MORE THAN ONE WAY TO RECLAIM THE POWER TO CREATE MONEY, August 28, 2009
Sirs: This is in response to the entry posted on your American Monetary Institute blog on August 16, 2009, which references my articles on a state-owned bank solution to the credit crisis. I was disappointed to read that you thought my proposal was “an insult to humanity,” as the idea was actually drawn from the AMI’s book The Lost Science of Money. I do quite a bit of writing and speaking, and I always follow your lead in saying the ideal monetary model is that established in Benjamin Franklin’s colony of Pennsylvania, which not only spent but lent money into the economy, through its own publicly-owned bank. The Lost Science of Money calls it “Pennsylvania’s Superior Money System.” On pages 370-71, your book quotes Pennsylvania Governor William Keith, who wrote of the province’s founding of a publicly-owned bank:
“It is inconceivable to think what a prodigious good effect immediately ensued on all the affairs of that province . . . . The poor middling people who had any lands or houses to pledge, borrowed from the loan office, and paid off their usurious creditors. The few rich men who had before this [quit] the trade – except that of usury – were obliged to build ships, and launch out again into trade.”
It is submitted that our proposals aim for the same thing – reclaiming the money power for the people themselves. We would just get there by different routes. My public bank would create credit on its books, lend it, and charge interest on it. You would have a public entity create money and lend it to private banks at interest, which would then lend it to consumers and businesses at interest. The private banks in your scheme would no doubt tack their interest costs onto the interest charged to the end borrowers, since banks are in the business of making a profit, and that is the only way they could make a profit in your system. My proposal would just eliminate the profits to the private banker middlemen. Banking would become a non-profit public service, with the interest returned to the public purse.
You maintain that publicly-owned banks are “mainly a distraction from genuine reform of the system, as encapsulated in the proposed American Monetary Act.” Indeed, much in that Act is excellent; but it would leave the determination of how much credit is available in the economy to a central planning board, when the money supply needs to be flexible, expanding and contracting organically in response to the needs of trade. The American Monetary Act gives the final word on the money supply to the Secretary of the Treasury, under the guidance of an independent monetary board. Today, that would be Timothy Geithner. Trusting Timothy Geithner to determine the day to day credit needs of the country would be the equivalent of trusting the Russian Soviet to accurately determine how many size 9 shoes its population needed. When the pot of available funds decreed by the Treasurer ran out, creditworthy borrowers would be turned away, and the economy would falter.
Ready credit is what makes an economy run smoothly, and its availability should not be subject to the whims of a political body. Credit-money is created when creditworthy borrowers take out loans. Banks merely “monetize” the borrowers’ promise to repay. As The Lost Science of Money makes clear, “money” is not a commodity but is created by legal agreement. Credit-money is created when the “full faith and credit” of the community is advanced to the borrower. The function of the banker is just to oversee the agreement, acting as the middleman who advances the funds and collects them back. Publicly-owned banks are the most efficient and cost-effective way to get ready credit into the economy. They are not a temporary stopgap measure, any more than the land bank of the colony of Pennsylvania was.
You have divided your objections to state-owned banks into two groups, “moral” and “technical,” with separate numbering for each. I will follow your numbering in addressing these points.
Moral Objections
1. You state that for a public bank to engage in “fractional reserve” lending – that is, to create credit on its books – is immoral. That appears to me to be a mischaracterization of the problem. What is immoral is the private creation of money. Both our proposals are attempting to overcome that flaw. I am just suggesting that publicly-owned banks are the most direct and practical means to that end. Congress is now owned by Wall Street, as Congressmen themselves are complaining. States, on the other hand, still have some autonomy.
2. You state that banks cannot create credit on their books but can make loans only against 90-95% of their deposits. This is no longer true. Federal Reserve data establishes that the reserve requirement is now essentially obsolete. For a detailed discussion, see Jake Towne, “Yes, Virginia, There Are No Reserve Requirements (Part 2),” August 12, 2009, establishing that “reserve requirements are effectively not in existence and easily avoided by accounting tricks in the U.S. banking system.” See also Eric deCarbonnel, “US Banks Operating Without Reserve Requirements” (March 29, 2009), stating, “Although, under current regulations, all depository institutions are required to maintain reserves against transaction (checking) deposits, the reality is they don’t.” Both articles are supported with Federal Reserve data.
What limits bank lending today is chiefly the capital requirement, and states are in a far better position to meet that requirement than private banks are. Banks must have Tier 1 capital equal to 4% of loans and other risk-weighted assets, and they must have combined Tier 1 plus Tier 2 capital of 8% of risk-weighted assets. Tier 2 capital includes several things, but the most interesting here is the appreciated value of unencumbered real assets. For a private bank, that typically means only the building that houses it; but a state has buildings, prisons, parks, etc. peppered all over the state. It has a HUGE asset base, so it basically does not have to worry about Tier 2 capital at all.
That just leaves Tier 1 capital, which is essentially the bank’s own money. For a private bank, that generally means the capital contributed by shareholders and the interest earned on loans. Again, a state has a huge amount of money of its own. A friendly regulator could count the state’s whole revenue base as Tier 1 capital. But let’s say that the state wants to dot all the i’s and cross all the t’s by actually setting aside enough Tier 1 capital to please the regulators. At 4%, $1 billion would be enough to create $25 billion in credit – virtually enough to meet California’s $26 billion budget deficit in one fell swoop. You say that this would just be a loan, which has to be paid back; but that is not necessarily the case. The state owns the bank, so it can roll the loan over as long as needed; and the interest returns to its own coffers, so the loan is essentially interest-free. The federal government has been rolling over its debt since the days of Andrew Jackson. For a state to create interest-free money on its books and roll the loans over indefinitely produces the same result you wish to achieve – an interest-free government-issued money supply. In both our schemes, the government gets the money interest-free, while private borrowers get it with an interest charge attached.
You say that only the federal government, not the states, can create money under the Constitution; but this is not true. The Constitution forbids states only to issue “bills of credit,” which has been interpreted to mean paper money. U.S. Supreme Court case law holds that a state can own a bank, and that the banknotes issued by the bank are not the sorts of “bills of credit” forbidden to the states by the Constitution. Banks no longer issue banknotes, but the principle still holds: bank-created money is not forbidden to governments any more than to private banks. We know that private banks create money. In fact, they create virtually all of our money. The ownership of the bank will not affect the bank’s ability to create credit on its books. Rather, it will just achieve our mutually desired end of transferring the power to create money from private to public control.
3. “The problem is being misidentified as interest,” you maintain, “when the problem is debt.” You argue that all money could be created interest-free by the government, just as coins are today; and that this would save the taxpayers money. I totally agree with that: Congress should issue money outright. That was the model followed in the colony of Pennsylvania, which we agree was the ideal model. Congress should create not just coins but paper dollar bills and accounting entry money. But that is a completely different issue from consumer credit or debt. You are not proposing to eliminate banks that charge interest to borrowers; you would just tack an extra interest charge on by making banks borrow from the government as the ultimate creator of credit. Under my proposed system, as in yours, the government would be the ultimate issuer of credit; but with a bank that was state-owned, the extra interest drawn off by private banker middlemen would be eliminated.
Technical Objections
1. You state that “no bank’s an island . . . If the other banks aren’t lending, a State-run bank wouldn’t be able to lend either.” Today, the other banks are not lending because they are not able to meet the capital requirement for additional loans; and this is because the “shadow lenders” have disappeared – the investors who were taking loans off their books, making room for more loans. A state-owned bank would have huge capital and deposit bases and a clean set of books, and therefore would have a huge capacity for lending as and where needed. It would not be dependent on other banks to meet its reserve requirement, which as noted above is now essentially obsolete.
2. You caution about following the model of the Bank of North Dakota, which you warn is playing with fire because it is not FDIC insured and could be subject to a bank run. In fact, the FDIC is now broke – literally. Its own funds offer little if any protection. In a few months it will have to start borrowing from the government. If the banks were owned by the government in the first place, this problem would have been obviated.
3. You say that a state bank would take deposits away from other banks, reducing the lending ability of those banks. However, the overall credit capacity of the system would not be reduced; the business would just move to the state-owned bank, as well it should if the latter can provide superior service at cheaper rates. The State of California has $17.6 billion in demand deposits and NOW deposits, which could be moved at will; and most of the banks it has them at actually turned down California’s request to honor its IOUs. Some of those banks got taxpayer bailout money specifically to keep credit flowing to the states and consumers, an obligation they have clearly failed to fulfill. California owes them nothing and has every right to remove its deposits from those banks into its own. That is free-market capitalism. More than that, it is a matter of survival. Why should we be feeding parasitic out-of-state banks that aren’t helping us in return? The Bank of North Dakota was set up in exactly those circumstances: the farmers were losing their farms to the Wall Street bankers, so they set up their own credit system to escape the Wall Street maelstrom — and it worked, brilliantly well.
4. You state that the meager benefits of forming a state-owned bank would not be worth the costs. However, you are looking at a very limited range of benefits. Let’s consider again California. With its enormous capital base, California could generate enormous amounts of credit, which could be used to refinance its existing debt; and since the state would own the bank, it would pocket the interest. California pays $5 billion yearly in interest alone — as much as some states’ whole budgets. Just that savings would make a state-owned bank worth the trouble; but a state-owned bank could serve more purposes than that. It could eliminate the cost of borrowing for income-generating projects such as infrastructure, low-cost housing, and alternative energy development. On average, interest has been calculated to compose 50% of the cost of every project. Moreover, the state wouldn’t have to scramble around looking for a loan when it needed one, knuckling under to inflated interest rates. On the question of costs, today a bank can be set up on the Internet, without even the cost of a physical building.
5. You suggest that negotiating better terms with existing banks would be more cost-effective than setting up a new bank. Again, you are overestimating the costs and underestimating the potential benefits of a state-owned bank.
6. You write, “We citizens have only so much energy and time to devote to changing our world for the better. Diverting good people into nonsense condemns us to continue suffering unnecessarily. This time of crisis must be used for real reform, not diversions.” I agree with that. The economy is in an emergency state. We cannot afford to wait for a Congress that has been captured by the same private money-creating monopoly from which we are trying to free ourselves.
Your plan represents a far more radical diversion from the status quo than mine and is therefore a harder sell to make to basically clueless politicians. A state-owned bank has already been operating very successfully for 90 years in one pioneer state, and following that model would require doing nothing different from what banks do now. How can regulators object, when we’ll be satisfying all their requirements? In fact, the shift will seem so minor that its significance is liable to be missed. Even committed monetary reformers like yourselves have apparently missed its implications and potential. Through state-owned banks that create money on their books, we can achieve what Benjamin Franklin, Thomas Jefferson, Abraham Lincoln and William Jennings Bryan all aimed to achieve: a publicly-created money supply issued by the people for the people.
WEB OF DEBT BLOG 
You wrote: “My public bank would create credit on its books, lend it, and charge interest on it. You would have a public entity create money and lend it to private banks at interest, which would then lend it to consumers and businesses at interest. The private banks in your scheme would no doubt tack their interest costs onto the interest charged to the end borrowers, since banks are in the business of making a profit, and that is the only way they could make a profit in your system. My proposal would just eliminate the profits to the private banker middlemen. Banking would become a non-profit public service, with the interest returned to the public purse.”
Private banks get income from charges, as well as interest on loans. They also pay (much lower) interest on loans to themselves – ‘time/savings deposits’.
A money supply consisting of State-created-and-spent-into circulation money in any of its ‘legal tender’ forms, and *adequate in volume to meet society’s needs for both buying/selling, investment and saving* should leave enough in banks’ ‘time/savings deposits’ to allow them to make loans from these, as far as such were still required, in the new situation, with adequate money in ‘permanent’ circulation i.e. not being chased for repayment and cancellation – i.e. not in the form of ephemeral, debt-based ‘credit’, FAR-fewer loan would be required.
It would be the responsibility of the ‘independent monetary board’ – which must be open to public scrutiny and debate – to maintain the optimum total volume of legal tender to meet society’s needs, and adjustment should be through (monthly?) credits to the Treasury of any extra required, or repayment to it from the Treasury of any excess.
Relying for the money supply, even in part, on creation-through-making-loans gives the creator power to determine who should be granted this ‘money’. This should never be allowed to be the main way of money-creation.
Your proposal would, as would the proposals for alternative/complementary money systems, reduce the problems created by the present system, and as an emergency measure, has some merit; but it would not end the problems of perpetual, growing levels of debt. The urgency of the need for radical, fundamental change, therefore, makes nay attempt to prolong the system, instead of making fundamental change, arguably wrong, in the longer term.
Thanks for writing. I would respectfully disagree that creating money by people themselves by “monetizing” their own promises to repay inevitably leads to increasing debt levels. Like in a community currency system, money is created when it is “borrowed” or withdrawn from the credit pool, and it is extinguished when the loan or advance is paid back. What perpetuates is the interest, and that is going to happen whether the lender is private or public. There is no difference betwen the AMI’s banking system and my proposed public banks with respect to interest, except that the interest is liable to be higher in their system because they will have private banker middlemen taking profits out of the system. Whether the government lends to banks that lend to the public at 5% interest, or the government OWNS the banks that lend at 5% interest (or less, since they would have lower operating expenses), the borrowers will still have to pay back more than they borrowed, perpetuating the pyramid scheme. The way to avoid that is to allow the government to issue enough extra money for its own expenses to cover the interest, and I strongly endorse that. I think that’s what SHOULD be done, just as in Benjamin Franklin’s colony of Pennsylvania.
Ellen… BRILLIANT REPLY to AMI! I have a friend who is guided by AMI, a;sp knocked your idea! He had sent me a copy of their insulting diatribe against you and your State Bank suggestions.
I sent him the above text of your excellent reply. That 90-95% asset limit AMI claimed about Banks just didn’t fly as I earlier told my friend – and you’ve explained why. Thank you!
Keep writing and speaking! Eventually the major “news” media will be pressured to report you! – Dick Fojut in Tucson
Thanks!
Thanks for rising so eloquently in your own defense!
“Your plan represents a far more radical diversion from the status quo than mine and is therefore a harder sell to make to basically clueless politicians.”
This is the kernel of the dispute. Like the old song says: “love the one you’re with”. We can’t simply overthrow he private system of credit creation no matter how “immoral” it may be. It has been with us since Alexander Hamilton and as odious as it may be, it does have the virtue of counteracting centralized government power by keeping the money power in private hands.
The AMI’s faith in the Treasury is naive. There is a “state’s rights” dimension to the problem. Do we want an all powerful Party ( a la the PRC) to dictate who will perish and who will prosper? Or do we distribute the money power among the various states a la the state owned banks, which are best positioned to determine local & regional needs?
I am sorry to hear Stephan Zarlenga take this view. He has established an orthodoxy, as revolutionaries tend to do, rather than being flexible and open-minded, AND practical.
Our Ms. Brown takes the world as she finds it. She’s not a revolutionary, but a true reformer. She demonstrates a greater capacity for creative adaptation than Mr. Zarlenga and the AMI.
Thanks. I think the problem is that the power to determine how much money the government can create for itself, greenback style, has been confused with the pool of money available for borrowing. The former could be determined by an independent body, and that would probably be a good thing. But available credit should be sufficient to match the demand by creditworthy borrowers. We have a credit crunch today because banks have been hamstrung by artificial credit limits — as well they should, since they’re pretending to have money they don’t have — but a public bank operating on behalf of the public would not be pretending. The only thing backing our money today is “the full faith and credit” of the public. There is no need to have “reserves” of your own credit; you just extend credit as and where needed, subject to whatever rules have been imposed to make sure it gets paid back. LIke in a community currency system, you can extend as much credit as there are borrowers to borrow it into existence and repay it.
The health care debate exposes the failure of our representative system to represent the will of the greatest number of the people. We all want Medicare, but single payer is off the table. The same dynamic will apply to any federal entity that oversees the money supply. AMI wants to remove this prerogative from private banks and vest the Treasury with the power to control the pool of money available for all the bankers to play with. This will not democratize our financial system anymore than federalization will protect the public interest from the health insurance lobby.
That is why I say the AMI is naive in its faith in the Treasury and why I like your state bank approach. Your approach acknowledges that the creation of credit and ultimately the control of the money supply should be a more democratic process. An “independent body”, like the “dictatorship of the proletariat”. is an elusive ideal that should not tempt us anymore. Zarlenga’s radical approach concentrates power in an unelected body of experts, displacing another unelected body of experts we call the Fed. Both claim to operate in the public interest. But the public interest is determined by the public, not vested pomposities in Washington.
Democratization of our monetary system demands that the money power be distributed, and your state bank proposal does this as the AMA does not. It is not the federal entity that should spend money into existence and create credit, it is the various states, as it was the colonies pre-1764. The federal entity would ultimately be a “super regulator”, something Ben Bernanke aspires to be. So let him! But let the state banks determine who gets credit and how large the pool of money will be to best serve the public interest..
Chances ae much better that a cabal of insiders can be controlled at the state level than at the federal.
Ironically, the private banking model of the national banking system that prevailed before 1913 may be a more democratic option when it is made public than any newly minted public model the AMI comes up with.
This is the genius of your proposal, Ellen, as I see it. Good luck at the AMI meeting. Personally, I wouldn’t pay AMI for the privilege of setting them straight!. Don’t take any wooden nickels!
Thanks Joseph, you said that REALLY well! I may have to use that (with your permission). I’m not really going to the AMI conference to set them straight. I’ll be happy if we all let sleeping dogs lie. I just like hanging out with the other money reformers in the hotel and the hall! And some of the lectures are good. Anyway I don’t mind paying my dues to the AMI, as I really did appreciate “The Lost Science of Money” and the opportunity to meet other people in the field. Plus, if AMI doesn’t get it, the tax man will. I need some deductions!
Well, THEY’RE obviously going to try to set you straight! Your modesty and good humor will disarm them, though. Sure, you’re welcome to use any felicitous construction I come up with. All for the cause! If I weren’t weighed down by the shackles of debt peonage, I’d join you all. Alas…….
I escaped the shackles of debt peonage. I live with my 90 year old mother! Just waiting for Godot.
They aren’t called the “greatest generation” for
nothing! Thanks, Mom!
Excellent point by point response. I heartily agree with your proposal of state-owned banks being the most practical and effective means for people to reclaim their “money” with good effect on the common wealth and general ecomony. I do not see state-owned banks as some sort of sell-out compromise short of complete public control of money creation but rather an understandable and straightforward way to propose something that otherwise would be way to cryptic and radical seeming to average folks.
What harm is there in doing this monetary change via state-banks? I see little. Possibly, and this is a reach, it is slightly less efficient and restrained than just issuing script nationally, ala Abe’s greenbacks. But please, with the enormous advantages that the state-owned banks offer in terms of effectuating monetary change, any very minor issues with this method of making money, (and AMI’s concerns are not very compelling anyways) these issues are far, far outweighed by the great advantages of Ellen’s, and Ben Franklin’s, promotion of state banks. In today’s economy, debt/credit is the vast majority of money. That is why as credit/debt bursts in bubble we are seeing deflation in spite of all the fed is doing in terms of “printing money”, it is being overwhlemed by the private credit/debt dissappearing. If you own a bank, you get to “print money” so why insist we avoid banks and only create money via national currency?
I see the advantages of the state-bank method of monetary reform as many and of enormous value compared the slight and dubious disadvantages AMI suggests.
As premise to my comments on state-banks I first want to make my case on how to effectuate political reform. Abraham Lincoln repeatedly noted public perception was practically everything to politics, and although politicians could control people, it was only to the extent they could control people’s perception. Once public perception turned against them, they would be powerless despite their positions of authority. As a man who influenced public opinion, not by appealing to fear or baser, selfish instincts of people, but taking, I believe, the harder and more effective road, always appealing to folks “better angles”, I find Abe’s example and his logic below on this very compelling:
“Our government rests in public opinion. Whoever can change public opinion, can change the government, practically just so much. Public opinion, on any subject, always has a ‘central idea,’ from which all its minor thoughts radiate. That ‘central idea’ in our political public opinion, at the beginning was, and until recently has continued to be, ‘the equality of men.’”. At the Lincoln-Douglas debate in Ottawa, Illinois in August 1858, he said: “In this and like communities, public sentiment is everything. With public sentiment, nothing can fail; without it nothing can succeed. Consequently he [that] moulds public sentiment, goes deeper than he who enacts statutes or pronounces decisions.”
The rest follows from Abe’s premise:
While most folks don’t really understand inner workings of banks and credit/debt, they are used to doing business with banks, so creating a bank that operates very much like these insitutions but promises to be focused on needs of people as opposed to purely profit, is a comfortable, understandable means of monetary reform.
As our health insurance reform debate shows, it is not practical to assume regular people, unless they have intense personal interest and hurt around an issue, will have time or inclination to pay close, wonky attention and have academic discussions about extensive facts and in-depth analyses and, based on this in-depth knowledge and fact-finding, make informed conclusions.
This is not to say people can’t get real smart and informed real quick when they are greatly impacted, but rather, most people have jobs, kids, family, community obligations, and unless they make one topic or another their abiding hobby and focus of all discussion and political attentiom because of its immediacy, they will not be policy experts. So most people, in the case of health care, that have insurance through employers, through govt Medicare, Medicaid, Vet etc…and even peole without insurance that are healthy, will not be health insurance experts, until such time the majority of us can’t afford care, don’t have care. Our health care debate would be so much more clear and factual if we had one or two states within the union that already had same type of reform proposed or something beyond it, such as sinlge-payer care. Lacking that, regular US folks don’t seem to interested in thoroughly evaluating what Canada, France or Siwtzerland or Japan has done well or poorly. The information and studies are all there, but public perception seems more driven by pithy statements, myths, and idealogical entrenchments.
So given that general public, even in a steep recession we are entering, does not have time or inclination to become monetary experts, at least not enough to press for a complete overhaul of money system at this time, it seems a state-run bank and its benefits would be a much better pitch that is simply, easily, understandable.
Now, I grant you, if we have a complete collapse of our financial/monetary system, people will get smart , fast, but I personally would rather reform things for the better than wait for collapse. The pain, say the State of CA is feeling is real for those out of work, losing shelter, losing state benefits. Why should we think of quadrupling such misery throughout the US as the only means of correction, finding better solutions?
The second aspect of state-banks that is very appealing is the smaller, more local scope. Changing the entire US monetary system overnight would make most except the strongest Ron Paul supporters quite queasy. But effectuating change a state at a time would be great way to show the effectiveness, unscariness of this proposal. Also, we must be realistic about hte push back by moneied-power types. I do not think its practical to take them on directly, instantly on a national level. However, public can manage to enact reforms that go against corporate monied interests on a more incremental, and regional basis, and this seems well proven. Despite huge insurance corporation opposition, CA passed a highly effective car insurance reform initiative that would have never gotten through national, or state for that matter, legislature. It has proven common sense reform and regulation can work on behalf of customers while still allowing for-profit car insrance businesses to be profitable and provide market efficiencies. The all powerful tobacco lobby is becoming a dinosaur, in part due to both fed and state efforts that had to work against horrible profit-driven corpoarte lobbying headwinds. State AGs suing cig companies was huge, state laws banning smoking was huge….it was not OSHA that said second hand smoke in workplace must stop, but rather state and local laws that first protected those workers. I could go on and on.
Not that national incremental efforts for reform can’t work and go hand in hand with state effots, such as Audit the Fed passing in congress, but reforming on a state level can be much quicker, and provide a proof of concept, that counters all hypothetical myths.
To that extent, state-run banks already have a leg up, in that we have ND already in place as our proof of concept to spread to other states, so all the better as a means to get expanded reform. ND bank existance, success and co-existance with private banks firmly, factually can refute all the likely scare tactics hypothetical concerns that would be thrown at at state bank concept. ND bank shows all good that flows from this concept and disproves all claimed harm/disadvantages, so replicating this is a GREAT means of driving public opinion.
Thanks and I agree. The fact that North Dakota, one of only two states currently able to meet their budgets, has its own state-owned bank in no way impairs the ability of the AMI to get their proposal passed in Washington. If California were able to meet its budget through the same means, great. Maybe somebody would get the picture in Washington: there is no reason why governments can’t generate their own money and their own credit, solving their budget crises.
I agree with you, Ellen, on this one. I plan to attend the AMI conference in Sept. and will defend you there. Wish you could be there too, but I understand from a previous e-mail that you consider arguing with these guys somewhat hopeless and have quit attending for that reason. I DO hope that in the future that the monetary reform “movement” can present a united front with a brief ,cogent and powerful message aimed at everyday people. Pointing to a successful state bank could be a convincing “real world” example of how public control of credit could be an advantage to all of us. I assume such banks would use the “real bills” rule for making loans to avoid what seems to be one of the BIG problems of our current system which is making loans for purely speculative purposes. In talking about the state option in banking, I feel like the regulatory changes necessary to avoid the disasters of the current deregulated banking regime should be emphasized more..
Thanks Mike! Actually I am planning to attend unless rejected. Their paypal form took my money at least. I wouldn’t have walked into this maelstrom, but my good friend Kristen already signed up and paid her money, and I had said I’d share the cost of a room; and Michael Hudson has been urging me to go to hold up my end of the debate. So see you there hopefully! On applying the “real bills” doctrine for extending credit, that’s a very good way to put it. I assume you mean that the money extended would have to be a “monetization” of real things, either a house or other real collateral, or some future project the funds would be applied toward — a plant of some sort, housing development, etc. Of course, some people would just need a loan against their future wages. I’m not sure that qualifies as “real bills”, but they’d still be monetizing their future earnings, so they’d be creating the money themselves and would have responsibly shown how they were going to pay it back. Good concept!
I’m thrilled that you’re coming to the AMI conference! I thought you had given up on it altogether! Hopefully Dr. Hudson will encourage Stephen to let you defend your position “on the floor”. I think the conference is in real need of debate on these issues, but I’m not optimistic that this will happen. If it doesn’t, I certainly look forward to talking with you(and others) “off the floor”. I’ve read your book for the fifth time and am constantly amazed at your breadth of knowledge. Naturally, I still have many questions, but hopefully it will be easier to exchange ideas in person. As to my mention of the “real bills” criteria for loans, it was just my way of saying that there should be some means by which loans for merely speculative purposes could be discouraged. I think you mentioned in Web Of Debt a Tobin tax on trades as one way to accomplish this, but wondered if you had any ideas as to how a state banking system would deal with this problem. At any rate, I’ll see you in Chicago! P.S. I wondered if you’ve received any rebuttal from Jamie or Stephen?
Thanks Mike! Haven’t received any response from Jamie or Stephen. “Off the floor” is actually my favorite medium. We ladies like to go to lunch. Best, Ellen
This is a very interesting confrontation. The ultimate goal of Zarlunga and Brown is similar if not identical: reform (a la Benjamin Franklin et al.) of our monetary system on a national level. There is possibly more than one way of reaching such a desirable goal but Zarlunga apparently regards Brown”s route as leading away from that goal. Zarlunga aims for change at the federal level straight off while Brown proposes state-owned banks on the way to the federal level. And with subsequent reform on the federal level, the state-owned banks could contribute to the maintenance of the national system, not detract from it, says Brown.
There are other differences, like Brown’s questioning of Zarlunga’s insistence that “the final word on the money supply [would be] the Secretary of the Treasury, under the guidance of an independent monetary board.” I don’t read that as an absolute requirement. If the principle is honored that money supply is a federal function, the specifics of which agencies within the government shall advise and exercise this function can be worked out at the appropriate phase of the reform. I don’t get the impression that Brown is adamently opposed to Zarlunga on this point or on most of the other points. She seems to be motivated primarily by the very pragmatic consideration of what interim steps seem to be required to bring about the desirable reform.
I’m reminded of a recent event: Rep. Kucinich got a rider attached to some bill which would allow state legislatures to adopt ‘single-payer’ insurance plans if they want. Kucinich explained that if the ‘publilc option’ healthcare reform failed at the federal level this time around, the public option principle could be kept alive on a state level at least. National healthcare reform in Canada began with the adoption of a single-payer plan in one of the provinces, which proved so successful that one by one other provinces adopted similar plans, and ultimately healthcare in the whole country was reformed. This, I think, may be the sort of thing Brown has in mind with her proposal that states consider establishing their own banks. I hope that Zarlunga, the brilliant initiator of a Franklin-like monetary reform, will rediscover common cause with Brown. These are critical times demanding concernted effort.
Thanks and I agree — critical times! I have normally refrained from saying anything critical of the other money reformers, because we’re such a small group as it is; but I could see I was going to keep getting flailed with this one till I responded, so I put some writing muscle into it and did it.
Dr. Brown’s point by point rebuttal is detailed, penetrating, analytical, and superbly reasoned. The responses so far have also been outstanding. Thanks to Joseph and Karen for fine contributions.
I see only benefit to apply pressure on states to adopt a public banking system. Each state that does so would get our federal government one step closer to following the more local examples.
It is noteworthy that EHB’s response to the AMI blog all but ignored the misperceptions or misinterpretations of her stance on many of these matters. She was as gracious as she was thorough, and did not reply in kind.
It is most unfortunate that this kind of response is ever needed in such critical moments in our history. All informed men and women of good will who see the need for a return to publicly created and controlled money should be standing shoulder to shoulder in solidarity.
AMI’s argument that state or local level efforts detract from the national one are unconvincing. Dr. Brown’s rebuttal is sound, if not airtight. It would be far easier, in my estimation, for grassroots pressure to be applied locally or statewide, and in so doing it would magnify the public’s recognition of the need for national banking reforms of a similar nature.
This should not be a “us versus them” dichotomy. There is plenty of room for all solid reform efforts at all levels of community and government as long as the objective is for the people to reclaim the authority over their money and their economies. Claiming otherwise is like saying that one must devote oneself to love at the expense of justice, mercy or charity. It is a one-dimensional perspective, at best. If we do not work on all levels, in as many ways as we can, we will fail to achieve our objectives, and the cost will be dear indeed.
The decentralization, IMO, would be a bonus, and counterbalance to the more centralized power of the federal system. I am more and more leaning to the Henry George shcool of economics that maintains that economic systems be localized, sustainable, and largely self-sufficient, especially as to necessities. Favorable balances of trade should be always maintained, lest real wealth be transferred out of that local economy to its detriment.
It will be interesting to see AMI’s response to Dr. Brown’s worthy rebuttal of their hypercritical blog against the state option in public banking.
It is obvious that we need to lobby Congress, lobbying for the State Bank alternative as well as briefing them on The American Monetary Act and pressuring them directly as much as we can. However, with the degree to which so many of our congressmen are either unconscious of our monetary problems at all, or worse yet, consciously or unconsciously in agreement the people and institutions that currently afflict us I begin to think that the way to make better headway is to “take to the streets.” In a peaceful way, of course, but with a greater passion than we have seen in 4 decades. As a catalyst to such a movement I believe we need the modern day equivalent to a William Jennings Bryan or a Dr. Martin Luther King, Jr. In tribute to their incredible oratorical skills and King’s inspirational effect on the Civil Rights Movement I post the following which is modeled structurally on his great “I Have a Dream” speech addressing monetary reform:
In 1776 our Fathers wisely crafted a political framework that has endured now these 233 years. And yet, all of this time later, we the people, are not yet economically or monetarily free. 233 years later, we the people are sadly crippled by the manacles of a debt based monetary system and the chains of inequality laid upon us by a minority’s rule of that system. We live increasingly on lonely and debt enslaved islands amidst a vast ocean of plenty and prosperity. 233 years later, we the people, are pushed to the corners of American society and find ourselves almost exiles in our own land. I am here today to say that we must overcome this shameful condition.
233 years ago America promised rich and poor alike they would be guaranteed our inalienable rights of “Life, Liberty and the Pursuit of Happiness” as well as a government that would act to promote “the general welfare.” It is obvious today that America is defaulting on this promissory note. Instead of honoring this sacred obligation this government has enabled the financiers and their wealthy stockholders to hand us all back a note that says we now owe them. And not only that we owe them a usurious burden of debt but our trust and confidence.
But I, and we, refuse to believe that we are their slaves! We refuse to believe that there are not better ways to create opportunity for ourselves and our posterity! And so we come to this point and say that we intend to bring an end to their usurious systems; to replace them with systems that do not force us to pay an ever increasing burden of debt and despair; and to declare and demand liberty through economic democracy!
And we have come to remind the current rulers of our monetary system of the fierce urgency of Now! This is no time to engage in the luxury of mere conversation or to take the tranquilizing drug of gradualism. Now is the time to make real the promises of democracy! Now is the time to rise from the dark and desolate valley of debt slavery and the wicked and unwise strategy of a confidence killing inequality before the law to, the sunlit path of economic justice! Now is the time to lift our nation up from the quicksands of debt to the solid rock of REAL money. Now is the time to finally create economic democracy and justice for all American citizens!
And as we go forth, we must make the pledge that we shall always march ahead. We cannot turn back until we are satisfied! Until there is a complete and actual reform of the current system! And though we may face the difficulties of today and tomorrow we still have a dream. It is a dream deeply rooted in the American dream. I have a dream that this nation will rise up and live out the true meaning of its creed that it will “promote the general welfare” not legalize the rule of the wealthy!
I have a dream that men of knowledge, and insight and high principle will someday soon come to operate our monetary system for the greater good of the general population! I have a dream!
I have a dream that this new system can bring the benefits of true economic democracy—a liberation from poverty amongst plenty, a liberation from the despair of debt slavery, and a general rise in the fruits of true liberation, namely increased faith, hope and love! I have a dream!
I have a dream that our new system of money and our humane and enlightened goals will not only bring about the elimination of poverty, but a new Golden Age in which there is a renewal of and intensified participation in the Arts, the re-discovery of community and a general rise in the spirit of the people! I have a dream!
I have a dream that even those whose fear and loathing of government, mistakenly acquired perhaps by even a lifetime of listening to voices who did not have their true interests in mind, can see clear to understand that like the Civil Rights Act of 1964, like the Emancipation Proclamation and like The Declaration of Independence government can be a righteous tool for the greater good! I have a dream!
I have a dream that this country will rise up and fulfill its true destiny of not only being a political democracy but also an economic democracy! A place where fast food workers, Investment Bank CEO’s, stay at home parents and Oligarchic Stock holders all receive their true and rightful share of the dividend of our incredible productive potential!
This is our hope, and this is our faith that we go forward with: From every mountainside, let freedom ring! And if America is to be a great nation, this must come true! And so let economic and monetary freedom ring from the outsourced textile mills of South Carolina, and from the bankrupt auto plants of Michigan! Let freedom ring from the foreclosed subdivisions of California, Arizona and Florida! And yes let freedom ring in the minds of even those whose hands are on the levers of our current system…for they enslave not only us…but themselves also!
And when this happens, when we allow economic democracy and the freedom that it can bring, to ring from every valley and every hamlet, every state and every city, we will speed that day when every citizen, Black, White, Hispanic, Native American, Asian or Middle Eastern will be able to join hands and sing in the words of the old negro spiritual:
Free at last! Free at last! Thank God Almighty, we are free at last!
c copyright 2009-08-25
Steve Hummel
Excellently put!
Hear! Hear! I have written similar thoughts myself, except perhaps not so eloquently do in paraphrasing MLK.
ECONOMIC DEMOCRACY! Political democracy can not long exist in the presence of extreme inequalities in the distributions of wealth and money. As AMI says, borrowing from Rothschild: “Those who control a nations money control that nation.” There is a name for it. It is called plutocracy. Money = Power. It’s axiomatic.
Extreme concentration of wealth equate to extreme concentrations of power, and we know from Lord Acton that “power corrupts, and absolute power corrupts absolutely”. He was talking about money and banking.
Not wanting to detract from anything but share a POV that has an understanding of the issue that finds agreement in parts of both the two sides of debate.
The ledger Credit or Debt accounting options in relation to the money supply operation is a simple mechanism. This has profound implications as informed people know, but the end result is either increasing Debt cycles or Credit liquidating cycles equalising ‘Debt’ based growth of the money supply.
This process doesn’t alter at all in relation to the chain of command that brought about what ever effect is the reality. What is the most practical approach for gaining the implemention of the full Credit option for any given different location/socety has not been proved yet…unfortunately, and when it is, it will not be exactly the same as what may work for other efforts.
I don’t think interest can be used to liquidate the debt growth cycle in ledger mechanics, but it can minimise the horrible systemic effects of it to an extent that would mimick many attributes of a fully implemented Credit system.
So Ms. Brown’s model would leave Keynesian or any exotic Gold based models in the dust – although things like Gold mayby would be best if able to be used by people who want to, and thus let a population find it’s natural utility with it in ongoing relation to a system like Ms. Browns or a fully fledged Credit system.
Nik, Although the non-profit credit union is outside the scope of essential monetary reforms, the non-profit CU model could be a big improvement over centralized private, for-profit banking systems. The essential elements of money reform include transferring the money creation and control from private to public (government) hands, and making transparency and accountability to the public a must. The all important issue is the ultimate cost of the money created to the citizen taxpayer in the form of interest on the money. By having government spend money into circulation, as well as lend it, the extra money to repay interest can be introduced into the economy, and both inflation and deflation can be kept in balance.
The current system is unsustainable, and cannot last. It must collapse soon, as it has reached it’s mathematical limits of exponential growth. We have to change it, pay off the national debt, and balance our budgets and balances of trade.
The real issue here is that there are many different ways or avenues we can work to educate the public on these essentials of reforms, and there is room for more than one (national) approach, even if that should, no, must be out ultimate goal.
Thanks for your comments.
Jere, you are welcome.
‘The all important issue is the ultimate cost of the money created to the citizen taxpayer in the form of interest on the money’ is not quite the full correction for the current system though.
It is the Debt that ends up being systemically growing through lack of matching Credit.
Recycling Interest on this debt into Credit will not equalise the whole problem/issue.
I’d like to return to the topic of fiscal accrual at the state or federal bank level, such as you wrote of last year. For infrastructure projects, bridges, schools, etc, cannot public banks 1) lend to contractor constructors the costs to proceed, and as projects reach stages of completion, 2) transfer the asset/loan to their capital asset ledger and 3) forgive repayment?
This method creates a wealth of publicly owned infrastructure where we now create indebtedness of bonds and taxes. It distributes new money to the contractors, and to their suppliers and employees, in place of bankruptcy and unemployment. It avoids the creation of new debt, and thus reduces public anxiety and fanaticism about what we as a people can afford.
It is limited only to the extent that slack in an economy can absorb new employment and activity without bidding up costs in an inflationary spiral. In contract presently, private banks restrict loans mostly to those who collatoralize with financial and real assets, and their new credits can only set off bidding wars for those assets in new bubbles.
On the downside, it may be an invitation to graft and corruption. But that’s the hazard of all public works.
Yes! I don’t quite follow why you would have to cancel repayment though. My thought was to use accrual accounting to write the asset up as if it were built, though it’s still on the drawing boards. You write the value of the asset on one side of the books and draw from that account to pay the workers and materials and build the thing. Then the profits from the asset go back to pay off the loan.
Yes, public works, and private ones 😉
Well written.
It should be clear that someone like Stephen Zarlenga cannot
outmatch you word for word, and that your cogent, well
reasoned proposals must ultimately make the flesh crawl on
the stiffs at the AMI. But why would this be so, since both your
concepts seem to be superficially close?
Perhaps the AMI proposals are primarily intended to preserve
the large banks as middlemen in the credit distribution
process, leaving them to continue skimming off a percentage.
Perhaps as their true nature is revealed, they will become
recognized for what they are, parasites. This would be too
harsh a denunciation if they served the national interest, but
this doesn’t seem to be so. Parasites they are, and not
particularly enlightened ones since they are in the process of
killing the host.
You cited my state, California, as an example several times in
your article, and I think here would be an excellent place to
start implementing your ideas — but how to begin? Presently,
we have a Governor who is well meaning but basically
clueless, but he will be gone soon. We have an election
coming up with enough time to raise ideas to the status of
issues. We have two great Senators, but I am not sure I would
trust one of them in matters pertaining to banking. I would
hope that a State Bank could be set up without approval
(or interference) from the Feds, so it would be a case of
education and will power.
How can we make this happen?
T. C. Gibian
Thanks! California is my state too, and we’re working on it. We’ve formed a google group for brainstorming on public banking. If you’d like to join, write to “contact us.”
All of you in the monetary field leave us laymen bewildered with your notes to each other. It seems you all could say what you want to say in more down-to-earth, k.i.s.s.=keep it simple, sweetheart, jargon.
The problem is that after the 1861-65 era with Abe’s central bank, centrist govt., and income tax schemes, we have been on a slide away from representative govt. to govt. of, by, & for the central Bankster interests that tried so hard through the years to get their talons into our nation, finally sneaking it in in 1913 when most of Congress were on Xmas break.
Now you desire each state to create its own bank to offset the wicked system of fiat, debt-note, baseless “money” of the “fed.” This is well & good, but much time would be needed for this to take place, if it ultimately could solve the problem. I was hoping for redress within my lifetime! No such hope, huh?
All my 72 years I’ve read & heard hundreds of individuals providing their solutions. All we had to do was buy their book, attend their rallies, you get the picture. Yet nothing has slowed down the “fed.” Remember, sticks & stones hurt the bones, but words won’t stop them.
The secret cabal knows that the only way you get what you want is to grab it in whatever way you can. They understand how to beat their enemies, but we Americans don’t even understand who our enemies are. The enemy has taught you to “love your enemy” and “subject yourselves to govt. (but what kind?), since it is ordained of God.”
Now how can a person argue with that?! Bringing a vengeful god into the picture stops all debate. You do it or else be zapped for eternity. Fear makes slaves.
A thinking person understands that either your enemy kills you or you kill him. As ole Ross would say, “It’s just that simple.” So why don’t our public thinkers point this out to the some 300 million who want relief?
Putting confidence in “public politicians” is folly at best.
Then again the religionists have sold us on the “pie in the sky by and by” idea, so the flock figure, “Why should I worry, I’ll just let Jesus do it,” & I’ll just wait for my “pie in the sky.”
What could be more effective than those millions of dissatisfied citizens making citizen arrests on government agents and offering them 2 alternatives: 1. Help us restore our Republic; or 2. Off to prison to face trial for treason.
This could have occurred, perhaps, when men were men centuries ago, but our enemies have dumbed our hoi poloi down so much that they prefer to go like sheep to the slaughter with no resistance. This is being loving & obedient!
This is the down-to-earth language people can relate to, but the vocabulary & concepts of the professionals are not going to break through the wall of lies and misinformation that has kept the cabals in power all these years. Perhaps we are too fearful to fight for our liberty any more, having become too indulged and, therefore, lazy & afraid. I hope not…….
State banks not only can be set up in your lifetime; a fast-tracked bank could be set up in a matter of weeks.
But can it & will it?
Then think of this happening all over America, & this could take years & years to implement.
I still say that trying to work within the system, already completely corrupted, and in a politically correct way, is quite hopeless in my opinion.
So what do you propose?
Ellen Brown, on September 7th, 2009 at 8:36 pm Said:
“I believe the nation is under covert attack by foreign powers, which are inches away from solidifying a global one-world private money system headed by the Bank for International Settlements as global regulator. The G20 just agreed to that, with the Financial Stability Board approved in April in London. If we don’t do something fast, they will pass a regulation forbidding all nations from issuing their own money or their own credit. Carroll Quigley said that was what they were up to 50 years ago, and they’re doing it and they’ve almost succeeded. The odds of Congress passing the 100% reserve solution in the next year or two before that happens are zero.”
As I’ve told you before, all this talking & writing doesn’t do the job, because the enemies are busy 24/7 laying all the groundwork to do us all in.
My proposal is for millions to snap to & make citizen arrests on the same day & time in all the govt. centers from ocean to ocean & offer 2 alternatives:
1. Help us restore the Republic; or
2. To prison for trial & execution for treason.
Everything else will not work, as it hasn’t up to now.
Evidently this is the only time anyone has mentioned this, but I don’t see any other alternative. Thanks.
Do you throw out the baby with all that dirty, corrupted bathwater? All difficult socio-economic growth tasks require public education and information. As long as there is life, there is hope.
Everyone in the last three hundred years who got near any attempt at creating ‘sovereign money’ – Ben Franklin, Abraham Lincoln, Adolph Hitler, John F. Kennedy, et. al. – was removed from the Capitalist system.
(Go to the URL for an overview.)
True! That’s the plot line of my book. Which URL? How do you mean about Franklin though? Perhaps you’re thinking of the King forbidding the colonists from issuing colonial scrip.
Yup.
The Banking Act (of 1775 or so) put an end to his colonial scrip.
This is one of my comments on the situation (trying to articulate it is tough, but I’ve got this far):
http://ws/travel3
Also, for a slightly longer (previous runup) Google .
What’s your take on the California banks refusing to accept Schwartzenegger’s scrip – his IOUs?
BTW I’m in South Africa trying to get the government to introduce sovereign money here along with Industrial hemp before it hits the fan here.
Great move and good luck with the South African government! On the banks not accepting California’s IOUs, I wrote an article on that. It’s here — http://www.webofdebt.com/articles/sunshine_state.php.
I am not a computer person:
http://file2.ws/traveling3
Again, another great article and point by point response Ellen.
My concern is that your monetary reform proposal is brilliant enough. But it’s not lack of brilliance that’s the greatest challenge it faces.
It’s about about who REALLY owns and controls washington and therefore Congress, the Fed and of course the Treasury. That’s the real issue. And you know that THEY will do everything in their power to retain the control, and thereby, obscene profits they have been garnering for centuries.
Even though the state owned bank idea is great, if the ‘goverment’ itself is owned and controlled by the wrong people, that’s where change must first be effected.
Maybe; but if the government is controlled by the mob, we probably can’t break through that. What about using their system, complying with all their rules, and setting up our own banks that are used for public purposes, with the profits being returned to the community purse?
First of all, I want to congratulate Dr. Ellen Brown for getting heads in the AMI to turn. No matter what their response is, the truth of the matter is, showing up inevitably causes resistance to show up too. Keep going!! I feel that there are many who are willing to stand with you.
The issue comes down to, I believe, is what we really believe – believe about our ability to make choices as human beings, to create a better world; and to actually DO whatever it takes.
First step – work towards empowering people to empower themselves and break down the illusion of vicitimhood. All movements of change (by truly virtuous intentions) work because ‘victim consciousness’ is no longer the prevailing attitude. It’s already happening in areas such as sustainable living, development, farming, etc. Why not about money creation?
This game needs to be raised into a bigger playing field by bringing awareness of the problems and the solutions to our current banking system dysfunction, and making it available and accessible to everyone. It has to be done from the a perspective everybody can relate to, and a message that everyone can understand. One of the plagues is believing we can never understand how money works, how credit works. Heck, maybe through a brilliantly simple tale or story through a cartoon that essentially underscores Dr. Ellen’s proposals, could be a way to begin to bring flexibility to the current attitudes.
Showing up does put one at risk, but it’s a transgression against humanity if we become discouraged and let the powerful proposals by Dr. Brown and many others, stand idle while our banking system is held out of the reach of citizens. It’s not only held out of reach by those who control it, but also those who believe that there’s nothing they can do about it.
We ARE extraordinary citizens empowered to make a better world, and WE have high convictions that we ARE the one’s who can make all the difference.
Yes, I actually think we’re held in the thrall of organized crime. I’m not sure how to break out of that, but it looks as if we have to organize from the ground up. Waiting for our leaders isn’t going to do it; they’re in the pockets of the mob.
Yes, depending on how one defines “the mob” or “organized crime”, I have thought this going back to the 1970’s and early 80’s. Criminal gangs and mobs grow powerful and then over time morph into the corporate path of respectability. Once respectable corporations adopt the mob morality (if any at all) and use mergers and acquisitions to destroy competition and pocket the profits from stripping off their assets and bankrupting the rest. The system today is shot through with “organized crime” and the international central bankers are at the apex of the criminal pyramid.
If you want to learn about all the flaws in the proposed American Monetary Act, go to http://tcallenco.blogspot.com/2009/07/analysis-of-american-monetary.html and read “Analysis of the American Monetary Institute’s American Monetary Act”
I fear that your analysis may be tainted by your religious beliefs. When you bring phrases like “However, real money, Scriptural money (see Genesis 23:16), has tangible value” to the debate, it opens up a lot of area for bias and not just via one’s religion.
The only real flaw in the proposed monetary act is that it will never gain enough support to be passed by a corrupt congress held hostage by the money and corporate power syndicates.
Other criticisms and complaints are minor, and could be adjusted with experience… assuming we had a truly representative government, of, by and for the people, rather than for the international central bankers and their corporate offspring.
Just watching the corporate mobsters going after health care reform should give anyone a foretaste of what trying to get meaningful money reforms would look like. Only federal money reform of the kind AMI advocates would be 100-fold worse. I think it would probably devolve into a civil war in the end if something didn’t intervene to stop that from happening… like another major 9-11 event or a war.
BTW, your commodity money solutions make no sense at all.
I just now looked at that website. I disagree with his premise in general, but here’s one point in particular I wanted to comment on —
“AMI is of the school that money is a creation of government and not of the markets. Money is what the government declares it to be. Apparently, people never used money until some monarch thought of it. Money is not a market (economic) concept; it is a political concept.”
It’s true — people never used money till some monarch thought of it! At least, that’s my recollection without looking it up. Money originated with the Sumerians in the 4th century B.C., and it was issued by the monarch. Actually it was a matriarchy; it was issued by the matriarch/goddess Innana, consort of Enki. See “The Gods of Sumer.” If you want to get California/far out about it, see Zecharia Sitchin: money came in along with writing, architecture, math, agriculture, animal husbandry, etc. — full blown, as if from somewhere else. Where are those gods when we need them?!
Sorry, I meant 4th millennium BC for the Sumerians. Thanks, Bill S., for pointing that out!
Sorry, I meant 4th millennium BC for the Sumerians. Thanks, Bill Still, for pointing that out!
I appreciate the exchange between Ellen Brown and AMI, both of which aim for healthy monetary reform. I had to read both sides of this debate closely, because up until now, I have regarded both to be credible, sincere sources of information on this crisis that faces human civilization.
I am not even close to being an expert on this issue, but it is fast becoming my #1 topic of concern. The primary point I gained from this Brown-AMI exchange was that we cannot reasonably expect “radical” changes (such as AMI’s plan) to garner adequate support, at least not in the short run. Brown’s state-owned bank plan seems to be a viable and politically-acceptable “first step” reform.
Further, the idea of decentralizing money-creation power by bringing state governments into the game solves the inevitable problem that a “publicly-controlled” monetary system (somehow managed by Congress) would still be a tempting opportunity for our current banksters to simply change careers.
However, Ellen, I still don’t understand why we need to keep credit and interest in the picture. It seems to me that debt — in principle — is still an unnecessary burden. In fact, the underlying problem may, in fact, be the unequal distribution of wealth. If one percent of the population weren’t so rich and powerful, the rest of us wouldn’t need to borrow from them!
Perhaps, again, I am asking for too radical of a change …
Hi, on the question of interest, in both the American Monetary Act plan and mine, borrowers would be charged interest, just as banks do now. The American Monetary Act would have private banks charge borrowers interest, plus the banks themselves would pay interest to the government entity which creates the money. My public bank would also charge interest to the borrower, but mine would charge less because there is no private banker middleman to take a cut. As for why we need “credit,” what is the alternative: save the money first before you spend it? That won’t work for poor people who have nothing to start with. You’ve got to have a rich daddy, an inheritance, or a bank that you can borrow from to get started with your business. Whether it could all be done interest-free, that’s possible; and certainly for government borrowing it’s possible. But interest serves some useful purposes, and you can avoid the parasitic pyramid scheme effect by make the bank publicly-owned, with the interest going back to the common pool for the benefit of the public. I’ve gone into that at more length in “Web of Debt.”
Brilliant! As always, Ellen. To aid you in your battle, I offer you some thoughts on INTEREST which I have developed over recent decades from an engineering perspective. I believe there are two distinguishable cases to consider – one where interest IS justifiable, the other where it is NOT justifiable. The two cases are like chalk and cheese and very easy to separate.
First case: I have EARNED $1,000 (or OWN something valued at that price) and you borrow it. In this case, I lose the opportunity of having its benefit and you get that benefit. It’s called “opportunity cost” on my account, similar to letting you use my car for a day. I am rightly entitled to charge ‘economic rent’ on what I have lent you, in order to cover the real cost of losing the opportunity of using it myself. If the thing lent is not rightly owned by the first person, he has no entitlement to rent it to you. It’s that simple.
Second Case: An accountant writes up a $1,000 Credit (and a balancing $1,000 Debit) in his books, assigns the $1,000 Credit item to you, then tracks your repayment instalments, writing his book-Debit entries down as he goes. Is he justified in charging you interest on that $1,000 Credit? No way!! What he IS entitled to is a “fee for the service” he provides, namely, ‘keeping the books’. The cost of handling the bookkeeping for a $1,000,000 loan is NOT 1,000 x the cost of handling the bookkeeping for a $1,000 loan. If the two loans are paid off in the same period of time, the cost of labour (hours) and material (ink and paper, of keyboard wear) to the bookkeeper in each case will be identical – although the “0” key on his keyboard might get bit more of a hammering in the second case.
I believe most of the confusion surrounding interest arises because the “$-unit” is the Unit used to measure “Money-cost”, which makes any attempt to think about the “Money-cost of a $” an exercise in incoherence. It is like asking, “What is the length-cost of an Inch? Or, “What is the Time-cost of a Second?” As a mechanical engineer who has specialized in physical measurements for more than a few decades, there is a clear distinction in my mind between the various Units of measurement we use (m, kg, second, $) and the Things we measure using those units, like distance travelled, weight of car, the duration of a trip, and the cost of the petrol used. Only in the case of “$” is there gross confusion of thinking.
I’ll just make two more points briefly in this vein, to whet your appetite:
First, while our units for physical measurements, like length and time, are legally defined in relation to known physical processes and can be realized to extreme precision (using expensive, cumbersome things called laser interferometers and caesium atomic clocks), nowhere in the world is any currency unit presently defined in relation to any ‘real exchange process’. It is obvious that 1 hour in the USA is the same as 1 hour anywhere else in the world and we can easily convert any known distance in Australia (where we use metric the system) into an equivalent distance in miles, but for no valid reason, economists have convinced the world that all currency Units should ‘float’ aimlessly, so that the public is obliged to hedge as best it can against expected variations in the ‘size’ these ‘uncertain’ units. Would we similarly tolerate ‘flexible inches’ (as in ‘elastic’ tape measures) or ‘variable hours’ (as in clocks which have ‘short’ hours today and ‘long’ hours tomorrow)? I don’t think so.
Second, there is no practical limit to the number of either Inch- or Second-units that are available to measure any Length or Time that needs to be measured, in the way the “$” is restricted when we come to ‘measure’ any ‘goods or services’ that need to go through some exchange process. The argument is made that if too many $’s are available for these purposes, their ‘value’ will be eroded. That is nonsense. Certainly, in high demand times, the ‘cost’ of $’s will increase with scarcity, but their ‘measuring ability’ should not.
The “money-cost” of manufacturing the ‘tools’ needed to measure any physical quantity (tape measures, egg-timers, digital watches, etc.) is irrelevant to their utility. If “62 inch units” are needed to measure your height (I hope you’re 5′-2″), they are available immediately. You don’t need to go to a “length bank” or a “ruler bank” to borrow a ruler or tape measure and then pay back “65 inches” a few days later. In fact, provided that their ‘size’ is rigidly controlled, the more freely available such Units are, the greater their Utility.
If you could ponder issues like the above at your leisure, you might begin to see just how thoroughly confused orthodox economists have become as a result of refusing to define their most fundamental concepts. When it comes to ‘measuring’ things they refuse to define using unspecified Units of measurement which vary from time to time and place to place, is it any wonder they come up with the garbage they do?
None of what I am offering you here is meant to detract from your arguments about state banking. Once we can clearly distinguish between the ‘cost of money’ (i.e. the effort and material consumed in manufacturing it) and its ‘value’ (being careful to distinguish its enormous ‘utility’ from its not-yet-legally-prescribed ‘exchange value’) we will be well on the way to establishing the just future you are trying to achieve.
By then we will be in a position to define a universal Unit of ‘exchange value’, defined against an agreed, replicable standard; a Unit whose ‘value’ will be the same all over the world (abolishing all foreign exchange debacles) and the quantity of which will be as unrestricted as are Inches and Hours.
Thanks! I normally ask that emails be kept shorter, but you appear to be addressing a question I’m still trying to work out myself, so I’ll print yours and digest it. Meanwhile on your first point, the reason a bank NEEDS to make a good chunk in compound interest is that it is pretending to HAVE the money it lends, and it’s on the hook for the money if it doesn’t get paid back. The bank can create credit on its books, but the books have to balance when the regulator comes around. If somebody doesn’t pay, it comes out of the bank’s own “capital.” That’s why the banks are in trouble now, and why I think the 100% reserve solution won’t work — the banks will go broke because they won’t have any extra money to cover the people who don’t pay back their loans. It’s also why I think public banking is the ultimate solution. It’s not a stopgap measure; it’s the only way we can have a functioning credit system. A government bank doesn’t need “reserves.” It’s just doing an accounting function. If some borrowers don’t pay and it has to write some loans off, the community can absorb the loss in a modest inflation. The Chinese did it that way for decades, and they came out ahead.
Thanks for your reply. I guess I need to read your book to see what the other “useful purposes” are for interest, but if the interest is going toward the public good, rather than private gain, I can see that.
But it still doesn’t resolve the inequality of wealth issue, and giving poor people a chance to “make it big” by going into debt first doesn’t seem fair. How did all of those rich daddies with inheritances get their wealth? Did they start out that way?
The AMI website has a great article on the [new] “religion” that serves the free market as its god, with economists as its priests. Somehow, this god seems to shower its blessings on only 1% of its worshippers … while the other 99% pay it homage in hopes of an elusive fortune.
Capitalism simply has not proven to be an equitable system, to my knowledge. And the need for credit still seems to favor those who already have all the capital.
The way I see credit, it’s a great blessing — if it’s publicly issued. Every time someone takes out a loan, he “monetizes” something — a house, a car, his future earnings, his factory and equipment. The community trusts him with the credit to spend on the things he needs to build his dream, backed only by what he puts up as collateral. Let’s say he’s got nothing to pledge except his future earnings. He’s got a brilliant idea that he wants to manifest, so he “monetizes” that: the dream project is written up on one side of the books as if it’s already built (this is called accrual accounting — as I understand it, without being an accountant), and the “money” necessary to build it is written into an account on the other side and drawn on to pay workers and materials to build the thing. Then the profits from the thing he builds pay off the loan. “Credit” is just an advance by the community, which trusts the borrower to pay the advance back wth the fruits of his labors. It’s a good thing, a wonderful thing, the thing that has made this country great– except for one fatal flaw: the bestower of “credit” got privatized, and the interest got drawn away from the community, turning it into a pyramid scheme. If the interest were returned to the community which trusted the borrower by supplying him with what he needed to build his dream, the system would become a closed loop and something wonderful again.
Hi Ellen.
Despite the immense improvement your historic model is over the current Keynesian economic one, it still doesn’t over all liquidate the entire growth of debt; the interest that the public bank spends back into the system probably won’t equal the entire debt created or on the other hand if it did, it wouldn’t be a positive characteristic for new businesses to have to overcome. But if that isn’t the case, then the only way that the person’s future earnings can pay the entire debt he owes is through elsewhere more debt being created in the system.
Do you see where my POV is coming from here?
That’s why you need to allow the government to simply print the money it needs for some of its expenses. I agree with the American Monetary Act on that — the government SHOULD be allowed to issue money interest-free for its needs, or enough of them to cover the shortfall in the money supply created by interest. The other option is an interest-free system, but that’s a much bigger leap from where we are now. We can dream about that later, but right now we’re trying to rescue the economy from another Great Depression; and the easiest, most direct step that could be taken to do that is for states to create their own state-owned banks, as North Dakota did in similar circumstances, very successfully. One problem with an interest-free system is that retirees depend on the interest on bonds to supplement their incomes in old age. You would need to revise the whole social structure so that we actually pay people enough in social security to live comfortably in old age.
There is another option also, and i think it is the only option to liquidate the inherent debt of a modern industrial system. That is the requirement for money to come into the system with no debt obligation at all.
As you know, Richard C Cook writes of this. In a sense the interest being spent into an economy does this, but only for that component of debt that it has created with interest obligations in the related loan.
Debt free money can enter through govt. spending with no attached re-payment obligation, through price rebates and dividend payments directly to citizens. Those methods would take into account whatever the arrangements with interest are in the economy, interest either serving as more debt or being recycled into no associated debt obligation spending.
It seems to me, once the cyclical price – purchasing power gap is being liquidated, then the previous debt overhang will start to be reduced through the system’s increasing productivity. And as this process works through, the natural demand and supply of the system will be less and less about serving debt, thereby transforming the destructive nature of economic growth.
David, You would do well to read “Web of Debt” as well as “The Lost Science of Money”. Ellen’s book is a far easier read, but the AMI book adds historical and philosophical perspective and depth to the money issue. They are the two best books about money ever written, in my opinion.
For the quickest introduction tot he subject the videos “Money as Debt 1 & 2” and “The Money Masters”. You can google them and watch them on Youtube or other video sites.
PS: Amazon is now listing TLSOM as “unavailable (again). Suppression of this book is very strong.
Sorry,
http://file2.traveling3
I concur with Tom’s points, that a state-owned bank still creates money by creating debt, and it does not create the money needed for the interest to be paid on that debt. Borrowers are still stuck in a last-man-standing competition for interest [usury] money.
I like Ellen’s idea that only the state loans money, but I’m not sure I like interest. Further, by putting money into circulation with loans, we still need to keep the money supply growth on par with economic growth to avoid inflation. Will the states work together to do that?
Finally, what to do about the 1% who profited from the “corrupt bathwater” (per Jere above)? Under Ellen’s reformed banking system, will the 1% release their excess wealth back into the system so we can inform and educate the impoverished and raise our collective standard of living? I think not, and I still am not sure capitalism promotes the survival of our species.
Ellen’s State Bank solution makes much more sense than any federal solution. Let the states lead the way. The State Bank solution — and even smaller entities, like individual university banks — de-centralizes the most abused power in this nation.
Zarlinga has some desperate need to be seen as the only decider of truth in monetary reform. People are moving away from him, therefore.
Much to his chagrin, I’d never even heard of him until 3-4 years ago when he called me up — about something — I don’t remember — and started waxing all authoritative about monetary reform.
I finally asked, “who are you, anyway?”
“I’m Stephen Zarlinga,” he responded incredulously, like he was the great and glorious Oz. “Don’t you know me?”
“Sorry, never heard of you? So when did you start with monetary reform?” I asks.
“1996” doth reply the Zarlinga.
“Oh, that was the year we released The MoneyMasters documentary.”
Zarlinga — silence.
Needless to say, I’ve never been invited to an AIM conference and, in fact, was thrown out of last year’s.
Bill, you were “thrown out” of last year’s AMI conference?
I am staggered! You and Paul Grignon have probably done more to awaken the public to the banker’s money-creation con game than any two people alive today. Video presentations reach so many more people than books nowadays, especially in this area of money, where unnecessary complexity is used to obscure and hide the truth.
It was your and Grignon’s videos (and websites) that helped me make the conceptual transition from GE Griffin, Murray Rothbard Von Mises and the goldbugs, to Zarlenga, Del Mar, EH Brown and others who understand the abstract and fiat (legal) nature of money. I am very much in your debt. For years I have been listing your “Money Masters” along with the top handful of sources for good information on money, others being Web of Debt, Lost Science of Money, and an extraodinary modern history, “Tragedy and Hope” along with other books by Carroll Quigley. David Korten is also up there.
As disheartening as this news is to me, I had seen glimpses of it when I mentioned the simple brilliance of EHB’s Web of Debt to him last year at the conference, I said I thought it was a great way to reach far more people with the truth about money. He went off on me like I was speaking of treason! I was as shocked then as I was when he denied my registration request for this year’s conference, without explanation, and even hung up the phone on me after I asked about Ellen being welcomed.
I posted two responses yesterday to Ellen’s posts on the AMI blog that started all this, and they have not yet been approved, even though they are extremely benign, even praising SZ.
All this is very unfortunate, to say the least. I see no reason for this “my way or the highway” stance.
I was not physically removed. He wouldn’t even do it face-to-face. I think he told Ellen to tell me I was not welcomed in his esteemed group. I offered to pay, but that was still turned down. I was there to do an on-camera interview with Ellen, Byron Dale, and Alistair McConnachie up in my hotel room between sessions.
In the spirit of unity, I even offered to give Zarlinga an interview slot in my new film, “The Secret of Oz”. That was ignored. Zarlinga forced Alistair to not give me the interview. I think Alistair deeply regrets that mistake because he has invited me to his Bromsgrove conference in a month and asked me to show the new film in its entirety.
Zarlinga is just going to sidetrack himself with this attitude. Leaders have to be flexible and inclusive or there is no one to lead.
Hi Bill, welcome to my blog! Yes that was totally weird at the AMI conference last year. I was pulled out of the lecture I wanted to hear most, Michael Hudson’s, to answer for what I was doing speaking to you in the hall! High treason indeed. It’s a public university, with public halls. You just came there because it was the most efficient way to interview several people at once, and anyway you were interviewing us back at the hotel. I wouldn’t have chosen to go this year, but Michael Hudson thinks I should, and my friend Kristen already signed up and I said I would share the room cost with her. Well, it should be interesting! I do really think “inclusivity” is better than “exclusivity.” It will be a challenge to see if I can patch things up graciously. I spent years in the foreign service perfecting the art of diplomacy. This will be a test!
When will the “Secret of Oz” be released? I seem to remember seeing the trailer.
“Zarlenga is just going to sidetrack himself with this attitude. Leaders have to be flexible and inclusive or there is no one to lead.”
That is my fear. It is the cause, or the work, that is essential. Self, ego, pride, vanity, these all get in the way of the mission. If this mission fails it will be a catastrophic failure.
Perhaps that is what the world must endure in order to self-correct. I pray not, because it sure will be messy, and take a long time to rebuild from the ruins.
Well, until about a month ago, I never had time for blogs or forums. But this gives me an opportunity to publicly proclaim how important I think your work is. I’ve learned tons from you and continue to learn more every time you write an article. Although we disagree on some small things, that doesn’t matter. You are without a doubt the greatest treasure in the monetary reform firmament.
Oh, that’s so kind! Glad you’re going to Bromsgrove. I’ll have shot my travel budget and mother caregiver time with NYC on 9-13 and Chicago on 9-24. It’s a 9-11 rally in NYC, but I’m speaking on the economic 9-11, which I’m calling the collapse of Lehman Bros on 9-15-08.
Bill Still, on September 1st, 2009 at 7:51 pm Said:
“Well, until about a month ago, I never had time for blogs or forums. But this gives me an opportunity to publicly proclaim how important I think your work is. I’ve learned tons from you and continue to learn more every time you write an article. Although we disagree on some small things, that doesn’t matter. You are without a doubt the greatest treasure in the monetary reform firmament.”
Well said, Bill. My thoughts exactly! I’ve never read any other author on money and economics who can explain these complexities and make them simple enough for the average citizen to understand. Zarlenga may have written the textbook history of money, but Ellen has written the book that will reach the masses.
And a massive education campaign directed at the citizens is what is most needed now. The control of money should be in the hands of the people, through our representative governments, and whatever it takes to do that is what I will support.
BTW, Your film, The Money Masters is still the best (most comprehensive) video on money and the fed in existence. 🙂 I also consider you a “supernova in the money reform firmament”.
Web of Debt log is the place to be!
“You are without a doubt the greatest treasure in the monetary reform firmament. ”
Thanks so much for your work, Bill. You are a star in the firmament yourself. A constellation is taking shape.
And as for Stephan Zarlenga, it is not widely known, but if you rub his bald head you will have 7 years of good luck. Of course, not getting bitten is the challenge.
Jere wrote:
ECONOMIC DEMOCRACY! Political democracy can not long exist in the presence of extreme inequalities in the distributions of wealth and money. As AMI says, borrowing from Rothschild: “Those who control a nations money control that nation.” There is a name for it. It is called plutocracy. Money = Power. It’s axiomatic.
Extreme concentration of wealth equate to extreme concentrations of power, and we know from Lord Acton that “power corrupts, and absolute power corrupts absolutely”. He was talking about money and banking. [end]
I wish to point out that plutocracy = psychopathocracy, since most top businessmen are psychopaths, as described in Dr. Robert Hare’s book, “Snakes in Suits”.
http://www.snakesinsuits.com/
Brian, I agree with the psychopath assessment. But I would lean even more to sociopath. I’ve used the terms generously in my writings about corporate and banking giants. The corporation itself is all about the “bottom line” (greed) and morality or ethics does not come into play. Even the law seldom restrains their greed, as the fines or penalties for breaking the law are almost never even close to the profits to be made from breaking it.
Thanks for the link.
My hat is off to Ellen Brown and Bill Still. The information that you both have shared has given me and countless others hope during these dark days.
The Web of Debt and The Money Masters both will undoubtedly be viewed by historians as catalyzing documents of these times. Please accept my sincerest thanks.
Thank you, Ellen, so much for writing this important article. I have been trying to understand the differences between your proposals and that of the AMI, and your article explains a lot. I actually think that this could be the beginning of a “coming together,” or at least a respectable co-existence. Your points are so clear and eloquent, they cannot be ignored. There most definitely needs to be a debate/discussion on achieving monetary reform.
Hi Ann. You are someone I was thinking of when Ellen wrote her Open Letter to AMI. The 100% reserve solution was the main difference between Ellen’s thinking and the AMI position. Now the state bank is another wrinkle.
However, I think these differences are evolutionary and incremental. The big move would be to place money creation for the top tier of money with the federal government. This puts it in public hands where it belongs. I see that as the main objective in money reform, bar none. Getting the federal government to take over (buy out or incorporate it into the real government) would be the first step. Then fiat money could be created and spent or lent into the economy in various ways that could increase prosperity and abundance for all, with the possible exception of ending the gravy train for the bankers.
After that, deciding what parts of banking should be public and which parts left to private enterprise could be worked out over time, and with wisdom, need not be too financial painful for any of the parties to the reforms. These should be no need to bankrupt any bank who has done sound business, whether federal or state chartered.
The current fractional reserve system could be modified to raise the level of reserves gradually, over time, as new money came into the system, or was exchanged for old or existing dollars,
The current Federal Reserve system is regional, so if it could be incorporated into the federal government that would provide regional elasticity in the velocity of money. And stability! There would be no need for the built-in inflation of 2-3% or so per year, because the money needed to repay interest would be created, and the need for money growth could be checked, and geared to economic output of real goods and services.
Anyway, I agree that this is a good dialogue to clarify the differences between Ellen’s WoD concepts for money reforms and AMI’s. Constructive dialogue is needed, as is creative thinking, cooperation, and brainstorming.
Personally, I support all efforts to transfer the creation of money from the private bankers to the public sector at all levels.
Hi, Jere. Thanks for the reply. I also agree that we support all efforts to bring the authority of all money creation back into public hands. And, Ellen’s letter is yet another excellent letter/article toward us progressing in the monetary reform movement. I’ve been spending time at one of my favorite websites posting all of Ellen’s articles as they come available. In addition to trying to educate myself, I’ve been trying to spread the word!
Hi Ann, it was GREAT getting to know you at the AMI conference! Putting faces on names, that’s what’s so cool about conferences. I’ll do a formal analysis when I get time, but I just wanted to say hello, now that I’m back and have a bit of breathing space. Ellen
I would like to join the Web of Debt forum, but it says it is not currently possible to create a new account. Um, that sounds exclusive to me!?
David, Thank you for your interest. However the WoD Forum is more or less inactive at the moment. I was administrating it, but it became more than I could handle alone, primarily because of the anti-money-reform attacks and spammers. This is all explained on the forum, along with how to request registration if you wish to join. We would prefer to have only those who have read WOD and/or TLSOM posting. Otherwise we just spend way to much time explaining remedial issues, which is one of the reasons I could not keep up with the moderation of the forum.
Thanks again for your interest.
I totally understand and will read TLSOM and WOD when I have the chance. I am currently reading the 700-page compilation by Alex James entitled, “The Hidden History of Money and New World Order Usury Secrets.” That’s where I learned about Ellen and Zarlenga.
I am a college teacher with an MBA and am hoping to get a PhD in monetary economics starting next year. Does anyone have a suggestion of an institution where I might pursue this topic freely? I talked to Zarlenga and he said “there are none.”
Regarding Zarlenga, I am sad to hear about his ego problem. I wonder, given all of the attacks that come with being a money reformer, whether it’s a self-defense mechanism gone awry?
It’s hard to be a Gandhi.
David, I agree with your last paragraph. Zarlenga is assailed on all sides for his courageous efforts on money reform, and the shedding of light on the corruption of our banking system. I think he may be starting to see “enemies” where there are none, or where differences are only slight.
I haven’t yet read the book you mentioned, but I’ll add it to my reading list. I’d also recommend any of the books by David C Korten, for even a bigger picture of where we may be heading.
As for your PhD program, I think Zarlenga is probably correct in saying there aren’t any that teach the real truth about the higher concepts of money, and money is the heart of economics, along with land (resources) and labor.
Wait! I may have spoken too soon. Some of the better Georgist institutions may offer PhD degrees, and his theories on land (resources) and labor are inclusive of ethical money concdpts expressed by Zarlenga and EH Brown. George may have been centuries ahead of his time in the fundamentals of economics.
The more basic one directs their thinking about a particular subject or sphere of existence, potentially, the more powerful. Copernicus and Einstein were examples of people whose ideas effected such great changes. Two things are characteristic of great changes to ways of thinking. First they illuminate things that are currently thought of as either inconsequential or that are unknown. The second characteristic of paradigm changing ideas is that they RESOLVE conflicts in current ways of thinking. And this is why IMO C.H. Douglas deserves so much credit. He not only spotted the true primary purpose for having a productive system, (fulfills characteristic #1) he also showed that choosing to institute that ACTUAL prime purpose resolved most if not all of the incredibly painful and inhumane consequences of falsely making a secondary purpose (profit) our prime purpose. (fulfills characteristic #2) Yes, truly evolutionary ideas RESOLVE CONFLICTS within the current paradigm allowing a better understanding and functioning of the systems effected. Marx was a reactionary. He wanted to end capitalism. Douglas was an evolutionary. His ideas allow capitalism to work without being so harmful and painful, within a larger framework of thinking. George’s land tax ideas may well be the way to keep the wealthy from CONTINUING to be so powerful that they will be able to take back control of our monetary system…which has happened before when we have briefly effected strong reforms. Douglas and George. Two men whose idea’s time has really come.
There is a famous quote, which I can’t lay my hands on just now so I shall paraphrase: “The quickest way for a promising young professor of economics to be derailed from his tenure track is to even mention the words “monetary reform.”
Right, Bill. If David want to rise in the academic ranks, he needs to avoid the money reform movement. One possible exception I hadn’t thought of before though could be UMKC. (University of Missouri at Kansas City) There are two outstanding professors there who are very engaged in money reforms, Michael Hudson, and William Black. Both are scheduled to speak at the upcoming AMI conference later in September.
One of the reasons I was so disappointed at being turned away by Zarlenga this year was my desire to hear what these two had to say. Those not familiar with them should try Googling their names for some interesting reading.
UM/KC would be the best bet that I know of.
Mike Hudson appears in my new film.
Agreed Bill. I hadn’t thought about it until just now, but I guess that (UM/KC) would be my choice for an economics PhD, just for those two guys on the staff. They are both heavyweight thinkers, and righteous ones. At least he would have some academic compatibility there.
LOL. Yes, money talks and the control of it is the most precious of privileges. And yet, thank the deity, there is one force more powerful than money, and that is thought or ideas.
Yup, It’s hard to beat the power of an idea whose time has come.