Ellen Brown: I'm just
saying that we could go back to the way it was.
Pennsylvania had the original public banking model. At that time, the government actually
literally created the money by printing up little paper receipts, and that's
what money was: the Colonial Script. The
government printed up these little receipts which were basically IOU's from the
government: basically, "We acknowledge that you have done work for the
government, and so we're going to pay you with this little paper receipt."
They printed up a bunch of receipts, and most of it they lent into the
economy through their own public banks.
They lent it to the farmers at 5% interest. Then all that money would come back to the
government, plus the 5%. And where did
the 5% come from? The government spent
some money on roads, and bridges, and all the things a government spends
on. So the government both spent and
lent the money of the government, which were these little paper receipts.
But nowadays, we don't allow the government to
issue money: all we allow the government to do is to borrow. What it does is it borrows from -- when it
originally writes checks, it pays out by writing checks on its account with the
Federal Reserve. So really, in effect,
it has an overdraft with the Federal Reserve.
Now, we require it to balance its books, because everybody thinks,
"Well, I have to balance my books. I
can't keep going heavily into debt, and so the government should too." So we make the government actually issue
bonds and get the money back, and levy taxes, and all that stuff.
But you could just wait to levy the taxes until
prices go up, which shows that you've hit your limit for putting money into the
economy. Right now there is not enough
money in the actual circulating economy to stimulate the economy. In other words, there is not enough demand:
what causes businesses to hire more people and make more product is
demand. So the first thing you need is
to get money into people's pockets so they can get out there and start
spending.
What I would do for starters is use that
quantitative easing to buy up all the student debt and rip it up. You'd essentially put a trillion dollars into
the pockets of students. Now, those people shop. They'll go out into the stores and buy
things. They'll buy houses, they're
young people starting a family, starting a business. They buy all kinds of stuff; they buy cars,
they buy electronics. Somehow you need
to get the money into the pockets of the people, but /
Rob Kall: So
wait. Let me just discuss this a little
bit further with you. Just ending
student debt would help the economy. How
would that work? Could you go into a
little more detail on that?
Ellen Brown: If the
students had their debts written off, instead of trying to pay on these debts
that are crippling them -- my son, for example, has a $44,000 debt from his
college. He's got a Master's Degree in
Economics. So he's paying down; monthly,
he pays on that debt. I'm not worried
about him because he actually has a job, but a lot of people don't' have a job. Anyway, if you made it so that they didn't
have to pay to the government on their student loan, they could spend that
money instead on the things that they need.
"They'd just go out and shop more," is the point. They would have more money to spend into the
economy.
Rob Kall: Even your
son: at $44,000, he's probably spending hundreds of dollars a month that's
going to banks that he could be spending on the economy.
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