3. QE2 IS the Populist Solution

Gary North, who purports to be an expert on the errors in my book “Web of Debt,” has evidently not actually read it.  In an article posted on the Market Oracle on November 23, he says that in calling QE2 a “bold precedent,” I have switched sides.  He apparently missed the chapter I wrote on this subject, first published in “Web of Debt” in 2007, saying exactly what I am saying now. 

 The Federal Reserve is finally using its “quantitative easing” (QE) tool to good purpose, and I’m endorsing that, not just for our central bank but for any central bank anywhere that would be so bold.  We are trapped in a web of debt devised by an international banking cartel that has hoodwinked us into believing that we have no recourse but to use money created by their banks as loans.  We do have recourse.  Money today is simply a legal agreement, an acknowledgment of services performed and debt owed.  Every country can and should issue its own money and its own national credit.  This would NOT inflate prices, for reasons I have explained again and again.  If  “money” originates as a receipt for goods and services delivered to the government — rather than in speculative leveraging by banks not attached to real productivity — supply and demand will increase together, and prices will remain stable.  If the money supply increases beyond GDP, the excess can be taxed or otherwise drawn back to the government.       

North writes:    

“Ellen Brown initially stood with the Greenbackers in their call to end the Federal Reserve. . . . She now says that the FED is on the government’s side. ‘It is the Fed funding the government virtually interest-free, allowing the government to do what it needs to do without driving up the interest bill on the federal debt – an interest bill that need not have existed in the first place.’ . . .

“If she tries to defend herself by saying, “This is consistent with what I have always said,” then she is dumber than dirt, or else she thinks her followers are dumber than dirt. If she says, “Yes, I switched. So what?” then she is just another lawyer. . . .

“She never had a clue about economic theory or monetary theory. She has therefore switched sides with ease – we might call this intellectual quantitative easing.

“Her only hope now is to insist that she never meant anything like this. “No, no, no, I meant something completely different. It’s all a big misunderstanding.” A lawyer who can’t make herself clear needs to find another career – maybe as an economic guru.”

I have not switched sides, as anyone who had actually read my book “Web of Debt” would know.  Chapter 40, which is all about Ben Bernanke’s helicopter money, says in part (again this was first published in 2007):

“[I]n a speech he delivered when he had to be less cautious about his utterances, Dr. Bernanke advocated what appeared to be a modern-day version of Lincoln’s Greenback solution: instead of filling the balloon with more debt, it could be filled with money issued debt-free by the government. 

“The speech was made in Washington in 2002 and was titled ‘Deflation: Making Sure ‘It’ Doesn’t Happen Here.’ Dr. Bernanke stated that the Fed would not be ‘out of ammunition’ to counteract deflation just because the federal funds rate had fallen to 0 percent.  Lowering interest rates was not the only way to get new money into the economy.  He said, ‘the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost

“He added, ‘One important concern in practice is that calibrating the economic effects of nonstandard means of injecting money may be difficult, given our relative lack of experience with such policies.’  If the government was inexperienced with the policies, they were not the usual ‘open market operations,’ in which the government prints bonds, the Fed prints dollars, and they swap stacks, leaving the government in debt for money created by the Fed.  Dr. Bernanke said that the government could print money, and that it could do this at essentially no cost.  The implication was that the government could create money without paying interest, and without having to pay it back to the Fed or the banks. 

“Later in the speech he said, ‘A money-financed tax cut is essentially equivalent to Milton Friedman’s famous ‘helicopter drop’ of money.’ Dropping money from helicopters was Professor Friedman’s hypothetical cure for deflation.  The ‘money-financed tax cut’ recommended by Dr. Bernanke was evidently one in which taxes would be replaced with money that was simply printed up by the government and spent into the economy.” 

QE2 is not quite replacing taxes with money printed up by the government, but as I wrote in the article criticized by Mr. North, in our current system it is the functional equivalent and the next best thing.  The Fed is funding the federal deficit by buying long-term government bonds with money created with a computer keystroke, and the Fed rebates its profits to the government after deducting its costs, so this funding is nearly interest-free.  These bonds never have to be paid back, because the federal debt is never paid back.  An interest-free debt rolled over indefinitely is the functional equivalent of debt-free, government-issued money. 

As Dick Cheney famously said, “Deficits don’t matter.”  The federal debt not only never DOES get paid back but it CAN’T be paid back under our current debt-based monetary regime.  This is because, in some sense, it IS our money supply.  As I’ve explained in another article I’m writing now:

Virtually all money today originates as debt, and private debts eventually get repaid, so somebody has to be in “permanent” debt to maintain a stable money supply.  The federal debt serves this role.  The federal debt has been the basis of the U.S. money supply ever since the Civil War, when the National Banking Act authorized private banks to issue their own banknotes backed by government bonds deposited with the U.S. Treasury.

 

 

To meet the demands of an expanding economy, the money supply must be able to expand; and when the money supply is created as a debt (as it is today), that means the federal debt must be able to expand.  This was confirmed by Marriner Eccles, Governor of the Federal Reserve Board, in hearings before the House Committee on Banking and Currency in 1941.  Representative Wright Patman asked Eccles how the Federal Reserve got the money to buy government bonds. 

“We created it,” Eccles replied.

 “Out of what?”                                                                     

 “Out of the right to issue credit money.”

“And there is nothing behind it, is the­re, except our government’s credit?”

“That is what our money system is,” Eccles replied.  “If there were no debts in our money system, there wouldn’t be any money.”

That explains why the federal debt never gets paid off but just continues to grow.  The federal debt hasn’t been paid off since the presidency of Andrew Jackson nearly two centuries ago.  On Jan. 8, 1835, six years into Jackson’s presidency, the debt actually reached zero.  According to the Bureau of Public Debt, this officially lasted one day.  Not long after, America plunged into a depression.  By 1838, the debt was $3.3 million.  By the end of the Civil War, America owed $2.7 billion.

Economist John Kenneth Galbraith wrote in 1975:               

“In numerous years following the [civil] war, the Federal Government ran a heavy surplus.  [But] it could not pay off its debt, retire its securities, because to do so meant there would be no bonds to back the national bank notes.  To pay off the debt was to destroy the money supply.”

In all but five fiscal years since 1961 (1969 and 1998 through 2001), the U.S. government has actually exceeded its projected budget, adding to the national debt.  The debt soared to record proportions during World War II.  By the end of the war, the U.S. debt was more than 100 percent of GDP.

This obviously did not hurt the economy.  The productivity generated by record government spending during World War II created the infrastructure that allowed the country to dominate industry globally for the next half century.  We are seeing the same sort of rapid infrastructure development today in China, which may well fill the role of world productivity leader in this century.

The U.S. debt incurred during World War II was never paid off but just continued to rise.  This too did not hurt the economy; the debt just became a smaller and smaller percentage of GDP as the economy expanded.

 

Indeed, that is the secret to adding “money” to the system without inflating prices: it needs to be used for productive rather than speculative purposes.  Inflation results when “demand” (money) exceeds “supply” (goods and services).  When money is used to “make money” (speculation) without adding to goods and services, prices are driven up.  When the money is used to produce goods and services, supply and demand increase together and prices remain stable.

The issue posed by QE2 is the sovereign right of a country to print its own money, debt-free and interest-free.  Whether conservative, liberal, or populist, any true patriot would support that; and we should support it not just for the United States but for all countries. 

Mr. North perceives me to be a threat and has declared he will destroy my credibility, just as Stephen Zarlenga perceived me to be a threat when I disagreed with his 100% reserve solution.  It’s too bad, as I was once an admirer of both and we could have been on the same team.  The trouble is, the threat is not a person or a book; it’s an idea, and it’s already out there and has blown the grass.  It’s moving and picking up steam of its own accord. Gold won’t work and the 100% reserve solution won’t work; in fact they’re very close to the same thing.  The Euro system is in the nature of a gold/100% reserve/fixed currency solution, and it has just proved that those won’t work.  A public credit system will work, and there are already finer minds than mine working on the details, globally.  

96 Responses

  1. i have enjoyed ellen browns writings for a decade.
    while i was initially resistant to her recent qe2 article, when i read it, and thought about it, it made reasonable sense. probably a stop-gap solution, but reasonable enough. does gary north have any better ideas? always easier to critisize, but hard to
    lead.

  2. Ever wonder why “the government” can do what common mortals cannot?

    The fate of the world rides on the answer to that question, and every sane person knows what that answer is:

    http://en.wikipedia.org/wiki/TANSTAAFL

    • We’re not getting something for nothing. The government gets goods and services and pays for them with dollars, which represent claims on the American people for an equivalent sum in goods and services. The American people have received value and acknowledge that they owe value in return. That’s what money is, and it should originate with the government, not with banks. It should, but our government won’t do it, so the next best thing is to borrow from our own central bank, which creates the money and lends it interest-free. Rolled over indefinitely, that amounts to the same thing.

      • Sorry, Ellen, but you couldn’t be more wrong, as events will make clear when reality finally has its way with the Fed’s “extend and pretend” policy, which is now dependent on QE.

        Money issued as debt is money that can never be repaid and is therefore the absolute corruption of money. And we won’t have a sound, sustained-growth economy until all of this pernicious nonsense comes to a halt and a 100%-reserve gold standard is instituted — not by government but by the free market, where all genuine money arises.

        In the meantime, we’ve got hell to pay, no thanks to wolves in sheeps’ clothing like yourself.

        • Ellen Brown is no “wolf in sheep’s clothing.”

          Your statement “Money issued as debt….” shows that you don’t understand this article.

          As long as the money is to run the government – which collects revenue from all of us who have worked for our money – and not subsidize the banksters, like QE1 – the policy is a good one.

  3. You can not ever stop speculative demand.

    Printing endless money does nothing to address the balance of payments in trade flows. This mechanism could only work, if and only if the US never traded with any other country for anything. Why would any one want our currency to buy things they can produce themselves? How could we ever buy another currency for things that other countries make? Why would they want the dollar? Another flaw:since when did govt ever produce anything useful? The thesis is that ‘When the money is used to produce goods and services, supply and demand increase together and prices remain stable” is void of logic when govt, that produces nothing, and is a huge component of GDP, in introduced. Its only force of arms that keeps the USD as the reserve currency that allows us to buy oil, another item we would have to 100% produce to not need Arab oil and a means to pay that they would accept? Money without interest would not interest any country as far as purchasing USD, nor is it fungible.
    Trade flows between nations are power, and this idea of interest free money does not include human pride, greed, or lust for power and control. This will always be a factor in trade, indeed in any human interaction. That is the real world.

    I havent read all of your writings and im not criticizing you:the ideas in this article dont make sense in the real world for the reasons noted above.

    • The government doesn’t “produce” the goods and services. It puts money into the economy by “paying” for goods and services. That’s the idea of a stimulus program; but there’s no chance of more stimulus with this gridlocked Congress. The Fed is the only entity left that can act, so it’s acting. $600 billion won’t even come close to hyperinflating the money supply. There’s a $15 trillion hole in it from the collapse of the credit machine. If we don’t have money in the economy, we won’t be able to put people to work, which means they won’t be able to buy things from us OR the Chinese. It’s good for everybody to keep people employed and economies functioning.

      • Ellen, here is where I think you are wrong…

        “If “money” originates as a receipt for goods and services delivered to the government — rather than in speculative leveraging by banks not attached to real productivity — supply and demand will increase together, and prices will remain stable.”

        If the gov’t were to print money in order to buy goods and services where would it end up? Think about it…

        After purchasing labor for infrastructure building those workers would then insert their money into the banks! Any company that gets a gov’t contract does the same thing.

        Then the fractional reserve process takes effect with the money that was injected into the system from thin air.

        This will obviously lead to CPI inflation because those speculative bankers you were hoping to keep out of the equation will reap the benefits by charging interest on their new deposits.

        Gotcha! Banks win again.

        This is the very reason for the central banks to exist in every nation on earth. When banks get in trouble the central banks bail them out by printing money. Then, the process I described above repeats.

        The debts of the bankers that were unsustainable are placed on the shoulders of the people through a hidden tax called… the inflation tax. Moral hazard rules, as long as banks aren’t allowed to fail based on their speculative bets that go wrong, this situation will continue in perpetuity.

        • The banks already have plenty of excess reserves, and they’re not lending. Giving them more isn’t going to help the banks or inflate the money supply. As I saw in an article today that I don’t have time to link here, the banks aren’t illiquid; they’re insolvent. No amount of extra reserves is going to fix that. What I would prescribe for the situation is some publicly-owned banks with clean books, the profits to be returned to the state or community. Adding $600 billion to a money supply that has shrunk by $15 trillion at the M3 level (the one no longer reported) isn’t even going to fill up the bottom of the money hole and won’t get anywhere near creating “hyperinflation.” You could pay the federal debt off entirely with Greenbacks and you’d just be back to where we were in 2006.

          • “‘The government doesn’t “produce” the goods and services. It puts money into the economy by “paying” for goods and services. That’s the idea of a stimulus program; but there’s no chance of more stimulus with this gridlocked Congress.”

            Wow, I wonder if any of you ellenbackers can see the immorality in these two statements.
            hint : smart people see “Government steals from entrepeneurs” and “with a better congress they could steal more.”

            Anyone that takes this woman seriously does not understand money.

            • Coming out of the Right Wing I know well the shallowness of that thinking when it comes to economics. The Right believes a Nation is a Business. A Nation is a Nation. The People of this country or any other cannot be reduced to simpleton ideas.
              Credit is Faith materialized. We have been spending money for speculation, debt service, service jobs, etc., and have nothing to show for it but memories of better times. If our Credit was spent for productive purposes average Americans would still be the richest middle class people in the world instead of down on the wealth list.
              How this credit works takes years to understand and Ellen Brown http://webofdebt.wordpress.com/response-to-gary-north/response-to-gary-north-qe2-is-the-populist-solution/comment-page-1/#comment-11277 is one of only about 10 people in the world that can express these concepts in ways that normal thinking people can understand them. However, if one’s mind is more committed to Right or Left Wing ideas than to Love of one’s own People, those dogmas become dams to understanding.
              The dynamics of a large population of PRODUCTIVE People is a rewarding subject once understood. It is closely related to understanding the far reaching effects of FAITH and LOVE, ideas apparently far out of reach of Earth’s dogmatic fanatic inhabitants.
              It may be a very good sign that Russia & China are talking directly to each other about currency values and such even though, at the moment, only China has something like a financial system that whose government profits primarily instead of a privately controlled central bank. America is in the interesting position of having a Federal Reserve that can sell us out at high interest overnight to the banks (read “bank bailout”) or issue interest free credit to the Government as just happened…the very opposite of the Bank Bailout!
              Now, Russia & China need to go to the next step and make state to state agreements with India and the United States. This could give enough total wealth and population weight to a deal that it could end London’s currency exchange, it could end private banking’s control of credit flows, interest rate and obscene bank profits. That is: the tail (central banks & WTO style business) would stop wagging the dog (the People’s sovereign national governments).
              Banks should exist only to distribute credit created by human inventive power maintaining and increasing a People’s productive labor. Currency thus produced will naturally remain stable so the cost of credit extension should be very low. A stable currency is dependant upon how much value is created by the issue of it, ie, what it is used for and what it does for the Life of People.
              (Those who doubt what is next written, may be unaware that, only recently, something like $750Trillion of what is proving to be worthless securities paper was “swallowed whole” by the world financial system. The effect of those investments? The current depression. I am talking about 180 degrees away from this.)
              For instance We today (government Treasury, not banks originally) could (and We should) issue $10Trillion for high speed rail. Such bonds, retired in 20 years, would be gobbled up being that they are backed by production which, as Franklin pointed out 250 years ago, equals Gold or Silver!
              If we created a national transportation system whose proven worth to the nation was $50Trillion within that system’s life time we not only would not have a downward value change in our currency, our money value would go up $40Trillion. An example of this is the windfall of wealth is from the NASA moon projects and the like, whose developments and discoveries paid for all the Government investment more than 40 times by 1990!
              We would afterwards have to issue more bonds and create more credit and issue more money for procudtion to keep our exports cheap enough to sell! That money in turn (if put into the productive sector) would create equal or greater value than its printing and in turn would support other issues, etc. That is how America became great. About 10% of our Nation’s history, politicians have followed “The American System” and done what is being suggested here. Think what our country would be like if we had done it 100% of the time which some governments in the world are now beginning to try to do!!!
              Our problems now are that 40% of $paychecks are going into speculative bankers pockets, almost nothing of both bank paychecks and speculative bank loans & “investment” is going into the productive sector, creating in turn nothing of true investment quality, bringing down the value of all our money.
              A Nation is greater than any Business. I wish business people would stop bringing good this great Democratic Constitutional Republic called America down to the idiotic greed level concepts of “for profit only” businesses. Businesses can become greater the more they become like good Nations and strive to serve the “General Welfare” of their customers (See “Built to Last. Successful Habits of Visionary Companies”).
              John Durham

              • Thanks John D! You write:

                It may be a very good sign that Russia & China are talking directly to each other about currency values and such even though, at the moment, only China has something like a financial system that whose government profits primarily instead of a privately controlled central bank.

                I agree, it’s good they’re dealing in their own currencies; why not? It’s just for bilateral trade. What do you know about Russia’s modern banking system? I don’t have much information on that.

                America is in the interesting position of having a Federal Reserve that can sell us out at high interest overnight to the banks (read “bank bailout”) or issue interest free credit to the Government as just happened…the very opposite of the Bank Bailout!

                I think that was Hank Paulson on the first and Ben Bernanke on the second. Bernanke is an academician, not a Wall Street man.

  4. [...] Posted on November 25, 2010 by dandelionsalad by Ellen Brown Featured Writer Dandelion Salad webofdebt.com November 25, [...]

  5. Ellen:
    Your book and your writings have educated me on the monetary policy of the US. What is really wrong with this country is that politicans do not understand what happened with the Federal Reserve Act of 1913. There is a place on google that explains the greenback policy of Lincoln’s that any dimwit can understand. Type in on google, “the greenback policy of Lincoln in financing the Civil War.” Keep up the good work Ellen maybe some day the American Monetary Act will see the light of day.. Betts

    • thanks!

  6. The banks do not have a bunch of money in reserves. Instead they have worthless paper claims on real money they do not possess. This is why JPMC is short silver!

    It is just as if they had a zimbabwe $100 Trillion dollar bill and could buy nothing with it.

    For you to quote Galbraith and Bernanke positively, and agree with QE2 or anything else from JPMC or Goldman, or The FED, or even to suggest that Congress is a worthy substitute is to ignore the very picture on Max’s website:

    http://maxkeiser.com/2010/11/25/endless-nightmare/

    You did not want to debate North, you memorised Max, but the rest of us have figured you out.

    • I will not debate North for the same reason North will not debate Max. He has declared he is out to destroy me; it won’t be a reasoned debate.

      • Ms. Brown,
        He thinks he can destroy you but it is going to be you who destroys GOLDBUGGISM and the misguided Austrians, so that they stop haunting dormitories and the poor minds of Ron Paul’s supporters.

        Accept the challenge and do the job.

        Besides, I do not think thae argument of being a MOM is valid if you simultaneously publish learned books on economics and try to repair this broken System. Am I misguided in this?

    • Problem is here an interim solution, as I understand.
      But, as always, means are just as important as goals. Not a devil in hell would get me endorse whatever the FED and the goblin “Shalom” are doing. It only entrenches bankster power even more and confounds the good people.

      The message should be simple and principled: “To hell with them all”.

  7. Ms. Brown,

    Gary North, one of the nestors of libertarianism and Austrian School of economics has via Max Keiser challenged you for a debate.

    This was a direct consequence of Max Keiser’s protests over North’s analysis of your book “Web of Debt” addressed to Lew Rockwell, another prominent Austrian and owner of the influential website lewrockwell.com.

    In my humble opinion and despite Mr. North being somehow ungentlemanly, I encourage you, nay, implore you to take up the challenge.
    You owe it if not to Mr. North so to your readers and followers!

    Gary North has, in his words, used over 100 hours writing his critique of your book: he found over 50 (in his opinion) historical and economic errors in it and you have in many cases conceded that he “got you”.

    Mr. North is prepared to debate you on your conditions. He declared that he didn’t mind if Max Keiser (or whoever) helped you, if you needed help.

    HE WANTS THE DISCUSSION VERY MUCH.

    He considers you a dangerous person – primarily for Teaparters but also Conservatives in general. He considers you a leftist-populist, Statist, Keynesian and (my words) Judas goat – a blind leading the blind to an economic precipice.
    He thinks you have betrayed your followers by endorsing QE2 and Bernanke.
    He thereby acknowledges your enormous influence and wishes to contain it.

    What do you have to lose? If you believe in what you are saying and writing, you will be able to show viewers (and I am sure the debate video will go viral) that you can handle an arch-conservative GOLD-BUG who in his narrow mind is unable to understand that State must create money in a truly free society. You will be able to definitively refute his hidebound idea that real money must be backed by a commodity – best if it is heavy, scarce, yellow and which failed the American People leading to starvation and debt peonage of Americans to the Banksters on more than one occasion.

    In short: This debate will be the best opportunity for you to definitively bury Goldbuggism.

    OK, you know and I know that Mr. North is so blinded by GOLD that he will be impervious to your arguments but thousands of young people will get a lesson of their lifetime in modern economics – you will show them that Goldbuggism is an ancient superstition and that it is irrelevant if money is made og gold, paper or whatever people agree to honor, so long as the State can control the quantity. This is “the State’s greatest creative opportunity”, remember?

    Please, debate Gary North! Do it also for the sake of the many readers torn between Goldbuggism and Greenbackism. Do it for ME!!!

    • I never actually said I wouldn’t, but he’s just so rude. It’s my general policy not to encourage bad behavior. I’m a mom! We learn those things. I’ll debate anyone who is polite. One time I hung up on an interviewer because he was rude. He got me out of bed at 6 in the morning and started haranguing before I could get a cup of coffee. When they’re rude, they’re assuming bad motives. My motives are benign, and I work all the time, very hard. I think that deserves respect.

    • “He thereby acknowledges your enormous influence and wishes to contain it.”

      Gary North is a crackpot and a vulgar polemicist. He is unable, genetically, to engage in any reasoned debate because his mind cannot entertain two opposing ideas without serious malfunction.

      Do a little reminiscence on Gary North & Y2K. He doesn’t recognize Ellen’s legitimacy, what he sees is an opportunity to promote himself at some one else’s expense.

      Ellen doesn’t NEED to debate this nutcase. She’s not a public brawler. She’s not a politician out for ratings. She’s not here to provide spectacle for your entertainment, Mr. Perdue. The fact that she resists the siren call is clear evidence of her good character.

  8. Ms. Brown,
    Never mind he is rude. Consider it your opportunity to educate US!!!

    By his bad argumentation and his bad manners he will expose himself for what he is: a choleric GOLDBUG.

    You can even put is as your condition of he debate: NO BAD GOLDBUG MANNERS.

    Even if he doesn’t respect you (and he will have to if you smash his contorted lines of reasoning) WE WILL respect you all the more!

    Please!

    • Mr. Perdue:

      Debates accomplish nothing, least of all, any educational purpose. Give it a rest dude. Mr. North, right or wrong, is an arrogant jerk. Do not feed the bear with any attention.

  9. Ellen –

    In your analysis, what chances are there that our currency will be rapidly devalued by a speculative attack on the U.S. Dollar (as was done to the German mark in Weimar Germany) or by similar manipulation in the foreign-exchange market?

    Happy Thanksgiving.

  10. What if I wish to contract with someone in a medium other than dollars? Does the greenback philosophy allow for such a transaction? The austro-libertarian position tends to be that the ideal is to have freedom in currency and beyond that there is an assumption that gold (and/or silver) will end up being the standard. The glaring problem that I see with your position is that it requires a monopoly state to issue the currency. IMO, the state is the primary evil in society. Whatever system they use, the current one, greenbacks, “gold standard” or something else, it’s going to be pro-state and anti-average Joe. Your solution may be better than the status quo, but it doesn’t seem compatible with a truly free society if I am required to use these greenbacks.

    • It’s a sad day when our government is the primary evil in society. What happened to the Commonwealth? The Constitution? What did we fight the Revolution for? To have our own government, under our own laws, headed by our own elected representatives. Would you prefer anarchy? Our government has been “bought” by big moneyed interests, but we can get that back; we just need to take our banking system back.

      • If anarchy is understood as the absence of an overarching coercive element within society, yes, that is my preference. We have a long way to go, but I truly believe that if we want a peaceful human existence, the coercive state must be abandoned as the means of organizing society.

        So I take from your response that yes, legal tender laws would be a part of your greenback plan. What is wrong with me selling my products/services in exchange for gold/silver/seashells and doing so under an enforceable contract? What’s wrong with freedom?

  11. Mrs. Brown,
    I have read your book and Dr. Norths criticism’s. There are things from both of you that i agree with. I do think that North’s criticism of you is kinda unfair but at the same time i believe you are sorely misunderstanding what money is. To the people who keep bashing goldbugs by saying it doesn’t matter what money is made out of in theory (gold, paper, pixie dust…) i have to say, you are right. but the problem comes that there is no restriction on the supply of paper money that governments can create. Whoever said above that a truly free society can only come from govt created paper is TOTALLY ASS BACKWARD! Paper money is what funds the warfare state PERIOD. We funded the revolutionary war with paper dollars that became worthless! We funded 1812 with paper dollars leading to the panic of 1819 when the artificial credit boom collapsed. We funded the un-necessary civil war with paper dollars killing 600,000 americans. We entered the un-necessary WW1 with paper dollars from the fed…couldn’t have fought korea, vietnam, iraq, afganistan, pakistan, or funded all of the ass backward govt programs if it wasn’t for paper money backed by promises….or in fewer words….life would be a whole lot better for everybody if govt and banks had no control over the supply of money and only the market guided the economy….so there is the answer and it allows all the money ever to be needed to be used…natural competition in currencies. gold backed, silver backed, oil backed, land backed, etc….then there really is trading value for value. paper whether coming from a central bank or govt is still only backed by promises to pay. real things dont lie, govts do. And the interest rate is what gives paper money all of its value. why is gold a nutty investment? because it pays no interest…that being said, i buy it because govts will create more and more money compared to the amount of goods that are in society…thats why gold is 1350/ounce. i like that you are trying to solve the issue of money, but banks and govts like paper because it gives them control…and that is it. 100% reserve, commodity backed competing currencies and we will grow to as close to a Utopia as is humanly possible…hoping to hear back

    • Did you really read my book? I guess if you’ve heard all my arguments, I have nothing more to say.

  12. oh and 1 (or a few) more thing(s), Lincoln was not a saint, wanted paper money for selfish reasons, did not free the slaves at all (emancipation proclamation was unenforceable since it freed slaves in states that had already seceded and allowed slaves in loyal southern states) technology and machines (capitalism) would have ended slavery with less life loss and less social problems going forward and the greenback lost 78% of its value in its first 3 years. inflation is good for people at the top and bad for those at the bottom….the people who get the new money first get to spend it at the lower prices (buy gold at 300 sell at 1200) simply because money doesnt spread to all people or goods equally. so the politically connected and the banks reap the fruits while the common man gets screwed…sounds like what is going on today….they all stem from the same problem, monopoly control over the supply of money and credit…monopolies are a bad thing and govt is the biggest monopoly of all…so i don’t want them supplying my money either…

    • Lincoln wanted paper money for selfish reasons? He wanted to win the war without going into debt slavery to the British-backed Wall Street bankers. What was selfish about that?

      • i agree lincoln wanted to win the war…but his political party was backing protectionist tariffs, central banking, and a centralized govt…that is what the war was really about…not freeing the slaves. There are many things that Lincoln did that people today would rant and rave of him being a traitor and tyrant (jailing political adversaries, jailing 10’s of thousands of journalists for antiwar writing, the decentralization of the union). He was a politician, just like politicians today. I applaud that the slaves were finally freed but that is the propaganda that runs rampant today on Lincolns legacy. The war was all about power and stopping the RIGHT of states to secede (voluntary to get in, voluntary to get out…makes sense) The paper money thing wasnt new and some great idea. As long as government controls 1/2 of every transaction they have a TOTALITARIAN control of the whole economy (Raising and lowering wages at will, moving in favor of debtors or creditors, paying out favors for political gain) these are what i see as the major problems with paper money (or any monopolized money). The historical picture that Lincoln has been painted is not the clearest picture of the man. I revere the founding fathers for many of their ideas about freedom, but in the same sense they had no idea of the totality of the concepts they espoused. Some of them were slave owners, some of them had no moral code whatsoever. But they believed in the idea that every man should be free to be the ruler of his own life. And when you introduce a monopoly control over money, you create slaves. Whether slaves to the debt of central banks or slaves to the political class i believe either or is a false choice. I again applaud your research into this subject and agree with a lot of what you say, but the idea that someone (govt, FED, john doe) has supreme knowledge of what the right supply of money or value thereof should be is not economically possible and only creates a distortion in the price structure of an economy. For instance, whos to say that interest rates shouldnt be higher in Utah than in Michigan based on the available amount of savings…Money attracts to its most productive use. So when the FED or Govt. sets the PRICE of money with interest rates, it distorts Michigan’s ability to attract more capital and Utah’s ability to lend more capital or vice versa…among many other distortions that monopolies create in a market. Just like Nixons wage and price controls created oil shortages later in the 70’s, setting interest rates creates shortages in some parts of the economy and surpluses in others…Thanks Again

      • And who doesn’t like to win a war?

        Being a Swede I am not in a position to teach you American history.
        I have just read on Lincoln a book or two from libertarians (DiLorenzo) and it does make sense. Just like most Swedes want out of EU, so the South wanted out of economically and politically dominating North.
        Theoretically it was OK but in praxis it was a wone way arrangement. The first serious test of federalism – failed with colors.

        And Lincoln just showed his disdain for Constitution, for sanctity of contracts, and for for human life, particularly. The 600K dead did not have to die early. Lincoln is no hero of mine.

  13. Looking on from across the Atlantic, my reading of Ms Brown’s article on QE2 is that she is simply acknowledging that the FED is, in this instance, doing what a truly federal agency responsible for the nation’s money supply would do – injecting much needed debt-free money into the economy. It’s not a matter of being a ‘turncoat’ – just a grown-up giving credit where it’s due.

    As she has pointed out numerous times, a far better solution would be a permanent, public body charged with supplying the nations credit, along with some publicly owned banks.

    • Thanks Michael from across the Atlantic! Just what I was trying to say.

  14. Ellen,

    I don’t like the fact that North tries to discredit you based on the fact that you’re a lawyer.

    Lawyers, in my view, should be integral to solving this crisis. Much more than economists, if you ask me.

    Law takes precedence over economics.

    That said, I don’t agree with you about QE2 or government issued money at all. I would recommend to you “A Monetary History of the United States” by Richard Timberlake.

  15. I don’t know a society able to produce such sterling Representatives who, having control of money wouldn’t use the Power for selfish purposes. Such a system would inexorably propel the most ambitious, ruthless, sociopathic individuals to where the Power rests – politics.
    And even if some societies are more traditional and relatively less corrupt, like Scandinavian ones (although I assure you that corruption is rampant there on higher levels), the less power politicians have, the freer the People, no exception. Money Power is a concentrated absolute power and it corrupts absolutely. Do you really want this, Ms. Brown?
    Power over money is not like administering post offices and no society is a happy village full of honest people.

    Which leads inexorably to Libertarianism and commodity monies competing in a free market. ….Except that Perfect Market and competition never existed in recorded history and is unlikely to somehow appear.
    Gold and ther valuables is going to be sooner or later cornered by some powerful clique and there is not going to be any Government strong enough to protect ordinary people. And then there appears some new, unofficial, private government (without the name Government in it).

    Which leads one to despair….Except that there is a minute possibility that somewhere in other dimensions there exists some good God who loves you (as George Carlin famously said) and some of us may yet enjoy a sensible existence in company with some nice people and girls. And a lot of money, of course. What kind of money might that be?

  16. Even if the Fed’s “dual mandate” were reduced to a single one — i.e., doing away with the employment mandate (since the Fed obviously can’t handle it anyway) and concentrating on stable price levels (though the dollar has lost 97% of its value since the Fed was created) — the Fed’s “inflation targeting” is obviously at odds with the best interests of the people. For even if the Fed could maintain a stable 2% inflation rate, all that would mean is that the people would suffer the monetary equivalent of death by a thousand cuts, as their purchasing power was eaten away year in and year out, ad infinitum.

    Not so with a 100%-reserve gold standard, as purchasing power would rise amid a steady decline in prices brought about by across-the-board increases in productivity. And to understand this, I urge everyone — especially you, Ellen — to read this fine piece by economist George Reisman:

    http://mises.org/journals/scholar/Reisman6.PDF

    And also note the additional advantages of a 100%-reserve gold standard: (1) “It is affirmative in approving the market’s choice of a commonly used medium of exchange,” and (2) “It is negative in obstructing the government’s propensity to meddle with the currency system.”

    Ellen, of course, doesn’t WANT the market to have this power — meaning that she doesn’t want THE PEOPLE to have this power — and instead wants THE GOVERNMENT to not only meddle with the currency system but to have complete control over it.

    Perhaps she can explain to us, then, how this is any different from the tenets of Communism, number five of which is “Centralization of credit in the hands of the state, by means of a national bank with State capital and an exclusive monopoly.”

    http://www.marxists.org/archive/marx/works/1848/communist-manifesto/ch02.htm

    But Ellen IS a Communist — or a fascist, which amounts to the same thing, since each is a form of state control with a commensurate loss of freedom, about which a well-known statist knew the difference:

    “When there is a state there can be no freedom, but when there is freedom there will be no state.” — Vladimir Lenin

    Face it, Ellen, you are outed, you are cornered, and you are accordingly discredited.

    • How do you establish, or enforce, or foster, a “100% gold reserve standard”?

      This is a question you need to answer.

      Calling Ellen a communist doesn’t cut it, either.

      • Once the government is out of the money and banking business — either the outright ownership of the central bank (socialism) or the corporatism of a “Federal Reserve” (fascism) — the market will decide what it wants to use as money, five thousand years of recorded history weighing in favor of precious metals (gold and silver). A law requiring 100% reserve of either or both would not be necessary, however, and in fact all banks wouldn’t necessarily BE 100% reserve. What all banks would have to DO (if they wanted earn/retain the public’s trust and therefore stay in business) would be to establish (by subjecting themselves to independent audits by reputable firms) that they are adhering to whatever reserve percentage they claim to, the interest paid to depositors being commensurate with the associated risk. Thus, while one might keep the bulk of one’s savings in a 100% reserve bank (paying storage fees rather than being paid interest), one might store the remainder in fractional reserve banks in accordance with whatever the market would bear, mindful that there would be no “deposit insurance” provided a bogus FDIC-type government agency. It would be a truly free market, in other words, with no way to inflate the money supply through the printing of irredeemable paper IOUnothings. And from there, the market would work its magic in accordance with George Reisman’s lucid explanation.

        As for calling Ellen a communist, the point is simply that central banking and that because Ellen believes that the government should have outright ownership of the central bank, she falls in line with the communists (“Centralization of credit in the hands of the state, by means of a national bank with State capital and an exclusive monopoly”) rather than than the fascists (private banks served by a government agancy (Fed Board of Governors). I’m just calling a spade a spade, in other words, never mind how blind the general public is to how far we’ve strayed from the path of freedom. And we’ve got hell to pay for having done so, all the more so for Ellen’s role in leading so many clueless Americans astray.

        • So in other words, you advocate for a 100% reserve gold standard for banks, but advocate no method to enforce that? The idea being that the market will sort out the good (honest) banks from the bad?

          And you do not propose to eliminate fractional reserve banking? You think that should be on the table as an option? Even though it is inherently fraudulent?

          • I advocate for the free market regulated by a rule of law restricted to the protection of life, liberty, and property. Period. Under such circumstances, fractional-reserve banking would only be fraudulent if a bank (1) either didn’t reveal that it IS fractional-reserve or didn’t reveal the EXTENT to which it is, (2) was based on legal tender laws that by definition dictate what money is, and (3) provided government-issued “deposit insurance” to prevent a run on it. Take away those three (as a free market would), and to whatever extent fractional-reserve banks existed, they would to so in strict compliance with depositor risk, meaning that they would be a mere shadow of the absolutely, utterly, and totally out-of-control money and banking system we have today.

            You know, the one that Ellen advocates.

            • First, banks themselves cannot control legal tender laws or laws establishing government insurance of deposits. I don’t see how either of those things being in place would put a bank or its officers in jeopardy of being prosecuted for fraud.

              That aside, then, under what you envision, as long as a bank disclosed the degree to which it practiced fractional reserve methods, such banks would be legitimate?

              And if they failed to disclose, or disclose fully, they would be liable to prosecution for criminal fraud under the rule of law?

              Or would they simply be liable civilly to the depositors they cheated? And you understand, of course, that such liability is illusory, since by definition the bank will have lost the depositors’ money and will have no way to make them whole.

              Is that about the size of it, then? You would not eliminate fractional reserve banking at all. Banks would have to disclose that they were fractional reserve, though, and if they did not the only effective enforcement you envision would be for the government to prosecute them criminally.

              In the alternative, people can pay to have their money stored in a 100% reserve gold standard bank.

              Please correct me if I’m wrong.

              • “First, banks themselves cannot control legal tender laws or laws establishing government insurance of deposits. I don’t see how either of those things being in place would put a bank or its officers in jeopardy of being prosecuted for fraud.”

                There wouldn’t BE legal tender laws or government deposit insurance, as the government would out of the money and banking business. Thus banks would be committing fraud if they falsely claimed 100% reserve or a higher fractional reserve than they were in fact maintaining.

                “And you understand, of course, that such liability is illusory, since by definition the bank will have lost the depositors’ money and will have no way to make them whole.”

                The threat of long prison sentences for the bank’s officers would a real and constant threat, not just from depositors but from shareholders.

                “Is that about the size of it, then?”

                Yes, with the understanding, again, that fractional reserve banking would for these reasons be a mere shadow of its former self. Which is to say that money would once again be honest, the market deciding what is and is not money (you and I could exchange seashells if we wanted to), while a rule of law based solely on the protection of life, liberty, and property be sufficient to maintain order.

                • You may recall that we had no central bank from the time of Andrew Jackson’s administration up to 1913; but that did not stop fractional reserve banking from becoming common and generating several bank panics in those years.

                  In addition, you imply that the “threat of long prison sentences” comes from shareholders and depositors, but the truth is it can only come from the government: the shareholders and depositors must appeal to the government to criminally prosecute offending bankers.

                  This establishes that in principle, even you believe that the government should have power over banks.

                  Your “understanding” that fractional reserve banking would be a mere shadow of its former self” is a prediction that is not borne out by history, since fractional reserve banking flourished in the US even when there was no central bank.

                  • That was then; this is now — i.e., an Information Age that would serve the interests of depositors vastly better than in the past. That is, depositors would be empowered to always know the risks involved in factional-reserve banking, doing so on a bank-by-bank basis. There would surely be bank rating agencies, for instance, that provided online, up-to-the-minute information, with money moving accordingly. Sure, there might be some periods of excessive risk-taking, but over time the market would balance itself out, there being no appeal to a “higher authority” for getting burned by taking on too much risk.

                    As for enforcement, a rule of law based solely on the protection of life, liberty, and property need not be provided by a government, nor in fact should it. For just as the market can provide every other good or service, including money, so can it provide a fully functioning legal system. See, for instance The Market for Liberty:

                    http://en.wikipedia.org/wiki/The_Market_for_Liberty

                  • As Thomas E. Woods wrote in Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse:

                    “[In the Panic of 1819,] as in other crises, banks were allowed to suspend specie payment (a fancy way of saying that the law permitted them to refuse to hand over their depositors’ money when their customers came looking for it) while permitting them to carry on their operations.

                    …The monetary system established by the National Banking Acts of 1863 and 1864 has been described as ‘a quasi-central banking type of monetary system.’ This inflationary system once again set in motion a boom-bust cycle along the Austrian-predicted pattern, culminating in the Panic of 1873 and the subsequent recession… Finance professor Michael Rozeff compares it to the boom in housing in our own day, which was also promoted by a combination of regulatory and monetary factors.”

                    Here is the Rozeff article he quotes:

                    http://snipurl.com/1jpctl

                    “The boom of 1869–1873 involved a banking system that created money backed by government bonds. The Fed does the same today. In both cases, it also involved Congressional stimulus. In the 1860s, it was railroad subsidies. In this century, it was a variety of measures to stimulate house construction and to absorb the mortgage credits via government-sponsored institutions like Fannie Mae and Freddie Mac.

                    Government leads the boom, business follows. Government prepares the boom. Wall Street commits it. The government’s tracks are hidden. Wall Street’s are not. Few blame government for the inevitable bust. Many blame Wall Street. Government investigates Wall Street and makes sure of that.”

                    Here are some free books from Austrian economist Murray Rothbard that you can read:

                    http://snipurl.com/1jpc6r

                    http://snipurl.com/1jpcbv

  17. Great article Ellen , As much as I despise the federal reserve banks, This is the next best solution…State and community owned banks ARE the way to go…..Gary North , while being a good writer and a smart man has lot invested in his way of thinking….Interest free greenbacks would work and he knows it….unfortunately Gary and his buddies gold holdings would not fare so well.

    • Thanks Jamie! Actually I have some gold. I’m not selling yet; I think it’s a good investment, just not a workable solution as a currency.

  18. In Gary North’s most recent article he writes that:

    “The Greenback movement has always been led by crackpots offering THE BIG SOLUTION.”

    Crackpots? Gary North is a poor historian if he actually believes this.

    Men such as Thomas Edison, Henry Ford, Peter Cooper, and Benjamin Franklin were all “Greenbackers” who believed that the money supply was one of the most important responsibilities of the Government.

    Gary North and Ludwig von Mises are not worthy to untie these men’s shoes.

    Interestingly, none of these men were “professional economists.” They were brilliant men – inventors, scientists, great business leaders and statesmen – and they understood monetary economics better than the so-called “professional economists.”

    Thank God nobody can ever accuse these great men of being associated with the “dismal science.”

    • Thanks, great point! I like Gandhi’s line: “At first they laugh, then they oppose you, then they say, ‘That’s what I said all along.'”

    • “It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.” – Henry Ford

      He was all for the fraud of central banking, in other words, as were his fellow corporatists, as the Keynesian addiction to “aggregate demand” assured that the masses would consume at all cost. And if they didn’t, the government would step in to do the consuming for them.

      What goes around comes around, though. Hope you’re ready, which I doubt, since you wouldn’t know Ludwig von Mises from Mickey von Mouse.

      • And let’s not forget Ben Franklin, who said: “When the people find they can vote themselves money, that will herald the end of the Republic.”

        “Free” education, healthcare, and retirement, anyone?

  19. Ellen, ignore North. Do a show with Keiser but don’t give North any more time.

    I’m looking for a simple, short handout to handout on the streets. The basics for the average, pretty clueless citizen. Do you have a recommendation? Thanks.

    • Thanks AJH. There’s a flyer you can print out on public banking, which is on my blog under Presentation Tools (lefthand side, home page).

  20. Ellen:
    I’m certainly not an expert. But,
    We are not really changing anything if we continue borrowing from the Feds . I know there is practically no interest rate(now). But, the fact is that we owe this money, which was created out of thin air, to a cartel – to the feds ticks me off. If our own government had issued fiat money or greenbacks I wouldn’t be so against the idea of QE2. But the fact remains that a private cartel, called the Federal Reserve, counterfeits the money that we the people are going to have to pay back. That irks me to no end. You, Ellen, have indicated many times, the government has the right to issue the money debt free. Why let the private banksters do this? It would be true QE2, if you ask me, to have the government step in with freshly printed money. Why the hell should we owe the Federal Reserve who simply prints up this 800 billion dollars, anything.
    There is a website that might come in handy for your movement Ellen. It is called “A New Way Forward” –> http://salsa.democracyinaction.org/o/1312/p/dia/action/public/?action_KEY=1340. It seems to me that to get something done that will resemble a democratic change movements that are similar should unite. We need a public bank. Nationalize the Federal Reserve!
    This article confused me. Dealing with the Feds seems to be like dealing with the devil. Today no interest tomorrow things will be different. Interest on what? Our fiat money? One step forward two steps back.
    I really enjoyed Your book Ellen
    terry

  21. If one wants to understand the theory around “QE” he/she should read the books by the inventor of the definition – Richard A Werner.

    He is a professor in macro economics at South Hampton University, UK, and one of the greatest authors on central banking-litterature. If you have read web of debt you really should read his classic “the princes of the yen” (bestseller in Japan) and his academical book “New paradigm in macro economics”. It will complement what you´ve learned from Ellen Browns work, including her latest QE2-article, in a very significant way.

  22. Folks, If ellen is wrong, then what has happened to our nation from being strong financial to being on the brink of being bankrupt as we are. Then I would encourage one to look at some of her solultions. As State owned Banks. Or maybe what China and Russia Is doing. My friends if what we are doing was so good why aren’t they jumping on our bandwagon? Ellen don’t give in.

    • “Or maybe what China and Russia Is doing.”

      I rest my case.

  23. Actually… I think both the goldbugs and the greenbackers are right and wrong. The thing is that no monoculture can survive for very long in nature. And the market or a society as a hole is a network just like nature. So… we can´t have only one currency. We need at least two and preferably even more.

    One great lets-system with both individualls and companies as members to utilise wasted resources and one or two currencies that works similiarly to our present system but without the FRB. And then another currency like an e-cold.com solution or similar could co-exist to create even greater resiliens withing the system.

    http://www.lieater.com will show you the way.

    • Those of us who favor market-based money and free banking would accordingly let the market decide what money is, there being no legal tender laws to force society to use “monopoly money.” While society in general might “rule” in favor of gold and/or silver, any two parties could use something else (e.g., seashells) if the voluntarily agreed to do so. As with the exchange of goods and services as a whole, that is, money would be no different.

      • Yeah I know that´s the theory. And I have no problem with gold and silver as decentralized “Yang-money” (but I do have a big problem with the gold standard as legal tender). However… gold and silver wont do it alone. We also need one or several “Yin-currencies” to take care of the unutilized resources in our society. Such a currency would for example be backed by peoples time or a companies underperforming assets or excess capacity (thereby being inflation proof).

        In such a system a person could help his/her handicapped neighbour with houseschoirs, get paid in the time backed currency, and then buy something from a company that otherwise would not have been sold, for example a car wash or a plain ticket. Together with one or more “normal” types of currencies (yang currencies) for the ordinary market this would create a world of abundance where poverty is no more (beacause everyone´s got time to back their own credit with) and where people interact more with each other in a positive way. No welfare state would be required and taxes could be reduced to a minimum.

      • Let’s think this through, before we get really confused.

        For a long time the “dollar” was defined in law in specie terms, e.g. 1/20th of an ounce of gold.

        Thus a $20 gold piece, of which some were minted, would be exactly an ounce, which was convenient for everyone.

        A “dollar” is just a term to establish a unit of account, in part to facilitate trade. Rather than price things in weights of precious metals that are practically infinitely divisible, “dollar” and its subdivisions such as cents have been used.

        The function of government is to define its unit of account. Thereafter, in theory anyone could produce “dollars”, presumably subject to laws against fraud.

        So you’re the John Smith mint, and you accept people’s gold and stamp it into coins of a particular weight to conform to the accepted definition of a dollar, or its subdivisions. You do this for a fee, which is called “seigniorage”, at least when the government does it.

        “Anyone” would include the government, of course, which can set up its own mints and stamp out coins, which is why the constitution gives the federal government the power to “coin” money, and this was traditionally done at the “Bureau of Weights and Measures” which still exists, I think though ironically I think all they do now is print up FRN’s.

        And of course if people do not want to deal in dollars at all they can barter with seashells or something else. They can do that now, but it’s very difficult and inconvenient, which is why the government set out to define a unit of account to begin with.

  24. Another great article, Ellen!! Thank you.

    I look forward to hearing also from those minds working on a public credit system globally that you write about in your final paragraph. You have helped pave the way for them.

    • Thanks Mary! Write to my website and we’ll talk!

  25. I can see a big change happening in America. The People that should control the wealth. The ones that create it by their sweat and hard work. are tried of the ones that want them to share it with those that feel they should get part of it. Then those on the other end, The ones that think they own the world and everyone should be their serants.

  26. Ms. Brown,
    I hate repeating myself but I really think you should take North’s challenge up. If only for educational purposes only. I am sure Max would be happy to host the debate.

    Our Civilization is based on debating things freely, from the antiquity thru the famous debates between popes and rabbis till today.

    There’s no escaping that North is one of the most respected libertarians – the same group which produced ONE sensible opponent of Bernanke in Congress – Dr. Paul.

    Your avoiding the debate gives the impression that you are afraid and that you know that your ideas are impossible to defend.

    People are fed up with the idea of strong government with all kind of powers and libertarians stand for minimal state and maximal liberty, also economic and monetary. If you have good arguments you will beat him but I am almost sure that you don’t and can’t, and that is the reason why you are avoiding him.

    North was “rude” to you because he saw what happened when Hayek had not refuted Keynes: Keynesism ruled and rules Academia to this day.
    North wanted to root you and your ideas out of patriot movement once and for all.

    And what you are doing? Hiding at your website and saying that you won’t debate cause you are a mom.

    This is not serious. The future of his country depends on what system will be instituted when this one falls. Time for debating i now.

    • Mr. Perdue:

      Give it a rest dude. You’re just a little hysterical.

    • I never infiltrated the Tea Party. I’ve never been to a Tea Party. I don’t go on Tea Party websites. I don’t know why he thinks I’m a threat. The debate will be won on the world forum. It’s between two competing systems, government-issued money and banker-issued debt. The banker-issued forum is the EU and its rigid austerity, which is precisely how a gold system would turn out, because it does not allow room for credit to expand naturally to meet the needs of trade. The closest thing we have to publicly-issued money is QE2, issued here in the States and in Japan (and to some extent Great Britain, though it has fallen for the austerity hype). I’m also working on the state bank option. I’ve got three presentations coming up shortly, two articles I’m trying to get out, I was invited to speak in Ecuador in January, and my kids are coming for Christmas. I’m just a writer, trying to illuminate some things that are going on that are being misinterpreted. I’m drowning in work. Debating rude people is not something I have time for or interest in. He can declare that he has won if he wants. I’m working on something else. The ideas we’re testing will be proved up not in debates but in real-world demonstrations. Show not tell, as we learned in English class.

      I invited Mary, who just showed up here, to write to me and we’ll talk. That’s because she’s nice, and is obviously trying to add something positive. We have a private google group, invitation only. It’s invitation only because we don’t want the difficult ones, such as show up on a blog; not that I don’t like interacting with my blog when I have time, but in our google group we’re really trying to get something done. We want the sincere committed working types, not the obstructionists. There is much work to do and little time for distraction.

      • Ms. Brown,

        I thank you for your reply.
        It’s a pity we aren’t going to hear an important and informative debate but it’s your choice and I respect it.

        Believe me, I do not doubt your noble intentions and wish you all the best in your endeavors.

        Alfred.

        • Thanks Alfred. He’s already said his intent is to destroy me and he’s demonstrated that he doesn’t play fair. He doesn’t exactly know how to entice a girl into the ring with him. Maybe later but I’m just swamped now. I shouldn’t even be looking at my blog! I do like the interaction though.

      • How do I get an invitation to the private google group? I feel so left out.

  27. Though I disagree with Webster Tarpley on rent control laws (I advocate a tax on land values as the optimal solution to rent extortion) and various other issues, he nails it when it comes to the true nature of monetarism and the Austrian school of economics:

    “Monetarist dogma is a mix of Herbert Hoover, Robert Taft (of the Skull & Bones family), Barry Goldwater, Ronald Reagan, and other reactionary Republicans. Monetarism is based on the von Hayek-von Mises Austrian school, which started when a bunch of rent-gouging Viennese landlords wanted to abolish rent control and hired some scribblers to prove that “the market” was always infallible and government is always the enemy.”

    Yup, that’s basically how this anarcho-capitalist B.S. was founded. Today, these charlatans and kooks would have us all believe that simply because a tyranny is privatized in nature, it is not a tyranny. According to them, rule by bankers and multinational corporations is supposed to be “freedom.”

    I will not be as nice as Ellen Brown in this debate. Idiots like Gary North cannot break out of the neoclassical economics paradigm, despite how utterly bankrupt of all legitimacy the field of economics has become. These people are not pro-free market; they are pro-plutocracy. Their myopic focus on “the guns of the state” completely ignores who is covertly funding and directing those guns in the first place.

    By their crackpot logic, the fact that George Washington pushed infrastructure projects would mean our 1st President of the United States was some kind of despot.

    Stupidity. Pure, childlike, absolute stupidity.

    I may not be on the same page with Ellen Brown in regards to national-scale healthcare programs, among other things, but her monetary ideas are moral, sound, and based on REAL HISTORY. So she’s a lawyer with no financial background, so what? Was the Constitution not ratified largely by lawyers?

    Anyone who legitimately esteems property rights and competition would understand that corporations only exist because the law allows them to under charter. They would understand that a wild west of competing currencies tends to be another scam though which the most financially savvy swindle everyone else of their wealth. But if you dare suggest that corporations be regulated or a national currency be established and protected, out crawl the anarcho-capitalists from underneath their stones screaming “totalitarianism.”

    I’ve said it before and I’ll keep repeating it until these fools let it sink in: The promotion of Austrian economics in America was funded by the Rockefeller family, a gaggle of eugenicist banking royalty with proven connections to Third World impoverishment and genocide.

    “For the first years of [Ludwig von] Mises’s life in the United States … he was almost totally dependent on annual research grants from the Rockefeller Foundation.” – Richard M. Ebeling

    • “Monetarist dogma is a mix of Herbert Hoover, Robert Taft (of the Skull & Bones family), Barry Goldwater, Ronald Reagan, and other reactionary Republicans. Monetarism is based on the von Hayek-von Mises Austrian school, which started when a bunch of rent-gouging Viennese landlords wanted to abolish rent control and hired some scribblers to prove that “the market” was always infallible and government is always the enemy.”

      Yes, well, um, gee, where to start. How about with NO MENTION OF MILTON FRIEDMAN — http://en.wikipedia.org/wiki/Monetarism — and the fact that this little sister of Keynesianism has about as much to do with Austrian Economics as I do with the assassination of JFK. (OK, I DID it! I DID it!)

      Read Mises’ HUMAN ACTION, and then we can talk. Intelligently.

    • As far as your Rockefeller accusation goes, it is simply flimsy circumstantial evidence. This was brought up on the Mises forum and dismantled:

      http://mises.org/Community/forums/t/20332.aspx

      These foundations fund all sorts of intellectuals, that’s how they capture those intellectuals.

      It’s no surprise that they supported Mises, although I think they may have been foolish if there was any expectation he would alter his views to suit his patrons. Mises was heroic for his commitment to liberal ideals.

    • ” Idiots like Gary North cannot break out of the neoclassical economics paradigm, despite how utterly bankrupt of all legitimacy the field of economics has become. These people are not pro-free market; they are pro-plutocracy.”

      It’s difficult to refute this brilliant reasoning. If you think with slogans, no wonder you like Tarpley economics. Or is it LaRouchism?

      I am sorry, man. You don’t know what you are talking about.

    • hmmm….first off anarcho-capitalist kinda means no govt…and since corporations only exist by govt charter i guess that kind of nullifies the logic of corporations dominating all in a pure free market. The privatized tyranny is noam chomsky speak and makes no sense. tyranny is something that you can’t get out of…like centralized govt…monopoly control over money…again having nothing to do with Mises. Free market means people are free to choose for themselves whatever they want to buy or grow or sell or where they want to work or if they want to live in a tent next to a river and fish for their life. Banks really would have no power other than holding the money for safe keeping. loans would be handled separately from deposits. banks would depend on a good reputation to survive. think of them like grain storages in a free market…can’t loan out what they dont have unlike this fractional reserve method….which by the way Mises kinda pointed out that it was the artificial credit expansion of fractional reserves that created the boom cycle and malinvestment that ultimately busts….And yes paper money has been tried a number of times in real history…both credit (FED) and fiat (greenback, continental, Confederate Dollar etc. etc etc Reichsmark etc etc etc) and EVERY SINGLE ONE OF THEM HAS GONE TO ITS REAL VALUE…..0.0000000000000. And yes, a national currency is a tyrannical thing. It gives the state the power over 1/2 of every transaction. So please actually learn to think and be open minded…its really not hard to understand once you open ur thinking a lil. The reason the corporations can be sooooo big is because of the power given to them by the govt. how can the govt get that big? because we the people let them print their own freaking money which “aint worth the paper its not printed on.” WE THE PEOPLE got complacent and let the govt get massive and gave it control and gave away our freedoms and handed over our money. U “liberals” (which you arent really) arent asking for freedom to live ur life and my freedom to live mine. U are really askiing for a teet to suck on and nurture u ur whole life….wake up and smell the roses….u are being robbed, lied to, manipulated and used and ur asking for more….WAKE UP!!!

  28. “QE2: Beware the Perils of Its Success”

    “The Fed wants to create asset bubbles, praying for the wealth effect – stock and real estate appreciation that will make people feel wealthier (at least on paper, for a while) so they will spend their phantom gains. However, the Fed is like a Judas goat leading gullible (yield-deprived) savers to the slaughterhouse. The paper wealth that is created will vanish as bubbles burst (they always do), wealth will be destroyed, and consumers will find themselves further in debt.”

    http://www.zerohedge.com/article/qe2-beware-perils-its-success

  29. It’s sad when those who speak the loudest about money know the least about it, and this includes the Austrians, Libertarians, and most formal branches of economics being taught in today’s schools and universities.

    Only free and independent thinkers like Ellen Brown can get back to first principles and definitions to strip away the confusion over money. One cannot talk intelligently about money without starting with basic definitions and axioms – prime assumptions.

    No one who does not recognize that wealth and money are different things can speak with any intelligence about money OR wealth. Both terms must be CLEARLY defined in the minds of those engaged in the debate, or all that ensues is Orwellian gibberish.

    We must start with a clear and concise concept of “wealth”. Wealth is either labor (energy) applied to produce or enhance a product or service OR the natural resources (metals, minerals, gasses, liquids) that are used in such production, OR some combination of both. In other words, wealth is end result of resources and applied labor and/or creativity that have VALUE to someone or some group. Gold and silver are examples of wealth, as is oil. gasoline, etc.

    Having a clear concept of WEALTH we can then differentiate it from MONEY, which is a substitute or proxy for wealth use to facilitate exchanges of wealth. The real debate here is what should be used as “money” and who should issue or control its value. Those who own and control most of the gold and other commodity resources (wealth) of the world naturally want to see their favored commodity (gold is forefront) used as money, and they would have nations borrow the “gold as money” from them or their central banks or agents. It’s the old “who benefits” question, “qui bono”. Eventually through the expansion of the “fractional reserve” lending practices, it nearly all ends up as “paper money” at some point, only issued by private banking corporation that are subject to bankruptcy and failure.

    The modern alternative promoted by Ben Franklin in the American Colonies and Lincoln during the Civil War is the direct issuance of US Treasury Notes, sometimes called “Greenbacks”. These are issued directly on the full faith and credit of the nation, i.e., its people.

    The ultimate question is one of sovereignty. Who is sovereign? Because the issuance of money or currency has always been a sovereign prerogative. In a republic or democracy the “people” are supposed to be sovereign, and therefore should contolf the issuance of money. In a dictatorship or monarchy the ruler is “sovereign”, and issues the money.

    Control of money and taxation have always gone hand in hand with the right of sovereignty.

    Ellen and a few other original thinkers here have it right. Most comments I see here are full of loud and boastful ignorance. When you start with “garbage in” you get “garbage out”. It’s called GIGO in computerese.

    • “The ultimate question is one of sovereignty. Who is sovereign? Because the issuance of money or currency has always been a sovereign prerogative. In a republic or democracy the “people” are supposed to be sovereign, and therefore should contolf the issuance of money.”

      Precisely, so why do you believe that twelve private banks overseen by a highly secretive government agency should control not only the issuance of money but the definition of it, the latter being “Federal Reserves Notes” that are completely unconstitutional and are backed by nothing more than the “full faith and credit” of the greatest debtor nation the world has ever known.

      If the “people” were in fact sovereign, they would do as people have done for millennia, i.e., decide among themselves what money is — be it seashells, coconuts, precious metals, whatever — as the parties to a given exchange see fit.

      You will have none of this, of course, and, like Ellen, are only too happy to place sovereignty in the hands of the state, with predictable results.

      GIGO, indeed.

      • “Precisely, so why do you believe that twelve private banks overseen by a highly secretive government agency should control not only the issuance of money but the definition of it, the latter being “Federal Reserves Notes” that are completely unconstitutional and are backed by nothing more than the “full faith and credit” of the greatest debtor nation the world has ever known.”

        ______________________

        At least I have to give you credit for getting the “precisely” right, if nothing else. Why ask why I believe something I don’t, nor have never given any indication that I do? In fact, it is exactly the opposite of what I believe, or advocate.

        Why does everyone from the Von Mises, Austrian, “Money is Gold” schools of thought have to first invent positions they falsely attribute to those they debate, before they refute them? Why can they seldom, of ever, seem to address the actual ideas and positions others advance?

        First you put words in Ellen’s mouth (or the written equivalent) and then mine, or anyone else that sees the fallacies in the Mises, Rothbard, Greenspan, Austrian School of economic distortion, then you build elaborate arguments against these “invented positions” or “straw men” in debate parlance.

        You don’t just do it occasionally, or some of the time. You do it ALL of the time. You spend all of your time “polarizing” the positions of others, and utterly ignoring any “middle ground” of what is being discussed.

        This is why I refuse to spend much valuable time debating those who always fall back on such deceptive tactics, and why Ellen is wise to do likewise with the likes of Gary North, an expert in such sophistries.

        You, North, Von Mises and all the followers of the “Goldbug” school of “Commodity Money” refuse to address those basic principles and fundamentals that prove your positions false, as you have again demonstrated in this deceptive reply.

        Once again, wealth is not “money”. Money is an abstract substitute for wealth used for purposes of exchanging wealth. Gold is wealth, not money. Silver is wealth, not money. Forms of wealth can be used as
        money”, like cattle, grain, gold or silver, but they are not money. They are instances of wealth. Money is given its value by social agreement, generally through governments among people, in order to more easily conduct the business of an highly organized and specialized society. Money is given its value by its stamp, or seal of issuing authority, which can be on a coin or a piece of paper.

        None of the Austrians, or Goldbugs, deal with these most basic assumptions. They, like you, simply ignore them.

        A pity we can never actually debate the issues. I wonder if it will always be so?

        • “Why does everyone from the Von Mises, Austrian, “Money is Gold” schools of thought have to first invent positions they falsely attribute to those they debate, before they refute them? Why can they seldom, of ever, seem to address the actual ideas and positions others advance?”

          An example, please.

          “First you put words in Ellen’s mouth (or the written equivalent) and then mine, or anyone else that sees the fallacies in the Mises, Rothbard, Greenspan, Austrian School of economic distortion, then you build elaborate arguments against these “invented positions” or “straw men” in debate parlance.”

          Again, an example, please.

          “You don’t just do it occasionally, or some of the time. You do it ALL of the time. You spend all of your time “polarizing” the positions of others…”

          I spend my time making it as clear as I possibly can — as does Gary North and any other Austro-libertarian worthy of the name — that market-based money is the polar opposite of the debt-based monetary fascism of the Federal Reserve System.

          “…and utterly ignoring any “middle ground” of what is being discussed.”

          You mean “muddle ground,” which is what Ellen spends her time flip-flopping in.

          “This is why I refuse to spend much valuable time debating those who always fall back on such deceptive tactics, and why Ellen is wise to do likewise with the likes of Gary North, an expert in such sophistries.”

          No, you waste your time in the lawyerly fashion of the following:

          If the facts are on you side, use them.
          If the law is on your side, use it.
          If neither are on your side, pound the table.

          Which is to say, your fist must be awfully sore.

          “You refuse to debate because you are incapable of thinking You, North, Von Mises and all the followers of the “Goldbug” school of “Commodity Money” refuse to address those basic principles and fundamentals that prove your positions false, as you have again demonstrated in this deceptive reply.”

          That one REALLY had to hurt.

          “Once again, wealth is not “money”. Money is an abstract substitute for wealth used for purposes of exchanging wealth. Gold is wealth, not money. Silver is wealth, not money. Forms of wealth can be used as money”, like cattle, grain, gold or silver, but they are not money.”

          Now that’s impressive: pounding the table and talking in circles at the same time.

          “Money is given its value by social agreement, generally through governments among people, in order to more easily conduct the business of an highly organized and specialized society. Money is given its value by its stamp, or seal of issuing authority, which can be on a coin or a piece of paper.”

          Show me where society ever agreed to the Federal Reserve System, and I, Dick Buttkiss, will kiss YOUR butt, having not the slightest doubt that I will ever have to do so — http://video.google.com/videoplay?docid=6507136891691870450#.

          Moreover, to believe that society needs anything other than mutually agreed upon money to conduct its business is to confuse the complicated with the complex — the US Tax Code, for instance, with the game of chess, the latter’s simple but certain rules resulting in complexity that has been a wonder of the world for centuries, while the former’s endless and ever-changing rules generate mind-numbing waste, massive fraud, and metastasizing oppression. That, in fact, is the primary difference between the society and the state, never mind that you are incapable of making that distinction.

          “Non of the Austrians, or Goldbugs, deal with these most basic assumptions. They, like you, simply ignore them.”

          If only we could ignore your assumptions, embodied as they are in the absurd belief that a government stamp or seal can magically create what in fact can only be created through saved work — i.e., by the extra loaf of bread that is baked not for one’s own consumption but to exchange for the extra dozen eggs that your neighbor produced. For however sophisticated this process might become over time, it is never really any more than this process. And as every attempt throughout history to short-circuit it has failed, so will the present one, the task Austro-libertarianism being to put an end to this insanity once and for all, with no thanks to you, Ellen, and the den of thieves you shill for.

          “A pity we can never actually debate the issues. I wonder if it will always be so?”

          That would be up to you, Jere, though you could do yourself and your fellow man a favor by reading Mises and Rothbard instead.

          • I’ve been reading Rothbard, Von Mises, Griffin, Hayek and other “Austrio-Libertanians” for years. I was an admirer of them far decades, until I reasoned through the flaws in their thinking on money.

            This is why I refuse to waste time “debating” you and those of your mindset. I’ve written tens of thousands of words on this website alone on these monetary issues, and if had bothered to check, you would know Ellen and I have long been promoters of GE Griffin’s books and videos that shed light on the evils of the Fed.

            It is not the problem that we disagree with the Austrians on, it is the solution. You may spend as much time as you like discovering my actual positions on these issues on my website by clicking on my name above, or going to

            http://wealthmoney.wordpress.com

            You’ll find a link (with high praise) to GE Griffin’s book and videos there. Ellen also posts them here, and in her book, about which you appear to have no clue.

            It is you who “shills for thieves”, not Ellen or I. All “Goldbugs” shill for theives (the international central bankers), knowingly or not.

            Now, since I’ve at least read a few dozen books by Griffin, Rothbard, Von Mises, Hayek and others of that scool of thought, perhaps as a matter of fairness YOU might actually read Ellen’s book, Web of Debt. This website is *supposed* to be about the material in that book, or her articles that extend those principles. It is NOT supposed to be about misrepresentations of her (or my) words and ideas.

            Thank you.

            • Again, only broadsides, to say nothing of the complete and utter contradiction between the conspiracy surrounding the Federal Reserve’s creation and the money you nonetheless believe is socially agreed upon.

              Like Ellen, you are intellectually conflicted and only muddy the waters with your futile attempts to square the circle of government intervention in this most vital component of the free market. And I pity those who are foolish enough to follow either of you down this path of destruction.

              Signing off,
              DB

              • The only ones who are conflicted are you, Mr “Buttkiss”, , Mr North, and the Austrio-Libertarians who insist on mislabeling wealth (gold) as money. It is the international bankers you represent who have been leading us on a path of destruction for the past 97 years. The “goldbug” or “gold is money” position is simply the other side of the international bankers position, their “Plan B” or fallback” position. It is where we were up until 1971 and during the start of the Great Depression of 1929 – 42.

                It is the Central Bankers, the IMF, BIS, and World Bank (and their agents) who own or control most of the world’s gold, and it is they, not the general public, who would benefit from any attempt to return to a gold standard.

                But all this is endless repetition stated and restated in Ellen’s books and articles, as well as those by the American Monetary Assn ( http://www.monetary.org ) and by progressive thinkers everywhere who are trying to warn us about the disastrous path we are now treading.

                It is the PRIVATE creation of interest-bearing money that is the heart of the problem, and switching to gold, or any other commodity, would only substitute on form on “Monopoly Money” for another.

                Using any form of commodity wealth for money simply allows for the richest individuals and corporations to “corner the market” in that commodity, thus enhancing their own wealth at the expense of everyone else.

                Only the blind and those who will not see beyond their own self-interest could understand this. Once again I will refer you to my website for more detailed explanations of all this: http://wealthmoney.wordpress.com

  30. Yesterday I was in Parry Sound, Ontario. There is an Irish pub/restaurant there with a fascinating display case featuring old currency, much of it from the late 19th century. During that time neither Canada nor the US had a central bank.

    Of course that did not mean there was no paper money. Banks, such as the Bank of Montreal or the Imperial Bank of Commerce issued bearer notes in various denominations; they had on display $10 notes, $2 notes and interestingly 25 cent notes. The “Dominion of Canada” issued notes as well, drawn on the national government’s treasury. There were also notes drawn on the US Treasury, though as far as I could tell these were all silver certificates.

    These were all “pay to the bearer on demand” notes, which are also known as “bearer paper”, as in, whoever possesses it is entitled to redeem it at whatever institution it is drawn on.

    The difference with all of this currency was that none of them were “legal tender”, which is to say that no one was required by law to accept them. Thus, if you didn’t care for the Bank of Montreal you didn’t have to accept their notes, although generally speaking all these notes were, in fact, widely accepted. Nobody had a monopoly on note issue, though, including the government. Anyone was permitted to issue currency, though – also including the government – and anyone could refuse to accept currency they didn’t like for one reason or another or for no reason at all.

    Ms. Brown and her followers need to understand this historical phenomenon, I think.

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