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Making our own money: Returning to the constitution

By   Follow Me on Twitter     Message Scott Baker       (Page 1 of 1 pages)     Permalink    (# of views)   4 comments

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Author and Financial seer Ellen Brown makes the excellent observation that the IMF is now becoming the lender of last resort.

It will be interesting to see what finally happens when the U.S. - the largest member nation of the IMF - defaults on its loans, or else tries to inflate and devalue the dollar enough to repay them. The ways to end this debt-cycle - which only serves the holders and sellers of the debt, the banks - however, are clear:

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1. Return to the constitutional authority granting Congress- and ONLY Congress - the power to print money (See Section 1, Article 8). What the U.S. Mint does now is becoming nearly of interest only to coin collectors, such is the minuscule portion of the monetary base produced by them. The Fed, and now, the IMF, create their money out of thin air, and electronically, in the form of loans, which they, prematurely, declare as assets on their books. The emperor has no clothes and the banks have no (real) money.
Having Congress print our money, as Lincoln did to spectacular effect to finance the Civil War, when the NY City banks wanted 24-30% interest, need not be inflationary. In fact, it is the Central Bank that has, since 1913, inflated our money, even by their rosy estimates by 250%, but by much more, as high as 4,900% for some everyday items, like ice cream. In contrast, there was virtually NO inflation before the Federal Reserve Act.
We don't have to have inflation, IF Congress puts into law that it will print no more money than needed to cover the growth in population OR prints extra money just to pay off our gargantuan debts (there is no realistic way to "grow" out of these multi-trillion dollar debts. The various bank bailouts alone now exceed our nearly $12 Trillion debt). The Federal reserve is an abject failure, and will bankrupt the country if we don't abolish it sometime before its 100th anniversary in 2013.

2. Set up state banks in all 50 states, as debt-free/record-surplus/FDIC non-insured North Dakota has done since 1919. Ellen has written about this previously, and I have a petition to do that very thing here:
click here
The way it works is the state bank collects all the state's revenues, then it makes loans, either directly or through subservient banks - private or public - using the traditional 10:1 loan to asset ratio. The 10:1 ratio has been shown historically to be safe if the bank keeps those loans on its books, as the State Bank of North Dakota does, and is conservative about who it loans to: no subprime, no-doc, liar loans etc. Yes to basic mortgages (probably at lower interest than the private banks charge), yes to school loans, car loans. Definitely no to securitization, which encourages fee-generation from selling loans and selling them again as structured packages to indirectly participating - and often, ignorant - financial institutions, e.g. sovereign funds, hedge funds etc.
Ellen Brown has written in support of this here.

3. Change the basis of our tax system wherever possible to a Single Tax basis: Tax the use and Abuse of natural resources, and not production (e.g. wages or true capital - factories, trucks, cranes etc.). I describe this Georgist/Geonomic solution in more detail here:
Single Tax, True Remedy to Inequity to Boom/Bust Cycle
A new form of capitalism is needed: Geonomics
A new form of Capitalism: Geonomics
Geonomics: what ever happened to the movement Henry George started?
Geonomics and the true cost of poverty
and in my petition here: petition here:

Obama, however, has missed his chance at reform by refusing to hold the TBTF banks to account. Instead of disallowing the super-leveraged, and noncollectable derivative investments to sink the banks - and putting the fraudsters in jail for deliberately making fraudulent assessments of their own collateral, he has continued the Bush friendly-to-bank policies endorsed by Goldman alums, eliminating moral hazard and making the next crash not only guaranteed, but guaranteed to be bigger and more unstoppable. No IMF bailout will be able to "rescue" us, even for a short time, from the collapse of the $600 Trillion (not a typo) derivative markets.
I was warning about this nearly a year ago, here.
We are running out of time and out of pyramid schemes.


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Scott Baker is a Managing Editor & The Economics Editor at Opednews, and a blogger for Huffington Post, Daily Kos, and Global Economic Intersection.

His anthology of updated Opednews articles "America is Not Broke" was published by Tayen Lane Publishing (March, 2015) and may be found here:

Scott is a former President of Common Ground-NYC (, a Geoist/Georgist activist group. He has written dozens of articles for (more...)

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