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A Cure-all for the Financial Ills of our time?

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An alien lands in New Orleans and asks an Earthling about the devastation. "So -- is there no building material for repairing the damage?"

          "Actually," says the Earthling, "there are building materials stockpiled just out of town."

" So, there are no workers to do the job?"

          "Actually, there are hordes of unemployed workers who would love to have the work."

" So -- what's the problem?"

          " Well, the way things work here, we need these pieces of green paper before we can get started..."


" Beam me up! There's no intelligent life on this planet!"

Philadelphia -- There were two visions expressed at this weekend's first (annual?) convention of the Public Banking Institute. The first is the very practical idea that states and cities around America could be rescued from insolvency if they had their own banks, instead of relying on commercial banks to borrow money through bonds. Tax-exempt bond issues supply money to states and municipal governments typically at 5 or 6% interest, while banks these days are able to borrow from the Fed at 1/4% per year.

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The second vision is hinted in the joke (above) that Board President Ellen Brown told as she opened her address to the group. It is the radically-subversive idea that the system we have for introducing money into the economy is a boon for the banks, but perhaps a major drag on our economy. Perhaps a simple, direct system of money creation by the Treasury Dept instead of the Fed would put an end to cycles of recession, and create a foundation for long-term prosperity.

Banking is a huge leech on our economy. 40% of every dollar we spend on goods and services -- 40% of all that we create and all we consume -- is siphoned off the top as bank interest in one form or another. (Calculations of Margrit Kennedy) The US Government is in the absurd position of paying interest to a private bank for every dollar that is put into circulation. The Federal Reserve system has privatized the power to create money, which, according to the Constitution, ought to belong to Congress alone. Presently, interest on the national debt costs the Federal government $500 billion in 2011, and (because of structural deficit spending) it is the fastest-growing portion of the Federal budget.

The problem is that an expanding economy needs an expanding money supply. But since 1913, the Federal Reserve (a private consortium of banks) creates the money, backed by new Treasury Notes (bonds) which the Federal Government issues. In essence, every dollar in the money supply represents a dollar of Federal debt. Interest on this debt grows exponentially -- which means it's not much of a problem until suddenly it is. It's a ticking time bomb.

We need another system.

It has not always been thus. Colonial America had paper money created separately by each colony -- a system promoted by young Benjamin Franklin in the 1730s. British King George put an end to the colonies' power, one of the inflammatory actions leading up to the Revolutionary War.

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Fourscore and seven years later, President Lincoln financed the Civil War by printing "greenbacks" -- direct money creation by the Federal Government, a sound and simple and publicly-accountable system for regulating the money supply. The greenback system died with Lincoln.

Some say it's not an accident that the present monetary system is so dysfunctional that it is stifling economic activity, and so complicated that "only economists can understand it". The system has many victims, but there are a few who benefit. Carroll Quigley was a professor of history and Washington insider who wrote, in 1966:

[T]he powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences.  The apex of the system was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations . (from Tragedy and Hope: A History of the World in Our Time (cited by Brown

A venerable voice at the conference was Bill Still, who has been educating the public on this issue for over 20 years. His video from the 1980s is available now on Youtube

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Josh Mitteldorf, an editor at OpEdNews, blogs on aging at http://JoshMitteldorf.ScienceBlog.com. Read how to stay young at http://AgingAdvice.org. Educated to be an astrophysicist, he has branched out from there to mathematical modeling in a (more...)
 

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Joel, thanks for the first heartening idea I've he... by Bayard Waterbury on Sunday, Apr 29, 2012 at 2:18:19 PM
Thank's Josh. Public banks are not a cure-all, but... by Ernie Messerschmidt on Sunday, Apr 29, 2012 at 2:55:27 PM
Nice article.  In addition to state banks, wh... by Burl Hall on Sunday, Apr 29, 2012 at 3:24:28 PM
"We need another system."Audit the Federal Reserve... by Rixar13 on Sunday, Apr 29, 2012 at 3:50:47 PM
Been there.  Done that.  Thanks to Ron P... by Josh Mitteldorf on Monday, Apr 30, 2012 at 10:15:29 AM
"We need another system." Audit the Federal Reserv... by Rixar13 on Sunday, Apr 29, 2012 at 3:51:07 PM
THE BIS PLOTS TO OVERTHROW GOVERNMENTS...USING THE... by rod bode on Sunday, Apr 29, 2012 at 3:59:24 PM
The book, Vile Acts of Evil - Banking in America, ... by Mike Kirchubel on Sunday, Apr 29, 2012 at 4:30:01 PM
While state banks are a great idea, the ... by Jerry Scott on Sunday, Apr 29, 2012 at 5:32:18 PM
I'm looking to have the U.S. Treasury issue our na... by Mike Kirchubel on Sunday, Apr 29, 2012 at 5:51:32 PM
It already does, via one of its subdivisions, ... by Jerry Scott on Sunday, Apr 29, 2012 at 7:29:33 PM
the Federal Reserve issues our nation's currency.&... by Mike Kirchubel on Monday, Apr 30, 2012 at 3:55:25 PM
Yes it does.  Check this for clarity - ... by Jerry Scott on Monday, Apr 30, 2012 at 9:41:54 PM
"The value of the Fed being separate from governm... by Joe Vignolo on Sunday, Apr 29, 2012 at 5:54:45 PM
Since the Fed was created in 1913? the nation's e... by Jerry Scott on Sunday, Apr 29, 2012 at 9:01:31 PM
Not sure who or what you mean by "us". The Fed is ... by Tom James on Monday, Apr 30, 2012 at 11:01:07 AM
I mean the citizens of the U.S. It finances what ... by Jerry Scott on Monday, Apr 30, 2012 at 1:19:03 PM
Public banking is not a panacea but it could certa... by Derryl Hermanutz on Sunday, Apr 29, 2012 at 7:58:04 PM
States surrendered its money creation power to p... by Samuel Bryan on Monday, Apr 30, 2012 at 4:04:17 PM
An Hour of Labor as a Medium of Exchange will allo... by William Huie on Sunday, Apr 29, 2012 at 9:58:09 PM
Everyone compensated at the same rate - 1 hour for... by Jerry Scott on Sunday, Apr 29, 2012 at 11:22:09 PM
Thank you for writing about public banks... very w... by Elizabeth Hanson on Monday, Apr 30, 2012 at 12:31:24 AM
On July 5th 1932, in the middle of the Great Dep... by Bart Klein Ikink on Monday, Apr 30, 2012 at 1:28:50 AM
Good to see more discussion and awareness of this ... by siamdave on Monday, Apr 30, 2012 at 4:53:35 AM
SAVE THE ECONOMY STOP PAYING YOUR MORTGA... by David Snieckus on Monday, Apr 30, 2012 at 9:47:06 AM
"In 1913 a Secret Meeting was held on the J. P. M... by Lance Ciepiela on Monday, Apr 30, 2012 at 11:27:57 AM
Take a look at the petition at: http://www.change.... by Mike Kirchubel on Monday, Apr 30, 2012 at 3:59:59 PM
Most posters in this thread don't understand the m... by Jerry Scott on Monday, Apr 30, 2012 at 1:56:27 PM