Share on Google Plus Share on Twitter Share on Facebook Share on LinkedIn Share on PInterest Share on Fark! Share on Reddit Share on StumbleUpon Tell A Friend 1 (1 Shares)  
Printer Friendly Page Save As Favorite View Favorites View Article Stats   2 comments

OpEdNews Op Eds

Nationalize Money Creation: Taking back Money Creation from the Federal Reserve

By (about the author)     Permalink       (Page 1 of 1 pages)
Related Topic(s): ; ; ; ; ; ; ; , Add Tags Add to My Group(s)

Must Read 2   Supported 2   Well Said 1  
View Ratings | Rate It

opednews.com Headlined to H3 12/2/09

Become a Fan
  (58 fans)

Worried Dollar



It's time - near the 100th anniversary of the Federal Reserve act of 1913 - to seriously question what this institution is doing for us. In its 96 year history it has - neatly - devalued the American Dollar by 96 cents. At the rate they are pumping out money, they will likely devalue the dollar another 3 cents - 99 cents total - by their Centenial. It cannot go to zero! Of even greater concern, perhaps, is the growth in the debt.

Stephen Zarlenga's American Monetary Institute agrees with Ellen Brown's recent article "Lessons from the Japanese: Time to Stop Borrowing Money and Start Printing It" but goes even further. You can read about the work of Dr. Stephen Zarlenga, who documents in his book, "The Lost Science of Money" how private bankers have systematically, over hundreds of years, sought to privatize the sovereign right to produce money. They finally succeeded in the U.S. with the Federal Reserve Act of 1913 - other countries, such as Japan, quickly follwed the flawed U.S. model. Why flawed? Because, as Ellen points out, we have to borrow every dime - well, actually, everything except the dimes...nickels, quarters and pennies - from the mostly private Federal Reserve. The U.S. Mint prints only 7% of the money supply.

Right now, over 20% of our national budget goes to repaying the debt, and that will only go higher as our indebtedness grows. Both Ellen Brown and Stephen Zarlenga point out there is no reason for this, but Zarlenga also documents how governments have historically done a much better job of creating money (which is distinct from banking, which can remain a private business). Zarlenga goes further with the American Monentary Institute's American Monetary Act, which is endorsed by Rep. Kucinich, among others and which would return the production of money back to Congress, where Article 1, section 8 of the Constitution says it belongs.


Most importantly, instead of borrowing money, Congress would simply print it, under the AMA, and the proceeds would go towards things like rebuilding the infrastructure (2.2 Trillion), Education, Universal Health Insurance etc. Inflationary? No, because these are all things that contribute to national wealth, so they would only increase the wealth pie, as opposed to war spending, which actually destroys wealth - and lives - but enriches banks who loan to the government to buy tanks, planes etc.

In contrast, the money spent on these necessary, and in many cases, green services, would eventually "trickle down" to the banks to make loans for other things. It's the reverse of what we do now - borrowing from the banks to pay ourselves. Instead, the banks would receive money from private citizens and companies paid directly by the government to go out and build bridges, set up schools, hire doctors etc. It would not be borrowed money either, but just...money.

Most radically, the AMA calls for the end of the fractional reserve system. I heard Zarlenga speak at the Henry George School in NYC recently (he is a big fan of George). At first I thought the AMA ought to be inflationary - that is the first and most common reaction, Zarlenga told me - but it is not if you actually look at the historical record. True, too much money chasing too few goods produces inflation, but a newly reorganized Federal Reserve, subsumed under the Treasury for the first time, would see that doesn't happen by not producing too much money at once. Congress would authorize the creation of money to make up the difference from what it collects in taxes, and what it spends, but it wouldn't have to borrow it and pay interest!

Government created money - from the original Continental Scripts to the Lincoln Greenbacks - has worked in the past, Zarlenga informs us in the first 23 chapters of his book (or, in the movie, "The Money Masters" which is based on Zarlenga's work), except when undercut by counterfeiters, such as Adam Smith's favorite - the Bank of England. (See also: "A Nation of Counterfeiters" by Stephen Mihm). Smith was working for the BOE indirectly through his benefactors, and was a major contributor to the propaganda that private banks manage money production better than public governments, democratically elected. If you look at the record of Federal Reserve managed economies everywhere, there has been runaway inflation, and periodic recessions and even depressions, plus unemployment. Some fiscal management!

I'm not sure I would go as far as Zarlenga but if you couple modest fractional reserve banking at the old ratio of 10:1 loans to assets (instead of the hyper-leveraged 100:1 or beyond currently enjoyed by such derivative players as JP Morgan who have some $85 Trillion in derivative contracts), and add in Henry George's Tax on Natural Resources with no tax on wages, true capital (tractors, factories, and other 'hard' assets), or sales, you would have a very different world than we have now. You would have a world that is not
chronically in debt to banks (who benefit while the debtors suffer, even in extreme poverty. See the recent movie put out by the Henry George School of New York City: The End of Poverty? to see how the developed nations profit from the debt of the developing nations).

The country is not poor, it is the people who are poor. Debt is not inevitable. The richest 1% owning 80% of the nation's wealth (Zarlenga says it's only 50%, but I think his figures are out of date, and Michael Moore quotes Citibank as saying it is 1% owning 90% of the wealth in "Capitalism: A Love Story" which I reviewed here) is not inevitable. Spending credit (as opposed to money) on wars and unfunded tax cuts for the already wealthy is not inevitable. All of these things are deliberate policies carried out over years of purposeful attempts, which have now succeeded, to monopolize national and international wealth in all its forms.

We, the People, have to take back our wealth. It comes from us - from labor working on the natural resources of the world to create true wealth, NOT from credit-backed capital investments creating...well, they can't really create anything. A dollar bill cannot get up and create a road. A loan is even more powerless. Creating a road, a school, a solar thermal power plant, takes workers - who then expect to be paid with money. Get it? Labor creates wealth, usually with the aid of true capital (like bulldozers), but not necessarily (OEN Editors, like me, produce labor to create the site - without getting paid anything. I still think it is one of the most important contributions I make to society, even though capital never comes into it). Capital alone creates nothing.

We can re-nationalize the power to create money and make it a sovereign right and obligation, again, as it is in the Constitution and ought to be. Support the American Monetary Act.

 

Take action -- click here to contact your local newspaper or congress people:
Support the American Monetary Act.

Click here to see the most recent messages sent to congressional reps and local newspapers

http://newthinking.blogspot.com/

Scott Baker is a Senior Editor/Economics Editor and Writer at Opednews, and a blogger for Huffington Post.
Scott Baker is President of Common Ground-NYC (http://commongroundnyc.org/), a Geoist/Georgist group. He has written dozens of (more...)
 

Share on Google Plus Submit to Twitter Add this Page to Facebook! Share on LinkedIn Pin It! Add this Page to Fark! Submit to Reddit Submit to Stumble Upon

The views expressed in this article are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.

Follow Me on Twitter

Contact Author Contact Editor View Authors' Articles

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

Obama Explains the FEMA Camps

Was Malaysian Flight MH370 Landed Safely in Afghanistan?

Let the Sun Shine on a State Bank in Florida

Batman, The Dark Knight Rises...and Occupy Wall Street Falls

The Least Productive People in the World

The continuing plight of Malaysian Flight MH370 - 2 month update

Comments

The time limit for entering new comments on this article has expired.

This limit can be removed. Our paid membership program is designed to give you many benefits, such as removing this time limit. To learn more, please click here.

Comments: Expand   Shrink   Hide  
2 people are discussing this page, with 2 comments
To view all comments:
Expand Comments
(Or you can set your preferences to show all comments, always)

I have read ~50% of the budget is interest on debt... by Dick Thomson on Wednesday, Dec 2, 2009 at 8:10:14 AM
Yes, the numbers are hard to pin down - I had thre... by Scott Baker on Wednesday, Dec 2, 2009 at 10:01:59 AM