THE NEED
FOR FINANCIAL REFORM
..James
Robertson on debt-free money
Date: Thu, 22 May 2003 12:21:51 +0100 
Earth Emergency meeting at LSE, 7 May 2003, on
Monetary Reform, Economic
Justice and Political Democracy
People all over the world
have become increasingly aware that money is power,
and that our institutions of money and finance use
their power to exploit people and keep them
dependent.
Monetary reform is about currencies. Taxation, public
spending, and other aspects of finance are related
and very important, but separate.
Key Questions
There are some key questions to keep in mind when we
think about
monetary reform.
1) Who should create the money
supply?
2) Should money be created as
debt, by lending it into existence
as interest-bearing loans?
3) Is there a difference between
money and credit?
UK National Monetary Reform
Less than 5% of today's national money supply has
been created debt-free by public service agencies -
in the form of banknotes by the Bank of England and
coins by the Royal Mint - and over 95% has been
created by commercial banks.
The commercial banks CREATE THE NON-CASH MONEY
OUT OF THIN AIR, calling it credit and writing it
into their customers' current accounts as
profit-making loans. That gives them over £20
billion a year in interest, while the taxpayer gets
less than £3 billion a year from the issue of
banknotes and coins.
If . the commercial banks were prohibited from
creating non-cash money, . and if the Bank of England
took on responsibility for creating it, and if the
Bank of England were to give the money debt-free to
the government to spend into circulation, the result
would be extra public revenue of about £45 billion a
year.
That is the reform proposed in "Creating New
Money: A monetary reform for the information
age" (New Economics Foundation, London, 2000 -
download from www.neweconomics.org).
Among other things this reform would mean that:-
1) Taxation and government debt could be
reduced, or public spending could be increased, by up
to £45 billion a year.
2) The value of a common resource - the
national money supply - would become a source of
public revenue rather than private profit. That would
remove an economic injustice.
3) Withdrawing the present hidden
subsidy to the banks would result in a freer market
for money and finance, a more competitive banking
industry, and better service to bank customers.
4) A debt-free money supply would help
to reduce present levels of public and private debt,
which are partly caused by the fact that virtually
all the money we use has been created as debt that
has to be repaid with interest.
5) The economy would become more stable.
Banks want to lend more and bank customers want to
borrow more at the peaks of the business cycle and
less in the troughs. So now, when the amount of money
put into circulation depends on how much the banks
are lending, booms and busts are automatically
amplified.
6) The central bank would be better able
to control the money supply and inflation if it
itself decided and directly created the quantity of
new money entering the economy. It now tries to
control inflation indirectly, by raising the interest
rates at which people can borrow from banks. But
raising costs in that way actually helps to cause
inflation - as well as directly damaging people and
businesses.
We called this reform "seigniorage reform".
Seigniorage was the profit made by monarchs and local
rulers from minting and issuing coins. The proposed
reform will restore to today's democratic state the
prerogative of collecting as public revenue the
profit arising from putting the national money supply
into circulation.
Some opponents of this reform, including MPs who
should know better, have claimed that the money the
banks create isn't really money, it's only credit -
although official monetary statistics and monetary
policy-makers recognise it as constituting over 95%
of the money supply.
In fact, the reform will exactly parallel the
19th-century reform which led to paper banknotes
being recognised as money, along with gold coins and
bullion. Banknotes, along with coins, are now
"cash". British banknotes still say "I
promise to pay... ", but that is a meaningless
survival from past history. Everyone knows that
banknotes are not just credit notes. They are cash,
and there is nothing they could be redeemed in except
themselves or other banknotes and coins of the same
value.
So the answer to the question about the difference
between money and credit is that, when what was
originally credit has become widely used as a means
of payment, it HAS BECOME money and IS money. That
happened to paper banknotes in the 19th century. It
has happened to electronic credits in bank accounts
now. The continuing creation of this kind of money by
private sector profit-making companies is now an
anachronism - a throwback to an earlier time.
Seigniorage and the Global Economy
Just as, under the proposed national reform, the
benefit from creating national-currency money would
go to the national community as a whole, so a
comparable global reform would benefit the world
community as a whole.
The present use of the US
dollar and other national currencies like the yen,
the euro and the pound as so-called 'reserve
currencies', would be replaced by a world currency
issued by a world monetary authority. The profit from
issuing it would be public revenue to be spent on
behalf of the world community by the UN or a similar
body.
Criticism of the 'dollar hegemony' of the United
States is growing. For example, three reports -
1) "To build up reserves, poor countries have to
borrow hard currency from the US at interest rates as
high as 18% and lend it back to the US in the form of
Treasury Bonds at 3% interest."
2)"The dollar is a global monetary instrument
that the United States, andonly the United States,
can produce by fiat [i.e. out of thin air]. ...World
trade is now a game in which the US produces dollars
and the restof the world produces things that dollars
can buy. The world's interlinked economies compete in
exports to capture dollars needed to service
dollar-denominated foreign debts and accumulate
dollar reserves".
3) Studies by Richard Douthwaite and the Irish NGO
Feasta confirm that the total annual subsidy (or
'tribute') received by the US from the rest of the
world from dollar seigniorage is at least $400bn a
year. This has been justified by one Pentagon analyst
as a payment by the rest of the world to the US as
the 'policeman' who keeps world order!
Studies like these demonstrate the need for
international monetary
reform to serve the interests of the world community
as a whole. As
international campaigning grows stronger for reform
on these lines, it will help to strengthen the
pressure for comparable reform at national level.
Recommendations
(1) Study this fascinating topic for yourselves. It
is
on the move.
(2) Help to persuade pressure groups like WDM, FOE,
Christian Aid and many others to get into it
seriously. (3) Write to your MPs about it. E.g. ask
them to support EDM 854 . It "calls upon
theGovernment and the Treasury Select Committee to
commission and publishindependent reviews on the
procedures for and benefits of increasing
theproportion of publicly created money in the
economy." 7 May 2003
James Robertson The Old Bakehouse, Cholsey Oxon OX10
9NU, UK Tel: +44
(0)1491 652346 Fax: +44 (0)1491 651804 e-mail:
robertson@tp2000.demon.co.uk
(2) Date: Mon, 19 May 2003 13:27:01 +0100 23May
2003OLGA SCULLY oscully@tassie.net.au
The Thomas
Jefferson Coinage And Currency Sets
These Sets Commemorate Thomas Jefferson's
Birth, April 13, 1743, And Pays Tribute To His Enduring
Legacy Of Freedom In America!
"We have the greatest opportunity
the world has ever seen, as long as we remain honest --
which will be as long as we can keep the attention of our
people alive. If they once become inattentive to public
affairs, you and I, and Congress and Assemblies, judges
and governors would
all become wolves."
--Thomas Jefferson
 STOP PRESS
The High Cabal's Economic
War Against the World
by Norman D. Livergood
http://www.hermes-press.com/econ2.htm
"Government is the only agency that can take a
valuable
commodity like paper, slap some ink on it, and make it
totally worthless."
Ludwig
von Mises
Modern American currency is a interesting example of how
the "High Cabal" has brainwashed common
citizens to believe dangerous lies. Most Americans have
no idea of how their currency is produced, if it has any
intrinsic value, and how it is used by those in power to
steal from the people. For example, when I asked college
students this question I received very interesting
answers:
"Can
United States currency be redeemed in gold only, or can
it also be redeemed in silver?"
62% said that
our currency is redeemable in both gold and silver.
35% said that
is redeemable in neither gold nor silver.
19% said that
it is redeemable only in gold.
8% admitted
they didn't know.
0% said that
it is redeemable in silver.
(the answers were not mutually exclusive, thus the total
percentage is more than 100%)
Most Americans have been
conditioned to believe unquestioningly in the
infallibility of the American monetary system and in the
financial stability and integrity
of the American government. If we were awake to reality,
we'd realize that we have our very survival staked on
those beliefs.
As defined in a background
article, money is any object used in the exchange of
goods and services. However, we can distinguish between
genuine money and money substitutes .
Genuine money
has several distinguishing characteristics:-
- Real money is a
durable, easily divisible commodity of a
consistently high value in its own right.
- Real money is a
commodity which enjoys universal acceptance. This
means its value is accepted by all people
everywhere. Such a commodity has withstood the
test of time as money; its value has been
recognized over time in a number of countries. To
serve as real money, a commodity must be rare
enough to be of great value yet available in
adequate supply, or able to be produced in
adequate amounts to serve as a medium of exchange
or the basis of a medium of exchange. The only
commodities which have consistently met these
criteria in Western history are gold and
silver.
A money substitute is
anything that is circulated in place of money, such as
paper currency.
A money substitute is illegitimate when it is merely the
creation of a government for the purposes of swindling
the people:-
- paper currency not
backed by gold or silver
- digital notations
within a computer system that have no necessary
connection to money or money substitutes
A money substitute is
legitimate when it is:-
- a note or receipt for
real money--gold or silver or some commodity of
equal value
- redeemable at any
time in real money
- issued in reasonable
proportion to the amount of real money in
storage
Modern Currency As a Ruler
Hoax
Until 1934, some of the currency of the United States was
redeemable in gold or silver. Note the $20 bill above
indicated that the certificate was "payable to the
bearer on demand" "IN GOLD COIN."
Since the "High Cabal"
took over the American monetary system in 1913, with the
creation of the "Federal" Reserve System,
illegitimate money substitutes--called Federal Reserve
Notes--have replaced genuine money and genuine money
substitutes. Note that the one dollar bill below does not
include "payable to the bearer on
demand."
The Gold Reserve Act of 1934
abolished gold as domestic money and made it illegal for
American citizens to own gold. All gold and gold-backed
currency was removed from circulation in the U.S.
American gold-backed currency--that produced before
1913--was still redeemable in gold or silver for foreign
currency holders. However, in 1971, President Nixon in
effect declared world bankruptcy; American currency was
no longer redeemable for anyone.
A booklet published by the Federal Reserve Bank of New
York tells us:
"Currency cannot be redeemed, or exchanged,
for Treasury gold or any other asset used as backing. The
question of just what assets 'back' Federal Reserve notes
has little but bookkeeping significance."
"It is well 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."
Henry
Ford
The Fed isn't shy about telling us about this money scam
they're pulling on us. In a booklet entitled Modern Money
Mechanics, the Federal Reserve Bank of Chicago
says:
"In the
United States neither paper currency nor deposits have
value as commodities. Intrinsically, a dollar bill is
just a piece of paper. Deposits are merely book entries.
Coins do have some intrinsic value as metal, but
generally far less than their face amount."
Why do Americans accept paper currency in place of real
money--gold or silver? Because the government forces them
to.
Federal Reserve currency has been designated "legal
tender" by the government -- that is, it must be
accepted. This is what is meant by fiat money--currency
or ledger entries that the government forces us to accept
as money.
In the fine print of a footnote
in a bulletin of the Federal Reserve Bank of St. Louis,
we find this surprisingly candid explanation:
"Modern monetary systems have a fiat base --
literally money by decree -- with depository
institutions, acting as fiduciaries, creating obligations
against themselves with the fiat base acting in part as
reserves. The decree appears on the currency notes: 'This
note is legal tender for all debts, public and
private.'"
"The regional Federal Reserve banks are not
government agencies. ...but are independent, privately
owned and locally controlled corporations."
Lewis vs. United States, 680 F. 2d 1239 9th Circuit
1982
Wonder Why Dubya Has Increased the National Debt?
Debt is the way the Bush junta, its corporate sponsors,
and the Federal Reserve steal from American taxpayers.
It's a neat con game that almost all Americans are
unaware of:
The federal
government prints a fancy piece of paper and calls it a
bond or Treasury note. Bonds or Treasury notes are merely
promises to pay a specified sum at a specified interest
on a specified date.
This is government debt, which will be paid for with
taxpayer money. Unlike the Federal Reserve, which
can create money out of thin air, tax revenues from
working Americans come from their salaries which they
earn through labor.
The Fed then
prints a Federal Reserve check and exchanges that with
the government in return for the bonds or notes that are
left unsold from periodic government sales. After this
transaction, the government bonds and notes become
"securities assets" for the Fed, which can be
used to offset liabilities.
Since it is required to have only 10%
"reserve"--10% in some kind of reserve fund to
"back" its notes, then it can create 9 Fed
notes for every dollar it has in "securities
assets." These additional Fed notes can be loaned to
other banks at interest.
The government
sends the Fed check to the Fed for deposit. Relative to
that deposit the government can now spend Fed notes
(currency) for its expenses. Under the Bush junta, almost
all of those Fed notes are paid out to the corporations
that put Dubya into power: the defense and energy
companies. What is actually happening is that huge
amounts of currency created out of thin air (Fed notes
without any backing whatsoever) now come into the
American monetary system. This is inflation: increase in
money substitutes.
"The money power preys upon the nation in times of
peace and conspires against it in times of adversity. It
is more despotic than monarchy, more insolent than
autocracy, more selfish than bureaucracy. I see in the
near future a crisis approaching that unnerves me and
causes me to tremble for the safety of my country.
Corporations have been and the money power of the country
will endeavor to prolong its REIGN by working upon the
prejudices of the people until the wealth is aggregated
in a few hands and the Republic is destroyed." President Abraham
Lincoln after the National Banking Act of 1863 was passed
Ever wonder why stamps have gone from 3 cents to 37
cents, why gasoline has gone from 20 cents to $2 a
gallon, etc. Has your salary gone up 100% in the last
twenty to thirty years? The "High Cabal"
puppets--American presidents and their cohorts--try to
make you believe that inflation is something other than
an increase in the currency supply. It isn't.
We can create a hypothetical
society with a total currency supply of $10, with stamps
costing 3 cents. If the total currency supply increases
to $20 (100% increase) then there are now more Fed notes
around to bid for that stamp and the price of the stamp
goes up--possibly 100
percent.
Only some sectors of the U.S.
economy have experienced increases in prices. If you
examine those that have, you'll see that they are all
either state or federal governments or corporations which
continually make huge donations to government election
campaigns. During this same time period, the
after-expense income of the average worker has steadily
and dramatically declined.
The Banking Scam
It's difficult for average Americans to understand what a
hoax American banking has become. Let's take a typical
example, the purchase of a $100,000 home, with $30,000
paid for the cost of the land, architect's fee, sales
commissions, building permits, etc., and $70,000 going
for the cost of labor and building materials. The home
buyer puts up $30,000 as a down payment and must then
borrow $70,000. Let's say the loan is issued at 11% over
a 30-year period; the amount of interest paid will be
$167,806.
That means the amount paid to the bank is about 2 1/2
times greater than paid to those who provide all the
labor and all the materials. Granted, this figure
represents the value of the amount borrowed over thirty
years and might conceivably be justified on the basis
that a lender deserves to be compensated for surrendering
the use of his capital for 30 years.
But that assumes the bank
actually "surrendered" something real of value.
It assumes that the bank had earned the money, saved it,
and then loaned it for construction of someone's house.
But the reality is that the bank did nothing to earn the
money, had not saved it, and, in fact, simply created it
out of thin air by putting numbers into a computer
system.
Bush's Weak Dollar is Retaliation Against the Europeans
The vindictive Bush junta is now allowing the U.S. dollar
to fall relative to European currencies to attack their
economies. This is how this exchange-rate ploy works:
To create a purely hypothetical situation, let's say that
one U.S. dollar is equivalent to two German marks.
That means that a Mercedes SUV which sells for
100,000 DM (German marks) in Germany will only
cost $50,000. And it means that Americans are
going to buy a lot of Mercedes SUVs.
However, if the American dollar drops in value so that it
is worth only 1 German mark, then a Mercedes SUV which
sells for 100,000 DM (German marks) in Germany
will also cost $100,000. And it means that Americans
are going to buy a lot fewer Mercedes cars
and Europeans are going to be able to buy a lot
more American goods.
So if you're a vindictive American pResident like Bush,
and you want to attack Europe's economy, then you allow
the dollar to fall precipitaley and Europe is suddenly
selling a lot less Mercedes products and everything else
to Americans and the rest of the world that deals in U.S.
dollars. And you'll lie to the American people that this
policy of letting the dollar slide against other
currencies is in the long-term interest of the American
economy.
The difficulty with this ploy is that the U.S. economy
may go even further under than it is now--which will
cause even more unemployment and less money for state and
federal social support programs.
Of course, the "High Cabal's" puppet Bush
administration doesn't really care what happens to
working people. And even if the economy goes into the
toilet the wealthy have sufficient funds to weather the
storm and when the crisis reaches its worst point,
they'll be able to buy bankrupt businesses and real
estate for pennies on the dollar.
Meanwhile Dubya and his cronies are ignoring the warning
signs of world recession (actually depression). The
recent collapse of the world’s 31st largest bank,
the Osaka-based Resona Holdings, became the subject of an
emergency meeting of the Japanese cabinet and the
subsequent announcement of a $17 billion bailout
operation by the Japanese government.
America's Trade Deficit Shuffle
America's current accounts deficit (which includes goods
and services) will hit about $500 billion this year.
Which means Americans will receive $500 billion more in
goods and services from other nations than we will
provide to them. According to Bridgewater Associates,
foreigners currently hold 48% of the US Treasury bond
market. Foreigners also own 24% of our corporate bond
market and 22% of all US corporations. In total,
foreigners hold $8 trillion of US financial assets.
What this means is that Americans get
goods, and foreigners get American dollars, which, as
we've seen, the Fed creates out of thin air and are not
redeemable in gold or silver. America's trade deficit
means that foreigners are selling us more goods than they
are buying from us; therefore, they have excess dollars,
which are used to purchase Treasury bonds. By accepting
and holding U.S. dollars, foreign nations finance our
trade deficit and the Bush administration's wild deficit
spending. Economists call this exporting inflation. The
U.S. prints ever more paper currency and foreigners end
up paying higher prices.
Economic analysts outside of
America are fully aware of Bush's economic war against
the other nations of the world. "America has
launched its own weapon of mass destruction," said
Nick Parsons, a currency strategist with Commerzbank.
"The US solution to deflation [lower prices] is to
export it to the rest of the world."
Europeans are clearly aware that one of the major reasons
Bush created the Iraq war was to take Iraq oil interests
off the Euro as the currency of exchange. Two other major
reasons for Bush's fake war against Iraqi weapons of mass
destruction was to reconfigure the entire Middle East and
to create a massive oil cartel with which to replace
OPEC. The recent terrorist strikes in Saudi Arabia
have raised speculation about possible CIA connection to
the attack. Whoever carried out the attacks, and whoever
was ultimately responsible for the operation, they give
clear warning to the Arab world that regime change,
Bush-style, may now be the inevitable future for
them.
How We Can Defeat Bush
Worldwide, people must realize that America is not the
problem--Bush and his controllers are! All of us need to
distinguish clearly between Bush and the American people.
The struggle against Bush must not degenerate into
debilitating anti-American sentiments and activities. The
American people do not deserve a power-mad leader like
Bush and they are not to blame for the havoc he is
causing throughout the globe. Americans did not elect
Bush; he was foisted on the American people by the
criminal machinations of his brother in Florida and the
Bush-influenced Supreme Court.
Recently, European businesses
have begun to boycott American goods. This may prove to
be merely a grand gesture, but it is in the right spirit.
Europeans, intelligent Americans, and others worldwide
must begin standing up to Bush, doing everything in our
power to see that he is not re-elected in 2004, and
making it clear to people everywhere just what an insane
policy Bush's world imperialism really is. The worldwide
anti-war protests were a harbinger of an effective
reaction to Bush's push toward a fascist
dictatorship.
A new strategy being seriously considered in the Muslim
world is the re-adoption of the gold dinar as the primary
means of monetary exchange. Malaysia expects to use gold
dinars to trade with other Islamic countries beginning in
2003. The gold dinar, which is 4.25 grams of 24-carat
gold, would help Muslim nations fight the imperialistic
onslaughts of Bush's misuse of the American dollar. The
dinar is already being privately used in 22 countries and
is minted in 4 nations.
People in Europe, America, and
other nations might also use the dinar and other gold
coins as the foundation for a new, genuine gold-backed
currency, returning to genuine money instead of fiat
paper currency.
The Islamic world has historically
used a gold coin, so this would be a natural transition
for them. Malaysian premier, Prime Minister Mahathir
Mohamad, last year proposed that the gold dinar could
eliminate paper money and would obviate arbitrary
exchange rates and currency manipulation which was so
rampant during the Asian financial crisis. "The risk
of speculation," said Mohamad, "can be reduced
to almost nothing. World trade can actually expand
because the cost of business will be much reduced as the
need to hedge will practically disappear."
People in America must be ready for the
possibility that the Bush junta will reproduce the
history of 1930s Germany down to the hyper-inflationary
crisis which brought financial ruin to hundreds of
thousands of Germans and ushered in the deadly Nazi
regime. The only safe course is to have one's own private
supply of gold coins--American Eagles--as a means of
survival if the "High Cabal" decides to cause a
complete collapse of the American economy.
Our primary responsibility is to
inform ourselves and to help others throughout the world
become fully informed as to what is really taking
place--beyond the delusions perpetrated by propaganda and
disinformation. As Senator Byrd recently said,
"eventually, like it always does, the truth will
emerge. And when it does, this house of cards, built of
deceit, will fall."
Forwarded by Jonathan
Graham AND NEIL BAIRD'S news-report-subscribe@wiretapped.net
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