In addition to mandatory private health insurance premiums, we may soon be hit with a “mandatory savings” tax and other belt-tightening measures ushered in by the President’s budget task force initiated on February 17. These radical austerity measures, however, are not only unnecessary but will actually make matters worse. The push for “fiscal responsibility” is based on bad economics.
Read more here –
http://www.webofdebt.com/articles/fiscal_responsibility.php
Filed under: Ellen Brown Articles/Commentary |
WEB OF DEBT BLOG 
thank you.
I wonder sometimes if political leaders are really clueless – or if they understand what is going on very well – and just chose “politically viable” option – which is to server the capital. I think the later is closer to the truth. In that case a few calls to the congressman won’t change much.
I’ve communicated with each of my senators and representatives about our nation’s economy. I usually receive back a polite reply that looks suspiciously like a form letter given to everyone who writes to them about that topic.
I’m still waiting for any of them to intelligently address my requests for monetary reform, and the associated reasoning that went with those requests.
What else can I do to promote real economic reform?
well, just think about it : what would congressman gain if he promoted real economic reform? In theory he would get public support and be re-elected. But in practice:
1) he would have trouble reaching the public – as media is controlled by those who like the status quo
2) he would create many VERY powerful enemies for himself – who have a lot of money to support anybody who would run against him – besides making his personal life difficult
3) he would basically bury his political carrier and any hope for some financial gain or comfortable and respected life after his term – for why do politics go into politics in the first place if not for that. I very much doubt there are any idealists among them
4) he would not find “the votes” to pass it. That is so obvious now when every even remotely reformist law initiative is killed. In fact it is probably safe to propose reformist law and gain some public exposure without risking that it would pass and make REAL enemies.
Basically it would be a lose-lose proposition to any lawmaker – I think including the president.
I was hoping for a more positive answer.
Since the political leaders are not going to do anything different, what else can I do?
honestly – I don’t know
On a more positive note…
It would be great if somebody like Michael Moore made a movie about this.
if there were a lot of calls to the lawmakers – then it would work. The problem is reaching and educating many people.
It seems the movies that do serve to properly educate, based on truth, are swept under the carpet and repressed by the media. This is what I have witnessed. Most of these movies must be released for free online, since the theaters will not show these movies.
Michael Moore appears to be a paid-for provocateur. He mentions the problems, and takes great care to never, ever mention the real source of the problems covered in his films. He is an expert distractor and attention re-director.
I don’t agree.
His recent movies were very informative – at least to me. “Sicko” – for example was a revelation to me regarding how widespread and permeating insurance con was. He also offered alternatives.
Of course – I wish he could be more thorough in his argument – but still it is way better than nothing.
I found this quite relevant:
“Private capital tends to become concentrated in few hands, partly because of competition among the capitalists, and partly because technological development and the increasing division of labor encourage the formation of larger units of production at the expense of smaller ones. The result of these developments is an oligarchy of private capital the enormous power of which cannot be effectively checked even by a democratically organized political society. This is true since the members of legislative bodies are selected by political parties, largely financed or otherwise influenced by private capitalists who, for all practical purposes, separate the electorate from the legislature. The consequence is that the representatives of the people do not in fact sufficiently protect the interests of the underprivileged sections of the population. Moreover, under existing conditions, private capitalists inevitably control, directly or indirectly, the main sources of information (press, radio, education). It is thus extremely difficult, and indeed in most cases quite impossible, for the individual citizen to come to objective conclusions and to make intelligent use of his political rights.”
Albert Einstein
1949
Full article:
http://monthlyreview.org/598einstein.php
“if the American people ever allow private banksters to control and issue their currency, the people and their children will one day wake up homeless on the continent their forefathers conquered” – Thomas Jefferson”….the power to issue and control the currency/money, must be given back to the people to which it rightly belongs” – Thomas Jefferson….”private central banksters controlling the peoples money are more dangerous than standing armies” – Thomas Jefferson….its time to END THE FED and big government for good people..Ron Paul’s bill HR 1207 to audit the fed,will do nothing,as the federal reserve lawyers will cook the books and make everything look just dandy..a waste of time..in fact, I would bet the fed lawyers are fudging the books right now ..the fed must be ABOLISHED,and it can be done w/o nary a bill to get rid of it..with this new state banking money system,the fed will die on its own accord..state run banks with “honest” money ARE the solution..a new interest free paper currency issued in each of the 50 states possibly backed by silver,[NO GOLD]..we had our money backed by gold in 1929 and the 1930’s..did it stop the great depression? NO!..although gold would still retain a value 16 times greater than silver per the constitution,with each state making their own $1,$5,$10,$20,$50,and $100 paper notes backed by silver[ex: $20 Texas silver note..under that “payable to the bearer on demand $20 in silver [when presented at any state bank,you would receive either $20 worth of 90% silver coin, 20-.999 silver dollars,4 – 5 oz. .999 silver bars,or 2 -10 oz, .999 silver bars],and all 50 state paper notes would be accepted in every state and abroad..having 50 different notes for the 50 sovereign states would make it extremely difficult for the banksters to take back control of the U.S. money system again.. a dollar would be 31.1 grams of silver[ONE OUNCE] as per the constitution..change for the new paper notes would be pre-1965 90% silver again[only 90% silver with 10% copper is hard enough to take the day to day pounding/ movement/exchanging and hold up],and 100% copper again for pennies..a state run honest money/banking system with interest free loans run by the people.. for the people.. there would be only a small administrative fee/ cost, to borrow money to pay state bank employees and mgrs. etc.
EX: you[or a small business starting up lets say ]were to borrow $205,000 for a $200,000 house/loan,you would pay back $205,000 over the next 5,10,or 15 years[ditto credit cards],instead of the present parasitic fractional reserve banking system where you would buy a $200,000 house[or a $200,000 loan] and you would pay the private parasitic fractional reserve banksters nearly $1,000,000 over 30 or 40 or even 50 years for money made from NOTHING!!..thin air..infinite free money..THIS IS ABSOLUTE,UNADULTERATED INSANITY..
paying the banksters for money made from nothing..it just blows you away when you think about it..its hard to wrap your mind around.. just like 9-11
the private non-federal reserve is simply the greatest scam,fraud, and deception in the history of the world..bar none
IS IT ANY WONDER MANY OF US ARE DEAD BROKE AND BURIED SO DEEP IN COMPOUNDING DEBT WE WILL NEVER GET OUT IN A LIFETIME??
and living paycheck to paycheck?
this isn’t living..this is [debt] slavery and many don’t even realize they are lifetime debt slaves of the banksters!
it just doesn’t have to be this way!
state controlled banks with “honest” money, will bring back manufacturing and real jobs!
a nation that is prosperous MUST produce goods folks!
3rd world countries don’t produce goods!
the U.S.A.. IS in fact a 3rd world country now!
a petition page will soon be up at WEB OF DEBT.COM
where you can sign it and DEMAND your state
implement state run banks! [unless you live in N.Dakota that already has state banks]
..BANKS AND “OUR” MONEY CONTROLLED BY WE THE PEOPLE..
talk about PROSPARITY RETURNING TO AMERICA..
imagine paying $500-$1,000 for a new car again..
of course a new state bank silver dollar will have the purchasing power of a 1913 dollar..but we can start all over again as a nation,
and bring ALL the troops home from abroad and have them protect OUR BORDERS! with 50 new sovereign state banks this country can be turned around in days
not months or years, but DAYS!
Dear Ellen,
Another winner of an article. Each time, you are able to get your arms around the situation and sum it up eloquently.
Whether our political leaders are sinister or ignorant, the article further illustrates the need for grass-roots movements, local publically-owned banks, and other measures regarding money and wealth that are controlled in manageable communities.
What I fear is not so much a global conspiracy, but the potential of multiple solutions yielding multiple camps of well-intentioned people, each saying that they have the best solution (be it putting the Fed under the treasury, abolishing it, or just focusing on state banks), but not uniting or compromising. It is my hope that everyone be willing to do whatever it takes to re-claim our right to control our fiat medium of exchange, whatever way that is.
Readers:
Do what I am doing. Write your members of congress! Do you know a mover-and-shaker in your community? Educate that person! Print out some articles and distribute them! Buy them Web of Debt and offer them a free dinner when they are finished with it! Offer this nation up in prayer! If you don’t, and the world-domination-conspiracy scenario plays out successfully, you have no one to blame but yourselves.
Paul.
Ellen
Thanks for posting this excellent article. It hits the nail directly on the head. Our debt based financial system is on its last leg, the bankers have bought all of the politicians and stolen all of the money that they can. Now is the time to change the system and hold those who directed this horrible play accountable. This site and others like it will ensure that the public is kept informed and not mislead. Pray for a smooth transition in the upcomming months as we try to correct the broken machine we call our country. If there is no orderly correction I would not want to be a banker or politician.
Thanks Daryl!
Thanks Ellen, for yet another “must read” article that looks at the economic realities that lie hidden “behind the curtain” of the financial Wizards of OZ. (OZ, as in ounces of gold). Also notable are the comments so far, for their quality.
More and more, people seem to be catching on to the money-magician’s games. It’s time to create a new paradigm: a system that is based on real the real democracy of personal and local responsibility for our economic and social well-being.
As you have noted, Buckminster Fuller said: ““You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.”
The new vision must be attractive to the many, and to be attractive it must offer people things that people want and need. I believe it is our task to create a vision of a new reality, a new paradigm. It must be a broad vision, with something that appeals to everyone. Most importantly, the vision must be in harmony with that of our Creator.
A fair and just monetary system would have to be an ingredient of that new paradigm. When monetary sovereignty rests with “the people” (as in the public) we will be on the right road to finding such a system.
Thanks for another fine piece of work, Ellen.
A jobless recovery is like having a foodless meal. There is no money velocity when the economy is still contracting in a jobless recovery. The financial markets have recovered to a certain extent in anticipation of the economic turn around, hopefully they are not hyperextended. All of the bailout money should have been created by treasury and lent to the banks via the Federal Reserve Bank. Let the interest flow back to the people, not the private bankers. All of the treasury bonds being redeemed by foreign countries should be bought by treasury with treasury creating the dollars to do so, not the FRB. How different the world would be if the interest on the money created went to our treasury and not to the private bankers. If bankers needed money, they could borrow it at interest from the treasury. There would be no debate on healthcare funding, social security, education cost, public infrastructure as that would be all funded by the interest paid to the government. In fact, there would be little or no need for income taxes or even state and local taxes. In fact, there would no need to let in the illegal immigrants to artificially expand our economy so that the interest payments are made to the private bankers. This is totally backwards and needs to be changed.
True. The tricky part is implementing it!
Boy O’ Boy – Free Money! It doesn’t have to stand for anything, it can be printed at will, it never has to be paid back, and it lasts forever. Wheeee…
What fools we’ve all been all this time.
What this travesty of an article doesnt mention is the only reason we can print our own money to pay our own debts is because the USD is the worlds reserve currency. Other nations have traded their real goods for our monopoly money.
This will not go on forever: at some point foreigners will no longer take our dollars. where does Ms Brown believe the resources will come from to pay foreigners for real goods. Where it will come from is we will go to war and steal others resources in exchange for our blood.
That money is debt in the current scheme there is no argument. That money should be debt, that is the real question. Long term prosperity from capitalism comes from uhh..capital, which Ms Brown also doesnt mention.
This article is like a icing without a cake:no real substance
Actually the reason we have such a large federal debt is that the dollar is the world’s reserve currency. Because dollars are needed in the world for international trade, they don’t come back to our shores. It’s not necessarily a good thing for us. It’s called Triffin’s Dilemma; the country providing the reserve currency eventually goes broke. Our dollars are not worthless paper, they are receipts, good for a dollar’s worth of goods. We acknowledge having received goods and deliver a receipt payable on demand in an equivalent amount of goods and services. It would be best for us if the dollars WOULD come back to buy our goods; then there would be some “demand” for U.S. products, and factories could start churning them out again. Gold will not work as a currency. When we were on a gold standard in the late 19th century, we were in a serious depression. There was not enough money for trade. “Money” is just a receipt for goods and services; we need MORE money out there, not less.
The reason we have such a large debt is that we spend more than we have. Debt is the mechanism by which we feed our cumulative addiction. Our dollars are not “receipts, good for a dollar’s worth of goods” – in stable terms anyway – since they were replaced by Federal Reserve notes, instead of retaining their status as “silver certificates”. Were they still backed by gold, silver, commodities, or other actual goods, we would not have this problem, because by being tied comparatively to something of actual value, we couldn’t just “increase our wealth” by creating more “money”. That is the Keynesian fallacy. Our currency is, in fact, mere paper or digital bits in computers (especially internationally), having “virtual” value, at best. It is also irredeemable, since the phrase “full faith and credit of the US” has been made an oxymoron by our unwillingness to balance our books and reestablish an ethical means of exchange. It is only when money can be counted on, to wholly substitute for the goods and services it is purported to represent in financial exchanges, that it can be said to have worth. Such is not the case for our dollar, and when we have created more debt than the capital value of our country, we will in fact be bankrupt. We’re almost there.
If we count the Federal Reserve System and Federal Government as a single unit, the government effectively prints our nation’s money. The main reason our government can successfully get away with this is that it requires payment of taxes in this money and makes all its expenditures in this money. That establishes a complete circuit – money flows out as the government spends and flows in as it taxes.
The federal deficit is just an accounting gimmick so our zero-sum accounting rules can account for the non-zero sum creation of money.
Unfortunately, the Federal Reserve System (FRS) and the Federal Government are separate entities and the FRS is owned by private interests who want to make a profit on an operation that would be more economically efficient for society if it were operated as a non-profit public monopoly.
Your point of circuitousness is well taken, except for the “deficit [being] just an accounting gimmick so our zero-sum accounting rules can account for the non-zero sum creation of money.”
Do our foreign creditors think the money we owe them is a gimmick? Supposing you own US T-bonds, do you think your expectation of being paid upon their maturity would overcome a gimmick? Does not a zero sum game imply a closed system? Is that what you think we’ve got here, or does your admission of non-zero sum money creation also admit that the deficit is real, i.e., more than an accounting gimmick?
A zero-sum game _does_ imply a closed system. And that’s part of the problem. The system is _not_ closed. Money can be created or destoryed at will. Whether that money be a commodity, paper tokens, or electronic bookkeeping entries.
The U.S. constitution grants Congress the authority to create and manage our nation’s money supply. If Congress decides to spend more money than the government takes in in taxes, it can do so. And doing so adds money to the nation’s money supply.
In theory, it should add money to the money supply, however, people’s beliefs that you cannot spend more than you earn leave them confused. The confusion leads to the belief that we are operating with a deficit. With many law makers and public officials being equally confused, they try to cover the deficit by selling bonds. The U.S. Treasury and Federal Reserve work together to make sure that the government borrows enough money to cover that gap between what is spent and what is received as taxes.
All this borrowing shifts the actual money creation from Congress to the Federal Reserve System. Private banking entities create the money, buy the bonds, and expect interest on those bonds. If the federal government really understood its power, it could simply create the money and avoid the debt.
Everything works well in your fiat monetary system until either :1) those who use the money, but are outside the closed part of the system, want value that your fiat money can no longer provide, and/or 2) confidnce in the govt or monetary system erodes. At either of those junctions, the fiat money loses value as the medium of exchange that it was.
Money backed by universally-accepted tangibles does not have that problem; thus, there is no ability to erode monetary value by the fractional reserve methods of which you speak. Further, for money based on tangible reserves, the term “deficit” has the actual meaning of not having enough tangibles to service the amount of money or debt instruments created, i.e., you are indebted and to purchase more you must add more debt or earn (not create) more money .
The notion that any amount of fiat money can be created and circulated by govt or banks, without devaluation, only works for some countries and only for so long. World reserve currency status is the basis by which we have been able to continue to do so, and that would not have been possible by now if not for our military superpower status. But, the news is out that America has overextended itself and, more importantly, has begun to turn away from the Capitalist model by which it has been so successful. Thus, the international clamor for a new reserve currency grows apace.
The day on which a new world currency regime takes hold will be the day that signals to Americans – the rest of the civilized world having been aware for some time now -that we are about to endure 3rd world status. Unfirtunately, that’s also the day that seriously unchecked monetary creation will accelerate and our true hyperinflationary ride will begin.
The Argentinian / Zimbabwean synthesis is about what we’ll call it.
“The notion that any amount of fiat money can be created and circulated by govt or banks, without devaluation, only works for some countries and only for so long.”
There are limits on how much (or how little) money can circulate within an economy without negative consequences. Regardless of whether that money is created directly by the government, through a debt process with the banking industry, through counterfeiting, or by some other means.
When it comes to international trade, our government’s debt provides a “safe” and marginally profitable place for outside investors to park the US Dollars received when selling their products to the U.S.. I suspect you’re right, that international sellers would not be as interested in selling their goods to the U.S. if there was no one interested in accepting those dollars in trade outside of the U.S.. But international trade carried on just fine before there was a reserve currency. Except for oil, our nation would manage just fine without international trade — life might be dull, it might take a couple years to ramp up manufacturing facilities, but it would also end off-shoring of jobs and reduce unemployment.
As for money backed by tangibles, by virtue of their use as money, those tangibles gain value above and beyond their intrinsic worth. Whether it be gold, silver, grain, conch shells, pieces of paper or anything else. In most cases that extra value was added by fiat – by a government demanding them in payment of taxes or declaring them legal tender. So I don’t buy the intrinsic value argument for a commodity based currency. I know many people think that a gold based currency would not be subject to inflation, but history shows that nations with a commodity based currency were no less immune to inflation than countries with a fiat currency. However, those nations with commodity based currencies, especially where those commidities were rare and easily monopolized, often suffered economic depressions from not having enough money.
My intent is not to distinguish between governmental- and bank-created money, but to establish the illusion of perpetual value for fiat money, especially for the US at this point in time. Any idea that we can spend our way to prosperity can be immediately and effectively rebuked by historical examples, including the Japanese experience, which leads the way for our own. They threw hundreds of trillions of yen at their financial collapse without anything positive to show. They initially had large monetary reserves (savings) by which to bolster the value of the yen (which we lack entirely) and still could not prevail through cranking up the monetary supply. The turn of our government toward the Argentinian political model of the 20th century is the next phase in our economic demise.
As for an asset-based currency, BRIC, OPEC, even Japan and the IMF are calling for, and have begun, replacement of the USD as the international reserve currency, most notably because of our profligate spending without regard to financial reserves, the unethical financial dealings we foisted upon our people and other countries of the world, our burgeoning unemployment, and our lack of productivity that render US a very poor financial risk going forward. Even T-bonds are poised for a fall. “Safe?” We and they, all, see that term being systematically devalued along with our currency, which (as noted above) is based only on “full faith and credit”. What other way than linkage to assets can the USD be resurrected as an honest store of value?
“What other way than linkage to assets can the USD be resurrected as an honest store of value?”
I think that is part of the problem. The belief that money is a store of value or desire to have it as a store of value. Money is not wealth and should not be treated as such. By itself, money does nothing productive. In most cases you cannot eat it, you cannot wear it, you cannot use it as a constrution material; in fact most money is nothing more than accounting book entries kept on computers – you cannot even use it as toilet paper!
Money should just be part of an accounting system by which we measure people’s contributions to society and allow them to take resources from society.
When money becomes a store of value, people start saving money rather than saving tangible goods or investing in future productivity. When disaster strikes, tangibles goods like food, clothing, and fuel will see you through, but money will not. When disasters occur, and everyone has monetary savings but no one has a store of tangible goods, the few available tangible goods will see their prices climb through the roof while many people discover that their monetary savings is useless. People would be better off with large pantries and store rooms of emergency supplies than with a savings account. They would be better served investing in disaster limiting construction than by saving money. So I no longer believe in using money as store of value.
Zareptheth…
Back to the wide column…
The US electorate wallows in a state of ideological befuddlement.
Broad distrust of the bloated federal government ( reflected in polls) is a traditional attitude echoing the dispute between Jefferson’s replublicanism and the Federalists of Washington and John Adams. Right wing Tea Party “populism” wants to reduce government influence and interference in the private sector. Joe Stack’s violent and impotent gesture of despair typifies this latter day republicanism. That government which governs least, governs best. The private sector is the redemptive power. Government is the enemy in the form of intrusive micro-management of the private sector…..Socialism.
The anti-socialist Republican Party, is representative of the traditional American desire for individual liberty, whereas the Democrats have become advocates of big government micro-management, AKA “socialism”.
Today, the true populist solution put forward by EHB falls on deaf ears because it is a “government” solution for the ills of the private sector. Blind ideology of the right believes this is impossible, whereas blind ideology of the left, the Clintonian “good government” is dominated by social engineers with little faith in private sector initiative, a government knows best attitude that dreams of a NWO where lions lie down with lambs.
Not only does Ellen’s populism require a faith in government that is in extremely short supply in the electorate, it also seems too good to be true. The greenback solution seems like a perpetual motion machine that generates abundant credit and national solvency….for nothing! A free lunch!
Nonetheless, all that she says is TRUE! But….only if government is subject to the will of the people, and is open and transparent. Real populism is not anti-government; it is government by and for the people. Government is the only tool the people have to control the wolves of the private sector, the corporate powers lately bolstered by the Supreme Court, that have in fact, seized the people’s government for themselves in a coup d’etat that began when Washington appointed Alexander Hamilton as Sec of the Treasury.
The government no longer represents the people. It exists as government did in the days of King George, but is supremely powerful as a mere monarchy was not. Secret, nefarious intelligence agencies control political agendas in ways the average voter would find unbelievable.
The people are befuddled and angry. They do not know how to take back their government, which is why Joe Pack flew his plane into the IRS building.
The solution is easily explained, as Ellen does article after article, but the ideological confusion of the electorate is not so easily corrected, especially when public discourse is by and large controlled and limited by the black budget powers that be.
Thanks! well said.
Zarepheth says – “When disaster strikes, tangibles goods like food, clothing, and fuel will see you through, but money will not… So I no longer believe in using money as store of value.”
And so I see your agreement that fiat money has no real value
You also say, “money should just be part of an accounting system by which we measure people’s contributions to society and allow them to take resources from society.”
Maybe that’s where we differ. Society doesn’t own squat. Individuals do. You collectivists are all alike.
I choose the word “society” because I could not think of a better word which would be inclusive of purchasing goods and services from any part of society wether that be an individual, a business, a non-profit, a local or state government or even the federal government.
And yes, money should have no real value. Various economists have even proposed monetary theories that the best money, is the money that has no value in itself. Indeed, there are historical examples of societies whose money had value only because it was money. One of the ancient Greek city-states used iron dipped in acid for their coins. That made their coins useless for anything but money. A half-millenia ago, the British Isles used wooden tallies as money. And these forms of money actually worked. The money had absolutely no value, except in trade. But it provided a functioning economy.
As for you comment that only individuals own things — you really need to take a look around you. Most businesses are owned by collective entities. Some number of people, greater than one person, got together and share ownership of the business. Local and State governments have ownership of our roads and much of the public infrastructure. The Federal government joins in with ownership of the rest of our nation’s public infrastructure. Religious organizations own most of the religious buildings and private schools. In many case, even homes and farms are owned by married couples, not individuals.
if there was a famine – eating gold won’t save you any more than eating paper.
“You collectivists”???? Give us a break! Mankind is a social being. Civilization is a social (collective) accomplishment. Without social organization (government, order) we would still be savages in the jungle, living in chaos.
I flubbed on individuals, as with you and society. My point had to do with anti-collectivism, and in the US, at least, govt is supposed to be of, by, and for. Your point about money is also well taken, especially when the worthlessness of money remains constant. Too bad ours has declining value, at least in terms of how much of something it can purchase. There’s a serious lesson there.
Nice chat, gotta go, plane to catch.
gold value is also far from constant. Sometimes it declines in values – sometimes it increases in value.
If gold was the only money – what would be its value? The numbers that are stamped on it, or the price of gold itself?
If it is the numbers – then it makes no difference if number is stamped on paper or on metal. If it is the price – then you have it now – just buy gold and hoard it.
It is the fiat currency that is changed in value by its desirability as the medium of exchange. Its has derivative value based on what it can purchase, as well as how willing people are to accept it. Gold is an anchor by which fiat currencies may be compared. Go to kitco.com or any other site where you can track the relative price of world currencies for any period you wish. What you will find is that the only constant among them is their value in terms of how much gold they will purchase. You’re right, you can’t eat it, but when the chips go down, it will allow you to buy – in essentially constant terms – things that your USD will not.
Those who consider gold to be a truer form of money than some sort of fiat currency are merely listening to tradition – albeit about 300 years worth of banking industry promoted tradition – but tradition nonetheless.
The Inca’s had plenty of gold. Yet it was not money for them. However, when the Spanish came, they saw the enormous quantity of gold adorning even the lowest castes and assumed the Incas were extremely wealthy. They weren’t. The spaniards used military power to subdue the Incas and ship their gold back to Spain. Lots of gold did not make Spain any wealthier, but it did cause inflation. The military conquest of the Incas destroyed their civilization and anything of value their culture and viewpoint might have added to the world, but did not create any new wealth elsewhere in the world. I’d say it was a bad investment — except for a few at the top who could use the extra gold to buy for themselves real wealth created by other people, no one else gained and many lost.
The thing that gold has going for it is its desirability within, and especially beyond, our national borders. It is desired worldwide as the number one alternative to fiat money, even the USD. In fact, all commodities are being sought worldwide to guard against insolvency. It’s not that gold, silver, or other commodities function better as the medium of exchange, it’s that they have actual uses beyond their exchange value. Paper money has none, and can create no real wealth either… in fact, our problem – as we know – is our unrepayable debt forged through fractional reserve banking. Talk about inflation!
To reiterate a previous post, only our status as providers of the world’s reserve currency, enforced at gunpoint, keeps the US from being faced with the type of IMF-required measures that 3rd world countries have faced when their fiscal houses fall apart. We will not escape that.
There is much to be said about money, as well as what it represents. I believe we have been talking past
each other, as you are generally addressing money-qua-money, while I am focusing on its derivative value relative to current debt,national solvency, politics, and power. To debate the status of money without regard to these practicalities is to miss the point of just exactly how and why we are selling ourselves down the river.
if the “chips” will REALLY “go down” – gold won’t buy you anything either. Otherwise – you are right – gold will buy you more than dollar. But what is it you want? You can hoard the gold now.
If everybody will hoard it – you won’t be any more special than the others – and again if everybody will have gold – it won’t buy anything when “the chips go down”.
Or do you have so much of it that you desire its price (in fiat dollars) to increase before “the chips go down”?
Everybody won’t have it, to begin with, either individually, nationally, or internationally. And whatever amount I could possibly own could not be bought at any price that might come along at least until those chips won’t float. But the point remains… gold is the accepted anchor, as far as things have gone since the US has been around, and any attempt to keep oneself afloat can have no better starting point. There is the theoretical, there is the argumentative, and then there is the practical. What would you rather have… a bag full o’ hundred dollar bills?
I’d rather have the means to produce the wealth I need to care for myself and my family, irrespective of monetary and financial systems.
A farm with reasonably fertile soil, seed, livestock, tools, and the knowledge to live off the land. No need for gold, no need for money. If the monetary system collapses, I can still feed myself and my family. I can barter with my neighbors. And with my current knowledge of money and can propose a new monetary system for our part of the world.
This is basically back to subsistence farming, but it is also the creation of real wealth. Whatever I create with my hands, whatever I cultivate, whatever livestock I raise are all forms of wealth that have real value for human life.
Outside of a few artisitc and industrial uses, gold has no real value. Perhaps that is why it became money! Easy to mark, resistant to corrosion, and useless for anything but trinkets. In other words, when civilization crashes, gold has no more value than paper!
Regarding subsistence farming as a way of life, we are in total agreement. Regarding gold, it has and will have whatever value people give it. Right now that is quite a lot and seems to be growing.
all right – gold is “accepted anchor” – but so is silver, diamonds, other precious stones – and many many other things that people value.
Ultimately – it seems that what you want is the ability to hoard something valuable so that later you can barter with it. You think that gold is the magic thing that you will always be able to barter. But really – it is no different than any other thing. Its price will fluctuate based on supply and demand – also it will differ as compared with the value of the thing you want to exchange for it.
What if the thing you want increases in value much faster than gold? Woudn’t you wish you hoarded that thing instead?
Like food or water or air. If the “chips go down” you might have to exchange all your precious gold for a piece of bread. So think about it – how much bread you can buy with your gold now – and how much will you be able to buy when “chips go down”? I think then you will wish that you hoarded food instead.
Really – if society is just and cares for its members – there is no need to hoard anything. Money can be anything in such case.
If a frog had wings…
ha ha ha 🙂
yeah – but what is easier – to change money – or society? And would you be able to do one without the other? And finally – if you just changed money without changing society – why do you think that would do the trick of suddenly making you (and I imagine you would include majority of fellow americans with you) live better lives?
I don’t believe in collectivist solutions, and only want the money to remain as valuable as it has bee. It seems I’m doomed to experience neither.
The “austerity” program does not include military and war spending. The truth is that the system was designed to enslave people in debt.
It all comes down to how and who issues the money. It always has. The species of currency is at best, a secondary issue that is often used to obscure the truth. David Astle explained this in “The Babylonian Woe” and I urge anyone interested in freedom and economics to read this book (available for free online, special thanks to a friend, Ishmael at yamaguchy – link – http://yamaguchy.netfirms.com/7897401/astle/astle_index.html
Here is an excerpt:
“History over these last three thousand years particularly, has largely been the interweaving of both a witting, and an unwitting distortion of the truth, with all the inevitable consequences which have been expected and now are but a little way ahead. Kings largely became the mouthpiece and sword arm of those semi-secret societies that controlled the material of money as its outward and visible symbols came to be restricted to gold, silver, and copper…
The fiat of the god in heaven which had been the decisive force behind that which brought about an equitable exchange, was replaced by the will of those classes controlling the undertones of civilization, leaders of the world of slave drivers, caravaneers, outcasts, and criminals generally, such as was to be discerned on the edges of the ancient city civilizations, and followed the trade routes between them…
The instrument of this will was precious metal, whose supply was controlled by the leaders of these classes through their control of the slave trade, since mining was rarely profitable in the case of the precious metals, except with slave labour, even after the development of hardened iron tools and efficient methods of smelting.
The power of these men, indifferent and alien to most cities as they were, relative to that power it was replacing, which was the will of the benevolent god of the city, had been made absolute by sowing in the minds of men over the thousands of years, the idea of such metals having a specially high value relative to other goods and services being offered for exchange; indeed that they were veritable store house of value.
The law of the ruler previously exercised towards the well being of the people in that they might live a good and honourable life accordingly became corrupted. It became merely a symbol raised before their gaze, in order that they might not look down and see the evil gnawing away at the roots of the Tree of Life itself, destroying all peace and goodness.
Nor could those semi-secret groups of persons be seen who so often were the sources of such evil. In their contemptuous indifference to the men of the state who found meaningfulness and tranquility through life lived in natural order under the law of the King, they constituted hidden force deeply inimical to the best interests of mankind.”
Mankind has been living in the financial dark ages for literally thousands of years under various forms of feudalism. Communism, fascism, naziism, monopoly capitalism and socialism are just variations of feudalism. The money power always rules supreme though it may be hidden behind the facade of monarchy, dictatorship or even a pretended representative government.
This knowledge can literally set us free if we understand and apply it to our current circumstance. We must take back our power to issue and control our own money from the private banks that rule us. If there is to be a revolution, it will really be an awakening.
Larry
Note: Compare the similarity of the EU Parliament Building and the Tower of Babel from these two image links –
Mmm, interesting! Thanks Larry!
Excellent post, Larry. Thanks
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“If there is to be a revolution, it will really be an awakening.”
Having grown up, married, accumulated assets, raised families and been divorced, I find this statement short on detail, since the dissolution of marriage and revolution, the dissolution of a similar agreements between people, result in similar chaos.
Divorcees rarely develop a new and better construct for their personal relations than they accepted and assimilated as they grew up. They generally just pick a new mate and resume life within the same construct. Revolutions historically seem to wind up similarly; a new set of faces begins operation, using the old ways of thinking that led to revolution in the first place. The Thai people call this “old wine in new bottles.”
To actually “wake up,” society must be able to function without any of its former flawed constructs, which seems to mean most of them these days, when fundamental constructs like “growth” require the same growth in raw materials and energy supplies which in fact are quite finite. True awakening to this reality will not be voluntary nor comfortable for the vast majority of people who have assimilated and believe in a culture based upon a false premise, the flawed fundamental that “more is better,” when we have reached the point where there is no “more.”
Reality dictates that now, many will have to get by with much less and a “revolution” will not change reality.
True awakening allows our deluded species to understand that a happy life requires far less than we’ve been sold. I do not expect this idea to gain traction following any upheaval based upon the idea that some parties have had too much and that they behaved poorly, therefore their stuff should be redistributed. This is the basis of most revolutions – and many divorces. It rarely leads to anything but prolonged angst, greater poverty and sadness.
Thanks Bill. I fully agree. I hope people click on your name, underlined (linked) above, and spend some time on your valuable website. Kudos for some great editing.
Quick question – sorry if I am detracting from the thread…but…
Bond Fraud – let me try to explain the way I understand government bonds, I may be missing something or just plain wrong.
Let’s say a primary bond dealer, like CitiBank, buys $100 worth of 5 year @ 10% bonds from the Treasury. So, it appears that $100 has been created and added to the money supply at a cost of $110.
Next, the Federal Reserve (New York Branch FOMC) buys the $100 bond from CitiBank, and it pays $100 which is posted to CitiBank’s reserve account.
It looks like $200 was created, for virtually free, over a $100 bond. Am I missing something?
Larry
Dear Ellen, I’m 76 and your book Web of Debt is a living history of my life. I’m not finished with it. I only hve a few chapters to go. And from the first chapter I wanted to read no.47 but i haven’t.. Everything is truth and i hope with the Tea Party Movement we can do what Lincoln, Jackson, Kennedy and others wanted to do. Maybe by the grace of God and people like you we can bring this nation back to what it was founded on. God Bless You and your love ones.
Thanks for the kind words. Tthat’s what keeps me going! Ellen
The Lincoln Administration issued Greenbacks to pay for war supplies — the food and ammunition and clothing for a million-man army. The manufacturers of these war supplies paid their employees with Greenbacks. The employees bought goods from local stores with Greenbacks. Local merchants bought their supplies from farmers and other manufacturers with Greenbacks. The war was won — the nation preserved — with Greenbacks.
The “hard money” people then, as now, complained that Greenbacks have no “value.”
Imagine a comprehensive health system today financed with Greenbacks — the training of new doctors and nurses; expanded laboratories and research; community health care centers with everything from primary care physician offices to swimming pools and saunas to intensive care units. Imagine the greatest system imaginable — regular paid health days to just relax; no long lines; you need a heart valve, you got it; need a new knee, no problem… all paid with Greenbacks, which the doctors and nurses spend at the grocery store and on and on…
Or an army of engineers creating the new machines and technologies to take us to Mars and beyond… all paid with Greenbacks.
Or systems to divert rivers to make deserts bloom; or fusion reactors to create tiny suns on earth… all paid with Greenbacks.
But the “hard money” people say Greenbacks have no VALUE. The exponential increase in the peoples’ health; new technologies; gardens on the Mohave; an endless supply of cheap, clean energy… of no value?
So, wealth is created by doing without polio vaccines?
Once while doing a clinical rotation on the mental ward of a hospital it struck me that what makes a person crazy is not knowing WHY they think the way they think.
You got good responses.
http://debtmanagementguide.org/
The bailout of Greece is a bank bailout…if no bailout, Greece would simply default and move on with their lives, internally…either way they will have to do without money from foreigners, so why just adjust to non-deficit spending and default on foreign banks rather than adjust to non-deficit spending and also having to pay back loans – a double whammy that will ensure economy will not recover for decades.
Greece should default, print drachmas…and when they fully recover they can even pay back banksters if they feel like it…since imports will be expensive, they will essential have “tariffs” to protect the creation of internal industry, a good thing.
If austerity is so brilliant, why had everyone shunned IMF until Greece?
And why doesn’t anyone mention Argentina…they defaulted which was painful but recovered quickly and nicely, thank you…if they had continued to pay IMF…just as painful but for
decades…and they would have done even better if they monetized more
http://www.huffingtonpost.com/2010/05/14/argentina-greek-financial_n_576931.html
shirking in fear of today’s rain leaves us forever cowered behind the clouds of ignorance….courageously standing up with hope for the future, we find the light and warmth of the sun, and realize, it was just a passing storm…