Here are some frequently asked questions (or variations of them) and my answers.  Feel free to add more!


I understand how the current system might require extra money to be created in order to payback a loan. Day 1, I borrow 100; Day 30, I repay 110. But does it have to be like that? Most loans are repaid in installments, so Day 1, I borrow 100. Day 10, I repay 40. Bank spends or invests 30 back into the economy. So money outstanding in the economy is the 100 I originally spent minus the 40 I earned back and gave to the bank plus the 30 that the bank reinjected into the economy (through other-than-lending) equals 90. And what I owe to the bank is 110-40=70. So if money is turning over in the economy, it seems like there is no necessity to create new money in order for me to satisfy my obligation. Do I have that wrong?


That is how they get away with it; it’s a huge shell game, so it’s hard to tell what’s really going on. But take the simplest case: we have a 100% gold currency, no inflation or deflation. Lenders lend out 20% of it at 5% interest. Two dollars lent at 5% compounded annually become $10 in 33 years. That means in 33 years, the lenders own all the gold. The only way to avoid this is for the money supply to expand, creating inflation.



Isn’t the best solution to return to the gold standard? That would prevent inflation or deflation. The money supply would remain fixed and stable.


Same as answer #1 – in 33 years, the lenders would own all the gold. The only way you could have a 100% gold currency that continued to circulate and perform the normal functions of “money” would be by eliminating interest from the system.



Why does the stock market keep going up? Is it simply pricing inflation in? Population growth and expansion of markets to other economies? If the price of a share today is the present value of all future expected dividends (which I think is the definition but I could be wrong), then do the expectations for dividends really rise all that much?


The stock market keeps going up despite a falling dollar, a subprime mortgage crisis, a credit crisis, and economic conditions that many people have already characterized as a recession because central banks around the world are inflating the money supply at double-digit rates. The money has to go somewhere. Real estate is no longer a good investment, and interest rates on government bonds are too low to be very appealing. Dividends have very little to do with the price of a stock. Look at Amazon’s stock, for example: it doesn’t list earnings, and it’s trading at a price/earnings ratio of 130, a huge multiple (10 or so is considered good). Yet it keeps going up. The stock market is a giant casino, where investors are just betting they can sell the stock for more than they paid for it.



I note your delicacy in not specifying WHO exactly these money-lenders are. Why are you so afraid to say the word “Jews”?


Your assertion is too broad. J.P. Morgan was an Episcopalian, and John D. Rockefeller was a Baptist. The Jews were allowed to practice usury when no one else was, and that’s why they dominated the field; but that’s not really the point of my writing. It’s that the SYSTEM is bad. We should not be allowing private money creation. If you allow people to pretend they have money and lend it at interest, you’re going to wind up with a spiral of debt and inflation, until it can’t spiral any higher, when it will have to collapse. If you forbade the whole Jewish race from being bankers and still let bankers create money out of nothing and lend it at interest, you’d still have the problem. Pirates will rush in where there is bounty to be had.

140 Responses

  1. Ellen
    I am currently listening to you on Real Truth on Americanewsnet on Dec 15. You mentioned that Americans are not prepared like russia was in that the majority of them had public assistance and had public housing in the soviet union. Well, none of us in the patriot community wants to go communist—no way. Maybe I did not understand your suggestion for the public owning the banking system. communism no, free republic yes!

    • Hi Arnie, I agree, free republic yes! I only meant, when we were talking about “super depression,” that we in the U.S. are in a worse position than people were in earlier depressions because we’ve become so citified and dependent on the economy working. We don’t have gardens and such anymore, for the most part. But I think putting some government credit into public transport would be a good thing. There are some things better done by government, including disbursing “the full faith and credit of the United States.” That doesn’t make us communist. Are public libraries communist? We share books for free; it’s a good thing. It’s part of a free republic — there are certain benefits that come with being part of a group entity. Corporations are considered “private enterprise” yet they come with group benefits, no? Roads, bridges and dams have always been built by the government. That’s not socialism. We did it before the term socialism was even invented. Socialism is taxing the rich to pay for the poor. I’m proposing a way to fund it all without taxing anyone and without putting the government into debt. Ellen

  2. The answers to the first 2 questions are simply false. Regarding a fixed money supply (such as in a %100 Gold standard), the answers couldn’t have used a worst eocnomic fallacy to justify an expanding money supply. The issue is just too important to ignore and I believe it is important to provide an alternative response:

    The fallacy stems from the confusion between money and wealth. Wealth is measured in terms of production of real goods and services. Money is just used as a medium of exchange of such goods. There is no optimal amount of money to meet a given supply of goods. Unlike consumer goods, money only performs an exchange function, therefore “any supply of money will be equally optimal with any other” (see The Theory of Money and Credit, by Ludwig von Mises).
    Although more consumer goods or capital goods will increase the general standard of living, all that an increase in the money supply accompoishes is to dilute the purchasing power of each dollar. So the real measure of wealth is the purchasing power of the money and not its quantity. The purchasing power will always change so that a new equilibrium is reached between the money supply and total supply of goods. (See “The Mystery of Banking” by Murray N. Rothbard for more detailed explanation).
    So a growing economy with a fixed money supply is perfectly fine. An increase in purchasing power expressed in falling prices will accomadate the growing economy.

    The fallacy in the lender example with the lender owning all the Gold after 33 years is obvious for 2 reasons:

    1. It assumes the lender will hoard. It is an unrealistic assumption that you can make about any business (nothing special about lenders). The lender has to pay out salaries to his employees, pay the bills, consume goods and services for himself and his family, save in order to expand and grow, and continue to lend out any remaining profits. Remember that the Gold money’s only value is from its exchange function. It is worthless in a stored safe if it is never put back in circulation.
    2. For the sake of argument, even if one lender hoards his profits from the interest, so what? Remember from the above explanation: There is no optimal amount of money for a given supply of goods. All that will happend is for the money supply to shrink (monetary deflation), causing the purchasing power to increase (expressed in further falling prices in addition to falling prices as a result of economic growth). Of course this is assuming a more realistc initial numbers for the money supply then the stated example of one lender having 20% of the money supply.

    A true 100% Gold standard (we never had such a standard) would be a great protector of our freedom.

  3. If …”any supply of money will be equally optimal with any other” then compound interest bearing debt as a credit function, as there is today, wouldn’t be a problem.

    An increase in the money supply outside of the production process carrying neither debt nor interest when measured and calibrated between prices and costs would also have a factor in it that would go towards calling forth more production, in it’s liquidation of the previous production cycle, thus actually increasing the future purchasing power of every dollar, not diluting. The rate of this future purchasing power trend would only start to decrease when equilibrium becomes nearer and nearer to distributed leisure outcomes, thus saving the environment in the process.


  4. In 2001, my wife and I were persistently pursued by our local banks account manager after we
    had mentioned our thoughts of refinancing, but not with this bank. For the next couple of months
    this determined person kept on the pressure of giving our name to his corporate office loan department
    back in Ohio. Finally, we relinquished and our nightmare began. The bank was US Bank, and they not
    only lied to us and led us along, they destroyed our credit, and to keep us the hook went so far as to
    orchestrate a means to do so, fraud. It all fell apart at the last minute after a couple of months of being
    led astray, resulting in a financial meltdown for us. This was in the days just prior when sub-prime became
    the mainstream, and no one would touch us because our credit was so destroyed.

    For the next year we fought and were persistent in getting justice, and when I found out that the appraiser
    they hired to perform a field review of the first appraisal was unlicensed, with phone numbers that connected
    into a beauty salon, obviously something was wrong. Scream loud enough and eventually someone hears you,
    and we must have hit a chord because we were in receipt of phone calls from Chuck Moore, President of
    Consumer Finance. To make long story short he made sure that he and his attorneys were not going to come
    out the losers, courtesy of the OCC.

    I had them on something, and they were scared enough to quietly reorganize their house and clean up whatever
    it was they had going on. I know this because I was informed of it from an inside source, but also because
    US Bank screws alot of customers over, but to have the President take it over, speaks volumes. As it turned
    out, coporate America won again and we have struggled ever since. The results eventually landed us in a
    sub-prime with Ownit Mortgage and subsequently to foreclosure. We have been on the auction block 4 months
    in a row, but because I will not give up in my efforts to push for a modification with Litton Loan Servicing, I have
    managed to have it postponed each time for 30 days. Of Course, having the help of a State Senator does not
    hinder the effort.

    I have dug deep into our MBS, tracking as far as I could into the tranches with which it belongs. I have dug
    into all aspects of this scam and have made it my mission to somehow enlighten the general public into action.
    It is my feeling that until the perception that people, ‘bought more house than they could afford’, is changed, made
    clearer that these people are victims and not irresponsible idiots nothing will ever change. The media reports
    just a vague description, Wall Street is bad and corrupt, people are in houses they could never qualify for,
    and you, the taxpayer, are on the hook to clean it up.

    My thought was simple, flat line all interest rates and eliminate credit reporting agencies which have become
    a haven for anybody wishing to make more money off those who have had problems in the past and marked
    by bad credit scores. We are sinking in debt payments to these bastards that judge us not on the ‘whys and hows’,
    but rather a total score, a number. Trust me, once you fall below the veil, it is impossible to get back up, because
    everybody wants a piece of that misfortune.

    Than I came across your book. A wonderful read, but useless unless it is brought out into mainstream, in simple
    and concise terms that anyone can understand. I have an idea on how to do so. You seem a sincere person, who
    wrote this book with a passion of belief, and not merely as just another project. The time to make a change
    is now, but we must empower the public to act, and I have an idea. I would love to discuss with you.

  5. These economic matters are rather daunting to me. Do you have any comments on Walter J. Burien’s efforts to publicize the fact that so much government wealth is kept off the budget basis by statute?

  6. Ellen, hi,
    I live in France and have read and greatly appreciated your book. Any plans to have it translated into French.
    Secong question is :
    Today, the money being poured into the system to help the banks is it:
    as before, government treasury bonds etc that the Fed acquires and then prints the money with interest back to the government, even if it is a 0.25% or
    Is the government finally issuing this new money without passing via the Fed. ?

    Thanks for your enlightenment

    • Thanks Leslie! Web of Debt has been translated into German, Swedish and Korean, and someone is working on a Spanish version. I’d take up a French publisher if one offered, but none has yet. I’m in Malaysia at the moment and super busy, so will have to delay your other questions. Would anyone else like to try them? Best, Ellen

  7. Is there somebody tracking the PPT actions? Or maybe its not possible, I dont know. I know I’ve seen charts of FED repo actions, and these have been linked to marking lows…
    Anything current on this?

  8. I heard you on “the power hour” on march 11 and the announcer mentioned your “advisement” on the zeitgeist addendum movie. I don’t recall you saying anything about the movie in the interview. Could you clarify your opinion about the movie?

    • Hi, I only advised on the first part of “Zeitgeist the Addendum,” concerning the Federal Reserve and how money is created. Since I edited it, I naturally thought it was excellent! The rest of the video I only saw after it came out.

  9. Darn. sorry I missed Power Lunch today. I generally see it.

    I am in agreement with Ellen on Zeitgeist. Some of the material there is controversial and objectionable, IMO. But the Federal Reserve and banking info is very good.

  10. Yes, the Zeitgeist movie is very good. But sadly overly idealistic with the introduction of Fresco, and his Venus Project along with some brief points made about non-violent action notably boycotting goods, and services created by large corporations. It is very hard to see how a grassroots organization such as this will actually succeed.

    This is especially true if the aim is towards the introduction of a resource-based economy where money no longer exists. It is not going to happen overnight. It is an “evolutionary” process which may, or may not happen in this century, or the next.

    In spite of what has been said hereI wish the Zeitgeist Movement well!


    PS. I was interested to see that my p2pfoundation entry on TFE was not deleted on the transition section of the Zeitgeist wiki. I also publicised it on their forum too, along with Simultaneous Policy, Binary Economics, and the Global Justice Movement.net…..plus, my other evolving paradigm (apart from TFE ofcourse) on Multi-Dimensional Science.


  11. “This is especially true if the aim is towards the introduction of a resource-based economy where money no longer exists.”

    How about an economy where hammers, saws and nails do not exist? How about the wheel? Just goofy goofy goofy.

    Money is a tool without which modern civilization could not exist, in which most of the world’s present population of six and a half billion people could not exist.

    Not just goofy, but satanic.


  12. Jumping the gun!! The Zeitgeist Movement is concerned with a Hi-Tech resource based economy..not a return to the Stone Age! However, mainstream Technocracy believes in the concept of the technate as a “medium of exchange” …….a form of energy accounting replacing money as we presently understand it.

  13. Hi Ellen,

    Thank you so much for your work in raising awareness about the private money-as-debt system and its effects. I have no background in economics and am struggling (but determined) to get to the bottom of it. I’ve just ordered your book and have read quite a few of your articles. However, just when I think I’m beginning to get a handle on what is currently going on, I seem to get confused again. The questions I, and many of my friends, have are summarized by James Robertson, in an article in the UK Guardian Newspaper: http://www.guardian.co.uk/commentisfree/2008/mar/20/jamesrobertsonmoneyfromthi
    “We should begin by pressing the chancellor and others responsible for managing our money system to tell us, in words we will understand:
    • Where did the billions of money come from which fuelled the credit bonanza, subprime market and associated financial boom?
    • Broadly what proportion of that money was created out of thin air by commercial banks as loans to one another to invest in risky packages of already existing debts?
    • Did their ability to create it for that purpose make it more difficult for the authorities to assess the potential consequences of the tangle of international interbank indebtedness when it threatened to unravel?
    • Who are the people who have actually suffered from the banks having “lost” billions of pounds and dollars?
    • Where have those billions gone? Where are they now? Who got them, and what have they done with them? Have they “been laughing all the way to a bank” with them? Is their bank quietly laughing too?
    • Or have the lost billions simply disappeared into the thin air from which bankers originally created them?
    • If so, during their return journey from and then back into thin air, roughly what proportion of them will have enriched the bankers and other financial operators who handled them on the way?”
    Any light you can shine on these questions would be most appreciated.

    • Thanks Tom. I’m not sure I can answer that either, but here’s my understanding: leveraged debt is money simply created on the books, and it can be extinguished in the same way. However, the stock market dropping by half is another matter: someone bought those stocks at the top and now has lost half his investment, but someone else sold at the top and got the money. Likewise with housing: someone sold at the top and got the money. The banks paid the sellers with money merely created on the books, expecting to get repaid by the borrowers; but many of the borrowers have defaulted, so that money is still out there in the system. It won’t get paid back and the debt won’t get extinguished. There’s more to be said and I’d be glad for other input here; I’m at a conference and have to get back to it. Thanks for writing, Ellen

  14. First of all, thanks for a great book! It has become my main inspiration for criticizing the current economic system. I have bought copies to my brothers as well to try and spread the word! I’m currently getting more and more active within JAK – the interest free bank in Sweden. I am really helped a lot by having so many important facts collected in a single book.

    I have tried to check the following fact from the book (p.277 3rd ed.):
    “He observed in an April 2005 newsletter that the ratio of total U.S. debt to gross domestic product (GDP) rose from 78 percent in 2000 to 308 percent in April 2005.”
    Unfortunately, what I found out was that the growth was not so chocking, it is just about 75%, see here: http://en.wikipedia.org/wiki/United_States_public_debt

    If this is simply a mistake – do you have an errata somewhere? It is quite important to get all the facts right when discussing these issues.


  15. Hey Ellen,

    I’ve been working through your book and have formulated a couple questions that I was hoping you could weigh in on. (By the way, thank you so much for providing a forum where your readers can interact with you.)

    – I spent some time studying the Austrian School of Economics, the gold standard and the like before I picked up your book. I feel as if your arguments against some of their tenets are grounded (gold is a tool of the bankers etc), but I have had a hard time totally reconciling your point of view with all of their points of discussion. I feel like there is still a lot of truth to what they have to say about the business cycle, but analyzing it all through the new filter of information you provided hasn’t been a walk in the park. Do you have an authoritative essay or short treatsie that directly addresses some of the Austrian school’s major strengths and flaws?

    – I have been mulling over your submission that a government-created paper currency (as opposed to a private banking-generated money) would not result in severe inflation even though it’s not backed by a hard asset such as gold since the government could just cycle the same dollars in and out of circulation. I believe you also contend that if they were to take the interest payments derived thereof and put them toward public works and social programs, it would virtually eliminate the need for taxes. It seems to make sense assuming one thing: that the government shows restraint. I haven’t been terribly impressed with the way government has managed much of anything, so what makes you so sure that the same government would show responsibility with the printing press? Wouldn’t they still benefit from irresponsibly creating more and more money for their own gain? I guess if you don’t believe that currency creation causes price inflation (you contended currency speculation does this), then it might be a moot point. I guess I’m just not fully clear on why you contend that more and more dollars, government created or otherwise, wouldn’t cause inflation to spike eventually. Is the foundation of your premise based on the supposition that governments operate responsibly and can exercise self-restraint? If not, are there intrinsic controls/limits in your proposed system to the damage a corrupt/self-interested government could inflict by abusing the printing press? Perhaps I just need more clarification on why you believe currency speculation is the primary driver of hyperinflation, not running off lots of dollars.

    Hopefully this makes sense. Looking forward to your thoughts.


  16. I have read, and thoroughly appreciated “Web of Debt”. I have also read some of Paul Krugman’s work and listened to various cable shows on financial issues. My question is why conventional and well-respected economists, even those not personally profitting, do not consider gov’t.–issued money for our country. Do you or anyone reading this know of any web sites or books that address this question? Thanks!

    • The usual hangup is the fear that it will be inflationary. The Weimar hyperinflation is generally used as the chief case in point, but the facts have been misconstrued. I’m writing an article on that now.

  17. I assume you agree with all that Zarlenga says about the possible causes of hyperinflation when “initiated” by governments….

    “The actual history of government control over money shows a far superior record to private control. There is a mythology – a reigning error – that government issued money has been irresponsible, and inflationary. But this is the result of decades, even centuries of relentless propaganda, and is contradicted by the historical facts. The Continental Currency is attacked, without discussion that while our government authorized $200 million and issued $200 million (plus replacement notes), the Brits successfully counterfeited untold $billions. They did the same for the French Assignats – the details became public when the counterfeiters sued each other in the English courts.

    The American Greenbacks are smeared as worthless inflation money when in fact our government authorized $450 million and printed exactly $450 million; and every greenback eventually exchanged one for one with gold coinage – but very few people bothered to exchange them!

    The German hyperinflation is cited by the private money gang without pointing out that the German Reichsbank was privately owned and controlled, or that the hyperinflation began the month that all governmental influence over the Reichsbank was removed on the insistence of the allied occupiers. These and other cases are described in The Lost Science of Money book.”

    Ofcourse, huge amounts of debt-free can be electronically created responsibly but for it to be successful ultimately in replacing taxation altogether we do need highly accurate data on how it would work in a modern industrial economy such as the UK, or USA.

    Hence, the importance, and relevance of Transfinancial Economics, or TFE which is still in the process of development, and research…though we are nearing basic completion of this subject.

  18. Also, one other point Obama has recently said this “I do not want to run banks! I do not want to run car companies!” So, we can clearly see which side his bread is buttered.

    Ofcourse, interest monetary reformers seem to believe in many cases that only the money supply should be nationalised, and not the banks per se. This would seem on the surface to be a good notion, and more acceptable to the present political climate


    The ideas of Transfinancial Economics are becoming alot clearer, and more easily comprehensible. See my new entry on the subject by clicking on my name….

  20. I think that it is very important to point out that the money supply can’t be expanded unless the economy is growing. Regardless of who is issuing the money. I would rather trust the government to be responsible than a private company. The government is democratic while a private company is controlled by the extremely wealthy which I can’t influence in any way.

    I have seen many suggestions to replace e.g. taxation with government issued money, but unless the total economy (GDP) is growing the government can’t issue more money. That would give inflation. And since our consumption level is already WAY to high, in the US it is 5 times over the sustainable level, we can’t have a growing economy regardless of how we try to make it more sustainable. Growth is by its very nature not sustainable and we have already “overgrown” a great deal. I would like to see an economic system which works when the economy is stable or in decline.

    What is wrong with taxation? If I’m a citizen in a country and use the common facilities that the government provides – should I not pay for them? The alternative to taxation is to pay fees for everything I use, which in effect will give the same end result. If the fees goes to private companies then they must be higher to pay for the profits too.

    A good way to use taxes is to make it more expensive to use natural resources. Since we want the society to become more sustainable we need to make the natural resources more expensive. The only way we can do this is through taxation. We own this planet together, if someone profit from using it for digging up resources or dumping waste then they should at least pay for it! This will of course slow down the part of the economy that is based on converting natural resources into money and waste. We must create an economy that works well with much less natural resources.

    • Thank you for your intelligent comments.

      1. In an ideal world money should not be created as loans by private commercial banks but rather by governments without interest ofcourse. But the chances of that ever really happening is remote in spite of what people may say here including Miss Brown.

      2. Ofcourse, it would be insane to create too much money as this would lead to serious inflation, or even hyperinflation. In Transfinancial Economics, or TFE enough can be created in a highly accurate manner unlike now .

      3. There is nothing wrong with more growth if we have in development, and indeed, hopefully in mass production a whole array of new sustainable technologies to help reduce, recycle, and reuse various products, and services of the economy. This would require some form of intervenionism notably from governments as well as blue skies thinking.

      4. And this brings me to taxation. The present set up is inadequate to supply enough money as subsidies, and commercial grants to stimulate real green sustainable growth (without serious inflation)as there are many potential products, and services which are simply not commercially viable.

      There are also many other pressing social, economic, and political projects which would require funding (eg. possible massive geo-engineering projects) even when resources are already there and waiting!! Venture capitalism can only go so far!!!

      If you want to you should re-examine in greater detail my p2p entry on Transfinancial Economics. It should explain many things. It goes beyond Miss Browns presentation, and more importantly it has a far more credible way of avoiding the possibility of serious inflation which could prove to be largely acceptable to society, and even many economists. Moreover, we can also find out highly accurately how much in the way of resources we are acutally using rather than relying on “dodgy” stats.

      • I agree on 1. Also I’m sure that there are many good ways to accurately create the right amount of money.
        On point 3 I recommend you to read Prosperity without Growth?. It is simply not good to have a growth based economy because we don’t get any happier from the growth. We work more than ever, spend more than ever AND use more resources than ever. Please perform some calculations on growth. 2% growth for 100 years means a 7-fold increase in consumption. (1.02^100) There is no technology that enables that growth together with the necessary reduction of resource use. And, as mentioned, we are already over-worked (especially in the US). Stress is a growth-related disease.
        On 4 I have to repeat that by making resources more expensive (through taxation) you won’t need subsidies for the industry to make the right choices. The global economy makes this difficult though since the products from abroad will compete in an unfair way unless the taxation is global. New types of trade agreements and tolls will be necessary to compensate for this.

        I have looked at TFE but didn’t find it convincing. An economy need to be based on “recycling” the money, not by producing more an more money. To follow a circular flow back to its origin there must be mechanisms that controls this. Currently the down payments on the loans make sure the money returns to its origin. In a debt free economy you need other mechanisms.

        This is probably not the right place to have a discussion about this…

        • Yes, I am well aware of the research you are on about but the figures used are always open to question, and should not be taken as gospel truth. Ofcourse, greater growth does not necessarily = Happiness Economics as it is now called!!

          But the problem with something akin to a steady state, or near “zero growth” economy is that it cannot really address the HUGE GLOBAL ISSUES quick enough. This is the rub of it, and the only way forward is a “counter-intuitive” one by empowering the present capitalist system with the right financial incentives to become sustainable en masse over a period of a few short decades. The present financial system is largely inadequate to meet the great challenges of our globe. Hence, TFE…..

          As for your idea on the need to “re-cycle” money. This is nonsense because what happen is that if there is little, or no goods/services around it is not spent!!! It is simple as that. It just builds up in deposit account.

          Furthermore, we are talking about electronic money. In the cases of hyper-inflation there was a printing of paper money which MORE EASILY enters into the economy unlike its electronic counterpart.

          What Miss Brown says is correct ofcourse. Alot of money could well be produced in a non-repayable fashion successfully with our present incomplete knowledge of economics. But no economist in the world would endorse a totally tax free world unless there are powerful, and highly exact data concerning the economy itself. This is where TFE steps in.

          • You have just proven to me that you do not know what inflation is.
            “what happen is that if there is little, or no goods/services around
            it is not spent!!! It is simple as that. It just builds up in deposit
            Well, if there is more money around than goods – then you get
            inflation! Pretty obvious really. That is why the money must circulate
            efficiently and can not be allowed to build up in piles.
            “exact data” can’t do much about that.

            • Obviously, you do not understand TFE, and please do not show yourself up on this forum by making ignorant comments!

              • Sorry Robert, but the same could be said about you, and with far more accuracy. To me, Jens seems very well informed on the subject, whereas many of your comments display a shocking ignorance of economic and monetary fundamentals.

                This shows up when people attempt to make sense out of your TFE. It is rather absurd to attempt to create a system that claims to be a transitional system when one clearly lacks the basic understandings of the current one, or its faults.

                Your attempt to invalidate the desirability of a “stable” or “steady state” economy ranks among the silliest things I have read by someone claiming proficiency in economic thinking.

                And, from where are you getting this “tax-free” world stuff that “no economist” would endorse? It certainly isn’t coming from Ms Brown’s writings, or anyone else I’ve seen post here.

                Publicly created money has the potential of eliminating a certain portion of federal taxes, but no claims have been made about all taxes.

                Honestly, I just don’t understand where some of your assertions come from.

                And would it be possible for you to make a comment that did not involve your endless self-promotion of your TFE claims?

                • Jere!

                  Ignorance is bliss!

                  i) There is nothing wrong with a “stable” or so-called “steady state” economy. The problem lies whether this would be enough to fast track change to fund new sustainable technologies. There is no reason why we could have greater growth IF we had this dimension added to it. It does not require a genuis to understand the obvious!!

                  ii) You are right about Jens. He does seem to be well-informed, and is probably Ryan sucking up to you, and others so that he can go in for “the kill” so to speak. So, he is probably making a fool out of you again..Be warned!

                  iii) If you read Miss Browns Monetary Proposal she does seem to indicate through a proces of time presumably that taxation would be phased out altogether. I maybe mistaken but I do not think so.

                  iv) Most economists (but possibly not all to be fair) would reject Miss Browns claim that debt-free money would not lead to short-term, medium-term, and long-term inflation. If you do not believe this then make own enquiries if you can be bothered.

                  TFE is hugely important but does require intelligence, and vision. It is actually quite simple in essence especially now with the new p2pfoundation entry.

                  • i) Ignorance + arrogance = disaster.

                    ii) I doubt Jens is Ryan, or any of his gang of intellectual thugs. Ryan never made a fool out of me at any time, any place or in any way. He took advantage of my tolerance and patience, and in so doing made a fool of himself.

                    iii) I believe you are mistaken. Public money could reduce a need for taxation to pay the interest on the money the federal govt borrows into existence now. But that is only a portion of the reasons income taxes are collected. There are many other taxes on all levels of government that would all be separate matters.

                    iv) “Most economists” live in a maze of contradiction and confusion, and I have little regard for most of what they think or write. “Most economists” beat a drum from some particular special or vested interest, and are financed by those interests. “Most economists” are shills for Wall Street.

                    Interest-free or debt-free money issued and controlled by public money authorities would not, or need not, lead to inflation IF spent into existence on productive assets and infrastructure, AND if other regulatory measures were placed on the supply of new money loaned into existence.

                    Your sweeping generalization are simply not supported by the facts, as I understand them.

                    • Jere.

                      I would advise you to read what Miss B says in her Monetary Proposal right at the end in ITALICS.

                      “A government with a properly designed and monitored system of publicly-issued money could fund itself without taxes, debt or inflation. ”

                      What does “without taxes” mean? Does it mean that the system would be partly funded by taxes in the end, or not?

                    • You obviously don’t need taxes if you have the power to issue money. The only question is whether that would be inflationary. You need to bring the money back to the government in some way to maintain a circular flow. That could be done by using the money to create goods and services for which a fee could be charged, with the fees returning to the government — rents, fees for energy, etc. You could also do it with interest on loans issued through publicly-owned banks. In addition, it wouldn’t hurt to keep increasing the money supply if the population and GDP were increasing, since supply and demand would go up together and prices would remain stable. If the money supply did get out of balance, however, it might be necessary to tax to keep prices stable.

                    • Hi Ellen, I think we may have finally hit on a point where we might have some disagreement, or at least a divergence of opinions.

                      Of course I agree that a government that could create all of the money it needs (or wants) would have no need for taxation, except for the runaway inflation that would result from non-productive or discretionary spending (war machinery, bombs, bullets, WMDs, planes, ships, tanks, etc.) and the accompanying money creation it would entail. Plus old age pensions, healthcare, education, sanitation, and other social services that would not immediately increase GDP or productive output or aggregate wealth would also be inflationary if the money was not returned to its source.

                      I think your last few sentences are tangential to my point of view. Money that did not result in population or GDP growth would have to come back to the government in some way, and I see most of that in some form of taxation, in addition to certain fees.

                      But this brings us into another area I see a great need for reforms: land and natural resources, and the private monopolies that now exist in them. A tax on land rents, or a Land Value Tax is the best way I know to remedy the inequities of private monopolies of land and resources.

                      However, taken together, I do see the possibility of money reforms and land tax reforms resulting in little or no taxation, and the complete elimination of income taxes.

                      The entire subject of taxation is even larger than that of money reform. It deserves its own website, and another book! Are you up to it? 😉

    • The money supply can be expanded without inflation even when there is no economic growth, IF the money supply has been collapsing, as is true today. ALL of our money except coins comes from loans, and lending has dropped off. There is a $10 trillion hole in the money supply just from the shadow lenders who have stopped taking loans off the books of the banks. This hole needs to be filled.

      • That was an interesting point that I haven’t really thought about! To be honest I can’t really understand what is happening with the money supply in the complex economic system of today. Somehow it feels like there is already a lot more money out there than is actually needed, it is just stuck in “virtual” stock market trade instead of real productive trade.
        Anyway, you can’t build a new economic system on either growth or collapsing money supply. So that is really a big “IF” you have there. My point still holds. During a recession the government wont (in general) be able to print more money to pay for its expenses. I expect that the periods of growth will be shorter than the periods of recession for a long time now, until our consumption level has reached a sane and sustainable level. So we will have to construct our new economic system so that it works well even in these circumstances. The paper I linked to above is very good, although it does not present any real solutions, just some minor adjustments.

        • Good post, Jens. The “real solutions” you seek will come only from fundamental changes in our economic and money systems.

          Ellen’s book explains the money part of the problem, but there is another larger monopoly problem that must be resolved before there can be real economic as well as political democracy.

          That problem is the vast inequity in the distribution of wealth that now exists. Henry George explains the root of the problem in “Progress and Poverty” as being grounded in private monopoly ownership in land, and the “RENT” income returns thereof.

          Moreover, the remedy is totally simple and instantly achievable, given the political will to do so. It is the Land Value Tax, or the tax on “rents” (as used in the economic sense).

          It is a tax that could replace most other forms of taxation, particularly the income tax, which was never intended by our founder to be a tax on wages (the return on labor). The idea of taxing wages was abhorrent to most of our founders, as well as to most western philosophers of the 18th and 19th centuries.

          George teaches us that unimproved Land (all environmental resources) should be held as common or community property, and that “use titles” should be subject to a return of “rent” to the community in the form of taxes. Improvements such as buildings, cultivation, clearing, roads, etc, would not be subject to taxation.

          But you can read it all in his work, Progress and Poverty, here:
          or here:

          • Interesting links indeed! I’m a member in a interest free bank whose name translates to “Land, Labor, Capital” (JAK). I see now where this term originates from.
            I have also read a book about “Parecon” – participatory economy, which pinpoints the problems to be that of unequal distribution of power and the unjustness of work-free income based on passive ownership. Its solutions is however way to complex and bureaucratic.
            It is possible that a Land Value Tax could completely replace income taxation. But that depends on how large parts of the welfare system that should be publicly financed.
            A continued discussion on these matters should probably not be held here. As this really a Q&A. The money reform think tank is perhaps a better place?

            • I’m familiar with JAK, Jens. It came up in the discussions on the web of debt forum I moderate. Unfortunately the discussions were sabotaged by a clan of idea assassins who troll discussions like these.

              I’m not familiar with “parecon” by that name. However, the idea of economic fairness and justice is a main theme of Henry George and other social reformers. The problem with the LVT (land value tax) is the same as all other socio-economic reforms: entrenched vested monopoly profits! The wealthiest and most powerful segments of society (even if small) will fight against it tooth and nail. Those who enjoy systemic transfers of wealth without work will not easily and willingly give up those special privileges.

              However, LVT could quickly transform our civilization into undreamed abundance and prosperity. Henry George overcomes every possible argument against its utility in his books, especially Progress and Poverty. The beauty of the LVT is that is ONLY taxes those that profit the most from doing the least. It does not negatively affect any incentive for growth, development or increases in production in any way. It increases the share of income for wages and capital gains, and only reduces them for gains from increasing unimproved land values.
              But LVT would be a longer term solution that would probably have to be implemented gradually over a period of time.

              It does not take the place of monetary reforms, which are needed immediately, or there may not be an economy left to which to apply the LVT.

              Your thoughts on the appropriateness of continuing discussions on Henry George’s economic ideas show a tactful consideration I appreciate. I’m sure Ellen would too. I’m inclined to think there is no really appropriate place for it here on a blog about monetary reform. There are many blogs and websites devoted to Georgist or LVT discussions, however. If you find one that you like drop me a line and I’ll try finding the time to join in.

  21. This, IMO, is a “must read”:

    The Law of Human Progress

    Civilization is cooperation. Union and liberty are factors of civilization. What has destroyed every previous civilization has been the tendency to the unequal distribution of wealth and power. This same tendency, operating with increasing force, is observable in our civilization today. As corruption becomes chronic; as public spirit is lost; as traditions of honor, virtue and patriotism are weakened; as law is brought into contempt and reforms become hopeless; then in the festering mass will be generated volcanic forces, which shatter and rend when seeming accident give them vent. Strong, unscrupulous men and women, rising up, upon occasion will become the exponents of blind popular desires or fierce popular passions and dash aside forms that have lost their vitality. The sword will again be mightier than the pen, and carnivals of destructive brute force and wild frenzy will alternate with the lethargy of a declining civilization.

    Whence shall come the new barbarians? Go through the squalid quarters of great cities, and you may see, even now, their gathering hordes. How shall learning perish? Men and women will cease to read, and books will kindle fires.

    In the decline of civilization, communities do not go down by the same path by which they came up. For instance, the decline of civilization as manifested in government would not take us back from republicanism to constitutional monarchy, and thence to the feudal system; it would take us to emperorship and anarchy.

    Where Liberty rises, there virtue grows, wealth increases, knowledge expands, invention multiplies human powers and in strength and spirit the freer nation rises among her neighbors. Where Liberty sinks, there virtues fade, wealth diminishes, knowledge is forgotten, invention ceases and empires once mighty in arms and arts become helpless prey to freer barbarians.

    Only in broken gleams and partial light has the sun of Liberty yet beamed among men and women, but all progress hath she called forth. Shall we not trust Liberty?

    In our time as in times before, insidious forces that produce inequality are destroying Liberty. On the horizon the clouds begin to lower. Liberty calls to us again. It is not enough that men and women should vote; it is not enough that they should be theoretically equal before the law. They must have liberty to avail themselves of the opportunities and means of life; they must stand on equal terms with reference to the bounty of nature. This is the universal law. This is the lesson of the centuries. Unless its foundations be laid in justice the social structure of the United States or any other country cannot stand. – Henry George, Progress and Poverty



    Our current economic system is unsustainable.

    Monopolies on Money and Land must end in order to correct the vast inequalities in the distributions of income and wealth.


      I would be grateful to know what exactly is the monitoring mechanism necessary for the creation of debt-free money? Would be electronic in some way, or what? Please answer clearly. I would love to know you take on this!!!

      • Hi Robert. Have you read Ellen’s book?

        • No, I have not had the time, or inclination as yet but I would be grateful if someone could inform me how inflation would be monitored from Miss Bs perspective.

          • Sorry Robert, but I don’t have either the time nor the inclination. Maybe Ellen will think otherwise, and say something about monitoring the CPI or inflation index, or other M1, M2 and other indexes, but I wouldn’t count on it. You probably wouldn’t understand those explanations either, until you ran them by some of your banker trained traditional economists for verification.

            • Jere,

              You remark seems to indicate that you probably do not know the answer about the monitoring process…and yet, it is all-important……

              As for the Economic Indicators you mention these are not enough in themselves to safely insure against any serious inflationary changes unlike TFE. No economist would use them for the introduction of a tax free world. it would be too risky, and moreover there is no reference to any kind of price control which might be necessary!!.

              I get the impression that Miss B in her latest incarnation of the Web of Debt does not really FULLY explain how inflation could be monitored..though I maybe wrong. I might even buy her book if she does go into some detail about it….because I would be intrigued.

  22. On the point of Publicly controlled money and taxation, I think we need to be clear that the main savings in taxes, especially income taxes, would be the elimination of interest now charged the government by the privately owned Federal Reserve System on the money it creates and then lends the USA.

    Most of our current taxes go to pay the interest on the national debt, while the principle always keeps rising. It can really never be paid off under the current fraudulent system, because paying it off would take that amount of money out of circulation, leading to deflation or depression due to circulating money shortages.

    It’s a shame that more people simply don’t take the time to figure out exactly how the banksters are conning us out of our wealth and money. It’s even more of a shame that when people like Ellen Brown try to explain the con game to them, they won’t even take the time to listen. Worse, they will ridicule the idea, and accuse those who are trying to help them understand as being “conspiracy theorists” or worse.

    It all makes for a very grim situation that is getting less likely to have a pleasant ending with each passing day. Sadly, I think people are in for a very rude awakening.

  23. Hi Ellen,
    through the book the second time and end up bashing my head against a brick wall when trying to discuss with my broker, so new broker is coming…
    Question: If the Fed is indeed a private company, why is bernanke appointed by the president and not by it’s own shareholders (whoever they might be) and why would they not be subject to the same regulatory and IRS conditions as all other ‘normal’ private institutions?

    • Hi Phil. I won’t presume to answer for Ellen, but I know her time is very limited, so I’ll give you may take.

      It’s far more complicated than that. The Federal Reserve System is a “hybrid” animal, neither fish nor fowl. That is why G. Ed Griffin called it “The Creature from Jekyll Island”, in his book by that name. In other words, it is part private, part governmental, part semi-governmental, part subject to government regulation an part not. In short it is a monstrosity. Wilson was convinced by Col. House Bernard Baruch and other economic advisers that it created a federal banking system. That was a ruse to get him to sign it. He was also told it was vastly different from the Aldrich Bill that had preceded it and been soundly defeated, and that was pure mendacity. It was the same bill with a few difrerent wrinkes and disguises.

      The document that created the Fed was about 1400 pages long, and written in the mixture of econospeak and legalese that stumps people with degrees in both specialties. Then there have been hundreds of changes and revisions to the FRS Act and the amendments.

      All that said, the board of governors is only one of the many “components” of the FRS, and the president has to appoint one of those people who are on a list of those approved by the system. The enabling legislation describes the applicable degrees of oversight and regulation, and what is actually comes down to is that there are none. They (congress) can abolish the Fed, or pretty much do as it wants. There is little middle ground, absent new enabling legislation.

      As for the IRS, that was created by the same banking interests to whom we are indebted (pun intended) to the Fed. They are effectively the “collection and enforcement” arm of the Fed, created to collect the taxes needed to pay the interest on the national debt, (in gold while they still had any).

      I think the evidence will someday show we only went off the gold standard completely in 1971 when the private international bankers who make up the FED had gotten all the US gold that was to be had. Of course it still remained in Ft. Knox and the federal reserve banks, but it was no longer the US government’s gold. That is my belief based upon circumstantial evidence, but I think history will prove it close to the truth of the matter.

      Sorry for the length, but these are complex issues.

  24. QUESTION – help:
    I’ve passed Ms. Brown’s book on and can’t remember something I’d read. I thought she spoke about the concept of a fractional reserve lending system like ours having the ability to last only about 100 years due to compounding interest. The amount of money required to keep the economic wheels greased as it nears the 100 year point becomes vertical on the exponential curve and thus can’t be sustained. Can someone please give me some details about this? I’m sort of in the dark on this.

    • Hi Jim, I don’t think I wrote that. It is a Ponzi scheme though, which has come close to its mathematical limits after 300 years. New debtors must continually be sucked in at the bottom of the pyramid to support the moneylenders at the top. The scheme has gone around the world and run out of debtors. The quadrillion dollar-plus derivative game is the last of the late great bubble schemes!

  25. […] WN Monetary Policy From Web of Debt- Questions and Answers : But take the simplest case: we have a 100% gold currency, no inflation or deflation. Lenders […]

  26. Dear Ms. Brown,
    I started reading your book on The Web of Debt. It is fantastic. But it seems worse than you describe. If a bank starts with $10M and makes 10 one-year loans of $10M at 10% interest. At the end of each year each borrower returns $11M. The bank now has the original $10M plus 10x$11M which is a total of $120M. I understand your argument about the siphoning off of the money from society. But during this process, the individual bank is increasing its wealth by 1200% per year (in this example). Am I missing something?

    • Thanks. Loans are created by double entry bookkeeping, a credit and a debit. The $10 million payment cancels out the debt both ways – borrower to bank and bank to borrower. So it’s a wash; only the $1 million in interest accrues to the bank. Basically, the bank gives the borrower an overdraft on his account. The payment repays the overdraft and brings the account back to zero — except for the interest.

  27. I hope this is an okay place for a question — can’t find the “contact us” link you refer to. Re your recent posts on FDIC insurance, safe deposit boxes, etc.: You say “Homeland Security has reportedly told banks that it has authority to seize the contents of safety deposit boxes without a warrant when it’s a matter of ‘national security,’” but Kitco, the linked source, makes that claim without any substantiation that I can see. Sorry if I missed the obvious somewhere, but how do we — or how does Kitco — know that DHS has told banks all that?

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: