Modern economics has been portrayed as a highly complex discipline, fit only for the rarefied intellects of economics faculties to appreciate and understand... Its graduates bask in the reflected glory of their self-awarded status symbols, and, armed with the latest computer simulations, pose amid their jargon as the modern-day witch-doctors of monetary science.
But these economists' aggregate contribution to the betterment of mankind is in inverse proportion to the prestige and mystique they enjoy. Finding a better way of doing things has been the happy lot of contemporary industry, as a century of invention has done away with the need for drudgery, obsoleted the oil lamp, the spinning-jenny and the wooden plough. Only economics has failed to meet the challenge. The nostrums of "orthodox" economics dwell eternally on controlling wealth rather than expanding it, and forever look backwards to the problems of artificial scarcity on a planet which stands ready to give of its bounty.
Why? The truth is that there is a fallacy in modern economic thinking which, because it is never debated or subjected to scrutiny, eternally defies the most ingenious attempts at balanced growth and maximisation of resources. That fallacy devolves around the creation of credit, and the orthodoxy which rules that new money can only be obtained as an interest-bearing loan from the banking system. Centuries of this practice have loaded the developed countries with massive national debts, and annual servicing charges which inhibit wealth production, thereby denying 20th century man the benefits of his own enhanced technology.
But even for economics there is a better way, and it's really very simple. Credit creation need not be a banking monopoly at all. Its privileges can revert to the people, through their elected state authority. This has already been done, for brief periods, and on well-documented occasions in Britain, America and Australia. On none of those occasions were the beneficial effects perpetuated, because a Money Power jealous of its privileges seized upon the first opportunity to take back its monopoly, whilst an uninformed citizenry looked on in ignorance of what it had gained -- and then lost again.
That must change. And it can only change when an enlightened populace has been thoroughly alerted, and can both see and hear the issues openly debated. There are a hundred and one theories on money creation, and how it can best be controlled by Government. The present system has failed and is causing the situation in human and environmental terms to rapidly deteriorate in developed and developing regions alike. It is essential that debate and reform should start now, before we plunge into the presently inevitable worldwide slump, worse than any before....
A lay public, including the many millions who are victims of economic adversity, must be in no way reluctant to try and understand what is happening to them and their lifestyles, to their security and their job prospects, to objectives which they feel entirely capable of attaining, but which remain forever out of reach, because there is not sufficient money.
Money - or the lack of it - is the restraint that places a limit on many vital areas of human endeavour, and it is a purpose of these articles to ask the reason why. The other limitation on what we can hope to achieve, either individually or jointly as a society, is the availability of resources. We cannot make bricks without clay, clothes without cloth, girders without steel - plus the requisite acquired skills to bring these benefits into existence.
Ideally a modern cash economy should be geared to achieve a fine balance between these two main factors, of money and resources. If the need is there - say for a specialist hospital to cure a range of human ailments - or for a technologically-based campaign to clean up the environment - then what is clearly recognised as a social benefit and a boon to future generations should not be put off, delayed or hindered by an apparent lack of money.
Yet money - not the availability of labour, skills and material resources - has been universally portrayed as the limiting factor upon even the most praiseworthy of ventures. We have been conditioned by our political and banker appointees, our financial and economic soothsayers, to believe that there must always be a shortfall between what is desirable and what is financially possible; that whatever the benefits advancing technology may place at our disposal, there must always be a degree of human need and deprivation that will be forever unsatisfied. That defies the achievement of true social justice...
Money and resources ... Resources and money! One is tangible, the other somewhat more elusive. Yet it is upon the marrying and harnessing of these two concepts that mankind must depend for an improved level of all-round prosperity and amenity in the future.
So where does the problem lie? Perhaps in money itself....
Most people's appreciation of money is based upon their everyday experience of life. Children get their first acquaintance with it through the coinage, when they find what buys them goodies at the sweetshop. At a later stage the association switches to banknotes, as larger outlays and perhaps earning capacity make them a more convenient medium for carrying and storing wealth.
We then gravitate to credit-card and chequebook money, which pays our debts even more conveniently through the scribbling of certified signatures on suitably inscribed pieces of bank paper, and much of our concern as wage or salary earners is devoted to ensuring that our bank and credit-card accounts and mortgages stay in balance.
That is normally the extent to which money impinges upon our personal lives. We become familiar with it as coin, banknotes and credit. But unless professionally engaged in banking or finance, we shall come in contact with only a tiny fraction of the total amount of money currently in existence, and the millions and billions of government and institutional money will float for ever above our heads. If we are hard-pressed with our commitments, our horizon may be clouded by the next unpaid bill, and in such a predicament money appears to be not only scarce, but also finite, with a limited supply to go round.
As a populace, we are groomed and conditioned to feel that way about money, and indeed, in straitened economic circumstances, there is often a carefully and deliberately cultivated scarcity at the lower levels. Yet money in the larger sense is never finite, and is almost continuously being created - and destroyed.
So who are the creators? Mainly the central banks, such as the Bank of England in Britain and the Federal Reserve Bank in the USA. They create money when they buy government securities such as Treasury bills, and that is money-creation in its absolute form because the cheques which they write to buy the stock are not covered by either collateral or deposits.
The privilege of creating this money has been conferred upon the Central Banks by the British Parliament and the US Congress, a delegation of their constitutional right to create "all the currency and credit needed to satisfy the spending power of Government and the buying power of consumers". Few people question the validity of this procedure, since it tends to work smoothly in practice, and is an indispensable element of modern finance management. But money reformers maintain that this treatment of the newly-created money as an interest-bearing loan between Central Bank and Treasury is a root cause of economic stringency and instability, since it results in an ever-increasing burden of National and Federal Debt. It is more than mere delegation, it is abdication and subjugation!
Here we come to a fine point ln the argument for money reform. This is where we have to separate reality from myth, logic from prejudice, public credibility from spurious protocol. We have established - and it is not disputed -- that money is created when a central bank purchases securities from the Treasury department of a state authority. The bank pays with a cheque drawn upon its own reserve account, which we know to possess neither collateral nor deposits, but to be both credible and acceptable because it has the backing of the state and all its resources.
So money has been created out of nothing, and instantly commands respect and acceptability through its linking to the nation's credit, that and the fact that it has been vouched in payment of government stock, which among the major industrial nations is reckoned to be as good as gold.
But whose money is it? Abraham Lincoln insisted that the ownership belonged to the people, and that the privilege of creating and issuing money on their behalf was the supreme prerogative of Government. To prove his contention, he caused some 460 million dollars to be created for the North's funding in the American Civil War, and this precedent might well have been repeated in peacetime had he not been assassinated....
Fifty years later a British chancellor, Lloyd George, ordered the creation of £300 million in Treasury notes to overcome a liquidity crisis at the onset of World War I. Like Lincoln's "greenback" money, these notes were created interest-free, for the benefit of both Government and people.
In The Financiers and the Nation the Rt.Hon. Thomas Johnston, M.P., a former Lord Privy Seal, claims that the same procedure might legitimately have been adopted for further prosecution of the Great War, had not powerful banking houses persuaded the Government to borrow the money in the form of War Loan.
The implications of these dramatic historical instances have to be considered, understood and documented. We have money created and issued for public use, interest-free and with no further obligations on posterity. We also have money created by a central bank selling securities to a government Treasury Department at varying rates of interest, and piling up irrevocable debt which has to be serviced by future generations.
So what is the determining factor? And what makes them different degrees of money, such that central bank financing, through the purchasing of securities at interest, is regarded as the norm, whilst Lincoln's "greenbacks" and Lloyd George's "Bradbury" pound notes become almost-forgotten historical curiosities?
It is clearly not good enough to argue, as bankers and orthodox economists do, that money created at interest by central banks is "sound money", whilst anything else is "fiat" money or "printed" money, issued at whim and without discipline, for mere political advantage. Have we not taken a look at the money-creation process, and realised that under both procedures the funds are created virtually out of nothing, being as it were the valuation, or monetisation, of assets or potentialities already in existence?
Is that a concept too difficult for our "leaders" to grasp? That of all the various forms of money or negotiable tender that may pass through our hands or touch upon our lives, by far the highest percentage is a form of invisible credit, called up as it is needed by what used to be described as ledger entries, but is now a series of digits on an electronic computer?
Are we to be blinded by the jargon of electronic numbers as our forefathers so obviously were by the solemn mystique of the ledger entry? It has been reckoned that among the legions of political leaders and legislators who from time to time have had to deal with such matters, while most have been quick to appreciate the characteristics and uses of physical money such as deposits, banknotes and coin, very few have come to really understand the fundamentals -- and the need for democratic control - on the creation of credit.
Yet this is a subject which now transcends, in priority and importance, virtually any other political or social issue. It transcends them because it impinges upon both political power and social opportunity. It is the machinery by which political and social objectives are given practical implementation. And if that machinery is not properly understood, or if its best functions not brought out to public advantage, it can perpetuate that all-too-familiar pattern of reduced expectations which is the economic malaise of the late twentieth century.
We can't afford the old. We can't afford the young. We can't afford the ill. We can't afford the environment. We can't afford to let the the system-scrapped human "units of production" have a reasonable standard of living... How can every country, everywhere, be in debt and forced to cut back on provision for its people -- all at the same time? If there are debts, then they must be owed to someone or something; yet it clearly is not to any authority accepted and legitimised by the people as their master!
The first paper dealt with money and resources. It touched upon the limiting factor which has to be imposed when new credit can only be obtained as an interest-bearing loan from the banking system, and it raised the spectre of an ever more onerous burden of National and Federal Debt. Many minds have been directed towards a solution of this problem since it was highlighted in the inter-war years by Major C.H.Douglas, and much has been done by the bankers and their appointees to confuse and obfuscate the issues, since any breach of their monopoly rights on the creation of credit would strike at the basis of bankerist power.
So, as with so many other aspects of life in a "free" society, this is an area
where the ordinary citizen must determine his own self-interest. As the orthodox
economic system grinds into an ever more corrupt mess, it will increasingly defend
its status by eroding those freedoms.
Think, question, debate, evangelise... resist while you still can!
At this stage a question arises : if the institution of some form of nationally owned credit facility is perhaps the most critical thing that needs to be done for the future benefit of humanity, why should the burden of urging it forward fall so heavily upon the public at large, when there are so many highly paid academics, economists and politicians with greater means and opportunity?
For an answer to that one, we must dwell upon the centuries of power and patronage conferred on the bankers by their monopoly control of the money system. It has been said that money -- if you have enough of it -- can be made to buy almost anything in the world. And the bankers, through their control of credit, have at their disposal virtually all the money in the world.
It enables them to go hostage-gathering in every sphere of public life. It is in their interest to do this, and on the evidence they have done so, buying up the loyalties of newspaper magnates, public commentators and leading politicians. Those who want to prosper in their chosen calling have to observe the protocol. If they step out of line, get curious about the bankers' credit monopoly, or start talking about economic power being restored to the people, they are liable to find that their financial or factional backing has been removed, and that they are being targeted by injurious media campaigns which quickly destroy their prestige and credibility.
So the prospect of a charismatic leader arising who would emulate Lincoln, invoke the constitution, and give financial power back to the people, is something which cannot seriously be contemplated, unless there is such a wide degree of public awareness that this People's Champion cannot be cast down by scandal, innuendo, or high-level criticism of his sanity and competence.
Back to the People.... Is that such an outlandish concept, that in this technological age of specialists' end "experts" in all the recognised sciences and disciplines, we should look to an enlightened citizenry for restoration of that eternal vigilance without which no Xuman freedom can ever be taken for granted?
In the past, an ill-informed public has cheerfully kicked its would-be benefactors into oblivion because the message was ill-considered, and only the few knew what it was all about. Now, in an age of unsurpassed communications skills and opportunities, the greatest need is for the People to understand the simple truths about the People's money -- since without that we can never get a proper utilisation of our planet's bounteous resources.
You who read this, and realise what it is saying, are imbued with a certain responsibility.....
Who now believes in the People's money, and who still needs some convincing? Who has become thirled to the concept of nations creating their own credit, and who is about to be confused and neutralised by the first blockbusting rebuttal issued on behalf of the bankers?
There are two levels on which there has to be clarity of conviction; first of all on the immense benefits that would accrue from the state creating all or part of its own financial outlays; secondly, in the knowledge that procedures are readily available for achieving this, and that only public ignorance and bankerist pressures have prevented earlier historical instances from being perpetuated.
We should be well aware that there are many skilful lobbyists in state Treasuries and economic faculties who stand ready to defend the established practice of issuing all new money as a debt upon society. They will gravely insist that it would be vastly inflationary to do otherwise, since governments presented with the opportunity to create their own funds interest-free, would use it to promote their own pet schemes and fantasies, and thereby debauch the currency. It is claimed that, faced with the awesome responsibility for committing a nation's resources, chancellors and Treasury officials require to be operating within a discipline which will prevent them straying from the paths of prudence and rectitude. And down through the centuries, since the formation in 1694 of the Bank of England, that self-imposed discipline has been a requirement that new funds should only be made available as an interest-bearing debt.
Today whole economies are reeling under a preponderance of debt. Societies are existing in straitened circumstances, peoples are starving in the midst of plenty, all because of debt -- because of the protocol which rules that new credit can only be made to materialise as a charge upon the community.
Having thought about it, having studied the implications, are you willing to go on accepting it? Just because it's something you won't ever see debated in economist papers, or the prestigious columns of financial editorials, are you willing to go on believing it's a problem that doesn't exist? Or if it does exist, that it's better not talked about, for fear of causing offence in high places?
This is the time to choose; between an intellectual honesty which seeks the truth and goes on seeking regardless of pressure or convenience; and a financial orthodoxy which, to protect its own protocol, creates selective no-go areas within the human mind.
Still we wonder, don't we, at the awesome majesty, the solemn certainty, with which the Establishment defends its rigid observance of current financial practices, even when they are so obviously at variance with our expectations of social justice? Presidents and prime ministers, chancellors and governors of the state Treasuries, all speak with such respect and reverence for the banking institutions from which they borrow the nation's money, that it might seem almost an affront and an impiety to question their motives and their judgement.
In the high places of government, alternative methods of creating credit are not mentioned. It is as though Lincoln's greenbacks, Lloyd George's Bradburys, had never happened. There are no clumsy lies or evasions, just a bland ineffable commitment to the system as it has always been operated. And if economic history has to be rewritten here and there, with such inconvenient episodes edited out and consigned to the dustbin of posterity, that too can be managed.
Over all, the preponderance of power and patronage can be totally disconcerting. Nothing in our upbringing has prepared us for a state of affairs under which all the symbols and emblems of authority so clearly mitigate against the public good.... We are up against an Established Order, with only our logic and our intellects, our sense of justice and our moral values to tell us truth from falsehood, right from wrong.
Revolutions are made of this. And it will surely take a revolution in economic thinking, a veritable upheaval in widely based conceptions, to force a situation in which governments no longer feel compelled to borrow at interest, but are able to supplement their budgets by judicious issues of the People's money.
It will come about by popular demand. It can happen no other way. The issue of the People's money is one which can only be settled by the people themselves, and they cannot do this until they have been properly alerted. And they will not be alerted until the subject can be openly debated.
We said in the beginning that it was really very simple, and that is the Ievel on which the debate must be continued; not by the slide rule and the calculus, and the massive computer banks of analytical data compiled by the modern economist, but on the simple logic of who owns what -- and whether money should be the servant or the master of man.
People -- ordinary people -- don't have to concern themselves with technicalities. That is a job for the professionals. A democratic public can defend its freedom by simple insistence on the principle alone -- and the principle in this case must enshrine a money system which benefits humanity at large, whilst curbing the immense power and patronage currently enjoyed by the oligarchs of finance.
Those who are closest to investment and currency markets, and to the complexities of the modern financial system, are probably the least receptive of any plan for changing things. Billions of pounds, dollars, D-Marks and yen are traded, gambled, cashed, invested, vouched, created and cancelled in any single working day, and the bedazzling flicker of the astronomic numbers warns all but the hardened operator to steer clear of matters that seem to be beyond their comprehension.
Fortunately it is not an issue that need concern us directly. Crash courses in market speculation are neither necessary nor recommended. For even in full cognizance of this sophisticated world within a world, this casino of invisible levers and mighty fortunes moving around at the flicker of an electronic button, we have to stay rooted on first principles, and let 'the constant bedlam of international brokerage, deal-making and currency gambling pass right over our heads.
Why? Because it is credit that drives this intricate and outwardly bewildering machine, unlimited and invisible credit based on the banking system's concessionary right to monopolise the creation and issue of money. So the technical know-how, the twists and manifestations, the dazzling sophistications, must be viewed in relation to that single point of principle upon which our discussions began.
The machine is out of control. This massive financing, investing, marketing, speculative and gambling machine is completely beyond any form of democratic control. That is because governments have collectively given up the right to create and issue the People's money. Democracy started to die when politicians abdicated its powers in favour of the banking system. Now it is sick and corrupt and pathetically inept in face of the true power, which is the financial power.
Abraham Lincoln said that the privilege of creating and issuing money was Government's supreme prerogative. His was a principle which he followed through in his own generation. Subsequently a latter-day statesman, Sir Robert Menzies of Australia, echoed Lincoln's basic wisdom when he declared that there could be "no independence without financial independence."
Think on these things, you who were born a democrat, and assumed that because of the sacrifices and clear-sightedness of our forefathers, such freedoms were guaranteed forever. There are ominous signs, borne out by the visions of both Menzies and Lincoln, for in the global situation evolved by an unregulated international Money Power, it is doubtful whether democracy can flourish again -- can even survive the vicissitudes of the next century -- without taking back some control over its own credit.
There is one area in which the financial establishment has recently been obliged to concede the principle of debt-free money. That is in the issue of banknotes and coin, where, following some intrusive probings by the Economic Research Council in 1980, it was revealed that for the United Kingdom at least, the pound in one's pocket had been obtained without any increase in the nation's debt. The procedure, as explained in the ERC booklet entitled Government Debt and Cedit Creation (Dec. 1981), is for the Government and Treasury to underwrite for each new cash issue an appropriate amount of securities, which are then lodged sine die with the Issue Department of the Bank of England.
Monetary and economic reformists, observing this, and seizing upon it as an already accepted method of obtaining debt-free national finance, have suggested that the principle -- and the issues -- should be extended till they had a real effect on Government borrowing, and erased the worst features of the debt-money system. Blandly the oligarchs have replied that they could see no possible justification for such a vast expansion in the supply of Physical money -- that it would be impracticable to store, and the economy couldn't absorb it -- and because there has never been an established forum for the debating of such proposals, no public opportunity has been presented for exploring the implications.
Yet these are vast and far-reaching. It is patently absurd to insist that an Authority which can order the creation of debt-free physical money should not also have it within its powers and its competence to create credit. And upon the vexed question of how much should be created, nothing is more finite than the proposal propounded in The Money Bomb in 1983 -- that Government, on an annual basis, should lodge with the Bank of England securities equal to the interest on the National Debt, and authorise it, as agent, to make out the payments to the debtholders.
Then, since it is now self-evident that further borrowings are only necessary to pay the interest on previous borrowings, that particular drain on Government finances would cease, the Debt would stabilise at current levels, and hey presto! our elected politicians would find that they had regained control of the People's money.
We said at the beginning that it was really very simple. That is just how simple - provided we stick to principles, and are not phased by technicalities. All it needs is open discussion and debate. The finance oligarchs are ever-fearful of having to face such a debate....
From: http://www9.pair.com/xpoez/money/ossian.htmlAll Content © HiddenMysteries - TGS (1998-2005)
HiddenMysteries.com Internet Store ~ HiddenMysteries Information Central
Texas National Press ~ TGS Publishers Dealers Site
All Rights Reserved
Please send bug reports to the Information .
The articles being presented and published are not necessarily the views and research of TGS. TGS and/or the editors and publishers may or may not agree with the assumptions, the articles, or the conclusions of the authors. Each article is presented to give everyone every possible source to TRUTH available. Discerning TRUTH is the responsibility of each reader.