Trumping the Federal Debt Without Playing the Default Card

“The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default.”

— Former Fed Chairman Alan Greenspan on Meet the Press, August 2011

In a post on “Sovereign Man” dated August 14th, Simon Black argued that Donald Trump may be the right man for the presidency:

[T]here’s one thing that really sets him apart, that, in my opinion, makes him the most qualified person for the job:

Donald Trump is an expert at declaring bankruptcy.

When the going gets tough, Trump stiffs his creditors. He’s done it four times!

Candidly, this is precisely what the Land of the Free needs right now: someone who can stop beating around the bush and just get on with it already.

Black says the country is officially bankrupt, with the government’s financial statements showing a negative net worth of $17.7 trillion:

Nations that pass the economic point of no return can’t rebuild until they hit rock bottom. And the US is way past that point. So let’s get on with it already and hit the reset button.

Black recommends doing this by defaulting, preferably on Social Security and Medicare. But that is unlikely to suit this leading Republican candidate. As Trump said on Meet the Press on August 16:

I want people to be taken care of from a healthcare standpoint.… I want to save Social Security without cuts. I want … a strong country with very little debt.

How can the country remain strong with very little debt, without defaulting on Social Security, Medicare, or the federal debt itself?

There is a way. The government can reduce the debt by buying it – and ripping it up. The debt can be bought either with debt-free US Notes of the sort issued during the Civil War, or with US dollars issued by the Federal Reserve in the form of “quantitative easing.”

The vast majority of the money supply today is created by banks when they make loans, as the Bank of England recently acknowledged. Banks create money by “monetizing” debt, turning loans into the digital deposits that make up most of the circulating money supply. The government could push the reset button by monetizing its own debt, turning it into what it should have been all along – debt-free, interest-free dollars. As Thomas Edison observed in 1921:

If the Nation can issue a dollar bond it can issue a dollar bill.  The element that makes the bond good makes the bill good also. . . . It is absurd to say our Country can issue bonds and cannot issue currency. Both are promises to pay, but one fattens the usurer and the other helps the People.

That is not just a quaint idea from the 1920s. Credible authorities are making that argument today. In November 2010, Dean Baker, co-director of the Center for Economic and Policy Research in Washington, wrote in response to the debt ceiling crisis:

There is no reason that the Fed can’t just buy this debt (as it is largely doing) and hold it indefinitely. If the Fed holds the debt, there is no interest burden for future taxpayers. The Fed refunds its interest earnings to the Treasury every year. Last year the Fed refunded almost $80 billion in interest to the Treasury, nearly 40 percent of the country’s net interest burden. And the Fed has other tools to ensure that the expansion of the monetary base required to purchase the debt does not lead to inflation.

In 2011, Republican presidential candidate Ron Paul proposed dealing with the debt ceiling by simply voiding out the $1.7 trillion in federal securities then held by the Fed. As Stephen Gandel explained Paul’s solution in Time Magazine, the Treasury pays interest on the securities to the Fed, which returns 90% of these payments to the Treasury. Despite this shell game of payments, the $1.7 trillion in US bonds owned by the Fed is still counted toward the debt ceiling. Paul’s plan:

Get the Fed and the Treasury to rip up that debt. It’s fake debt anyway. And the Fed is legally allowed to return the debt to the Treasury to be destroyed.

Congressman Alan Grayson, a Democrat, also endorsed this proposal.

In February 2015, financial author Richard Duncan made a strong case for going further than monetizing existing debt. He argued that under current market conditions, the US could rebuild its collapsing infrastructure with quantitative easing without causing price inflation. Prices go up when demand (money) exceeds supply (goods and services); and with automation and the availability of cheap labor in vast global markets today, supply (productivity) can keep up with demand for decades to come. Duncan observed:

Quantitative Easing has only been possible because it has occurred at a time when Globalization is driving down the price of labor and industrial goods. The combination of fiat money and Globalization creates a unique moment in history where the governments of the developed economies can print money on an aggressive scale without causing inflation.

They should take advantage of this once-in-history opportunity to borrow more in order to invest in new industries and technologies, to restructure their economies and to retrain and educate their workforce at the post-graduate level. If they do, they could not only end the global economic crisis, but also ensure that the standard of living in the developed world continues to improve, rather than sinking down to third world levels.

Abraham Lincoln revived the colonial system of government-issued money when he endorsed the printing of $450 million in US Notes or “greenbacks” during the Civil War. The greenbacks not only helped the Union win the war but triggered a period of robust national growth and saved the taxpayers about $14 billion in interest payments (figuring an average of $300 million in outstanding US Notes over 150 years, at an average real interest rate of 2.6% compounded annually). The US federal debt has been growing ever since 1835, when President Andrew Jackson last paid it off and closed down the Second US Bank. If judicious use of US Notes had continued to the present, there might now be no federal debt at all.

The Inflation Snag

In short, the sovereign debt crisis can be solved by issuing sovereign money. But is there really such a thing as a free lunch? Wouldn’t buying up the debt with newly-issued money lead to a hyperinflationary disaster?That was the fear when the Federal Reserve began its QE program in 2008. But the Fed has now monetized $4.5 trillion in QE ($2.7 trillion of which consisted of buying back federal securities, and these fears have not materialized. The stock market has gone up, but not apparently from an increased money supply. More likely it is from very low interest rates, making bonds unattractive and facilitating stock buybacks and borrowing to invest. The cost of produce has gone up, but it is largely because of drought in California, which supplies nearly half the country’s fruits, vegetables and nuts; and because speculators have moved into foodstuffs. Despite all that, the overall inflation rate remains at manageable levels.

Why didn’t $4.5 trillion in QE drive prices into the stratosphere? As financial writer Matthew Kerkhoff explained in a November 2013 article, quantitative easing is just an asset swap:

When the Fed creates $85 billion, it uses this money to buy bonds . . . . When the Fed creates and gives $85 billion in reserves to its member banks, it removes $85 billion worth of assets (bonds) from the balance sheets of those same member banks. The result is that no new net financial assets enter the economy. . . .

It’s much more accurate to think of the Fed’s QE program as an asset swap. In fact it’s even more accurate to think of it as a liquidity swap. . . . In this context liquidity refers to the ease with which money can be used.

Bonds are more cumbersome to spend than cash, but they still represent purchasing power. Government securities that can be quickly converted into cash or that are near maturity are considered a form of “near money”. When the Fed buys the bonds, it is simply converting this less-liquid money back into more-liquid money. As Warren Mosler and John Carney explain on

Quantitative easing is about the Fed buying Treasury securities. When you (voluntarily) sell them to the Fed, at current market prices, the Fed just shifts your dollars from your securities account to your bank’s reserve account, all at the Fed. So why should that do anything to the economy? You have the same amount of dollars, and you could have shifted them in the same market place any time you wanted in any case.

The QE liquidity swap does not increase the circulating money supply. The money supply increased when the bonds were issued – when the debt was incurred and the government spent the funds.

Adding to the federal debt beyond its current level (i.e. by funding infrastructure with new QE that is not repaid with taxes) would increase the money competing for goods and services. But the economy actually needs that increased “demand” in order to promote full employment (one of the Fed’s mandates). Demand (money) precedes supply (goods and services). The money has to be out there searching for goods and services before employers will add more workers to create this increased supply. Money can be added to the point of full productive capacity (full use of workers, supplies and machines) before adding more will drive up prices. And as Richard Duncan observes, we are a long way from full productive capacity now.

Whether full productive capacity would exhaust the earth’s resources is another question, but there are many ways to put people to work that either don’t use physical resources (e.g. education, art, social service, environmental cleanup) or that actually make resource use more efficient (investment in improved infrastructure, sustainable energy, research and development).

Time to Reset

Back to Donald Trump. Besides his experience with bankruptcy, Trump, along with Bernie Sanders on the left, is unique in not being beholden to big money. Sanders does not take it, and Trump does not need it. If either candidate makes it to the White House, he will be in a position to stand up to Wall Street and do what is right for the country. And that includes restoring the power to issue the national money supply to the people of the nation through their representative government.


Ellen Brown is an attorney, founder of the Public Banking Institute, and author of twelve books including the best-selling Web of Debt. Her latest book, The Public Bank Solution, explores successful public banking models historically and globally. Her 300+ blog articles are at Listen to “It’s Our Money with Ellen Brown” on PRN.FM.

156 Responses

  1. […] DI ELLEN BROWN – […]

  2. […] ELLEN BROWN – ellenbrown​.com Redazione: Gli Stati Uniti hanno toccato il fondo e devono premere il pulsante del ‘reset’ […]

  3. charles3000, on August 19, 2015 at 10:49 am said:

    “Treasury bonds and bank CDs are identical instruments; agreements to return monies at the end of a defined length of time at a stated rate of interest. As such both can be viewed as debt of the issuer. Viewed in that way the debt of the federal govt is 17T$+ and the debt of the private banks is 19T$+ or -. The US govt can, will and does pay their debt but banks can fail…”
    Not so. The banks can not erase their debt when that debt is so high that it would cause “systemic failure”
    The FED has destroyed its ability ‘to control the quality and the quantity of the currency. OUR sovereign currency is now at the mercy of the Private For Profit Banks, therein lies the fatal flaw.

    • It is bookkeeping. If you wish to understand the process study the materials in The entire process is described there.

      • Charles, posts the following statement:

        “REAL MONEY ECONOMICS is a fledgling research and advocacy initiative growing out of a conference held at the Federal Reserve Bank, Philadelphia in April 2013 ”

        You would ask the Fed on how to fix the swindle of the Fed ??

        • Read all of it and it is not “The Fed”, it is real people who are experts in their field and understand how things work proposing actions that will take away the power of the Fed and return it to the people.It is not the people in the Fed who are to be blamed, it is the system established eons ago that gave power over money to bankers. People working for the Fed want to see that change too and they know how to do it!

          • Dear Charles and Old Rebel,
            Charles, thank you for your kind encouragement, I am at your service.
            The function of money has two sides, the executive and the planning. The executive facilitates the actualization of the planning. Planning is accessible to all, but because of the transnational banking system, capital is limited. Control of the capital, the executive function, equals power concentrated beyond the control of the people, which is only countered when people create, concrete, autonomous sovereignty, inclusive of monetized organization and production-based economy. Sovereignty is an economic proposition. The money is created and invested by the people. That presupposes an authentic democracy, which presupposes human scale, sovereign, communities, and confederated communities. The basis of that possibility is that the exchange element, EE, would not be money. Money would serve it s functions, but the new EE, would become each person’s self-realization, self-actualization, sanity, maturity; a contrasting civilization. The money would be a public service, together with all civic services. The objective would become, living in real conviviality. Conviviality, too, is an economic proposition; mutualism, civic-economy. Mutualism is purposed to provide everyone with the means for developing subjective individuation – education through art extending into the civic-economy and participatory, community dialogical decision making processes – a structural proposition that functions in decentralized organization. The civic-economy, would establish the floor of economic stability for everyone. And, people are capitalized to actualize private projects. Public banking fits in that context. It gives the people unity and momentum. It provides the means to leave the “Fed” behind. You be well!

        • Dear Charles and Old Reb,
          Charles, thank you for your kind encouragement, I am at your service.
          The function of money has two sides, the executive and the planning. The executive facilitates the actualization of the planning. Planning is accessible to all, but because of the transnational banking system, capital is limited. Control of the capital, the executive function, equals power concentrated beyond the control of the people, which is only countered when people create, concrete, autonomous sovereignty, inclusive of monetized organization and production-based economy. Sovereignty is an economic proposition. The money is created and invested by the people. That presupposes an authentic democracy, which presupposes human scale, sovereign, communities, and confederated communities. The basis of that possibility is that the exchange element, EE, would not be money. Money would serve it s functions, but the new EE, would become each person’s self-realization, self-actualization, sanity, maturity; a contrasting civilization. The money would be a public service, together with all civic services. The objective would become, living in real conviviality. Conviviality, too, is an economic proposition; mutualism, civic-economy. Mutualism is purposed to provide everyone with the means for developing subjective individuation – education through art extending into the civic-economy and participatory, community dialogical decision making processes – a structural proposition that functions in decentralized organization. The civic-economy, would establish the floor of economic stability for everyone. And, people are capitalized to actualize private projects. Public banking fits in that context. It gives the people unity and momentum. It provides the means to leave the “Fed” behind. You be well!

  4. I’m glad someone is finally talking about this. Unfortunately, the two presidents who have tried this both ended up the same way. Here is a link to a United States Note issued by Kennedy, fyi.

    • I am reasonably sure US Notes were issued under the greenback law from Abe Lincoln’s era. Their issuance was ended in 1971 and the remainder at Treasury was burned. JFK was associated with silver certificates which were also non-borrowed money.

      • Follow the link. It’s a U.S. Treasury Note (not a silver certificate) issued by Kennedy under an executive order.

  5. The link did not get in the comment. I am interested…

    • Greenspan declared that the national debt could always be paid because the government could always print more money.

      to create more money requites the government issue more debt (which becomes more profit for the Fed).

      Is this not the classic description of a Ponzi scheme that inherently results in bankruptcy ??

      • The government can, has and does issue money without borrowing. It is allowed in the constitution and existing law. And it is on going as I write.

        • The concept that the government is “borrowing” money is an illusion spread by the FR. If money was in fact borrowed, there would be no increase in the money in circulation nor would there be any increase in the national debt (the money already existed).

          The money of deficit spending is a book-entry creation of fiat money performed by the FRBNY. It is not borrowing. What is created is Federal Reserve Notes which are identified on the face as a legal tender denominated in dollars. You are required to accept them—by law—as a substitute for dollars for all debts public and private.

          The government has in the past issued money. It is always identified as United States Notes. It does not increase the National Debt. They were last issued in 1963—very briefly.

          • “Continentals” were issued at the dawn of this nation, Abe issued greenbacks when banks wanted 36% interest to loan money to fight the civil war. Greenbacks were later called US Notes and they have been issued for many years, many being issued in WWII. Silver Certificates were issued after the war and I am rather certain the last US note was issued in early 1971, A very large quantity are still in circulation.

            • Dear Old Rebel and Charles,
              The fact remains, Americans are dominated by a private, transnational banking syndicate and by transnational corporate directives. I cannot discuss the intricacies and intrigues of those transnational institutions. Even so, it is quite clear that Americans are progressively impoverished by those economic and social systems of control. Too many Americans still believe in the existence of an American Federal Government, and that somehow it serves in the best interests of Americans. No postulate could be further from the truth. The “competitive political system” is a sham, drama, media show illusion. I venture to agree with Old Rebel. The Bank and the Government are one in the same; specifically, so that anonymous plutocrats can drive us into inane wars. The war is actually against Americans; more specifically, Americans are being bamboozled by a foreign power. I’ll leave it to you to know which one. You be well!

            • Let us affirm we have an understanding of terms.

              Treasury bills, bonds, and NOTES that are issued by the US government Treasury Department and are marketable securities. T Notes have a duration period of two to five year periods in values of tens of thousand dollars. These NOTES are not considered currency.

              United States Notes circulate as currency and have been called Continentals and green-backs at different periods. They comprised all currency in circulation in 1910.

              Federal Reserve Notes were introduced as “commercial paper” in 1913 and circulated in parallel with US Notes. The Fed issued instructions to all commercial banks that any US notes received were to be turned over to the FR banks. Various pundits contend the depression was deliberately contrived to drive hoards of gold backed US notes into Fed vaults. WW II resulted in flooding society with FR notes.

              The only known period wherein non-interest bearing US Notes (silver certificates) were issued by the government after 1932 is a very brief period in 1963. They were recalled after the assassination.

              A few US Notes (gold or silver backed) are in the hands of collectors.

              Such is my recollection of history.

              • Prior to the formation of the Fed, the 3d US central bank, there were as many varieties of currency in circulation as there were banks. Each bank issued their own “bills”. When ever you talk about paper currency the most important factor to understand is who takes the seigniorage. If the seigniorage factor is not understood or not included in the discussion the discussion is essentially meaningless. On continentals, greenbacks, US Notes, silver certificates and all US minted coins the US government takes full seigniorage. Commercial banks draw interest on seigniorage of legal US money when they extend loans. The seigniorage issue with FRNs is a bit more confused but they are sold to banks for the cost of printing and then earnings / interest received by the Fed is returned to the Treasury which some claim is the seigniorage but it is not really full seigniorage..

                • The profit between fiat money and itself is sourced from manipulation, not from production. Sovereignty is an economic proposition, and a structural challenge. Looking into the cesspool of the monetized, criminal organization that holds us down is, to me, somewhat pointless. A beginning towards emancipation is unconventional. Imagine the bank of the people, by the people, for the people (autonomous monetized organization and autonomous economy) Decentralized power – our best defense from the tar bucket we’ve got ourselves into – presupposes, real community, which we are required to realize. Get past nationalized illusions and specters of horror; the reality is that wickedness descends upon us. We cannot defend ourselves solely, across the internet. You be well!

                  • Reed, if I understand what you are saying then it is happening, as you describe it, in Mondragon, Spain. Have you read about what is happening there?

                    • Dear Charles,

                      We discussed Mondragon on a previous occasion. I pointed out that Mondragon is ethnically embedded. It is good as far as it goes, but it is not designed to supersede and displace the existing economic system. I have wanted more information regarding Mondragon. Please, if you would be so kind, send me the link.

                      Excerpt from today’s letter to Steve Hudson:

                      To bring peace into the world would only require that we establish the contrary way of doing business. Yes, dialogical, consensus-based, community decision making processes, a structural proposition (authentic democracy) for real confederated, sovereign communities, based-on their “production-based” economy, which constitutes their “civic-economy.” The bank would be a public service, among many public services, in a decentralized economy; a decentralized, industrial society – a stateless democracy.

                      You be well!

                    • I Googled “Mondragon economics” and got many links. It is well documented.

                    • Dear Charles,
                      Thank you. I will look into that.
                      You be well!

                    • I haven’t gotten the letter, Reed, but thanks. How is this stateless society supposed to protect it’s citizens rights, freedoms, and well-being against predatory private companies and foreign militaries? How is it going to compete and survive on a high level economically against nation-states like Japan and China that aggressively pursue their economic ascendancy through 5 year plans, pillar industries, tariffs and non-tariff barriers (mercantilism), or against aggressive nations like the US that will foment a color revolution and bomb the shit out of you if you treat your citizens decently and try to be independent? As James Galbraith writes in The Predator State, “the market,” left on its own is criminogenic. The state representing the interests of the people is the only effective protection. This is democracy. Without a state there can be no rule by the people for the people.

                    • Dear Ernie,
                      Thank you for the thoughtful questions. The state can be superseded via organization among folks for specific economic and social objectives. Even a sketch, a prelude for that type of organization is necessary for people to work-with-each-other-for-each-other in order to realize its objectives. The theory is that real democracy is contingent on another type of organization. I cannot write the whole theory here. Nonetheless, organization among people is first. The dangers that suggests are real. I have seen many usable initiatives towards decentralization, but without the needed organizational principles. Tribal organization does not need a tribe to be actualized. The only requirement is that the organizational structures are purposed to share power equally among everybody. That is not possible in any representational government. The executive function of organization must be directly accountable to the people. However, with a decentralized economy, and a participatory political organization, then that can be accomplished. I differ with you regarding security. The main cause of our helplessness is that we have not figured how to deal with powers concentrated beyond the control of the people. The deficiency is the lack of real community. Real community, and confederated communities, would provide more safety than we have now. Real community is economically sovereign, and produces a surplus to afford the needed services of community confederation. The type of organization I allude to is supervised and controlled directly by the people. The internal, production-based economy is self-managed and self-regulated by the people. The objective of decentralization transcends materialism and enters into meeting the real, existential needs of all the people. There is no state, per se, but there is economic organization with executive management. Please, let me know your thoughts on my I answer to your kind questions. You be well!

                    • I think socialism needs to have a strong state. I don’t believe in decentralization as the answer-all for reasons stated in my last comment. A mixed economy with limited and subordinated capitalism seems like the ticket to me. At least we agree that we need to get rid of the parasitic money-creating/debt-imposing private banks and Fed, which is what this site is about, not anarchism.

                    • Dear Ernie,
                      P. S. Also, only from a position of real, economic independence can people make any impact on the powers that be. Economic independence is sovereignty and that is contingent on the concerted efforts of real community. However, from that platform the existing political apparatus can be altered enough, especially local government, to form buffers against transnational initiatives, and it can defend the existing public services from transactional expropriation, and, too, it can expand regional influence into national movements. The concrete independence, and all that entails, sovereignty, must be established, before anyone can get a grip on the momentum of globalization in order to end it. You be well!
                      Ecological Economics, Herman Daly:

        • Dear Charles, Yes, there were brief instances that we all know about. Yes, it is constitutional. “And it is going on as I write” Please, if you would be so kind, confirm that with a link, But, for the most part I disagree. Were what you say correct, then, the economic and the political reality would be different. Americans are being deceived, and murdered in stupid wars for the sake of the plutocracy and its oligarchy. No, the prevailing, conventional political apparatus is not of the people, by the people, for the people. Cognitive dissonance; perhaps. What else explains the dogged, redundant, stalwart refusal to admit that, as anarchist author,Paul Goodman, used to say, “The Jig is up!”

          • All coins are issued at face value, not at the cost of minting as are bills which are sold to banks for the cost of printing. The government issues coins and makes out good with dollar coins you see very often in Central America. That was the bases of the proposal to coin T$ coins which would make the country deficit free and eventually erase the national debt.

        • Dear Charles,
          This reading from my manuscript shows what many economic minded folks have a hard time coming to terms with,
           “The objective of transnational corporate domination, ownership, is ultimately to expropriate everything that is rightfully private or public; water, food, fiber, et cetera. The objective is to establish a monopolized, global production system for maximum control over the people, to control every aspect of their lives; totalitarianism. The obstacles to that objective are national governments and constitutional protections, which are attacked by the owners of the global, monetized organization.” P. 88

          Ellen Brown wrote a great outline of the economic mechanics that the World Bank and The International Monetary Fund planned and executed in order to invade the national government of Greece. The transnational plutocracy harvested national sovereignty, and its public services, figuratively, with a few deft strokes; certainly, not for the good of anyone other than plutocrats. The Bank faults the Greeks, without mentioning its deceit, to manipulate the Greek government into taking the money. The racket, intentionally sets interest rates beyond the physical capacity to meet them.

          There is allot of good life in the world, but too much is being devastated, and I need not reiterate what I think the problem is.

          You be well!

          • I should have said “This government can….” Greece cannot because they gave up their right to issue money when they joined the EU. They need to get back to the drachma and solve their problem. It will not be easy but lots of folks are working to show them the way including Bernie Sanders and his economic adviser, Step Kelton. I am fairly sure it will eventually happen and of course the things you mention are very true. No question about that. CBs around the globe are fighting to maintain their power in a world that is becoming increasingly aware of what they are doing and have been doing for centuries.

            • Dear Charles,
              Thank you for your kind response to my letter. I appreciate that you concur with my observations. The question remains, what is to be done about it? I think, the State prohibits democracy, and keeps secret what democracy is. I think, democracy is contingent on the democratization of the economy. That is, of course, a structural challenge. Nonetheless, authentic democracy is organization of the people, by the people, for the people; independent, sovereign, and devoid of any State. You be well!

              • Teach. That is the single most important action that can be taken. Ezra Pound once opined that the change in the world economy and social structure would be changed as much by people actually understanding monetary systems as was changed when people generally became literate, able to read and write. I agree with him.

                • Dear Charles,
                  Thank you for your kind and wise words. Ezra Pound is correct about education.
                  But, I think allot more needed to turn the corner.
                  The structures of society, civilization, are set in motion to achieve particular objectives. Everything about humans is culturally embedded. Public monetized organization is culturally embedded. The prevailing hierarchies are unassailable within their own contexts. An independent, organizational context, an independent civilization is the best option for dismantling the destructive momentum of globalization (as described by Herman E. Dally). You be well!

      • Old Rebel, I think you are largely correct. The matter is that the Bank and cronies, transnational corporations, are killing and traumatizing us Americans in wars they have instigated that impoverish and traumatize Americans for nothing in return. You be well!

        Herman Daly on the Economy & the Environment

        Michael Hudson’s New Book: Wall Street Parasites Have Devoured Their Hosts — Your Retirement Plan and the U.S. Economy
        Scroll down page to Michael Hudson.

    • Old Rebel, Greenspan double talks, the truth of the matter is that the bank is calling the shots. Historically, we can note each depression was caused by the bank, for whatever reason. You may need to suffer cognitive dissonance, but the bank is our mortal enemy. You be well!

      • Are you suggesting that somewhere I implied the Federal Reserve/ international banks are not the cause of all the chaos in the current era ???

        The way I see it, the Fed is embezzling $3 billion daily from the government using their exclusive handling of funds from the auctions of Treasury securities. Ref.

        Wall Street (major players in the Fed scheme) has used the embezzled $18 trillion to impoverish the world using the IMF, WB, CIA, and US military among other entities (ref. )

        They are currently working on Greece and Ukraine. ( THE NEW COLONIALISM by Jack Rasmus ).

        • Dear Rebel,
          Thank you for your kind letter, and for the links you included. I will look at them. I apologize for not communicating succinctly enough with you. I think that you are absolutely correct. The question that poses is whether or not the problem can be attacked effectively within conventional organization, or whether building independent, unconventional organization (authentic democracy) would be our best option for generating our sovereignty. There is too much to discuss in these brief messages. If you and Charles would establish contact it could be productive:
          You be well!

  6. Dear Ernie,
    I appreciate your thoughtful responses.
    I answered your question regarding a stateless, democratic, socioeconomic organization. You said that, “…we agree that we need to get rid of the parasitic money-creating/debt-imposing private banks and Fed” This site is about what economy we can use to displace it. You suggest socialism with a powerful state. You suggested, “A mixed economy with limited and subordinated capitalism” You do not address the question of what type of organization is needed to replace “representational” government. Unless power is shared equally, you will invariably end up in the same economic-political “tar bucket” we are currently embroiled in. There is an organization, only now being formulated, that can replace “representational” government. I think that decentralization is based on universal, confederated confederations of sovereign communities. The state is not needed, nor does it develop in that context. And, decentralization will prove the most effective means of salvaging what life there is that remains. The premise is 1) organization, and 2) that the people, given the organizational structures to work-with-each-other-for-each-other, will do just that.
    You be well!

    • I don’t think we’ve gotten anywhere in this exchange. How do you have organizational structure without a state? Laws and law enforcement, representation, defense, economic infrastructure–these are all THE STATE. Some decentralization, of course, but as an organizing principle decentralization is self-contradictory. I’m not interested in pursuing it further.

      • Dear Ernie,
        You are correct. I cannot place the theory in your hands, five hundred pages, or so. However, the points you bring up warrant some responses. In brief, civil law is not needed for economic social organization, common law and the law of the land will suffice. There is representation at the confederated level, but it is controlled by the people. To make it short, everything you mention is accounted for. I already mentioned that the subject cannot be discussed in these brief exchanges. You may peruse my blog, particularly the article, What is Community?:
        Get back with me about that, if you choose to.
        However, the best work is in progress, and is soon to be completed.
        Keep your chin up! There will be a way “out from under this rock.”
        You be well!

    • I am sure you realize that what you are advocating is the same as what Marx, Lenin, and Trotsky preached.

      The status quo must be destroyed because it stands in the way of utopia. Details were extensive on how, and why, the overthrow was to proceed but after the regime was in their hands, the procedure on how to proceed whereby everybody was free from their control was completely void.

      How does your system differ ?

      • Old Reb, it was Ernie that made the statement, “I think socialism needs to have a strong state.” and he said, “A mixed economy with limited and subordinated capitalism….” By contrast, the authentic democratic model that I develop does not have a state, per se, which is what Ernie was responding to. Ernie, made mention of my subject, decentralization, as if he understood it. The decentralization of power is accomplished with authentic democracy, which (although a structured “political” organization), has nothing to do with representational government. Decentralized economic social organization, DESO, does not include political parties. I cannot do the subject justice in this brief note. However, if you want to know what I am getting at, then, if you would be so kind, please, visit my blog:
        And, click on my essay, What is Community? I will be pleased to receive any comments or questions that you may have in regard to that writing. You be well!

        • I knew you could explain it.

          • Okay. You be well.

  7. Let’s be clear. What you describe as the national debt in bank created loans is not the same as the legal definition of the national public debt of the United States government. That is the accumulated value of all the US Treasury securities still active. Furthermore, are you taking into account that each time a borrower repays the bank its debt, that extinguishes the debt. So, you can’t just accumulate all the bank loans made without considering their redemption. As for the public debt of the government, even it is not all from deficit spending. Much of it, 85% in some recent years, is due to investors buying US Treasury securities, which happens to be deflationary because their dollars are kept out of circulation while their money exists in the form of the securities kept in a special US securities account at the Fed. Investors money is not spent into circulation on government operations.
    Furthermore, you are right, the federal debt in the US securities held by banks for deficit spending, has been (not could be) nearly eliminated by QE. What remains in the banks is new deficit spending securities that have not yet matured. That the Fed’s assumption of the loan has relieved the government of obligation to the banks for the loan via the securities. When a bank loan is repaid, the money used to pay off the loan has been extinguished. (Otherwise, the banks would just get rich on the principal of their loans when they are paid back, so they effectively in the long run would be creating money for their own use. They can’t and don’t do this.) So, in QE, buying the securities does not increase the money supply in circulation. It vanishes. Hence QE does not cause inflation. What causes potentially inflation was the original money borrowed for deficit spending and spending it into circulation.

    Now what happens to the securities the Fed has bought in QE (or otherwise)? The Fed simply goes to the Treasury with them and swaps them for new securities with new future maturity dates. The Treasury has its securities back and extinguishes the debt on its books. Fed will sell its new securities at some point, usually during inflation, to investors and banks to drain money from or constrain lending money into circulation.

    The problems involving inflationary bubbles are due to poorly regulated bank lending, creating debt as you describe. Deficit spending has not been a major source of inflation since 1971.

  8. […] Brown, who agrees with Greenspan that the U.S. government can create infinite dollars. She even quotes […]

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