Friday, December 31, 2010

H.R. 6550: National Emergency Employment Defense Act of 2010

Kucinich has introduced a bill to fundamentally reform the American monetary system. If passed, I think it could be the most significant act of Congress ever.

Because almost nothing affects so many things as does money, monetary reform has potentially huge consequences. Due to the current fiscal crisis, certain long-unquestioned, very basic assumptions about money -- what is it? who really creates it? how is it introduced into the economy? what are the consequences? what alternatives are there? -- are receiving new attention, making real reforms at least thinkable.

The Kucinich measure holds within it the possibility of funding full employment, universal healthcare and public education, and of repairing the national infrastructure, while eliminating the Federal debt and boom and bust cycles of inflation and deflation. It promises to reduce the exploitation of people and the environment. As I said, it can affect so much, because this is about reforming the monetary system, and nothing affects so many things as does the monetary system.

Yet I am curious whether what the bill proposes -- the assumptions it questions, the simple but at first difficult-to-fathom concepts it introduces -- has any real chance of making its way into public discourse. I wonder whether it will be able, even, to get any real hearing in Congress.

There are a lot of passionate, smart and dedicated people who have shepherded this bill, and the thinking and historical awareness behind it, this far. But I don’t imagine it’s that difficult for those interests who will feel threatened to make any serious, thoughtful consideration of what it says impossible. Sometimes I wonder if a chief function of our government, media and educational systems hasn’t been to keep people distracted from every fundamental question and insight.

The full text of the bill -- it’s being called the National Emergency Employment Defense Act of 2010 (H.R. 6550) -- is available at:

http://www.govtrack.us/congress/billtext.xpd?bill=h111-6550

A good background piece can be downloaded at:
http://www.monetary.org/32pageexplanation.pdf

Thursday, August 12, 2010

Prosperity & Community - And Canada's Great Monetary Experiment

In this engaging set of video clips (see below), Bill Abrams, a retired, 85-year old Canadian high school teacher nicely tells the story of modern money and banking that, I hope, is gradually working its way into the public awareness.

The story he tells, which parallels what has happened in the United States and elsewhere, is about Canada’s growing national debt and the gradual bankrupting of its community life, individual freedoms, and public goods and services consequent to the adoption and spread of the “fractional reserve banking system.”

This is the system the United States, without public debate, adopted in 1913 with the creation of the Federal Reserve. Ever since, our country’s direction has been largely determined by private banks, our national debt has grown exponentially, and we have been subject to unnecessary cycles of economic boom and collapse.

Abrams talks about how Canada for many decades operated on a different monetary system — a healthier system that pulled it out of the depression and enabled Canada to build a national infrastructure, full employment, and safe, happy communities from 1935 to 1972, without incurring any significant public debt.

But as Abrams relates, in 1972, under pressure from the international banking system, Canada too adopted the debt-based, fractional reserve currency-issuance system. Since then, its public debt has been skyrocketing year after year, and interest payments to banks on that debt have been taking an ever-larger piece of the public budget. In other words, Canada joined the club.

Perhaps surprising to many, the United States, too, has at times enjoyed monetary systems that were in fundamental ways like what Canada had in place from 1935 to 1972. In fact, the American Colonies invented similar systems when they devised paper money to fund local prosperity. It was British opposition to Colonial-issued paper money that helped to ignite the American Revolution. Abraham Lincoln resurrected such a system when he started issuing the famed “Greenbacks” in the mid-19th century, to fund the Civil War without going into debt to banks. But, like the Bank of Canada, Lincoln's Greenback system was gradually displaced by modern banking, and with similar results.

Similar stories have occurred elsewhere. For instance, there is the dramatic example of the Island of Guernsey, which I wrote of elsewhere (Guernsey).

All of these stories renew hope for a world where every community can rediscover its way to creating a world of safety and prosperity, where we lead more fulfilling and meaningful lives, in more caring and neighborly communities.

The stories also suggest that local communities – towns, neighborhoods, counties — have it within their power to create complementary currencies that can help them regain the sovereignty and self-sufficiency they have lost to the “system,” i.e. to large private and public institutions and the marketplace that they control. The phenomenon of local currency creation is one of the remarkable stories going on around the world right now, with many thousands of examples springing up around the world.

Money in its essence is a human creation, an artifact of the law — or, more fundamentally, of human agreement. Money, in its essence, is simply a powerful enabler of human cooperation. It can be understood as an acknowledgment of service rendered, and the promise of the same in return. Money is therefore simply a sign of trust. Even in our corrupt, privatized system, and despite money’s alternating “golden” and “filthy” emotional associations, this mutual trust is still the underlying core from which money derives and that makes money work. Our current monetary system, which uses privately-issued bank debt as a substitute for money, falls sadly short of fulfilling money's social promise. A good money system builds community trust and capacity, and engages everyone in building a world that benefits all. How we create money is a great piece of the puzzle for setting the world on a better and different course. History shows that there is a better way.

Here are the Bill Abram video clips:

THE CRIME OF THE CANADIAN BANKING SYSTEM: Bill Abram

Part 1 (http://www.youtube.com/watch?v=jghiU55O5eY)
Part 2 (http://www.youtube.com/watch?v=FyHpaHo71mQ)
Part 3 (http://www.youtube.com/watch?v=1ixeDP5LEEQ)
Part 4 (http://www.youtube.com/watch?v=hLtretltL3I)

Other people who are telling the story, each from a different angle, include:

- Stephen Zarlenga, The Lost Science of Money
- American Monetary Institutute - www.monetary.org
- Bernard Lietaer, The Future of Money
- Robert De Fremery, Rights and Privileges
- Ellen H. Brown, The Web of Debt
- Thomas H. Greco, Jr., Money: Understanding and
Creating Alternatives to Legal Tender

- Paul Grignon, Videos (available on YouTube): “Money as Debt,”
parts 1 & 2; Web: www.moneyasdebt.net

“All of the perplexities, confusion and distress in America arises, not from the defects of the Constitution or Confederation, not from want of honor or virtue, so much as from downright ignorance of the nature of coin, credit, and circulation” -- John Adams

Friday, January 15, 2010

The American Monetary Act

The American Monetary Act, a legislative proposal intended for U.S. Congress, recognizes that through the creation of the Federal Reserve in 1913, private banks effectively took over from Congress the sovereign power to create money, and that this has resulted in “a multitude of monetary and financial afflictions, including:

  • an uncontrollable national debt
  • excessive taxation of citizens
  • inflation of the currency
  • drastic increases in the cost of public infrastructure investments[*]
  • excessive un- and under-employment and
  • erosion of the ability of Congress to exercise its Constitutional responsibilities to provide for the common defense and general welfare”

[Notes: Bullets added.]

The proposed legislation, created chiefly through the initiative of Stephen Zarlenga and his American Monetary Institute, is breathtaking. It is brief, simple, commensensical, practical, revolutionary. The Act isn't entirely new: it's an update of legislation first proposed by respected American economists in the 1930's. Zarlenga lays out the rationale for it at the end of his magnificent (if inexpertly edited) 700-page globally comprehensive history of money, which he personally gave me a copy of back in 2002 or so, The Lost Science of Money.

The language of the Act is relatively simple, but it may still be too laden with technical terms to be easily comprehensible to the newcomer. A supporting, 32-page explanatory pamphlet available at Zarlenga's web site can be downloaded here. This document itself is one of the best primers on the current monetary situation that I have seen. It gives a good synopsis of Zarlenga's book as well as of the proposed Monetary Act. I recommend that newcomers to monetary policy read this pamphlet before diving into The Lost Science of Money. It will make the larger book more easily comprehensible by providing a clear overarching framework.

Among other things, the proposed American Monetary Act is intended to:


  • Convert our money system from one running on debt-based money (today’s money that is created primarilty through private banks "lending" at interest) to one running on real money issued directly by the government.
  • End “fractional-reserve” banking (where 95% of money in circulation is created through bank loans), making banks into what almost everyone today already believes that they now are, banks of deposit that manage real money.
  • Over time, eliminate the national debt and burdensome interest payments on that debt, which eats up a large and growing portion of our tax dollars.
  • Catalyze spending on public needs at a fraction of prior cost and in the service of full employment and enhanced productive capacity by bringing additional money into circulation, not through lending, but through debt- and interest-free spending on public works. (Under the current system, the costs to government for infrastructure construction are increased 100%-200% by unnecessary interest payments to banks.)
  • Keep inflation at bay by matching new disbursement with expanding productive capacity.
  • Reduce or replace taxation with government issuance of money through spending on public priorities. 
  • Bring the Federal Reserve, now a consortium of private banks only nominally overseen by government, within the U.S. Treasury.
  • Help to eliminate the terribly destructive boom/bust cycles that further enrich the elite at the expense of the rest, in part by replacing the "house of cards" of "credit money," which is like an unstable Ponzi scheme, with real money.
  • Reduce influence of private interests on government.
  • Provide a new, ethical princple for government monetary policy: that of “furnishing sufficient liquidity to support the reasoned sustainable expansion of the physical economy, providing for the common defense and general welfare of the United States, and full employment of the nation’s working population.”
  • Set out country on a new healthy course more supportive of the common good.


Reading the Act, I find it quite beautiful to imagine all of us exchanging the filthy luchre of “Federal Reserve Notes” for cleaner, greener “U.S. Money,” and throwing the old notes in the trash. This is in the section stipulating that, in timely fashion: “the Secretary [of the Treasury] shall establish the capability of converting outstanding Federal Reserve Notes to United States Money of equal face value upon presentation to any domestic ... financial institution by the bearer;" “all fund accounts within United States financial institutions shall be denominated only in United States Money; and “The Secretary shall promptly dispose of all Federal Reserve Notes upon receipt.”

The fact that this Act can be proposed in such straightforward simplicity seems to me a good sign. If Obama and his ilk were ever publicly to take notice of it, I would know they were for real. Bernanke the current Fed Chair seemed a pile of nerves in one interview where I saw him responding to unprecedented focus on the Federal Reserve, as Ralph Nader and others began asking for a first-ever comprehensive audit of that institution. But it seems to me that the Fed has, for now, successfully deflected the recent scrutiny.

As Thomas Alva Edison once remarked, if the U.S. Government can issue IOUs to private banks (as it now does to the Federal Reserve at interest, with the banks subsequently creating the money supply through subsequent loans based on this initial fractional reserve), the government can just as well issue U.S. currency directly.

Here, again, is a link to Zarlenga’s proposed American Monetary Act (http://www.monetary.org/American_Monetary_Act_version_10_feb_06.htm).

Thursday, January 14, 2010

Toward A More Just Money System (Money as Debt II - Video by Paul Grignon)

A set of short, animated videos by Paul Grignon -- available on YouTube and entitled "Money as Debt II" -- provides a pretty good overview of money and its history as I’ve been learning about it over the past several years, and points to the historical opportunity we have today of transforming money to the world's benefit.

The videos tell the story, in brief, of the rise of our current private-bank-controlled, debt-based monetary system, and point out some of its consequences in, for example, unsustainable environmental exploitation, gross economic injustice, overwhelming imbalance and concentration of power, war, and a whole host of familiar ills.

A valid point is that the current money-system, while it gives rise to many evils, has also unleashed extraordinary human productivity by introducing extraordinary liquidity into the world of human relations and human exchange. Defenders of the current system have a legitimate perspective: If a population is thirsty, then even filthy, muddy water is a godsend. Dirty oil is preferable to no oil to keep an engine running. Maybe this is why our emotional response to money has always been so ambivalent.

But now with historical hindsight growing rapidly in the wake of modern progress, we are gaining the clarity necessary to separate the baby from the bathwater; i.e. we are opening a new prospect of having abundant money, but clean stuff, rather than filthy. Imagine clean money that helps repair the world, that builds human relations of cooperation and mutual benefit rather than extends systems of domination and exploitation, that supports rather than destroys a healthy environment. Can we exchange our filthy luchre for pretty?

The history of money is a story whose basic arc, I hope, will gradually come to the public’s attention over the next several years. ("The cat is out of the bag," I say to myself. "Too many people are starting to write about this and spread awareness. How many years will it take before these new realizations about our money system reach the general public? Five? Ten? Fifteen?" Or am I overly optimistic and is the capacity of mainstream propaganda simply too much to overcome?)

Grignon's video series points, in its final segments, to the existence and need of such alternatives to the current system. (I noticed, for instance, passing references to the Guernsey dollars I blogged about some months ago, as well as to colonial scrips, the old U.S. Greenbacks, and to the currently burgeoning community currencies, all of which I’ve also commented upon.)

The videos even make brief reference to Stephen Zarlenga’s work at the American Monetary Institute and his American Monetary Act, legislation [discussed in my following blog] that Zarlenga hopes to bring before Congress and in which Dennis Kucinich has shown an interest. (Look for the unidentified cartoon images of Kucinich and Ron Paul that briefly pop up in the Grignon videos; alert me if you see others that I missed!) I believe Zarlenga’s thinking is a bit stronger and clearer in some respects than Grignon’s, but these videos are very good nonetheless; then again, Grignon no doubt has valuable insights of his own to bring to Zarlenga's thinking.

To see the videos, click here (series 2) or here (series 1) and/or search YouTube for:

money as debt ii promises unleashed (1 of 8) through (8 of 8)
money as debt (1 of 5) through (5 of 5)

See also:

Stephen Zarlenga: His book, The Lost Science of Money and his non-profit organization, The American Monetary Institute (http://www.monetary.org/)

The American Monetary Act (at http://www.monetary.org/)

Paul Grignon's Web site (http://www.moneyasdebt.net/)

Ellen Hodgson Brown: Her book: The Web of Debt (http://www.webofdebt.com/) -- Brown’s book is a good overview and compendium of many of the things Zarlenga addresses, and it’s more accessible and more focused on modern U.S. Monetary history (but much less historically comprehensive).

The Money Masters: How International Bankers Gained Control of America (http://www.themoneymasters.com/) -- This 3.5 hour video can also be found in free segments on YouTube; it’s a great and revealing piece, although the unfortunate and strong “conspiracy theory” tone and slant might drive some people away.

Henry George Institute (http://www.henrygeorge.org/) -- The above thinkers are concerned with the privatization and monopolization of the inherently public money power by the private banking system. The economist Henry George instead focuses on another critical and related concern: the privatization of the earth, or land.