. That is, banks lend on overpriced land, counting on a further rise. When the rise slows, they extend the loans, sometimes even granting new loans for paying interest on old loans. They use political pressure to get governmental agencies (e.g. the World Bank) to extend or underwrite these risky loans (e.g. in Latin America). When the bubble bursts, the loans are not repaid. This destroys capital. The Savings & Loan fiasco of the 1980s is a case in point, but the basic dynamics are there in every recession.

This is not a new phenomenon. John Stuart Mill (http://www.wealthandwant.com/themes/Mill.html) had written (before Henry George) of a tendency of lenders, when legitimate demand for loans dries up, to "lower the quality of credit" by accepting high-risk loans they would have spurned before. Because land value is such a large part of collateral on loans, and land values fluctuate wildly in business cycles, the tendency toward these volatile, high-risk lending practices is very strong.

Why don't capitalists needing land simply join in the speculative game? Couldn't they buy land at speculative prices and use it while it continues to rise in value? Actually, that's what they all do. No one can justify buying and holding land at today's prices without counting the future advance in price or rent as part of his or her gain. Thus everyone is hooked, forced by the market to participate in the speculative game, once it gets started. All become implicated and habituated, emotionally and politically, whether they like the principle or not. Eventually people forget that there could be any other way of doing business.

How do labor and capital resist advances in land value, when they must have land in order to produce? By ceasing production. What does this mean in real life? Labor and capital decline to buy or rent land at the high asking prices. Some will rent or buy less land, and use it more intensively. Some will sleep on the street, or sell from the sidewalk. Some will retreat to little patches of marginal land. Some will buy as much land as ever, but thus use up funds they otherwise would have used to improve it, becoming withholders themselves. Some will organize and pass counterproductive rent-control laws. The economy-wide net result will be less production, more unemployment.

The question that many modern-day economists fail to ask is this: How do investors react to a set of incentives where expected changes in land value are made part of the overall return on investment -- and land price is part of the investment on which return is figured?

This has several results:


Land Speculation and Inflation?

(http://www.henrygeorge.org/images/money.jpg)

There are as many different theories of the basic cause of inflation as there are for depressions. But since today's business cycle seems to involve a constant tension between periods of inflation and periods of unemployment/recession, the two phenomena clearly are linked.

George said almost nothing in Progress and Poverty about inflation; in his day industrial depression was a much more serious problem. However, inflation was not unheard-of in those days, and a strong connection is implied in George's reasoning. Consider the following statement regarding George's remedy (which this course is soon to consider): "Taxes may be imposed upon the value of land until all rent is taken by the state, without reducing the wages of labor or the reward of capital one iota; without increasing the price of a single commodity, or making production in any way more difficult."

What has this to do with inflation? George identifies land rent (http://www.henrygeorge.org/rent1.htm) as an income that does not come from production; it is, in effect, a tax on production, the burden of which increases as production increases -- due to rising demand for the fixed supply of land. The tendency of this process is, as we have seen, to raise land rents beyond the marginal ability of labor and capital to pay them -- and depression is the result.

This process can be forestalled, temporarily at least, by increasing the money supply. Remember, the income of landowners increases as overall production increases, even though landowners make no contribution to production! The buying power that landowners gain, laborers and capitalists lose. But the effect of this can be blunted by increasing the money supply. When then supply of money increases faster than the supply of actual wealth, that's called inflation. An increase in the money supply can stimulate demand for goods, for a while -- if people have a certain amount of money to spend, they will try to spend it before it loses its value. Thus, an increase in the money supply, via lowered interest rates, can keep a period of economic growth alive -- at least until after the next election.

However, even this expediency is thwarted by the process of land speculation. As we explained here (http://www.henrygeorge.org/mike.htm), land prices are arrived at via the process of capitalization. Essentially, the annual rent of a site is divided by the current rate of interest, and this capitalized rent is the basis for the selling price (most often a speculative premium will be added). Now, if the central bank lowers interest rates to free up the money supply, this means that the divisor, the capitalization rate, is a lower figure -- and therefore land prices will increase!

Many analysts, for example, note that the persistently low interest rates maintained by Alan Greenspan's Federal Reserve in the early 2000s played a key role in the "housing boom" that followed. Of course, in the real world a great many factors influence financial markets, and particular market situations are extremely complex. However, this by no means denies the pivotal, fundamental role played by land rent and land speculation. Eventually, in a growing economy (even if the growth is only a short-term blip brought about by fiscal stimulus), increased rents will consume the extra buying power. Then, one of two things must happen: either the money supply must be increased further, risking runaway inflation -- or there must be a recession.

[Continued... (http://web.archive.org/web/20090509102114/http://www.henrygeorge.org/bust.htm)]

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Thus, contrary to what the Austrian School would have everyone believe, inflation -- under the current system -- is not caused by "government printing too much money."

First of all, the bulk of our money supply isn't even paper, but mere numeric entries on the books of some bank.

Second, the government doesn't print "money," otherwise it wouldn't have to borrow it all the time. What the government "prints" is currency. But that currency does not become "money" (legal tender) until it's been issued by the private banking system, which does so by lending it at interest.

It is thus private banks who've been causing inflation all these decades, and they've done so by (a) loaning out trillions of dollars they didn't even have, and (b) never creating the money needed to pay the usurious interest on all these inherently fraudulent loans -- thereby forcing indebted business owners, as a whole, to silently incorporate the cost of this unpayable (http://www.wealthmoney.org/compound-interest-8th-world/) interest debt into the selling price of virtually everything we buy (a form of "cost-push" inflation one never hears about from news anchors, media pundits, or either Austrian or Keynesian ideologues); and consumers, as a whole, to continually borrow (http://www.msnbc.msn.com/Default.aspx?id=3939463) more in order to afford the usury-induced price increases.

Land speculation then makes matters worse by driving up the location values of a fixed supply of land, and hence the cost of either renting or purchasing that land (another form of cost-push inflation one never hears about). And since land isn't a product of human labor, and since the increased cost of renting or purchasing it forces the cash-strapped masses to borrow still more, this has the effect of (a) delinking money creation increasingly further from the production of new goods and services, and thus of (b) increasing the amount of money there is in circulation relative to the amount of goods and services available for sale, thereby triggering eventual demand-pull inflation as well -- though not as much as one might think, since this is offset to a significant degree by both

* the fact that money vanishes from the money supply whenever the principal of a bank loan is repaid; and

* the deflationary impact that mortage loan defaults have on the money supply, due to the fact that pledged collateral usually sells for much less than what the bankrupted homeowner or business owner owed on it, and how this in turn forces the bank to offset the unpaid principal dollar for dollar from its capital assets. The more this happens nationwide (http://www.infowars.com/record-3-million-homeowners-plagued-by-foreclosure/print/), the less banks as a whole can lend. The less banks can lend, the more the gap between (a) the overall indebtedness of the economy (principal-plus-interest) and (b) the amount of money (principal) there is in circulation to pay it off increases (since interest debt continues to increase at a compounding rate regardless of whether the money supply increases along with it). And as that gap increases, more and more people are consequently forced into bankruptcy, thus creating a vicious, self-perpetuating cycle of bankruptcies, increased money shortages, followed by still further bankruptcies.

(The above two factors, coupled with the dramatic decrease in the velocity of money brought on by record lows in consumer confidence, are why -- in mid-2010 -- we have yet to experience the runaway hyperinflation that many were insisting as far back as late 2008 was just around the corner.)

Thus, while there is undoubtedly a certain degree of inflation that may be accurately classified as "demand-pull," much if not most of it is actually cost-push inflation (for the reasons explained above). And whatever demand-pull inflation we do have is driven primarily by usury and land speculation and the consequent delinking of money creation from wealth production.
: Re: Monetary Reform!
: citizenx July 09, 2010, 12:40:00 AM
Exactly, what good does deflation do the average person, if they don't have any work or if they don't have much money to spend?  Deflation also meant depressed wages for these folk as well.  Furhter, if you can't charge very much for your goods, you have to pay less for the labor that goes in to producing them.  If not and your profit margin is narrowed, why make more?  Why produce more?  The tendency will simply be to lay more people off, and have even more people idle, which is more or less what happened and what has been happening since the financial crisis of 07' -- largely unabated, and possibly about to become even worse despite the quasi-recoverey of the markets and a deflation beneficial only to some exporters and those already relatively well off.
: The Horrific Derivatives Bubble That Could Destroy Entire World Financial System
: Geolibertarian August 09, 2010, 11:10:20 AM
  • put all derivatives (http://www.webofdebt.com/articles/its_the_derivatives.php)-infected mega-banks (http://www.prisonplanet.com/96-of-credit-derivative-risk-held-by-5-banks.html) through Chapter 11 bankruptcy and, in the reorganization proceedings, legally void all of their derivatives contracts;
  • liquidate all of the ill-gotten assets of criminal scam artists such as Henry Paulson and Bernard Madoff, and use the resultant proceeds to help replenish whatever retirement funds they raided;

http://www.prisonplanet.com/the-horrific-derivatives-bubble-that-could-one-day-destroy-the-entire-world-financial-system.html (http://www.prisonplanet.com/the-horrific-derivatives-bubble-that-could-one-day-destroy-the-entire-world-financial-system.html)

The Horrific Derivatives Bubble That Could One Day Destroy The Entire World Financial System

The Economic Collapse (http://theeconomiccollapseblog.com)
Aug 9, 2010

Today there is a horrific derivatives bubble that threatens to destroy not only the U.S. economy but the entire world financial system as well, but unfortunately the vast majority of people do not understand it.  When you say the word “derivatives” to most Americans, they have no idea what you are talking about.  In fact, even most members of the U.S. Congress don’t really seem to understand them.  But you don’t have to get into all the technicalities to understand the bigger picture.  Basically, derivatives are financial instruments whose value depends upon or is derived from the price of something else.  A derivative has no underlying value of its own.  It is essentially a side bet.  Originally, derivatives were mostly used to hedge risk and to offset the possibility of taking losses.  But today it has gone way, way beyond that.  Today the world financial system has become a gigantic casino where insanely large bets are made on anything and everything that you can possibly imagine.

The derivatives market is almost entirely unregulated and in recent years it has ballooned to such enormous proportions that it is almost hard to believe.  Today, the worldwide derivatives market is approximately 20 times the size of the entire global economy.

Because derivatives are so unregulated, nobody knows for certain exactly what the total value of all the derivatives worldwide is, but low estimates put it around 600 trillion dollars and high estimates put it at around 1.5 quadrillion dollars.

Do you know how large one quadrillion is?

Counting at one dollar per second, it would take 32 million years to count to one quadrillion.

If you want to attempt it, you might want to get started right now.

To put that in perspective, the gross domestic product of the United States is only about 14 trillion dollars.

In fact, the total market cap of all major global stock markets is only about 30 trillion dollars.

So when you are talking about 1.5 quadrillion dollars, you are talking about an amount of money that is almost inconceivable.

So what is going to happen when this insanely large derivatives bubble pops?

Well, the truth is that the danger that we face from derivatives is so great that Warren Buffet has called them “financial weapons of mass destruction” (http://news.bbc.co.uk/2/hi/2817995.stm).

Unfortunately, he is not exaggerating.

It would be hard to understate the financial devastation that we could potentially be facing.

A number of years back, French President Jacques Chirac referred to derivatives as “financial AIDS” (http://tarpley.net/2010/04/25/fight-the-derivatives-cancer-with-a-wall-street-sales-tax-plus-bans-on-hedge-funds-credit-default-swaps-and-synthetic-cdos/).

The reality is that when this bubble pops there won’t be enough money in the entire world to fix it.

But ignorance is bliss, and most people simply do not understand these complex financial instruments enough to be worried about them.

Unfortunately, just because most of us do not understand the danger does not mean that the danger has been eliminated.

In a recent column, Dr. Jerome Corsi of WorldNetDaily (http://www.wnd.com/index.php?fa=PAGE.view&pageId=143057) noted that even many institutional investors have gotten sucked into investing in derivatives without even understanding the incredible risk they were facing….

A key problem with derivatives is that in the attempt to reduce costs or prevent losses, institutional investors typically accepted complex risks that carried little-understood liabilities widely disproportionate to any potential savings the derivatives contract may have initially obtained.

The hedge-fund and derivatives markets are so highly complex and technical that even many top economists and investment-banking professionals don’t fully understand them.

Moreover, both the hedge-fund and the derivatives markets are almost totally unregulated, either by the U.S. government or by any other government worldwide.


Most Americans don’t realize it, but derivatives played a major role in the financial crisis of 2007 and 2008.

Do you remember how AIG was constantly in the news for a while there?

Well, they weren’t in financial trouble because they had written a bunch of bad insurance policies.

What had happened is that a subsidiary of AIG had lost more than $18 billion on Credit Default Swaps (derivatives) it had written, and additional losses from derivatives were on the way which could have caused the complete collapse of the insurance giant.

So the U.S. government stepped in and bailed them out – all at U.S. taxpayer expense of course.

But the AIG incident was actually quite small compared to what could be coming. The derivatives market has become so monolithic that even a relatively minor imbalance in the global economy could set off a chain reaction that would have devastating consequences.

In his recent article on derivatives, Webster Tarpley (http://tarpley.net/2010/04/25/fight-the-derivatives-cancer-with-a-wall-street-sales-tax-plus-bans-on-hedge-funds-credit-default-swaps-and-synthetic-cdos/) described the central role that derivatives now play in our financial system….

Far from being some arcane or marginal activity, financial derivatives have come to represent the principal business of the financier oligarchy in Wall Street, the City of London, Frankfurt, and other money centers. A concerted effort has been made by politicians and the news media to hide and camouflage the central role played by derivative speculation in the economic disasters of recent years. Journalists and public relations types have done everything possible to avoid even mentioning derivatives, coining phrases like “toxic assets,” “exotic instruments,” and – most notably – “troubled assets,” as in Troubled Assets Relief Program or TARP, aka the monstrous $800 billion bailout of Wall Street speculators which was enacted in October 2008 with the support of Bush, Henry Paulson, John McCain, Sarah Palin, and the Obama Democrats.

But wasn’t the financial reform law that Congress just passed supposed to fix all this?

Well, the truth is that you simply cannot “fix” a 1.5 quadrillion dollar problem, but yes, the financial reform law was supposed to put some new restrictions on derivatives.

And initially, there were some somewhat significant reforms contained in the bill. But after the vast horde of Wall Street lobbyists in Washington got done doing their thing, the derivatives reforms were almost completely and totally neutered.

So the rampant casino gambling continues and everybody on Wall Street is happy.

For now.

One day some event will happen which will cause a sudden shift in world financial markets and trillions of dollars of losses in derivatives will create a tsunami that will bring the entire house of cards down.

All of the money in the world will not be enough to bail out the financial system when that day arrives.

The truth is that we should have never allowed world financial markets to become a giant casino.

But we did.

Soon enough we will all pay the price, and when that disastrous day comes, most Americans will still not understand what is happening.
: When Money Eats the World
: Geolibertarian August 09, 2010, 05:18:19 PM
http://web.archive.org/web/20061116031731/landru.i-link-2.net/monques/moneyeats.html (http://web.archive.org/web/20061116031731/landru.i-link-2.net/monques/moneyeats.html)

WHEN MONEY EATS THE WORLD

by John McMurtry, Professor of Philosophy
University of Guelph

As the wheels come off the global market juggernaut, we need to understand that the unfolding collapse has been programmed into the machine. Stay the course of capital deregulation long enough and a truly momentous wreck is guaranteed. The fact is that our political and market leaderships have ensured no intelligent thought relating to the actual life needs of societies has been listened to for 15 years. "No alternative," they incanted without a break since the Reagan revolution of mindless govenment first began stripping social infrastructures by ever lower tax rates for the rich and 20% compound interest rates on public debt. Even now as the government of France pulls out of the MAI declaration of rights for unaccountable borderless capital, Ottawa is still prating about "sticking to its commitments" to the meltdown program.

The problem is a generalized mind-seizure. As money-to-more-money circuits have become increasingly autonomous, public consciousness has fetishized money demand as the sovereign authority of the world. The lifeblood of societies has been circulated away as fast as possible to "pay off deficits as a national emergency," "reduce social costs to attract investors," "cool down the employment rate to ward off currency devaluation," "deregulate the labour and resource markets economy for greater efficiencies," and so on. The litany for expropriation of societies' common heritage and infrastructure has been recited every hour for almost twenty years, and it has always and everywhere been the disguise for highly leveraged money sequences to feed on the social life substance across the planet.

But even as the meltdown progresses across continents, the unseen seat of the disease is not yet whispered—that money sequences are overloaded far beyond the capacity of social and environmental capacities to feed them, and that they increasingly attack life-serving functions to continue their decoupled cycles.

Because these money sequences are increasingly without productive outcome of any kind, redistribute more and more wealth to the economically parasitic (http://forum.prisonplanet.com/index.php?topic=162212.msg967898#msg967898) while stripping the civil commons and the poor, and progressively demand ever more revenue extraction from social and environmental hosts, their reproduction has become increasingly incompatible with civil and planetary life.

The overloading of the life-system by ever more ravenous money sequences is, in truth, behind every crisis people face today in the global market—behind the stressing and breaking of the planetary environment's carrying capacities, behind government debt and deficit loads and crises across the world, behind the ceaseless mergers, acquisitions and job-sheddings by corporate finance departments, behind the speed-ups of every process of work and resource extraction, behind the privatization and enclosure of evolved civil commons in every culture, and behind now the Asian meltdown and the great slump of Japan.

We need not summarize all the symptoms. But consider some figures of money-demand aggregates increasing exponentially on life systems at every level, every new unit of the escalating load requiring "more competitive performance" or "more competitive cost cutting" from individual, social and environmental life-hosts, with no limit set to what will be demanded next.

Bear in mind that the meaning of "discounted cash flow," which is the moving line and reference body of global market value, means that what is today $100 in real terms is the same as $100 + compound interest in one year ($110), two years ($121), or 20 years from now as the starting base from which every "worthwhile enterprise" is calculated. The system is a horizonlessly expanding money-demand machine engineering all that lives to extract more money value from it.

If the victim societies melt under the "free circulation" of the hot money flows, then this is because they did not "adapt effectively." If the atmosphere itself can no longer hold the pollutants dumped into it, then this is the occasion for issuing "pollution credits" to make more business out of the earth's collapse.

Canada's Pension Plan itself is now being fed to the hungry money circuits. The reason is simple. Since money grows money, why not put our national pension funds into the global market to make it pay for future pensions. Consider the rate of multiplication. An input of $10,614 in 1955 yields an output of compound-interest-plus multification to $5,309,000 in 1998. That is, an over 500-times increase in what goes to "the investor" who performs no function in the increase, nor in the productive economy to receive this increase, nor in serving the life of any life organization to be entitled to all further exponential multiplication of this money demand seeking to be still more. This is called "market freedom."

In 1998, the combined money-demand value of US pension and mutual funds to whom this multiplication is promised was $9 trillion, or 30 times the net money worth of the US's 60 richest market agents, with more new money-demand then going into these funds every quarter than all the US super-rich own together. These were predicted to grow at a sustained or rising rate. At the same time, both British and Canadian national pension funds planned to redistribute all of their public funds into the global market of transnational money sequences as well, instead of as in the past lending to governments, investing in jobs for the young, or committing to any defence or growth of life at all. Meanwhile the poverty of children, dead-end youth prospects and the slips in environmental carrying capacity in both societies continued to climb.

During this collapse of life-system bearings and money-sequence metastasis, even the once mighty machine shop of the world, Japan, came to the end of the line. It reached the surplus money wall in the early 1990's, performing as a harbinger of the disorder few saw. When the speculatively driven prices or real estate and Nikkei stocks plunged, and the richest banks in the world could not find productive enterprises to invest in and steward as their successful automobile and electronic industries had done since 1950 by long-term, careful financial ministry planning, Japan's money sequences had no way out. When the hundreds of billions of uncommitted money demand first invaded and then exited Asian stocks and currencies in 1997-98, leaving societies there on average halved in their money access to means of existence, Japan was left with hundreds of billions of debt that could not be paid by the lenders, and with no advances behind the armed force of land clearances and forced borderless markets favoured by the US corporate axis.

Japan controlled $12 trillion in loose money with no real function to perform except to become more. But with its unmoored banks loaded with $1000 billions in bad loans, Japan's government naturally had to pump over $200 billion more in public funds to back up the decoupled financial circuits.

Robotically lock-stepping to the unhinged market paradigm, the IMF and the US government demanded still more borderless financial deregulation from Japan, just as they had prescribed for all the economies of Asia that had already been melted down by such financial deregulation. Japan's government, not recognizing the gallows wit and still locked in the paradigm themselves, promised "a big bang" of more deregulation in financial markets.

We've been getting the big bang now for a long time, and it only gets bigger.

When a long-dominant paradigm fails in its prescriptions, and it calls for more of its failed prescriptions to solve its failures, its circularity becomes terminal. What is not recognized is the underlying principle of the escalating failures: that financial crises always follow from money-value delinked from real value, which has many names but no understanding of what it is. Value is what serves life itself, and the global market paradigm has no place in its metric for the life factor at any level.
: Greening the Dollar
: Geolibertarian September 07, 2010, 01:51:47 PM
http://www.monetary.org/greenpartymonetaryplank.html (http://www.monetary.org/greenpartymonetaryplank.html)

Dear Friends,

Some exciting and historic news from the U.S. Green Party (http://geolib.com/essays/sullivan.dan/greenlibertarians.html)!

This past week (end of August 2010) the Green Party's National Committee working on monetary and economic policy matters have approved an historic, comprehensive Monetary Reform Plank in their 2010 Platform which actually does the job, as it includes all three of the necessary elements to achieve real reform.  We're happy to report this mirrors the proposed American Monetary Act.

Monetary Reform (Greening the dollar)

"While the banking reforms outlined in the above 12 points are very important to ameliorate the present crisis in our banking system, to affect long term, transformative change, it is imperative that we restructure our poorly conceived monetary system.  The present mis-structured system of privatized control has resulted in the misdirection of our resources to speculation, toxic loans, and phony financial instruments that create huge profits for the few but no real wealth or jobs.   It is both possible and necessary for our government to take back its special money creation privilege and spend this money into circulation through a carefully controlled policy of directing funds, through community banks and interest-free loans, to local and state government entities to be used for infrastructure, health, education, and the arts This would add millions of good jobs, enrich our communities, and go a long ways toward ending the current deep recession.

To reverse the privatization of control over the money issuing process of our nation’s monetary system; to reverse its resulting obscene and undeserved concentration of wealth and income; to place it within a more equitable public system of governmental checks and balances; and to end the regular recurrence of severe and disruptive banking crises such as the ongoing financial crisis which threatens the livelihood of millions; the Green Party supports the following interconnected,

Green Solutions:

1. Nationalize the 12 Federal Reserve Banks, reconstituting them and the Federal Reserve Systems Washington Board of Governors under a new Monetary Authority Board within the U.S. Treasury. The private creation of money or credit which substitutes for money, will cease and with it the reckless and fraudulent practices that have led to the present financial and economic crisis.

2. Create a Monetary Authority, which will, with assistance from the FDIC, the SEC, the U.S. Treasury, the Congressional Budget Office, and others, redefine bank lending rules and procedures to end the privilege banks now have to create money when they extend their credit, by ending what is known as the fractional reserve system in an elegant, non disruptive manner. Banks will be encouraged to continue as profit making companies, extending loans of real money at interest; acting as intermediaries between those clients seeking a return on their savings and those clients ready and able to pay for borrowing the money; but banks will no longer be creators of what we are using for money. Many new forms of banks will be encouraged such as community banks, credit unions, etc., see 11 and 12 above)  

3. The new money that must be regularly added to an improving system as population and commerce grow will be created and spent into circulation by the U. S. Government for infrastructure, including the human infrastructure of education and health care. This begins with the $2.2 trillion the American Society of Civil Engineers warns us is needed to bring existing infrastructure to safe levels over the next 5 years. Per capita guidelines will assure a fair distribution of such expenditures across the United States, creating good jobs, re-invigorating the local economies and re-funding government at all levels. As this money is paid out to various contractors, they in turn pay their suppliers and laborers who in turn pay for their living expenses and ultimately this money gets deposited into banks, which are then in a position to make loans of this money, according to the new regulations."

----------------------------------

Now if the Greens would only wake up and smell the corporate fascist Kool-Aid they've been drinking with regard to the "carbon tax," and advocate instead the Georgist tax reform called for here (http://forum.prisonplanet.com/index.php?topic=160421.0), I could wholeheartedly endorse their economic policy agenda.
: Re: Monetary Reform!
: citizenx September 07, 2010, 05:09:29 PM
One former Green, right here.  Woke up, undrank the cool-aid on GW.  Totally with you all the way on "green-backs".

(Was a (re-) co-founder of the "Bruin Greens" at my alma mater!)

Right on, Geo.  Hopefully, we will see some other folks come on over.
: The After-the-Fed Solutions Debate Begins: Greenbackers vs. Goldbugs
: Geolibertarian October 13, 2010, 02:59:19 PM
http://www.infowars.com/the-after-the-fed-solutions-debate-begins-greenbackers-vs-goldbugs/ (http://www.infowars.com/the-after-the-fed-solutions-debate-begins-greenbackers-vs-goldbugs/)

The After-the-Fed Solutions Debate Begins: Greenbackers vs. Goldbugs

Eric Blair
Activist Post (http://www.activistpost.com/2010/10/after-fed-solutions-debate-begins.html)
October 13, 2010

The battle to expose the Federal Reserve has been long and arduous. It finally appears that after nearly 100 years of absolute economic control and near complete debasement of the dollar, the Fed’s reign may be coming to an end. Its eventual demise is certain according to Black Swan author (http://www.huffingtonpost.com/2010/09/30/nassim-taleb-federal-reserve-will-be-gone_n_746109.html) Nassim Taleb and others (http://www.economicpolicyjournal.com/2010/10/jim-rogers-federal-reserve-will-implode.html). With all the recent mainstream talk and speculation about the end of the Fed, it is time to debate solutions for the future of America’s currency. This may indeed be the most important discussion of our lifetime.

First, we must be aware that the Federal Reserve, along with other foreign private central banks and the IMF, have long had plans for a global currency. This is not conspiracy theory mumbo-jumbo anymore, but rather cold hard fact. Lew Rockwell wrote an excellent article summarizing the IMF’s push for a global currency — the Bancor (http://www.lewrockwell.com/rockwell/new-push-for-global-currency151.html). The recent international currency war (http://www.bloomberg.com/news/2010-10-09/finance-leaders-call-for-imf-role-in-averting-protectionist-currency-war-.html) may be the beginning of creating a false demand for something more stable for international trade. As all major currencies race to the bottom, the private banking cartel will surely offer their global solution. We know what their solution will be — continued debt slavery with more centralized control — but what will the people’s solution be?

There seems to be another currency war brewing right here in America. The debate between the two most popular proposed solutions of adopting the Greenback (http://globalgulag.freesmfhosting.com/index.php/topic,379.msg1157.html#msg1157) or the Gold Standard (http://globalgulag.freesmfhosting.com/index.php/topic,379.msg1162.html#msg1162) has just officially begun. Last week (http://www.lewrockwell.com/north/north891.html), Gary North, a Goldbug and author of Honest Money (http://www.amazon.com/Honest-Money-Biblical-Principles-Banking/dp/0930462157?ie=UTF8&tag=permacultucom-20&link_code=btl&camp=213689&creative=392969), wrote a scathing attack of Web of Debt (http://www.webofdebt.com) author Ellen Brown, a Greenbacker. He took select samples from her book in an attempt to tie her public bank solution to Hitler, but failed to address the “interest-free” philosophy of her policy. Despite that, he does manage to frame the Goldbug’s argument against the Greenback, or public banking, as inferior:


A rebuttal piece was then written by Interest-Free Currency activist Anthony Michgels (http://realcurrencies.wordpress.com/2010/10/10/in-defense-of-ellen-brown/) in defense of Brown and the Greenbackers where he goes after North and claims interest-bearing gold can never work:


Passions already seem to be running high in the opening round of this most critical debate that surely will shape the future of our economy and society. Notably, both sides of this argument are in agreement that the Fed is a corrupt organization that must be ended. North acknowledged that Ron Paul and Ellen Brown share this common ground, but says the Tea Party movement (liberty movement) has “no economic understanding” and “They cannot distinguish Ron Paul’s opposition to the FED, based on the gold coin standard, from Ellen Brown’s opposition, based on a fiat money standard. They are intellectually defenseless.”

It seems a bit arrogant of North to suggest that the liberty movement is confused about why Ron Paul and Ellen Brown support ending the Fed, and it’s also disingenuous to say that one side of the growing movement is “intellectually defenseless” because of disagreements about the solution. Especially when Brown’s public banking movement appears to be immediately workable and is gaining ground as the first pragmatic step being to establish state banks — as proven in North Dakota, which has a state-owned bank and boasts the lowest unemployment and the only budget surplus of the United States.

The public banking movement opposes the Federal Reserve, like Paul, because it is unconstitutional, but also for a variety of other intellectually defensible positions, starting with the fact that they are a private monopoly who care not for Americans or the country. There are very real concerns that this group of banksters may maintain dominance of a gold-based system since they already have possession of most of the world’s gold — including much of the mining as well (http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a.2iJPPmhM94). Furthermore, if they can continue to create money on a fractional basis — even if backed partially by gold — and can continue to charge and determine interest, they’ll still possess the power to enslave-by-debt people, industry, and entire nations. Finally, the private profit motive of international banksters, driven by interest, has historically proven to encourage wars as evidenced by their funding of both sides of all wars. This would also seem to give them dubious power to determine the outcome of those wars.

In turn, it’s a given that the liberty movement supports the restoration of the Constitution which clearly states that the coinage of money shall be in gold and that only the elected Congress is authorized to issue and control it. However, the Constitution says nothing of allowing a fractional reserve gold standard run by private bankers which is promoted by some Goldbugs. Furthermore, some Constitutionalists still maintain the strange notion that the government should belong to the people. Therefore, if we were able to restore the Constitutional principle for a government of, by and for the people, it would seem that interest-free currency issued and controlled by our elected government would be considered more constitutional than the current system.

It is true that gold has been valued in society for thousands of years and it will likely continue to maintain its terrific investment value for the foreseeable future. Gold clearly has a physical value derived from the incredible energy it requires to mine and refine it. But gold, as a limited resource, is interest bearing and can be hoarded by those with the wherewithal to do so. This would seem to suggest that gold could then be manipulated by the few who control vast sums of it. And that sounds a lot like the economic tyranny we face today with the private Fed.

North attacks Greenbackers because they “are opposed to central banking, unless the central bank is 100% owned and controlled by Congress.” As if to say, how dare the people demand ownership of their own currency. It shows a blinding distrust for Constitutional government and obvious preference for private banking interests.  

[Continued... (http://www.infowars.com/the-after-the-fed-solutions-debate-begins-greenbackers-vs-goldbugs/)]
: The Hidden Slavery of Interest
: Geolibertarian October 16, 2010, 11:13:41 AM
http://www.infowars.com/the-hidden-slavery-of-interest/ (http://www.infowars.com/the-hidden-slavery-of-interest/)

The Hidden Slavery of Interest

Anthony Migchels
Activist Post (http://www.activistpost.com/2010/10/hidden-slavery-of-interest.html)
October 16, 2010

Most advanced political and economic debate is dominated by the Americans. Through films like Zeitgeist Addendum, The Money Masters and Money as Debt, and books like those of Thomas Greco and Ellen Brown (http://www.webofdebt.com). They have been enormously important contributions to the awakening of the many (including myself!) towards the most pressing problem of our time, our monetary “system.”

The one notable exception is interest. Of course all the aforementioned sources have dealt with interest, but to my mind there has been no really comprehensive and satisfactory analysis of interest in the Anglo Saxon world. In fact, most analysts concentrate on the fact that money is debt. There seems to be some kind of consensus that debt is the heart of the issue. But it is not. Without interest, debt would not be a problem, as I worked out here (http://realcurrencies.wordpress.com/2009/11/17/on-the-creation-of-money/).

(http://static.infowars.com/2010/10/i/article-images/debt5.jpg)
Interest is being payed by people borrowing money and received
by people having loads of it. So it is per definition a wealth transfer
from poor to rich.


Interest is one of the few things that is more profoundly understood in Europe, more specifically, Germany. Throughout the 20th century interest has been analyzed by some unknown, but brilliant thinkers. Silvio Gesell comes to mind, Gottfried Feder and later Helmut Creutz and their current standard bearer Margrit Kennedy.

Feder wrote a book Breaking the Shackles of Interest, and later advised Hitler, who was to say time and again, that “the kernel of National Socialism is breaking the thralldom of interest.” Maybe that did some damage by association to the theme....

Be that as it may, it is time to make fully clear what the scale of the interest problem is. We need to get rid of any misunderstanding, let alone underestimation of this most heinous tool in the hands of our Satanist masters.

Dealing with Interest

We’ll go through this point for point. Some points will in some way overlap others, but they are still worth mentioning because they widen our perspective. I’ll be quoting Margrit Kennedy a lot and I would strongly suggest going through her classic ‘Why we need monetary innovation (http://www.margritkennedy.de/index.php?id=105&ord=56)’.

1. To begin with, I’ll put forward my standard example: a mortgage. Let’s say you want to buy a house and go the bank and get a loan. Say 200k. The simple truth is, after thirty years you will have payed back 600k. 200k for the principal and 400k (!!) in interest. Now this might be OK, or at least somewhat understandable, if you were borrowing this money from somebody else, who has been saving it. But as we know, this is not the case. The money is produced the moment the loan is granted by the bank. In a computer program. By pressing a few buttons.

So basically you pay 400k interest for pressing a button. Granted, the bank needs to manage the loan during the time it is being repaid. But the cost for this is still only a fraction of the income they get through the interest.

Now, we could stop here, because it is clear that the bank is ripping us off, also in legal terms, although they make the laws themselves, because there is no realistic service being delivered for the money.

But there is so much more, we must continue.

2. When the bank creates some money by giving you a loan, it takes the money out of circulation when you repay. Repaying debts means a diminishing money supply. The banks only provide the principal, in our previous example 200k. But after thirty years, 600k has been repaid and only 200k was created. So how can this be? How can 600k be repaid by 200k?

It can’t. Somebody else needs to get into debt to create sufficient liquidity to pay the 400k interest. And the borrower of the original loan must start competing for this liquidity with everybody else to obtain that, intrinsically scarce, cash.

This means that because of the combination of debt and interest, the money supply must grow forever. But we know that a growing money supply is the definition of inflation and that inflation is closely linked to rising prices. So inflation is inherent in the system. This sounds strange, because Central Banks raise interest rates to lower inflation, reasoning less credit will be issued because of rising prices for it. But the higher the interest rates go, the more money must be created to pay for this interest.

Just one of the perverse side effects of interest in the current wealth transfer system we call “finance.”

3. Due to interest, money circulates slower. This is a big problem, because the slower the money circulates, the more we need of it in circulation to meet our needs. And when you have interest bearing money as debt, that is quite a problem indeed. The reason for slower circulation is that it enhances the store of value function of money, with all its detrimental implications (http://realcurrencies.wordpress.com/2009/11/10/what-is-money/).

This phenomenon can be best seen when thinking about paying bills. If you know you can increase your money by postponing paying your bills, you will help the money circulate slower. People will be encouraged to hoard the money instead of spending it.

It is also more likely because of this reason rather than the growing cost of money which lessens inflation (or better, price rises) in the short term when raising interest rates. Because less money is circulating slower, demand falls.

4. Now, because of the fact that the principal is created but not the money to pay the interest, money is intrinsically scarce. Because of scarce money, capital is the scarce factor of production, whereas reason has it that labor should be the scarcer than capital. How else can we say we live in abundance?

I think it was Lietaer who pointed out the natural consequence of this state of affairs: competition. Economic actors in the current system compete with each other primarily for scarce working capital. Scarce money is a major driving force in the ever more competitive marketplace. Of course, the winners of this system have their lackeys (“economists”) explain that competition leads to efficiency. But common sense dictates that humans are more effective when they can cooperate. Surely there is a place for competition in the market, but it has gotten totally out of hand and it is getting worse.

Scarce money because of interest is one of the more profound reasons for this trend.

5. So what of it you think. I was raised to be conservative in these matters and one should simply not get into debt, so you won’t pay interest.

Wrong. Not only because if nobody went into debt, there would be no money, but because companies go into debt to finance their production. They pay interest (capital costs) over these loans. And like any cost this must be calculated into the prices they ask for their goods and services.

And what percentage of prices can be related to interest? It depends on the kind of business, particularly how capital intensive it is. Going from 12% for garbage collection to 77% for renting a house. All in all about 40% of prices can be traced back to costs for capital. These figures are by Kennedy and they have been corroborated by an independent study done by Erasmus University, Rotterdam, the Netherlands under the supervision of STRO (http://www.socialtrade.org), a leading monetary think tank in the Netherlands.

So, you lose 40% (!!!!) of your disposable income to interest through prices.

6. Interest is being payed by people borrowing money and received by people having loads of it. So it is per definition a wealth transfer from poor to rich.

It transpires, that about 80% of the poorest people pay more interest than they receive to the richest 10%. The next richest 10% pay as much as they receive. This means the vast majority is losing a substantial part of their money to interest. The richest own the banks or have a lot of money there.

We must keep in mind that this is totally for nothing, since most of the money is printed at the time it is loaned out.

How much money are we talking about? I have only figures for Germany, but reason suggests it is basically the same everywhere.

In Germany the poorest 80% pay 1 billion Euros in interest to the richest 10% PER DAY. Yes, that’s right, one billion euros per day. That is a grand total of 365 billion euro’s per year. That is one seventh of German GDP and extrapolating this to America, the poorest 80% must be paying at least a trillion a year.

It conclusively explains the old adage that the rich get richer and the poor get poorer.

This is the hidden tax that nobody is talking about.

This is the yoke that we carry.

This is the worst kind of slavery, because it is slavery without even realizing it.

This is interest and let it never be forgotten.

This is our mortal enemy and let us never take our eyes of it again, until it is thrown into the fire of hell, together with the usurers enslaving us with it.
: Re: Monetary Reform!
: decemberfellow October 16, 2010, 12:06:34 PM
I and my wife have been turning more and more to the bartering system. It works well and I know all the elites  HATE that!  I know that this will never happen nationally because of the years of brainwashing that has been going on.  Grant it I cannot solely get by on bartering simply because there are not enough people awake to make it so. But where and when I can I use it. Works fine for me. 
: World Bank chief calls for new gold standard
: Geolibertarian November 09, 2010, 02:32:29 PM
http://www.infowars.com/the-after-the-fed-solutions-debate-begins-greenbackers-vs-goldbugs/ (http://www.infowars.com/the-after-the-fed-solutions-debate-begins-greenbackers-vs-goldbugs/)

It is true that gold has been valued in society for thousands of years and it will likely continue to maintain its terrific investment value for the foreseeable future. Gold clearly has a physical value derived from the incredible energy it requires to mine and refine it. But gold, as a limited resource, is interest bearing and can be hoarded by those with the wherewithal to do so. This would seem to suggest that gold could then be manipulated by the few who control vast sums of it. And that sounds a lot like the economic tyranny we face today with the private Fed.

North attacks Greenbackers because they “are opposed to central banking, unless the central bank is 100% owned and controlled by Congress.” As if to say, how dare the people demand ownership of their own currency. It shows a blinding distrust for Constitutional government and obvious preference for private banking interests.  

[Continued... (http://www.infowars.com/the-after-the-fed-solutions-debate-begins-greenbackers-vs-goldbugs/)]

Toward the end of The Money Masters (http://www.themoneymasters.com) (released in 1996), Bill Still makes the following prophetic warning:


-- http://www.youtube.com/watch?v=2EuB82bErJY (http://www.youtube.com/watch?v=2EuB82bErJY)

Keep the above in mind as you read the following:

--------------------------------------------

http://www.marketwatch.com/story/world-bank-chief-calls-for-new-gold-standard-2010-11-07 (http://www.marketwatch.com/story/world-bank-chief-calls-for-new-gold-standard-2010-11-07)

World Bank chief calls for new gold standard

By Chris Oliver
MarketWatch
Nov. 7, 2010

HONG KONG (MarketWatch) –- The president of the World Bank said in a newspaper editorial Monday that the Group of 20 leading economies should consider adopting a global reserve currency based on gold as part of structural reforms to the world’s foreign-exchange regime.

World Bank chief Robert Zoellick said in an article the Financial Times that leading economies should consider “employing gold as an international reference point of market expectations about inflation, deflation and future currency values.”

Zoellick made the proposal as part of reforms to be considered at this week’s G-20 meeting in Seoul.

[Continued... (http://www.marketwatch.com/story/world-bank-chief-calls-for-new-gold-standard-2010-11-07)]

--------------------------------------------

I've said it before and I'll say it again: with "opponents" like the Austrian School (http://globalgulag.freesmfhosting.com/index.php/topic,395.0.html), the international bankers don't need any allies!
: Re: Monetary Reform!
: freedom_commonsense November 22, 2010, 11:44:17 AM
http://www.progress.org/2010/dakota.htm

A State Bank for California

The California Green Party puts forth some proposals nicely in line with geonomics. This 2010 article is from Beyond Chron.org‚ Nov. 10.

by Bernard Marszalek


The idea of a state bank -- proposed by the California Green Party -- can be found in Ellen Brown’s Web of Debt which describes the North Dakota State Bank, a financial institution dating back to 1919.

The State of North Dakota, in part because of its bank (they have oil, too, and very little land speculation), has remained solvent during the financial meltdown. Their state bank arose from a vibrant populist movement one hundred years ago.

With a public bank, how about our own money system? For years Argentina used the American dollar, until we pulled the rug out from under their economy. We could continue to use the dollar for international trade, and for local trade nothing stops us from creating our own currencies, an option some communities are discussing now.

In Alaska, each citizen receives a yearly dividend check from the tax on extracting Alaska’s oil. I am not advocating off shore drilling, but mentioning the Alaska Fund as an example of citizens sharing the bounty from their natural resources. The Bush Regime even floated this idea for Iraq.

California’s resources, however, go far beyond oil -- we have deserts, for solar energy; water (including tides) and wind; forests that could be sustainably harvested (in agreement with the federal government); minerals of all sorts, and the list goes on.

Of course, this means renegotiating with those companies that currently rip off the citizens of California mainly to benefit out-of-state investors. No self-respecting world-class economy should tolerate that. The ultimate aim of creating a state fund like the Alaska model is not to make us all rich, but to begin the process of securing our commons to generate an income for all, separate from jobs.

...

[continued at link above]
: Re: Monetary Reform!
: citizenx December 05, 2010, 04:05:58 PM
Cheerleader for bankster economics
October 9, 2010 by FauxCapitalist

 My email to Gary North on his October 8, 2010 hit piece on Ellen Brown, the author of Web of Debt:

Dr. North,

You’re getting real desperate with today’s hit piece on Ellen Brown, “Cheerleader for Hitler’s Economics,” as you scramble to defend what more and more people are realizing to be the gold standard bankster scam to confiscate people’s wealth in the inevitable terminal phase of their latest debt with interest money scheme, all in the name of a return to “sound money.” It happened in 1933, it will happen again, and you know it.

This year alone, despite being a self-professed “gold bug,” he admitted gold was a bad investment from 1980-2001, he made the outlandish claim that 21 years is a medium-term investment to justify gold’s embarrassing performance during that time, and claimed that gold coins produced by the U.S. and Canada aren’t money, despite being legal tender.

http://fauxcapitalist.com/2010/10/09/cheerleader-for-bankster-economics/
: Re: Monetary Reform!
: Dig December 25, 2010, 04:39:02 PM
http://www.progress.org/2010/dakota.htm

A State Bank for California

The California Green Party puts forth some proposals nicely in line with geonomics. This 2010 article is from Beyond Chron.org‚ Nov. 10.

by Bernard Marszalek


The idea of a state bank -- proposed by the California Green Party -- can be found in Ellen Brown’s Web of Debt which describes the North Dakota State Bank, a financial institution dating back to 1919.

The State of North Dakota, in part because of its bank (they have oil, too, and very little land speculation), has remained solvent during the financial meltdown. Their state bank arose from a vibrant populist movement one hundred years ago.

With a public bank, how about our own money system? For years Argentina used the American dollar, until we pulled the rug out from under their economy. We could continue to use the dollar for international trade, and for local trade nothing stops us from creating our own currencies, an option some communities are discussing now.

In Alaska, each citizen receives a yearly dividend check from the tax on extracting Alaska’s oil. I am not advocating off shore drilling, but mentioning the Alaska Fund as an example of citizens sharing the bounty from their natural resources. The Bush Regime even floated this idea for Iraq.

California’s resources, however, go far beyond oil -- we have deserts, for solar energy; water (including tides) and wind; forests that could be sustainably harvested (in agreement with the federal government); minerals of all sorts, and the list goes on.

Of course, this means renegotiating with those companies that currently rip off the citizens of California mainly to benefit out-of-state investors. No self-respecting world-class economy should tolerate that. The ultimate aim of creating a state fund like the Alaska model is not to make us all rich, but to begin the process of securing our commons to generate an income for all, separate from jobs.

...

[continued at link above]

California Green Party is following the Rothschild/Buffett/Strong path and not the North Dakota path...

**Black & Veatch: Transforming monetary policy from Petro based to Water based
http://forum.prisonplanet.com/index.php?topic=195608.0


Africa will be the new Middle East with false flags everywhere. Their plan to make natural resources the monetary base means that all water will have to be controlled by private banksters and derivitive traders.
: Re: Monetary Reform!
: Geolibertarian December 27, 2010, 09:49:46 AM
California Green Party is following the Rothschild/Buffett/Strong path and not the North Dakota path...

I'm not familiar enough with the CA Green Party's position on monetary reform to make that asssessment (their platform (http://www.cagreens.org/platform/platform_toc.shtml) is virtually silent on the matter), but I do know that they advocate the ridiculously fraudulent, economy-destroying "carbon" tax (http://forum.prisonplanet.com/index.php?topic=160421.msg1019432#msg1019432), and that alone is cause for alarm.
: Derivatives: The Real Reason Bernanke Funnels Trillions Into Wall Street Banks
: Geolibertarian February 09, 2011, 03:05:40 PM
If I had the power, I would simultaneously

*  put all derivatives (http://www.webofdebt.com/articles/its_the_derivatives.php)-infected mega-banks (http://www.prisonplanet.com/96-of-credit-derivative-risk-held-by-5-banks.html) through Chapter 11 bankruptcy and, in the reorganization proceedings, legally void all of their derivatives contracts;

*  liquidate all of the ill-gotten assets of criminal scam artists such as Henry Paulson and Bernard Madoff, and use the resultant proceeds to help replenish whatever retirement funds they raided;

http://www.prisonplanet.com/derivatives-the-real-reason-bernanke-funnels-trillions-into-wall-street-banks.html (http://www.prisonplanet.com/derivatives-the-real-reason-bernanke-funnels-trillions-into-wall-street-banks.html)

Derivatives: The Real Reason Bernanke Funnels Trillions Into Wall Street Banks

Seeking Alpha (http://seekingalpha.com/article/251375-derivatives-the-real-reason-bernanke-funnels-trillions-into-wall-street-banks)
Feb 9, 2011

We’ve been over the numerous BS excuses that US Dollar destroyer extraordinaire Ben Bernanke has made for QE enough times that today I’d rather simply focus on the REAL reason he continues to funnel TRILLIONS of Dollars into the Wall Street Banks.

I’ve written this analysis before. But given the enormity of what it entails, it’s worth repeating. The following paragraphs are the REAL reason Bernanke does what he does no matter what any other media outlet, book, investment expert, or guru tell you.

Bernanke is printing money and funneling it into the Wall Street banks for one reason and one reason only. That reason is: DERIVATIVES.

According to the Office of the Comptroller of the Currency’s Quarterly Report on Bank Trading and Derivatives Activities for the Second Quarter 2010 (most recent), the notional value of derivatives held by U.S. commercial banks is around $223.4 TRILLION.

Five banks account for 95% of this. Can you guess which five?

(http://static.seekingalpha.com/uploads/2011/2/8/saupload_gpc_2011_10_3_20top_20five_20derivative_20exposure_thumb1.png)

[Continued... (http://www.prisonplanet.com/derivatives-the-real-reason-bernanke-funnels-trillions-into-wall-street-banks.html)]
: Re: Monetary Reform!
: TheHiveMind February 16, 2011, 04:43:53 AM
Tremendously good information Geo!
: WISCONSIN: BROKE UNLESS YOU COUNT THE $67 BILLION . . .
: Geolibertarian March 08, 2011, 03:04:12 PM
WISCONSIN: BROKE UNLESS YOU COUNT THE $67 BILLION . . .

Ellen Brown
March 7th, 2011
www.webofdebt.com/articles/wiconsin.php (http://www.webofdebt.com/articles/wisconsin.php)

       Public sector man sitting in a bar: “They’re trying to take away our pensions.”
       Private sector man: “What’s a pension?”
              -- Cartoon in the Houston Chronicle (http://blogs.chron.com/txpotomac/2011/02/political_cartoons_of_the_week_162.html)

As states struggle to meet their budgets, public pensions are on the chopping block, but they needn’t be. States can keep their pension funds intact while leveraging them into many times their worth in loans, just as Wall Street banks do. They can do this by forming their own public banks, following the lead of North Dakota (http://www.yesmagazine.org/blogs/fixing-the-future/north-dakota-banking-on-the-locals)—a state that currently has a budget surplus.

Wisconsin Governor Scott Walker, whose recently proposed bill to gut benefits, wages, and bargaining rights for unionized public workers inspired weeks of protests in Madison, has justified the move as necessary for balancing the state's budget. But is it?

After three weeks of demonstrations in Wisconsin, protesters report no plans to back down. Fourteen Wisconsin Democratic lawmakers—who left the state so that a quorum to vote on the bill could not be reached—said Friday that they are not deterred by threats of possible arrest and of 1,500 layoffs if they don't return to work. President Obama has charged Wisconsin’s Governor Scott Walker with attempting to bust the unions. But Walker’s defense is:


Among other concessions, Governor Walker wants to require public employees to pay a portion of the cost of their own pensions. Bemoaning a budget deficit of $3.6 billion (http://www.greenbaypressgazette.com/article/20110211/GPG0101/110211052/Public-workers-in-Wisconsin-reeling-from-anti-union-bill#_blank), he says the state is too broke to afford all these benefits.

Broke Unless You Count the $67 Billion Pension Fund . . .

That’s what he says, but according to Wisconsin’s 2010 CAFR (http://ftp://doaftp04.doa.state.wi.us/doadocs/2010CAFR_Linked.pdf) [.pdf] (Comprehensive Annual Financial Report), the state has $67 billion in pension and other employee benefit trust funds, invested mainly in stocks and debt securities drawing a modest return.

A recent study (http://www.huffingtonpost.com/2011/02/22/wisconsin-pension-fund-among-healthiest-us_n_826709.html) by the PEW Center for the States showed that Wisconsin’s pension fund is almost fully funded, meaning it can meet its commitments for years to come without drawing on outside sources. It requires a contribution of only $645 million annually to meet pension payouts. Zach Carter, writing (http://www.huffingtonpost.com/2011/02/22/wisconsin-pension-fund-among-healthiest-us_n_826709.html) in the Huffington Post, notes that the pension program could save another $195 million annually just by cutting out its Wall Street investment managers and managing the funds in-house.

The governor is evidently eying the state’s lucrative pension fund, not because the state cannot afford the pension program, but as a source of revenue for programs that are not fully funded. This tactic, however, is not going down well with state employees.

Fortunately, there is another alternative. Wisconsin could draw down the fund by the small amount needed to meet pension obligations, and put the bulk of the money to work creating jobs, helping local businesses, and increasing tax revenues for the state. It could do this by forming its own bank, following the lead of North Dakota, the only state to have its own bank -- and the only state to escape the credit crisis.

This could be done without spending the pension fund money or lending it. The funds would just be shifted from one form of investment to another (equity in a bank). When a bank makes a loan, neither the bank’s own capital nor its customers’ demand deposits are actually lent to borrowers. As observed on the Dallas Federal Reserve’s website (http://www.dallasfed.org/educate/everyday/ev9.html), “Banks actually create money when they lend it.” They simply extend accounting-entry bank credit, which is extinguished when the loan is repaid. Creating this sort of credit-money is a privilege available only to banks, but states can tap into that privilege by owning a bank.

How North Dakota Escaped the Credit Crunch

Ironically, the only state to have one of these socialist-sounding credit machines is a conservative Republican state. The state-owned Bank of North Dakota (BND) has allowed North Dakota to maintain its economic sovereignty, a conservative states-rights sort of ideal. The BND was established in 1919 in response to a wave of farm foreclosures at the hands of out-of-state Wall Street banks. Today the state not only has no debt, but it recently boastedits largest-ever budget surplus. The BND helps to fund not only local government but local businesses and local banks, by partnering with the banks to provide the funds to support small business lending.

The BND is also a boon to the state treasury. It has a return on equity of 25-26% (http://motherjones.com/mojo/2009/03/how-nation%E2%80%99s-only-state-owned-bank-became-envy-wall-street), and it has contributed over $300 million to the state (its only shareholder) in the past decade -- a notable achievement for a state with a population less than one-tenth the size of Los Angeles County. In comparison, California’s public pension funds are down more than $100 billion (http://calpensions.com/2010/03/12/calpers-calstrs-still-down-100-billion/)—that’s billion with a “b”—or close to half the funds’ holdings, following the Wall Street debacle of 2008. It was, in fact, the 2008 bank collapse rather than overpaid public employees that caused the crisis that shrank state revenues and prompted the budget cuts in the first place.

Seven States Are Now Considering Setting Up Public Banks

Faced with federal inaction and growing local budget crises, an increasing number of states are exploring the possibility of setting up their own state-owned banks, following the North Dakota model. On January 11, 2011, a bill to establish a state-owned bank was introduced in the Oregon State legislature (http://www.leg.state.or.us/11reg/measures/hb2900.dir/hb2972.intro.html); on January 13, a similar bill was introduced in Washington State (http://www.webofdebt.com/articles/washington_state.php); on January 20, a bill for a state bank was filed in Massachusetts (http://www.malegislature.gov/Bills/187/House/H01192) (following a 2010 bill that had lapsed); and on February 4, a bill was introduced in the Maryland legislature (http://mlis.state.md.us/2011rs/billfile/SB0789.htm) for a feasibility study looking into the possibilities. They join Illinois (http://www.ilga.gov/legislation/billstatus.asp?DocNum=5476&GAID=10&GA=96&DocTypeID=HB&LegID=50515&SessionID=76), Virginia (http://leg6.state.va.us/cgi-bin/legp604.exe?101+sum+HJ62), and Hawaii (http://www.capitol.hawaii.gov/session2010/lists/measure_indiv.aspx?billtype=HCR&billnumber=200), which introduced similar bills in 2010, bringing the total number of states with such bills to seven.

If Governor Walker wanted to explore this possibility for his state, he could drop in on the Center for State Innovation (CSI), which is located down the street in his capitol city of Madison, Wisconsin. The CSI has done detailed cost/benefit analyses of the Oregon and Washington state bank initiatives, which show substantial projected benefits based on the BND precedent. See reports here (http://www.stateinnovation.org/Home/CSI-Oregon-State-Bank-Analysis-020411.aspx) and here (http://www.stateinnovation.org/Home/CSI-Washington-State-Bank-Analysis-020411.aspx).

For Washington State, with an economy not much larger than Wisconsin’s, the CSI report estimates that after an initial startup period, establishing a state-owned bank would create new or retained jobs of between 7,400 and 10,700 a year at small businesses alone, while at the same time returning a profit to the state.

A Bank of Wisconsin Could Generate “Bank Credit” Many Times the Size of the Budget Deficit

Economists looking at the CSI reports have called their conclusions conservative. The CSI made its projections without relying on state pension funds for bank capital, although it acknowledged that this could be a potential source of capitalization.

If the Bank of Wisconsin were to use state pension funds, it could have a capitalization of more than $57 billion – nearly as large as that of Goldman Sachs (http://www.google.com/imgres?imgurl=http://static.seekingalpha.com/uploads/2010/6/23/saupload_image86.png&imgrefurl=http://seekingalpha.com/article/211438-north-american-and-european-bank-rankings-june-2010&usg=__JTOJBDoLqvLj9a7P5pc38lBj4As=&h=453&w=629&sz). At an 8% capital requirement, $8 in capital can support $100 in loans, or a potential lending capacity of over $500 billion. The bank would need deposits to clear the checks, but the credit-generating potential could still be huge.

Banks can create all the bank credit they want, limited (http://neweconomicperspectives.blogspot.com/2009/06/dont-fear-rise-in-feds-reserve-balances.html) only by (a) the availability of creditworthy borrowers, (b) the lending limits imposed by bank capital requirements, and (c) the availability of “liquidity” to clear outgoing checks. Liquidity can be acquired either from the deposits of the bank’s own customers or by borrowing from other banks or the money market. If borrowed, the cost of funds is a factor; but at today’s very low Fed funds rate of 0.2%, that cost is minimal. Again, however, only banks can tap into these very low rates. States are reduced to borrowing at about 5% -- unless they own their own banks; or, better yet, unless they are banks. The BND is set up as “North Dakota doing business as the Bank of North Dakota.”

That means that technically, all of North Dakota’s assets are the assets of the bank. The BND also has its deposit needs covered. It has a massive, captive deposit base, since all of the state’s revenues are deposited in the bank by law. The bank also takes other deposits, but the bulk of its deposits are government funds. The BND is careful not to compete with local banks for consumer deposits, which account for less than 2% of the total. The BND reports that it has deposits of $2.7 billion and outstanding loans of $2.6 billion. With a population of 647,000, that works out to about $4,000 per capita in deposits, backing roughly the same amount in loans.

Wisconsin has a population that is nine times the size of North Dakota’s. Other factors being equal, Wisconsin might be able to amass over $24 billion in deposits and generate an equivalent sum in loans – over six times the deficit complained of by the state’s governor. That lending capacity could be used for many purposes, depending on the will of the legislature and state law. Possibilities include (a) partnering with local banks, on the North Dakota model, strengthening their capital bases to allow credit to flow to small businesses and homeowners, where it is sorely needed today; (b) funding infrastructure virtually interest-free (since the state would own the bank and would get back any interest paid out); and (c) refinancing state deficits nearly interest-free.

Why Give Wisconsin’s Enormous Credit-generating Power Away?

The budget woes of Wisconsin and other states were caused, not by overspending on employee benefits, but by a credit crisis on Wall Street. The “cure” is to get credit flowing again in the local economy, and this can be done by using state assets to capitalize state-owned banks.

Against the modest cost of establishing a publicly-owned bank, state legislators need to weigh the much greater costs of the alternatives – slashing essential public services, laying off workers, raising taxes on constituents who are already over-taxed, and selling off public assets. Given the cost of continuing business as usual, states can hardly afford not to consider the public bank option. When state and local governments invest their capital in out-of-state money center banks and deposit their revenues there, they are giving their enormous credit-generating power away to Wall Street.
: Compound Interest - The 8th Wonder of the World!
: Geolibertarian March 12, 2011, 11:36:17 AM
http://web.archive.org/web/20110513235103/http://www.wealthmoney.org/compound-interest-8th-world/ (http://web.archive.org/web/20110513235103/http://www.wealthmoney.org/compound-interest-8th-world/)

The 8th Wonder of the World!

Often we are told of the wonderful power of compound interest (earning interest on both principal and previous interest). We are told how compound interest can make a modest investment grow into a great amount.

For example: If you invested  $10,000 at 7% compound interest for 30 years; you’d expect your investment to grow to $76,122.52.

Sounds Great!  

Compound Interest must truly make money grow!


For a moment, let’s step out of the dream world hype of banking, financial planning and Wall Street. Just HOW DOES MONEY GROW?

Where does the interest money come from?

When you put money into an interest-bearing account, does it turn into something like rabbits that mate and quickly reproduce? What happens? The increase of money in your account had to come from someplace. To understand financial planning, economics, growing public and private debts, ever increasing taxes and prices, etc. we must learn and always remember what it is we now use for money and how ALL new money is created and put into circulation.

When the economy grows and more money is needed, always remember:  “...the actual creation of money always involves the extension of credit by private commercial banks.” -- US Treasury

If the private sector doesn’t borrow it, the government must or the money cannot exist. If you invest $10,000 and 30 years later get $76,122.56; somewhere, someone in the private sector or the government had to borrow $66,122.56 before it could get into your account! Now, you have the money. They have the debt which can never be paid because there is no way to create the interest money when money is created through the lending process. Therefore, the debt must constantly grow.

Many people claim that the interest money comes from increased production (worker productivity). But, when was the last time your personal production (goods and services) turned into money? Did you ever wave a magic wand over a shoe, shirt, bushel of corn, a new car or an hour of labor etc. and see it turn into money?

There are only 2 ways to get money from what we produce.

ONE: We can use our produce as collateral for a bank loan which creates the new money.

TWO: We can sell our production to someone in exchange for money that was created as a loan.

Production NEVER turns into money.

You can create money by using a credit card by signing the forms sent to you by the credit card company and promising to pay the credit (money) back in the future with interest. The bank turns that promise to pay into collateral to create the money as a loan the minute you use your credit card to buy something.

Let me explain another way.

The Shoe Factory

Imagine that we have $10,000 total money in circulation. We invest all of it in a compound interest-bearing account. Let’s say that the money is invested in a shoe factory.

The factory spends the $10,000 for raw resources and labor to produce shoes. It sells the shoes and gathers back the total money supply and returns it to the investor. Remember, if the total money supply is only $10,000, that is all the shoe factory could return to the investor.

If the factory is going to return the original $10,000 investment PLUS compound interest, the money supply would have to be increased by at least $66,122.52 or even more if the shoe factory is going to have a profit. To increase the money supply, under the present system, it must be borrowed by someone from a bank. By borrowing the $66,122.52 needed to pay the investor 7% compound interest, the total debt drawing interest at some bank would be $76,122.52. It’s easy to understand how we have $50+ Trillion of debt drawing interest in 2006.

These facts are not clearly seen because there are vast numbers of loans being made and extinguished daily. Banks spend a large part of the interest back into circulation. However, this ‘interest-spending’ does not increase the money supply. It simply keeps money in circulation. In addition, the total amount of interest and debts that are not repaid are repudiated through business losses, repossessions and bankruptcies.

---------------------------

For more commentary by author and monetary reformer, Byron Dale, visit: www.wealthmoney.org (http://www.wealthmoney.org)
: Is the banker-owned Obama administration waging war on state-owned banks?
: Geolibertarian March 30, 2011, 01:47:07 PM
A few years ago Ellen Brown wrote (http://www.webofdebt.com/articles/new-american-century.php) the following:

-----------------------------

The story has been widely circulated that when Albert Einstein was asked what the most powerful force in the universe was, he replied, "compound interest." The story is probably apocryphal, but it underscores the force of the concept. Compound interest has allowed a private global banking cartel to control most of the resources of the world. The debt trap was set in 1974, when OPEC was induced to trade its oil only in U.S. dollars. The price of oil then suddenly quadrupled, and countries with insufficient dollars for their oil needs had to borrow them. In 1980, international interest rates shot up to 20 percent. At 20 percent interest compounded annually, $100 doubles in under 4 years; and in 20 years, it becomes a breathtaking $3,834. The impact on Third World debtors was devastating. President Obasanjo of Nigeria complained in 2000:


Could the "viable economic alternative" that threatens the Western economic model be one that declares the collecting of interest to be illegal? That is the model Iran is now holding out to the world. In 1979, Iran was established as an "Islamic Republic," designed to enforce the principles of the Koran not just morally or religiously but as a matter of state government policy. Afghanistan, which is also in the cross-hairs of the U.S. war machine, and Pakistan, which the U.S. is trying hard to control, are also Islamic Republics. The economic principles of the Koran include Sharia banking, which forbids "usury." In the Koran, usury is defined as charging not just excess interest but any interest.

That is also how the term was defined under Old English law until Protestant scholars redefined it in the seventeenth century, opening the Christian world to a form of economic advantage formerly available only to Jewish money lenders. In Jewish scriptures, charging interest was forbidden between "brothers" but was allowed in dealings with "foreigners." (See, for example, Deuteronomy 23:19, "You must not make your brother pay interest," and 23:20, "You may make a foreigner pay interest, but your brother you must not make pay interest.") This point is raised here not to indict the Jewish people (who are not the "global bankers") but for its historical relevance in tracking the divergence of two religious systems. Charging interest on loans has been accepted banking practice throughout the Judao-Christian world for so long that we don't think there is anything wrong with it today, but that hasn't always been true. The history of interest is detailed in an article in The World Guide Encyclopedia, which is published in Uruguay and has a Third World/Islamic slant. It states:


Islamic scholars have been seeking to devise a global banking system that would serve as an alternative to the interest-based scheme that is in control of the world economy, and Iran has led the way in devising that model. Iran was able to escape the debt trap that captured other developing countries because it had its own oil. Few Islamic banks existed before Iran became an Islamic Republic in 1979, but the concept is now spreading globally. With the fall of the Iron Curtain in 1989, the viable economic model that threatens the global dominance of the Western banking clique may no longer be Communism. It may be the specter of an Islamic banking system that would strip a private banking cartel of the compound interest scheme that is its most powerful economic weapon.

-- Ellen Brown, http://www.webofdebt.com/articles/new-american-century.php (http://www.webofdebt.com/articles/new-american-century.php)

-----------------------------

Keep the above in mind as you read the following:

-----------------------------

http://www.prisonplanet.com/globalist-target-central-bank-of-libya-is-100-state-owned.html (http://www.prisonplanet.com/globalist-target-central-bank-of-libya-is-100-state-owned.html)

GLOBALIST TARGET: Central Bank of Libya is 100% State Owned

By Eric V. Encina
21st Century Wire (http://21stcenturywire.com/2011/03/28/globalist-target-the-central-bank-of-libya-is-100-state-owned/)
March 28, 2011

One seldom mentioned fact by western politicians and media pundits: the Central Bank of Libya is 100% State Owned. The world’s globalist financiers and market manipulators do not like it and would continue to their on-going effort to dethrone Muammar Muhammad al-Gaddafi, bringing an end to Libya as independent nation.

Currently, the Libyan government creates its own money, the Libyan Dinar, through the facilities of its own central bank. Few can argue that Libya is a sovereign nation with its own great resources, able to sustain its own economic destiny. One major problem for globalist banking cartels is that in order to do business with Libya, they must go through the Libyan Central Bank and its national currency, a place where they have absolutely zero dominion or power-broking ability.  Hence, taking down the Central Bank of Libya (http://en.wikipedia.org/wiki/Central_Bank_of_Libya) (CBL) may not appear in the speeches of Obama, Cameron and Sarkozy but this is certainly at the top of the globalist agenda for absorbing Libya into its hive of compliant nations.

When the smoke eventually clears from all the cruise missiles and cluster bombs, you will see the Allied reformers move in to reform Libya’s monetary system, pumping it full of worthless dollars, priming it for a series of chaotic inflationary cycles.

[Continued... (http://www.prisonplanet.com/globalist-target-central-bank-of-libya-is-100-state-owned.html)]


http://www.prisonplanet.com/wow-that-was-fast-libyan-rebels-have-already-established-a-new-central-bank-of-libya.html (http://www.prisonplanet.com/wow-that-was-fast-libyan-rebels-have-already-established-a-new-central-bank-of-libya.html)

Wow That Was Fast! Libyan Rebels Have Already Established A New Central Bank Of Libya

The Economic Collapse (http://theeconomiccollapseblog.com/archives/wow-that-was-fast-libyan-rebels-have-already-established-a-new-central-bank-of-libya)
March 29, 2011

The rebels in Libya are in the middle of a life or death civil war and Moammar Gadhafi is still in power and yet somehow the Libyan rebels have had enough time to establish a new Central Bank of Libya and form a new national oil company.  Perhaps when this conflict is over those rebels can become time management consultants.  They sure do get a lot done.  What a skilled bunch of rebels – they can fight a war during the day and draw up a new central bank and a new national oil company at night without any outside help whatsoever.  If only the rest of us were so versatile!  But isn’t forming a central bank something that could be done after the civil war is over?  According to Bloomberg (http://www.bloomberg.com/news/2011-03-21/libyan-rebel-council-sets-up-oil-company-to-replace-qaddafi-s.html), the Transitional National Council has “designated the Central Bank of Benghazi as a monetary authority competent in monetary policies in Libya and the appointment of a governor to the Central Bank of Libya, with a temporary headquarters in Benghazi.”  Apparently someone felt that it was very important to get pesky matters such as control of the banks and control of the money supply out of the way even before a new government is formed.

[Continued... (http://www.prisonplanet.com/wow-that-was-fast-libyan-rebels-have-already-established-a-new-central-bank-of-libya.html)]

-----------------------------

Does this mean the banker-owned Obama administration will next be dropping bombs on North Dakota (http://motherjones.com/mojo/2009/03/how-nation%25E2%2580%2599s-only-state-owned-bank-became-envy-wall-street) in the name of "humanitarianism"?  ::)

And will privatize-everything (http://www.youtube.com/watch?v=lDMenqKCXdw) Austrian Schoolers wink and look the other way as it does so?
: "SOUND MONEY" = CRUCIFYING MANKIND UPON A "CROSS OF GOLD!"
: Geolibertarian April 14, 2011, 04:41:11 PM
"Having behind us the producing masses of this nation and the world, supported by the commercial interests, the laboring interests and the toilers everywhere, we will answer their demand for a gold standard by saying to them: You shall not press down upon the brow of labor this crown of thorns, you shall not crucify mankind upon a cross of gold." -- http://www.youtube.com/watch?v=DFKSBF6d9O4 (http://www.youtube.com/watch?v=DFKSBF6d9O4)

"Author Ron Paul has been the leading champion of sound money in the Congress. He explains why sound money has meant the gold standard." -- https://mises.org/library/gold-peace-and-prosperity (https://mises.org/library/gold-peace-and-prosperity)

In 1929 the M2 money supply (http://www.investopedia.com/terms/m/m2.asp) was approximately $46.6 billion (http://www.sjsu.edu/faculty/watkins/depmon.htm); four years later it was roughly $32.2 billion (http://www.sjsu.edu/faculty/watkins/depmon.htm). This 31% decrease was all it took to bring on a depression so severe and so devastating that it was called the "Great Depression."

Thus, when Austrian Schoolers insist on instituting a new gold standard under the euphemistic guise of "sound money," we would be well advised to consider what effect this would have on the M2 money supply, and hence on the economy -- and hence on our very lives.

Let's assume that a 100% reserve gold-based money system is instituted (since that's what Austrian School icon Murray Rothbard advocated); and -- since gold standard apologists are fond of waxing nostalgic about pre-1913 America (particularly the Gilded Age (http://books.google.com/books?id=U3eG_QoBRzsC&printsec=frontcover&source=gbs_navlinks_s#v=onepage&q&f=false)) -- let's also assume that, in accordance with the Gold Standard Act of 1900 (http://en.wikipedia.org/wiki/Gold_Standard_Act), each paper dollar is made "redeemable" in 23.22 grains of gold.

To determine what effect this will have on the M2 money supply -- which is $8.9137 trillion (http://www.federalreserve.gov/releases/h6/current/) at present -- let's further assume that the U.S. has all the gold that's ever been mined (even though it doesn't (http://www.prisonplanet.com/central-banks-purchase-127-tons-of-gold-in-q1.html)) -- 165,000 metric tonnes, or 2.546336 trillion grains, according to the World Gold Council (http://www.gold.org/about_gold/story_of_gold/demand_and_supply/). If we divide that figure by 23.22 grains, we have a maximum M2 money supply of $109.66 billion.

That's a minimum 98.8% decrease!

This would make the 1/3 money supply contraction that occurred between 1929-1933 -- and the magnitude of the resultant depression -- both look minuscule by comparison. The effect of such a severe contraction would be beyond devastating -- it would be GENOCIDAL!

Realizing this, what if we instead made each paper dollar redeemable in merely two grains of gold? The result would be a maximum money supply of $1.273168 trillion, and hence a M2 money supply contraction of at least 85.7%, which, although not quite as bad as the previous figure (98.8%), is still far worse than the contraction that caused the Great Depression.

And if all this wasn't bad enough, there's also the issue of how the current trade deficit would (under the system in question) cause whatever gold we had to be quickly drained from our economy, thereby contracting the money supply even further.

As Byron Dale (http://www.wealthmoney.org) explains it here (http://www.youtube.com/watch?v=9E0UPBtmTb0):

----------------------------

“Ok, so now we get that, which makes the total money supply for the United States roughly $1.6 trillion. Ok, if the United States has a trade deficit, like we do right now, of $40.4 billion per month (and it goes up and down a little), it would only take 3.29 years for the total money supply -- or all the gold -- to leave the country just to pay for the trade deficit. And they’re not bringing that money back -- or they’re not buying things from us -- or we wouldn’t have that trade deficit. They’re bringing this stuff over in big ships, and then the ships are going back empty. So the money flows over and doesn’t comes back, that’s why you have a trade deficit. Ok, so now, if we just went to that, with all the gold in the world, in a little over 3 1/4 years we wouldn’t have any gold in the country left -- and no money.

“Now what are we going to do?

“Now, if you borrow the gold back at interest, so you can have it back in your country, you’ve turned the whole thing into a debt money system again."

[Continued... (http://www.youtube.com/watch?v=Y9FWECWWN5o)]

----------------------------

This is why deflation (http://forum.prisonplanet.com/index.php?topic=202072.0)-worshiping Austrians (http://recoveringaustrians.wordpress.com/top-ten-austrian-economic-lies-and-mistakes/) never want to talk about specifics. They figure that, if they simply parrot the euphemism (http://forum.prisonplanet.com/index.php?topic=223151.0) "sound money" over and over again, everyone will just blindly assume that it's a good idea, and consequently refrain from determining for themselves what the actual effect of such a system would be.

Conclusion? Although Ron Paul is by far the most honorable politician in Washington, and although he's right on many issues (http://forum.prisonplanet.com/index.php?topic=208525.0), he is (with all due respect) sadly wrong on the question of what we should replace our current debt-based money system with.

This is why the "end the Fed" mantra is so misleading. It causes people to falsely assume that, if we simply "end" the Federal Reserve System, a much better system will magically and automatically take its place. Yet as we now see, that's not necessarily the case. Not by a long shot.

The solution? Instead of merely "ending" the Fed, we must replace it with the debt-free money system called for on page one of this thread -- a system that avoids both currency-destroying, compound interest-driven hyperinflation AND economy-destroying deflation.

Anything short of this will prove to be, at best, the equivalent of rearranging deck chairs on the Titanic, and, at worst, the equivalent of burning down the house to roast the pig.

Must we find that out the hard way?
: "Pay no attention to those private speculators behind the curtain!"
: Geolibertarian April 19, 2011, 04:55:02 PM
What destroyed Germany's national currency, the Reichsmark, in the early 1920s? According to the monetary flat-earthers (http://www.monetary.org/a-refutation-of-mengers-theory-of-the-origin-of-money-abridged/2010/12) from the Austrian School (http://recoveringaustrians.wordpress.com/top-ten-austrian-economic-lies-and-mistakes/), the answer is the mere fact that Reichsmarks were being "printed" (i.e., issued via fractional reserve lending) at all. In reality, however, it's what they were being "printed" for that ultimately destroyed their exchange value.

Instead of being "printed" to finance, say, the construction and repair of roads, bridges and other public goods, Reichsmarks were being "printed" so that private speculators could use them to engage in the predatory "short-selling" of the very currency that had just been loaned to them by the Reichsbank (Germany's privately owned and controlled central bank).

As monetary historian, Stephen Zarlenga, explains it (all emphasis his):

------------------------------------

The great German hyper-inflation of 1922-1923 is one of the most widely cited examples by those who insist that private bankers, not governments, should control the money system. What is practically unknown about that sordid affair is that it occurred under the auspices of a privately owned and controlled central bank.

Up to then the Reichsbank had a form of private ownership but with substantial public control; the President and Directors were officials of the German government, appointed by the Emperor for life. There was a sharing of the revenue of the central bank between the private shareholders and the government. But shareholders had no power to determine policy.

The Allies' plan for the reconstruction of Germany after WWI came to be known as the Dawes Plan, named after General Charles Gates Dawes, a Chicago banker. The foreign experts delegated by the League of Nations to guide the economic recovery of Germany wanted a more free market orientation for the German central bank.

[Hjalmar] Schacht relates how the Allies had insisted that the Reichsbank be made more independent from the government:

"On May 26, 1922, the law establishing the independence of the Reichsbank and withdrawing from the Chancellor of the Reich any influence on the conduct of the Bank's business was promulgated."

This granting of total private control over the German currency became a key factor in the worst inflation of modern times.

The stage had already been set by the immense reparations payments. That they were payable in foreign currency would place a great continuing pressure on the Reichsmark far into the future.

HOW IS A CURRENCY DESTROYED?

In a sentence, a currency is destroyed by issuing or creating tremendously excessive amounts of it. Not just too much of it but far too much. This excessive issue can happen in several ways, for example by British counterfeiting as occurred with the U.S. Continental Currency, and with the French Assignats. The central bank itself might print too much currency, or the central bank might allow speculators to destroy a currency through excessive short selling of it, similar to short selling a company's shares, in effect allowing speculators to "issue" the currency.

The destruction of an already pressured national currency through speculation is what concerns us in this case. A related process was recently allowed to destroy several Asian currencies, which dropped over 50% against the Dollar in a few months time, in 1997-98, threatening the livelihood of millions.

It works like this: First there is some obvious weakness involved in the currency. In Germany's case it was World War One, and the need for foreign currency for reparations payments. In the case of the Asian countries, they had a need for U.S. dollars in order to repay foreign debts coming due.

Such problems can be solved over time and usually require national contribution toward their solution, in the form of taxes or temporary lowering of living standards. However, because currency speculation on a scale large enough to affect the currency's value is still erroneously viewed as a legitimate activity, private currency speculators can make a weak situation immeasurably worse and take billions of dollars in "profits" out of the situation by selling short the currency in question. This doesn't just involve selling currency that they own but making contracts to sell currency that they don't own -- to sell it short.

If done in large amounts, in a weak situation, such short selling soon has self-fulfilling results, driving down the value of the currency faster and further than it otherwise would have fallen. Then at some point, panic strikes, which causes widespread flight from the currency by those who actually hold it. It drops precipitously. The short selling speculators are then able to buy back the currency that they sold short, and obtain tremendous profits, at the expense of the producers and working people whose lives and enterprises were dependent on that currency.

The free market gang claim that it's all the fault of the government that the currency was weak in the first place. But by what logic does it follow that speculators take this money from those already in trouble? Currency speculation in such large amounts should be viewed as a form of aggression, no less harmful than dropping bombs on the country in question.

Industrialists should realize that when they allow such activity to be included under the umbrella of "business activity," they are making a serious error. They should help isolate such speculation and educate the populace on how destructive it is, so that it can be stopped through law.

Limitations could easily be placed on speculative currency transactions without limiting those that are a normal part of business and trading, while stopping the kind of transactions that are thinly disguised attacks on the country involved. Placing a small tax on such transactions would be a healthy first move.

TOO MANY GERMAN MARKS ISSUED

By July 1922 the German Mark fell to 300 marks for $1; in November it was at 9,000 to $1; by January 1923 it was at 49,000 to $1; by July 1923 it was at 1,100,000 to $1. It reached 2.5 trillion marks to $1 in mid November, 1923, varying from city to city.

In the monetary chaos Hamburg, Bremen and Kiel established private banks to issue money backed by gold and foreign exchange. The private Reichsbank printing presses had been unable to keep up and other private parties were given the authority to issue money. Schacht estimated that about half the money in circulation was private money from other than Reichsbank sources.

CAUSE OF THE FIRST INFLATION: SCHACHT'S FIRST "EXPLANATION"

There is often a false assumption made that the government allowed the mark to fall, in order to more easily pay off the war indemnity. But since the Versailles Treaty required payment in U.S. Dollars and British Pounds, the inflationary disorder actually made it much harder to raise such foreign exchange.

Hjalmar Schacht's 1967 book, The Magic of Money, presents what appears to be a contradictory explanation of the private Reichsbank's role in the inflation disaster.

First, in the hackneyed tradition of economists, he is prepared to let the private Reichsbank off the hook very easily and blame the government's difficult reparations situation instead. He minimized the connection of the private control of the central bank with the inflation as mere co-incidence....

THEN SCHACHT GIVES THE REAL EXPLANATION

Schacht was a lifelong member of the banking fraternity, reaching its highest levels. He may have felt compelled to give his banker peers and their public relations corps something innocuous to quote. But Schacht also had a streak of German nationalism, and more than that, an almost sacred devotion to a stable mark. He had watched helplessly as the hyper-inflation destroyed "his mark."

For whatever reasons, after 44 years he proceeded to let the cat out of the bag, with some truly remarkable admissions, which shatter the "accepted wisdom" the Anglo-American financial community has promulgated on the German hyper-inflation....

SCHACHT'S REVELATION

It was in describing his 1924 battles in stabilizing the Rentenmarks that Schacht made his revelation, giving the private mechanism of the hyper-inflation. Schacht was obviously very upset when the speculators continued to attack the new Rentenmark currency. By the end of the November 1923:

"The dollar reached an exchange rate of 12 trillion Rentenmarks on the free market of the Cologne Bourse. This speculation was not only hostile to the country's economic interests, it was also stupid. In previous years such speculation had been carried on either with loans which the Reichsbank granted lavishly, or with emergency money which one printed oneself, and then exchanged for Reichsmarks.

"Now, however, three things had happened. The emergency money had lost its value. It was no longer possible to exchange it for Reichsmarks. The loans formerly easily obtained from the Reichsbank were no longer granted, and the Rentenmark could not be used abroad. For these reasons the speculators were unable to pay for the dollars they had bought when payment became due (and they) made considerable losses."

Schacht is telling us that the excessive speculation against the mark -- the short selling of the mark -- was financed by lavish loans from the private Reichsbank. The margin requirements that the anti-mark speculators needed and without which they could not have attacked the mark was provided by the private Reichsbank!

This contradicts Schacht's earlier explanation, for there is no way to interpret or justify "lavishly" loaning to anti-mark speculators as "helping to keep the government's head above water." Just the opposite. Schacht was a bright fellow, and he wanted this point to be understood. He waited until he wrote the Magic of Money in 1967. His earlier book, The Stabilization of the Mark (1927), discussed inflation profiteering but did not clearly identify the private Reichsbank itself as financing such speculation, making it so convenient to go short the mark.

Thus it was a privately owned and privately controlled central bank, that made loans to private speculators, enabling them to speculate against the nation's currency. Whatever other pressures the currency faced (and they were substantial), such speculation helped create a one way market down for the Reichsmark. Soon a continuous panic set in, and not just speculators, but everyone else had to do what they could to get out of their marks, further fueling the disaster. This private factor has been largely unknown in America.

-- Stephen Zarlenga, The Lost Science of Money (http://www.monetary.org/lostscienceofmoney.html), pp. 579-87


(http://www.moneyreformparty.org.uk/images/lostscienceofmoney.jpg) (http://www.monetary.org/lostscienceofmoney.html)

------------------------------------

But in the ideological fantasy world of the Austrian School, private speculators are never to blame for anything; only government is -- particularly government "regulation," even if it was admittedly DE-regulation (http://www.globalresearch.ca/index.php?context=va&aid=10588) that enabled the speculators in question to wreak so much financial havoc in the first place! ::)
: Thanks, Alex!
: Geolibertarian April 26, 2011, 07:11:40 PM
I'd like to thank Alex Jones for having Bill Still on earlier today:

       http://www.youtube.com/watch?v=s0ZFB4UlR7g (http://www.youtube.com/watch?v=s0ZFB4UlR7g)

       (http://www.infowarsshop.com/thumbnail.asp?file=assets/images/nomorenationaldebt.jpg&maxx=300&maxy=0) (http://www.infowarsshop.com/No-More-National-Debt_p_445.html)

Please don't let self-appointed Thought Police from the Austrian School (http://forum.prisonplanet.com/index.php?topic=192293.0) discourage you from having him on again!
: Re: Thanks, Alex!
: lazarus April 27, 2011, 11:27:21 AM
A caller questioned Bill Still's proposal that only a a sovereign nation should create its currency in the public interest, saying that the government cannot be trusted with such a power. This is a legitimate question. Bill Still's answer is reasonable, saying who else are we going to trust it with then? The key to a better an answer is to allow competing currencies and the natural order of things is for countries to be sovereign. So even if the one country's fiat becomes corrupt, its effect is naturally limited, in space, because of its sovereignty, and in time, as the competing currencies of other currencies and commodities/metals becomes a refuge of safety for her citizens.

Again for the gold and silver bugs, don't worry, these will naturally be further valued, as they are being artificially suppressed in the current system.
: Re: Thanks, Alex!
: Geolibertarian April 27, 2011, 01:35:27 PM
A caller questioned Bill Still's proposal that only a a sovereign nation should create its currency in the public interest, saying that the government cannot be trusted with such a power.

It's an Austrian School talking point I've heard a million times, and it's ridiculous on its face, because if our government can't even be trusted with the power to issue debt-free money, then -- contrary to the Constitution that Austrian Schoolers love to wrap themselves in -- it also can't be trusted with the power to declare and wage war.

This is a legitimate question.

No, it's a red herring that anarcho-capitalists posing as "Constitutionalists" incessantly invoke in a shameless attempt to fool people into presuming that ours can never be a government "of, by and for the people," and so can never be trusted to do anything that promotes or serves the "general welfare."

Austrian Schoolers don't really want to "end" tyranny; they merely want to privatize (http://www.youtube.com/watch?v=lDMenqKCXdw) it and call it "liberty." (Not that they'll ever admit to this, of course, even though it was the Rockefeller Foundation that financed the Austrian School out of obscurity in the U.S.)

Bill Still's answer is reasonable, saying who else are we going to trust it with then? The key to a better an answer is to allow competing currencies and the natural order of things

Then why stop there? Why not -- in the name of "liberty" and the "free market" -- trust competing private interests (read: warlords) with the power to declare and wage war? (I'm sure the Founding Fathers, knowing history as well as they did, would have laughed at such a question.)

As to the question of currencies, allow me to repeat an explanation I've given elsewhere (http://forum.prisonplanet.com/index.php?topic=192293.msg1140741#msg1140741) concerning this issue:

Thanks to the educational efforts of monetary reformers such as Ellen Brown (http://www.webofdebt.com), Richard C. Cook (http://www.richardccook.com/we-hold-these-truths/), Byron Dale (http://wealthmoney.org), Bill Still (http://www.themoneymasters.com/mm) and Stephen Zarlenga (http://monetary.org), millions of people are now aware of just how disastrous the gold standard in all its variants has consistently proven to be in the past, and of how finance oligarchs have historically promoted this system while demonizing debt-free Greenbacks.

As an apparent consequence of this, it has in recent years become fashionable among many public relations-savvy Austrian Schoolers to avoid even mentioning the discredited gold standard, and to instead peddle the notion that if we simply turned money creation entirely over to the (euphemism (http://forum.prisonplanet.com/index.php?topic=223151.0) alert!) "free market," then we would finally have a “sound” money system, and, as a result, all of our monetarily-caused economic problems would magically "correct" themselves.

Yet there's a fatal flaw with this idea that its advocates either can't or won't see: once the government declares commodity-backed currencies A, B and C good for the payment of taxes and commodity-backed currencies X, Y and Z not good for such payment (or not as good), from that moment on the value that the former three have relative to the latter is determined more by government "fiat" than by the forces of free market "competition" -- at which point they cease to be "competing currencies" in any meaningful sense of the term.

Of course, despite the obligatory lip service they pay to the Constitution, many if not most Austrian Schoolers are in fact anarcho-capitalists (http://anarchism.pageabode.com/afaq/secFcon.html), and so the likely response from the more intellectually honest among them would be that there shouldn't even be a government.

This "no government" fantasy is particularly delusional, because they simultaneously advocate the very sort of land tenure system (http://geolib.com/essays/sullivan.dan/royallib.html) that invariably and inevitably gives rise to oppressive "governments" in the first place:

----------------------------------

http://lysanderspooner.org/node/59 (http://lysanderspooner.org/node/59)

In process of time, the robber, or slaveholding, class -- who had seized all the lands, and held all the means of creating wealth -- began to discover that the easiest mode of managing their slaves, and making them profitable, was not for each slaveholder to hold his specified number of slaves, as he had done before, and as he would hold so many cattle, but to give them so much liberty as would throw upon themselves (the slaves) the responsibility of their own subsistence, and yet compel them to sell their labor to the land-holding class -- their former owners -- for just what the latter might choose to give them.

Of course, these liberated slaves, as some have erroneously called them, having no lands, or other property, and no means of obtaining an independent subsistence, had no alternative -- to save themselves from starvation -- but to sell their labor to the landholders, in exchange only for the coarsest necessaries of life; not always for so much even as that.

These liberated slaves, as they were called, were now scarcely less slaves than they were before. Their means of subsistence were perhaps even more precarious than when each had his own owner, who had an interest to preserve his life. They were liable, at the caprice or interest of the landholders, to be thrown out of home, employment, and the opportunity of even earning a subsistence by their labor. They were, therefore, in large numbers, driven to the necessity of begging, stealing, or starving; and became, of course, dangerous to the property and quiet of their late masters.

The consequence was, that these late owners found it necessary, for their own safety and the safety of their property, to organize themselves more perfectly as a government and make laws for keeping these dangerous people in subjection; that is, laws fixing the prices at which they should be compelled to labor, and also prescribing fearful punishments, even death itself, for such thefts and tresspasses as they were driven to commit, as their only means of saving themselves from starvation.

These laws have continued in force for hundreds, and, in some countries, for thousands of years; and are in force today, in greater or less severity, in nearly all the countries on the globe.

The purpose and effect of these laws have been to maintain, in the hands of the robber, or slave holding class, a monopoly of all lands, and, as far as possible, of all other means of creating wealth; and thus to keep the great body of laborers in such a state of poverty and dependence, as would compel them to sell their labor to their tyrants for the lowest prices at which life could be sustained.

The result of all this is, that the little wealth there is in the world is all in the hands of a few -- that is, in the hands of the law-making, slave-holding class; who are now as much slaveholders in spirit as they ever were, but who accomplish their purposes by means of the laws they make for keeping the laborers in subjection and dependence, instead of each one's owning his individual slaves as so many chattels.

[Continued... (http://lysanderspooner.org/node/59)]

----------------------------------

As I explained on page one of this thread, the key point here is that a group of private individuals presuming to "own" all the land comes first, and the "government" (or, more accurately, the State (http://www.barefootsworld.net/nockoets2.html)) into which they organize out of common interest comes second. (Whether they actually call it such is irrelevant.) That's the inevitable result of allowing the concept of "private property" to be applied to the Earth on which all must live yet which none produced (http://schalkenbach.org/library/henry-george/land-for-the-people.html) in the same unlimited, unconditional sense that it's applied to the products of human labor.

       http://geolib.com/sullivan.dan/commonrights.html (http://geolib.com/sullivan.dan/commonrights.html)

It's also the inevitable result of turning the power of money creation (as the Austrian School would have us do) entirely over to private interests:


-- attributed to Sir Josiah Stamp, Director of the Bank of England (appointed 1928)



-- Carroll Quigley, Tragedy and Hope (http://www.wanttoknow.info/articles/tragedy_hope_banking_money_history), p. 324


The typical Austrian School reaction to this is to shamelessly engage in hysterical fearmongering about the presumed evils of government-issued currency. Yet one could just as easily posit all sorts of ridiculous fearmongering scenarios concerning government-controlled police and government-controlled armies as a way of scaring well-meaning yet gullible readers into embracing the stateless utopian fantasy world of the Austrian School, wherein -- according to those who promote this quasi-religious fairy tale -- a mystical, God-like entity euphemistically called the "free market" magically keeps privately controlled police and privately controlled armies from terrorizing, oppressing and enslaving the masses.

Fortunately, most readers aren't quite so gullible. They know that keeping the police and military in public rather than private hands is, if nothing else, the far lesser of two evils; and that the reason certain public institutions have become so corrupt and oppressive is that they've been, in effect, "privatized" to one extent or another (case in point: the "Federal" Reserve (http://www.globalresearch.ca/index.php?context=va&aid=10489)), and that the solution, therefore, is not to mindlessly throw the baby out with the bathwater, but to reclaim (http://forum.prisonplanet.com/index.php?topic=162212.0) from these private interests our rightful control over our own government.

I, for one, say "no" to the privatized tyranny that anarcho-capitalists would have us all living under if they had their way, and "yes" to the liberty and freedom that can only be experienced in a truly Democratic Constitutional Republic:

       http://www.youtube.com/watch?v=DioQooFIcgE (http://www.youtube.com/watch?v=DioQooFIcgE) (The American Form of Government)

I'm sure I'm far from alone in that regard.
: Re: "SOUND MONEY" = CRUCIFYING MANKIND UPON A "CROSS OF GOLD!"
: Geolibertarian April 28, 2011, 01:17:51 PM
Realizing this, what if we instead made each paper dollar redeemable in merely two grains of gold? The result would be a maximum money supply of $1.273 trillion, and hence a M2 money supply contraction of at least 85.7%, which, although not quite as bad as the previous figure (98.8%), is still far worse than the contraction that caused the Great Depression.

There are undoubtedly many who believe that the preemptive solution to the deflationary nightmare referred to above is to institute a gold and silver backing of the dollar.

Is this belief based on an actual study of the matter, or is it the mere product of wishful thinking? Let's find out.

According to the Silver Institute (http://www.silverinstitute.org/supply_demand.php), the total supply of silver is 1,056.8 million ounces, or 507.263 billion grains.

If we add that to the total supply of gold -- 2,546.336 billion grains at present -- we have a combined gold-silver supply of 3,053.599 billion grains (or just over 3 trillion grains).

Now, even though it took a lot more silver (371.25 grains) to make a dollar under the 1792 Coinage Act (http://en.wikipedia.org/wiki/Coinage_Act_of_1792) than it did gold (24.75 grains), let's assume that the newly-instituted gold/silver standard makes each paper dollar "redeemable" in either one grain of gold or one grain of silver.

Note: To understand how small a "grain" is, in the following pic the small golden disk close to the 5cm marker is a piece of pure gold weighing one troy grain:

(http://upload.wikimedia.org/wikipedia/commons/thumb/f/f4/Gold_grain_size_comparison.jpg/350px-Gold_grain_size_comparison.jpg)

With that sort of "backing" under a 100% reserve system, the maximum M2 money supply is $3.053599 trillion, which (surprise!) is a mere 34.26 percent of the current M2 money supply ($8.9137 trillion), and hence a minimum decrease of 65.74 percent -- more than twice the money supply contraction that caused the Great Depression. And that's assuming we have the total supply of gold and silver (we don't) and that we don't have a trade deficit that would drain however much gold and silver we actually do have out of the country within a few years (we do).

Do all of you precious metal-obsessed conservatives and libertarians finally get it now?

The very thing that makes gold and silver a great private investment (http://www.midasresources.com/invest.php) is what makes them a disastrous thing on which to base a nation's entire money supply.
: Re: "SOUND MONEY" = CRUCIFYING MANKIND UPON A "CROSS OF GOLD!"
: Geolibertarian May 04, 2011, 04:12:59 PM
http://www.youtube.com/watch?v=Bi2gOhvpOHg (http://www.youtube.com/watch?v=Bi2gOhvpOHg) (The Money Masters – part 9 of 22)
http://www.youtube.com/watch?v=Pyaj30n8kZY (http://www.youtube.com/watch?v=Pyaj30n8kZY) (The Money Masters – part 10 of 22)

The following excerpts from The Money Masters (http://www.amazon.com/Masters--International-Bankers-Control-America/dp/B0018IPKCG/ref=sr_1_1?ie=UTF8&qid=1433062630&sr=8-1&keywords=the+money+masters+dvd) can be viewed in the two youtube clips above.

------------------------------

A truly incredible editorial in the London Times explained the central bankers' attitude towards Lincoln's Greenbacks:


[...]

Allegations that international bankers were responsible for Lincoln's assassination surfaced in Canada 70 years later in 1934. Gerald G. McGeer, a popular and well-respected Canadian attorney, revealed this stunning charge in a five hour speech before the Canadian House of Commons blasting Canada's debt-based money system. Remember: it was 1934, the height of the Great Depression, which was ravaging Canada as well. McGeer had obtained evidence -- deleted from the public record -- provided to him by Secret Service agents at the trial of John Wilks Booth, after Booth's death. McGeer said it showed that Booth was a mercenary working for the international bankers. According to an article in the Vancouver Sun of May 2, 1934:


Interestingly, McGeer claimed that Lincoln was assassinated not only because international bankers wanted to reestablish a central bank in America, but because they also wanted to base America's currency on gold -- gold they controlled. In other words: put America on a gold standard. Lincoln had done just the opposite by issuing U.S. notes -- Greenbacks -- which were based purely on the good faith and credit of the United States. The article quoted McGeer as saying:


Not since Lincoln has the U.S. issued debt-free United States notes.

[...]

With Lincoln out of the way, the money changers' next objective was to gain complete control over America's money. This was no easy task. With the opening of the American west, silver had been discovered in huge quantities. On top of that, Lincoln's Greenbacks were generally popular. Despite the European central bankers' deliberate attacks on Greenbacks, they continued to circulate in the United States -- in fact until a few years ago. According to historian W. Cleon Skousen:


It is clear that the concept of America printing her own debt-free money sent shock waves throughout the European central banking elite. They watched with horror as Americans clamored for more Greenbacks. They may have killed Lincoln, but support for his monetary ideas grew.

On April 12, 1866, nearly one year to the day of Lincoln's assassination, Congress went to work at the bidding of the European central banking interests. It passed the Contraction Act, authorizing the Secretary of the Treasury to begin to retire some of the Greenbacks in circulation, and thereby contract the money supply. Authors Theodore R. Thoren and Richard F. Warner explained the results of the money contraction in their classic book on the subject, The Truth In Money Book:


In other words, the money changers wanted two things: (1) the reinstitution of a central bank under their exclusive control, and (2) an American currency backed by gold. Their strategy was two-fold.

First of all, cause a series of panics to try to convince the American people that only centralized control of the money supply could provide economic stability.

And secondly, remove so much money from the system, that most Americans would be so desperately poor that they either wouldn't care or would be too weak to oppose the bankers.

In 1866, there was $1.8 billion in currency in circulation in the United States -- about $50.46 per capita. In 1867 alone, half a billion dollars...was removed from the U.S. money supply. Ten years later, in 1876, America's money supply was reduced to only $600 million. In other words, 2/3 of America's money had been called in by the bankers. Only $14.60 per capita remained in circulation. Ten years later [in 1886], the money supply had been reduced to only $400 million, even though the population had boomed. The result was that only $6.67 per capita remained in circulation -- a 760% loss in buying power over 20 years.

Today, economists try to sell the idea that recessions and depressions are a natural part of something they call the "business cycle." The truth is, our money supply is manipulated now just as it was before and after the Civil War.

How did this happen? How did money become so scarce? Simple. Bank loans were called in, and no new ones were given. In addition, silver coins were melted down. In 1872, a man named Ernest Seyd was given a hundred thousand pounds -- about $500 thousand -- by the Bank of England and sent to America to bribe necessary Congressmen to get silver demonetized. He was told that if that was not sufficient, to draw an additional hundred thousand pounds, or as much more as was necessary.

The next year Congress passed the Coinage Act of 1873, and the minting of silver dollars abruptly stopped. In fact, Representative Samuel Hooper, who introduced the bill in the House, acknowledged that Mr. Seyd actually drafted the legislation. But it gets even worse than that. In 1874, Seyd himself admitted who was behind the scheme:


But the contest over control of America's money was not yet over. Only three years later, in 1876, with one-third of America's workforce unemployed, the population was growing restless. People were clamoring for a return to the Greenback money system of President Lincoln, or a return to silver money -- anything that would make money more plentiful. That year, Congress created the United States Silver Commission to study the problem. Their report clearly blamed the monetary contraction on the national bankers. The report is interesting, because it compares the deliberate money contraction by the national bankers after the Civil War to the fall of the Roman Empire:


Despite this report by the Silver Commission, Congress took no action. The next year, 1877, riots broke out from Pittsburgh to Chicago. The torches of starving vandals lit up the sky. The bankers huddled to decide what to do. They decided to hang on. Now that they were back in control (to a certain extent), they were not about to give it up.

At the meeting of the American Bankers Association that year, they urged their membership to do everything in their power to put down the notion of a return to Greenbacks. The ABA secretary, James Buel, authored a letter to the members which blatantly called on the banks to subvert not only Congress but the press:


------------------------------

Keep the above in mind as you read the following goldbug propaganda piece:

------------------------------

http://www.thegoldstandardnow.org/key-blogs/235-not-dollar-depreciation-gold-standard (http://www.thegoldstandardnow.org/key-blogs/235-not-dollar-depreciation-gold-standard)

Not Dollar Depreciation but the Gold Standard

by Christopher K. Potter
May 03, 2011

Recently a New York Times article screamed “Prices Surge as Investors Rush to Safety of Gold.”  In reality there was no rush and the gold price did not surge.  Gold was up less than 0.5% on the day in question and is up only 6% in 2011, less than the increase in the S&P 500.  For 10 years, the gold price has edged quietly higher, rarely moving more than 1% up or down on any given day.  Along the way, the media argued that each new high was driven by panicked investors who were fleeing from equities.  I would argue just the opposite.  Individuals and institutions, reacting rationally to expansionary monetary policy, are merely exchanging cash balances for gold. This has little to do with geopolitical turmoil or perceived troubles in the economy and stock market.  It is a currency trade, pure and simple.

The basic mechanics of monetary policy and money creation remain a mystery to most people.  Few are aware that most new treasury debt is purchased by the Federal Reserve with brand new dollars; that China buys large quantities of dollars every day with newly minted Yuan or that Japan created 39 trillion ($481 billion) new Yen in the two weeks following the earthquake.  As James Grant points out in his March 25th Interest Rate Observer, “when the materialization of nearly a half-trillion dollars in a fortnight’s time stops astounding reporters, it’s past time for a monetary reappraisal.”  Perhaps reporters are more unaware than unimpressed.  With everyone printing at once, the value of one currency relative to another (the exchange rate) never reflects the magnitude of the new supply of money.  All currencies decline together while appearing to not decline at all.  While this provides ample cover for our central bankers to perpetuate the print-off, it results in inflation, progressively severe boom and bust cycles, perpetual deficits and an increasing inequality of wealth.

Under a gold standard, in which paper money is convertible into a fixed weight of gold, the threat of dollar to gold conversion compels monetary restraint on all central banks.  In our present unreserved monetary system, that threat has become reality and the qualities that define our money as sound have been transferred, at the margin, from paper to gold.  We have seen the creation of gold denominated shares by hedge fund manager John Paulson and others; the passage of a bill in the Utah legislature allowing gold and silver coins to be used as legal tender; and the conversion of cash balances into gold bullion by major investment and endowment funds.  Even the manufacturers of our money have been exchanging paper for gold - witness the buying of bullion by the central banks of India, Bangladesh, Sri Lanka, China and Thailand over the last year.

Economic stimulation through currency depreciation is the unwritten, unspoken policy of today’s monetary leaders.  While our Federal Reserve receives a disproportionate amount of the blame for this dangerous game, all central banks are active participants.  In response, gold is predictably performing its role as the only supply constrained currency – its price is adjusting upward.  Despite the headlines, it has done so in an orderly, methodical way for over a decade.  Other commodity prices have risen as well, but only the gold price has risen with a consistently tight correlation to the growth in world money.  This has won converts to the idea that gold must be the centerpiece of monetary reform.   It has also shortened the road forward to a modernized gold standard.

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: Re: Monetary Reform!
: JT Coyoté May 04, 2011, 05:53:40 PM
To continue the time line for the controlling of not only the gold, but silver and debt control of all scrip... toward the absolute control of the entire country through debt foreclosure by the bank through controlling the amount of money within the economy.

Geolib ended the time-line in his last post just after 1877 which I reiterate here for continuity in italics, then I will continue the time line to where the False Bank is established in 1913...


"The next year, 1877, riots broke out from Pittsburgh to Chicago. The torches of starving vandals lit up the sky. The bankers huddled to decide what to do. They decided to hang on. Now that they were back in control, to a certain extent, they were not about to give it up.

At the meeting of the American Bankers Association that year, they urged their membership to do everything in their power to put down the notion of a return to Greenbacks. The ABA secretary, James Buel, authored a letter to the members which blatantly called on the banks to subvert not only Congress but the press:

      "It is advisable to do all in your power to sustain such prominent daily and weekly newspapers, especially the Agricultural and Religious Press, as will oppose the Greenback issue of paper money and that you will also withhold patronage from all applicants who are not willing to oppose the government issue of money.

      "....To repeal the Act creating bank notes, or to restore to circulation the government issue of money will be to provide the people with money and will therefore seriously affect our individual profits as bankers and lenders.

      "See your Congressman at once and engage him to support our interests that we may control legislation." -- James Buel, American Bankers Association..."



"1878...    

James Buel's letter clearly had some effect, as although pressure mounted in Congress for change, the press tried to turn the general public away from the truth.  An example of this is from the New York Tribune in their 10th January edition in which is stated in a bankers propaganda piece,

    "The capital of the country is organized at last and we will see whether Congress will dare to fly in its face."

This early control of the media didn't work entirely nevertheless, as on February 28th Congress passed the, "Sherman Law."  This law allowed the minting of a limited number of silver dollars, ending the 5 year hiatus.  However this did not mean that anyone who brought silver to the United States Mint could have it struck into silver dollars, free of charge, as in the period prior to Ernest Seyd's Coinage Act, in 1873.  Gold backing of the American currency also remained.

However, this Sherman Law did ensure that some money began to flow into the economy again, and coupled with the fact that the bankers now realized that they were still firmly in control, they started issuing loans again and the post Civil War depression was finally over.

1881...    

The American people elect the Republican, James Garfield as the 20th President of the United States.  This was a worry to the money changers, because as a Congressman, he had been Chairman of the Appropriations Committee, and was a member of Banking and Currency.  The money changers were therefore aware that President Garfield was in full knowledge of their scam on the American people.  Indeed following his inauguration, President Garfield stated,

   "Whosoever controls the volume of money in any country is absolute master of all industry and commerce...And when you realize that the entire system is very easily controlled, one way or another, by a few powerful men at the top, you will not have to be told how periods of inflation and depression originate."

Strangely enough within a few weeks of making that statement, President Garfield was assassinated on 2nd July.

1891...    

The money changers spent the last decade creating economic booms followed by depressions, so that they could buy up thousands of homes and farms for pennies on the dollar.  They were preparing to take the economy down again in the near future, and in a shocking memo sent out by the American Bankers Association, which would come out in the Congressional Record more than twenty years later, the following is stated,

    "On September 1st 1894 we will not renew our loans under any consideration.  On September 1st we will demand our money.

    We will foreclose and become mortgages in possession.  We can take two-thirds of the farms west of the Mississippi, and thousands of them east of the Mississippi as well, at our own price...Then the farmers will become tenants as in England...,"
1891 American Bankers Association, as printed in the Congressional Record of April 29, 1913.

1896...    

The central issue in the Presidential campaign is the issue of more silver money.  Senator William Jennings Bryan from Nebraska, a Democrat aged only 36, makes an emotional speech at the Democratic National Convention in Chicago, entitled, "Crown Of Thorns And Cross Of Gold."  Senator Bryan stated,

    "We will answer their demand for a gold standard by saying to them, you shall not press down upon the brow of labor this crown of thorns, you shall not crucify mankind upon a cross of gold."


The bankers naturally supported the Republican candidate, William McKinley who in return favored the gold standard.  Furthermore those in the McKinley campaign, got manufacturers and industrialists to inform their employees that if Bryan were elected, all factories and plants would close and there would be no work.

This tactic succeeded, McKinley beat Bryan, albeit by a small margin.

1898...    

Pope Leo XIII stated the following on the subject of usury,

    "On the one hand there is the party which holds the power because it holds the wealth, which has in its grasp all labor and all trade, which manipulates for its own benefit and its own purposes all the sources of supply, and which is powerfully represented in the councils of State itself.  On the other side there is the needy and powerless multitude, sore and suffering.

    Rapacious usury, which, although more than once condemned by the Church, is nevertheless under a different form but with the same guilt, still practiced by avaricious and grasping men...so that a small number of very rich men have been able to lay upon the masses of the poor a yoke little better than slavery itself."


1907...    

During the early 1900's, the money changers were anxious to advance their business of setting up another private Central Bank for America.  Rothschild, Jacob Schiff, the head of Kuhn, Loeb and Co., in a speech to the New York Chamber of Commerce, stated, or rather threatened,

    “Unless we have a Central Bank with adequate control of credit resources, this country is going to undergo the most severe and far reaching money panic in its history.”

They put Rothschild agent, J. P. Morgan at the forefront of their charge.  Interestingly J. P. Morgan's father, Julius Morgan, had been America's financial agent to the British, and after Julius' death, J. P. Morgan took on a British partner, Edward Grenville, who was a long time director of the Bank Of England.

This year was the year of the money changers attack.  J. P. Morgan and his cohorts secretly crashed the stock market.  They were aware that thousands of small banks were so vastly over extended, some only had reserves of 1% under the fraudulent fractional reserve principle.  Within only a few days, bank runs became commonplace across the nation.

Morgan then stepped up and publicly announced that he would support these failing banks.  What he failed to mention is that he would do this by manufacturing money out of nothing.  And then what happened, surprise, surprise, Congress let him do it!  So, Morgan manufactured $200,000,000 of this completely reserve-less private money, purchased goods and services with it, and sent some of it to his branch banks to lend out at interest.

As a result, the general public regained confidence in money, but most importantly it meant the banking power was now further consolidated into the hands of a few large banks.

1908...    

With the widespread financial panic over, J. P. Morgan was hailed as a hero by the then President of Princeton University, Woodrow Wilson, who even crassly or arrogantly stated,

    "All this trouble could be averted if we appointed a committee of six or seven public spirited men like J. P. Morgan, to handle the affairs of our country."

President Theodore Roosevelt had also signed into law, following the financial panic, a bill creating the, "National Monetary Commission."

This commission was supposed to study the banking problem and make recommendations to Congress.  Naturally, the commission was packed with J. P. Morgan's friends and cronies.

The chairman was Senator Nelson Aldrich from Rhode Island, and he represented the Newport Rhode Island homes of America's richest banking families.  His daughter married John D. Rockefeller Jr., and together they had five sons (including Nelson who would become Vice President in 1974 and David who would become Head of the Council on Foreign Relations).

Following the setting up of this National Monetary Commission, Senator Aldrich immediately embarked on a 2 year fact finding tour of Europe, where he consulted at length with the private central bankers in England, France, and Germany, or rather Rothschild, Rothschild, and Rothschild.

The total cost of this 2 year trip to the American taxpayer?  $300,000.  Yes, three hundred thousand dollars, that is not a misprint!
1910    Senator Aldrich returns from his two year European fact finding mission on 22nd November.  Shortly afterwards some of America's most wealthy and powerful men boarded Senator Aldrich's private rail-car in the strictest secrecy.  They journeyed to Jekyll Island off the coast of Georgia.

In this group were Paul Warburg, who was earning a $500,000 a year salary from Rothschild owned firm, Kuhn, Loeb & Company.  This salary was for him to lobby for a privately owned central bank in America.  Also present was Jacob Schiff, a Rothschild who had purchased Kuhn, Loeb and Company shortly after he arrived in America from England.

The Rothschilds, Warburgs and Schiffs, interconnected by marriage, were essentially the same family.

Secrecy at this meeting was so tight that all the participants were cautioned to use only first names, to prevent servants from learning their identities.  Years later, one participant, Frank Vanderlip, President of National Citibank and a representative of the Rockefeller family, confirmed the Jekyll Island trip in a 9th February 1935 edition of the Saturday Evening Post in which he stated,

    "I was as secretive indeed, as furtive as any conspirator ...Discovery we knew, simply must not happen, or else all our time and effort would be wasted.  If it were to be exposed that our particular group had got together and written a banking bill, that bill would have no chance whatever of passage by Congress."

It was not just the setting up of a Central Bank that was on the agenda.  Other problems for these bankers were that the market share of these big national banks was shrinking fast.  In the first ten years of the century the number of United States banks had more than doubled to over 20,000.  By 1913 only 29% of all banks were national banks and they held only 57% of all deposits.  As John D. Rockefeller put it,

    "Competition is Sin!"

Senator Aldrich later admitted in a magazine article,

    "Before passage of this Act, the New York Bankers could only dominate the reserves of New York.  Now we are able to dominate bank reserves of the entire country."

So one of the aims of these conspirators was to bring these new banks under their control.  Secondly the nations economy was so strong that corporations were starting to finance their own expansions out of profits instead of taking out huge loans from large banks.  Indeed, in the first ten years of the century, 70% of corporate funding came from profits.

Basically, American Industry was becoming independent of the money changers, and the money changers were not about to let that happen.

There was also much discussion regarding the name of the new bank, which took place in a conference room in the Jekyll Island Club Hotel.  Aldrich believed the word, "bank," should not even appear in the name.  Warburg wanted to call the legislation, the, "National Reserve Bill," or the, "Federal Reserve Bill."  The idea was not only to give the impression that the purpose of the new central bank was to stop bank runs, but also to conceal its monopoly character.

However it was Senator Aldrich, the egomaniac, who insisted it be called the, "Aldrich Bill."  So, after nine days at Jekyll Island, the group dispersed.  This group of conspirators immediately set up an educational fund of $5,000,000 to finance Professors at top universities to endorse the new bank.

The new central bank would be very similar to the old Bank Of The United States, in that it would be given a monopoly over United States currency and create that money out of nothing.  Also in order to make the public think it was under control of the Government, the plan called for the central bank to be run by a board of governors appointed by the President and approved by the Senate.

This would not cause any undue problems for the bankers, as they knew they could use their money to buy influence over the politicians, in order to ensure the men they wanted got appointed to the board of governors.
1912    

The Aldrich bill is presented to Congress for debate.  This was very quickly identified as a bill to benefit the bankers, or an expression for them which was coined at the time, "The Money Trust."  During the debate, the Republican, Charles A. Lindbergh Sr. stated,

    "The Aldrich plan is the Wall Street Plan.  It means another panic, if necessary, to intimidate the people.  Aldrich, paid by the government to represent the people, proposes a plan for the trusts instead."


As this debate continued on, the bankers realized they didn't have enough support, so the Republican leadership never brought the Aldrich bill to a vote.  Instead the bankers decided to switch their attention to the Democrats and started heavily financing Woodrow Wilson, the Democratic Presidential nominee.  The Wall Street banker, Bernard Baruch, was put in charge of the Wilson project, and as historian, James Perloff, stated,

    "Baruch brought Wilson to the Democratic Party headquarters in New York in 1912, 'leading him like one wood a poodle on a string.' Wilson received an, 'indoctrination course,' from the leaders convened there...."


During the Democratic Presidential campaign, Wilson and the rulers of the Democratic Party pretended to oppose the Aldrich bill.  As Republican representative, Louis T. McFadden, explained twenty years later, when he was was Chairman Of The House Banking And Currency Committee,

   "The Aldrich Bill was condemned in the platform...when Woodrow Wilson was nominated...The men who ruled the Democratic Party promised the people that if they were returned to power there would be no central bank established here while they held the reins of government.

    Thirteen months later that promise was broken, and the Wilson administration, under the tutelage of those sinister Wall Street figures who stood behind Colonel House, established here in our free country the worm-eaten monarchical institution of the, 'King's Bank,' to control us from the top downward, and to shackle us from the cradle to the grave."

On November 5th, Woodrow Wilson was elected, and J. P. Morgan, Paul Warburg, Bernard Baruch et al, advanced a new plan which Warburg called the Federal Reserve System.  The leadership of the Democratic Party hailed this new bill called the, "Glass-Owen Bill," as totally different to the Aldrich bill, when in fact it was virtually identical.

Funnily enough the Democrats were so vehement in their denial of the similarity of the, "Glass-Owen Bill," to the, "Aldrich Bill," that Paul Warburg, the creator of both bills, had to inform his paid friends in Congress, that the two bills were virtually identical and therefore they must vote to pass it.  Warburg stated,

    "Brushing aside the external differences affecting the, 'shells,' we find the, 'kernels,' of the two systems very closely resembling and related to one another."


However this admission by Warburg was not made public.  Instead, Senator Aldrich, and Frank Vanderlip, the President of Rockefeller's National Citibank of New York, were to publicly state their opposition to the bill in order to make people think that the bill proposed was radically different to the Aldrich bill.  Indeed, Frank Vanderlip stated years later in the Saturday Evening Post,

    "Although the Aldrich Federal Reserve Plan was defeated when it bore the name Aldrich, nevertheless its essential points were all contained in the plan that finally was adopted."


1913    With Congress nearing a vote on the Glass-Owen Bill, they called Ohio Attorney, Alfred Crozier, to testify.  However, Crozier noticed the similarities between the Aldrich Bill and the Glass-Owen Bill, and subsequently stated,

    "The...bill grants just what Wall Street and the big banks for twenty-five years have been striving for - private instead of public control of currency.  It (the Glass-Owen bill) does this as completely as the Aldrich bill.  Both measures rob the government and the people of all effective control over the public's money, and vest in the banks exclusively the dangerous power to make money among the people scarce or plenty."

The debate on this bill was not going well for the banks, with many Senators intimating the bill was corrupt and deceitful, however the bill was approved through the Senate on December 22nd.  How did this happen? Because most of the Senators had left town to return home for the Christmas holidays. Furthermore, these Senators had been assured by the leadership, that nothing would be done regarding this bill until long after the Christmas recess.

Representative Charles A Lindbergh Sr. stated,

    "This Act establishes the most gigantic trust on earth.  When the President signs this bill, the invisible government of the monetary power will be legalized.  The people may not know it immediately, but the day of reckoning is only a few years removed...The worst legislative crime of the ages is perpetrated by this banking and currency bill."

Interestingly, only a few weeks earlier, in October, Congress finally passed a bill legalizing direct income tax of the people.  This was in the form of a bill pushed through by Senator Aldrich, which is now commonly known as the 16th amendment.  The income tax law was fundamental to the Federal Reserve.  This is because the Federal Reserve was a system which would run up, essentially, an unlimited Federal debt.

The only way to guarantee the payment of interest on this debt was to directly tax the people, as they had done with the Bank Of England.  If the Federal Reserve had to rely on contributions from the States, they would be dealing with bigger entities, who could revolt and refuse to pay the interest on their own money, or at least bring political pressure to bear in order to keep the debt small.

Actually, this 16th amendment was never ratified, and therefore many American citizens do not pay their income tax and there is nothing the United States Government can do about it.  For further information on this go to  www.thelawthatneverwas.com .  Also, back in 1895, the Supreme Court had also found an income tax law similar to the 16th amendment, as unconstitutional.  The Supreme Court also found a Corporate Tax Law unconstitutional in 1909.

Another important amendment that was put through this year is the 17th amendment.  This provided for the direct election by the people of two Senators from each state as oppose to the original system of having state legislatures elect United States Senators.  More democratic, you would think, until you realize these bankers could now provide the funds for their hand picked people to run for the Senate, and thus avoid future problems like getting the Federal Reserve through the Senate.

Anyway, back to the Federal Reserve, if you are in any doubt as to whether the Federal Reserve is a private company, a basic check the public can carry out is in their phone book.  Look under the government pages and it is not listed, but you will find it listed within the business pages.

Actually some recent evidence has come forward as to who really owns the Federal Reserve, and they are the following banks:

    * Rothschild Bank of London
    * Warburg Bank of Hamburg
    * Rothschild Bank of Berlin
    * Lehman Brothers of New York
    * Lazard Brothers of Paris
    * Kuhn Loeb Bank of New York
    * Israel Moses Seif Banks of Italy
    * Goldman, Sachs of New York
    * Warburg Bank of Amsterdam
    * Chase Manhattan Bank of New York

Also some argue that the Federal Reserve is a quasi-governmental agency, yet the President appoints only 2 of the 7 members of the Federal Reserve Board of Governors, every four years, and he appoints them to 14 year terms, which is far longer than any term he could possibly serve as President.  The Senate confirms these appointments, but as we have seen, that is the idea, because these are the very people hand picked by the bankers who also finance their campaigns, ensuring loyalty to them, not the people.

Let's summarize how the Federal Reserve creates money out of nothing.  It is a four step process:

   1. The Federal Open Market Committee approves the purchase of United States Bonds*.
   2. The bonds are purchased by the Federal Reserve.
   3. The Federal Reserve pays for these bonds with electronic credits to the seller's bank, these credits are based on nothing.
   4. The banks use these deposits as reserves.  They can loan out over ten times the amount of their reserves to new borrowers, all at interest.

* Bonds are simply promises to pay or Government IOU's.  People purchase bonds in order to get a secure rate of interest.  At the end of the term of the bond, the government repays the bond, plus interest and the bond is destroyed.

Let's look at an example of how this works with a Federal Reserve purchase of $1,000,000 of bonds.  This then gets turned into over $10,000,000 in bank accounts.  The Federal Reserve in effect creates 10% of this totally new $10,000,000 and the banks create the other 90%.

To reduce the amount of money in circulation this process is simply reversed.  The Federal Reserve sells these bonds to the public and the money flows out of the purchaser's local bank.  Loans must be reduced by ten times the amount of the sale, so a Federal Reserve sale of $1,000,000 in bonds, results in $10,000,000 less money in the economy.  How does this benefit the bankers, whose representatives met at Jekyll Island?

   1. It prevented any future banking reform efforts, as the Federal Reserve was to be the only producer of money.
   2. This in turn prevented a proper debt free system of government finance, like President Lincoln's Greenbacks, from making a comeback.  Instead, the bond based system of government finance, forced on Lincoln after he created Greenbacks, was now cast in stone.
   3. It delegated to the bankers the right to create 90% of our money supply based on a fraudulent system of fractional reserve banking and allowed them to loan out that 90% at interest.
   4. It centralized overall control of our nations money supply in the hands of and for the profits of a few men.
   5. It established a private central bank with a high degree of independence from effective political control.

1914...    

The start of World War I.  In this war, the German Rothschilds loaned money to the Germans, the British Rothschilds loaned money to the British, and the French Rothschilds loaned money to the French.

One year after the passage of the Federal Reserve Bill, Representative Charles A Lindbergh Sr., outlined how The Federal Reserve created the, "business cycle," and how they manipulated that to their own advantage.  He stated,

    "To cause high prices, all the Federal Reserve Board will do will be to lower the re-discount rate..., producing an expansion of credit and a rising stock market, then when ...business men are adjusted to these conditions, it can check... prosperity in mid-career by arbitrarily raising the rate of interest.

    It can cause the pendulum of a rising and falling market to swing gently back and forth by slight changes in the discount rate, or cause violent fluctuations by a greater rate variation, and in either case it will possess inside information as to financial conditions and advance knowledge of the coming change, either up or down.  This is the strongest, most dangerous advantage ever placed in the hands of a special privilege class by any Government that ever existed.

    The system is private, conducted for the sole purpose of obtaining the greatest possible profits from the use of other people's money.  They know in advance when to create panics to their advantage.  They also know when to stop panic.  Inflation and deflation work equally well for them when they control finance."


Oldyoti

"Free trade is the serial killer of American manufacturing and the
Trojan Horse of World Government. It is the primrose path to
the loss of economic independence and national sovereignty.
Free trade is a bright shining lie."
~Pat Buchanan,
Where the Right Went Wrong

: Reducing U.S. Debt and Creating Jobs Through Public Control of Our Money System
: Geolibertarian May 05, 2011, 07:47:06 PM
http://www.huffingtonpost.com/stephen-zarlenga/reducing-us-debt-and-crea_b_857230.html (http://www.huffingtonpost.com/stephen-zarlenga/reducing-us-debt-and-crea_b_857230.html)

Reducing U.S. Debt and Creating Jobs Through Public Control of Our Money System

by Stephen Zarlenga
TheHuffingtonPost.com
May 3, 2011

Coauthored by Greg Coleridge

For all the boisterous talk and debate by Congressional leaders of both parties and the President about the many ways to reduce our nation's deficit and debt while maintaining vital services and programs, there continues to be a roaring silence about a solution that has nothing to do with the budget. It has to do, rather, with our nation's monetary system.

Be it for ignorance or by intention, few federal elected officials have examined how a change in the way money in our nation is created and issued could reduce our nation's deficit and debt and, in doing so, increase millions of vital jobs to transform our economy.

One of the few exceptions is Rep. Dennis Kucinich (D-OH), who during the last Congressional session introduced H.R. 6550, The National Emergency Employment Defense Act. A revised version is expected to be soon reintroduced. Americans would be wise to rally behind it.

The basis of the bill are three essential monetary measures proposed by the American Monetary Institute in their American Monetary Act (AMA). The AMA's recommendations are based on decades of research and centuries of experience; are designed to end the current fiscal crisis in a just and sustainable way, and are aimed to place the U.S. money system under our constitutional system of checks and balances.

The three essential measures include:

[Continued... (http://www.huffingtonpost.com/stephen-zarlenga/reducing-us-debt-and-crea_b_857230.html)]
: Monetary FAQ
: Geolibertarian May 09, 2011, 01:51:03 PM
http://www.monetary.org/faq.html (http://www.monetary.org/faq.html)

Twenty Frequently Asked Questions on The American Monetary Act (AMA)

(August 8, 2009)

For more background, see The Lost Science of Money (http://www.monetary.org/lostscienceofmoney.html) (LSM) by Stephen Zarlenga, available at our website.

1) Won't the government creating new money for infrastructure and other expenses cause inflation?

No. While this is an important concern, some of it is anti-governmental propaganda and it need not cause inflation, depending on where the new money goes, for example:

When new money is used to create real wealth, such as goods and services and the $2.2 trillion worth of public infrastructure building and repair the engineers tell us is needed over the next 5 years, there need not be inflation because real things of real value are being created at the same time as the money, and the existence of those real values for living, keeps prices down.

If it goes into warfare or bubbles (real estate/Wall Street/etc.) it would create inflationary bubbles with no real production of goods and services. That is the history of private control over money creation. It must end now. Government tends to direct resources more into areas of concern for the whole nation, such as infrastructure, health care, education, etc. The AMA Title 5 specifies infrastructure items including human infrastructure of health care and education to focus on.

Also remember, the American Monetary Act eliminates ‘fractional reserve banking’ which has been one of the main causes of inflation. And remember new money must be introduced into circulation as the population and economy grow or is improved, or we’d have deflation.

2) How can we trust government with the power to create money? – Won’t they go wild (and again cause inflation)? Don’t you know that government can’t do anything right?

Two Points:

A. The U.S. Constitution binds government to represent the interests of the American people – “to promote the General Welfare” and empowers our Federal Government to create, issue and regulate our money (Article I, Section 8, Clause 5). We must hold our officeholders responsible to the laws. Do you want us to deny the Constitution? In favor of who? Enron? Bear Stearns? J.P. Morgan? Goldman Sachs? Lehman Brothers? Please get real! Our choice is to let those pirates continue to control our money system or to intelligently constitute the MONEY POWER within our government.

Under the American Monetary Act, the Congress, the President and the Board of the Monetary Authority will all be responsible if any inflation or deflation takes place, and the people will know that they are responsible. They are specifically directed to avoid policies that are either inflationary or deflationary.

Do you really trust the “ENRONS” to dominate our money? Look how they have abused that power! And Yes Damn it! Enron was on the Board of the Dallas Federal Reserve Bank!

B. Finally and most importantly, an examination of history, despite the current prejudice and massive propaganda waged against government, shows that government control of money has a far superior historical record to private control over money systems. See the AMA brochure, and the LSM, Chapter 16. History shows that government has a far superior record in controlling the money system than private money creators have. And Yes, that includes the Continental Currency, The Greenbacks, and even the German hyperinflation; which by the way took place under a completely privatized German central bank! The German hyperinflation is really an example of a private money disaster.

The Lost Science of Money book, chapter 12, uncovers the beginnings of the attack on government and found it started with Adam Smith himself in an attempt to block moves to take back the monetary power from the then private Bank of England, and put it back into government, which had done a good job in monarchical management of the money system, with only one exception under Henry VIII.

3) Why should we give the government even more power?

Because our money system belongs to society as a whole. It is too important to trust to unrepresentative and unaccountable private hands, preoccupied with private gain, with little regard for the detrimental consequences of their actions on the country, and outside our system of checks and balances. Just look what they have done!

4) How can we prevent government from abusing its power once it can create money directly?

The same way we prevent it from abusing any power, by upholding the rule of law and by participating in democratic political processes; and through reasonable structural limits.

5) Should we let private banks keep some part of the money creation privilege?

Absolutely not! History shows that the private interests, if given any privileged power over money, eventually undermine the public interest, and take over the whole thing. We know this from historical case studies in at least 4 major historical situations – the U.S. “Greenbacks”, The nationalization of the Bank of England, and the Canadian and New Zealand monetary experience. Anyone who proposes allowing the banks to keep any part of the power to create money are either ignorant of monetary history or are shilling for the banks.

Under the American Monetary Act we do have the best of both worlds. We keep the benefits of having the professionalism and expertise of a competitive banking system in the private sector, but we take away the dangers of having them dominate our monetary and public policies with their narrow short term profit focus, by removing their privilege to create money. Ultimately this is a question of morality. No such special privileges can be allowed to particular groups; especially the monetary privilege, which confers power and wealth on them at the expense of the rest of society.

6) Well then, should we nationalize all the banking business?

What kind of “Kool Aid” are you drinking and who gave it to you? The banking business is obviously not a proper function of government; but providing, controlling and overseeing the monetary system is definitely a function of government. No private party can do that properly. Markets have utterly failed to do that. They have concentrated wealth, have harmed the average American and now broken down entirely, except for assistance from our government. Who would keep money in banks today, except for the FDIC guarantees?

But banks should remain privately owned, because when reasonably structured, they perform very necessary functions, and can do it professionally and conveniently. Who within government would run the banking business? Bankers however, have nothing in their training, experience or their souls that qualifies them as masters of the universe – to control our society as the money power confers upon them.

Banks should act as intermediaries for their clients who want to get a return on a deposit or similar investment; and their clients who are willing to pay for the use of that money. But banks must not create the money. The money system belongs to the Nation and our Federal Government must be the only entity with the power to issue and regulate our money as the U.S. Constitution already mandates. We nationalize the monetary system, but don’t nationalize the individual banks. That would be a dangerous step towards fascism. Private enterprise is a powerful mechanism that can produce excellent results when properly structured and regulated. That is an important American “theme!” The AMA does not throw out the baby with the bathwater! But it most certainly gets rid of the bathwater, which is private money creation. That acts like a private tax on the rest of us!

We regard such nationalization proposals (nationalize all banking) either as an inability to understand the difference between nationalizing the money system and nationalizing the private banking business, OR as possibly attempts to actually block proper monetary reform, because you’d have to change the essence of America in order to do it. So it distracts from real reform. The AMA reform that we advocate actually puts into place the system that most people think we have now! People think our money is provided by government. They erroneously believe that the Federal Reserve is already a part of our government. They think the banks are lending money which has been deposited with them, not that they are creating that money when they make loans. Under the AMA many of those things people already believe about money and banking actually become true! It’s a natural fit with already existing attitudes.

7) Doesn’t your AMA proposal merely continue with a fiat money system? Shouldn’t we be using gold and silver instead? Wouldn’t that provide a more stable money?

Our system is absolutely a fiat money system. But that’s a good thing, not a bad one. In reaction to the many problems caused by our privatized fiat money system over the decades, many Americans have blamed fiat money for our troubles, and they support using valuable commodities for money.

But Folks! The problem is not fiat money, because all advanced money is a fiat of the Law! The problem is privately issued fiat money. Then that is like a private tax on all of us imposed by those with the privilege to privately issue fiat money. Private fiat money must now stop forever!

Aristotle gave us the science of money in the 4th century B.C. which he summarized as: “Money exists not by nature but by law!” So Aristotle accurately defines money as a legal fiat.

As for gold, most systems pretending to be gold systems have been frauds which never had the gold to back up their promises. And remember if you are still in a stage of trading things (such as gold) for other things, you are still operating in some form of barter system, not a real money system, and therefore not having the potential advantages as are available through the American Monetary Act!

And finally as regards gold and silver: Please do not confuse a good investment with a good money system. From time to time gold and silver are good investments. However you want very different results from an investment than you want from a money. Obviously you want an investment to go up and keep going up. But you want money to remain fairly stable. Rising money would mean that you’d end up paying your debts in much more valuable money. For example the mortgage on your house would keep rising if the value of money kept rising.

Also, contrary to prevailing prejudice, gold and silver have both been very volatile and not stable at all. Just check out the long term gold chart.

8} How can a bank lend money if they have to keep 100% reserves?

The 100% reserve provision applies only to checking accounts. This question results from economists classifying our AMA as a “100% reserve” plan, as the Chicago Plan was known. But our plan fundamentally reforms the private credit system, replacing it with a government money system. The accounting rules are changed.

Banks will be encouraged to continue their loan activities by lending money that has been deposited with them in savings and time deposit accounts; or lending their capital that has been invested with them. It is in the checking account departments that the banks presently create money when they make loans in a fractional reserve system. This will be stopped by new bank accounting rules. Making loans from savings account is a different matter, because real money, not credit will have been transfered into such accounts, and loaning that out does not create new money or give the bank any seigniorage, that belongs to our society. Some money loaned out of a savings type account might later get redeposited into another savings account and again be reloaned, but its the same money, not any newly created money, and will reflect that way on the bank's books. This is sufficient to solve the problem of banks creating "purchasing media" by loaning their credit which then functions as money in the present system. (for details see the wording on pages 8, 9, and 14 of the American Monetary Act at http://www.monetary.org/amacolorpamphlet.pdf)

Various types of accounts will have differing requirements: e.g. matching time deposits to loan durations, lessening the “borrowing short term and lending long term” problem. Money market and mutual fund type accounts can be very flexible. The principle applied will be to encourage good intermediation of money between clients who want a return on their money and those willing to pay for using it; but will prohibit money creation. Checking accounts will become a warehousing service, for which fees are charged. Good accountancy can achieve these results. (Please see # 9 below for more info on the many sources of money for these accounts.)

9) If banks are no longer allowed to create money, where will banks get enough money to fill client’s needs for money under the American Monetary Act?

We devote substantial space to this question because economists so used to confusing credit and money have to get used to the idea of money instead of credit. Usually they want to know how the AMA creates money within the present bank accounting framework. Well it does not! The AMA will change the accounting rules to deal with money not credit.

There will be several substantial sources of money for banks to satisfy their clients money needs:

a) Title III of the AMA converts through an accounting procedure, the existing credit the banks have circulated through loans (about $6 to 7 trillion, roughly the existing “money” supply) into US money, no longer bank credit. That process will indebt the banks to the government for the amount converted over and above their capital. At present when bank loans are repaid to the banks by their customers, those credits/debts go out of circulation/out of existence and the credit money supply contracts as loans are repaid, until they make new loans. But under the American Monetary Act, since it’s now money, those monies will not go out of circulation the way the credits did. They are repaid to the government in satisfaction of the debt the banks incurred in converting them from credit to money. That goes into a pool which can be used by Congress for the items in Title V of the AMA (as described on pages 8 and 9), or it can even be re-lent to the banks at an adjusted interest rate. Note: this action de-leverages the banks, but does not reduce the money supply.

b) Probably the most important source of funds for bank lending will be the continuing government expenditures, over and above tax receipts, such as social security and other payments by government on the items in Title V of the American Monetary Act. Also the engineers tell us that $2.2 trillion is now necessary to make our infrastructure safe over the next 5 years. That’s $440 billion new money per year. Also the health care and education provisions, and grants to states in Title V can be introduced as new money. ALL these will eventually be deposited into various types of bank accounts where provisions of the Act will allow this money to be lent or invested. The banks will be lending and placing this money that has been deposited with them; not lending credit they create, masquerading as money. They will have to compete to attract such deposits from citizens and companies.

c) Title II of the AMA specifies the repayment of US instruments of indebtedness (bonds/notes/etc). Instead of being rolled over as at present, new US monies will be paid to the bondholders as they become due. Those people/institutions will be looking for places to invest that money. One place would be in bank stock, which is a source of lending funds for banks. Of the $5 to 7 trillion in US bonds and notes privately held, about 3.5 trillion is due within 1 to 5 years; .72 trillion is due in 5 to 10 years; .35 trillion is due in 10 to 20 years. All these amounts will represent newly created US money and will eventually find their way to becoming new lend-able or investable bank deposits and even investments in banks.

d) Finally the AMA does not allow the banks to decide their own leverage situations. The Act essentially eliminates most leverage from the banking system in a healthy, non deflationary way. That will be good. They will no longer be able to pretend they were “banking” when they made bad loans overextending their positions and creating bubbles, in order to grab huge bonuses on imaginary profits. In other words banks will no longer be able to make loans in a bubble creation process. That will be a big improvement!

10) How will the U.S. Treasury create the money?"

The same way the Federal Reserve does now, as simple account entries, but as income, without the accompanying debt obligations. It’s described in the AMA, Sec. 103 NEGATIVE FUND BALANCES: The Secretary of the Treasury shall directly issue United States Money to account for any differences between Government appropriations authorized by Congress under law and available Government receipts.

11) Is there any chance the AMA could eliminate the federal income tax?

It “could,” and though that’s not likely in the near future, it is the direction the AMA goes in. Thanks to the immense savings our government will experience through control over its money system, taxation should decline substantially for middle and lower income groups. It should be raised for the super rich.

In addition the AMA should directly lead to substantial reductions in interest rates, because as the US pays off its national debt in money rather than rolling it over, those receiving those payments will be looking for places to loan and invest those funds. Interest rates should drop substantially.

12) Why does the American Monetary Act have an 8% maximum interest rate, including all fees?

Because before 1980/1981, forty nine States had “anti-usury” laws which limited normal interest rates to a maximum of between 6% and 10% p.a. (one state had 12%). The American Monetary Act takes the middle of this range to represent a restoration of the interest rate limits prevailing across the country prior to 1980/1981. See page 9 of the AMA.

13) Won’t you be breaking the sanctity of contracts when you convert the existing bank credit already in circulation, into U.S. Money?
 
No. First of all a contract requires understanding of the terms by all parties to it, and that certainly did not exist. But more likely it will be viewed as very acceptable by the banks, considering the security it confers on banking, especially when the alternative is going broke. There would be no reason to extend the legal tender privilege (acceptance for taxes) to the credits of any disagreeing banks.

14) How would the ACT affect our position with China?

The ACT would have a number of positive effects on Chinese - American Trade. Particularly it would encourage the Chinese to use more of their dollar earnings to really trade with us rather than just sell to us, and then invest their earnings in US bonds as at present. More details forthcoming!

15) What about other countries, and international systems such as the IMF (International Monetary Fund) and the BIS (Bank for International Settlements)?
 
We’d expect other countries to follow quickly in our footsteps to each obtain the advantages of issuing their own national monies. The United Nations is already putting forward suggestions that member states shift now to nationally created, debt free; interest free moneys. They are way ahead of the US Congress just now. A much reformed IMF, already organized under United Nations Article 57; #3, will see a greatly expanded role for the SDR and more responsibility for international accounts clearing as well as real assistance to member states, rather than acting as a destructive collection agent for the big banks. The role and importance of the BIS should be rapidly reduced, and perhaps eliminated. Just look at the mess created under their guidance and rules. Some job they did!

16) The latest craze “question” making the rounds in the organized disinformation campaign that is attacking our national psychology, is not a question at all, but a vicious assertion:

“Government is so corrupt and so much in the hands of the worst people and they won’t ever let you do this reform! Or any good thing”


This popped up simultaneously from LA to Seattle. I’ve told friends to put that stupidity out of their minds. This assertion, designed to discourage, is a variant of the Sun Tzu method of winning the battle by convincing the opposition not to fight because they can’t win. It reminds me of the cyborg "Borg Wars" line “Resistance is futile” from the Star Trek New Generation series. Don’t fall for it!

As our people suffer more deeply from the unfortunate monetary/banking system, any remaining bad elements in government can and must be cleansed. That’s what we’ll do instead of whining about it. Become a part of the solution not a cry-baby! Get up and fight for your family and nation!

“Put a stone in your stomach!” is an old phrase of Zulu warriors when summoning courage. Earlier tonight I saw an electric message on a local banks billboard:

“If you think you can, you can. If you think you can’t, you can’t!”

Yeah! We never said all bankers are evil, but there’s a very bad controlling element among them.

17) Why didn’t nationalized money systems work in the former Soviet countries?

Because their monetary systems were still controlled from within their banking systems, using the same faulty methods. The 1966 Federal Reserve publication Money, Banking, and Credit in Eastern Europe states:


Sound familiar? Their politicians and economists were as dumb as ours!

18) Won’t we get hyper-inflation like Zimbabwe?

No. For governments or anyone to issue money, there has to be a functioning society with enough rule of law and physical and social infrastructure to support the creation of values for living. Zimbabwe unfortunately does not have those pre-requisites; thus their society is falling apart.

19) Should we have the individual 50 states own banks? Like North Dakota?

More Kool-Aid and distractions…Look folks the objective is to get the banks out of the Money creation field, not to get the government into banking!! A highly distracting idea that does not in any way accomplish any necessary reform! Instead it gives our fraudulent banking system a moral free pass! It is mind boggling that progressive people fall for this. (see the home page for an in depth article by Jamie Walton on this)

20) How about local currencies?

Local currency movements can help people to understand the money problem but it would be an illusion to think that local currencies would stop a mismanaged, unjust national system from unfairly concentrating wealth; from being a motivating factor for warfare; from financing harmful polluting activities even when saner alternatives exist. Understand also that a national currency properly placed under governmental control gives much greater local control than the present national currency under private control, because locally, our voting power can exert influence on national policy.

And remember the principle of subsidiarity put forward by E.F. Schumacher. His slogan was not “small is beautiful.” What E.F. Shumacher actually said is what the AMI is saying: Use an “Appropriate scale”- do things on an appropriate scale. That dominant scale in the currency area is national and will continue to be for the foreseeable future. The appropriateness of acting on the national level must be recognized.
: Forbes Predicts U.S. Gold Standard Within 5 Years
: Geolibertarian May 11, 2011, 01:02:40 PM
Toward the end of The Money Masters (http://www.themoneymasters.com) (released in 1996), Bill Still makes the following prophetic warning:

    ''Our country needs a solid group who really understand how our money is manipulated and what the solutions really are, because if a depression comes, there will be those who call themselves conservatives who will come forward advancing solutions framed by the international bankers.

    "Beware of calls to return to a gold standard.

    "Why?

    "Simple. Because never before has so much gold been so concentrated outside of American hands, and never before has so much gold been in the hands of international governmental bodies such as the World Bank and International Monetary Fund.

    "A gold-backed currency usually brings despair to a nation, and to return to it would certainly be a false solution in our case. Remember: we had a gold-backed currency in 1929 and during the first four years of the Great Depression.

    "Likewise, beware of any plans advanced for a regional or world currency. This is the international bankers' Trojan Horse.''

-- http://www.youtube.com/watch?v=2EuB82bErJY (http://www.youtube.com/watch?v=2EuB82bErJY)

Keep the above in mind as you read the following:

http://www.humanevents.com/article.php?id=43439 (http://www.humanevents.com/article.php?id=43439)

Forbes Predicts U.S. Gold Standard Within 5 Years

by Paul Dykewicz
Human Events
05/11/2011

A return to the gold standard by the United States within the next five years now seems likely, because that move would help the nation solve a variety of economic, fiscal, and monetary ills, Steve Forbes predicted during an exclusive interview this week with HUMAN EVENTS.

“What seems astonishing today could become conventional wisdom in a short period of time,” Forbes said.

Such a move would help to stabilize the value of the dollar, restore confidence among foreign investors in U.S. government bonds, and discourage reckless federal spending, the media mogul and former presidential candidate said.  The United States used gold as the basis for valuing the U.S. dollar successfully for roughly 180 years before President Richard Nixon embarked upon an experiment to end the practice in the 1970s that has contributed to a number of woes that the country is suffering from now, Forbes added.

If the gold standard had been in place in recent years, the value of the U.S. dollar would not have weakened as it has and excessive federal spending would have been curbed, Forbes told HUMAN EVENTS.  The constantly changing value of the U.S. dollar leads to marketplace uncertainty and consequently spurs speculation in commodity investing as a hedge against inflation.

The only probable 2012 U.S. presidential candidate who has championed a return to the gold standard so far is Rep. Ron Paul (R.-Tex.).  But the idea “makes too much sense” not to gain popularity as the U.S. economy struggles to create jobs, recover from a housing bubble induced by the Federal Reserve’s easy-money policies, stop rising gasoline prices, and restore fiscal responsibility to U.S. government’s budget, Forbes insisted.

[Continued... (http://www.humanevents.com/article.php?id=43439)]
: INFLATION FEARS: REAL OR HYSTERIA?
: Geolibertarian May 11, 2011, 01:29:50 PM
INFLATION FEARS: REAL OR HYSTERIA?

Ellen Brown
May 10th, 2011
www.webofdebt.com/articles/inflation_fears.php

Debate continues to rage between the inflationists who say the money supply is increasing, dangerously devaluing the currency, and the deflationists who say we need more money in the economy to stimulate productivity. The debate is not just an academic one, since the Fed’s monetary policy turns on it and so does Congressional budget policy.

Inflation fears have been fueled ever since 2009, when the Fed began its policy of “quantitative easing” (effectively “money printing”). The inflationists point to commodity prices that have shot up. The deflationists, in turn, point to the housing market, which has collapsed and taken prices down with it. Prices of consumer products other than food and fuel are also down. Wages have remained stagnant, so higher food (http://forum.prisonplanet.com/index.php?topic=204193.0) and gas (http://forum.prisonplanet.com/index.php?topic=202354.0) prices mean people have less money to spend on consumer goods. The bubble in commodities, say the deflationists, has been triggered by the fear of inflation. Commodities are considered a safe haven, attracting a flood of “hot money” -- investment money racing from one hot investment to another (http://www.prisonplanet.com/is-there-a-financial-scam-behind-the-rise-in-oil-and-food-prices.html).

To resolve this debate, we need the actual money supply figures. Unfortunately, the Fed quit reporting M3, the largest measure of the money supply, in 2006.

Fortunately, figures are still available for the individual components of M3. Here is a graph (http://www.zerohedge.com/article/guest-post-currency-wars-rip-shadow-banking-system-long-live-qex) that is worth a thousand words. It comes from ShadowStats.com (Shadow Government Statistics or SGS) and is reconstructed from the available data on those components. The red line is the M3 money supply reported by the Fed until 2006. The blue line is M3 after 2006.

(http://www.webofdebt.com/articles/510-1.gif)

The chart shows that the overall U.S. money supply is shrinking, despite the Fed’s determination to inflate it with quantitative easing. Like Japan, which has been doing quantitative easing (QE) for a decade, the U.S. is still fighting deflation (http://www.businessweek.com/magazine/content/11_06/b4214014587950.htm).

Here is another telling chart – the M1 Money Multiplier from the Federal Reserve Bank of St. Louis:

(http://www.webofdebt.com/articles/510-2.gif)

Barry Ritholtz comments (http://www.ritholtz.com/blog/2011/04/fade-the-inflation-hysteria/), “All that heavy breathing about the flood of liquidity that was going to pour into the system. Hyper-inflation! Except not so much, apparently.” He quotes David Rosenberg: “Fully 100% of both QEs by the Fed merely was new money printing that ended up sitting idly on commercial bank balance sheets. Money velocity and money multiplier are stagnant at best.” If QE1 and QE2 are sitting in bank reserve accounts, they’re not driving up the price of gold, silver, oil and food; and they’re not being multiplied into loans, which are still contracting.

The part of M3 that collapsed in 2008 was the “shadow banking system,” including money market funds and repos. This is the non-bank system in which large institutional investors that have substantially more to deposit than $250,000 (the FDIC insurance limit) park their money overnight. Economist Gary Gorton explains (http://online.wsj.com/public/resources/documents/crisisqa0210.pdf) [.pdf]:


Before the banking crisis, the shadow banking system composed about half the money supply; and it still hasn’t been restored. Without the shadow banking system to fund bank loans, banks will not lend; and without credit, there is insufficient money to fund businesses, buy products, or pay salaries or taxes. Neither raising taxes nor slashing services will fix the problem. It needs to be addressed at its source, which means getting more credit (or debt) flowing in the local economy.

When private debt falls off, public debt must increase to fill the void. Public debt is not the same as household debt, which debtors must pay off or face bankruptcy. The U.S. federal debt has not been paid off since 1835. Indeed, it has grown continuously since then, and the economy has grown and flourished along with it.

As explained in an earlier article, the public debt is the people’s money (http://www.webofdebt.com/articles/cheney_deficits.php). The government pays for goods and services by writing a check on the national bank account. Whether this payment is called a “bond” or a “dollar,” it is simply a debit against the credit of the nation. As Thomas Edison said in the 1920s:


That is true, but Congress no longer seems to have the option of issuing dollars, a privilege it has delegated to the Federal Reserve. Congress can, however, issue debt, which as Edison says amounts to the same thing. A bond can be cashed in quickly at face value. A bond is money, just as a dollar is.

An accumulating public debt owed to the IMF or to foreign banks is to be avoided, but compounding interest charges can be eliminated by financing state and federal deficits through state- and federally-owned banks. Since the government would own the bank, the debt would effectively be interest-free. More important, it would be free of the demands of private creditors, including austerity measures and privatization of public assets.

[Continued... (http://www.webofdebt.com/articles/inflation_fears.php)]
: Re: "SOUND MONEY" = CRUCIFYING MANKIND UPON A "CROSS OF GOLD!"
: Geolibertarian May 13, 2011, 02:56:13 PM
To determine what effect this will have on the M2 money supply -- which is $8.9137 trillion (http://www.federalreserve.gov/releases/h6/current/) at present -- let's further assume that the U.S. has all the gold that's ever been mined (even though it doesn't)

From http://www.prisonplanet.com/central-banks-purchase-127-tons-of-gold-in-q1.html (http://www.prisonplanet.com/central-banks-purchase-127-tons-of-gold-in-q1.html):

(http://www.zerohedge.com/sites/default/files/images/user5/imageroot/images/WGC%20top%20100.jpg)
: FEDS TO STATES: “DROP DEAD.” STATE BANK MOVEMENT PICKS UP STEAM
: Geolibertarian May 19, 2011, 07:33:33 PM
FEDS TO STATES: “DROP DEAD.”
STATE BANK MOVEMENT PICKS UP STEAM


Ellen Brown
May 17th, 2011
www.webofdebt.com/articles/feds_states2.php

“Ford to New York: Drop Dead,” said a famous headline in 1975. President Ford had declared flatly that he would veto any bill calling for “a federal bail-out of New York City.” What he proposed instead was legislation that would make it easier for the city to go bankrupt.

Now the Federal Treasury and Federal Reserve seem to be saying this to the states, which are slated to be the first ritual victims in the battle over the budget ceiling. On May 2, Treasury Secretary Timothy Geithner said that the Treasury would stop issuing special securities that help state and local governments pay for their debt. This was to be the first in a series of “extraordinary measures” taken by the Treasury to avoid default in the event that Congress failed to raise the debt ceiling on May 16. On May 13, the Secretary said these extraordinary measures had been set in motion.

The Federal Reserve, too, has declared that it cannot help the states with their budget problems -- although those problems were created by the profligate banks under the Fed’s purview. The Fed advanced $12.3 trillion in liquidity and short-term loans to bail out the financial sector from the 2008 banking collapse, 64 times the $191 billion required to balance the budgets of all 50 states. But Fed Chairman Ben Bernanke declared in January that the Fed could not make the same cheap credit lines available to state and local governments -- not because the Fed couldn’t find the money, but because it was not in the Fed’s legislative mandate.

The federal government can fix its own budget problems by raising its debt ceiling, and the too-big-to-fail banks have the federal government and Federal Reserve to fall back on. But these options are not available to state governments. Like New York City in 1975, many states are teetering on bankruptcy.

A Beacon in the Storm

Many states are in trouble, but not all. North Dakota has consistently boasted large surpluses, aided by a state-owned bank that is showing landmark profits. On April 20, the Bank of North Dakota (BND) reported profits for 2010 of $62 million, setting a record for the seventh straight year. The BND’s profits belong to the citizens and are produced without taxation.

Inspired by North Dakota’s example, twelve states have now introduced bills to form state-owned banks or to study their feasibility. Eight of these bills have been introduced just since January, including in Oregon, Washington State, Massachusetts, Arizona, Maryland, New Mexico, Maine and California. Illinois, Virginia, Hawaii and Louisiana introduced similar bills in 2010. For links, dates and text, see here (http://publicbankinginstitute.org/state-info.htm).

(http://www.webofdebt.com/articles/514-1.jpg)

The Center for State Innovation, based in Madison, Wisconsin, was commissioned to do detailed analyses for Washington and Oregon. Their conclusion was that a state-owned bank on the model of the Bank of North Dakota would have a substantial positive impact on employment, new lending, and government revenue in those states.

[Continued... (http://www.webofdebt.com/articles/feds_states2.php)]
: The Federal Reserve Cartel: The Eight Families
: Geolibertarian June 01, 2011, 07:42:46 PM
http://www.globalresearch.ca/the-federal-reserve-cartel-the-eight-families/25080 (http://www.globalresearch.ca/the-federal-reserve-cartel-the-eight-families/25080)

The Federal Reserve Cartel: The Eight Families

by Dean Henderson

(http://www.globalresearch.ca/wp-content/uploads/2011/06/125080.jpg)

Global Research
June 1, 2011

(Part one of a four-part series)

The Four Horsemen of Banking (Bank of America, JP Morgan Chase, Citigroup and Wells Fargo) own the Four Horsemen of Oil (Exxon Mobil, Royal Dutch/Shell, BP Amoco and Chevron Texaco); in tandem with Deutsche Bank, BNP, Barclays and other European old money behemoths.  But their monopoly over the global economy does not end at the edge of the oil patch.


According to company 10K filings to the SEC, the Four Horsemen of Banking are among the top ten stock holders of virtually every Fortune 500 corporation.[1]

So who then are the stockholders in these money center banks?

This information is guarded much more closely.  My queries to bank regulatory agencies regarding stock ownership in the top 25 US bank holding companies were given Freedom of Information Act status, before being denied on “national security” grounds.  This is rather ironic, since many of the bank’s stockholders reside in Europe.

One important repository for the wealth of the global oligarchy that owns these bank holding companies is US Trust Corporation - founded in 1853 and now owned by Bank of America.  A recent US Trust Corporate Director and Honorary Trustee was Walter Rothschild.  Other directors included Daniel Davison of JP Morgan Chase, Richard Tucker of Exxon Mobil, Daniel Roberts of Citigroup and Marshall Schwartz of Morgan Stanley. [2]

J. W. McCallister, an oil industry insider with House of Saud connections, wrote in The Grim Reaper that information he acquired from Saudi bankers cited 80% ownership of the New York Federal Reserve Bank- by far the most powerful Fed branch- by just eight families, four of which reside in the US.  They are the Goldman Sachs, Rockefellers, Lehmans and Kuhn Loebs of New York; the Rothschilds of Paris and London; the Warburgs of Hamburg; the Lazards of Paris; and the Israel Moses Seifs of Rome.

CPA Thomas D. Schauf corroborates McCallister’s claims, adding that ten banks control all twelve Federal Reserve Bank branches.  He names N.M. Rothschild of London, Rothschild Bank of Berlin, Warburg Bank of Hamburg, Warburg Bank of Amsterdam, Lehman Brothers of New York, Lazard Brothers of Paris, Kuhn Loeb Bank of New York, Israel Moses Seif Bank of Italy, Goldman Sachs of New York and JP Morgan Chase Bank of New York.  Schauf lists William Rockefeller, Paul Warburg, Jacob Schiff and James Stillman as individuals who own large shares of the Fed. [3]  The Schiffs are insiders at Kuhn Loeb.  The Stillmans are Citigroup insiders, who married into the Rockefeller clan at the turn of the century.

Eustace Mullins came to the same conclusions in his book The Secrets of the Federal Reserve, in which he displays charts connecting the Fed and its member banks to the families of Rothschild, Warburg, Rockefeller and the others. [4]

The control that these banking families exert over the global economy cannot be overstated and is quite intentionally shrouded in secrecy.  Their corporate media arm is quick to discredit any information exposing this private central banking cartel as “conspiracy theory (http://forum.prisonplanet.com/index.php?topic=161407.0)”.  Yet the facts remain.

The House of Morgan
 
The Federal Reserve Bank was born in 1913, the same year US banking scion J. Pierpont Morgan died and the Rockefeller Foundation was formed.  The House of Morgan presided over American finance from the corner of Wall Street and Broad, acting as quasi-US central bank since 1838, when George Peabody founded it in London.

Peabody was a business associate of the Rothschilds.  In 1952 Fed researcher Eustace Mullins put forth the supposition that the Morgans were nothing more than Rothschild agents.  Mullins wrote that the Rothschilds, “…preferred to operate anonymously in the US behind the facade of J.P. Morgan & Company”. [5]

Author Gabriel Kolko stated, “Morgan’s activities in 1895-1896 in selling US gold bonds in Europe were based on an alliance with the House of Rothschild.” [6]

The Morgan financial octopus wrapped its tentacles quickly around the globe.  Morgan Grenfell operated in London.  Morgan et Ce ruled Paris.  The Rothschild's Lambert cousins set up Drexel & Company in Philadelphia.

The House of Morgan catered to the Astors, DuPonts, Guggenheims, Vanderbilts and Rockefellers.  It financed the launch of AT&T, General Motors, General Electric and DuPont.  Like the London-based Rothschild and Barings banks, Morgan became part of the power structure in many countries.

By 1890 the House of Morgan was lending to Egypt’s central bank, financing Russian railroads, floating Brazilian provincial government bonds and funding Argentine public works projects.  A recession in 1893 enhanced Morgan’s power.  That year Morgan saved the US government from a bank panic, forming a syndicate to prop up government reserves with a shipment of $62 million worth of Rothschild gold. [7]

Morgan was the driving force behind Western expansion in the US, financing and controlling West-bound railroads through voting trusts.  In 1879 Cornelius Vanderbilt’s Morgan-financed New York Central Railroad gave preferential shipping rates to John D. Rockefeller’s budding Standard Oil monopoly, cementing the Rockefeller/Morgan relationship.

The House of Morgan now fell under Rothschild and Rockefeller family control.  A New York Herald headline read, “Railroad Kings Form Gigantic Trust”.  J. Pierpont Morgan, who once stated, “Competition is a sin”, now opined gleefully, “Think of it.  All competing railroad traffic west of St. Louis placed in the control of about thirty men.”[8]

Morgan and Edward Harriman’s banker Kuhn Loeb held a monopoly over the railroads, while banking dynasties Lehman, Goldman Sachs and Lazard joined the Rockefellers in controlling the US industrial base. [9]

In 1903 Banker’s Trust was set up by the Eight Families.  Benjamin Strong of Banker’s Trust was the first Governor of the New York Federal Reserve Bank.  The 1913 creation of the Fed fused the power of the Eight Families to the military and diplomatic might of the US government.  If their overseas loans went unpaid, the oligarchs could now deploy US Marines to collect the debts.  Morgan, Chase and Citibank formed an international lending syndicate.

The House of Morgan was cozy with the British House of Windsor and the Italian House of Savoy. The Kuhn Loebs, Warburgs, Lehmans, Lazards, Israel Moses Seifs and Goldman Sachs also had close ties to European royalty. By 1895 Morgan controlled the flow of gold in and out of the US. The first American wave of mergers was in its infancy and was being promoted by the bankers. In 1897 there were sixty-nine industrial mergers. By 1899 there were twelve-hundred. In 1904 John Moody - founder of Moody’s Investor Services - said it was impossible to talk of Rockefeller and Morgan interests as separate. [10]

Public distrust of the combine spread. Many considered them traitors working for European old money. Rockefeller’s Standard Oil, Andrew Carnegie’s US Steel and Edward Harriman’s railroads were all financed by banker Jacob Schiff at Kuhn Loeb, who worked closely with the European Rothschilds.

Several Western states banned the bankers. Populist preacher William Jennings Bryan was thrice the Democratic nominee for President from 1896 -1908. The central theme of his anti-imperialist campaign was that America was falling into a trap of “financial servitude to British capital”. Teddy Roosevelt defeated Bryan in 1908, but was forced by this spreading populist wildfire to enact the Sherman Anti-Trust Act. He then went after the Standard Oil Trust.

In 1912 the Pujo hearings were held, addressing concentration of power on Wall Street. That same year Mrs. Edward Harriman sold her substantial shares in New York’s Guaranty Trust Bank to J.P. Morgan, creating Morgan Guaranty Trust. Judge Louis Brandeis convinced President Woodrow Wilson to call for an end to interlocking board directorates. In 1914 the Clayton Anti-Trust Act was passed.

Jack Morgan - J. Pierpont’s son and successor - responded by calling on Morgan clients Remington and Winchester to increase arms production. He argued that the US needed to enter WWI. Goaded by the Carnegie Foundation and other oligarchy fronts, Wilson accommodated. As Charles Tansill wrote in America Goes to War, “Even before the clash of arms, the French firm of Rothschild Freres cabled to Morgan & Company in New York suggesting the flotation of a loan of $100 million, a substantial part of which was to be left in the US to pay for French purchases of American goods.”

The House of Morgan financed half the US war effort, while receiving commissions for lining up contractors like GE, Du Pont, US Steel, Kennecott and ASARCO. All were Morgan clients. Morgan also financed the British Boer War in South Africa and the Franco-Prussian War. The 1919 Paris Peace Conference was presided over by Morgan, which led both German and Allied reconstruction efforts. [11]

In the 1930’s populism resurfaced in America after Goldman Sachs, Lehman Bank and others profited from the Crash of 1929. [12] House Banking Committee Chairman Louis McFadden (D-NY) said of the Great Depression, “It was no accident. It was a carefully contrived occurrence...The international bankers sought to bring about a condition of despair here so they might emerge as rulers of us all”.

Sen. Gerald Nye (D-ND) chaired a munitions investigation in 1936. Nye concluded that the House of Morgan had plunged the US into WWI to protect loans and create a booming arms industry. Nye later produced a document titled The Next War, which cynically referred to “the old goddess of democracy trick”, through which Japan could be used to lure the US into WWII.

In 1937 Interior Secretary Harold Ickes warned of the influence of “America’s 60 Families”. Historian Ferdinand Lundberg later penned a book of the exact same title. Supreme Court Justice William O. Douglas decried, “Morgan influence...the most pernicious one in industry and finance today.”

Jack Morgan responded by nudging the US towards WWII. Morgan had close relations with the Iwasaki and Dan families - Japan’s two wealthiest clans - who have owned Mitsubishi and Mitsui, respectively, since the companies emerged from 17th Century shogunates. When Japan invaded Manchuria, slaughtering Chinese peasants at Nanking, Morgan downplayed the incident. Morgan also had close relations with Italian fascist Benito Mussolini, while German Nazi Dr. Hjalmer Schacht was a Morgan Bank liaison during WWII. After the war Morgan representatives met with Schacht at the Bank of International Settlements (BIS) in Basel, Switzerland. [13]

The House of Rockefeller

BIS is the most powerful bank in the world, a global central bank for the Eight Families who control the private central banks of almost all Western and developing nations. The first President of BIS was Rockefeller banker Gates McGarrah- an official at Chase Manhattan and the Federal Reserve. McGarrah was the grandfather of former CIA director Richard Helms. The Rockefellers- like the Morgans- had close ties to London. David Icke writes in Children of the Matrix, that the Rockefellers and Morgans were just “gofers” for the European Rothschilds. [14]

BIS is owned by the Federal Reserve, Bank of England, Bank of Italy, Bank of Canada, Swiss National Bank, Nederlandsche Bank, Bundesbank and Bank of France.

Historian Carroll Quigley wrote in his epic book Tragedy and Hope that BIS was part of a plan, “to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole...to be controlled in a feudalistic fashion by the central banks of the world acting in concert by secret agreements.”

[Continued... (http://www.globalresearch.ca/the-federal-reserve-cartel-the-eight-families/25080)]
: The Global Debt Crisis: How We Got In It, and How to Get Out
: Geolibertarian June 06, 2011, 07:40:59 PM
http://www.globalresearch.ca/the-global-debt-crisis-how-we-got-in-it-and-how-to-get-out/25154 (http://www.globalresearch.ca/the-global-debt-crisis-how-we-got-in-it-and-how-to-get-out/25154)

The Global Debt Crisis: How We Got In It, and How to Get Out

by Ellen Brown

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Global Research
June 6, 2011

Countries everywhere are facing debt crises today, precipitated by the credit collapse of 2008.  Public services are being slashed and public assets are being sold off, in a futile attempt to balance budgets that can’t be balanced because the money supply itself has shrunk.  Governments usually get the blame for excessive spending, but governments did not initiate the crisis.  The collapse was in the banking system, and in the credit that it is responsible for creating and sustaining.

Contrary to popular belief, most of our money today is not created by governments.  It is created by private banks as loans.  The private system of money creation has grown so powerful over the centuries that it has come to dominate governments globally.  The system, however, contains the seeds of its own destruction.  The source of its power is also a fatal design flaw.


The flaw is that banks advance “bank credit” that must be paid back with interest, continually requiring more money to be repaid than was created as loans; and the only way to get additional money from the private banking system is to take out yet more loans, at interest. The system is, in effect, a pyramid scheme. When the banks run out of borrowers to support the pyramid, it must collapse; and we are nearing that point today.

There are more sustainable ways to run a banking and credit system, as will be shown.

How Banks Create Money

The process by which banks create money was explained by the Chicago Federal Reserve in a booklet called “Modern Money Mechanics (http://).” It states:

“The actual process of money creation takes place primarily in banks.” [p3]

“[Banks] do not really pay out loans from the money they receive as deposits. If they did this, no additional money would be created. What they do when they make loans is to accept promissory notes in exchange for credits to the borrowers’ transaction accounts. Loans (assets) and deposits (liabilities) both rise [by the same amount].” [p6]

“With a uniform 10 percent reserve requirement, a $1 increase in reserves would support $10 of additional transaction accounts.” [p49]

A $100 deposit supports a $90 loan, which becomes a $90 deposit in another bank, which supports an $81 loan, etc.

That’s the conventional model, but banks actually create the loans FIRST. (Picture how a credit card works.) Banks need deposits to clear their outgoing checks, but they find the deposits later. Banks create money as loans, which become checks, which go into other banks. Then, if needed to clear the checks, they borrow the money back from the other banks. In effect, they borrow back the money they just created, pocketing the spread between the interest rates as their profit. The rate at which banks can borrow from each other in the U.S. today (the Fed funds rate) is an extremely low 0.2%.

How the System Evolved

The current system of privately-issued money is traced in “Modern Money Mechanics” to the 17th century goldsmiths. People who left gold with the goldsmiths for safekeeping would be issued paper receipts for it called “banknotes.” Other people who wanted to borrow money were also happy to accept paper banknotes in place of gold, since the notes were safer and more convenient to carry around. The sleight of hand came in when the goldsmiths discovered that people would come for their gold only about 10% of the time. That meant that up to ten times as many notes could be printed and lent as the goldsmiths had gold. Ninety percent of the notes were basically counterfeited.

This system was called “fractional reserve” banking and was institutionalized when the Bank of England was founded in 1694. The bank was allowed to lend its own banknotes to the government, forming the national money supply. Only the interest on the loans had to be paid. The debt was rolled over indefinitely.

That is still true today. The U.S. federal debt is never paid off but just continues to grow, forming the basis of the U.S. money supply.

The Public Banking Alternative

There are other ways to create a banking system, ways that would eliminate its ponzi-scheme elements and make the system sustainable. One solution is to make the loans interest-free; but for Western economies today, that transition could be difficult.

Another alternative is for banks to be publicly-owned. If the people collectively own the bank, the interest and profits go back to the government and the people, who benefit from decreased taxes, increased public services, and cheaper public infrastructure. Cutting out interest has been shown (http://www.mkeever.com/kent.html) to reduce the cost of public projects by 30-50%.

In the United States, this system of publicly-owned banks goes back to the American colonists. The best of the colonial models was in Benjamin Franklin’s colony of Pennsylvania, where the government operated a “land bank.” Money was printed and lent into the community. It recycled back to the government and could be lent and relent. The system was mathematically sound because the interest and profits were returned to the government, which then spent the money back into the economy in place of taxes. Private banks, by contrast, generally lend their profits back into the economy, or invest in private money-making ventures in which more is always expected back than was originally invested.

During the period that the Pennsylvania system (http://www.hoover.org/publications/policy-review/article/8029) was in place, the colonists paid no taxes except excise taxes, prices did not inflate, and there was no government debt.

How Private Banknotes Became the National U.S. Currency

The Pennsylvania system was sustainable, but some early American colonial governments just printed and spent, inflating the money supply and devaluing the currency. The British merchants complained, prompting King George II to forbid the colonists to issue their own money. Taxes had to be paid to England in gold. That meant going into debt to the English bankers. The result was a massive depression. The colonists finally rebelled and went back to issuing their own money, precipitating the American Revolution.

In an international first, the colonists funded a war against a major power with mere paper receipts, and won. But the British counterattacked by waging a currency war. They massively counterfeited the colonists’ paper money, at a time when this was easy to do. By the end of the war, the paper scrip was virtually worthless. After it lost its value, the colonists were so disillusioned with paper money that they left the power to issue it out of the U.S. Constitution.

Meanwhile, Alexander Hamilton, the first U.S. Treasury Secretary, was faced with huge war debts, and he had no money to pay them. He therefore resorted to the ruse used in England known as fractional reserve banking. In 1791, Hamilton set up the First U.S. Bank, a largely private bank that would print banknotes “backed” by gold and lend them to the government.

The ruse worked: the paper banknotes expanded the money supply, the debts were paid, and the economy thrived. But it was the beginning of a system of government funded by debt to private bankers, who lent banknotes only nominally backed by gold.

During the American Civil War, President Lincoln avoided a crippling war debt by returning to the system of government-issued money of the American colonists. He issued U.S. Notes from the Treasury called “Greenbacks” rather than borrowing at usurious interest rates. But Lincoln was assassinated, and Greenback issuance was halted.

In 1913, the privately-owned Federal Reserve was authorized to issue its own Federal Reserve Notes as the national currency. These notes were then lent to the government, eliminating the government’s own power to issue money (except for coins). The Federal Reserve was set up to prevent bank runs, but twenty years later we had the Great Depression, the greatest bank run in history. Robert H. Hemphill, Credit Manager of the Federal Reserve Bank of Atlanta, wrote in 1934:

“We are completely dependent on the commercial Banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the Banks create ample synthetic money we are prosperous; if not, we starve.”

For the bankers, however, it was a good system. It put them in control.

Setting the Global Debt Trap

Prof. Carroll Quigley was an insider groomed by the international bankers. He wrote in Tragedy and Hope in 1966:

“The powers of financial capitalism had another far reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole.

“The apex of the system was to be the Bank for International Settlements [BIS] in Basle, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank... sought to dominate its government by its ability to control Treasury loans…."

The debt trap was set in stages. In 1971, the dollar went off the gold standard internationally. Currencies were unpegged from gold and allowed to “float” in currency markets, competing with other currencies, making them vulnerable to speculation and manipulation.

In 1973, a secret agreement (http://www.newswithviews.com/Spingola/deanna75.htm) was entered into in which the OPEC countries would sell oil only in dollars, and the price of oil would be dramatically increased. By 1974, oil prices had increased by 400% from 1971 levels. Countries lacking oil had to borrow dollars from U.S. banks.

In 1981, the Fed funds rate was raised to 20% (http://en.wikipedia.org/wiki/Early_1980s_recession). At 20% compound interest, debt doubles in under four years. As a result, most of the world became crippled by debt. By 2001, developing nations had repaid the principal originally owed on their debts six times over; but their total debt had quadrupled because of interest payments.

When debtor nations could not pay the banks, the International Monetary Fund stepped in with loans -- with strings attached. The debtors had to agree to “austerity measures,” including:

*  cutting social services

*  privatizing banks and public utilities

*  opening markets to foreign investors

*  letting currencies “float.”

Today, austerity measures are being imposed not just in developing countries but in the European Union and on U.S. States.

[Continued... (http://www.globalresearch.ca/the-global-debt-crisis-how-we-got-in-it-and-how-to-get-out/25154)]
: The Federal Reserve Cartel: Freemasons and The House of Rothschild
: Geolibertarian June 08, 2011, 01:51:09 PM
http://www.globalresearch.ca/the-federal-reserve-cartel-freemasons-and-the-house-of-rothschild/25179 (http://www.globalresearch.ca/the-federal-reserve-cartel-freemasons-and-the-house-of-rothschild/25179)

The Federal Reserve Cartel: Freemasons and The House of Rothschild

by Dean Henderson

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Global Research
June 8, 2011

(Part two of a four-part series)

In 1789 Alexander Hamilton became the first Treasury Secretary of the United States.  Hamilton was one of many Founding Fathers who were Freemasons.  He had close relations with the Rothschild family which owns the Bank of England and leads the European Freemason movement.  George Washington, Benjamin Franklin, John Jay, Ethan Allen, Samuel Adams, Patrick Henry, John Brown and Roger Sherman were all Masons.

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Andrew Hamilton

Roger Livingston helped Sherman and Franklin write the Declaration of Independence. He gave George Washington his oaths of office while he was Grand Master of the New York Grand Lodge of Freemasons. Washington himself was Grand Master of the Virginia Lodge. Of the General Officers in the Revolutionary Army, thirty-three were Masons. This was highly symbolic since 33rd Degree Masons become Illuminated. [1]

Populist founding fathers led by John Adams, Thomas Jefferson, James Madison and Thomas Paine- none of whom were Masons- wanted to completely severe ties with the British Crown, but were overruled by the Masonic faction led by Washington, Hamilton and Grand Master of the St. Andrews Lodge in Boston General Joseph Warren, who wanted to “defy Parliament but remain loyal to the Crown”. St. Andrews Lodge was the hub of New World Masonry and began issuing Knights Templar Degrees in 1769. [2]

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General Joseph Warren

All US Masonic lodges are to this day warranted by the British Crown, whom they serve as a global intelligence and counterrevolutionary subversion network. Their most recent initiative is the Masonic Child Identification Program (CHIP). According to Wikipedia, the CHIP programs allow parents the opportunity to create a kit of identifying materials for their child, free of charge. The kit contains a fingerprint card, a physical description, a video, computer disk, or DVD of the child, a dental imprint, and a DNA sample.

The First Continental Congress convened in Philadelphia in 1774 under the Presidency of Peyton Randolph, who succeeded Washington as Grand Master of the Virginia Lodge. The Second Continental Congress convened in 1775 under the Presidency of Freemason John Hancock. Peyton’s brother William succeeded him as Virginia Lodge Grand Master and became the leading proponent of centralization and federalism at the First Constitutional Convention in 1787. The federalism at the heart of the US Constitution is identical to the federalism laid out in the Freemason’s Anderson’s Constitutions of 1723. William Randolph became the nation’s first Attorney General and Secretary of State under George Washington. His family returned to England loyal to the Crown. John Marshall, the nation’s first Supreme Court Justice, was also a Mason. [3]

When Benjamin Franklin journeyed to France to seek financial help for American revolutionaries, his meetings took place at Rothschild banks. He brokered arms sales via German Mason Baron von Steuben. His Committees of Correspondence operated through Freemason channels and paralleled a British spy network. In 1776 Franklin became de facto Ambassador to France. In 1779 he became Grand Master of the French Neuf Soeurs (Nine Sisters) Lodge, to which John Paul Jones and Voltaire belonged. Franklin was also a member of the more secretive Royal Lodge of Commanders of the Temple West of Carcasonne, whose members included Frederick Prince of Whales. While Franklin preached temperance in the US, he cavorted wildly with his Lodge brothers in Europe. Franklin served as Postmaster General from the 1750’s to 1775 - a role traditionally relegated to British spies. [4]

With Rothschild financing Alexander Hamilton founded two New York banks, including Bank of New York. [5] He died in a gun battle with Aaron Burr, who founded Bank of Manhattan with Kuhn Loeb financing. Hamilton exemplified the contempt which the Eight Families hold towards common people, once stating, “All communities divide themselves into the few and the many. The first are the rich and the well born, the others the mass of the people...The people are turbulent and changing; they seldom judge and determine right. Give therefore to the first class a distinct, permanent share of government. They will check the unsteadiness of the second.”[6]

Hamilton was only the first in a series of Eight Families cronies to hold the key position of Treasury Secretary. In recent times Kennedy Treasury Secretary Douglas Dillon came from Dillon Read (now part of UBS Warburg). Nixon Treasury Secretaries David Kennedy and William Simon came from Continental Illinois Bank (now part of Bank of America) and Salomon Brothers (now part of Citigroup), respectively. Carter Treasury Secretary Michael Blumenthal came from Goldman Sachs, Reagan Treasury Secretary Donald Regan came from Merrill Lynch (now part of Bank of America), Bush Sr. Treasury Secretary Nicholas Brady came from Dillon Read (UBS Warburg) and both Clinton Treasury Secretary Robert Rubin and Bush Jr. Treasury Secretary Henry Paulson came from Goldman Sachs. Obama Treasury Secretary Tim Geithner worked at Kissinger Associates and the New York Fed.

Thomas Jefferson argued that the United States needed a publicly-owned central bank so that European monarchs and aristocrats could not use the printing of money to control the affairs of the new nation. Jefferson extolled, “A country which expects to remain ignorant and free...expects that which has never been and that which will never be. There is scarcely a King in a hundred who would not, if he could, follow the example of Pharaoh – get first all the people’s money, then all their lands and then make them and their children servants forever...banking establishments are more dangerous than standing armies. Already they have raised up a money aristocracy.” Jefferson watched as the Euro-banking conspiracy to control the United States unfolded, weighing in, “Single acts of tyranny may be ascribed to the accidental opinion of the day, but a series of oppressions begun at a distinguished period, unalterable through every change of ministers, too plainly prove a deliberate, systematic plan of reducing us to slavery”. [7]

But the Rothschild-sponsored Hamilton’s arguments for a private US central bank carried the day. In 1791 the Bank of the United States (BUS) was founded, with the Rothschilds as main owners. The bank’s charter was to run out in 1811. Public opinion ran in favor of revoking the charter and replacing it with a Jeffersonian public central bank. The debate was postponed as the nation was plunged by the Euro-bankers into the War of 1812. Amidst a climate of fear and economic hardship, Hamilton’s bank got its charter renewed in 1816.

Old Hickory, Honest Abe & Camelot

In 1828 Andrew Jackson took a run at the US Presidency. Throughout his campaign he railed against the international bankers who controlled the BUS. Jackson ranted, “You are a den of vipers. I intend to expose you and by Eternal God I will rout you out. If the people understood the rank injustices of our money and banking system there would be a revolution before morning.”

Jackson won the election and revoked the bank’s charter stating, “The Act seems to be predicated on an erroneous idea that the present shareholders have a prescriptive right to not only the favor, but the bounty of the government...for their benefit does this Act exclude the whole American people from competition in the purchase of this monopoly. Present stockholders and those inheriting their rights as successors be established a privileged order, clothed both with great political power and enjoying immense pecuniary advantages from their connection with government. Should its influence be concentrated under the operation of such an Act as this, in the hands of a self-elected directory whose interests are identified with those of the foreign stockholders, will there not be cause to tremble for the independence of our country in war...controlling our currency, receiving our public monies and holding thousands of our citizens independence, it would be more formidable and dangerous than the naval and military power of the enemy. It is to be regretted that the rich and powerful too often bend the acts of government for selfish purposes...to make the rich richer and more powerful. Many of our rich men have not been content with equal protection and equal benefits, but have besought us to make them richer by acts of Congress. I have done my duty to this country.”[8]

Populism prevailed and Jackson was re-elected. In 1835 he was the target of an assassination attempt. The gunman was Richard Lawrence, who confessed that he was, “in touch with the powers in Europe”. [9]

Still, in 1836 Jackson refused to renew the BUS charter. Under his watch the US national debt went to zero for the first and last time in our nation’s history. This angered the international bankers, whose primary income is derived from interest payments on debt. BUS President Nicholas Biddle cut off funding to the US government in 1842, plunging the US into a depression. Biddle was an agent for the Paris-based Jacob Rothschild. [10]

The Mexican War was simultaneously sprung on Jackson. A few years later the Civil War was unleashed, with London bankers backing the Union and French bankers backing the South. The Lehman family made a fortune smuggling arms to the south and cotton to the north. By 1861 the US was $100 million in debt. New President Abraham Lincoln snubbed the Euro-bankers again, issuing Lincoln Greenbacks to pay Union Army bills.

The Rothschild-controlled Times of London wrote, “If that mischievous policy, which had its origins in the North American Republic, should become indurated down to a fixture, then that Government will furnish its own money without cost. It will pay off its debts and be without debt. It will have all the money necessary to carry on its commerce. It will become prosperous beyond precedent in the history of the civilized governments of the world. The brains and the wealth of all countries will go to North America. That government must be destroyed, or it will destroy every monarchy on the globe.” [11]

The Euro-banker-written Hazard Circular was exposed and circulated throughout the country by angry populists. It stated, “The great debt that capitalists will see is made out of the war and must be used to control the valve of money. To accomplish this government bonds must be used as a banking basis. We are now awaiting Secretary of Treasury Salmon Chase to make that recommendation. It will not allow Greenbacks to circulate as money as we cannot control that. We control bonds and through them banking issues”.

The 1863 National Banking Act reinstated a private US central bank and Chase’s war bonds were issued. Lincoln was re-elected the next year, vowing to repeal the act after he took his January 1865 oaths of office. Before he could act, he was assassinated at the Ford Theatre by John Wilkes Booth. Booth had major connections to the international bankers. His granddaughter wrote This One Mad Act, which details Booth’s contact with “mysterious Europeans” just before the Lincoln assassination.

Following the Lincoln hit, Booth was whisked away by members of a secret society known as Knights of the Golden Circle (KGC). KGC had close ties to the French Society of Seasons, which produced Karl Marx. KGC had fomented much of the tension that caused the Civil War and President Lincoln had specifically targeted the group. Booth was a KGC member and was connected through Confederate Secretary of State Judah Benjamin to the House of Rothschild. Benjamin fled to England after the Civil War. [12]

Nearly a century after Lincoln was assassinated for issuing Greenbacks, President John F. Kennedy found himself in the Eight Families’ crosshairs. Kennedy had announced a crackdown on off-shore tax havens and proposed increases in tax rates on large oil and mining companies. He supported eliminating tax loopholes which benefit the super-rich. His economic policies were publicly attacked by Fortune magazine, the Wall Street Journal and both David and Nelson Rockefeller. Even Kennedy’s own Treasury Secretary Douglas Dillon, who came from the UBS Warburg-controlled Dillon Read investment bank, voiced opposition to the JFK proposals. [13]

Kennedy’s fate was sealed in June 1963 when he authorized the issuance of more than $4 billion in United States Notes by his Treasury Department in an attempt to circumvent the high interest rate usury of the private Federal Reserve international banker crowd. The wife of Lee Harvey Oswald, who was conveniently gunned down by Jack Ruby before Ruby himself was shot, told author A. J. Weberman in 1994, “The answer to the Kennedy assassination is with the Federal Reserve Bank. Don’t underestimate that. It’s wrong to blame it on Angleton and the CIA per se only. This is only one finger on the same hand. The people who supply the money are above the CIA”. [14]

Fueled by incoming President Lyndon Johnson’s immediate escalation of the Vietnam War, the US sank further into debt. Its citizens were terrorized into silence. If they could kill the President they could kill anyone.

The House of Rothschild

The Dutch House of Orange founded the Bank of Amsterdam in 1609 as the world’s first central bank. Prince William of Orange married into the English House of Windsor, taking King James II’s daughter Mary as his bride. The Orange Order Brotherhood, which recently fomented Northern Ireland Protestant violence, put William III on the English throne where he ruled both Holland and Britain. In 1694 William III teamed up with the UK aristocracy to launch the private Bank of England.

The Old Lady of Threadneedle Street- as the Bank of England is known- is surrounded by thirty foot walls. Three floors beneath it the third largest stock of gold bullion in the world is stored. [15]

The Rothschilds and their inbred Eight Families partners gradually came to control the Bank of England. The daily London gold “fixing” occurred at the N. M. Rothschild Bank until 2004. As Bank of England Deputy Governor George Blunden put it, “Fear is what makes the bank’s powers so acceptable. The bank is able to exert its influence when people are dependent on us and fear losing their privileges or when they are frightened.”[16]

Mayer Amschel Rothschild sold the British government German Hessian mercenaries to fight against American Revolutionaries, diverting the proceeds to his brother Nathan in London, where N.M. (Nathan and Mayer) Rothschild & Sons was established. Mayer was a serious student of Cabala and launched his fortune on money embezzled from William IX- royal administrator of the Hesse-Kassel region and a prominent Freemason.

Rothschild-controlled Barings bankrolled the Chinese opium and African slave trades. It financed the Louisiana Purchase. When several states defaulted on its loans, Barings bribed Daniel Webster to make speeches stressing the virtues of loan repayment. The states held their ground, so the House of Rothschild cut off the money spigot in 1842, plunging the US into a deep depression. It was often said that the wealth of the Rothschilds depended on the bankruptcy of nations. Mayer Amschel Rothschild once said, “I care not who controls a nation’s political affairs, so long as I control her currency”.

[Continued... (http://www.globalresearch.ca/the-federal-reserve-cartel-freemasons-and-the-house-of-rothschild/25179)]
: How can the government sell gold it never legitimately owned in the first place?
: Geolibertarian June 29, 2011, 03:50:15 PM
Wasn't all the gold that's allegedly at Fort Knox unjustly confiscated from the American people?

If so, then doesn't it follow that it was never the legitimate property of the U.S. government in the first place, and is therefore not "theirs" to sell?

If so, then why are so many cheerleading the idea of selling it off in order to pay down the national debt -- particularly in view of the fact that eliminating the national debt without first instituting a debt-free money system would destroy our money supply and, consequently, our entire economy?

Or am I a thought criminal merely for asking that question, since this idea has been wrapped in the flag of "liberty"?
: Re: Monetary Reform!
: trailhound July 04, 2011, 06:41:18 PM
Geolibertian wrote
To determine what effect this will have on the M2 money supply -- which is $8.9137 trillion at present -- let's further assume that the U.S. has all the gold that's ever been mined (even though it doesn't) -- 165,000 metric tonnes, or 2.546336 trillion grains, according to the World Gold Council. If we divide that figure by 23.22 grains, we have a maximum M2 money supply of $109.66 billion.

That's a minimum 98.8% decrease!

Yep thats a 98.8% decrease in the magic of numerology. Of course you could allow for other precious metals like, as the constitution suggests, silver. 

98.8% decrease in illusory power.
: Re: Monetary Reform!
: Geolibertarian July 05, 2011, 10:36:39 AM
Geolibertian wrote
Yep thats a 98.8% decrease in the magic of numerology. Of course you could allow for other precious metals like, as the constitution suggests, silver.

I already explained (in a post subsequent to the one you quoted) why that wouldn't even come close to preempting a deflationary crash.
 
98.8% decrease in illusory power.

The catastrophic effects of such a severe money supply contraction would be anything but "illusory." The monetary flat-earthers (http://) from the privatize-everything Austrian School have made a virtual religion out of ignoring this simple fact, because they know that widespread ignorance of this fact is the only way they can con the masses into cutting their own throats economically.
: Re: Monetary Reform!
: trailhound July 05, 2011, 06:20:18 PM

 
The catastrophic effects of such a severe money supply contraction would be anything but "illusory." The monetary flat-earthers (http://) from the privatize-everything Austrian School have made a virtual religion out of ignoring this simple fact, because they know that widespread ignorance of this fact is the only way they can con the masses into cutting their own throats economically.

 So we recognize all these 'units' that have been created through fraud in your plan? Im not trying to argue with you Geo just making sure I understand that right...
: Re: Monetary Reform!
: Geolibertarian July 05, 2011, 07:26:05 PM
So we recognize all these 'units' that have been created through fraud in your plan? Im not trying to argue with you Geo just making sure I understand that right...

Rather than repeat things I've already posted in this thread, only to have you pretend I never posted them again, re-read my first four posts to this thread, then tell me which part you don't understand.

And I truly mean "read." If all you're going to do is lazily skim through it looking for something to cherry-pick out of context, then don't even bother. We can just agree to disagree right now and be done with it.
: Re: Monetary Reform!
: trailhound July 05, 2011, 07:52:46 PM
Rather than repeat things I've already posted in this thread, only to have you pretend I never posted them again, re-read my first four posts to this thread, then tell me which part you don't understand.

And I truly mean "read." If all you're going to do is lazily skim through it looking for something to cherry-pick out of context, then don't even bother. We can just agree to disagree right now and be done with it.

You are so condescending man geesh...i read your posts a couple years ago sorry for asking if I remembered correctly what you propose, seems I am remembering correctly.

You wrote:
"As some of you already know, an airtight case could be made for invalidating virtually all bank loans on the ground that no "lawful consideration" was made on the part of the banks, since the "money" they offer as consideration for the borrower's promise to repay doesn't really exist. (Ellen Brown explains this more thoroughly here.)

I oppose invalidating traditional bank loans, however, because doing so would cause the entire money supply to collapse and the economy along with it. That's where "converting the existing volume of bank credit into actual money having an existence independent of debt" (while simultaneously abolishing fractional reserve banking) comes in."

So you are proposing to, at the start of this system, allow the funny money in but then only allow the govt to create a certain amount of it after the initial takeover...or do i misunderstand?
 


: Re: Monetary Reform!
: trailhound July 05, 2011, 08:01:15 PM
 What im thinking if you have this initial figure you are going to create, why not peg each of those units to value redeemable in gold or silver. Either way the market will determine its true value, no?
: Re: Monetary Reform!
: freedom_commonsense July 05, 2011, 09:20:19 PM
What im thinking if you have this initial figure you are going to create, why not peg each of those units to value redeemable in gold or silver. Either way the market will determine its true value, no?

Or we can peg it to products and services as a whole...
: Re: Monetary Reform!
: trailhound July 05, 2011, 10:21:53 PM
Or we can peg it to products and services as a whole...

You cant guarantee perishables and future labor, im from the show me state. Show me the law and show me the money!
: Re: Monetary Reform!
: Geolibertarian July 06, 2011, 01:08:41 PM
You are so condescending man geesh...

No, I just know from experience you like to go around in circles by asking questions I've already addressed, and I get fed up having to repeat myself all the time, only to hear the same canned reactions every time.

i read your posts a couple years ago sorry for asking if I remembered correctly what you propose, seems I am remembering correctly.

You wrote:
"As some of you already know, an airtight case could be made for invalidating virtually all bank loans on the ground that no "lawful consideration" was made on the part of the banks, since the "money" they offer as consideration for the borrower's promise to repay doesn't really exist. (Ellen Brown explains this more thoroughly here.)

I oppose invalidating traditional bank loans, however, because doing so would cause the entire money supply to collapse and the economy along with it. That's where "converting the existing volume of bank credit into actual money having an existence independent of debt" (while simultaneously abolishing fractional reserve banking) comes in."

So you are proposing to, at the start of this system, allow the funny money in

You know darn well I don't regard debt-free Greenbacks as "funny money," so this is a ridiculously loaded question (http://en.wikipedia.org/wiki/Loaded_question) on your part.

but then only allow the govt to create a certain amount of it after the initial takeover...or do i misunderstand?

You obviously skimmed my first four posts instead of reading them like I asked you to, because if you had actually read them, you'd know that this question is already addressed in the excerpts I posted from Robert De Fremery's book, Rights vs. Privileges. So if you're genuinely interested in understanding my proposal, and aren't just throwing sand in the air in a veiled attempt to confuse the issue, then read those excerpts and let me know what part (if any) you don't understand.
: Re: Monetary Reform!
: Geolibertarian July 06, 2011, 01:30:43 PM
What im thinking if you have this initial figure you are going to create, why not peg each of those units to value redeemable in gold or silver.

You can play dumb all you want, the fact remains that anyone can go to page 2 of this thread and see for himself that I've already explained why backing U.S. currency with gold and/or silver would be disastrous. I'm not going to repeat myself over and over again just because you're too lazy (or too much of a know-it-all) to actually read something instead of lazily skim it.

Now, if my hunch is correct, you're going to start whining because I refuse to let you manipulate me into needlessly repeating explanations I've already given, and because I won't let you feign ignorance without calling you on it.


-- http://www.911truth.org/article.php?story=20050116064744556 (http://www.911truth.org/article.php?story=20050116064744556)
: S&P AND THE BILDERBERGERS: ALL PART OF THE PLAN?
: Geolibertarian August 18, 2011, 07:32:17 PM
S&P AND THE BILDERBERGERS: ALL PART OF THE PLAN?

Ellen Brown
August 18, 2011
www.webofdebt.com/articles/s_p.php (http://www.webofdebt.com/articles/s_p.php)

What just happened in the stock market? Last week, the Dow Jones Industrial Average rose or fell by at least 400 points for four straight days, a stock market first.

The worst drop was on Monday, 8-8-11, when the Dow plunged 624 points. Monday was the first day of trading after US Treasury bonds were downgraded from AAA to AA+ by Standard and Poor’s.

But the roller coaster actually began on Tuesday, 8-2-11, the day after the last-minute deal to raise the U.S. debt ceiling -- a deal that was supposed to avoid the downgrade that happened anyway five days later. The Dow changed directions for eight consecutive trading sessions after that, another first.

The volatility was unprecedented, leaving analysts at a loss (http://www.casavaria.com/cafesentido/2011/08/12/8434/four-days-of-radical-stock-market-swings-show/) to explain it. High frequency program trading no doubt added to the wild swings, but why the daily reversals? Why didn’t the market head down and just keep going, as it did in September 2008?

The plunge on 8-8-11 was the worst since 2008 and the sixth largest stock market crash ever. According to (http://www.spiegel.de/international/world/0,1518,779008,00.html) Der Spiegel, one of the most widely read periodicals in Europe:


On Tuesday, August 9, however, the market gained more points from its low than it lost on Monday. Why? A tug of war seemed to be going on between two titanic forces, one bent on crashing the market, the other on propping it up.

The Dubious S&P Downgrade

Many commentators questioned the validity of the downgrade that threatened to collapse the market. Dean Baker, co-director of the Center for Economic and Policy Research, said in a statement (http://www.cepr.net/index.php/press-releases/press-releases/statement-on-the-sap-downgrade):


Paul Krugman, writing (http://krugman.blogs.nytimes.com/2011/08/05/sp-and-the-usa/) in the New York Times, was also skeptical, stating:


In an illuminating expose (https://secure.fhttps/secure.firedoglake.com/page/s/investigate-sp?) posted on Firedoglake on August 5, Jane Hamsher concluded:


Who Drove the S&P Agenda?

Jason Schwarz shed light on this question in an article on Seeking Alpha titled “The Rise of Financial Terrorism” (http://seekingalpha.com/article/285737-the-rise-of-financial-terrorism). He wrote:


Also named by Schwarz as a suspect in the market manipulations was Michel Barnier, head of European Regulation. Barnier triggered an alarming 513-point drop in the Dow on August 4, when he blocked the plan of Hans Hoogervorst, newly appointed Chairman of the International Accounting Standards Board, to save Europe by adopting a new rule called IFRS 9. The rule would have eliminated mark-to-market accounting of sovereign debt from European bank balance sheets. Schwarz writes:

[Continued... (http://www.webofdebt.com/articles/s_p.php)]
: NORTH DAKOTA’S ECONOMIC “MIRACLE”—IT’S NOT OIL
: Geolibertarian September 03, 2011, 11:07:47 AM
NORTH DAKOTA’S ECONOMIC “MIRACLE”—IT’S NOT OIL

Ellen Brown
August 31st, 2011
www.webofdebt.com/articles/north_dakota.php (http://www.webofdebt.com/articles/north_dakota.php)

North Dakota has had the nation's lowest unemployment ever since the economy tanked. What's its secret?

In an article in The New York Times on August 19th titled “The North Dakota Miracle,” Catherine Rampell writes:


Oil is certainly a factor, but it is not what has put North Dakota over the top. Alaska has roughly the same population (http://en.wikipedia.org/wiki/List_of_U.S._states_and_territories_by_population) as North Dakota and produces nearly twice as much oil (http://www.msnbc.msn.com/id/43085246/ns/business-oil_and_energy/t/bubbling-crude-americas-top-oil-producing-states/), yet unemployment in Alaska is running at 7.7 percent. Montana, South Dakota, and Wyoming have all benefited from a boom in energy prices, with Montana and Wyoming extracting much more gas than North Dakota has. The Bakken oil field stretches across Montana as well as North Dakota, with the greatest Bakken oil production (http://en.wikipedia.org/wiki/Bakken_formation) coming from Elm Coulee Oil Field in Montana. Yet Montana’s unemployment rate, like Alaska’s, is 7.7% percent.

A number of other mineral-rich states were initially not affected by the economic downturn, but they lost revenues with the later decline in oil prices. North Dakota is the only state to be in continuous budget surplus (http://growth.newamerica.net/sites/newamerica.net/files/policydocs/Canova%20Public%20Option%201%20July.pdf) [.pdf] since the banking crisis of 2008. Its balance sheet is so strong that it recently reduced individual income taxes and property taxes by a combined $400 million, and is debating further cuts. It also has the lowest foreclosure rate (http://www.landcentral.com/north-dakota) and lowest credit card default rate (http://finance.yahoo.com/family-home/article/112420/why-north-dakota-may-be-best-state-in-country-to-live-in) in the country, and it has had NO bank failures in at least the last decade (http://www.fdic.gov/bank/individual/failed/banklist.html).

If its secret isn’t oil, what is so unique about the state? North Dakota has one thing that no other state has: its own state-owned bank.

Access to credit is the enabling factor that has fostered both a boom in oil and record profits from agriculture in North Dakota. The Bank of North Dakota (BND) does not compete with local banks but partners with them, helping with capital and liquidity requirements. It participates in loans, provides guarantees, and acts as a sort of mini-Fed for the state. In 2010, according to the BND’s annual report:


The BND also has a loan program called Flex PACE, which allows a local community to provide assistance to borrowers in areas of jobs retention, technology creation, retail, small business, and essential community services. In 2010, according to the BND annual report (http://www.banknd.nd.gov/financials_and_compliance/annual_report_2010/report.html#pg1):


The BND’s revenues have also been a major boost to the state budget. It has contributed over $300 million in revenues over the last decade to state coffers, a substantial sum for a state with a population less than one-tenth the size of Los Angeles County. According to a study by the Center for State Innovation (http://stateinnovation.org/Initiatives/State-Banks-Materials/CSI-Washington-State-Bank-Analysis-020411.aspx), from 2007 to 2009 the BND added nearly as much money to the state’s general fund as oil and gas tax revenues did (oil and gas revenues added $71 million while the Bank of North Dakota returned $60 million). Over a 15-year period, according to other data, the BND has contributed more to the state budget than oil taxes have.

North Dakota’s money and banking reserves are being kept within the state and invested there. The BND’s loan portfolio shows a steady uninterrupted increase in North Dakota lending programs since 2006.

According to the annual BND report:


A 19 percent return on equity! How many states are getting that sort of return on their Wall Street investments?

Timothy Canova is Professor of International Economic Law at Chapman University School of Law in Orange, California. In a June 2011 paper (http://growth.newamerica.net/sites/newamerica.net/files/policydocs/Canova%20Public%20Option%201%20July.pdf) [.pdf] called “The Public Option: The Case for Parallel Public Banking Institutions,” he compares North Dakota’s financial situation to California’s. He writes of North Dakota and its state-owned bank:


He then compares the dire situation in California:


Not all states have oil, of course (and it’s hardly a sustainable economic basis), but all could learn from the state-owned bank that allows North Dakota to capitalize on its resources to full advantage. States that deposit their revenues and invest their capital in large Wall Street banks are giving this economic opportunity away.
: The Money Masters: Behind the Global Debt Crisis
: Geolibertarian September 26, 2011, 01:02:59 PM
http://www.prisonplanet.com/the-money-masters-behind-the-global-debt-crisis.html (http://www.prisonplanet.com/the-money-masters-behind-the-global-debt-crisis.html)

The Money Masters: Behind the Global Debt Crisis

Adrian Salbuchi
Global Research (http://www.globalresearch.ca/index.php?context=va&aid=26775)
Sept 26, 2011

In the US, we see untold millions suffering from the impact of mass foreclosures and unemployment; in Greece, Spain, Portugal, Ireland, and Italy, stringent austerity measures are imposed upon the whole population; all coupled with major banking collapses in Iceland, the UK and the US, and indecent bail-outs of “too-big-to-fail” bankers (Newspeak for too powerful to fail).

No doubt, the bulk of the responsibility for these debacles falls squarely on the shoulders of caretaker governments in these countries that are subordinated to Money Power interests and objectives. In country after country, that comes together with embedded corruption, particularly evident today in the UK, Italy and the US.

As we assess some of the key components of today’s Global Financial, Currency and Banking Model in this article, readers will hopefully get a better understanding as to why we are all in such a crisis, and that it will tend to get much worse in the months and years to come.

Foundations of a Failed and False Model

Hiding behind the mask of false “laws” allegedly governing “globalised markets and economies,” this Financial Model has allowed a small group of people to amass and wield huge and overwhelming power over markets, corporations, industries, governments and the global media. The irresponsible and criminal consequences of their actions are now clear for all to see.

The “Model” we will briefly describe, falls within the framework of a much vaster Global Power System that is grossly unjust and was conceived and designed from the lofty heights of private geopolitical and geo-economic[1] planning centres that function to promote the Global Power Elite’s agenda as they prepare their “New World Order” – again, Newspeak for a Coming World Government.[2]

Specifically, we are talking about key think tanks like the Council on Foreign Relations, the Trilateral Commission, the Bilderberg Group, and other similar entities such as the Cato Institute (Monetary Issues), American Enterprise Institute and the Project for a New American Century that conform an intricate, solid, tight and very powerful network, engineering and managing New World Order interests, goals and objectives.

Writing from the stance of an Argentine citizen, I admit we have some “advantages” over the citizens of industrialised countries as the US, UK, European Union, Japan or Australia, in that over the last few decades we have had direct experience of successive catastrophic national crises emanating from inflation, hyper-inflation, systemic banking collapse, currency revamps, sovereign debt bond mega-swaps, military coups and lost wars…

Finance vs the Economy

The Financial system (i.e., a basically unreal Virtual, symbolic and parasitic world), increasingly functions in a direction that is contrary to the interest of the Real Economy (i.e., the Real and concrete world of work, production, manufacturing, creativity, toil, effort and sacrifice done by real people). Over the past decades, Finance and the Economy have gone their totally separate and antagonistic ways, and no longer function in a healthy and balanced relationship that prioritises the Common Good of We the People. This huge conflict between the two can be seen, amongst other places, in today’s Financial and Economic System, whose main support lies in the Debt Paradigm, i.e., that nothing can be done unless you first have credit, financing and loans to do it. Thus, the Real Economy becomes dependent on and distorted by the objectives, interests and fluctuations of Virtual Finance.[3]

Debt-Based System

The Real Economy should be financed with genuine funds; however with time, the Global Banking Elite succeeded in getting one Sovereign Nation-State after another to give up its inalienable function of supplying the correct quantity of National Currency as the primary financial instrument to finance the Real Economy. That requires decided action through Policies centred on promoting the Common Good of We The People in each country, and securing the National Interest against the perils posed by internal and external adversaries.

Thus, we can better understand why the financial “law” that requires central banks to always be totally “independent” of Government and the State has become a veritable dogma. This is just another way of ensuring that central banking should always be fully subordinated to the interests of the private banking over-world – both locally in each country, as well as globally.

We find this to prevail in all countries: Argentina, Brazil, Japan, Mexico, the European Union and in just about every other country that adopts so-called “Western” financial practice. Perhaps the best (or rather, the worst) example of this is the United States where the Federal Reserve System is a privately controlled institution outright, with around 97% of its shares being owned by the member banks themselves (admittedly, it does have a very special stock scheme), even though the bankers running “Fed” do everything they can to make it appear as if it is a “public” entity operated by Government, something that it is definitely not.

One of the Global Banking Over-world’s permanent goals is – and has been – to maintain full control over all central banks in just about every country, in order to be able to control their public currencies.[4] This, in turn, allows them to impose a fundamental (for them) condition whereby there is never the right quantity of public currency to satisfy the true demand and needs of the Real Economy. That is when those very same private banks that control central banking come on scene to “satisfy the demand for money” of the Real Economy by artificially generating private bank money out of nothing. They call it “credits and loans” and offer to supply it to the Real Economy, but with an “added value” (for them): (a) they will charge interest for them (often at usury levels) and, (b) they will create most of that private bank money out of thin air through the fractional lending system.

At a Geo-economic level, this has also served to generate huge and unnecessary public sovereign debts in country after country all over the world. Argentina is a good example, whose Caretaker Governments are systematically ignorant and unwilling to use one of the sovereign state’s key powers: the issuance of high power non-interest generating Public Money (see below for a more detailed definition). Instead, Argentina has allowed IMF (International Monetary Fund) so-called “recipes” that reflect the global banking cartel’s own interests to be imposed upon it in fundamental matters like what are the proper functions of its Central Bank, sovereign debt, fiscal policy, and other monetary, banking and financial mechanisms, that are thus systematically used against the Common Good of the Argentine People andagainst the National Interest of the country.

This system and its dreadful results, now and in the past, are so similar in so many other countries – Brazil, Mexico, Greece, Ireland, Iceland, UK, Portugal, Spain, Italy, Indonesia, Hungary, Russia, Ukraine… that it can only reflect a well thought-out and engineered plan, emanating from the highest planning echelons of the Global Power Elite.

Fractional Bank Lending

This banking concept is in use throughout the world’s financial markets, and allows private banks to generate “virtual” Money out of thin air (i.e., scriptural annotations and electronic entries into current and savings accounts, and a vast array of lines of credit), in a ratio that is 8, 10, 30, 50 times or more larger than the actual amount of cash (i.e., public money) held by the bank in its vaults. In exchange for lending this private “money” created out of nothing, bankers collect interest, demand collateral with intrinsic value and if the debtor defaults they can then foreclose on their property or other assets.

The ratio that exists between the amount of Dollars or Pesos in its vaults and the amount of credit private banks generate is determined by the central banking authority which fixes the fractional lending leverage level (which is why controlling the central bank is so vital strategically for private banker cartels). This leverage level is a statistical reserve based on actuarial calculations of the portion of account holders who in normal time go to their banks or ATM machines to withdraw their money in cash (i.e., in public money notes). The key factor here is that this works fine in “normal” times, however “normal” is basically a collective psychology concept intimately linked to what those account holders, and the population at large, perceive regarding the financial system in general and each bank in particular.

So, when for whatever reason, “abnormal” times hit – i.e., every time there are (subtly predictable) periodic crises, bank runs, collapses and panics, which seem to suddenly explode as happened in Argentina in 2001 and as is now happening in the US, UK, Ireland, Greece, Iceland, Portugal, Spain, Italy and a growing number of countries – we see all bank account holders running to their banks to try to get their money out in cash. That’s when they discover that there is not enough cash in their banks to pay, save for a small fraction of account holders (usually insiders “in the know” or “friends of the bankers”).

For the rest of us mortals “there is no more money left,” which means that they must resort to whatever public insurance scheme may or may not be in place (e.g., in the US, the state-owned Federal Deposit Insurance Corporation that “insures” up to US$250,000 per account holder with taxpayer money). In countries like Argentina, however, there is no other option but to go out on the streets banging pots and pans against those ominous, solid and firmly closed bronze bank gates and doors. All thanks to the fraudulent fractional bank lending system.

Investment Banking

In the US, so called “Commercial Banks” are those that have large portfolios of checking, savings and fixed deposit accounts for people and companies (e.g., such main street names as CitiBank, Bank of America, JPMorganChase, etc.; in Argentina, we have Standard Bank, BBVA, Galicia, HSBC and others). Commercial Banks operate with fractional lending leverage levels that allow them to lend out “virtual” dollars or pesos for amounts equal to 6, 8 or 10 times the cash actually held in their vaults; these banks are usually more closely supervised by the local monetary authorities of the country.

A different story, however, we had in the US (and still have elsewhere) with so-called global “Investment Banks” (those that make the mega-loans to corporations, major clients and sovereign states), over which there is much less control, so that their leveraging fractional lending ratios are far, far higher. This greater flexibility is what allowed investment banks in the US to “make loans” by, for example, creating out of thin air 26 “virtual” Dollars for every real Dollar in cash they held in their vaults (i.e., Goldman Sachs), or 30 virtual Dollars (Morgan Stanley), or more than 60 virtual Dollars (Merrill Lynch until just before it folded on 15 Sept 2008), or more than 100 virtual Dollars in the cases of collapsed banks Bear Stearns and Lehman Brothers.[5]

Private Money vs Public Money

At this point in our review, it is essential to very clearly distinguish between two types of Money or Currency:

Private Money – This is “Virtual” Money created out of thin air by the private banking system. It generates interests on loans, which increases the amount of Private money in (electronic) circulation, and spreads and expands throughout the entire economy. We then perceive this as “inflation.” In actual fact, the main cause of inflation in the economy is structural to the interest-bearing fractional lending banking system, even among industrialised countries. The cause of inflation nowadays is not so much the excessive issuance of Public Money by Government as all so-called banking experts would have us believe but, rather, the combined effect of fractional lending and interest on private banking money.

Public Money – This is the only Real Money there is. It is the actual notes issued by the national currency entity holding a monopoly (i.e., the central bank or some such government agency) and, as Public Money, it does not generate interest, and should not be created by anyone other than the State. Anybody else doing this is a counterfeiter and should end up in jail because counterfeiting Public Money is equivalent to robbing the Real Economy (i.e., “we, the working people”) of their work, toil and production capabilities without contributing anything in return in terms of socially productive work. The same should apply to private bankers under the present fractional lending system: counterfeiting money (i.e., creating it out of thin air as a ledger entry or electronic blip on a computer screen) is equivalent to robbing the Real Economy of its work and production capacity without contributing any counter-value in terms of work.

Why We Have Financial Crises

A fundamental concept that lies at the very heart of the present Financial Model can be found in the way huge parasitic profits on the one hand, and catastrophic systemic losses on the other, are effectively transferred to specific sectors of the economy, throughout the entire system, beyond borders and public control.

As with all models, the one we suffer today has its own internal logic which, once properly understood, makes that model predictable. The people who designed it know full well that it is governed by grand cycles having specific expansion and contraction stages, and specific timelines. Thus, they can ensure that in bull market times of growth and gigantic profits (i.e., whilst the system, grows and grows, is relatively stable and generates tons of money out of nothing), all profits are privatised making them flow towards specific institutions, economic sectors, shareholders, speculators, CEO and top management & trader bonuses, “investors”, etc who operate the gears and maintain the whole system properly tuned and working.

However, they also know that – like all roller coaster rides – when you reach the very top, the system turns into a bear market that destabilises, spins out of control, contracts and irremediably collapses, as happened to Argentina in 2001 and to the better part of the world since 2008, then all losses are socialised by making Governments absorb them through the most varied transference mechanisms that dump these huge losses onto the population at large (whether in the form of generalised inflation, catastrophic hyperinflation, banking collapses, bail-outs, tax hikes, debt defaults, forced nationalisations, extreme austerity measures, etc).

The Four-sided Global “Ponzi” Pyramid Scheme

As we know, all good pyramids have four sides, and since the Global Financial System is based on a “Ponzi” Pyramid Scheme, there’s no reason why this particular pyramid should not have four sides as well.

Below is a summary of the Four-side Global “Ponzi” Pyramid Scheme that lies at the core of today’s Financial Model, indicating how these four “sides” function in a coordinated, consistent, and sequential manner.

Side One – Create Public Money Insufficiency. This is achieved, as we explained above, by controlling the National Public entity that issues public money. Its goal is to demonetise the Real Economy so that the latter is forced to seek “alternative funding” for its needs (i.e., so that it has no choice but to resort to private bank loans).

Side Two – Impose Private Banking Fractional Lending Loans. This, as we said, is virtual private money created out of thin air on which bankers charge interest – often at usury levels – thus generating enormous profit for “investors,” creditors and all sorts of entities and individuals who operate as parasites living off other people’s work. This would never have been the case if each local central bank were to flexibly generate the correct quantity of Public Money necessary to satisfy the needs of the Real Economy in each country and region.

Side Three – Promote a Debt-Based Economic System. In fact, the whole Pyramid Model is based on being able to promote this generalised paradigm that falsely states that what really “moves” the private and public economy is not so much work, creativity, toil and effort of workers, but rather “private investors,” “bank loans” and “credit” – i.e., indebtedness. With time, this paradigm has replaced the infinitely wiser, sounder, more balanced and solid concept of corporate profit being reinvested and genuine personal savings being the foundation for future prosperity and security. Pretty much the way Henry Ford, Sr. originally grew his most successful company.

Today, however, Debt reigns supreme and this paradigm has become entrenched and embedded into people’s minds thanks to the mainstream media and specialised journals and publications, combined with Ivy League universities’ Economics Departments that have all succeeded in imposing such “politically correct” thinking with respect to financial matters, especially those relating to the proper nature and function of Public Money.

The facts are that this Model generates unnecessary loans so that banking creditors can receive huge profits, which includes promoting uncontrolled, unwarranted and often pathological consumerism, which goes hand in hand with the increasing abandonment of the traditional value of “saving for a rainy day.”

Such debts having political and strategic goals rather than merely financial ones, are usually given a thin layer of “legality” so that they may be imposed by the creditor on the debtor (i.e., in the case of The Merchant of Venice, the bond entered into between Antonio and Shylock giving the latter the legal right to a pound of the former’s flesh; in the case of chronically indebted countries like Argentina, such “legality” is achieved through a complex public debt laundering[6] mechanism carried out by successive formally “democratic” Caretaker Governments to this very day).

Side Four – Privatisation of Profits/Socialisation of Losses. Lastly, and knowing full well that, in the long run, the numbers of the entire Cycle of this Model never add up, and that the whole system will inevitably come crashing down, the Model imposes a highly complex and often subtle financial, legal and media engineering that allows privatising profits and socialising losses. In Argentina, this cycle has become increasingly visible for those who want to see it, because in our country the local “Ponzi” Pyramid Cycle lasts on average 15 to 17 years, i.e., we’ve had successive collapses involving brutal devaluation (1975), hyperinflation (1989) and systemic banking collapse (2001), however in the industrialised world, that cycle was made to last almost 80 years (i.e., three generations spanning from 1929 to 2008).

Conclusions

The fundamental cause of today’s on-going global financial collapse that exerts massive distortions over the Real Economy – and the ensuing social hardship, suffering and violence – is clear: Virtual Finance has usurped a pedestal of supremacy over the Real Economy, which does not legitimately belong to it. Finance must always be subordinated to, and in the service of, the Real Economy just as the Economy must heed the law and social needs of the Political Model executed by a Sovereign Nation-State (as we back-engineer this entire system, we thus understand why it is necessary for the Global Power Elite to first erode the sovereign Nation-State and to eventually do away with it altogether, in order to achieve its monetary, financial and political ends).

In fact, if we look at matters in their proper perspective, we will see that most national economies are pretty much intact, in spite of having been badly bruised by the financial collapse. It is Finance that is in the midst of a massive global collapse, as this Model of “Ponzi” Finance has grown into a sort of malignant “cancerous tumour” that has now “metastasised,” threatening to kill the whole economy and social body politic, in just about every country in the world, and certainly in the industrialised countries.

The above comparison of today’s financial system with a malignant tumour is more than a mere metaphor. If we look at the figures, we will immediately be able to see signs of this financial “metastasis.” For example, The New York Times in their 22 September 2008 edition explains that the main trigger of the financial collapse that had exploded just one week earlier on 15 September was, as we all know, mismanagement and lack of supervision over the “Derivatives” market. The Times then went on to explain that twenty years earlier, in 1988, there was no derivatives market; by 2002 however, Derivatives had grown into a global 102 trillion Dollar market (that’s 50% more than the Gross Domestic Product of all the countries in the world, the US, EU, Japan and BRICS nations included), and by September 2008, Derivatives had ballooned into a global 531 trillion Dollar market. That’s eight times the GDP of the entire planet! “Financial Metastasis” at its very worst. Since then, some have estimated this Derivatives global market figure to be in the region of One-Quadrillion Dollars…

Naturally, when that collapse began, the caretaker governments in the US, European Union and elsewhere, immediately sprang into action and implemented “Operation Bail-out” of all the mega-banks, insurance companies, stock exchanges and speculation markets, and their respective operators, controllers and “friends.” Thus, trillions upon trillions of Dollars, Euros and Pounds were given to Goldman Sachs, Citicorp, Morgan Stanley, AIG, HSBC and other “too big to fail” financial institutions… which is newspeak for “too powerful to fail”, because they hold politicians, political parties and governments in their steel grip.

All of this was paid with taxpayer dollars or, even worse, with uncontrolled and irresponsible issuance of Public Money bank notes and treasury bonds, especially by the Federal Reserve Bank which has, in practice, technically hyper-inflated the US Dollar: “Quantitative Easing” they call it, which is Newspeak for hyperinflation.

So far, however, like the proverbial Naked Emperor, nobody dares to state this openly. At least not until some “uncontrolled” event triggers or unmasks what should by now be obvious to all: Emperor Dollar is totally and completely naked.[7] When that happens, we will then see bloody social and civil wars throughout the world and not just in Greece and Argentina.

By then, however, and as always happens, the powerful bankster clique and their well-paid financial and media operators, will be watching the whole hellish spectacle perched in the safety and comfort of their plush boardrooms atop the skyscrapers of New York, London, Frankfurt, Buenos Aires and Sao Paulo…


Footnotes

1. The concept of “Geoeconomics” was coined by the New York-based Council on Foreign Relations, through a studies group honouring Maurice Greenberg, the financier who was for decades CEO of American International Group (AIG) which collapsed in 2008 and had strong conflict-of-interest ties with major insurance and reinsurance broker Marsh Group whose CEO was his son Jeffrey. Both father and son were indicted for fraud by then New York Attorney General Elliot Spitzer. Spitzer would later pay a very heavy price for this after becoming Governor of New York State when someone “discovered” his sex escapades which were quickly blown up into a major scandal by The New York Times

2. We have described the basic Global Power Elite structure, model and objectives in our e-Book The Coming World Government: Tragedy & Hope?, available through www.asalbuchi.com.ar.

3. For more information, see the Third Pillar of the Second Republic Project “Reject the Debt-Based Economy” on www.secondrepublicproject.com.

4. Some notable exceptions: Today: Libya, Iran, Syria, China; In the past: Peron’s Argentina, Germany and Italy in the 30’s and 40’s…. Are we seeing a pattern here?

5. See The New York Times, 22 September 2008

6. See White Paper comparing Debt Laundering mechanisms to Money Laundering mechanisms, lodged under Pillar No 3 “Reject the Debt-Based Economy” of Second Republic Project in www.secondrepublicproject.com.

7. This is more fully described in the author’s book The Coming World Government: Tragedy & Hope?, in the chapter “Death & Resurrection of the US Dollar”. Details on www.asalbuchi.com.ar. Also available upon request by E-mail: salbuchi@fibertel.com.ar.
: Debt-Free United States Notes Were Once Issued Under JFK
: Geolibertarian December 19, 2011, 08:09:04 PM
http://www.prisonplanet.com/debt-free-united-states-notes-were-once-issued-under-jfk-and-the-u-s-government-still-has-the-power-to-issue-debt-free-money.html (http://www.prisonplanet.com/debt-free-united-states-notes-were-once-issued-under-jfk-and-the-u-s-government-still-has-the-power-to-issue-debt-free-money.html)

Debt-Free United States Notes Were Once Issued Under JFK

The U.S. Government Still Has The Power To Issue Debt-Free Money

The Economic Collapse
December 19, 2011

Most Americans have no idea that the U.S. government once issued debt-free money directly into circulation.  America once thrived under a debt-free monetary system, and we can do it again.  The truth is that the United States is a sovereign nation and it does not need to borrow money from anyone.  Back in the days of JFK, Federal Reserve Notes were not the only currency in circulation.  Under JFK (at at various other times), a limited number of debt-free United States Notes were issued by the U.S. Treasury and spent by the U.S. government without any new debt being created.  In fact, each bill said “United States Note” right at the top.  Unfortunately, United States Notes are not being issued today.  If you stop right now and pull a dollar out of your wallet, what does it say right at the top?  It says “Federal Reserve Note”.  Normally, the way our current system works is that whenever more Federal Reserve Notes are created more debt is also created.  This debt-based monetary system is systematically destroying the wealth of this nation.  But it does not have to be this way.  The truth is that the U.S. government still has the power under the U.S. Constitution to issue debt-free money, and we need to educate the American people about this.

Posted below are pictures of the front and the back of a United States Note printed in 1963 while JFK was president….

(http://theeconomiccollapseblog.com/wp-content/uploads/2011/12/United-States-Note-JFK-1963.jpg)

(http://theeconomiccollapseblog.com/wp-content/uploads/2011/12/United-States-Note-JFK-1963-Back.jpg)

Notice that there is a red seal instead of a green seal on the front, and it says “United States Note” rather than “Federal Reserve Note”.

According to Wikipedia (http://en.wikipedia.org/wiki/United_States_Note), United States Notes were issued directly into circulation by the U.S. Treasury and they were first used during the Civil War….


So why are we using debt-based Federal Reserve Notes today instead of debt-free United States Notes?

It seems rather stupid, doesn’t it?

Well, that is what Thomas Edison thought too.

Thomas Edison was once quoted in the New York Times (http://query.nytimes.com/mem/archive-free/pdf?_r=3&res=9C04E0D7103EEE3ABC4E53DFB467838A639EDE) as saying the following….


Our current debt-based monetary system was devised by greedy bankers that wanted to make huge profits by creating money out of thin air and lending it to the U.S. government at interest.

Sadly, the vast majority of the American people have no idea how money is actually created in this nation.

[Continued... (http://www.prisonplanet.com/debt-free-united-states-notes-were-once-issued-under-jfk-and-the-u-s-government-still-has-the-power-to-issue-debt-free-money.html)]
: What is the truth about inflation?
: Geolibertarian January 18, 2012, 01:31:29 PM
http://www.wealthmoney.org/articles/truth_inflation/ (http://www.wealthmoney.org/articles/truth_inflation/)

What is the truth about inflation?

A Close Look at the Theory of Inflation

By Byron Dale (http://www.youtube.com/user/TheByronDaleChannel/featured)

Webster’s New World College Dictionary states: Inflation – (a) an increase in the amount of money and credit in relation to the supply of goods and services. (b) an increase in the general price level, resulting from this, specif., an excessive or persistent increase, causing a decline in purchasing power.

Let’s assume for the moment that Webster’s definition is correct. If it is, we need to address the issue of how and on what basis did the amount of money and credit increase without there being an increase in the goods and services. This increase in money and credit could not arise due to the need to pay for any existing goods or due to the need for more money or credit to purchase any increase in goods or services. Black’s Law Dictionary defines Credit as: – “Time allowed to the buyer of goods by the seller, in which to make payment for them.” –“The right granted by a creditor to a debtor to defer payment of debt or to incur debt and defer its payment."

According to this definition there would need to be an increase in the amount of goods and services coupled with a shortage of money needed to obtain those good or services before there would be any need for credit at all. Almost every one has the lawful authority to create goods or to provide a service. At this time, only banks have the lawful authority to create money. As a general rule the goods are created and the services are rendered before payment is made for the goods and services. Therefore, an increase in money needed only to gain a profit off of money in and of itself, without any ties to an increase in goods, is the only reason and the only way money could be created without there being an increase in goods or services.

The only way an increase in the money supply would increase prices would be if almost everything was bought and sold at auctions where the price is determined by the bidding process. Personal observation and experience has shown me that very few buyers offer to pay more than the seller’s asking price.

This fact is proven by the fact that so many things are now sold with the words ‘on sale’ preceding the asking price. This leads the buyers to believe they are buying the goods at less than the regular selling price. The fact that there is a shortage of money to buy all the goods that are for sale is proven by the fact that there are so many ads promising ‘no money down’ and ‘no interest for a certain length of time’ if one will only buy the goods right now.

Many writers use the example of a king taking the metal money he acquires through taxes and other means, then re-coining and debasing it by substituting less valuable metal for the more valuable metal. Therefore, the king is able to issue more coins with the same amount of the more valuable metals, thus inflating the money supply, resulting in increased prices. This only proves that the king believed that he had a shortage of money.

There could only be truth to the idea that the king caused inflation by creating more coins if a person was used to dealing in metal money where it would be possible to recognize that the new coins did not have the same metal composition as the old coins. The seller, upon realizing that he was not receiving as much of the more valuable metal as he was expecting for his goods or services clearly might raise his prices to obtain the same amount of the more valuable metal he was expecting.

Those facts are no longer in play today. We do not use metal money. In fact, we don’t even use paper money. We only use bank-generated numbers as our money. Everyone I know, when given the amount of bank-generated numbers that he’s expecting, is happy with his deal. No one can tell the difference in numbers like they can tell the difference in metals.

Not one person in ten million truly understands how our money system works, the principle under which it functions or how money gets into circulation so people can use it. Even fewer care. I doubt if one man in two million has any idea what the money supply is or whether it has increased or decreased. So, why would people raise or lower there prices due to an increase or a decrease in the money supply when they don’t even know if there’s been an increase or a decrease?

If we were using gold as money it is possible, and in fact likely, that in the area of a gold rush there could be a temporary rise in prices on the goods the gold miners needed. That rise in the prices of goods would only last till people found out it was easier to get the gold by supplying the miners with goods rather than trying to find more gold or when most of the new gold was mined out, harder to find, or already owned by a few.

Webster’s Dictionary also states: Inflationary spiral – a continuous and accelerating rise in the prices of goods and services, primarily due to the interaction of increases in wages and costs.

A continuous and accelerating rise in the price of goods and services is clearly what we are experiencing. The question is, “Why do costs keep increasing?” To answer that question we have to truly understand how our money gets into circulation. Today, all new money goes into circulation as interest-bearing loans. When money is created as interest bearing debt, the debt owed goes up and the interest on that debt always drives up the cost of doing business. When governments borrow, its interest cost increases followed by an increase in taxes. Interest always increases the cost of doing business. Interest also causes the debt to increase but it does not increase the money supply nor does it increase goods or services. Interest on debt also increases the need for an increase in the money supply to pay the added cost of the interest or someone must suffer a loss of money. Additionally, when the principal of a loan is repaid, the money is extinguished causing a decrease in the money supply until someone borrows more money. When money is loaned into circulation at interest, interest is the only cost that can’t be eliminated without stopping the increase in the money supply.

There are only three increases in the cost of doing business that courts will force you to pay: interest, taxes and rent. When one suffers from a rise in interest, taxes or rent they must raise their prices or cut their living standard. When one’s standard of living starts to suffer, most people try to get an increase in wages.

Add greed and growing governmental regulations to interest and taxes and you have the true cause of price inflation. Do you really think that the price of gasoline went up to over $4 a gallon because there was a sudden increase in the money supply? It is clear that when the cost of gasoline went up over $4 a gallon, the price of everything that was shipped had to go up or someone’s profit had to go down. The continuous increase in the nation’s interest bearing debt is the cause of our continuous and accelerating rise in prices.
: Economic Slavery
: Geolibertarian January 20, 2012, 05:09:45 AM
http://www.wealthmoney.org/articles/economic-slavery/ (http://www.wealthmoney.org/articles/economic-slavery/)

Economic Slavery

This article was written to give people a greater understanding about our current monetary system. To will clarify how and why it came into being, how it affects our economy and the peoples daily lives. It will explain why we are constantly going deeper into unpayable debt when we are constantly producing wealth and will give you the best solution to this problem.

THE BEGINNING

From the beginning of mankind, we have strived to make our lives more comfortable. Starting as gatherers, mankind, through necessity, learned to use and get benefit from primitive tools. Mankind learned how to utilize agriculture and mining. People, through trial and error, using their labor and ideas, coupled with the natural resources of the earth have steadily improved their quality of life. As all the natural resources are not always available in one region, one area may produce agricultural products while another may have an abundance of wood or iron ore. People have always relied on each others skills to meet their collective wants and needs. This need for economic interaction enhanced the desire to trade and greater commerce slowly evolved.

Due to differing values of items to be traded, mediums-of-exchange began be adopted to enhance trade. The mediums-of-exchange have been many things including shells and beads. As an example a person agreeing to trade a cow for 100 chickens may not have wanted all the chickens at that time. Therefore might agree to accept 10 chickens and 90 shells for his cow. He could then at a latter time trade some of his shells for more chickens or for some thing else. Silver, gold, iron, copper and other metals made into rough coins were also widely accepted as a medium of exchange.

History tells us that the word dollar (first called a thaler) originated as a piece of silver stamped into a rough coin by a German Count Stephen Von Schlick who was a miner and a merchant. If a person came to trade some thing of a greater value for some thing of a lesser value, the Count would give them some coins to equalize the value of the trade.

Value is only a state of mind based on emotions. A mental concept of how much I want to keep something, balanced against what I am willing to give up for some thing else. When two people agree on that point, value is set. Trade can take place. All exchanges (commerce) take place in one of two ways, fair and honest trade, where willing and knowledgeable people agree and trade, or theft by force or deception.

History tells us that banking came on the scene as a fair and honest deal between agreeing parties. However, it soon turned into theft by deception. The United States Treasury told me in a personal letter that our concept of banking originated with the goldsmiths during the seventeenth century. The goldsmiths had large vaults in which they kept the precious metals they worked with. People began to take their gold and silver to the goldsmiths for safekeeping. The goldsmith for a small fee would store other people’s gold and silver and give the people receipts (certificates of deposit) for the coins deposited in their vaults.

Imagine yourself as a rich person living in the seventeenth century. You have in your possession a large amount of silver and gold in coin form. You decide to take a trip however you don’t want to take all your coins with you. You decide to take your coins to the goldsmith and have him store it for you. The goldsmith gives you a receipt for the coins stored with him. Now you could go on your trip knowing your coins would be safe in a strong vault and you would have receipts to prove how many coins you had stored (banked) at the goldsmith’s.

While on your trip you decide to buy something that cost a few more coins than you have with you. You ask the seller if he would take one of the receipts for the coins you have stored with the goldsmith as partial payment. He agrees to do so. You decide that this is much more convenient than going back to the goldsmiths, producing your receipt, obtaining your coins and traveling back to make your purchase. You tell your friends how well it works to simply trade with the receipts instead of the coins. Appreciating convenience, it soon became a common practice to use the receipts as part of the medium of exchange, while leaving the silver and gold safely in the vault. Soon this concept of paper money was accepted throughout Europe. (Note here that this paper money represented wealth already produced not interest-bearing debt owed to the goldsmith.) The goldsmiths soon found themselves in possession of large amounts of other people’s coins.

The goldsmiths, like most men, were open to concepts that might enhance profits. Maybe it started when a close friend of the goldsmith came by and said “I decided to buy something but I am short a few coins. How about a loan? The goldsmith thought about the silver and gold stored in his vault that people seldom asked for because they were using his receipts as their medium of exchange. Thoughts of enhanced profits popped in his mind. Yes, I will make you a loan, but I will have to charge you a fee which we shall call interest for the use of the coins.

[However this fee will be a little different kind of fee. It will not be a one time fee like other fees are. It will be a fee that renews it self every month as long as you use the coins; until in a few months time the fee will be 2 to 3 times greater the value of the coins that you borrowed. Think about it as you would a real estate agent who said sure I will find a buyer for your house. I will do it for a small fee that will in time become 2½ times the value of your house. Of course the borrower is never taught to think about it that way.]

With that loan the goldsmith changed the money both in quantity and quality. The change in quantity is very clear and understandable. The money supply increased as soon as the goldsmith made the loan of the silver or gold coins because both the coins and the receipt for the coins were in circulation at the same time, both passing as money. The change in quality is not as clearly seen nor understood, but it’s just as real. When the goldsmith loaned the coins into circulation the money supply increased as interestbearing indebtedness, not as an increase in wealth as it was when the silver and gold was first coined. At that moment debt money (money that some one must borrow before it can exist) was born.

The more wily and dishonest goldsmiths soon realized that they could increase their economic advantage, power and monetary gains, if they kept the coins in the vault and just loaned out thee receipts [their promise to pay]. Unlike the coins multiple receipts for each coin held in the vault could be loaned out. That would have the same profit effect as increasing the interest rate on the original coin. If the interest rate on one coin was 10% when the goldsmiths loaned out 10 receipts for one coin, his interest rate on the coin would jump to 100% and no one would see or understand the increase in the lenders profits. In fact, to this day few people have really under stood what happened or what is happening now.

The news spread rapidly. If you were a little short on coins to complete a deal you could go to the goldsmith and sign a promissory note pledging some of your property as collateral. The goldsmith would loan you receipts [his promise to pay you] for the coins you needed.

The goldsmiths soon realized that if he demanded that most the interest on his receipts be paid in silver and gold. It would not take too many years until he would own vast amounts of silver and gold. Using the rule of 72 we find that if the goldsmith loaned out one gold or silver coin at 10% interest it would take him 7.2 years to double his money. However if he loaned out ten receipts for the one coin that he had it would only take him 8.6 months to double his money.

Over the years the goldsmiths’ turned into bankers and great financiers and gained great control over the people by increasing the money supply as loans. The facts show clearly that the banking system has become the slave master over all commerce and today they hold mortgages on most all the property in the world, either through direct loans or indirectly through loans to governments.

Even after the bankers gained the control and ownership of lots of silver and most of the gold through the interest earning from the issuing of excess receipts, it was very important for the bankers to keep everyone believing the real money was gold and silver and all their receipts were backed by gold and silver. That way few would ever question their right to issue the receipts that had become the most accepted medium-of-exchange.

To ensure that most economic writings supported their practices, the bankers found it is very much in their self interest to fund schools of economic thought and professors who teach in them. It is very important for the banking system to have people believe that banking and high finance is too complicated to be understood by the average person and is best left to the “experts” It is very easy to control the minds of people by controlling what is taught in the schools they attend.

College banking and economists courses teach that the goldsmiths simply increased the money supply, leaving out the fact that the ‘increased money supply’ was as interestbearing debts to the people and a 100% gain to the bankers, rather than more wealth to the people as it was when gold and silver were mined out of the earth. Obviously the amount of gold or silver had not increased, but the promise (obligation/debt) to pay gold or silver, did increase. When the goldsmiths created extra receipts, he also created a shortage of gold or silver. Soon the receipts for gold or silver in storage were greater than the amount of gold and silver stored. In more modern times, it was an easy step from making the loans in the form of a note promising to pay gold or silver, to just making the loans as book entries to the customer’s checking account.

Knowing that there was not enough gold and silver to cover their promises to pay, bankers had no choice but to demonetize gold and silver (Roosevelt demonetized gold in the U.S, in 1933 and Nixon demonetized gold internationally in 1971) and declare it outdated and no longer useful as money. The minute gold and silver was demonetized, the original wealth dollar died and all that was left was the debt dollar. The original dollar was produced as wealth though the combination of labor and raw resources. (Man getting monetary benefit of his productivity). The new debt dollar was created by an act of deception designed to acquire wealth, produced by someone else, by fraud.

A couple of points that almost everyone misses, or at least refuse to talk about is, once all the medium-of-exchange is created as interest-bearing loans, there is no way to create the funds needed to pay the interest on the interest-bearing loans without creating more interest-bearing debt. The only way a borrower can pay his interest to the banking system is to capture, through commerce, some of the debt principal of another person’s loan. The bank system then claiming its own promises-to-pay as income from interest (no person can truthfully gain a profit by promising to pay him self) simply spend there own promises-to-pay to obtain anything they desire, including more of the newly mined gold and silver, without producing anything. This isn’t fair trade; it's only theft by deception.

Interest on the banking systems promises-to-pay is great for the banking system but it is a great evil upon the borrowers. In the long run nothing can beat interest for generating a profit. It is the only thing that runs 24 hours a day, 7 days a week, 365.25 days a year. It never needs to sleep. It never needs to be stopped for repairs or servicing.

As time moved on, the men of banking began to really understand and believe in the power of money. Each generation worked to improve and enhance the system for their benefit. The Rothschilds, perhaps the greatest banking family the world has ever known, realized that it was really good business to loan to Kings and Governments, if the King or the Government had a good taxing system that would ensure them the interest payments. Meyer Amschel Rothschild said “Let me issue and control a nation’s money and I care not who writes the laws.” He had learned this lesson well from his predecessor William Paterson, who in 1694 created the First Bank of England. In return for giving the King a large loan Paterson’s bank was given a monopoly on the issuance of the nation’s currency. This currency was the promise-to-pay gold and silver coin that the bank, nor Paterson had.

This brings us to the beginning of the United States. According to the United States Constitution Sesquicentennial Commission Representative Sol Bloom Director General, the meeting of the First Continental Congress was on September 5, 1774, in Carpenters’ Hall at Philadelphia. The Second Continental Congress met at Philadelphia on May 10, 1775 and endured until superseded in 1789 by the government organized under the new Constitution.

The Declaration of Independence was unanimously adopted in General Congress assembled at Philadelphia July 4, 1776 and states: We hold these truths to be selfevident, that all men are created equal, that they are endowed by their Creator withcertain inalienable rights that among these are life liberty and the pursuit of happiness.

On January 21, 1786, the legislature of Virginia, ignoring entirely the requirements of the Articles of Confederation suggested a general convention of Commissioners from the states to view the trade of the Union, and consider how a uniform system in their commercial relations may be necessary to their common interests.

The convention thus projected, met at Annapolis in September of 1786. The convention was attended by New York, New Jersey, Pennsylvania, Delaware and Virginia. Because of the limited attendance, nothing was done except to make a report, drafted by Alexander Hamilton. On February 21, 1787 Congress with eleven states being represented, took this report into consideration and resolved that a convention appeared to be the most probable means of establishing in these states, a firm national government. The Legislatures of all the states except Rhode Island appointed deputies to this Convention.

On May 29, 1787 Randolph from Virginia opened the main business by introducing the Virginia Plan drafted by Madison and worked on by the rest of the Virginia delegation. The deputies who feared a too strong central government introduced the “Paterson Plan on June 15. On July 16, 1787 came the adoption of the Great Compromise urged by the Connecticut deputies. Eleven of the States Ratified the Constitution by 1788. Washington was inaugurated President April 30, 1789.

The Constitution of the United States reads: We the people of the United States in order to form a more Perfect Union, establish Justice, insure Domestic Tranquility, provide for the common Defense, promote the General Welfare, and secure the blessing of Liberty to ourselves and our posterity, do ordain and establishes this Constitution.

The Constitution in Article I Sec. 8 states: The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defense and general Welfare of the United States; – - – - To borrow Money on the credit of the United States; – - – - To coin Money, regulate the Value thereof, – - – - To establish Post Offices and post Roads; Then in Sec. 10 states: No State shall – - – - coin Money; emit Bills of Credit; make any Thing but gold and silver Coins Tender in Payment of Debts; – - – -.

The ink that formed the above words of the Constitution was hardly dry when Alexander Hamilton and his backers, men who clearly understood the benefits and the profits that could come through banking practices, Hamilton had founded the Bank of New York in 1784, moved to place the newly formed nation into financial bondage to the banking system. Hamilton’s plan had four parts. Part one, establish a federal tax system. Part two, guarantee holders of Revolutionary War debt that they would be paid interest on that debt until the debt was repaid. Part three, the federal government would assume the war debts of the states. Part four, pass the Bank Act, which created a mostly privately owned bank and authorized the use of the debt certificates to purchase bank stock that would then serve as assets against which the bank could make loans, at interest, of money that the bank did not have; right from the play book of William Paterson.

Hamilton stated: (quotes have been reworded a little to flow better in today’s English) “It is a well-know fact, that countries in which the national debt is properly funded, (properly funded, means that the government has the taxing power to ensure the interest payments) it answers most of the purposes of money. Transfers of public debt are equivalent to payments in specie, or in other words passes as money. The same thing would, in all probability, happen here, under like circumstances.” “The benefits of this are various and obvious. Trade is extended by it; because there is a larger debt based interest-bearing money supply to carry it. Agriculture and manufacturing are also promoted by it; for like reasons.” From 1791 to 1796 prices rose 72% in response to the flood of new paper money issued by the bank.

Part one on his plan was implemented. In July 1789 Congress passed a tax law mostly written by Hamilton. Part two was needed to get his fourth part passed. James Callender, a reporter for the Philadelphia Gazette charged; “The funding law was passed through Congress by the influence of a majority, who purchased certificates from the army at under value and who voted for the law, with the single view of enriching them selves. It is firmly believed and loudly asserted, by at least one half of the citizens of America, that the funding system was devised, not for the sake of paying real creditors but of wronging them. Hamilton planned, Congress voted. The president approved” Taylor, 1950, pp.61-4.

Part three of Hamilton plan was needed to ensure that the wealthy supported the federal government over the state governments because that would be the source of their interest payment.

It seems The First Secretary of the Treasury, The First Congress, and First President supported a money supply based on debt because the majority of them had purchased depreciated debt certificates before the Funding and Banking acts were passed into law. This would have provided them with the ability to secure windfall profits for themselves.

The first congressman from Georgia, James Jackson, seemed to have been one of few people that understood where Hamilton’s plan would take the young nation. On February 9, 1790 he stated: The funding of the debt will occasion enormous taxes for the payment of the interest. These taxes will bear heavily both on agriculture and commerce. It will be charging the active and industrious citizen, who pays his share of the taxes, to pay the indolent and idle creditor who receives them. It is doubtful with me whether a permanent funded debt is beneficial or not to any country.

Some of the first writers in the world, who are most admired on account of the clearness of their perceptions, have thought otherwise and declared that wherever such funding systems have been adopted in a Government, they tend more to injure posterity. This principle is demonstrated by experience. The first system of the kind that we have any account of originated in the State of Florence in the year 1634. That Government then owed about £60,000 sterling, and being unable to pay it, formed the principal into a funded debt, transferable with interest at five per cent. What is the situation of Florence in consequence of this event? Her ancient importance is annihilated. Look at Genoa and Venice; they adopted a similar policy, and are the only two of the Italian Republics, who can pretend to an independent existence, but their splendor is obscured. They have never since the period at which said funding system was introduced, been able to raise themselves to the formidable state they were before. Spain seems to have learned the practice from the Italian Republics, and she, by the anticipation of her immense revenue, has sunk her status beneath that level which her natural situation might have maintained. France is considerably enfeebled, and languishes under a heavy load of debt. England is a melancholy instance of the ruin attending such engagements.

The same effect must be produced here that has taken place in other nations. It must either bring on a national bankruptcy, or annihilate our existence as an independent empire. Hence I contend that such a funding system in this country will be highly dangerous to the welfare of the Republic. It may, for a moment, raise our credit, and increase our circulation by multiplying a new form of currency, but it must hereafter settle upon our posterity a burden which they can neither bear nor relieve themselves from. It will establish a precedent in America that may, and in all probability will, be pursued by the Sovereign authority, until it brings upon us that ruin which it has never failed to bring, or is inevitably bringing, upon all the nations of the earth who have had the temerity to make the experiment. Let us take warning by the errors of Europe and guard against the introduction of a system followed by calamities so universal. Though our present debt be but a few millions, in the course of a single century it may be multiplied to an extent we dare not think of. (Annals of Congress, Vol. I, February 1790).

Today we are seeing the fulfillment of Jackson’s words. Hamilton’s plan did establish a precedent that has been pursued and refined by the sovereign authority to a point where the Federal Reserve banking system and the corporations that have grown up around it has become an unelected all powerful fourth branch of government, that control all the other branches (Today, we have the best government corrupt money can buy). Today, all our money is created as interest-bearing loans. “All bank deposits are a form of credit. Basically, they represent amounts owed by banks to depositors. They come into existence by an exchange of bank promises to pay customers for the various assets which banks acquire – currency, promissory notes of business, consumer, and other customers, mortgages on real estate, and Government and other securities.” The Federal Reserve System purposes and Functions, Third Edition pg. 6 “the actual creation of money always involves the extension of credit from private commercial banks.” “The bank owns all the money all the time the customer only borrows it.” Russell Munk, assistant general council for the U. S. Treasury. “If all the bank loans were paid, no one would have a bank deposit and there would not be a dollar of coin or currency in circulation.” Robert H. Hemphill, credit manager of the Federal Reserve in Atlanta.

When all money is created as interest-bear loans, there is no way to create the money needed to pay the required interest. “The money to pay the interest on loans, comes from the same source as all other money.” Russell Munk

In other words, it has to be borrowed from a commercial bank. “The money that one borrower uses to pay interest on a loan has been created somewhere else in the economy by another loan.” John M. Yetter, U. S. treasury "Money is created when loans are issued and debts incurred, money is extinguished when loans are repaid”. John B Henderson, Senior Specialist in Price Economics, Congressional Research Service, The Library of Congress

In December 1791 the Bank of the United States opened. A first loan for $400,000 was made in May 1792. By 1795 the total borrowing from the Bank of the United States was $4,500,000; by 1796 it was $6,200,000. Because of the fraudulent monetary system Hamilton introduced, each generation has been forced deeper into debt than the generation before it. Until now the total debt is over 40 trillion and is growing at a rate of around 5 trillion a year.

As Jackson envisioned, the same effect has happened here that has always taken place in other nations. By 2016 the debt will be so great that the interest on the debt at just 6% will be over a billion dollars greater that the total consumer income! We will be facing national bankruptcy, on the business level, the consumer level and all governmental levels.

According to the Grandfather Economic Report found at http://mwhodges.home.att.net/nat-debt/debt-nat.htm (http://mwhodges.home.att.net/nat-debt/debt-nat.htm).  The Grandfather Economic Report has been endorsed by both Gerald P. Dwyer VP of the Federal Reserve Bank of Atlanta and Dr. Milton Friedman.

(http://www.wealthmoney.org/wp-content/uploads/2011/10/famof41-300x180.jpg) (http://www.wealthmoney.org/wp-content/uploads/2011/10/famof41.jpg)

Rob Grunnewald of the Federal Reserve Bank of Minneapolis has confirmed that the figures of this chart seem to be accurate. Since this chart was created the Total Debt has increased to over $40 Trillion.

The total debt, in 1990, was $13 trillion, This includes the household (consumer) debt, the business debt and federal, state and local government debt. This doesn’t include the huge un-funded government liabilities. This amounts to $52,000 per person or $208,000 for a family of four. That family’s share of servicing the interest load on that debt, at 6% would have been $12,480 per year. In 1990 the median family’s income was $40,000.

Currently, (2004) America’s total debt is $37 trillion dollars, or $128,560 per man woman and child. This comes to $514,240 for a family of four. Now the family’s share of servicing the interest load on this debt, at 6 percent, would be $30,854.40 per year. According the U.S. Dept. of Commerce the median family income is $43,500.

The total debt has grown $24 trillion, or $1.71 trillion per year since 1990. The additional interest load has grown by $102,600 billion a year since 1990. This means that the interest load for a family of four has increased by an average of $1,425 a year since 1990. If the debt keeps increasing at the same rate, by 2016 the median family’s share of servicing the interest cost will be $47,954.40.

The median family income has increased by $250 a year since 1990. If their income increases at the same rate their annual income, by 2016 will be $46,500. This means the Median family’s income will fall short of paying their share of the interest bill by $1,454.40 to say nothing about having any money for food and other things. The expanding interest load will have surpassed the total consumer income. It has become very clear that we can’t borrow our way to prosperity.

It’s sad but the majority of the people don’t understand the SINISTER NATURE OF INTEREST. Many understand they pay interest directly when making house, car and other installment plan payments. Very few however, realize that this is only a small part of the interest bill they pay. They don’t realize that most businesses have huge debts and the interest on those debts is passed on to the consumer though higher prices. They don’t realize that the federal, state, county, city governments and school districts have huge debts, and that the interest on those debts is passed on to the consumer though higher taxes and fees.

“If all the bank loans were paid no one would have a bank deposit and there would not be a dollar of coin or currency in circulation. This is a staggering thought. We are completely dependent on the commercial banks. Someone has to borrow every dollar we have in circulation, cash or credit, If the banks create ample synthetic money we are prosperous; if not, we starve. We are absolutely without a permanent money system. When one gets a complete grasp of the picture, the tragic absurdity of our hopeless position is almost incredible, but there it is. It (the banking problem) is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defects remedied very soon.” Robert Hemphill Federal Reserve of Atlanta

The defects in our money system are that “The actual creation of money always involves the extension of credit by private commercial banks.” Russell Munk U.S. Treasury

Therefore there is no way to create the money needed to pay the interest, which is charged, on the extensions of credit. People clearly do not understand that all interest increases the debt owed, but does not increase the money supply! This therefore makes the total debt unpayable. The best we can do is, pass the debt on to someone else then on to the next generation. That is why every generation must get deeper in debt to keep the system working. Do you care about your children’s future?

"All the perplexities, confusion, and distress in America arise not from defects in their constitution or confederation. Not from want of honor or virtue so much as from downright ignorance of the nature of coin, credit, and circulation." John Adams

As this debt compounds, it is obvious that the consumer has less and less discretionary income and businesses have less profit and more individuals, businesses, state and local governments will be forced into filing bankruptcy.

For more than 250 years workers throughout this nation have created immense wealth by combining their ideas and labor with natural raw resources of the earth. There is no debt in this process so how did we get over $37 trillion in debt (2004)?

Look around you. What do you see? Millions of homes, automobiles, skyscrapers, airlines, factories, railroads, and farms, (but not nearly as many as there use to be), all produced as wealth and with profits in mind! I asked Erick Gandrud, President of the MN Bankers Assn., if he could name 5 things that are not produced as wealth assets? He replied: Everything is produced as an asset?

If working Americans created all of this wealth, and run all business with the intent of gaining profit, why are we collectively over $37 trillion in debt (2004)? This debt is increasing daily. This includes Federal government, non-financial Corporate, and personal household debt, yet our total MI money supply is less than $1.4 Trillion. Why does approximately 5% of the population own 80% of this wealth? The answer can only be found by looking at how our money is created and put into circulation. These facts were stated in the above writing but are so important that we will restate them.

To find answers to the above questions we wrote to the U.S. treasury and others and asked questions.

1. How is money created and how does it get into circulation?

Russell L. Munk, answering for the Treasury stated: “the actual creation of money always involves the extension of credit from private commercial banks.” This means interest bearing loans.

2. If all money is created as debt and put into circulation through loans, where does the money to pay the interest on the loans come from?

John M. Yetter answering for the Treasury stated “the money that one borrower uses to pay interest on a loan has been created somewhere else in the economy by another loan.”

In other words, all money is created by private commercial banks as loans. The borrower who spends the money must capture his debt principal back and enough of someone else’s debt principal, through commerce, to pay the interest on his loan.

3. What happens to money when a loan is repaid?

John B. Henderson, Senior Specialist in Price Economics, Congressional Research Service, The Library of Congress answered that question by stating: Money is created when loans are issued and debts incurred; money is extinguished when loans are repaid.

4. What would happen if all loans were paid off?

Robert H. Hemphill, Credit Manager of the Federal Reserve Bank of Atlanta, stated: “If all the bank loans were paid no one would have a bank deposit and there would not be a dollar of coin or currency in circulation.”

This means that under our present monetary system to have money, we must have interest bearing debts. Interest and time makes the debt grow but time and interest does not make the money supply grow. With each interest bearing loan, we are creating a debt greater than the debt money supply. The spread between the debt and the money supply must grow greater with each passing day. As interest is a cost of doing business, the greater the interest-load, the harder it is to generate a profit. The harder it is to generate a profit the harder it is to pay the interest. The harder it is to generate a profit the greater the pressure to cut both your labor and raw resource costs. The more you cut wages, the harder it is for the wage earners to buy the things they need and want without borrowing more. This leads to excess debt and a shortage of money for nearly everyone, until finally the interest load becomes greater than the total income of the nation. (See previous chart.)

This is why more members of families must work more jobs and longer hours to try to maintain the same standard of living.

This is why you see large companies moving their production lines to countries where laborers are paid less. This leads to trade deficits where more money flows out of the country to buy imports than flows back to buy exports. This causes the additional loss of many factories and the ability to produce the things we need in our own country. America has lost most of its production base to outsourcing and off-shoring. Those jobs have been replaced with lower paying jobs in the service sector. That is why we are told that we are and must move into a service economy; thereby slowly killing our own markets. It’s a spiral stairway going down a circular path to national destruction unless we change the way money is put into circulation.

John Maynard Keynes said: “There is no subtler, no surer means of overturning the existing basis of society than to DEBAUCH the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which only one man in a million is able to diagnose.” The only way to DEBAUCH money is to change it from a representation of wealth to an evidence of Debt!

In 1792 the new congress passed the 1792 Mint Act that stated in part: Sec. 9 And be it further enacted, That there shall be from time to time struck and coined at the said mint, coins of gold, silver and copper, of the following Eagles each the value of ten dollars and to contain two hundred and forty-seven and one half grains of pure gold. Half Eagles — each to be the value of five dollars and to contain one hundred and twenty-three grains and six eighths of a grain of pure gold. Quarter Eagles – each to be of the value of two dollars and a half dollar, and to contain sixty-one grains and seven eighths of a grain of pure gold. Dollars – each to be value of a Spanish milled dollar as the same is now current, and to contain three hundred and seventy-one grains and four sixteenth parts of a grain of pure silver. Half Dollars – each to be of half the value of the dollar and to contain one hundred and eighty-five grains and ten sixteenth parts of a grain of pure silver. Quarter Dollars – each to be of one fourth the value of the dollar and to contain ninety-two grains and thirteen sixteenth parts of a grain of pure silver. Dismes (dimes) – each to be the value of one tenth of a dollar and to contain thirty-seven grains and two sixteenth parts of pure silver. Half Dismes (nickels) – each to be the of one twentieth of a dollar, and to contain eighteen grains and sixteenth parts of a grain of silver. Cents – each to be of the value of the one hundredth part of a dollar, and to contain eleven pennyweights of copper.

Sec. 14 And be it further enacted, That it shall be lawful for any person or persons to bring to the said mint gold and silver bullion, in order to their being coined; and that the bullion so brought shall be there assayed and coined as speedily as may be after the receipt thereof, and that free of expense to the person or persons by whom the same shall have been brought. —

Looking at and comparing the basic concepts of these two pieces of legislation, Hamilton’s banking legislation and the 1792 Coinage Act, one can only come to one of two conclusions. Either these laws came from some very confused minds that did not understand anything about the working of banking and the role that money plays in the lives, fortunes and the destiny of the people of a nation. Or these two pieces of legislation were well planned by keen minds that really understood the finer points of banking and the benefits that go to the small portion of the population that controls the issuance of the nations money supply as interest-bearing loans and wanted to ensure that they would keep getting those benefits by fostering the idea that gold and silver was the only real money and the bank was simply loaning gold and silver that it owned.

Let’s closely scrutinize the basic concepts of these two pieces of legislation. Starting with the one passed first. Chartering a bank to issue money as interest bearing debt.

Hopefully we have covered this quite well in what has already been written, so I will only summarize here. The issuing of money as interest bearing debts is simply the monetization of the people’s production as assets to the banking system and unpayable debts to the people.

When money is created as interest-bearing loans by the banking system, the banking system ends up owning and controlling everything and the people end up being economic slaves to the banking system and their unpayable debt. Having at least 90% of all their production taken from them either through interest or taxes. As war is one of the best justification for greater indebtedness this also leads to almost constant wars.

If we closely examine the principles of coining gold and silver into money we see that it has nothing to do with gold or silver. It is simply the monetization of the people’s production as wealth to the people with no debts to anyone. Think about it. That is all gold and silver is, a raw resource of the earth extracted from the earth by the labor of people. If the government stamps that material into coins free of charge, what really has happened is that the government has monetized the production of the people as wealth to the people without debt. This gives the people the monetary benefit as well as the physical benefit of all that they produce without debt to anyone. That is what makes a truly free, prosperous and peaceful people.

There are ways to monetize the production of the people as wealth to the people that are much more beneficial to them than using gold and silver.

If our founding fathers had really understood the above facts there was no reason for them declare gold and silver money. A new young country that didn’t have any known gold and silver mines in their country would be crazy to declare some thing that they did not have as their money. The fact that the country had already issued paper money, used tobacco and other things as money instead of building a mint proves that they did not have any gold and silver mines of their own. Where and how was this young nation going to get the gold and silver that is was going to use as it’s medium of exchange?

The young nation in its constitution, gave itself the power to make up money and the duty to provide the county with post offices and post roads. If the young nation would have really understood money (as a medium-of-exchange), they would have issued paper money as payment, in lieu of taxes, to build the post offices and the post roads the nation needed. Not issued money as interest bearing debt to a bank that didn’t produce anything. If they had today this nation would be the greatest, wealthiest nation on the face of the earth with no debts to anyone. If we had taught the rest of the world to do the same, we would have a wealthy peaceful world. Not a world full of poverty and misery. Since our monetary system was DEBAUCHED, our economy has been forced marched towards destruction by interesting-bearing debt.

The only way stop the headlong rush to destruction is to reform our money to where it is a representation of the wealth the people produce; not an evidence of interest-bearing Debt owed to the banking system! This could easily be done by creating the money and spending it into circulation to rebuild the nation’s transportation system.

Reading the above information, it appears that we don’t have a lot of time to remedy the defects in our economic system. It’s time that intelligent people, who care about themselves and their children, address this problem.

Researched and Prepared by the Citizens for Better Transportation
: Modern Monetary Theory as a Private Central Bank Alternative
: Geolibertarian March 04, 2012, 04:07:59 AM
http://michael-hudson.com/2012/02/mmt-theory-as-an-ecb-alternative/ (http://michael-hudson.com/2012/02/mmt-theory-as-an-ecb-alternative/)

MMT as an ECB Alternative

February 27, 2012
By Michael Hudson

2,181 Italians pack a Sports Arena to learn Modern Monetary Theory:
The Economy doesn’t Need to suffer Neoliberal Austerity

I have just returned from Rimini, Italy, where I experienced one of the most amazing spectacles of my academic life. Four of us associated with the University of Missouri at Kansas City (UMKC) were invited to lecture for three days on Modern Monetary Theory (MMT) and explain why Europe is in such monetary trouble today – and to show that there is an alternative, that the enforced austerity for the 99% and vast wealth grab by the 1% is not a force of nature.

Stephanie Kelton (incoming UMKC Economics Dept. chair and editor of its economic blog, New Economic Perspectives (http://www.neweconomicperspectives.org)), criminologist and law professor Bill Black, investment banker Marshall Auerback and myself (along with a French economist, Alain Parquez) stepped into the basketball auditorium on Friday night. We walked down, and down, and further down the central aisle, past a packed audience reported as over 2,100. It was like entering the Oscars as People called out our first names. Some told us they had read all of our economics blogs. Stephanie joked that now she knew how The Beatles felt. There was prolonged applause – all for an intellectual rather than a physical sporting event.

With one difference, of course: Our adversaries were not there. There was much press, but the prevailing Euro-technocrats (the bank lobbyists who determine European economic policy) hoped that the less discussion of possible alternatives to austerity, the easier it would be to force their brutal financial grab through.

All the audience members had contributed to raise the funds to fly us over from the United States (and from France for Alain), and treat us to Federico Fellini’s Grand Hotel on the Rimini beach. The conference was organized by reporter Paolo Barnard, who had studied MMT with Randall Wray and realized that there was plenty of demand in Italian mass culture for a discussion of what actually was determining the living conditions of Europe – and the emerging financial elite that hopes to use this crisis as an opportunity to become the new financial lords carving out fiefdoms by privatizing the public domain being sold off by governments that have no central bank to finance their deficits, and are tragically beholden to bondholders and to Eurocrats drawn from the neoliberal camp.

Paolo and his enormous support staff of translators and interns provided an opportunity to hear an approach to monetary and tax theory and policy that until recently was almost unheard of in the United States. Just one week earlier the Washington Post published a review of MMT (http://www.washingtonpost.com/business/modern-monetary-theory-is-an-unconventional-take-on-economic-strategy/2012/02/15/gIQAR8uPMR_story.html), followed by a long discussion in the Financial Times (http://ftalphaville.ft.com/blog/2012/02/22/890211/yes-virginia-there-really-is-modern-monetary-theory/). But the theory remains grounded primarily at the UMKC’s economics department and the Levy Institute at Bard College, with which most of us are associated.

The basic thrust of our argument is that just as commercial banks create credit electronically on their computer keyboards (creating a bank account credit for borrowers in exchange for their signing an IOU at interest), governments can create money. There is no need to borrow from banks, as computer keyboards provide nearly free credit creation to finance spending.

The difference, of course, is that governments spend money (at least in principle) to promote long-term growth and employment, to invest in public infrastructure, research and development, provide health care and other basic economic functions. Banks have a more short-term time frame. They lend credit against collateral in place. Some 80% of bank loans are mortgages against real estate. Other loans are made to finance leveraged buyouts and corporate takeovers. But most new fixed capital investment by corporations is financed out of retained earnings.

Unfortunately, the flow of earnings is now being diverted increasingly to the financial sector – not only to pay interest and penalties to banks, but for stock buybacks intended to support stock prices and hence the value of stock options that managers of today’s financialized companies give themselves. As for the stock market – which textbook diagrams still depict as raising money for new capital investment – it has been turned into a vehicle to buy out companies on credit (e.g., with high interest junk bonds) and replace equity with debt. Inasmuch as interest payments are tax-deductible, as if they were a necessary cost of doing business, corporate income-tax payments lowered. And what the tax collector relinquishes is available to be paid out to the bankers and bondholders who get rich by loading the economy down with debt.

Welcome to the post-industrial economy, financialized style. Industrial capitalism has passed into a series of stages of finance capitalism, from the Bubble Economy to the Negative Equity stage, foreclosure time, debt deflation, austerity – and what looks like debt peonage in Europe, above all for the PIIGS: Portugal, Ireland, Italy, Greece and Spain. (The Baltic countries of Latvia, Estonia and Lithuania already have been plunged so deeply into debt that their populations are emigrating to find work and flee debt-burdened real estate. The same has plagued Iceland since its bank rip-offs collapsed in 2008.)

Why aren’t economists describing this phenomenon? The answer is a combination of political ideology and analytic blinders. As soon as the Rimini conference ended on Sunday evening, for instance, Paul Krugman’s Monday, February 27 New York Times column, What Ails Europe? (http://www.nytimes.com/2012/02/27/opinion/krugman-what-ails-europe.html?hp) blamed the euro’s problems simply on the inability of countries to devalue their currencies. He rightly criticized the Republican party line that blames European welfare spending for the Eurozone’s problems, and also criticizing putting the blame on budget deficits.

But he left out of account the straitjacket of the European Central Bank (ECB) unable to monetize the deficits, as a result of junk economics written into the EU constitution.


Depreciation would lower the price of labor while raising the price of imports. The burden of debts denominated in foreign currencies would increase in keeping with the devaluation, thereby creating problems unless the government passed a law re-denominating all debts in domestic currency. This would satisfy the Prime Directive of international financing: always denominated debts in your own currency, as the United States does.

In 1933, Franklin Roosevelt nullified the Gold Clause in U.S. loan contracts, enabling banks and other creditors to be paid in the equivalent gold value. But in his usual neoclassical fashion, Mr. Krugman ignores the debt issue:


But leaving the euro is not sufficient to avert austerity, foreclosure and debt deflation if the nation that withdraws retains the neoliberal policy that plagues the euro. Suppose the post-euro economy has a central bank that still refuses to finance public budget deficits, forcing the government to borrow from commercial banks and bondholders? Suppose the government believes that it should balance the budget rather than provide the economy with spending power to increase its growth?’

Suppose the government slashes public welfare spending, or bails out banks for their losses, or takes losing bank gambles onto the public balance sheet, as Ireland has done? Or for that matter, what if the governments do not write down real estate mortgages and other debts to the debtors’ ability to pay, as Iceland has failed to do? The result will still be debt deflation, forfeiture of property, unemployment – and a rising tide of emigration as the domestic economy and employment opportunities shrink.

So what then is the key? It is to have a central bank that does what central banks were founded to do: monetize government budget deficits so as to spend money into the economy, in a way best intended to promote economic growth and full employment.

This was the MMT message that the five of us were invited to explain to the audience in Rimini. Some attendees came up and explained that they had come all the way from Spain, others from France and cities across Italy. And although we did many press, radio and TV interviews, we were told that the major media were directed to ignore us as not politically correct.

Such is the censorial spirit of neoliberal monetary austerity. Its motto is TINA: There Is No Alternative, and it wants to keep matters this way. As long as it can suppress discussion of how many better alternatives there are, the hope is that the public will remain acquiescent as their living standards shrink and wealth is sucked up to the top of the economic pyramid to the 1%.

[Continued... (http://michael-hudson.com/2012/02/mmt-theory-as-an-ecb-alternative/)]
: Goldman Sachs: Making Money by Stealing It
: Geolibertarian March 19, 2012, 01:22:43 AM
*  put all derivatives (http://www.webofdebt.com/articles/its_the_derivatives.php)-infected mega-banks (http://www.prisonplanet.com/96-of-credit-derivative-risk-held-by-5-banks.html) through Chapter 11 bankruptcy and, in the reorganization proceedings, legally void all of their derivatives contracts;

*  liquidate all of the ill-gotten assets of criminal scam artists such as Henry Paulson, Lloyd Blankfein and Jamie Dimon, and use the resultant proceeds to help replenish whatever retirement funds they raided;

http://www.globalresearch.ca/goldman-sachs-making-money-by-stealing-it/29823 (http://www.globalresearch.ca/goldman-sachs-making-money-by-stealing-it/29823)

Goldman Sachs: Making Money by Stealing It

by Stephen Lendman
Global Research, March 17, 2012
sjlendman.blogspot.ca

Money power in private hands and democracy can't co-exist. Wall Street crooks transformed America into an unprecedented money making racket.

Goldman symbolizes master of the universe of financial manipulation (http://marketheist.com/2010/04/20/goldman-sachs-charged-with-fraud-who-could-have-guessed-part-1/) (Reuters April 16, 2011)  It's been involved in nearly all financial scandals since the 19th century.

It makes money the old-fashioned way, through market manipulation, the scamming of investors, bribing political Washington, having its executives in top administration posts, and getting open-ended low or no interest rate bailouts when needed.

It's business model and culture assure billions of bonus dollars for company officials, complicit traders, and others on the take.

Compared to Goldman, Bernie Madoff was small-time.

Former bank regulator expert on white-collar crime, public finance, economics, and related law, Bill Black (http://www.newdeal20.org/2010/04/22/bill-black-interview-the-great-global-bank-robbery-part-2-10008/) explained Goldman shenanigans pertaining to earlier SEC charges this way:


An SEC civil suit charged Goldman with defrauding customers. It made billions, and settled for $550 million. It was pocket change, the equivalent of four 2009 revenue days. It hardly mattered.

No executive was fined or imprisoned. Grand theft continues unabated. It includes pump-and-dump schemes. The corporate media does not explain. Only scammed customers and insiders who are involved understand.

On March 4, Black (http://neweconomicperspectives.org/2012/03/wall-streets-broken-windows.html) used James Q. Wilson's "broken windows" metaphor pertaining to blue collar crime. He applied it to far more serious elite white-collar offenses. None rise to the level of financial ones. The amounts involved are staggering. Broken lives, communities, and economies result. The landscape's littered with them.

No firm's more adept at amassing fraudulent fortunes than Goldman. Its CEO Lloyd Blankfein calls it "doing God's work."

It's also appalling that the Wall Street Journal "serve(s) as cheerleader and apologist for those" who amass wealth by stealing it, said Black.

Goldman Executive Resigns

Broken clocks are right twice a day. On March 14, so was The New York Times. It gave rare op-ed space to high level Goldman executive Greg Smith (http://www.nytimes.com/2012/03/14/opinion/why-i-am-leaving-goldman-sachs.html) for views worth sharing. He served as executive director and head of the firm's domestic equity derivatives business in Europe, the Middle East and Africa.

Headlining, "Why I Am Leaving Goldman Sachs," he said:

After almost 12 years with the firm, today was his last day. He worked there "long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it."

In "simplest terms," he said client interests are sidelined. Goldman thinks only about making money. "The firm has veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for."

In less blunt terms than Black, this writer, and other critics, he stopped short of explaining its grand theft model, but comments he made suggested it.

An earlier Goldman culture contributed to its success, he said. "It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients."

Exaggerated? Absolutely, whatever minor differences between today and earlier existed. According to Smith, "virtually no trace" of what he admired remains. Whatever pride he once had is now gone. It was time to leave when he no longer could look aspiring students wanting Goldman jobs "in the eye and tell them what a great place this was to work."

How can it be operating like a crime family. It's business model involves grand theft. Customers are defrauded, not helped. Politicians are bought like toothpaste. Laws are subverted and ignored. Others are discarded or rewritten at its behest. Economies are wrecked for profit.

When future Goldman histories are written, honest ones will say Blankfein, president Gary Cohn, and other top executives "lost hold of the firm’s culture on their watch. I truly believe that this decline in the firm’s moral fiber represents the single most serious threat to its long-run survival."

Smith said his career involved advising two of the largest global hedge funds, five of America's largest asset managers, and three of the Middle East's most prominent sovereign wealth funds. His clients manage over a trillion dollars in assets.

He took pride, he said, advising them "to do what I believe is right for them, even if it means less money for the firm. This view is becoming increasingly unpopular at Goldman Sachs." He knew it was time to leave.

"Leadership used to be about ideas, setting an example and doing the right thing. Today, if you make enough money for the firm (and are not currently an ax murderer), you will be promoted into a position of influence."

Three key ways, include:

(1) Advising clients to invest in assets Goldman wants to dump, including toxic ones.

(2) Getting them to buy what makes Goldman most money.

(3) Trading "any illiquid, opaque product with a three-letter acronym," no matter how much toxic or without merit.

He attended sales meetings devoid of ways to help clients. They're about maximizing Goldman's profit, no matter how illegally. "It makes me ill," he said, "how callously people talk about ripping their clients off. Over the last 12 months, I have seen five different managing directors refer to their own clients as 'muppets.' "

They're marks to be manipulated and scammed for profit. He can't explain how senior managers don't understand that losing client trust means forfeiting their business. No matter if you're the smartest guys in the room. They'll know you're smart enough to scam them without hearing back room insults about "muppets," "ripping eyeballs out," and "getting paid" at their expense.

He hopes his article "can be a wake-up call to" Goldman's board. "Make the client the focal point of your business again. Without clients you will not make money. In fact, you will not exist."

"Weed out the morally bankrupt people, no matter how much money they make for the firm." Make "people want to work here for the right reasons. People who care only about making money will not sustain this firm — or the trust of its clients — for very much longer."

A Final Comment

Goldman's entire history, or at least most of it, reflects predation. Its scams way pre-date Smith's birth. In the 1920s, its Ponzi scheme investment trusts (http://www.amazon.com/Great-Crash-1929-Kenneth-Galbraith/dp/0395859999) defrauded investors. Goldman profited. They lost out, and when Wall Street crashed were left high, dry, and broke.

One trust sold investors reflected others. Its offering price was $104 a share. It became virtually worthless at $1.75. It lost over 98% of its value. Unwary buyers then and now lose out. Only the stakes get bigger.

Today they're enormous. Getting in bed with Goldman's like swimming with sharks. You're prey. They're predators. Those burned understand Goldman's culture enough to know it's toxic and corrupted.

In 2002, it was largely responsible for Greece's debt problems. It involved circumventing Eurozone rules in return for mortgaging assets.

Using creative accounting, debt was hidden through off-balance sheet shenanigans. Derivatives called cross-currency swaps were used. Government debt issued in dollars and yen was swapped for euros, then later exchanged back to original currencies.

Debt entrapment followed. Greece was held hostage to repay it. The country's been raped and pillaged. Paying bankers comes first. Doing it left Greeks impoverished, high and dry. Goldman profited enormously by scamming an entire country and millions in it.

Its business model thrives on similar schemes globally. It's about profits, no matter the huge cost to others. Expecting this leopard to change spots is like imagining reformers will transform Washington.

Former alderman Paddy Bauler once said "Chicago ain't ready for reform." It's still not ready and may never be.

Neither is political Washington, Goldman, other Wall Street crooks, or their counterparts throughout corporate America.

They connive, cheat, profiteer from wars, drain trillions from households and the national treasury, wage war on labor, sell dangerous products, destroy the environment, and do whatever they damn please complicit with corrupt politicians who let them.

Goldman and other Wall Street giants are the worst of the lot. Standing armies pale by comparison. Michael Hudson calls finance warfare by other means. Generalissimo bankers run everything.

Their job is pillaging households, investors, communities, and countries for profit. Doing so holds humanity hostage. They'll lose everything unless stopped. Job one's assuring that's done. The stakes are too high for failure. It’s up to public rage (http://www.youtube.com/watch?v=WINDtlPXmmE) to change things.
: Big Banks Continue to "Suck at the Government" With Endless Stealth Bailouts
: Geolibertarian March 25, 2012, 11:21:07 AM
http://www.globalresearch.ca/big-banks-continue-to-suck-at-the-government-with-never-ending-stealth-bailouts/29941 (http://www.globalresearch.ca/big-banks-continue-to-suck-at-the-government-with-never-ending-stealth-bailouts/29941)

Big Banks Continue to "Suck at the Government" With Never-Ending Stealth Bailouts

by Washington's Blog

(http://www.globalresearch.ca/wp-content/uploads/2012/03/129941.jpg)

Global Research, March 24, 2012
Washington's Blog

Open-Ended Bailouts Are Continuing

We’ve previously documented the fact that bailouts of the big banks are continued in stealth mode up to the present day (http://www.washingtonsblog.com/2011/01/government-says-no-to-helping-states-and-main-street-while-continuing-to-throw-trillions-at-the-giant-banks.html).

True, the banks claim they’ve repaid the Tarp bailout funds … but nearly half of the banks “repaid” such bailout funds by borrowing from other government bailout funds (http://www.washingtonsblog.com/2012/02/mortgage-settlement-is-just-another-stealth-bank-bailout.html) (and the rest could only repay money by fudging their accounting and using stealth bailouts which are are a little harder to detect).

Indeed, the government has decided on perpetual bailouts (http://www.washingtonsblog.com/2010/11/welcome-to-the-age-of-permanent-bailouts-for-the-giant-banks.html) for the too big to fail banks.

Some of the ongoing stealth bailouts include:

[Continued... (http://www.globalresearch.ca/big-banks-continue-to-suck-at-the-government-with-never-ending-stealth-bailouts/29941)]

-----------------------------

(http://files.abovetopsecret.com/files/img/jy4f033a5d.jpg)

(http://www.infiniteunknown.net/wp-content/uploads/2009/12/elite-puppet-president-and-wall-street-banksters.jpg)
: Re: A Real Monetary Reform Proposal to Be Considered
: Constitutionary April 13, 2012, 01:03:41 PM
We need debt free money, like a Guernsey system.

The solution has been around since 1995.

The Money Masters.

http://video.google.com/videoplay?docid=-515319560256183936&q=The+money+changers&ei=Zd4QSMjvB47YqAKQtJmzBA
: Indentured Servitude for Seniors: Social Security Garnished for Student Debts
: Geolibertarian May 11, 2012, 02:04:07 PM
http://www.globalresearch.ca/indentured-servitude-for-seniors-social-security-garnished-for-student-debts/30805 (http://www.globalresearch.ca/indentured-servitude-for-seniors-social-security-garnished-for-student-debts/30805)

Indentured Servitude for Seniors: Social Security Garnished for Student Debts

by Ellen Brown

(http://www.globalresearch.ca/wp-content/uploads/2012/05/130805.jpg)

Global Research, May 11, 2012
Web of Debt

The Social Security program…represents our commitment as a society to the belief that workers should not live in dread that a disability, death, or old age could leave them or their families destitute.
 
– President Jimmy Carter, December 20, 1977

[This law] assures the elderly that America will always keep the promises made in troubled times a half century ago…[The Social Security Amendments of 1983 are] a monument to the spirit of compassion and commitment that unites us as a people.
 
– President Ronald Reagan, April 20, 1983

So said Presidents Carter and Regan, but that was before 1996, when Congress voted to allow federal agencies to offset portions of Social Security payments to collect debts owed to those agencies. (31 U.S.C. §3716).  Now we read of horror stories like this (http://getoutofdebt.org/6328/im-a-grandmother-and-getting-my-social-security-check-garnished-for-student-loans-janis):


Her debt went from $3500 to over $17,000 in 10 years?!  How could that be?

It seems that Congress has removed nearly every consumer protection (http://thechoice.blogs.nytimes.com/2010/01/11/bankruptcy/) from student loans, including not only standard bankruptcy protections, statutes of limitations, and truth in lending requirements, but protection from usury (excessive interest).  Lenders can vary the interest rates, and some borrowers are reporting rates as high as 18-20% (http://www.washingtonwatch.com/bills/show/112_HR_2028.html).  At 20%, debt doubles in just 3-1/2 years; and in 7 years, it quadruples.  Congress has also given lenders draconian collection powers to extort not just the original principal and interest on student loans but huge sums in penalties, fees, and collection costs.

The majority of these debts are being imposed on young people, who have a potential 40 years of gainful employment ahead of them to pay the debt off.  But a sizeable chunk of U.S. student loan debt is held by senior citizens (http://www.huffingtonpost.com/2012/04/02/student-loan-debt-senior-citizens_n_1396713.html), many of whom are not only unemployed but unemployable.  According to the New York Federal Reserve, two million U.S. seniors age 60 and over have student loan debt, on which they owe a collective $36.5 billion; and 11.2 percent of this debt is in default.  Almost a third of all student loan debt is held by people aged 40 and over, and 4.2% is held by people over the age of 60.  The total student debt is now over $1 trillion, more even than credit card debt.  The sum is unsustainable and threatens to be the next debt tsunami.

Some of this debt is for loans taken out years earlier on their own schooling, and some is from co-signing student loans for children or grandchildren.  But much of it has been incurred by middle-aged people going back to school in the hope of finding employment in a bad job market.  What they have wound up with is something much worse: no job, an exponentially mounting debt that cannot be discharged in bankruptcy, and the prospect of old age without a social security check adequate to survive on.

Gone is the promise of earlier presidents of a “commitment to the belief that workers should not live in dread that a disability, death, or old age could leave them or their families destitute.”  The plight of the indebted elderly is reminiscent of the Irish immigrants who came to America after a potato famine in the 19th century, who were looked upon in some places as actually lower than slaves. Plantation owners kept their slaves fed, clothed and cared for, because they were valuable property.  The Irish were expendable, and they were on their own.

It is obviously not a good time to raise interest rates on student debt, but they are set to double on July 1, 2012, to 6.8%.  Many lawmakers in both parties agree that the current 3.4% rates should be extended for another year, but they can’t agree on how to find the $6 billion that this would cost.  Republicans want to take the money from a health care fund that promotes preventive care; Democrats want to eliminate some tax benefits for small business owners.

Congress cannot agree on $6 billion to save the students, yet they managed to agree in a matter of days in September 2008 to come up with $700 billion to save the banks; and the Federal Reserve found many trillions more.  Estimates are that tuition could be provided free (http://www.thenation.com/article/167690/end-student-debt) to students for a mere $30 billion annually.  The government has the power to find $30 billion — or $300 billion or $3 trillion — in the same place the Federal Reserve found it: it can simply issue the money.

Congress is empowered by the Constitution to “coin money” and “regulate the value thereof,” and no limit is set on the face amount of the coins it creates. It could issue a few one-billion dollar coins, deposit them in an account, and start writing checks.

But wouldn’t that be inflationary?  No.  The Fed’s own figures show that the money supply (M3) has shrunk by $3 trillion (http://www.newyorkfed.org/research/staff_reports/sr458.html) since 2008. That sum could be added back into the economy without inflating prices.  Gas and food are going up today, but the whole range of prices must be considered in order to determine whether price inflation is occurring.  Housing and wages are significantly larger components of the price structure than commodities, and they remain severely depressed.

There is another way the government could find needed funds without raising taxes, slashing services, or going further into debt: Congress could re-finance the federal debt through the Federal Reserve, interest-free.  Canada did this (http://www.webofdebt.com/articles/canada.php) from 1939 to 1974, keeping its national debt low and sustainable while funding massive programs including seaways, roadways, pensions, and national health care.  The national debt shot up only when the government switched from borrowing from its own central bank to borrowing from private lenders at interest.  The rationale was that borrowing bank-created money from the government’s own central bank inflated the money supply, while borrowing existing funds from private banks did not.  But even the Federal Reserve acknowledges (http://www.dallasfed.org/assets/documents/educate/everyday/money.pdf) that private banks create the money they lend on their books, just as central banks do.

U.S. taxpayers now pay nearly half a trillion dollars annually to finance our federal debt.  The cumulative figure comes to $8.2 trillion paid in interest just in the last 24 years.  By financing the debt itself rather than paying interest to private parties, the government could divert what it would have paid in interest into tuition, jobs, infrastructure and social services, allowing us to keep the social contract while at the same time stimulating the economy.

For students, at the very least the bankruptcy option needs to be reinstated, usury laws restored, predatory practices eliminated, and the cost of education brought back down to earth.  One possibility for relieving the burden on students would be to give them interest-free loans.  The government of New  Zealand now offers 0% loans to New Zealand students (http://www.ird.govt.nz/studentloans/about/eligibility-int-free/), with repayment to be made from their income after they graduate.  For the past twenty years, the Australian government has also successfully funded students by giving out what are in effect interest-free loans.  The loans in the Australian Higher Education Loan Programme (http://en.wikipedia.org/wiki/Tertiary_education_fees_in_Australia) (or HELP) do not bear interest, but the government gets back more than it lends, because the principal is indexed to the Consumer Price Index (CPI), which goes up every year.

Predatory lenders are keeping us in debt peonage through misguided economics and bank-captured legislators.  We have people who desperately want to work, to the point of going back to school to try to improve their chances; and we have mountains of work that needs to be done.  The only thing keeping them apart is that artificial constraint called “money”, which we have allowed to be created by banks and let out at interest when it could have been created by public institutions for public purposes, either by direct issuance or through publicly-owned banks.  We just need to recognize our oppressors and throw off their yoke, and the good times can roll again.
: A Monetary Policy for the 99%: Twelve-Year-Old Reformer Goes Viral
: Geolibertarian May 30, 2012, 12:01:52 PM
http://truth-out.org/news/item/9430-out-of-the-mouths-of-babes-video-of-12-year-old-money-reformer-tops-a-million-views (http://truth-out.org/news/item/9430-out-of-the-mouths-of-babes-video-of-12-year-old-money-reformer-tops-a-million-views)

A Monetary Policy for the 99%: Twelve-Year-Old Reformer Goes Viral

By Ellen Brown
Truthout
May 29, 2012

The YouTube video of 12-year-old Victoria Grant speaking at the Public Banking in America conference last month has gone viral, topping a million views on various web sites.

     http://www.youtube.com/watch?v=Bx5Sc3vWefE (http://www.youtube.com/watch?v=Bx5Sc3vWefE)

Monetary reform - the contention that governments, not banks, should create and lend a nation's money - has rarely even made the news, so this is a first. Either the times they are a-changin', or Victoria managed to frame the message in a way that was so simple and clear that even a child could understand it.

(http://truth-out.org/images/052912k_.jpg)
12-year old Victoria Grant explains why her homeland,
Canada, and most of the world, is in debt. April 27,
2012 at the Public Banking in America Conference,
Philadelphia, PA. (Screengrab: publicbankingtv)


Basically, her message was that banks create money "out of thin air" and lend it to people and governments at interest. If governments borrowed from their own banks, they could keep the interest and save a lot of money for the taxpayers.

She said her own country of Canada actually did this, from 1939 to 1974. During that time, the government's debt was low and sustainable and it funded all sorts of remarkable things. Only when the government switched to borrowing privately did it acquire a crippling national debt.

Borrowing privately means selling bonds at market rates of interest (which in Canada quickly shot up to 22 percent), and the money for these bonds is ultimately created by private banks. For the latter point, Victoria quoted Graham Towers, head of the Bank of Canada for the first twenty years of its history. He said:


Towers was asked, "Will you tell me why a government with power to create money, should give that power away to a private monopoly and then borrow that which Parliament can create itself, back at interest, to the point of national bankruptcy?" He replied, "If Parliament wants to change the form of operating the banking system, then certainly that is within the power of Parliament."

In other words, said Victoria, "If the Canadian government needs money, they can borrow it directly from the Bank of Canada. The people would then pay fair taxes to repay the Bank of Canada. This tax money would in turn get injected back into the economic infrastructure and the debt would be wiped out. Canadians would again prosper with real money as the foundation of our economic structure and not debt money. Regarding the debt money owed to the private banks such as the Royal Bank, we would simply have the Bank of Canada print the money owing, hand it over to the private banks and then clear the debt to the Bank of Canada."

Problem solved; case closed.

But critics said, "Not so fast." Victoria might be charming, but she was naïve.

One critic was William Watson, writing in the Canadian newspaper The National Post in an article titled "No, Victoria, There Is No Money Monster (http://opinion.financialpost.com/2012/05/16/william-watson-no-victoria-there-is-no-money-monster/)." Interestingly, he did not deny Victoria's contention that "When you take out a mortgage, the bank creates the money by clicking on a key and generating 'fake money out of thin air.'" Watson acknowledged:


What he disputed was that the Canadian government's monster debt was the result of paying high interest rates to banks. Rather, he said:


That contention is countered, however, by the Canadian government's own auditor general (the nation's top accountant, who reviews the government's books). In 1993, the auditor general noted in his annual report (http://www.oag-bvg.gc.ca/internet/English/parl_oag_199312_05_e_5944.html#0.2.L39QK2.DVW2PL.2FGQFE.OA):

"[The] cost of borrowing and its compounding effect have a significant impact on Canada's annual deficits. From Confederation up to 1991-92, the federal government accumulated a net debt of $423 billion. Of this, $37 billion represents the accumulated shortfall in meeting the cost of government programs since Confederation. The remainder, $386 billion, represents the amount the government has borrowed to service the debt created by previous annual shortfalls."

In other words, 91 percent of the debt consists of compounded interest charges. Subtract those and the government would have a debt of only C$37 billion, very low and sustainable, just as it was before 1974.

[Continued... (http://truth-out.org/news/item/9430-out-of-the-mouths-of-babes-video-of-12-year-old-money-reformer-tops-a-million-views)]
: Re: Monetary Reform!
: freedom_commonsense May 30, 2012, 01:32:01 PM
All credit to the young lady for getting noticed and making the most of that opportunity.
: Jesus became violent only once. Against whom was this violence directed?
: Geolibertarian June 06, 2012, 02:15:00 PM
For the answer, see:

     http://www.youtube.com/watch?v=kEtBs6j7QgU (http://www.youtube.com/watch?v=kEtBs6j7QgU)

Yet which social group do most of his professed followers obsess over today?

I'll give you a hint: It ain't the money changers.
: Wall Street's Protection Racket of Covert Derivatives
: Geolibertarian June 21, 2012, 11:24:27 AM
http://www.globalresearch.ca/wall-street-s-protection-racket-of-covert-derivatives-jpmorgan-derivatives-prop-up-u-s-debt/31505 (http://www.globalresearch.ca/wall-street-s-protection-racket-of-covert-derivatives-jpmorgan-derivatives-prop-up-u-s-debt/31505)

Wall Street's Protection Racket of Covert Derivatives: JPMorgan Derivatives Prop Up U.S. Debt
Why the Senate Won’t Touch Jamie Dimon

by Ellen Brown

(http://www.globalresearch.ca/wp-content/uploads/2012/06/131505.jpg)

Global Research
June 20, 2012

When Jamie Dimon, CEO of JPMorgan Chase Bank, appeared before the Senate Banking Committee on June 13, he was wearing cufflinks bearing the presidential seal.  “Was Dimon trying to send any particular message by wearing the presidential cufflinks?” asked CNBC editor John Carney (http://www.cnbc.com/id/47820947).  “Was he . . . subtly hinting that he’s really the guy in charge?”

The groveling of the Senators was so obvious that Jon Stewart did a spoof news clip on it, featured in a Huffington Post piece titled “Jon Stewart Blasts Senate’s Coddling Of JP Morgan Chase CEO Jamie Dimon (http://www.huffingtonpost.com/2012/06/15/jon-stewart-senate-jamie-dimon-video_n_1599689.html?utm_hp_ref=comedy),” and Matt Taibbi wrote an op-ed called “Senators Grovel, Embarrass Themselves at Dimon Hearing (http://www.rollingstone.com/politics/blogs/taibblog/senators-grovel-embarrass-themselves-at-dimon-hearing-20120615).”  He said the whole thing was painful to watch.

“What is going on with this panel of senators?” asked Stewart.  “They’re sucking up to Jamie Dimon like they’re on JPMorgan’s payroll.”  The explanation in a news clip that followed was that JPMorgan Chase is the biggest campaign donor to many of the members of the Banking Committee.

That is one obvious answer, but financial analysts Jim Willie and Rob Kirby think it may be something far larger, deeper, and more ominous.  They contend that the $3 billion-plus losses in London hedging transactions that were the subject of the hearing can be traced, not to European sovereign debt (as alleged), but to the record-low interest rates maintained on U.S. government bonds.

The national debt is growing at $1.5 trillion per year.  Ultra-low interest rates MUST be maintained to prevent the debt from overwhelming the government budget.  Near-zero rates also need to be maintained because even a moderate rise would cause multi-trillion dollar derivative losses for the banks, and would remove the banks’ chief income stream, the arbitrage afforded by borrowing at 0% and investing at higher rates.

The low rates are maintained by interest rate swaps, called by Willie a “derivative tool which controls the bond market in a devious artificial manner.”  How they control it is complicated, and is explored in detail in the Willie piece here (http://www.marketoracle.co.uk/Article34819.html) and Kirby piece here (http://news.goldseek.com/GoldSeek/1339766400.php).

Kirby contends that the only organization large enough to act as counterparty to some of these trades is the U.S. Treasury itself.  He suspects the Treasury’s Exchange Stabilization Fund, a covert entity without oversight and accountable to no one. Kirby also notes that if publicly-traded companies (including JPMorgan, Goldman Sachs, and Morgan Stanley) are deemed to be integral to U.S. national security (meaning protecting the integrity of the dollar), they can legally be excused from reporting their true financial condition.  They are allowed to keep two sets of books.

Interest rate swaps (http://www.webofdebt.com/articles/interestrateswap.php) are now over 80 percent of the massive derivatives market, and JPMorgan holds about $57.5 trillion of them.  Without the protective JPMorgan swaps, interest rates on U.S. debt could follow those of Greece and climb to 30%.  CEO Dimon could, then, indeed be “the guy in charge”: he could be controlling the lever propping up the whole U.S. financial system.

Hero or Felon?

So should Dimon be regarded as a national hero?  Not if past conduct is any gauge.  Besides the recent $3 billion in JPMorgan losses, which look more like illegal speculation (http://www.zerohedge.com/contributed/2012-20-16/jp-morgan-used-%E2%80%9Chedginess%E2%80%9D-engage-illegal-speculation) than legal hedging, there is JPM’s use of its conflicting positions (http://www.americablog.com/2012/01/yves-smith-more-evidence-jp-morgan.html) as clearing house and creditor of MF Global to siphon off funds that should have gone into customer accounts, and its responsibility in dooming Lehman Brothers by withholding $7 billion in cash and collateral.  There is also the fact that Dimon sat on the board of the New York Federal Reserve when it lent $55 billion to JPMorgan (http://www.webofdebt.com/articles/banking-bailout.php) in 2008 to buy Bear Stearns for pennies on the dollar.  Dimon then owned nearly three million shares (http://www.webofdebt.com/articles/lehman_brothers.php) of JPM stock and options, in clear violation of 18 U.S.C. Section 208, which makes that sort of conflict of interest a felony.

Financial analyst John Olagues, a former stock options market maker, points out (http://optionsforemployees.com/articles/article.php?id=146) that the loan was guaranteed by $55 billion of Bear Stearns assets.  If Bear had that much in assets, the Fed could have given it the loan directly, saving it from being swallowed up by JPMorgan.  But Bear did not have a director on the board of the NY Fed.

Olagues also notes that JPMorgan received an additional $25 billion in TARP payments from the Treasury, which were evidently paid off by borrowing from the NY Fed at a very low 0.5%; and that JPM executives received some very large and highly suspicious bonuses called Stock Appreciation Rights and Restricted Stock Units (complicated variants of employee stock options and restricted stock).  In 2009, these bonuses were granted on the day JPMorgan stock reached its lowest value in five years.  The stock quickly rebounded thereafter, substantially increasing the value of the bonuses.  This pattern recurred in 2008 and 2012.

Olagues has evidence of systematic computer-generated selling of JPMorgan stock immediately prior to and on the dates of the granted equity compensation.  Collusion to manipulate the stock to accommodate the grant of options is called “spring-loading” and is a violation of SEC Rule 10 b-5 and tax laws, with criminal and civil penalties.

All of which suggests we could actually have a felon at the helm of our ship of state.

There is a movement afoot (http://money.cnn.com/2012/05/21/news/economy/jamie-dimon-new-york-fed/index.htm) to get Dimon replaced on the Board, on the ground that his directorship represents a clear conflict of interest.  In May, Massachusetts Senate candidate Elizabeth Warren called for Dimon’s resignation from the NY Fed board, and Vermont Senator Bernie Sanders has used the uproar over the speculative JPM losses to promote an overhaul of the Federal Reserve.  In a release to reporters, Warren said (http://www.motherjones.com/mojo/2012/06/elizabeth-warren-jamie-dimon-new-york-federal-reserve):


But what chance does even this small step have against the gun-to-the-head persuasion of a nightmare collapse of the entire U.S. debt scheme?

Propping Up a Pyramid Scheme

Is there no alternative but to succumb to the Mafia-like Wall Street protection racket of a covert derivatives trade in interest rate swaps?  As Willie and Kirby observe, that scheme itself must ultimately fail, and may have failed already.  They point to evidence that the JPM losses are not just $3 billion but $30 billion or more, and that JPM is actually bankrupt.

The derivatives casino itself is just a last-ditch attempt to prop up a private pyramid scheme in fractional-reserve money creation, one that has progressed over several centuries (http://www.webofdebt.com/articles/new_theory.php) through a series of “reserves”—from gold, to Fed-created “base money,” to mortgage-backed securities, to sovereign debt ostensibly protected with derivatives.  We’ve seen that the only real guarantor in all this is the government itself, first with FDIC insurance and then with government bailouts of too-big-to-fail banks.  If we the people are funding the banks, we should own them; and our national currency should be issued, not through banks at interest, but through our own sovereign government.

Unlike Greece, which is dependent on an uncooperative European Central Bank for funding, the U.S. still has the legal power to issue its own dollars or borrow them interest-free from its own central bank.  The government could buy back its bonds and refinance them at 0% interest through the Federal Reserve—which now buys them on the open market at interest like everyone else—or it could simply rip them up.

The chief obstacle to that alternative is the bugaboo of inflation, but many countries have proven that this approach need not be inflationary.  Canada borrowed from its own central bank (http://www.webofdebt.com/articles/canada.php) effectively interest free from 1939 to 1974, stimulating productivity without creating inflation; Australia did it (http://www.webofdebt.com/articles/commonwealth_bank_aus.php) from 1912 to 1923; and China has done it (http://www.webofdebt.com/articles/secret_of_china.php) for decades.

The private creation of money at interest is the granddaddy of all pyramid schemes; and like all such schemes, it must eventually collapse, despite a quadrillion dollar derivatives edifice (http://www.dailyfinance.com/2010/06/09/risk-quadrillion-derivatives-market-gdp/) propping it up.  Willie and Kirby think that time is upon us.  We need to have alternative, public and cooperative systems ready to replace the old system when it comes crashing down.
: Re: Monetary Reform!
: Geolibertarian July 16, 2012, 05:10:44 PM
http://www.youtube.com/watch?v=swkq2E8mswI (http://www.youtube.com/watch?v=swkq2E8mswI)

(http://1.bp.blogspot.com/_YGLQQZTHoU0/TOBUYNzyosI/AAAAAAAAMBc/P7W8X_izwYE/s1600/the-secret-of-oz.JPG)
: The Gold Solution is a Lie - by Bill Still
: Geolibertarian September 04, 2012, 05:58:44 PM
http://www.youtube.com/watch?v=WVlqwJ00LMU (http://www.youtube.com/watch?v=WVlqwJ00LMU) (SR 68 The Gold Solution is a Lie - Bill Still)
: How Congress Could Fix Its Budget Woes, Permanently
: Geolibertarian March 02, 2013, 03:43:22 PM
Note: Is the reason why Ellen Brown (among others -- see this (http://www.monetary.org), this (http://www.wealthmoney.org/articles/) and this (http://www.billstill.com)) continues to get ignored is that her message transcends the narrow parameters of the false Austrian-vs.-Keynesian (http://www.youtube.com/watch?v=ojCqYcGMzps) paradigm? You be the judge...

HOW CONGRESS COULD FIX ITS BUDGET WOES, PERMANENTLY

Ellen Brown
February 8, 2013
www.webofdebt.com/articles/budgetfix.php (http://www.webofdebt.com/articles/budgetfix.php)

As Congress struggles through one budget crisis after another, it is becoming increasingly evident that austerity doesn't work. We cannot possibly pay off a $16 trillion debt by tightening our belts, slashing public services, and raising taxes. Historically, when the deficit has been reduced (http://wallstreetpit.com/17145-time-to-throw-some-water-on-the-deficit-hysteria-fire), the money supply has been reduced along with it, throwing the economy into recession. After a thorough analysis of statistics from dozens of countries forced to apply austerity plans by the World Bank and IMF, former World Bank chief economist Joseph Stiglitz called austerity plans a “suicide pact.” (http://www.telegraph.co.uk/finance/financialcrisis/9019819/Stiglitz-says-European-austerity-plans-are-a-suicide-pact.html)

Congress already has in its hands the power to solve the nation’s budget challenges – today and permanently. But it has been artificially constrained from using that power by misguided economic dogma, dogma generated by the interests it serves.  We have bought into the idea that there is not enough money to feed and house our population, rebuild our roads and bridges, or fund our most important programs -- that there is no alternative but to slash budgets and deficits if we are to survive. We have a mountain of critical work to do, improving our schools, rebuilding our infrastructure, pursuing our research goals, and so forth. And with millions of unemployed and underemployed, the people are there to do it. What we don’t have, we are told, is just the money to bring workers and resources together.

But we do have it.  Or we could.

Money today is simply a legal agreement between parties. Nothing backs it but “the full faith and credit of the United States.” The United States could issue its credit directly to fund its own budget, just as our forebears did in the American colonies and as Abraham Lincoln did in the Civil War.

Any serious discussion of this alternative has long been taboo among economists and politicians. But in a landmark speech on February 6, 2013, Adair Turner, chairman of Britain’s Financial Services Authority, broke the taboo with a historic speech recommending that approach. According to a February 7th article in Reuters (http://blogs.reuters.com/anatole-kaletsky/2013/02/07/a-breakthrough-speech-on-monetary-policy/), Turner is one of the most influential financial policy makers in the world.  His recommendation was supported by a 75-page paper explaining why handing out newly-created money to citizens and governments could solve economic woes globally and would not lead to hyperinflation.

Our Money Exists Only at the Will and Pleasure of Banks

Government-issued money would work because it addresses the problem at its source. Today, we have no permanent money supply. People and governments are drowning in debt because our money comes into existence only as a debt to banks at interest. As Robert Hemphill of the Atlanta Federal Reserve observed in the 1930s:


In the U.S. monetary system, the only money that is not borrowed from banks is the “base money” or “monetary base” created by the Treasury and the Federal Reserve (the Fed). The Treasury creates only the tiny portion consisting of coins. All of the rest is created by the Fed.  

Despite its name, the Fed is at best only quasi-federal; and most of the money it creates is electronic rather than paper. We the people have no access to this money, which is not turned over to the government or the people but goes directly into the reserve accounts of private banks at the Fed.  

It goes there and it stays there. Except for the small amount of “vault cash” available for withdrawal from commercial banks, bank reserves do not leave the doors of the central bank. According to Peter Stella (http://ftalphaville.ft.com/2012/07/03/1067591/the-base-money-confusion/?), former head of the Central Banking and Monetary and Foreign Exchange Operations Divisions at the International Monetary Fund:


Banks do not lend their reserves to us, but they do lend them to each other. The reserves are what they need to clear checks between banks. Reserves move from one reserve account to another; but the total money in bank reserve accounts remains unchanged, unless the Fed itself issues new money or extinguishes it.

The base money to which we have no access includes that created on a computer screen through “quantitative easing” (QE), which now exceeds $3 trillion. That explains why QE has not driven the economy into hyperinflation, as the deficit hawks have long predicted; and why it has not created jobs, as was its purported mission. The Fed’s QE money simply does not get into the circulating money supply at all.

What we the people have in our bank accounts is a mere reflection of the base money that is the exclusive domain of the bankers’ club. Banks borrow from the Fed and each other at near-zero rates, then lend this money to us at 4% or 8% or 30%, depending on what the market will bear.  Like in a house of mirrors, the Fed’s “base money” gets multiplied over and over whenever “bank credit” is deposited and relent; and that illusory house of mirrors is what we call our money supply.

We Need “Quantitative Easing” for the People

The quantitative easing engaged in by central banks today is not what UK Professor Richard Werner intended when he invented the term (http://www.greennewdealgroup.org/wp-content/uploads/2012/03/Green-QE-report-CBFSD-Policy-News-2012-No-1.pdf). Werner advised the Japanese in the 1990s, when they were caught in a spiral of “debt deflation” like the one we are struggling with now. What he had in mind was credit creation by the central bank for productive purposes in the real, physical economy. But like central banks now, the Bank of Japan simply directed its QE firehose at the banks. Werner complains:


The QE he recommended was more along the lines of the money-printing engaged in by the American settlers in colonial times and by Abraham Lincoln during the American Civil War. The colonists’ paper scrip and Lincoln’s “greenbacks” consisted, not of bank loans, but of paper receipts from the government acknowledging goods and services delivered to the government. The receipts circulated as money in the economy, and in the colonies they were accepted in the payment of taxes.

The best of these models was in Benjamin Franklin’s colony of Pennsylvania, where government-issued money got into the economy by way of loans issued by a publicly-owned bank (http://www.unz.org/Pub/PolicyRev-2004dec-00067). Except for an excise tax on liquor, the government was funded entirely without taxes; there was no government debt; and price inflation did not result. In 1938, Dr. Richard A. Lester, an economist at Princeton University, wrote (http://21stcenturycicero.wordpress.com/fraud/colonial-scrip/), “The price level during the 52 years prior to the American Revolution and while Pennsylvania was on a paper standard was more stable than the American price level has been during any succeeding fifty-year period.”

The Inflation Conundrum

The threat of price inflation is the excuse invariably used for discouraging this sort of “irresponsible” monetary policy today, based on the Milton Friedman dictum that “inflation is everywhere and always a monetary phenomenon.” When the quantity of money goes up, says the theory, more money will be chasing fewer goods, driving prices up.

What it overlooks is the supply side of the equation. As long as workers are sitting idle and materials are available, increased “demand” will put workers to work creating more “supply.” Supply will rise along with demand, and prices will remain stable.

True, today these additional workers might be in China or they might be robots. But the principle still holds: if we want the increased supply necessary to satisfy the needs of the people and the economy, more money must first be injected into the economy.  Demand drives supply.  People must have money in their pockets before they can shop, stimulating increased production.  Production doesn’t need as many human workers as it once did. To get enough money in the economy to drive the needed supply, it might be time to issue a national dividend divided equally among the people.

Increased demand will drive up prices only when the economy hits full productive capacitys. It is at that point, and not before, that taxes may need to be levied—not to fund the federal budget, but to prevent “overheating” and keep prices stable. Overheating in the current economy could be a long time coming, however, since according to the Fed’s figures (http://www.ny.frb.org/research/staff_reports/sr458.pdf), $4 trillion needs to be added into the money supply just to get it back to where it was in 2008.

Taxes might be avoided altogether, if excess funds were pulled out with fees charged for various government services. A good place to start might be with banking services rendered by publicly-owned banks (http://publicbankinginstitute.org) that returned their profits to the public.

Taking a Lesson from Iceland: Austerity Doesn’t Work

The Federal Reserve has lavished over $13 trillion in computer-generated bail-out money on the banks, and still the economy is flagging and the debt ceiling refuses to go away. If this money had been pumped into the real economy instead of into the black hole of the private banking system, we might have a thriving economy today.

We need to take a lesson from Iceland, which turned its hopelessly insolvent economy around when other European countries were drowning in debt despite severe austerity measures. Iceland’s president Olafur Grimson was asked at the Davos conference in January 2013 why his country had survived where Europe had failed.  He replied:

"I think it surprises a lot of people that a year ago we were accepted by the world as a failed financial system, but now we are back on recovery with economic growth and very little unemployment, and I think the primary reason is that . . . we didn’t follow the traditional prevailing orthodoxies of the Western world in the last 30 years.  We introduced currency controls; we let the banks fail; we provided support for the poor; we didn’t introduce austerity measures of the scale you are seeing here in Europe.  And the end result four years later is that Iceland is enjoying progress and recovery very different from the other countries that suffered from the financial crisis." [Emphasis added.]

He added:

"[W]hy do [we] consider the banks to be the holy churches of the modern economy? . . . The theory that you have to bail out banks is a theory about bankers enjoying for their own profit the success and then letting ordinary people bear the failure through taxes and austerity, and people in enlightened democracies are not going to accept that in the long run."

The Road to Prosperity

We are waking up from the long night of our delusion. We do not need to follow the prevailing economic orthodoxies, which have consistently failed and are not corroborated by empirical data.  We need a permanent money supply, and the money must come from somewhere. It is the right and duty of government to provide a money supply that is adequate and sustainable.

It is also the duty of government to provide the public services necessary for a secure and prosperous life for its people. As Thomas Edison observed in the 1920s, if the government can issue a dollar bond, it can issue a dollar bill. Both are backed by “the full faith and credit of the United States.”  The government can pay for all the services its people need and eliminate budget crises permanently, simply by issuing the dollars to pay for them, debt-free and interest-free.
: ‘Italy may abandon euro if debt not renegotiated’- politics kingmaker Grillo
: Sasha March 02, 2013, 04:12:32 PM
‘Italy may abandon euro if debt not renegotiated’ - politics kingmaker Grillo
Published time: March 02, 2013 23:31

The economic crisis may see Italy abandoning euro and returning to lira, says comedian-turned-politician, Beppe Grillo, who’s anti-establishment Five Star Movement became a major power in the country’s politics after the last week’s general election.

In his interview with German Focus magazine, Grillo urged for the renegotiation of Italy’s €2-trillion debt, which is the second highest in the euro zone after Greece, at 127 per cent of gross domestic product (GDP).

“Right now we are being crushed, not by the euro, but by our debt. When the interest payments reach €100 billion a year, we’re dead. There’s no alternative,” the 64-year-old said.

 According to the Five Star Movement leader’s forecast, the Italian political system has "only six months" left before it collapses and the state will no longer be able "to pay pensions and public sector salaries".

Full article:
http://rt.com/news/grillo-italy-euro-abandon-731/
: Re: Monetary Reform!
: Constitutionary March 02, 2013, 04:45:16 PM
The American Dream Film-Full Length
 
https://www.youtube.com/watch?v=tGk5ioEXlIM


The Money Masters.
 
http://www.youtube.com/watch?v=H56FUHgqRNE


2 films, 5 hours and 1 vote for the Constitution Party back in 2008 would have put us where ICELAND is now.

But Americans are so smart that is why their vote for Obama has put America in worse shape than Hoover's Depression.
: Re: Monetary Reform!
: chris jones March 02, 2013, 07:42:53 PM
GEO knows the deal, BUMP HIM.
: Stunning Facts About How the Banking System Works & How Its Destroying America
: Geolibertarian March 28, 2013, 01:55:18 PM
http://www.prisonplanet.com/stunning-facts-about-how-the-banking-system-really-works-%E2%80%A6-and-how-it-is-destroying-america.html (http://www.prisonplanet.com/stunning-facts-about-how-the-banking-system-really-works-%E2%80%A6-and-how-it-is-destroying-america.html)

Stunning Facts About How the Banking System Really Works … And How It Is Destroying America

Washington’s Blog (http://www.washingtonsblog.com/2013/03/stunning-facts-about-how-the-banking-system-really-works-and-how-it-is-destroying-america.html)
March 28, 2013

To understand the core problem in America today, we have to look back to the very founding of our country.

The Founding Fathers fought for liberty and justice. But they also fought for a sound economy and freedom from the tyranny of big banks:

“[It was] the poverty caused by the bad influence of the English bankers on the Parliament which has caused in the colonies hatred of the English and . . . the Revolutionary War.” - Benjamin Franklin

“There are two ways to conquer and enslave a nation. One is by the sword. The other is by debt.” - John Adams

“All the perplexities, confusion and distress in America arise, not from defects in their Constitution or Confederation, not from want of honor or virtue, so much as from the downright ignorance of the nature of coin, credit and circulation.” - John Adams

“If the American people ever allow the banks to control issuance of their currency, first by inflation and then by deflation, the banks and corporations that grow up around them will deprive the people of all property until their children will wake up homeless on the continent their fathers occupied”. — Thomas Jefferson

“I believe that banking institutions are more dangerous to our liberties than standing armies…The issuing power should be taken from the banks and restored to the Government, to whom it properly belongs.” - Thomas Jefferson

“The Founding Fathers of this great land had no difficulty whatsoever understanding the agenda of bankers, and they frequently referred to them and their kind as, quote, ‘friends of paper money. They hated the Bank of England, in particular, and felt that even were we successful in winning our independence from England and King George, we could never truly be a nation of freemen, unless we had an honest money system.” -Peter Kershaw, author of the 1994 booklet “Economic Solutions”

Indeed, everyone knows that the American colonists revolted largely because of taxation without representation and related forms of oppression by the British. See this and this. But – according to Benjamin Franklin and others in the thick of the action – a little-known factor was actually the mainreason for the revolution.

To give some background on the issue, when Benjamin Franklin went to London in 1764, this is what he observed (http://www.amazon.com/Web-Debt-Shocking-Sleight-Trapped/dp/0979560802):


(for more on the Currency Act, see this (http://www.google.com/search?hl=en&client=firefox-a&rls=org.mozilla%3Aen-US%3Aofficial&hs=17w&q=1764+%22Currency+Act%22&btnG=Search&aq=f&oq=&aqi=).)

Alexander Hamilton echoed similar sentiments:

[Continued... (http://www.prisonplanet.com/stunning-facts-about-how-the-banking-system-really-works-%E2%80%A6-and-how-it-is-destroying-america.html)]
: Why Tom Woods is wrong about the Greenbackers
: Geolibertarian April 09, 2013, 02:09:59 PM
http://realcurrencies.wordpress.com/2013/04/08/why-tom-woods-is-wrong-about-the-greenbackers/ (http://realcurrencies.wordpress.com/2013/04/08/why-tom-woods-is-wrong-about-the-greenbackers/)

Why Tom Woods is wrong about the Greenbackers

by Anthony Migchels
Real Currencies
April 8, 2013

(http://realcurrencies.files.wordpress.com/2013/04/tom-woods.jpg?w=250)
                  Tom Woods

Recently the Austrians have been aiming some firepower at the ‘Greenbackers’ again. As we have documented extensively, Austrianism was developed mainly to organize the opposition against the current monetary order and to mind control it into cheerleading the reinstatement of the Gold Standard, which the Money Power has been planning for decades now. Not much new under the sun, but since they insist, let’s have some more fun with their silly antics.

Tom Woods has 34k likes on Facebook, is asked by friends to run for the Senate, is clearly groomed to play a major role in Libertarianism in the future and looks like the Heir Apparent to Lew Rockwell’s ‘Catholic arm of Libertarianism (http://realcurrencies.wordpress.com/2012/02/21/thecatholic-arm-of-libertarianism/)‘. Certainly an influential fellow and he recently opened up a page on his site called ‘Why the Greenbackers are wrong‘.

As we know, the Greenbackers are the sworn enemies of the Austrians. They don’t like to talk too much about them, lest they would get unwarranted attention, and they usually reserve their gall for the Keynesians. But in fact, the Greenbackers are their ‘raison d’être’, to usurp the real opposition against the Money Power’s control of the money supply. So it’s probably necessary, even if a tad boring, to rebut this 5100 word screed.

Let’s keep in mind what is at stake

We could print enough debt free paper money to pay off the National Debt. This Debt is entirely credit based, for every debt free dollar we print, a credit based dollar would go out of circulation. Meaning: no inflation. After the operation we would have no national debt and the Fed Govt would be spared $450 billion per year in interest payments. This is the Greenback and this is not something the Money Power is going to allow and stopping this is what Austrianism is all about.

This would end the Fed, at least as we know it, and it would nationalize money. This, according to Tom Woods, would mean more socialism. You see, it is clearly better when a private banking cartel prints money, slaps interest on it and a few Trillionaires rake in this $450 billion per year. That is, after all, the ‘free market’, a great example of ‘human action’ by the Rothschilds, certainly not to be interfered with.

As we have analyzed in ‘Libertarianism’s main fault: Blaming the State while ignoring the Money Power‘ (http://realcurrencies.wordpress.com/2012/02/20/libertarianisms-main-fault-blaming-the-state-while-ignoring-the-money-power/), the Money Power, which sits at the top of the international power hierarchy, owns all the money supplies in the world, including that of the US. It uses it to enslave us with interest and the boom-bust cycle.

It can do this, because it forced sovereigns in the past to create de facto currency monopolies through legal tender laws and then hand these to the Money Power.

So reclaiming this currency monopoly actually devolves power from the summit (the Money Power) to one level lower, the Government. In short: less socialism than we have now, not more.

[Continued... (http://realcurrencies.wordpress.com/2013/04/08/why-tom-woods-is-wrong-about-the-greenbackers/)]
: On Greenbacks, Free Silver, and Free Banking
: Geolibertarian April 10, 2013, 02:08:24 PM
http://www.cooperativeindividualism.org/george-henry_on-greenbacks-free-silver-and-free-banking-1889.html (http://www.cooperativeindividualism.org/george-henry_on-greenbacks-free-silver-and-free-banking-1889.html)

On Greenbacks, Free Silver, and Free Banking

by Henry George

[Reprinted from The Standard, 14 December, 1889]

The meeting in St. Louis between Powderly, Wright and Beaumont of the Knights of Labor and the officials of the Farmers' alliance and kindred organizations seems to have resulted in establishing relations which will aid in the interchange of views and the gradual concentration on mutual aims, without much definite immediate result. Anything better than this was, however, hardly to be expected, for the strength of these organizations in among the farmers of the west, who from their situation are behind in new matters of discussion.

Though the land resolution adopted does not amount to anything in itself, it at least serves as a peg on which to hang discussion, and the platform recognizes the land question as one of the great questions to which effort is to be directed. One of the best things done was the adoption of a resolution in favor of the Australian ballot, and while all sorts of reforms, or alleged reforms, were indorsed, money, land and transportation are the three matters which it was agreed that the farmers and the workingmen should strive to press to the front.

As has been seen in the Knights of Labor, the land question, as the discussion proceeds, must steadily come to the lead. The land resolution is as follows:


The discussion of alien ownership of land inevitably carries with it the discussion of ownership of land; and any discussion of such a scheme of purchase will quickly develop the idea of the single tax (http://schalkenbach.org/rsf-1/henry-george/the-single-tax/) as a cheaper and better way of securing land to actual users. The financial demands of the platform are: (1) The issue of a sufficient amount of fractional currency to facilitate exchange through the United States mails. (2) The free and unlimited coinage of silver.

The first of these demands is eminently just and wise. For the withdrawal of the fractional currency from circulation there was no manner of valid excuse. It was simply a little job of the contractionists, silver men and express companies at the expense of the great body of the people, and has inconvenienced the farmers, who must go some distance to a post office to get a postal order, more than any other class. But it is an inconvenience to all, for no system of postal notes or postal orders can be as convenient for small remittances as was this fractional currency. And it is a loss to the people of the United States as a whole, since in the fractional currency a considerable part of the public debt was kept in a non-interest bearing form. That much of the fractional currency was dirty and ill smelling was no argument against it, any more than the dirtiness of a shirt is an argument against the wearing of shirts.

It would be easy to keep fractional currency almost as fresh and as clean as Bank of England notes, if the same policy were adopted of always paying out fresh currency from government offices and depositories. But while the first resolution is entirely good, the second is utterly bad. What does the free and unlimited coinage of silver mean? It means simply that the government mints shall impress on any amount of silver which anyone may bring them for the purpose, that official stamp or “fiat” which now enables seventy-two cents worth of silver, or its representative, to pass current among our people for a dollar. So far as this stamp or "fiat" would add any value to the silver, its effect would he to enable the owners of silver mines, like the Windoms, the Joneses, the Mackays, the banks and the owners of silver in foreign countries to make forced sales of silver to the masses of our people at more than its market price. But the speedy and inevitable result would be the depreciation of our currency and the driving out of circulation of everything but silver and silver notes.

Now it may seem to those who owe money, and it certainly does seem to a good many of the farmers burdened with mortgages, that this would be to their advantage, since they could pay off their debts with a less valuable currency. But nothing is more certain than such a depreciation—like the subsequent appreciation, which sometime would be sure to follow—would really be to the relative benefit of the rich and to the injury of the men who work for a living. The moneyed class can always best guard against and take advantage of any impending change, and, as we all know by experience, when any form of currency begins to depreciate, that is the currency which is forced upon wage workers and which they are the least able to refuse. With the deliberate idea of depreciating the currency there is also mixed some idea of retaliation for the forced contraction of the currency after the war. But two wrongs do not make a right, and in wrongs like these the poorer and most helpless class are always sure to suffer most.

Secretary Windom's proposition that the government should go even further than it yet has into the business of buying silver, is simply an attempt to use the administration for the benefit of the members of the administration, which is a hundred-fold worse than anything John Wanamaker has attempted or apparently thought of.

Mr. Windom, according to a Colorado correspondent of THE STANDARD, is the owner of some two hundred silver claims, which might be somewhat increased in value by the government going into this business. But the farmers might as well ask that the government should buy up wheat as the silver men ask that the government should buy up silver. Any debating club that should discuss the question, Which is the most useful silver or wheat ? would quickly decide in favor of wheat.

In this issue of THE STANDARD we give place to a condensation of a long communication from Mr. Alfred B. Westrup, of what styles itself the "Mutual Bank Propaganda," in reply to a criticism by Thomas G. Shearman upon a circular issued by that concern. As to the article itself it is hardly necessary to say much. Who would profit if everybody were allowed to issue money? Evidently the richer class, who could start banks and issue money, and the large employers of labor, who could in many cases force money on their employes.

Lee Merriwether, the active and efficient labor commissioner of Missouri who recently made an exposure of how the Mendotta mining company was working the "free money racket " on its employes by paying them in checks, has recently investigated similar cases in the southern part of that state. Here are some samples: “Holloday has a store, and if his employes do not wish to purchase his goods they get no wages at all. One of his employes, an intelligent German, whose board shanty, although meagerly furnished, leaky and full of cracks and holes, was scrupulously neat and clean, stated to me that last August, on the so-called pay day, he went to Mr. Holloday and asked that the wages due him be paid in cash, as he wished to return to his old home in Michigan. 'I was feeling very poorly,' said this employe, 'and told Mr. Holloday that I wanted to go back to my old home to die. Mr. Holloday said to me: 'You can die here just us well as in Michigan. I can' t give you anything except checks.' The checks are only good at his store. The railroad won't take them, so I cannot go. My lungs are weak. I want to go to Colorado, but do not see how I shall ever get there, as I am never paid in money.' The wife of this man, who at the time I saw him looked weak and consumptive, told me that although $17.17 wages were due her husband, she could not got enough money to buy a pair of shoes. She talked simply, not complainingly, as though it were the usual and proper thing to be paid in pasteboard, as though Mr. Holloday, in refusing to give her husband his wages in money, merely refused a favor.

While one of my agents, Mr. C. N. Mitchell, ex-mayor of La Plata, Mo., was in the office of the lumber mills, an employe entered and asked for his wages. The cashier handed him a check. Mr. Mitchell heard the employe ask for money. The cashier refused. The employe said he wanted to leave town, that he was tired of working for pasteboard. The cashier coolly replied that he could walk out of town if he wanted to go, that he (the cashier) was authorized to pay only in checks. On another occasion when an employe who had just received a check for his wages asked for cash, the cashier refused, saying: ‘I have paid you your wages, but if you want me to buy that check, that is another thing. I will give you $4 for it.’ The amount of the check was $7.20. The postmaster of Williamsville buys checks from employes for seventy-five cents on the dollar. Sometimes all that the employe can obtain is fifty cents on the dollar.

I have a number of other statements of Holloday's employes to the effect that they had applied for their wages on pay day, but were refused payment in cash and were compelled to accept checks on his store. One man says that he waited at the office until eleven o'clock at night to see Holloday and get his wages in money. During this time Mr. Holloday remained locked in his private office. At eleven o'clock the clerks forced the employe to leave in order to close the office. He went the three following days, but with no better success and was finally obliged to accept checks in lieu of lawful money of the United States.” If the free money people had their way Holloday's pasteboard checks would be lawful money of the United States, and pretty much every large employer would constitute himself a bank and begin issuing this sort of money.

The truth of the matter is that the power to issue money is a valuable privilege which, to secure the best circulating medium and to put all citizens on a footing of equality, ought to be retained by the general government, and to be permitted to no one else, either individual or corporation. The greenbackers, who have insisted that national bank notes should not be permitted, and that all money should be the direct issue of the government , are in the right. It is a pity that so many greenbackers permit themselves to be used by the silver men, instead of insisting on their own principles. If we want two millions of notes issued every month, let them be greenbacks, and let the two millions now expended in buying silver be saved.

Nothing can be clearer than that the silver notes now in circulation do not derive their value from the silver which is supposed to be corded up in the treasury to redeem them. For they circulate at one hundred cents on the dollar, whereas the silver that is supposed to be lying in the treasury vaults for their redemption is only seventy-two cents' worth. They would circulate just as well as if there were no silver in the treasury, and we might as well sell that silver off or put it to some more sensible use than hoarding it—say, for the construction of long-distance telephone wires for the post office department. And what is true of silver is true of gold. It is the credit of the government that furnishes the real basis for our paper money, not any deposit in government vaults.
: The Daily Bell shills on behalf of usurious commercial banking
: Geolibertarian April 10, 2013, 04:00:05 PM
http://realcurrencies.wordpress.com/2013/04/10/the-daily-bell-usurious-commercial-banking-is-freedom-interest-free-government-money-is-tyranny/ (http://realcurrencies.wordpress.com/2013/04/10/the-daily-bell-usurious-commercial-banking-is-freedom-interest-free-government-money-is-tyranny/)

The Daily Bell: Usurious Commercial Banking is Freedom, Interest-Free Government Money is Tyranny

by Anthony Migchels
Real Currencies
April 10, 2013

(http://realcurrencies.files.wordpress.com/2013/04/the-daily-bell-top-logo6.jpg?w=250)

The Daily Bell is indeed back: trying to reframe the debate once more. Saying Government money printing is always bad because the Money Power controls the State. There is some truth in this but as always evades the real issue. The elves passionately defend commercial banking while not wasting a single word on usury. But Usury is the ultimate Centralizer of Power.

Morphing the classical Marxist vs. Capitalist dialectic into public vs. private, the elves recently have been trying to regain some lost ground (see here (http://thedailybell.com/28942/Greenbacker-Proposals-in-Vogue-Build-Bridges-and-Print-Print-Print) and here (http://thedailybell.com/28934/Mises-Has-Won)). Their latest effort is ‘Real Evil: Attributing Money Creation to the State (http://thedailybell.com/28952/Real-Evil-Attributing-the-Creation-of-Money-to-the-State)‘. Money Power controls the State, they correctly note, while ‘forgetting’ the Money Power is the Banking Cartel they are simultaneously defending as ‘free market banks’.

And ‘t is true: the fact that the Government creates a monopoly, only to hand it to the Money Power to milk the masses and start World Government just shows how utterly subservient to the Money Power Governments all over the world are.

Here’s the power pyramid again, it helps to keep a clear view of what is actually at stake.

(http://realcurrencies.files.wordpress.com/2012/02/horizontal-pyramid.jpg?w=497&h=497&h=497)

The Protocols do not promote a free market Utopia. They want an all powerful World State. All its proxies see strong states. Nazism, which is a typical Money Power system, strong State, one Fuehrer, collectivist. Marxism, with its omnipotent State.

The free markets of Capitalism, aka the Money Power Transnational Monopoly, are just a ruse, it’s all one big block. Both Capitalism and Marxism are monopolies.

[Continued... (http://realcurrencies.wordpress.com/2013/04/10/the-daily-bell-usurious-commercial-banking-is-freedom-interest-free-government-money-is-tyranny/)]
: Re: Monetary Reform!
: Tlion714 April 27, 2013, 05:43:15 PM
GEO knows the deal, BUMP HIM.
;)
: Jekyll Island: The truth behind the Federal Reserve
: Geolibertarian June 06, 2013, 01:54:30 PM
Documentary filmmaker and Greenback advocate, Bill Still (who is despised by Austrians (http://recoveringaustrians.wordpress.com/top-ten-austrian-economic-lies-and-mistakes/) and Keynesians (http://www.youtube.com/watch?v=ojCqYcGMzps) alike), has a new film out!

     http://www.jekyllisland-themovie.com/SearchResults.asp?Cat=1819 (http://www.jekyllisland-themovie.com/SearchResults.asp?Cat=1819)
: Re: Monetary Reform!
: EvadingGrid June 06, 2013, 02:45:53 PM
w00t !
: The Federal Reserve Is Paying Banks NOT To Lend
: Geolibertarian July 02, 2013, 01:03:45 PM
http://www.prisonplanet.com/the-federal-reserve-is-paying-banks-not-to-lend-1-8-trillion-dollars-to-the-american-people.html (http://www.prisonplanet.com/the-federal-reserve-is-paying-banks-not-to-lend-1-8-trillion-dollars-to-the-american-people.html)

The Federal Reserve Is Paying Banks NOT To Lend 1.8 Trillion Dollars To The American People

Michael Snyder
Economic Collapse
July 2, 2013

Did you know that U.S. banks have more than 1.8 trillion dollars parked at the Federal Reserve and that the Fed is actually paying them not to lend that money to us?  We were always told that the goal of quantitative easing was to “help the economy”, but the truth is that the vast majority of the money that the Fed has created through quantitative easing has not even gotten into the system.  Instead, most of it is sitting at the Fed slowly earning interest for the bankers.  Back in October 2008, just as the last financial crisis was starting, Federal Reserve Chairman Ben Bernanke announced that the Federal Reserve would start paying interest on the reserves that banks keep at the Fed.  This caused an absolute explosion in the size of these reserves.  Back in 2008, U.S. banks had less than 2 billion dollars (http://research.stlouisfed.org/fred2/data/EXCRESNS.txt) of excess reserves parked at the Fed.  Today, they have more than 1.8 trillion.  In less than five years, the pile of excess reserves has gotten nearly 1,000 times larger.  This is utter insanity, and it will have very serious consequences down the road.

Posted below is a chart that shows the explosive growth of these excess reserves in recent years…

[Continued... (http://www.prisonplanet.com/the-federal-reserve-is-paying-banks-not-to-lend-1-8-trillion-dollars-to-the-american-people.html)]
: Re: Monetary Reform!
: Geolibertarian July 13, 2013, 01:09:49 PM
http://realcurrencies.wordpress.com/2013/06/25/the-sulking-elves-of-the-woods-of-the-north/ (http://realcurrencies.wordpress.com/2013/06/25/the-sulking-elves-of-the-woods-of-the-north/)

The sulking Elves from the Woods of the North

by Anthony Migchels
Real Currencies
June 25, 2013

While some say Elves do not exist, in the days of yesteryear they were well known as tricksters, messing with livestock and fooling people with their strange beliefs. Cross breeding between Elves and humans is possible, but when the Old Norse hero Helgi raped an Elf woman, she bore Skuld, who became so adept at witchcraft that she was almost invincible in battle. So perhaps it’s better to leave the Elves alone after all.

The problem is: they won’t leave us humans alone and strange noises keep coming from the distant fairy lands of Austrianism. Recently the Elves again opened fire with ‘the Con of Public Banking (http://www.thedailybell.com/29292/Con-of-Public-Banking)‘.

Here’s some of their text:

“Ellen Brown has written another statist hagiography called The Public Bank Solution. As a libertarian-oriented website promoting free-market economic approaches, we obviously disagree with her premise.

We don’t mind disagreeing with her because she is a nice person and she doesn’t do what some allied “neo-Nazi” websites do when confronted with their faulty analyses, which is to immediately launch vicious animadversions in place of logical rebuttals (because they have none).

We call such sites “neo-Nazi,” because public banking, LETS and other such alternative solutions have at their heart certain authoritarian premises, either overtly or covertly. A deep fascist impulse seems to run through the conversation.

Do they seek the lash? They may repudiate Hitler, but don’t believe it. They are likely in favor of the entire socialist paraphernalia, from private bank confiscation, to top-down monopoly money printing by the state and even the rule of one “superhuman” individual with a self-proclaimed “iron will” of the sort mentioned by Adolf Hitler and Benito Mussolini.

They admire people like Margrit Kennedy and her husband, both of whom had extensive careers with UNESCO. In fact, as we have extensively shown, the United Nations is the foremost backer of certain kinds of alternative LETS systems.”


The fascism of denouncing Usury! The iniquity of exposing massive elite financing of Austrianism (http://books.google.com/books?id=vh7sx2xtjGEC&pg=PA13&lpg=PA13&dq=%22von+mises%22+%22von+hayek%22+rockefeller&source=bl&ots=DO0TLFjjfl&sig=w-XEo-MrA9WPY-Xqu1OVJcJ7tk0&hl=en&sa=X&ei=uZHhUdyDDpG44AOY_4C4Dw&ved=0CE8Q6AEwBQ#v=onepage&q=%22von%20mises%22%20%22von%20hayek%22%20rockefeller&f=false)! How much must these endearing creatures suffer before us primitive humans will understand how we have wronged them?

The conclusion of the Elves’ article runs: “The erudite Ms. Brown aside, those supporting such ideas do so with intentions much different than they claim, and some of them are, from what we can tell, maliciously opportunistic and plain evil.”

When confronted with this down to earth comment on the article and its conclusion, “Hmmm. I, George Washington’s Blog and others who agree with Ellen are a pack of liars – and the North Dakota State Bank is an example of evil? Give me a break please.“, they responded: “It is evil to attack Austrian, free-market economics as a knowing part of a Jewish [read: Zionist -- see this (http://www.youtube.com/watch?v=T4eL6ona1m8) and this (http://www.youtube.com/watch?v=dlEX1xD1wtM)] genocidal, globalist conspiracy, label those who believe in freedom and write about it at great risk to themselves as elite conspirators, claim that a 10,000 year old freedom conversation is actually a Jewish [read: Zionist (http://www.informationclearinghouse.info/article18716.htm)] con job, constantly celebrate the state over individual human action, etc. Evil seems to sum it up.“

Yes, the cushy ‘middle class wages’ Gary North (http://forum.prisonplanet.com/index.php?topic=244103.msg1413762#msg1413762) was making in the sixties at the Volker Fund (http://www.scoop.co.nz/stories/HL0812/S00378.htm) and the multi-million dollar mansion that Daily Bell Editor Anthony Wile owns in Toronto certainly indicate grave risks to their health and fortune in valiantly defending the rights of the rich.

And then there is this quote from their article on ‘BIS demands Global Depression? (http://thedailybell.com/29288/Staff-Report-BIS-Demands-Global-Depression)‘:

“This is absolutely true but to blame “Austrianism” for this – and Austrianism is a term of contempt, as the correct phrase is Austrian economics – is entirely disingenuous. Just because one understands the reality of economics doesn’t mean one is supportive of the kind of ruin that the BIS now demands.”

In all fairness: the Mises Institute itself calls for ‘Radical Austrianism (http://mises.org/media.aspx?action=category&ID=80)‘, and I assume they actually take pride in the term. But I don’t mind taking some credit for having slanted the phrase to become ‘derogatory’ in their ears. The day is not far off that their ‘correct phrase Austrian economics’ will sound like a curse too.

The Elves live in the Woods……

A few months ago I responded (http://realcurrencies.wordpress.com/2013/04/08/why-tom-woods-is-wrong-about-the-greenbackers/) to Tom Woods’ rather simpleminded ‘Why the Greenbackers are wrong‘. A little while later Woods indirectly answered this with ‘the Greenbackers’ Fake Quote Industry‘. In my response to his original article I made a little fun about the difficulty (http://forum.prisonplanet.com/index.php?topic=208434.0) the Libertarian leadership seems to have (http://www.youtube.com/watch?v=41dLeFHO3Yo) with the rather blatant Government conspiracy known as 9/11. Woods simply turns this argument upside down:

Woods: “The correct argument against the Fed is not that we need the federal government to create our money more directly rather than delegating the task to the Fed, but that is the Greenbacker objection to the Fed. No free-market person thinks this way. No one who takes liberty seriously thinks this way. This naivete on the part of the Greenbackers is especially hard to believe since so many of them are 9/11 Truthers. That means their position is this: we believe the U.S. government conspired to kill thousands of its own citizens in the interest of furthering its imperial ambitions, but we think they are the best people to trust with the creation of money.

"Not all Greenbackers are Truthers, to be sure, but the position is terminally naive all the same.”


Note that Woods studiously avoids taking a position here himself. In fact, we know his position: he’s on the side of the Government. Woods, hating the State, has a wonderful future as a leading Libertarian politician and he certainly is not going to destroy that future with something as silly as 9/11 Truth.

We know all too well how the Libertarians chuckle at the ‘conspiracy industry’. That’s only one reason we keep warning the Truth Community about this Trojan Horse messing up our affairs.

After this brazen assault on the Truth Community, he goes on to make a little fun about the many fake quotes that circulate in the Populist movement. This is indeed an annoying phenomenon. Two great populist classics, Ellen Brown’s ‘Web of Debt’ and Bill Still’s ‘the Money Masters’ were slightly compromised by these quotes and here at Real Currencies we have been spreading them too, until the uncompromising gaze of the uncanny Name789 sternly reeducated me on these matters. As usual, I was the last to learn, as Bill Still already in 2011 opened up a page warning for bad quotes in his film (http://s6.zetaboards.com/Bill_Still_Reforum/topic/1177385/1/%29), after the copyright holders of his film refused his request to correct them. Ellen Brown had no problems admitting some mistakes back in 2010. That’s what normal people do when they launch major works and are shown inevitable inaccuracies after the fact.

Here’s how Tom Woods concludes his article: “If they can’t be bothered to carry out this most fundamental obligation of the scholar (to check quotes, A.M.), how can we believe they have fulfilled the far more laborious task of studying economics beyond the slogans of their fellow Greenbackers? Their record makes me skeptical. You should be skeptical, too.“

So because we get a few quotes wrong, people shouldn’t believe anything we say and we should now all forget about the $450 billion the US Government loses on ‘debt-service’ to the banking cartel on the National Debt. Let alone about the $300k interest the common man pays for his $200k mortgage. I’m certain there is a term for this kind of logical fallacy, but I forget what it is.

We should not forget this is coming from a ‘Catholic’ guy who has managed to ignore 1500 years worth of quotes by Catholic scholars denouncing Usury in his ‘the Church and the Market’. According to Mises himself Christianity is ‘a religion of hatred’ because it despises ‘free market’ ideology, so I’m not too sure about Woods’ scholarship either.

…..and the dark and dangerous Woods are in the cold and dreary North

Of course, it’s ‘Grumpy Gary’ who’s behind the ‘fake quote’ trick. North has been devising sly arguments against all those pesky little monetary reform programs that have been popping up over the last century or so for more than fifty years now and his body of work pervades the entirety of Austrianism. In 2010 he thought to do away with Ellen Brown with the ‘fake quote’ trick and utterly failed. Previously we discussed his take on usury and how he tried to make the uninitiated believe that the problem is not interest, but fractional reserve banking. Worse still is his outrageous take on Usury in the Bible, exclaiming it’s bad to be in debt, but quite alright to lend out money at interest. Talking about bad quotes…….

Anyhow, for a normal person it’s always difficult to fathom outright lies. It’s always nasty to call someone a liar, because it’s hard to prove we’re not dealing with honest mistakes and the basic instinct is to stick with the benefit of doubt.

But recently I came across this little gem:

     http://www.youtube.com/watch?v=yqUSbrHguO0 (http://www.youtube.com/watch?v=yqUSbrHguO0)

We watch Gary North so you don’t have to, so I certainly don’t recommend wasting an hour on this dreary piece of work. Here’s the deal: North is talking to some young people at a Libertarian get together. It’s a seminar in which the youngsters are trained how to deal with ‘Greenbackerism’ and the ‘murky underworld of Social Credit’.

The core of the lecture is how to deal with the notion that economies are depressed because of a lack of purchasing power. North explains a line of reasoning the youngsters can use in arguments when faced with this fundamental economic issue. As we know, Austrianism denies that deflation stifles economic growth and causes depressions. They even go so far as to deny that deflation caused the Great Depression (North does that again at about 29 min in the video). Hilariously, as I cannot help myself from gloatingly repeating, they use this FED study (http://minneapolisfed.org/research/sr/sr331.pdf) to back up this notion.

Deflation and Usury are closely related to the theme of ‘scarcity of money’, the notion that there is insufficient liquidity in the economy to finance all plausible trades, causing permanent depression. This is at the core of Social Credit, Keynesianism and Interest-Free Economics. It’s also well analyzed in the Protocols.

But whereas there is clear and insurmountable statistical evidence proving that a declining money supply will lead to a contracting economy, Austrianism has only deductionist arguments, i.e. wholly devoid of any empirical proof to counter this.

And this is why the video is so interesting. Because Gary openly admits this. He begins this lecture with a number of tips on how to defend what he (at 6:50) calls ‘ideological positions’. Meaning he openly distances himself from any scientific basis for his beliefs.

In short, according to the master Mind Controller Gary North himself , Austrianism promotes the purely ideological position that deflation and scarcity of money do not exist and that ‘markets will clear’ when they are ‘free’. Money has nothing to do with it.

Not only that, in this seminar Gary is teaching the youngsters on how to defend these purely ‘ideological’ and ‘unpopular’ positions and he even has no qualms to admit from whom he learned to do it himself: at 10:31 he starts explaining how the communist cadres of the old days went about defending ‘unpopular’ and ‘minority’ positions.

Conclusion

We can rest assured that the Libertarian Leadership knows exactly what it’s doing. They know quite well that Usury, Deflation and Scarcity of Money are the great problems of money and their whole ideology (and they know full well it’s an ideology and thus pseudo-science) is centered around arguments combating those trying to alleviate the suffering of the multitude by addressing these most fundamental problems. They have been paying Gary for more than 50 years to keep us all busy and distracted. They are grooming Tom Woods to push Gary’s venom as the future head of the Mises Institute or even in the Senate itself. They are funding Anthony Wile and the Daily Bell to call those looking for answers ‘fascists’ and ‘evil’.

Elves do exist, but they’re not really evil. They’re just a sorry bunch looking for attention and getting more of it than they should.
: Everyone Knows the Federal Reserve Banks Are PRIVATE…Except the American people
: Geolibertarian July 14, 2013, 08:09:27 AM
http://www.prisonplanet.com/everyone-knows-that-the-federal-reserve-banks-are-private-except-the-american-people.html (http://www.prisonplanet.com/everyone-knows-that-the-federal-reserve-banks-are-private-except-the-american-people.html)

Everyone Knows that the Federal Reserve Banks Are PRIVATE … Except the American People

Washington’s Blog
July 13, 2013

The country’s most powerful “agency” – the Federal Reserve – is actually no more federal than Federal Express (http://www.youtube.com/watch?v=u2KBpqiORkU).

The U.S. Supreme Court ruled (http://openjurist.org/275/us/415) in 1928:


The long-time Chairman of the House Banking and Currency Committee (Charles McFadden) said on June 10, 1932:


The Fed itself admitted (http://www.bloomberg.com/apps/news?pid=20601203&sid=avjlPu.bRVmk) (via Bloomberg):


For that reason, the New York Fed alleged in the lawsuit brought by Bloomberg to force the Fed to reveal some information about its loans – Bloomberg LP v. Board of Governors of the Federal Reserve System, 08-CV-9595, U.S. District Court, Southern District of New York (Manhattan) – that it was not subject to Federal Freedom of Information Act.

As Bloomberg reported (http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aS89AaGjOplw) in a separate article:

[a freedom of information lawsuit filed by Bloomberg news] are at the New York Fed, which isn’t subject to FOIA law [a law which applies to Federal agencies}, according to the central bank. The Board of Governors has 231 pages of documents, to which it is denying access under an exemption for trade secrets.[/list]

San Francisco Federal Reserve research analyst David Lang confirmed in 2011:


http://www.youtube.com/watch?v=UOEOa9iraeI (http://www.youtube.com/watch?v=UOEOa9iraeI) (SF Fed admits a private corporation, pay dividends!!!)

The senior counsel for the Federal Reserve confirmed in a court hearing in the Bloomberg lawsuit that the Federal Reserve Banks are “independent corporations” (http://www.c-spanarchives.org/program/ID/217869&start=2632&end=2692), which are “not agencies”, are “privately held”, and have “private boards of directors” (http://www.c-spanarchives.org/program/ID/217869&start=2753&end=2874).

And Federal Reserve law enforcement officers agree (http://www.youtube.com/watch?v=4UqcY8lGUUE&feature=player_embedded).

Postscript:  The Bank of International Settlements (BIS) – which is the “Central Banks’ Central Bank” – is, in turn, owned (http://www.spiegel.de/international/business/0,1518,635051,00.html) by the Fed and other central banks:


So the private banks own the Fed (and other central banks), and the central banks own BIS.
: Collateral Damage: QE3 and the Shadow Banking System
: Geolibertarian July 24, 2013, 02:53:28 PM
http://www.globalresearch.ca/collateral-damage-qe3-and-the-shadow-banking-system/5343591 (http://www.globalresearch.ca/collateral-damage-qe3-and-the-shadow-banking-system/5343591)

Collateral Damage: QE3 and the Shadow Banking System

By Ellen Brown
Global Research
July 23, 2013

(http://www.globalresearch.ca/wp-content/uploads/2013/07/Money-Black-Hole.jpg)

Rather than expanding the money supply, quantitative easing (QE) has actually caused it to shrink by sucking up the collateral needed by the shadow banking system to create credit. The “failure” of QE has prompted the Bank for International Settlements to urge the Fed to shirk its mandate to pursue full employment, but the sort of QE that could fulfill that mandate has not yet been tried.

Ben Bernanke’s May 29th speech signaling the beginning of the end of QE3 provoked a “taper tantrum” that wiped about $3 trillion from global equity markets – this from the mere suggestion that the Fed would moderate its pace of asset purchases, and that if the economy continues to improve, it might stop QE3 altogether by mid-2014. The Fed is currently buying $85 billion in US Treasuries and mortgage-backed securities per month.

The Fed Chairman then went into damage control mode, assuring investors that the central bank would “continue to implement highly accommodative monetary policy” (meaning interest rates would not change) and that tapering was contingent on conditions that look unlikely this year. The only thing now likely to be tapered in 2013is the Fed’s growth forecast.

It is a neoliberal (http://forum.prisonplanet.com/index.php?topic=244152.msg1413807#msg1413807) maxim that “the market is always right,” but as former World Bank chief economist Joseph Stiglitz demonstrated, the maxim only holds when the market has perfect information. The market may be misinformed about QE, what it achieves, and what harm it can do. Getting more purchasing power into the economy could work; but QE as currently practiced may be having the opposite effect.

Unintended Consequences

The popular perception is that QE stimulates the economy by increasing bank reserves, which increase the money supply through a multiplier effect.  But as shown earlier here, QE is just an asset swap – assets for cash reserves that never leave bank balance sheets. As University of Chicago Professor John Cochrane put it in a May 23rd blog:


Cochrane discusses a May 23rd Wall Street Journal article by Andy Kessler titled “The Fed Squeezes the Shadow-Banking System,” in which Kessler argued that QE3 has backfired. Rather than stimulating the economy by expanding the money supply, it has contracted the money supply by removing the collateral needed by the shadow banking system. The shadow system creates about half the credit available to the economy but remains unregulated because it does not involve traditional bank deposits. It includes hedge funds, money market funds, structured investment vehicles, investment banks, and even commercial banks, to the extent that they engage in non-deposit-based credit creation. Kessler wrote:


That explains what he calls the great economic paradox of our time:


Fractional Reserve Lending Without the Reserves

The post-textbook form of money creation to which Kessler refers was explained in a July 2012 article by IMF researcher Manmohan Singh titled “The (Other) Deleveraging: What Economists Need to Know About the Modern Money Creation Process.” He wrote:


Like the reserves in conventional fractional reserve lending, collateral can be re-used (or rehypothecated) several times over. Singh gives the example of a US Treasury bond used by a hedge fund to get financing from Goldman Sachs. The same collateral is used by Goldman to pay Credit Suisse on a derivative position. Then Credit Suisse passes the US Treasury bond to a money market fund that will hold it for a short time or until maturity. Singh states that at the end of 2007, about $3.4 trillion in “primary source” collateral was turned into about $10 trillion in pledged collateral – a multiplier of about three. By comparison, the US M2 money supply (the credit-money created by banks via fractional reserve lending) was only about $7 trillion in 2007.  Thus credit-creation-via-collateral-chains is a major source of credit in today’s financial system.

Exiting Without Panicking the Markets

The shadow banking system is controversial. It funds derivatives and other speculative ventures that may harm the real, producing economy or put it at greater risk. But the shadow system is also a source of credit for many businesses that would otherwise be priced out of the credit market, and for such things as credit cards that we have come to rely on. And whether we approve of the shadow system or not, depriving it of collateral could create mayhem in the markets. According to the Treasury Borrowing Advisory Committee of the Securities and Financial Markets Association, the shadow system could be short as much as $11.2 trillion in collateralunder stressed market conditions. That means that if every collateral claimant tried to grab its collateral in a Lehman-like run, the whole fragile Ponzi scheme could collapse. That alone is reason for the Fed to prevent “taper tantrums” and keep the market pacified. But the Fed is under pressure from the Swiss-based Bank for International Settlements, which has been admonishing central banks to back off from their asset-buying ventures.

An Excuse to Abandon the Fed’s Mandate of Full Employment?

The BIS said in its annual report in June:


For “adjustment,” read “structural adjustment” – imposing austerity measures on the people in order to balance federal budgets and pay off national debts. The Fed has a dual mandate to achieve full employment and price stability. QE was supposed to encourage employment by getting money into the economy, stimulating demand and productivity. But that approach is now to be abandoned, because “the roots of the problem are not monetary.” So concludes the BIS, but the failure may not be in the theory but the execution of QE. Businesses still need demand before they can hire, which means they need customers with money to spend. QE has not gotten new money into the real economy but has trapped it on bank balance sheets. A true Bernanke-style helicopter drop, raining money down on the people, has not yet been tried.

[Continued... (http://www.globalresearch.ca/collateral-damage-qe3-and-the-shadow-banking-system/5343591)]
: Who Controls The Global Economy? Do Not Underestimate The Power Of The Big Banks
: Geolibertarian July 25, 2013, 11:18:06 AM
http://www.infowars.com/who-controls-the-global-economy-do-not-underestimate-the-power-of-the-big-banks/ (http://www.infowars.com/who-controls-the-global-economy-do-not-underestimate-the-power-of-the-big-banks/)

Who Controls The Global Economy? Do Not Underestimate The Power Of The Big Banks

Michael Snyder
Economic Collapse
July 25, 2013

Are the big banks really as powerful as some people say that they are?  Do they really control the global economy?  If you asked most people, they would tell you that governments control the global economy.  But the campaigns of our politicians are funded by the ultra-wealthy, the big banks and the large corporations that they control.  Others would tell you that the Federal Reserve and the rest of the central banks around the world control the global economy.  But the truth is that the Federal Reserve was established by the bankers and for the benefit of the bankers (http://theeconomiccollapseblog.com/archives/10-things-that-every-american-should-know-about-the-federal-reserve).  As you will see below, at the very core of the global economy there exists a “super-entity” of financial institutions that control an almost unimaginable amount of wealth and power.  These financial institutions and the ultra-wealthy individuals behind them (http://theeconomiccollapseblog.com/archives/who-runs-the-world-solid-proof-that-a-core-group-of-wealthy-elitists-is-pulling-the-strings) are really the ones that are pulling all the strings.  In this world money equals power, and the borrower is the servant of the lender.  When you follow the pyramid all the way to the top, it begins to become very clear who really is in control.

In business schools all over America today, instead of dreaming of starting new businesses and contributing something positive to society, most business students are dreaming of going to Wall Street and getting rich.  But Wall Street doesn’t actually create or build anything of value for society.  Instead, the bankers make most of their profits by essentially pushing money and paper around.  In a recent article, Chris Martenson (http://www.peakprosperity.com/insider/82432/bankers-own-world) commented on this…