USuncutMN says: Tax the corporations! Tax the rich! Stop the cuts, fight for social justice for all. Standing in solidarity with http://www.usuncut.org/ and other Uncutters worldwide. FIGHT for a Foreclosure Moratorium! Foreclosure = homelessness. Resist the American Legislative Exchange Council, Grover Norquist and Citizen's United. #Austerity for the wheeler dealers, NOT the people.
USuncutMN supports #occupyWallStreet, #occupyDC, the XL Pipeline resistance Yes, We, the People, are going to put democracy in all its forms up front and center. Open mic, diversity, nonviolent tactics .. Social media, economic democracy, repeal Citizen's United, single-payer healthcare, State Bank, Operation Feed the Homeless, anti-racism, homophobia, sexISM, war budgetting, lack of transparency, et al. Once we identify who we are and what we've lost, We can move forward.
The Goal is Not to Occupy it is to End Corporate Rule
By Kevin Zeese
December 11, 2011 "Information Clearing House" --
With encampments being closed across the country it is important to
remember the end goal is not to occupy public space, it is to end
corporate rule. We seek to replace the rule of money with the rule of
people. Occupying is a tactic but the grand strategy of the Occupy
Movement is to weaken the pillars that hold the corporate-government in place by educating, organizing and mobilizing people into an independent political force.
The
occupations of public space have already done a great deal to lift the
veil of lies. People are now more aware than ever that the wealth
divide is caused by a rigged economic system of crony capitalism and
that we can create a fair economy
that works for all Americans. We are also aware that many of our
fellow citizens are ready to take action – extreme action of sleeping
outside in the cold in a public park. And, we also now know that we
have the power to shift the debate and force the economic and political elites to listen to us. In just a few months we have made a difference.
Occupying
public space involves a lot of resources and energy that could be spent
educating, organizing and mobilizing people in much greater numbers.
There is a lot to do to end corporate rule and the challenges of
occupying public space can divert our attention and resources from other
responsibilities we have as a movement.
When we were organizing the Occupation of Washington, DC
– before the occupation of Wall Street began – we were in conversation
with movements around the world. The Spanish Indignados told us that an
occupation should last no more than two weeks. After that it becomes a
diversion from the political objectives. The occupation begins to
spend its time dealing with poverty, homelessness, inadequately treated
mental illness and addiction – this has been experienced by occupies
across the country.
Occupying
for a short time accomplishes many of the objectives of holding public
space – the political dialogue is affected, people are mobilized and all
see that fellow citizens can effectively challenge the corporate-state.
Staying for a lengthy period continues to deepen these goals but the
impacts are more limited and the costs get higher.
What to
do next? The Occupy Movement needs to bring participatory democracy to
communities. Occupiers should develop an aggressive organizing plan for
their city. Divide the city and appoint people to be responsible for
different areas of the city. Depending on how many people you have make
these areas as small as possible. Develop plans for house-to-house
campaigns where you knock on doors, provide literature, ask what you can
do to make their lives better. Do they need snow removed? Clothes?
If so, get the occupy team to fulfill their needs, find used clothes,
clean their yard – whatever you can do to help. This shows community
and builds relationships.
Plan a
march through the different communities in the city. Make it a
spectacle. Have a marching band. Don’t have one – reach out to local
school bands. Organize them. Create floats, images and signs. Display
yourselves and your message. Hand out literature as you march. Let
people know what the occupy stands for they should join us in building a
better world for them and their families.
Plan
public General Assemblies in communities across the city. Teach people
the General Assembly process, the hand signals, how to stack speakers,
how to listen and reach consensus. Learn the local issues. Solve local
problems. Again, build a community that works together to solve
problems.
Let people know about the National Occupation of Washington DC (NOW DC), the American Spring
beginning on March 30th. Organize people to come, share rides, hire
buses, walk, ride a bike – get people to the nation’s capital to show
the united force of the people against the rule of money. This will be
an opportunity to display our solidarity and demand that the people, not
money, rule.
How
rapidly a movement makes progress is hard to predict. It is never a
constant upswing of growth and progress. We may be in for a sprint, or
more likely, a marathon with hurdles. If you are hoping for a sprint,
note that the deep corruption of the government and the economy has left
both weaker than is publicly acknowledged. It may be a hollowed out
shell ready to fall.
But,
this may also take years to accomplish. Take the timeline of the Civil
Rights movement: 1955 Rosa Parks sits in the front of the bus, not until
five years later in 1960, do the lunch counter sit-ins begin. Not until
three years later in 1963 does Dr. Martin Luther King, Jr. lead a march
on Washington for the “I have a Dream” speech. No doubt the time
between Rosa Parks and the lunch counter sit-ins and Civil Rights Act
passing in 1964 seemed slow to those involved. Looking back it was
rapid, transformational change. In fact, the movement grew in fits and
starts and had roots decades of activity before the 1950s. In those
times of seeming lull, work was being done, to educate and organize
people that led to the big spurts of progress.
Older
movements, when communication was slower, have taken even longer. The
women’s suffrage movement held its first convention in 1848 in Seneca
Falls, NY. Twenty years later, Susan B. Anthony and Elizabeth Cady
Stanton formed the National Woman Suffrage Association. In 1913, Alice
Paul and Lucy Burns formed the National Women's Party to work for a
constitutional amendment to give women the vote. Finally, in 1919 the
federal woman’s suffrage amendment, originally written by Susan B.
Anthony and introduced in Congress in 1878, was passed by the House of
Representatives and the Senate, sent to the states for ratification and
signed into law one year later.
With
mass media, and especially the new democratized media of social
networks, the Internet, anonymous leaks and independent media, it is
very likely the end of the rule of money will come more quickly. If we
focus on our goal, act with intention and use our energy and resources
wisely victory will come sooner.
Our challenge to corporate power has roots. The Project on Corporations Law and Democracy
was founded in 1995. In 1999 the protests against the World Trade
Organization occurred in Seattle. In 2000, long-time crusader against
corporate power, Ralph Nader, ran his first full presidential campaign
and continues to challenge corporatism. This decade has been called the “Great Turning,” which Joanna Macy has defined as “the shift from the Industrial Growth Society to a life-sustaining civilization.”
“America Beyond Capitalism” by Gar Alperovitz, just printed its second edition, five years after the first, documenting the evolution of the developing democratized economy.
These are some of the foundations on which the Occupy Movement is
building as the unfairness and insecurity of corporate capitalism
becomes evident to all. Our roots are deeper than the few months of our
existence.
The
elites are foolish to think they will stop this movement by closing
occupations. The Occupy Movement will evolve in new and unpredictable
ways that will make the elites wish for the days of mere public
encampments. The 1% should know they will be held accountable. The
people have found their voice and will not be silenced. The era of the
rule of money is nearing its end.
Henry Ford said, “It is well enough that the people of the
nation do not understand our banking and monetary system, for if they
did, I believe there would be a revolution before tomorrow morning.”
We are beginning to understand, and Occupy Wall Street looks like the beginning of the revolution.
We are beginning to understand that our money is created, not by the
government, but by banks. Many authorities have confirmed this,
including the Federal Reserve itself.
The only money the government creates today are coins, which compose
less than one ten-thousandth of the money supply. Federal Reserve
Notes, or dollar bills, are issued by Federal Reserve Banks, all twelve
of which are owned by the private banks in their district. Most of our
money comes into circulation as bank loans, and it comes with an
interest charge attached.
According to Margrit Kennedy, a German researcher who has studied this issue extensively, interest now composes 40% of the cost of everything we buy.
We don’t see it on the sales slips, but interest is exacted at every
stage of production. Suppliers need to take out loans to pay for labor
and materials, before they have a product to sell.
For government projects, Kennedy found that the average cost of interest is 50%.
If the government owned the banks, it could keep the interest and get
these projects at half price. That means governments—state and
federal—could double the number of projects they could afford, without
costing the taxpayers a single penny more than we are paying now.
This opens up exciting possibilities. Federal and state governments
could fund all sorts of things we think we can’t afford now, simply by
owning their own banks. They could fund something Franklin D. Roosevelt
and Martin Luther King dreamt of—an Economic Bill of Rights.
A Vision for Tomorrow
In his first inaugural address in 1933, Roosevelt criticized the sort
of near-sighted Wall Street greed that precipitated the Great
Depression. He said, “They only know the rules of a generation of
self-seekers. They have no vision, and where there is no vision the
people perish.”
Roosevelt’s own vision reached its sharpest focus in 1944, when he called for a Second Bill of Rights. He said:
This Republic had its beginning, and grew to its present
strength, under the protection of certain inalienable political rights .
. . . They were our rights to life and liberty.
As our nation has grown in size and stature, however—as our
industrial economy expanded—these political rights proved inadequate to
assure us equality in the pursuit of happiness.
He then enumerated the economic rights he thought needed to be added to the Bill of Rights. They included:
The right to a job;
The right to earn enough to pay for food and clothing;
The right of businessmen to be free of unfair competition and domination by monopolies;
The right to a decent home;
The right to adequate medical care and the opportunity to enjoy good health;
The right to adequate protection from the economic fears of old age, sickness, accident, and unemployment;
The right to a good education.
Times have changed since the first Bill of Rights was added to the
Constitution in 1791. When the country was founded, people could stake
out some land, build a house on it, farm it, and be self-sufficient.
The Great Depression saw people turned out of their homes and living in
the streets—a phenomenon we are seeing again today. Few people now own
their own homes. Even if you have signed a mortgage, you will be in
debt peonage to the bank for 30 years or so before you can claim the
home as your own.
Health needs have changed too. In 1791, foods were natural and
nutrient-rich, and outdoor exercise was built into the lifestyle.
Degenerative diseases such as cancer and heart disease were rare.
Today, health insurance for some people can cost as much as rent.
Then there are college loans, which collectively now exceed a
trillion dollars, more even than credit card debt. Students are coming
out of universities not just without jobs but carrying a debt of $20,000
or so on their backs. For medical students and other post-graduate
students, it can be $100,000 or more. Again, that’s as much as a
mortgage, with no house to show for it. The justification for incurring
these debts was supposed to be that the students would get better jobs
when they graduated, but now jobs are scarce.
After World War II, the G.I. Bill provided returning servicemen with
free college tuition, as well as cheap home loans and business loans.
It was called “the G.I. Bill of Rights.” Studies have shown that the
G.I. Bill paid for itself seven times over and is one of the most
lucrative investments the government ever made.
The government could do that again—without increasing taxes or the
federal debt. It could do it by recovering the power to create money
from Wall Street and the financial services industry, which now claim a
whopping 40% of everything we buy.
An Updated Constitution for a New Millennium
Banks acquired the power to create money by default, when Congress
declined to claim it at the Constitutional Convention in 1787. The
Constitution says only that “Congress shall have the power to coin
money [and] regulate the power thereof.” The Founders left out not
just paper money but checkbook money, credit card money, money market
funds, and other forms of exchange that make up the money supply today.
All of them are created by private financial institutions, and they all
come into the economy as loans with interest attached.
Governments—state and federal—could bypass the interest tab by
setting up their own publicly-owned banks. Banking would become a
public utility, a tool for promoting productivity and trade rather than
for extracting wealth from the debtor class.
Congress could go further: it could reclaim the power to issue money
from the banks and fund its budget directly. It could do this, in fact,
without changing any laws. Congress is empowered to “coin money,” and
the Constitution sets no limit on the face amount of the coins.
Congress could issue a few one-trillion dollar coins, deposit them in an
account, and start writing checks.
The Fed’s own figures show that the money supply has shrunk by $3 trillion
since 2008. That sum could be spent into the economy without inflating
prices. Three trillion dollars could go a long way toward providing
the jobs and social services necessary to fulfill an Economic Bill of
Rights. Guaranteeing employment to anyone willing and able to work
would increase GDP, allowing the money supply to expand even further
without inflating prices, since supply and demand would increase
together.
Modernizing the Bill of Rights
As Bob Dylan said, “The times they are a’changin’.” Revolutionary
times call for revolutionary solutions and an updated social contract.
Apple and Microsoft update their programs every year. We are trying to
fit a highly complex modern monetary scheme into a constitutional
framework that is 200 years old.
After President Roosevelt died in 1945, his vision for an Economic
Bill of Rights was kept alive by Martin Luther King. “True compassion,”
King declared, “is more than flinging a coin to a beggar; it comes to
see that an edifice which produces beggars needs restructuring.”
MLK too has now passed away, but his vision has been carried on by a
variety of money reform groups. The government as “employer of last
resort,” guaranteeing a living wage to anyone who wants to work, is a
basic platform of Modern Monetary Theory (MMT). An MMT website
declares that by “[e]nding the enormous unearned profits acquired by
the means of the privatization of our sovereign currency. . . [i]t is
possible to have truly full employment without causing inflation.”
What was sufficient for a simple agrarian economy does not provide an
adequate framework for freedom and democracy today. We need an
Economic Bill of Rights, and we need to end the privatization of the
national currency. Only when the privilege of creating the national
money supply is returned to the people can we have a government that is
truly of the people, by the people and for the people.
——————
Ellen Brown is an attorney and president of the Public Banking Institute, http://PublicBankingInstitute.org.
In Web of Debt, her latest of eleven books, she shows how a private
cartel has usurped the power to create money from the people themselves,
and how we the people can get it back. Her websites are http://WebofDebt.com and http://EllenBrown.com.
UPDATE 9-27-11: When I first wrote this blog, it was to open a new conversation about debt, how we got here, and what to do about it both as citizens and as societies. As things have progressed, or should I say regressed, I am discovering with others the daunting and growing problems we face.
This is now Day Ten of the Occupy Wall Street demonstrations, and the world is beginning to take note of the complaints being made there. Wall Street is the enemy, not Main Street. Police “Serve & Protect” selectively…and it would appear only when video cams are at the ready to show their transgressions.
In that spirit, I think the reading below will make even more sense to you. Got a debt story? Would love to hear from you…
You and I are in debt, and I mean this in the broadest possible sense. Physically, Emotionally, Mentally and – perhaps even – Spiritually.
Our national debt now hovers at $14 trillion, 532 billion and counting, equivalent to $46,630 per citizen or $130,000 per taxpayer! Check out our “Debt Clock” – http://bit.ly/3pbLQ2 – and see the wheels fly by, moving higher, and higher, and higher.
It is the purpose of Written Off – America and Americans (WOAA), a book-in-process which is scheduled to be published this winter 2011, to explore this subject in ways that many of its readers will find hopeful and useful. How did we get here, how can we get OUTof this mess, and just what is stopping us from doing just that? Oh yes, and who, really, is responsible for this and how do we hold them accountable?
Since its inception in Spring, 2010, WOAA has morphed into something I would not have imagined – and we can blame (thank?) “Crowd-Sourcing” and Social Media for its evolution. Contributors weighed in from LinkedIn, Facebook, Twitter and an international roster of blogs to provide the Wisdom of Crowds to both form and inform the subject matter.
Written Off – America and Americans was initially intended to serve its readers as a simplified blueprint for surviving and thriving in the Great Recession. It take its instructional place, as one contributor surmised, somewhere between “Bankuptcy for Dummies” and theHarvard Business Review. Its source would be unassailable – the people most affected and least heard from - you and me.
That was then, this is now. WOAA is growing to fit a much more important role. Drawing on the wisdom of those who are at daily battle with economic forces that seem impossible to surmount, WOAA will provide its reader with both armament and battle plans that are proving victorious.
What is it evolving to become? An Activist Guide for people who refuse to be “written off”and who are rolling up their sleeves to do something about it.
WOAA started out to be a primer for people to understand and deal with the world’s economic meltdown – as seen through my eyes as a lifelong credit, collections and customer service professional. (A “bill collector,” as it were.) As time went along, and contributions flowed in, it became obvious that merely helping people to “understand and “deal with” the Great Recession and its effects were not going to cut it, and that the perspective of a credit professional was too narrow to meet the subject matter.
WOAA is being molded by its contributors to fill a role as a bright light to expose abuses by Big Business, Big Banks, Big Education and Bad Government and their Hired Guns. It is evolving into a How-To manual of clear paths and workable solutions which can be put into action by Everyman and Everywoman. Call it, “Revolution for (no-longer) Dummies.”
WOAA intends to make sense of the incomprehensible – that this world’s economic well-being has been placed in the care of the incompetent or the immoral and that only the strongest actions and remedies will correct this dangerous spiral downward.
A compelling reason – requiring meaningful action!
You and I who owe and are owed and who are now citizens of a debtor nation must arrive at a new sense and definition of what constitutes debt, the extension and use of credit. We need to reasses the role played by financial institutions and government oversight, the optimum way in which excesses can be corrected, and how all this knowledge and determined action will frame our lives as individuals and as a nation in the coming century.
We simply cannot continue on as a nation of debtors and a debtor nation. What must be corrected are the abuses of credit grantors and the abuses by the user of credit. We must review and rescind the laws and regulations that unfairly impact both the creditor and the debtor. We must root out and punish the money manipulators who – in the Wall Street tradition of “greed is good” – end-run the system and engineer financial meltdowns the like of which we in the U.S. and the global economy have experienced and will continue to experience unless systemic changes are installed.
WOAA intends to see that, once we define and understand this delicate dance between those who owe and those who are owed, we will be better prepared to either bear the yoke or even free ourselves from it.
It will be about not just surviving this economy, but thriving in it, and see that everyone has this opportunity.
Is that positive enough?
But, can we get therefrom here? That is, sanity in how we practice commerce and financial relationships over the insanity of never seeming to learn from the past and being forever bound to its “laws?? No, because here is a state of mind – even a shared hallucination – which cannot understand that the only way a world works best is by seeing to it that it operates on a win-win basis – the there that everyone wants.
The state of “there” requires that we adopt – in advance – a physical, emotional, mental and spiritual state of abundance and financial grace – one in which we will operate even though the world around us does not support that way of doing things. Yet.
The bottom line is this. There has to be a better way to manage that concept called credit and debt. The contributors to WOAA know that this is so, and that it can be learned and practiced. WOAA will be your handbook and guide to that better way. Better yet, you can help fulfill the role as a guide or activist in partnership with other contributors to this book by sharing your thoughts, experiences and solutions.
If all of us don’t make it, none of us will make it.
Donate $15 or More at the blog above and receive a free CD packed with 160 Survival books to build your library to help you get the knowledge you will need to get through the great reset.
Read and occasionally paraphrased from an article
Written By :
Silver Shield
Titled: Top 5 Places NOT To Be When The Dollar Collapses
http://dont-tread-on.me/
My apologies for not originally giving him credit for the written material. My motives are purely to sound the alarm in a way to awaken the masses to the dangers we most certainly face. Thank you Silver Shield for your understanding ;-)
The dollar collapse will be the single largest event in human history. This will be the first event that will touch every single living person in the world. All human activity is controlled by money. Our wealth,our work,our food,our government,even our relationships are affected by money.
No money in human history has had as much reach in both breadth and depth as the dollar. It is the de facto world currency.
All other currency collapses will pale in comparison to this big one. All other currency crises have been regional and there were other currencies for people to grasp on to.
This collapse will be global and it will bring down not only the dollar but all other fiat currencies,as they are fundamentally no different. The collapse of currencies will lead to the collapse of ALL paper assets.
By Stephen Lendman How Wall Street Fleeces America: Privatized Banking, Government Collusion and Class War
by Stephen Lendman
ISBN: 978-0-9833539-4-2 192 pp. $16.95 2011
SYNOPSIS
The 1913 Federal Reserve Act let powerful bankers usurp money
creation authority in violation of the Constitution's Article I, Section
8, giving only Congress the power to "coin Money (and) regulate the
Value thereof...."
Thereafter, powerful bankers used their control over money, credit
and debt for private self-enrichment, bankrolling and colluding with
Congress and administrations to implement laws favoring them.
As a result, decades of deregulation, outsourcing, economic financialization,
and casino capitalism followed, producing asset bubbles, record
budget and national debt levels, and depression-sized unemployment far
higher than reported numbers, albeit manipulated to look better.
After the financial crisis erupted in late 2007, even harder times
have left Main Street in the early stages of a depression, with recovery
pure illusion. Today's contagion has spread out of control, globally.
Wall Street got trillions of dollars in a desperate attempt to socialize losses, privatize
profits, and pump life back into the corpses by blowing public wealth
into a moribund financial sector, failing corporate favorites, and
America's aristocracy.
While Wall Street boasts it has recovered, industrial America keeps
imploding. High-paying jobs are exported. Economic prospects are
eroding. Austerity is being imposed, with no one sure how to revive
stable, sustainable long-term growth.
This book provides a powerful tool for showing angry Americans how
they've been fleeced, and includes a plan for constructive change.
TABLE OF CONTENTS
Dirty Secrets of the Temple
Capitalism and Freedom Unmasked
Greenspan's Dark Legacy
A Short History of Government Handouts to Bankers and Other Corporate Favorites
Quantitative Easing: Elixir or Poison?
Fraud in Washington
Obama's Anti-Populist Budget and Deficit Fix
The Recession Is Over, the Depression Is Just Beginning
Manipulation: How Markets Really Work
Goldman Sachs: Master of the Universe
Financialization: The Rise of Casino Capitalism
Class Warfare Jeopardizing American Workers' Security
Waging War on America's Workers
Permanent Debt Bondage from America's Student Loan Racket
On the Chopping Block: Social Security, Medicare and Medicaid
The Federal Reserve Abolition Act
Public Banking: An Idea Whose Time Has Come.
AUTHOR
Stephen Lendman is a writer and broadcaster. His work is exceedingly
widely distributed online, with his articles carried on numerous
listservs and websites such as OpEd News, Cyrano's Journal, Information
Clearing House, Countercurrents, Rense, AltNews, Uruknet, Global
Research, Counterpunch, and more.
In early 2007, he began regular radio hosting, and now hosts The Progressive Radio News Hour on The Progressive Radio Network.
He's the co-author with J.J. Asongu of The Iraq Quagmire:The Price of Imperial Arrogance.
He holds a BA from Harvard and an MBA from Wharton.
Available directly from Clarity Press, amazon.com, amazon.co.uk or our distributors in the USA, UK/Europe/ Middle East, Malaysia/Singapore, World Clarity Press, Inc. http://www.claritypress.com. ;
REVIEWS
"Stephen Lendman has been tireless in exposing the hidden forces
behind the news, on everything from political economy and human rights
to social justice and workers' rights. His writings draw from a wealth
of knowledge and deep conviction. I'm delighted to see him tackle the
problem of private banking and government collusion and what I believe
is the key to the solution--public banking."
ELLEN BROWN, Web of Debt
"Steve Lendman is one of America's leading critics,whether it
involves exposing collusion between Wall Street and Washington, the
Obama regime's support of the Israeli occupation of Palestine, or the
frame-up of Muslim citizens by the attorney general. Fearless,thoroughly
documented and judicious in his judgement, Lendman's essays are a major
contribution to the struggle for social justice in America."
JAMES PETRAS
"I think this text is terrific, just what is needed, very clear,
informative beyond most people's ken, easy to read, and of ultimate
importance to steering economic and political recovery. The Capitalism
and Freedom chapter is right in biopsy. The book just keeps on going
with brilliant full exposure."
JOHN McMURTRY
Unequal Freedoms: The Global Market as an Ethical System
"A comprehensive understanding of Wall Street's manipulations of
markets, money and power to the detriment of working people everywhere
is badly needed. Stephen Lendman's new book 'How Wall Street Fleeces
America,' is the answer."
PETER PHILLIPS President Media Freedom Foundation/Project Censored
"Stephen Lendman has written a brilliant, passionate, and humane
analysis of the current economic disarray in which we now live. Picking
up where Thorstein Veblen left off, Lendman links our catastrophic
economic situation to the robber- baron mentality in corporations and
the failure of government to act as the enforcer of morality. His
analysis is full of concrete illustrations of this latter-day barbarism,
and is accessible to the everyday person, as well as intellectuals.
This book should be required reading in business schools as well as Congress."
STJEPAN G. MESTROVIC
Professor of Sociology, Texas A&M University
"Stephen Lendman's latest work covers a great many interconnected
subjects that affect not only the United States but everyone in the
world. The aspect of investment in America today is shown to be nothing
less then the robbing of the American people by a criminal syndicate, known as Wall Street,
banking and the Federal Reserve. A good deal of this is based upon the
Federal Reserve Act and the ability of major private banks to control
American society. The players have turned the financial world into one
vast casino and when the players lose large amounts of money the public
is allowed to bail them out. This book digs deeply into many of the
contributing parts of what is wrong with the financial system of America
and the world today. Stephen Lendman has a great gift for writing and research and all his readers are the
BOB CHAPMAN
Editor of the International Forecaster
"Stephen Lendman has a breadth and depth of understanding of world
and national affairs virtually unmatched among other public
intellectuals today. With this exceptional collection of reflections
upon our financial and budgetary crises, he clarifies and illuminates
the dark and obscure recesses of policies and programs that, although ostensibly intended to promote the interests
of the people, all too often have the opposite effect, enriching and
strengthening the wealthy at the taxpayer's expense. Let us hope this
book will be followed by many more!"
JAMES H. FETZER
McKnight Professor Emeritus, University of Minnesota Duluth
""Stephen Lendman is a true citizen journalist and scholar. After a
long and successful business career, Lendman took it upon himself to use
his retirement as a springboard for a new career as an analyst of
political economy. With great acumen, Lendman calls out economic charlatans and cuts straight
through the core of so-called bull markets to tell the truth about how
the powerful fleece the public on a daily basis. Lendman not only traces
the history of the current financial calamity, he offers common sense
advice on what we can do about it. A solid, fact-based read for anyone
trying to make heads or tails of what's happening in today's economy."
MICKEY HUFF
Associate Professor of History, Diablo Valley College, Director, Project Censored
"There
are many descriptive, narrative accounts about Wall St. and the current
economic crisis available to readers today. But Stephen Lendman's new
book takes the analysis far deeper than a simple narrative. Lendman
emphasizes and focuses on the connections between Wall St. actions and
the political system in Washington. How money operates on both sides of
the street -- the banking and the political--is described in detail. The
reader is left with a broader, deeper understanding of why the recent
crisis happened and where it may well be headed. Most importantly, the author does not shirk from calling the
outcomes of the Wall St.-Washington alliance for what it represents: the
emergence of a new kind of class war in America. Readers will find of
special interest his innovative views on banking and public banking.
Lendman's book is definitely one not to be missed."
DR. JACK RASMUS
Professor of Economics, Santa Clara University
Author: Epic Recession: Prelude to Global Depression
Tuesday, August 30, 2011
Monetary reform: reclaiming $1 trillion every year through public creation of money
Without knowing how money is created and managed, all other topics concerning money are out of context. This is crucial: regarding trillions of dollars of economic power, you have no idea where money comes from. It’s time for you to learn. When people don’t know how money is created and managed, the only thing between them and tyranny is trust in ethical government. American democracy is founded upon cautious distrust of government. To compensate for temptations of power and personal profit in government, the US Constitution is designed with checks and balances. However, because checks and balances can be thwarted if politicians are unethical, the only real protection of liberty is citizen responsibility. American democracy is dependent upon our taking personal responsibility for understanding our most important economic and political issues. This is one of them.
Many Americans believe in the US without understanding our major economic and government policies. Collectively, American’s trust in our government to ethically create and manage money is so pervasive that few of us ever give this multi-trillion dollar issue a moment’s thought. As a teacher of economics, I hope this brief is helpful for your responsible citizenry.
There are five topics to understand for civic competence in creating and managing money. The first four are standard to economics curriculum; the last is rational analysis:
Money and bank credit.
Fractional reserve banking.
Debt (public and private) and money supply.
Historical struggle between government-issued money and private bank-issued credit.
Cost-benefit analysis for monetary reform in your world of the present.
I promise you can easily understand each topic and that your understanding will give you an informed policy voice over trillions of dollars. I encourage you to verify and supplement the information in this paper through additional research. My experience as a teacher is that the best tool to visualize this information is to literally see it through an online 78-minute video, “Money As Debt II: Promises Unleashed.” These video segments follow the brief; and for your use: background and transcript of Money as Debt. Two other sources of information that I recommend: an excellent overview of our monetary system from Want to Know.info, and incisive articles from the most-read author on this topic, Ellen Brown.
“The process by which banks create money is so simple that the mind is repelled.”
– John Kenneth Galbraith, Money: Whence it came, where it went (1975), p.29. Galbraith wrote five best-selling books on economics (best-selling to the public), was President of the American Economic Association, economics professor at Harvard, and advisor to four US Presidents.
Please be advised that the ideas most people have about how money is created and managed are false. Because the facts are so different from what most people believe, cognitive dissonance will push some people to reject the facts. Please reaffirm your commitment to embrace the facts. Here we go:
Money and Bank Credit: Money is broadly defined as anything generally accepted for trade. However, in the real world something is money only when the government authorizes it as “legal tender.” Its purpose is to facilitate trade. Fiat money (not exchangeable for a commodity that “backs” the currency) is all that’s required for this purpose because the government enforces its acceptance as payment. Commodity money is the attachment of money to a thing, like gold or silver. This is not needed for legal enforcement and introduces fluctuation as the value of the attached commodity changes. If you’re aware of the violent swings of the price of gold, you’ll understand the risk of a wildly fluctuating value of commodity money. Its proponents, like my friend Ron Paul, argue that linkage to a thing of limited quantity is an acceptable tradeoff compared to their prediction of inevitable corruption of any system designed to limit the supply of fiat currency.
Bank credit is the legal power government has given banks to create quasi-money out of nothing and lend it to the public at interest. Your deposits to a bank are loans to them. The bank can legally take a percentage of your deposit (90 to really 100% through clever manipulations of regulations) and create new credit to lend to the public at interest. They are not lending your deposit, as most people envision. They are making the new credit out of thin air! Bank credit increases the supply of money, causes inflation (by definition as the supply increases), and devalues the money already possessed by the public. Inflation is a hidden tax on your money because purchasing power decreases with inflation. The banking industry benefits from this policy of creating credit out of nothing and lending it to us at interest, while the public has the costs of paying banks to “so-called borrow” credit at interest while existing money is devalued. I use the term “so-called borrow” because the loan wasn’t something possessed by the bank. The loan was created out of nothing when you asked for the loan. This can be difficult to grasp. Watching “Money As Debt II” will walk you through the process.
The fact that banks create credit out of thin air is verified by the Federal Reserve’s Publication, “Modern Money Mechanics.”[1] Excerpts:
“The purpose of this booklet is to describe the basic process of money creation in a ‘fractional reserve’ banking system…The actual process of money creation takes place primarily in banks.”
“[Banks] do not really pay out loans from the money they receive as deposits. If they did this, no additional money would be created. What they do when they make loans is to accept promissory notes in exchange for credits to the borrower’ transaction accounts. Loans (assets) and deposits (liabilities) both rise by [the amount of the "loan"]."
When you understand the power of creating credit out of nothing, your mind will probably take the next logical step: why don’t we create money out of nothing to pay for public goods and services directly rather than surrender this awesome power to the banks? You’ll begin to realize: isn’t it insane for a government that has the Constitutional authority to create money to not do so when we have unemployed workers, work that needs to be done, and the resources to do the work???
Fractional Reserve Banking: This is the term for how banks and the banking industry create credit. An individual bank creates credit and “so-called lends” it to the public as a fraction of the deposits the public puts in the bank. Because the money so-called lent ends up in another bank that then so-called lends the money again, the effect in the overall economy is a multiplier effect rather than an individual bank phenomenon of a fraction. It works like this: the definition of “fractional reserve banking” is that banks keep a regulated “fraction” of their total deposits “on reserve,” called their reserve ration (RR) that they cannot “lend,” and can create new credit out of thin air up to the total of all their customers’ deposits minus their RR. Again, because my teaching experience agrees with John Kenneth Galbraith’s quote above that this is difficult to grasp: once a bank is established, they must hold a percentage (ratio) of their total deposits “on reserve” that is not leant to customers. This rate is set by the Federal Reserve (Fed), 10% for established banks and less for smaller ones (however, banks get around these limits and will always make credit on terms profitable to the bank).
This means that if you deposit money into your bank, they can then create credit up to their limit in new “loans.” If you deposit $100, the bank can create new/thin-air credit of $90 to anyone asking for a loan. That’s the micro picture.
The macro picture is that the new credit then circulates to other banks and is “re-leant” at 90% and so on. Let’s say that someone borrows the $90 from your bank, purchases something, and then the $90 ends up deposited in another bank. The receiving bank can create credit, let’s say 90% of up to $81 in new credit. The injection of increasing the money supply comes from the Federal Reserve. They create money out of nothing and then use it to buy government securities or non-voting shares of banks, etc. If they buy a government bond for $1,000 from money they create out of nothing, this new money increases the money by the formula 1/RR. Assuming a simplified textbook understanding of a RR of 10% of deposits that banks cannot create credit from, in this case of the Fed creating $1,000 the new credit/money multiplied from the banking system is $1000 x 1/10%, or $1000 x 10 = $10,000. This is the macro effect if all receiving banks create credit up to their reserve requirement and all “lend” out the new credit.
Because the Federal Reserve is owned by the banking industry, this causes a classic conflict of interest: the banking industry’s profit comes from expanding the money supply and then creating credit to “lend” to us at interest. Expanding the money supply is in conflict with the public’s interest to limit the supply of money to guard its value from inflation.
Some people are confused by the Fed’s ownership. What’s in agreement in all curricula and publications is that the Fed is owned by their member banks; over half the stock is from the New York area (also known as Wall Street banks). Court cases have found in each instance that the Federal Reserve is not a government agency. You cannot find them in a government agency organizational chart in any branch of government. They are listed in the business section of phone books shortly after Federal Express.
Debt (public and national) and the Money Supply: When banks “lend” credit, the interest charge can double the amount the customer must repay. Through fractional reserve banking, only the amount leant is created (principle) but not the interest. Because our US money is only created as debt in our current monetary system, and the interest is never created, we can now explain some extraordinary but predictable outcomes. Money is debt, created out of thin air by private banks, and then “leant” to us to repay at interest. The debt will always be greater than the money supply. It’s impossible to ever repay total debt; we are in debt forever in this monetary system. Please let this important fact have a place of honor in your understanding and think through it’s implications in our economy.
To put this in numbers, the total debt of the US public is currently over $50 trillion.[2] The total US money supply is somewhere around $13-15 trillion.[3] We don’t know the exact amount anymore because the Federal Reserve stopped publishing that figure in 2006, claiming it was unimportant and “too expensive to tabulate and print.” This decision was made without consultation from Congress or opportunity for comment from professional economists or the public. Critics responded that this number is among the most important because inflation is a function of the money supply, tabulating its cost is negligible, and not keeping track of the total money supply is potentially crippling to our overall economy through the risk of inflation. Critics suspect that the Fed is hiding how much they’re increasing the money supply.[4]
The Fed is privately-owned by the banking industry with their meetings closed to Congress and the public. The purpose of all business is to maximize their own profit with limited interest in the public good. The Fed is only audited by giving their accounting books to an independent firm to verify their math is correct in the books. Because the Fed is not strictly and transparently regulated by Congress, we have to trust the Fed that the numbers on their books are accurate. As I’ve gently suggested, trusting people in positions of power is un-American from the view of the Founding Fathers. The only “oversight” from Congress is semi-annual interviews for questions and answers with the Chair of the Federal Reserve. Presidents appoints the seven Board of Governors to help manage the Fed, but historically these selections always come from a short-list of candidates selected by Fed ownership.[5] The term of office for Board members is 14 years. As you may know, Congresspersons Ron Paul and Dennis Kucinich have current bills to fully audit the Fed (HR 1207 and HR 2424, respectfully) that the Fed is opposing to protect its “independence.”
Because the Federal Reserve can always create money out of nothing to buy US government securities, the federal government is tempted to increase the national debt rather than operate a balanced budget. The current national debt of over $11 trillion[6] has an annual interest cost to the American taxpayers over $500 billion.[7] US taxpayers only pay the interest and never pay down the principal of the debt. When the securities are due to be paid, additional securities are sold to cover the cost. There is no government plan to pay the national debt or reduce it rather than vague promises to reduce spending and reduce the debt from higher tax revenue of a strong economy. This rhetoric has no track record of performance since Andrew Jackson enacted partial monetary reform in his administration that ended in 1836.
Please let that sink-in: we only pay the interest on the debt and actually cannot pay the debt because it’s far larger than the money supply. Of course, you’re now thinking there has to be a more intelligently-designed monetary system, you’re feeling good in your citizenry that you’re reading this article, and are excited to discover a better policy in creating money!
But let’s allow the costs of our current system to be fully understood to fuel your passion for monetary reform. The interest payment cost of $500 billion every year to Americans is enormous. As we learned in my article, “The economics of ending poverty,” the investment to fund the UN Millennium Goals that would save a million children’s lives every month while decreasing population growth rates is estimated by professional economists from a low of $40 billion/year to a maximum of $150 billion/year at the project’s most expensive phase.[8] This is a ten-year investment, as sustainable and self-funding development is the project’s goal. Even if we wanted to repay the debt, the average cost to the ~100 million American households is about $110,000. We’ll consider alternatives to this monetary system in our cost-benefit section shortly.
To put this in another perspective, the US Bureau of Engraving and Printing (BEP) has two buildings, one in Washington, D.C. and one in Fort Worth, Texas. Imagine each building has two halves: both print pretty pieces of paper. In one half, money is printed; in the other half, US Treasury Securities. Securities are mostly T-Bills, Notes, and Bonds; they are auctioned to the public every week as loans to whoever buys them and are repaid with interest. Bills are loans for a year or less, Notes are two to ten years, and Bonds are ten to thirty years. These are mostly all marketable, meaning that they can be resold.
If Congress wants to buy government programs beyond their tax revenue, they may print and sell as many securities as they wish but cannot get money directly because that is illegal in our current monetary system. If the Fed wants money, they request as much as they wish at the cost of the paper and then charge the taxpayers as an operating expense. Of course, the Fed can also enter money electronically into accounts. We have no way of knowing if the Fed abuses their power to create money by entering money into accounts and not reporting this on their books. The only safeguard the public has is their word that they would never ever create money for themselves, even though that is possible with a few computer keystrokes and undetectable.
And please let the above facts and risks sink-in.
For comparison, imagine if your family was a nation with the power to print its own money. I offer to take this job from you with the following spin: I’m a banking expert. Whomever you appoint from your family to create money will combine ignorance with inevitable corruption that will be incapable of managing your family’s money no matter what transparent safeguards you enact. Therefore, I will print money to lend to your family at interest. With your family’s increased education and economic productivity, you can only increase the money supply by additional lending from me. As a “government,” your family need never pay off the loan, only the interest. Your family will work for me in paying the interest, and my family will manage the money to lend to your family. This is fair because printing your own money will lead to your ruin.
Your family becomes increasingly in debt to me. After decades of this practice, your family doesn’t give this system any thought and whines about the interest payment and debt without taking any action to understand the system and look for alternative structures. This is our Federal Reserve system today.
Historical struggle between government-issued money and private bank-issued credit: As you can imagine, privately-owned banks would love to have the legal right to create and manage a nation’s money. This authority gives a whole new meaning to “taking your work home with you.” For an excellent comprehensive history, watch “The Money Masters” online (made in 1996: http://video.google.com/videoplay?docid=-515319560256183936 among many) and/or read the updated 2006 transcript: http://users.cyberone.com.au/myers/money-masters.html .[9] Watching “Money As Debt II” will give you a general appreciation of the history, as will the historical quotes at the end of this lesson.
Watching “Money As Debt II” is important. From my conversations among AP Economics teachers, their reports are in agreement with my experience that students (of all ages) will not be able to understand our monetary system and creation of debt without a walkthrough demonstration. I highly recommend that you watch the beginning of “The Money Masters;” if you like what you learn, keep watching. The entire video is 3.5 hours, so you might want to watch in chapters. A short written parable might also help: The Money Myth Exploded.[10] The bottom-line of the history is a centuries-long struggle of wealthy bankers who have endeavored for the ultimate banking job. In the US, this struggle was won by the banks with the passage of the Federal Reserve Act in 1913. This allowed for the legal practice of fractional reserve banking and a monetary system of perpetual debt. Let’s consider the alternative envisioned for the Constitution but not included because the debate took so much energy and time at the Constitutional Convention that the members tabled the issue for Congress to resolve later.
Cost-Benefit Analysis for Monetary Reform: Monetary reform would nationalize the Federal Reserve (this name is deceptive so the public would perceive it as a government entity) and retain its use for bank administrative functions. Fractional reserve lending by private banks would be made illegal, with the US Treasury having sole legal authority to issue new money for the benefit of the American public rather than the benefit of the banking industry. About 40% of the national debt is intra-governmental transfers and 10% held by the Fed; this debt would be cancelled as it becomes a bookkeeping entry with nationalization. Of the publicly-held debt of various parties holding US Securities, the US Treasury would monetize (pay) the debt in proportion to fractional reserves being replaced with full reserves over a period of one to two years to monitor money supply and avoid inflation. The American Monetary Institute has a proposal called The American Monetary Act.[11] Ellen Brown has extensive articles, including how states can act now rather than waiting for federal reform.[12]
The governmental cost of this reform is negligible. The benefits are astounding: the American public would no longer pay $500 billion every year for national debt interest payments (because 40% of the debt is intra-governmental transfers, this is a savings of $300 billion/year). If lending is run at a non-profit rate or at nominal interest returned to the American public (for infrastructure, schools, fire and police protection, etc.) rather than profiting the banks, the savings to the US public is conservatively $500 billion.[13] If the US Federal government increased the money supply by 3% a year to keep up with population increase and economic growth, we could spend an additional $400 billion yearly into public programs or refund it as a public dividend.[14] This savings would allow us to simplify or eliminate the income tax.[15] The estimated savings of eliminating the income tax with all its complexity, loopholes, and evasion is $250 billion/year.[16]The total benefits for monetary reform are conservatively over a trillion dollars every year to the American public. One trillion is $1,000,000,000,000. I invite professional economists and committed citizens to analyze and comment on my observation of costs and benefits.
To give you an idea of this amount, imagine a new stack of $1 bills. New bills are about 200/inch. Imagine if you laminated bills in a horizontal stack; this would be the same size as a 2x4 board. Now imagine that this board of money was to travel on your nearest freeway. How far would the money-board go to equal $1 trillion? Make your guess, then check the footnote.[17]
The private sector economic costs of monetary reform are transfers of wealth from the banking industry to the American public. The replacement would be either non-profit banks operating as needed with minimum public cost such as fire departments and the postal service, for-profit banks lending time-deposits in regulated free-market competition, or a hybrid of the two (perhaps with government mortgages at a non-profit rate of 1%).
Monetary reform stops the current built-in increases of the money supply through fractional reserve banking, and redirects it for direct payment of taxes for public goods and services. Each dollar transferred from bank creation to public benefit is one dollar less in public tax payment.
Opponents of monetary reform claim that even if government issued money with transparency, any oversight created would be defeated; government would issue too much money and cause inflation. Ron Paul believes that gold should be used as a physical-limit barrier to creating money. Some fear that any change will make things worse. Some also claim that competition for large profits in the banking industry spur innovation that wouldn’t occur in a non-profit design. Improvements such as ATMs, on-line banking, instant purchasing are worth the cost of giving monetary power to the private sector.
The statutory purposes of the Fed are stable prices, maximum employment, and moderate interest rates. For prices, consider for yourself how well they’ve done since the Fed began in 1913. Ask parents and grandparents if prices have remained stable in their lifetimes or if they’ve increased just a teensy-weensy little bit. You could, of course, also check the data and confirm that the dollar has lost over 95% of its value since the Fed went to work for stable prices.[18]
For employment, consider that we have unemployed people in this country, resources to put to work, and infrastructure to improve; then judge the Fed’s effectiveness in creating money only as debt. For example, consider in California that 20,000 teachers were scheduled to be laid-off in 2008 and again in 2009 because of government budget cuts.[19] We have the need for teachers, the teachers are available, but we have unemployed teachers because the government must borrow its money to hire them rather than issue money directly. Nationally, the US had over 11 million unemployed workers at the end of 2008,[20] and perhaps up to 30 million in August 2009.[21] These millions of individuals are key income earners to a multiple average of 2.5 additional Americans. This unemployment rate puts these Americans livelihoods at risk. This only occurs because money is debt in our current system; we would not have this problem if government restored this Constitutional power and issued money directly. If we were serious about achieving the goal of full employment, OBVIOULSY the only way to achieve it is for government to be the employer of last resort. In market failure of what free-market capitalism cannot employ, we either put people to work on infrastructure/public service jobs or we don’t achieve our goal of full employment. Please ponder that idea to full realization. If the public jobs provided to the unemployed and funded by government-created money provide greater economic benefit than their cost, then inflation will actually decrease from creating those jobs. That is conservative definition of how inflation/deflation works.
Another angle of minimizing our costs: consider that the US Government Interagency Council on Homelessness has compiled every known study on cost-benefits of housing the homeless and providing food, medical care and job-employment services versus just leaving them on the streets. In every case study the costs are less to take action for their care.[22] Ponder that.
For interest rates, the non-profit rate of borrowing money is generally considered among economists at 3% in our current inflationary economy caused by fractional reserve banking. With monetary reform, the non-profit rate for a home loan would be less than 1%. Ask yourself if the value added by the banking industry is worth the amount you currently pay above 1%, understanding as you do that your total cost of a home loan has a higher cost of the interest than the principle. That is, you’re paying the banking industry more than your home is worth for them creating credit out of nothing on their bank books.
Thank you for your attention to this information. If the performance of the Fed is acceptable to you along with its trillion dollar annual cost, feel free to defend it. If you prefer monetary reform, a trillion dollars of benefit every year to the American public will go far to building a brighter future. Because it’s so important for your learning in the observations of people who teach this for a living, I gently request once more: please watch “Money As Debt II,” below.
My next articles document historical and sourced quotes to allow America’s brightest minds an opportunity to speak to you on this topic: here and here. Their contributions to our nation deserve a few minutes of your attention.
[9] Many of their quotes from Presidents are not included at the end of this lesson because their sources are usually the Congressional Record. Members of Congress did not footnote their sources and we do not have other written sources to corroborate the quotes.
[13] Of $50 trillion total debt, a conservative current interest cost of 5% is $2.5 trillion every year. The academic estimate of the true cost of borrowing is about 3%. A $500 billion savings if the profits are transferred to the American public rather than to the banking industry is probably low.
[14] The US GDP is ~$13 trillion every year. Three percent growth is moderately conservative.
[15] Of the US Federal government’s ~$2.5 trillion annual budget, about $1.2 trillion is received from income tax.
[19] California Department of Education. State Schools Chief Jack O'Connell, Teachers, Support Staff, Administrators Announce More Than 20,000 Teachers and Support Staff Getting Layoff Notices Due to Budget Crisis. March 14, 2008: http://www.cde.ca.gov/nr/ne/yr08/yr08rel31.asp
