The Looming Debt Ceiling Crisis
The next crisis on the
agenda appears to be the October 17th deadline for agreeing on a federal budget
default on the government's loans. It may only be a coincidence, but two
large-scale drills are scheduled to take place the same day, the " Great
ShakeOut Earthquake Drill " and the " Quantum
Dawn 2 Cyber Attack Bank Drill ." According to a Bloomberg news clip on the
bank drill, the attacks being prepared for are from hackers, state-sponsored
espionage, and organized crime (financial fraud). One interviewee stated, "You
might experience that your online banking is down . . . . You might experience
that you can't log in." It sounds like a dress rehearsal for the Great American
Ominous as all this is, it
has a bright side. Bail-ins and martial law can be seen as the last desperate thrashings
of a dinosaur. The exploitative financial scheme responsible for turning
millions out of their jobs and their homes has reached the end of the line.
Crisis in the current scheme means opportunity for those more sustainable
solutions waiting in the wings.
Other countries faced with a
collapse in their debt-based borrowed currencies have survived and thrived by issuing
their own. When the dollar-pegged currency collapsed in Argentina in 2001, the
national government returned to issuing its own pesos; municipal governments
paid with "debt-canceling bonds" that circulated as currency; and neighborhoods
traded with community currencies. After the German currency collapsed in the
1920s, the government turned the economy around in the 1930s by issuing "MEFO"
bills that circulated as currency. When England ran out of gold in 1914, the
government issued "Bradbury pounds" similar to the Greenbacks issued by
Abraham Lincoln during the US Civil War.
Today our government could
avoid the debt ceiling crisis by doing something similar: it could simply mint
some trillion dollar coins and deposit them in an account. That alternative
could be pursued by the Administration immediately, without going to Congress
or changing the law, as discussed in my earlier article here .
It need not be inflationary, since Congress could still spend only what it
passed in its budget. And if Congress did expand its budget for infrastructure
and job creation, that would actually be good for the economy, since hoarding
cash and paying down loans have significantly shrunk the circulating money
Peer-to-peer Trading and Public Banks
At the local level, we need to set up an alternative system that provides safety for depositors, funds small and medium-sized businesses, and serves the needs of the community.
Much progress has already
been made on that front in the peer-to-peer economy. In a September 27 th article titled
Economy Thrives as Activists Vacate the System ," Eric Blair reports that
the Occupy Movement is engaged in a peaceful revolution in which people are
abandoning the established system in favor of a "sharing economy." Trading
occurs between individuals, without taxes, regulations or licenses, and in some
cases without government-issued currency.
Peer-to-peer trading happens
largely on the Internet, where customer reviews rather than regulation keep
sellers honest. It started with eBay and Craigslist and has grown exponentially
since. Bitcoin is a private currency outside the prying eyes of regulators.
Software is being devised that circumvents
NSA spying . Bank loans are being shunned in favor of crowdfunding. Local
food co-ops are also a form of opting out of the corporate-government system.
Peer-to-peer trading works
for local exchange, but we also need a way to protect our dollars, both public
and private. We need dollars to pay at least some of our bills, and businesses
need them to acquire raw materials. We also need a way to protect our public
revenues, which are currently deposited and invested in Wall Street banks that
have heavy derivatives exposure.
To meet those needs, we can set
up publicly-owned banks on the model of the Bank of North Dakota, currently our
only state-owned depository bank. The BND is mandated by law to receive all the
state's deposits and to serve the public interest. Ideally, every state would
have one of these "mini-Feds." Counties and cities could have them as well. For
more information, see http://PublicBankingInstitute.org .
Preparations for martial law have been reported
for decades, and it hasn't happened yet. Hopefully, we can sidestep that danger
by moving into a saner, more sustainable system that makes military action against
American citizens unnecessary.
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