You can always count on Americans to do the right thing, after they’ve tried everything else. —Winston Churchill
When an article appears in Foreign Affairs, the mouthpiece of the policy-setting Council on Foreign Relations, recommending that the Federal Reserve do a money drop directly on the 99%, you know the central bank must be down to its last bullet.
The September/October issue of Foreign Affairs features an article by Mark Blyth and Eric Lonergan titled “Print Less But Transfer More: Why Central Banks Should Give Money Directly To The People.” It’s the sort of thing normally heard only from money reformers and Social Credit enthusiasts far from the mainstream. What’s going on?
The Fed, it seems, has finally run out of other ammo. It has to taper its quantitative easing program, which is eating up the Treasuries and mortgage-backed securities needed as collateral for the repo market that is the engine of the bankers’ shell game. The Fed’s Zero Interest Rate Policy (ZIRP) has also done serious collateral damage. The banks that get the money just put it in interest-bearing Federal Reserve accounts or buy foreign debt or speculate with it; and the profits go back to the 1%, who park it offshore to avoid taxes. Worse, any increase in the money supply from increased borrowing increases the overall debt burden and compounding finance costs, which are already a major constraint on economic growth.
Meanwhile, the economy continues to teeter on the edge of deflation. The Fed needs to pump up the money supply and stimulate demand in some other way. All else having failed, it is reduced to trying what money reformers have been advocating for decades — get money into the pockets of the people who actually spend it on goods and services.
A Helicopter Drop on Main Street
Blyth and Lonergan write:
[L]ow inflation . . . occurs when people and businesses are too hesitant to spend their money, which keeps unemployment high and wage growth low. In the eurozone, inflation has recently dropped perilously close to zero. . . . At best, the current policies are not working; at worst, they will lead to further instability and prolonged stagnation.
Governments must do better. Rather than trying to spur private-sector spending through asset purchases or interest-rate changes, central banks, such as the Fed, should hand consumers cash directly. In practice, this policy could take the form of giving central banks the ability to hand their countries’ tax-paying households a certain amount of money. The government could distribute cash equally to all households or, even better, aim for the bottom 80 percent of households in terms of income. Targeting those who earn the least would have two primary benefits. For one thing, lower-income households are more prone to consume, so they would provide a greater boost to spending. For another, the policy would offset rising income inequality. [Emphasis added.]
A money drop directly on consumers is not a new idea for the Fed. Ben Bernanke recommended it in his notorious 2002 helicopter speech to the Japanese who were caught in a similar deflation trap. But the Japanese ignored the advice. According to Blyth and Lonergan:
Bernanke argued that the Bank of Japan needed to act more aggressively and suggested it consider an unconventional approach: give Japanese households cash directly. Consumers could use the new windfalls to spend their way out of the recession, driving up demand and raising prices.
. . . The conservative economist Milton Friedman also saw the appeal of direct money transfers, which he likened to dropping cash out of a helicopter. Japan never tried using them, however, and the country’s economy has never fully recovered. Between 1993 and 2003, Japan’s annual growth rates averaged less than one percent.
Today most of the global economy is drowning in debt, and central banks have played all their other cards. Blyth and Lonergan write:
It’s well past time, then, for U.S. policymakers — as well as their counterparts in other developed countries — to consider a version of Friedman’s helicopter drops. In the short term, such cash transfers could jump-start the economy. Over the long term, they could reduce dependence on the banking system for growth and reverse the trend of rising inequality. The transfers wouldn’t cause damaging inflation, and few doubt that they would work. The only real question is why no government has tried them.
The Hyperinflation Bugaboo
The main reason governments have not tried this approach, say the authors, is the widespread belief that it will trigger hyperinflation. But will it? In a Forbes article titled “Money Growth Does Not Cause Inflation!”, John Harvey argues that the rule as taught in economics class is based on some invalid assumptions. The formula is:
MV = Py
When the velocity of money (V) and the quantity of goods sold (y) are constant, adding money (M) must drive up prices (P). But, says Harvey, V and y are not constant. The more money people have to spend (M), the more money that will change hands (V), and the more goods and services that will get sold (y). Only when V and y reach their limits – only when demand is saturated and productivity is at full capacity – will consumer prices be driven up. And they are nowhere near their limits yet.
The US output gap – the difference between actual output (y) and potential output – is currently estimated at about $1 trillion annually. That means the money supply could be increased by at least $1 trillion without driving up prices.
As for V, the relevant figure for the lower 80% (the target population of Blyth and Lonergan) is the velocity of M1 –– coins, dollar bills, and checkbook money. Fully 76% of Americans now live paycheck to paycheck. When they get money, they spend it. They don’t trade in the forms of investment called “near money” and “near, near money” that make up the bulk of M2 and M3.
The velocity of M1 in 2012 was 7 (down from a high of 10 in 2007). That means M1 changed hands seven times during 2012 – from housewife to grocer to farmer, etc. Since each recipient owes taxes on this money, increasing M1 by one dollar increases the tax base by seven dollars.
Total tax revenue as a percentage of GDP in 2012 was 24.3%. Extrapolating from those figures, one dollar spent seven times over on goods and services could increase tax revenue to the government by 7 x 24.3% = $1.7. The government could actually get more back in taxes than it paid out! Even with some leakage in those figures, the entire dividend paid out by the Fed might be taxed back to the government, so that the money supply would not increase at all.
Assume a $1 trillion dividend issued in the form of debit cards that could be used only for goods and services. A back-of-the-envelope estimate is that if $1 trillion were shared by all US adults making under $35,000 annually, they could each get about $600 per month. If the total dividend were $2 trillion, they could get $1,200 per month. And in either case it could, at least in theory, all come back in taxes to the government without any net increase in the money supply.
There are also other ways to get money back into the Treasury so that there is no net increase in the money supply. They include closing tax loopholes, taxing the $21 trillion or more hidden in offshore tax havens, raising tax rates on the rich to levels like those seen in the boom years after World War II, and setting up a system of public banks that would return the interest on loans to the government. If bank credit were made a public utility, nearly $1 trillion could be returned annually to the Treasury just in bank profits and savings on interest on the federal debt. Interest collected by U.S. banks in 2011 was $507 billion (down from $725 billion in 2007), and total interest paid on the federal debt was $454 billion.
Thus there are many ways to return the money issued in a national dividend to the government. The same money could be spent and collected back year after year, without creating price inflation or hyperinflating the money supply.
Why It’s the Job of the Fed
Why not just stimulate employment through the congressional funding of infrastructure projects, as politicians usually advocate? Blyth and Lonergan write:
The problem with these proposals is that infrastructure spending takes too long to revive an ailing economy. . . . Governments should . . . continue to invest in infrastructure and research, but when facing insufficient demand, they should tackle the spending problem quickly and directly.
Still, getting money into the pockets of the people sounds more like fiscal policy (the business of Congress) than monetary policy (the business of the Fed). But monetary policy means managing the money supply, and that is the point of a dividend. The antidote to deflation – a shrinking supply of money – is to add more. The Fed tried adding money to bank balance sheets through its quantitative easing program, but the result was simply to drive up the profits of the 1%. The alternative that hasn’t yet been tried is to bypass the profit-siphoning 1% and get the money directly to the consumers who create consumer demand.
There is another reason for handing the job to the Fed. Congress has been eviscerated by a political system that keeps legislators in open battle, deadlocked in inaction. The Fed, however, is “independent.” At least, it is independent of government. It marches to the drum of Wall Street, but it does not need to ask permission from voters or legislators before it acts. It is basically a dictatorship. The Fed did not ask permission before it advanced $85 billion to buy an 80% equity stake in an insurance company (AIG), or issued over $24 trillion in very-low-interest credit to bail out the banks, or issued trillions of dollars in those glorified “open market operations” called quantitative easing. As noted in an opinion piece in the Atlantic titled “How Dare the Fed Buy AIG”:
It’s probable that they don’t actually have the legal right to do anything like this. Their authority is this: who’s going to stop them? No one wants to take on responsibility for this mess themselves.
There is a third reason for handing the job to the Fed. It is actually in the interest of the banks – the Fed’s real constituency – to issue a national dividend to the laboring masses. Interest and fees cannot be squeezed from people who are bankrupt. Creditor and debtor are in a symbiotic relationship. Like parasites and cancers, compound interest grows exponentially, doubling and doubling again until the host is consumed; and we are now at the end stage of that cycle. To keep the host alive, the creditors must restock their food source. Dropping money on Main Street is thus not only the Fed’s last bullet but is a critical play for keeping the game going.
________________
Ellen Brown is an attorney, founder of the Public Banking Institute, and author of twelve books, including the best-selling Web of Debt. In The Public Bank Solution, her latest book, she explores successful public banking models historically and globally. Her 200+ blog articles are at EllenBrown.com.
Filed under: Ellen Brown Articles/Commentary | Tagged: Federal Reserve, national dividend, public banking, quantitative easing |
WEB OF DEBT BLOG 
Let’s just give everyone their own printing press!
I appreciate this comment. It expresses an extreme position and helps think about the issue. Now the banks (the rich people and groups who own the banks) and their partner in crime, the privately owned Fed, have their own printing press. How’s that working out?
Of course it won’t work to allow each individual his own printing press either. But allowing a truly representative government that has the well-being of the whole society at heart to have a printing press makes perfect sense. It can print enough money–enough tickets to keep commerce running strong and the economy healthy. Of course it would be disincentivized to print too much money and wreck the economy, unless corrupt. But a corrupt government won’t serve the people well under any monetary set-up. Cleaning up our corrupt governmental system is necessary in any case.
Of course it won’t work to allow each individual his own printing press either. ErnieM
Actually, it would*, but for private debts ONLY; inexpensive fiat should remain, as it must for ethical reasons, the ONLY means to pay government debts (taxes, etc) though it could also be used on a voluntary basis for private debts too.
That way if the monetary sovereign overspent relative to taxation and real growth then ONLY government and its payees need necessarily suffer from price inflation in fiat since all others could use private currencies to escape the “stealth inflation tax.”
Purchasing power creation is, or at least should be, a problem in ethics and the basic principle of co-existing government and private money supplies was laid down nearly 2 thousand years ago in Matthew 22:16-22 (“Render to Caesar …”).
*The problem being to get others to accept that money, of course!
I’m amazed anyone (well, almost anyone) could neg this comment. Let’s hear the specifics, please?
When would be the level of too much money that would wreck the economy?
Cleaning up government corruption, if that is necessary in any case, we are doomed – according to your theory.
Don Levit
The economy has already been wrecked by the banks and the Fed. The main worry with too much money in the economy is normally inflation. Doomed? Why, because you think it is impossible to have a generally honest government? That’s pretty cynical.
Ernie, The fallacy of your supposition is that an economically stratified society can somehow be an equitable society. The best option is real community, which is the only place where “community money” will function. Community money requires a “production-based” economy, which provides community economic stability. Surplus production is needed, not for economies of scale, but to afford Community Confederation, which is needed for a number of reasons, which leads to confederations of such. Decentralized civilization is just that, it is structured to make needless, and to prevent, any centralization of power. All economically stratified societies function on the basis of centralized power. A recent caricature of that set-up is the movie Hunger Games. My manuscript project is in progress, and it’s nearing its completion. http://decentralizationblog.wordpress.com
I don’t buy it, Reed. Methinks there’s nothing wrong with centralization, as long as it serves the whole, not just those who have the power of excess wealth.
Ernie, There are couple of truths worth considering. Power corrupts and absolute power corrupts absolutely. It is the nature of power to fall to ever-fewer hands. Conceptually, you have a way to go, before you comprehend the premise I’m presenting. The centralization of power, by definition, is based on violence. In the case of the Central Bank, contrary to what has been said about it, demanding interest on loans is violence. The bogus justification for charging interest is “risk,” but in your innocence you know that to be a lie. Charging interest on loans, as distinct from a service charge, is legalized plunder.
Ha! If I had a penchant for condescesion I might say you have a long way to go conceptually, Reed. I reject your “power corrupts . . . ” platitude–it’s like saying “guns kill”– along with most of the rest of what you say. I’m with you on interest being plunder though.
I think reedkinney’s primary point has to do with concepts heavily debated by Muslim scholars concerning loans being interest free. The discussion into the complexities of interest-free loans is all over the Internet under the topic of “Muslim Compliant Loans.” There are many merit worthy highlights for example on compliant home purchases with interest free loans.
Many Muslims choose to purchase their home using a contract that assigns ownership to a partner. The partner pays all cash and “rents” the home back to the Muslim family buying the home and living in it. Ownership is prorated in the partnership based on their respective equities at time of purchase. It becomes quite complicated in order to remain Muslim compliant….paying rent instead of interest. I know very little about the details but I grasp the concept of brotherly love implicit in the intent.
The question I have never been able to get answered from Muslim scholars on the big picture here in the United States has been what happens when the Muslim bank files bankruptcy in the US? How then is the US Taxpayer responsible to Muslim compliant depositors? Do we have to make good on their losses too. Or do Muslin bank owners step up to the plate and pony up to cover the losses?
If we can find an answer to the last question we might be able to figure a way to build brotherly love East and West again and improve our own banking systems at the same time. It’s complicated. And what reedkinney says is basically, eventually true. Interest is violence. Of course the flip side of “interest is violence” is also, I have brotherly love even for the lender I pay my interest to because he saw fit to take me into his fold and extend me his credit.
The far bigger issue today, for me at least, isn’t that I pay interest or I pay rent. What matters to me is I would much prefer to pay my interest to my US Treasury than to a group of evil, corrupted, private bankers owned by private foreign interests who need to keep us in perpetual wars for their own profit.
Rich,
I appreciate your encouragement. I’m sorry in my response to your kind letter I went off on a tangent. We can have a better conversation through e-mail. You be well. Yours, Reed C. Kinney: rkinney@prodigy.net.mx
Rich we can e-mail: rkinney@prodigy.net.mx
The most basic question is not what is best, but who shall decide what is best.” – Thomas Sowell
Don, The present economic conundrum has been doom in progress for a long while. However, as Ellen, and so many economists point out, an end to it is inevitable. The systemic problem is FIAT money backed by debt. The vicious cycle of printing more money to make possible greater debt will eventually, or is really close to, complete deflation, or implosion. The Bank can postpone that eventuality by funding the production systems that harvest and process finite resources to feed the consumer-based economy, which generates profits for paying interest on loans, but that tactic becomes useless in the advent of limited resources and shrinking markets. Combined, those shortages cause corporate interests to fight for privatizing all public resources and services. Another tactic, in progress, is conquest, to rob the Middle-east of what had been their “private” debt-free, self-capitalizing systems, in order to supersede them with the Central Bank’s debt generating systems, which would give the debt-based FIAT money a “second breath.” Also, the bank will benefit from international corporate plundering of the Middle-east material and human resources, assuming the markets can generate profit. The Bank cares not how much misery imperialism causes perfectly fine people. The Bank and its cronies own American media, so you hear constantly how Arabs are incapable of secular, democratic organization in an attempt to convince you that only Bank abiding dictatorships are the Arabs’ best option. – One of the tactics used by centralized power to control the minds of its people, and to coerce their support, is to make and develop, or make up (Teehee!), enemies of the State, their economic ideology, or their religion. – The end of debt-based FIAT money is imminent. But, the war and the deprivation of poverty the banking system causes to postpone that eventuality are unconscionable. Poverty is a tactic used to conserve the usefulness of FIAT money. While people, the world over, live paycheck to paycheck, or are destitute, FIAT money maintains its “buoyancy” as something sought after, especially while all transactions require it.
Nonetheless, centralized power will always “put all their eggs in one basket,” meaning, they will depend entirely on their monetized monopoly, which they use to coerce complete dependence and obedience from everybody and from their civil governments. “Unless you obey us, a terrible depression will befall you!” Their weakness is that we don’t need their exchange system. People can, in fact, organize for real decentralized independence and build production-based regional economic organizations owned and managed by the people for the people. People can create their independent exchange systems, and they can all prosper and afford each other the support needed for the individuated development of each child. The type of organization that requires is based on structured, authentic democracy, and it does not resemble the systems of control that we are currently subjected to. However, the benefits of real community and its dialogical, consensus-based community decision making processes are worlds better than the current oppressive system we are currently subjected to. With decentralized community organization, and confederations of such, we will be able to successfully defend ourselves from the Central Bank, and we will supplant it with a modern, decentralized civilization. Yeah!
Reed C. Kinney
http://decentralizationblog.wordpress.com
F. Beard:
The Hebrew scriptures forbid interest on loans between Jews.
Between 2 non Jews or a non Jew and Jew, interest can be charged.
In today’s time, interest needs to be charged simply due to the time value of money.
To say the time value of money is zero or one percent, makes no historical or present sense.
Especially in relation to the federal government, interest is vital for they have no intention of paying back the loan principal.
In any book of economics, this entity that failed to repay loan principal would be considered defunct.
Don Levit
In today’s time, interest needs to be charged simply due to the time value of money. Don Levit
I’m not necessarily against usury since it is permitted from foreigners and that definition may certainly be flexible but what isn’t permitted by the Hebrew Scriptures is oppression of the poor and that’s exactly what government subsidized credit creation does – oppress the poor to benefit banks and the so-called creditworthy.
Dear Don,
* Thank you for your kind response. It is interesting. I do not know anything about Jewish and Islamic philosophy. What little I know about religious philosophy in disagreement with charging interest includes Christian philosophy. Overall, I know very little, and I learn a little more now and then.
* The American IRS is an office of the Federal Reserve System (1), and the F. R. S. has positioned itself to collect interest ad infinitum, surpassing principle many fold. The F.R.S. obliges the United Sates Government to barrow from it to cover its operating costs. The F.R.S does not allow the American government to create its own money. The context I develop regarding interest-free financing in regard to Federal Reserve Notes does not exclude “Service Charges” (2). There may be a rational relation between the devaluation of FIAT money and interest. The context I develop in regard to “Community Autonomous Money” is my own, and free financing is accomplished through grants. You can learn more about that model at my blog: http://decentralizationblog.wordpress.com
* Ours is a failed civilization. It has legalized domination and oppression. The impersonal, mechanical institutions it is based on have an expansionist momentum of their own, which their uncritical dependents and managers do not control. Those same institutions contain systemic, self-destructive flaws. The types of men that compete for positions of control in the profit-based institutions are uncritical sociopaths.
* The solution is to develop the contrasting civilization that we so richly deserve, and, which is well within our capacity to accomplish.
You be well. Reed C. Kinney
Notes:
1. Grace Commission:
http://www.truthintaxation.us/?tax_inform=whereTaxesGo
2. An Assessment of Sweden’s JAK No-Interest Bank:
Click to access The%20JAK%20Bank%20Report.pdf
This explains why so many North American billionaires (who started with almost nothing) are Jewish. They got massive loans at ZERO interest from Jewish bankers, who then charge all their non-Jewish customers huge interest.
This is a dreary topic. The joke goes that if you are lost in the West Virginia hills, and want to get to Wheeling (an equitable society), “If I was you Mister, I wouldn’t start from here.””
See this: https://www.youtube.com/watch?v=5fbvquHSPJU
F. Beard, yes I agree, time value of whatever one defines as “money” is critical and must be considered.
The 12 Characteristics of Real Money 1. It must be easily transportable, i.e. must have a high value to mass ratio (high value density although value is subjective). 2. It must be easily divisible for commerce and trade. 3. It must be resistant to physical and chemical damage. 4. It must be a store of value, i.e. not subject to severe inflation 5. It must have intrinsic value, i.e. a common denominator, e.g. labor for prospecting, mining, transporting, processing/smelting, analyzing/assaying and coining or a general usefulness such as for food, raw materials or in manufacturing usable goods or refined materials 6. It must be universally recognized and accepted, i.e. people must have confidence in it 7. It must be rare, i.e. not easily found, discovered or synthesized. 8. It must be difficult to counterfeit and efficiently analyzed, i.e. low cost & speedy procedures for differentiating real and bogus money or stuff used AS money must exist 9. It must be defined in writing, i.e. full disclosure and perhaps even legally defined 10. It should be something of substance or backed by that sustains life, i.e. not simply computer bits or ledger book entries. Food, materials, equipment, cars, trucks, fuel, planes, ships, locomotives, boxcars and land are substances as are silver and gold 11. It should be easily measured for weight and purity or authenticated, i.e. it should not require complex or time consuming methods of measurement. 12. It should not be easily monopolized, or in limited or controlled distribution.
I’m sure some holes in this set of criteria exist and am open to criticisms.
Jack Worthington,
* In regard to time and loans, I have never completed that conceptualization in my mind, because the economic calculus required for judging such estimates are more involved than I care to entertain.
* I think money and its creation should be in the hands of the people, a public service for the benefit of facilitating transactions, and for the benefit of personal savings for all people. But, that is possible in the type of society we live in.
* The type of money I can comprehend requires a “production-based” economy, and is work-based money. It is a simple process of correlating work value, goods and services, to money value. The buyer and the seller agree on the value of the work, and attribute that value to the money used to facilitates the transaction, which is documented on the “tender,” endorsable currency bearing the number value agreed on, akin to certificates of exchange. However, that type of money is designed for use in a specific type of economy that does not now exists.
* And, in that type of economy the community issues grants, but does not loan capital.
* Reed C. Kinney
* Click on the essay, What is Community?, http://decentralizationblog.wordpress.com
* And see: Four Horsemen – Feature Documentary – Official Version
Sounds like you’ve been brainwashed by the reactionary (Is there any other kind?) Austrians.
I suggest you study MMT to get a much more plausible view of what money is. Those folks (the MMT crowd) will insist that money MUST be debt; close but no cigar. Money can also be shares in equity.
As for commodity monies, if used as money they cease being a commodity and if used as a commodity they cease being money. The reason coins were made of silver and gold was to make counterfeiting them too expensive., not to give them an intrinsic value. Indeed, you should note that paper fiat has very little intrinsic value but nevertheless has value because it can be used to pay down debt and pay taxes.
Fiat with intrinsic value is a scam designed to put the taxation authority and power of government behind someone’s hoard of gold, silver or other scarce substance.
I like F.Beard’s comment about “commodity money” and paper money.
Ben Franklin is quoted on the merits of paper money or as it was called then the Colonial Script :
“Franklin’s friends then asked him how the American Colonies managed to collect enough money to support their poor houses, and how they could overcome this plague of pauperism…
“At that time, England was throwing into jail those who could not pay their debts. They therefore asked Franklin how he could explain the remarkable prosperity of the New England Colonies. Franklin replied:
“That is simple. In the Colonies, we issue our own paper money. It is called ‘Colonial Scrip.’ We issue it in proper proportion to make the goods and pass easily from the producers to the consumers. In this manner, creating ourselves our own paper money, we control its purchasing power and we have no interest to pay to no one.”…”
The importance of the words “in proper proportion” is the highest art in managing money. Our controlling bankers have a history of intentionally betraying the public’s best interests in setting money levels in circulation. The consequences of these cycles of betrayals are always catastrophic and end in enriching the central bank owners at the public’s expense. We must end the Federal Reserve.
In 1913 the bank usurped the power of the American Government when it legislated the Federal Reserve System as the only source of “legal” tender, and obliged the government borrow that money instead of creating real, national currency. Income tax was authorized the same year (Congress almost immediately enacted the Revenue Act of 1913). (http://en.wikipedia.org/wiki/Legal_history_of_income_tax_in_the_United_States#Modern_income_tax). All income tax is deposited directly into the Central Bank to cover the interest payment on the constant flow of borrowed Federal Reserve Notes needed by the American Government to cover its operating costs. In 1971 President Nixon took the dollar off the Gold Standard, switching backed money for debt based FIAT money. The Glass-Steagall Act prevented the Banks from trading in corporate securities. (http://www.ehow.com/about_5413083_history-bank-deregulation.html)The Financial Services Modernization Act of 1999 (http://en.wikipedia.org/wiki/Gramm%E2%80%93Leach%E2%80%93Bliley_Act) allowed the banks to merge with other financial institutions and enabled bank investment in private firms, which speculation became a “casino” of sorts where loses were picked up by the government, barrowing from the Central bank to “bail out” bank losses. However, we are facing a problem with two sides. One side of the problem is that (as you have so often heard), no bank creates the funds to cover the interest payments on loans. Currently about 90% of the money is debt. That is a systemic problem. But, the problem is worse than systemic. The systemic problem of debt based money can be stabilized, by the central bank freely investing its money, while it is still useful as the exchange element, in the people and in genuine local productivity for local use, which was discussed in Ellen’s fine article. But, rather than ethical pragmatics, bankers have been squandering money on speculative “bubbles” while obliging the people to pay for the bank’s mistakes through income tax. Before I continue in that argument, I must say that we have a double problem; the systemic problem, that with some pragmatic adjustments can be addressed, and, as so many believe, even stabilized – and the moral problem. No pragmatic proposals will ever address the systemic problem; no effort for the benefit of the people will be made, while the men in positions of control are criminals who care not a rat’s ass about the well being of Americans. It is cheaper for the owners of the Federal Reserve System to gamble on waging wars of imperialism in the Mideast, at the expense of Americans, which is evil, than to do what is right for Americans. Then, the question leads us to the real source of the problem, the owners of the central bank, and AIPAC, and Netanyahu’s Israel, who are all tied together to dominate Americans to get Americans to fight their wars on their behalf. Of course, it’s evil; a small group of wealthy megalomaniacs who don’t care about Americans, forcing Americans to support their foreign interests at the danger and the expense of Americans who do not receive any benefit, but end up paying for the whole mess. Americans are the unwitting slaves of the above mentioned cowardly culprits. For Americans to fight for their country really means to throw off that domination. Reed C. Kinney
Rich:
I agree with what you wrote.
I am impressed you have a quote from Franklin.
You must be an amateur (or professional) historian!
What in your opinion, or even in Franklin’s opinion, would be the “proper proportion”?
Don Levit
“money must be debt.”
If you mean there are 2 parties to a transaction, a buyer and seller, I agree.
In that situation the buyer is, in a sense, in debt, until he pays off the seller.
Fiat needs to have intrinsic value, otherwise, its value is based on faith.
If that faith is based on the goodwill of the U.S., that value should be very small.
The real value, the intrinsic value of fiat money, is the taxes that back it.
There needs to be a certain relationship between current taxation and current spending for fiat to have intrinsic value.
As we are spending about 40% more than we have taken in, and have $17 trillion of debt, of which we, apparently, do not intend to pay back one cent of loan principal, I would see our fiat (a word meaning demand), does not have enough supply backing it to make it have much intrinsic value, which is the only value which makes the dollar earn its ability to collect taxes and pay down debt.
Don Levit
Re “The real value, the intrinsic value of fiat money, is the taxes that back it.” Hogwash. Read MMT. Taxes aren’t necessary. The main validation of fiat money is that the govt. accept it in payment of taxes.
OK, I was hasty but your use of “intrinsic value” is non-standard and confusing and would conflate fiat made of materials with a high salvage value, e.g. platinum coins, with inexpensive fiat.
Four Horsemen – Feature Documentary – Official Version
Four Horsemen Writer / Director Ross Ashcroft
Four Horsemen – Q&A
Four Horsemen – The Debate
Fiat needs to have intrinsic value, otherwise, its value is based on faith. Don Levit
Totally wrong. The only faith needed to give fiat value is the knowledge that ONLY fiat can extinguish tax liabilities and that government has the ability to punish tax evaders.
Totally wrong.
Fiat currency gets its value from the people’s full faith and credit in the U.S,. Government
The fait is soft if based on goodwill, and hard if based on revenue in relation to expenses.
Don Levit
The fait is soft if based on goodwill, and hard if based on revenue in relation to expenses.
Don’t forget the real economic growth rate of the economy permits pure money printing without price inflation.
Dear Ellen,
Thank you for your superb article, “Even the Council on Foreign Relations Is Saying It: Time to Rain Money on Main Street”
For the Central bank to issue money to the bottom 80% of Americans is a pragmatic option. Correct me if I’m wrong. Another option is for the Bank to usurp the Arabian national banks in order to increase both Mideast governmental and private indebtedness, which would sustain their FIAT money for a while longer. That type of War costs the Bank nothing since only American resources, labor and lives would pay for it. The Federal Reserve System is owned by the people who have an active interest in Israeli interests. Those same folks oblige Americans to arm Israel, and for the American Government to give Israel its political support. The Bank may be more interested in obliging Americans to conquer the Mideast, on their behalf, in order to enable the Bank to dominate Mideast financial markets, than to invest money in Americans. ISIS is a convenient enemy that Israel can try to use to get American support for Israeli Mideast objectives. ISIS is still too young to be useful to Israeli designs, so they may keep Obama’s leash tight until the right time, perhaps after some calamity is created on American soil to get Americans’ support for a fuller military intervention useful to Israel. Israel, meaning Netanyahu and his cronies, would like to rule more of the Mideast, a whimsical compulsion perhaps, but entirely perilous for America. Iran poses no threat to the United States, but is viewed by Israel as an obstacle to its covert, imperialistic objectives. The Bank covets Iran’s, and all Mideast financial markets. Ellen, your suggestion is rational. And, correct me if I’m wrong. But alas, the owners of the Central Bank don’t give a rat’s ass about Americans, and they want the entire world indebted to them, partly, at the expense and jeopardy of Americans.
Ellen, keep up your good work. You are doing a good job that I appreciate. Every step towards decentralization is a step in the right direction. Our objective is the decentralization of power.Every act of kindness contributes to that realization.
Sincerely yours, Reed Kinney
http://decentralizationblog.wordpress.com
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[…] Ellen Brown*: The recent essay in Foreign Affairs recommending the Federal Reserve do a money drop directly on the 99%: “When an article appears in Foreign Affairs, the mouthpiece of the policy-setting Council on Foreign Relations, recommending that the Federal Reserve do a money drop directly on the 99%, you know the central bank must be down to its last bullet.” .. On the Federal Reserve: “The Fed, however, is ‘independent.’ At least, it is independent of government. It marches to the drum of Wall Street, but it does not need to ask permission from voters or legislators before it acts. It is basically a dictatorship. The Fed did not ask permission before it advanced $85 billion to buy an 80% equity stake in an insurance company (AIG), or issued over $24 trillion in very-low-interest credit to bail out the banks, or issued trillions of dollars in those glorified ‘open market operations’ called quantitative easing. As noted in an opinion piece in the Atlantic titled How Dare the Fed Buy AIG: It’s probable that they don’t actually have the legal right to do anything like this. Their authority is this: who’s going to stop them? No one wants to take on responsibility for this mess themselves.”LINK HERE to the essay […]