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Interest Rate Hikes Will Not Save Us from Inflation
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Rather than making money harder to get, the U.S. government needs to focus on the other side of the demand vs. supply equation.

In prescribing cures for inflation, economists rely on the diagnosis of Nobel laureate Milton Friedman: inflation is always and everywhere a monetary phenomenon—too much money chasing too few goods. But that equation has three variables: too much money (“demand”) chasing (the “velocity” of spending) too few goods (“supply”). And “orthodox” economists, from Lawrence Summers to the Federal Reserve, seem to be focusing only on the “demand” variable.

The Fed’s prescription is to suppress demand (borrowing and spending) by raising interest rates. Summers, a former U.S. Treasury Secretary who presided over the massive post-2008 bank bailouts, is proposing to reduce demand by raising taxes or raising unemployment rates, reducing disposable income and thus people’s ability to spend. But those rather brutal solutions miss the real problem, just as Summers missed the crisis leading up to the 2008-09 crash. As explained in a November 2021 editorial titled “Too Few Goods – The Simple Explanation for October’s Elevated Inflation Rates,” we don’t actually have too much consumer money chasing available goods:

M2 money supply surged [in 2020] as the Fed pumped out liquidity to replace businesses’ lost sales and households’ lost paychecks. But bank reserves account for nearly half of the cumulative increase since 2020 began, and the vast majority seem to be excess reserves sitting on deposit at Federal Reserve banks and not backing loans. Excluding bank reserves, M2 money supply is now growing more slowly than it did for most of 2015 – 2019, when inflation was mostly below the Fed’s 2% y/y target, much to policymakers’ chagrin. Weak lending also suggests money isn’t doing much “chasing,” a notion underscored by the historically low velocity of money. US personal consumption expenditures—the broadest measure of household spending—have already slowed from a reopening resurgence to rates more akin to the pre-pandemic norm and surveys show many households used stimulus money to repay debt or build savings they may not spend at all. It doesn’t look like there is a mountain of household liquidity waiting to do more chasing from here. [Emphasis added.]

In March 2022, the Federal Reserve tackled inflation with its traditional tools – raising interest rates and tightening the money supply by selling bonds, pulling dollars out of the economy. But not only have prices not gone down since then, they are going up. As observed in a July 15 article on Seeking Alpha titled “Fed-Induced Recession Looms As Rate Fears Roil All Markets”:

On Wednesday, the Consumer Price Index came in at a 9.1% annual rate. The higher-than-expected reading puts the CPI at a new 41-year high.

The biggest contributors to rising consumer prices are the basic necessities of food, fuel, and shelter. As households struggle to make ends meet, they are trimming discretionary spending, burning through savings, and running up credit card balances.

Businesses are also getting squeezed. On Thursday, the Producer Price Index showed wholesale costs rising at a massive 11.3% year-over-year.

When their own costs go up, producers must raise the prices of their products to cover those costs, regardless of demand. Less money competing for their products won’t bring producer costs down. It will just drive the companies out of business, as happened in the Great Depression. The Seeking Alpha article concludes:

… As both businesses and consumers are forced to tighten their belts, a slowdown looms.

And if the Federal Reserve makes another major policy misstep, then a severe recession and financial crisis may also be coming.

Recession is already evident. The stock market has lost a cumulative \$7 trillion in value this year, while the crypto market has lost \$2 trillion since last November. Emerging markets are in even worse straits. According to a July 14 article by Larry McDonald on ZeroHedge, “Emerging and frontier market countries currently owe the IMF over \$100 billion. US central banking policy plus a strong USD is vaporizing this capital as we speak.… A quarter-trillion dollars of distressed debt is threatening to drag the developing world into a historic cascade of defaults.”

Every time the Fed raises rates, borrowing becomes more expensive. That means higher interest costs not only for governments but for borrowers with mortgages, home equity lines of credit, credit cards, student debt and car loans. For both large and small businesses, loans also get pricier.

To be clear, this is not the same sort of inflation that Paul Volcker was taming in 1980 when he raised the Fed funds rate to 20%. McDonald observes, “In 2021, global debt reached a record \$303T, according to the Institute of International Finance .… Volcker was jacking rates into a planet with about \$200T LESS debt.” [Emphasis added]

Volcker was also not dealing with the supply shortages we have today, generated by lockdowns that put more than 100,000 U.S. companies out of business; sanctions and war that cut off global supplies of fuel, food and resources; and farming crises such as that in the Netherlands, generated by overly stringent regulations.

Higher interest rates don’t alleviate cost/push inflation caused by supply crises; they make it worse. Rather than making money harder to get, the government needs to focus on the supply side of the equation, stimulating local production to bring supply levels up. Rather than Volcker’s solution, what we need is that pioneered by Alexander Hamilton, Abraham Lincoln, and Franklin D. Roosevelt, who pulled us out of similar crises with public banking institutions designed to stimulate infrastructure and development.

For foreign models, we can look to the infrastructure-funding central banks of Australia, New Zealand and Canada in the first half of the 20th century; and to China, which salvaged the global economy following the 2008 banking crisis with massive infrastructure and development funded through its state-owned development banks.

China Did It

In the last 40 years, China has exploded from one of the world’s poorest countries to a global economic powerhouse. Among other notable achievements, from 2008 to 2022 it built 23,500 miles of high-speed rail, at a time when U.S. infrastructure projects were stalled for lack of funding. How did China pull this off? Rather than relying on taxpayer funds or foreign debt, it borrowed from its own banks.

China has three massive state-owned infrastructure and development banks – the China Development Bank, the Export-Import Bank of China, and the Agricultural Development Bank of China. Called “policy banks,” they get their liquidity either (a) directly from the People’s Bank of China (PBOC) in the form of “Pledged Supplementary Lending,” or (b) by issuing bonds, which have higher credit ratings than commercial bank bonds and are in demand because they can be used as collateral to borrow from the central bank. China’s policy banks are limited to funding certain specific government policies; and these policies are all productive and public-purpose-driven, unlike the short-term private profit-maximization driving Wall Street banks.

Besides its big state-owned banks, China has an extensive network of local banks, which know their local markets. The PBOC website lists seven tools it can use for adjusting monetary policy, including not just a short-term lending facility like the U.S. Fed’s discount window, but a facility to inject liquidity into banks for medium-term loans, as well as the “pledged supplementary lending” to fund long-term loans from the three policy lenders for specific sectors, including agriculture, small businesses, and shanty town re-development.

Yet all this stimulus has not driven up Chinese prices. In fact consumer prices initially fell in 2008 and have hovered around 2% ever since. [See chart below.]

Prices are creeping up now, as is happening everywhere; but they have reached only 2.5%—far below the 9.7% seen in the U.S. in July.

Our Forebears Did It Too

State-owned infrastructure banks are not unique to China. In the United States, a similar model was initiated by Alexander Hamilton, the first U.S. Treasury Secretary. The “American System” of government-issued money and credit was key both to winning the American Revolutionary War and to transforming the nation from a collection of agrarian colonies to an industrial powerhouse. But after the War, the federal government was \$70 million in debt, including \$44 million from the colonies-turned-states.

Hamilton solved the debt problem with debt-for-equity swaps. Debt instruments were accepted in partial payment for stock in the First U.S. Bank. This capital was then leveraged into credit, issued as the first U.S. currency. Loans were based on the fractional reserve model. Hamilton wrote, “It is a well established fact, that Banks in good credit can circulate a far greater sum than the actual quantum of their capital in Gold & Silver.”

That was also the model of the Bank of England, the financial engine of the colonial oppressors; but there were fundamental differences between the two models. The Bank of the United States (BUS) was designed for public development. The Bank of England (BOE) was intended for private gain. (See Hamilton Versus Wall Street: The Core Principles of the American System of Economics by Nancy Spannaus, and Alexander Hamilton: A Biography by Forrest McDonald.)

The BOE was chartered to fund a national war and was capitalized exclusively by public debt. The government would pay private lenders, who controlled what policies could be funded. Hamilton’s BUS, by contrast, was to be a commercial bank, funding itself by generating credit for infrastructure and development.

Under Hamilton’s system of “Public Credit,” the primary function of the BUS would be to issue credit to the government and private interests for internal improvements and other economic development. Hamilton said a bank’s function was to generate active capital for agriculture and manufactures, increasing the quantity and quality of labor and industry. The BUS would establish a sovereign currency, a banking system, and a source of credit to build the nation, creating productive wealth, not just financial profit.

The BUS was chartered for only 20 years, after which it lapsed. When economic hardships and monetary pressures followed, the Second Bank of the United States was founded in 1816 under President John Quincy Adams, basically on the Hamiltonian model. It funded one of the most intense periods of economic progress in history, investing directly in canals, railroads, roads, and coal and iron enterprises; lending money to states and cities engaged in such projects; and managing credit so that it continually flowed into needed productive activities.

After the Second BUS was shut down, Abraham Lincoln’s government issued Greenbacks (U.S. Notes) directly, funding both the Civil War and extensive infrastructure and development. The National Banking System was also established, under which national banks would be partially capitalized with federal securities.

An International Movement Is Born

The American System and its leaders not only allowed the American colonists to break free of British control but inspired an international movement. Other British colonies revolted, including Australia, New Zealand and Canada; and other countries rebelled against the British imperial free-trade doctrines and developed their own infrastructure and manufacturing, including Germany, Ireland, Russia, Japan, India, Mexico, and South America.

The Commonwealth Bank of Australia (CBA), founded in 1911, followed the Hamiltonian model. It was masterminded by an American named King O’Malley, who called Hamilton “the greatest financial man who ever walked the earth.” The CBA funded major national development and Australia’s participation in World War I, simply with national credit issued by the bank.

In Canada from 1939-74, the government borrowed from its own Bank of Canada, effectively interest-free. Major government projects were funded without increasing the national debt, including aircraft production during and after World War II, education benefits for returning soldiers, family allowances, old age pensions, the Trans-Canada Highway, the St. Lawrence Seaway project, and universal health care for all Canadians.

Meanwhile in the U.S., we got the Federal Reserve – and the worst banking crisis and economic depression ever in 1929-33. Pres. Franklin D. Roosevelt then rebuilt the U.S. economy financed through the Reconstruction Finance Corporation, again funded on the Hamiltonian model. Initially capitalized with \$500 million, from 1932 to 1957 it lent or invested over \$40 billion for infrastructure and development of all kinds; funded the New Deal and World War II; and turned a net profit to the government of \$690 million.

Solving Today’s Price Inflation

That could be done again, assuming the political will. Some pundits predict that the Fed will back off its aggressive interest rate hikes when the carnage from that approach becomes painfully evident, but it seems to be a phase we have to go through to convince policymakers that the Fed’s current tools are not able to curb the price inflation we have today. We need to stimulate local development with a national infrastructure and development bank like China’s; and for that, Congress needs to pass an infrastructure bank bill.

Four such bills are currently before Congress. Only one, however, is capable of generating the nearly \$6 trillion that the American Society of Civil Engineers says is needed over the next decade for U.S. infrastructure investment. This is HR 3339: The National Infrastructure Bank Act of 2021, which would effectively be self-funded on the American System model – a critical feature given that the federal debt is at record levels. The bank would be capitalized with federal debt acquired in debt-for-equity swaps – federal securities for non-voting bank shares paying a 2% dividend. This capital would then be leveraged at 10 to 1 into low-interest loans, essentially at cost. The bank would be anti-inflationary, by bringing supply up to meet demand; would not require new taxes but would rather increase the tax base, by increasing GDP; and would require only a small Congressional outlay for startup costs, which would quickly be repaid. For more information on HR 3339, see the National Infrastructure Bank Coalition website.

This article was first posted on ScheerPost. Ellen Brown is an attorney, chair of the Public Banking Institute, and author of thirteen books including Web of Debt, The Public Bank Solution, and Banking on the People: Democratizing Money in the Digital Age. She also co-hosts a radio program on PRN.FM called “It’s Our Money.” Her 300+ blog articles are posted at EllenBrown.com.

(Republished from Web of Debt by permission of author or representative)
 
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  1. Notsofast says:

    the purpose of the fed raising interest rates has nothing to do with fighting inflation but rather to keep the dollar strong against other currencies. this will aid in the looting of the e.u. and south and central american governments (whose debt is denominated in dollars), and in a last desperate attempt for the vampire squid to latch onto it’s victims.

    • Agree: dogbumbreath
  2. The Fed is nickel and diming it–with a current inflation rate of 10% the interest rate would have to be over 10% to be a real interest rate above zero.

    That would create a federal interest expenditure that exceeded tax revenue–a clue that fiscal policy has passed the ridiculous zone and gone into the ludicrous zone.

    There are no fixes any more–just hard landings and harder landings.

  3. When I encounter a new author discussing a subject I know very little about myself, I try to find out if that author is ‘reliable’. Clicking on the Ellen Brown name link found this:

    https://www.unz.com/article/natures-own-fuel-could-save-us-from-the-greenhouse-effect-and-electric-grid-failure/

    That’s a topic I’m not totally ignorant about, and I quickly recognized author Brown was writing pure nonsense. On that account I can hardly trust what she is saying about “inflation”.

    • Thanks: Emslander
    • Replies: @David Homer
  4. The very idea that money must be borrowed into existence is perverse. Modern governments monopolised the creation of currency, and promptly made it fiat – legally forced to use.

    Imagine you are the king of a country, about 3000 years ago. And your economy has no money or currency; people use ad hoc units to evaluate – this is worth so many cows, that is worth so many bags of rice, etc.

    [MORE]

    You collect your taxes in kind – so much percentage of the produce; and those who do not produce anything, but only render some service, you tax them in units of some cheap metal – so many grams of iron, etc.

    Your major item of expenditure, no, only item of expenditure let us say, is paying your 1000 soldiers, each with 10 bags of rice every year. Your officers collect the rice bags from the farmers, store them in warehouses, transport them to the barracks and distribute among the soldiers. Evidently you can do it only after the harvest is over. Therefore your major tax is 1000 x 10 = 10,000 bags of rice; the small amount of taxes paid by others in iron ingots is used for the palace expenditure.

    One year a smart ass from the London School of Economics comes to you. “You are wasting your time, energy and money in collecting, storing and transporting these rice bags; let me show you how you can do it easily, and at a profit”. Your curiosity got better over your natural suspicion about anyone from LSE, and you let him a free hand.

    First, this fellow uses your savings, buys silver, and mints them into 100,000 coins; then he announces that henceforth taxes must be paid only in these coins; then he sends assessors all over the country, who fix the taxes to be paid in terms of coins; for easier calculations, lets say 10 silver coins = 1 bag of rice. Then he distributes these 100,000 coins to the 1000 soldiers, @100 coins per head; then he sits back and relaxes in his own perverse ways.

    Comes harvest; farmers have harvested the rice, but the tax collector demands taxes in coins. Now where do we get coins? Farmers sell their produce to soldiers, get coins, and pay their taxes. If no coin is lost in the process, then when all the taxes have been collected, all the 100,000 coins would have come back to your treasury, and your soldiers would have bought their usual quota of rice. Without getting out of your armchair, you have transferred 100,000 worth of rice bags to your soldiers, at no cost to yourself – no cost of collection, storing and transporting.

    Here first you paid the salary – distributed the coins – to your soldiers; then you collected the taxes; this process completes a cycle, and coins return back to you. This model, whereby government creates currency when it spends, and extinguishes it – takes it out of circulation – when it collects taxes, is called Chartelism.

    Next year, you pay the salary of your soldiers, but there is a bumper harvest, and your farmers produced an extra 10%, and you hike your tax demand by 10%. Now, if you do not introduce new coins into circulation, then same number of coins as last year – 100, 000 – will chase more number of rice bags; that will make the rice bags cheaper; your soldiers are happy because they got more rice for the same coins, but your farmers are very unhappy because even though they produced 10% more, they got the same payment; worse, there is no coin around to pay your 10% tax hike. They agitate.

    Your LSE guy gets out of his bed, mints another 10,000 coins, gives them to you, and goes back to his frolicking. Now you don’t want to spend these coins as salary to the soldiers; you call your contractor, Binladin Company, and command him to build a palace for you. He takes these new coins to the market, buys material and labour for the palace, and these coins eventually reaches the farmers, and the cycle is completed.

    Now, at one stroke, you have converted the surplus produce of your economy this year into a beautiful palace, without raising any new taxes. This is the hidden lesson of Chartelism: newly created currency absorbs the new surplus in the economy, no taxation needed.

    Now this model can be extended to cover all the monetary phenomena. It shows us that the new currency absorbs the new surplus; if there is no surplus, then there will be a rise in general prices – inflation; and the purchasing power of the currency goes down; and in an inflationary economy, those who has access to this new currency first, get full value for the currency, and those who get the new currency at the end of the chain, get diluted value; this is Cantillon Effect.

    Now understand that all the trillions created by the FED out of the thin air silently absorb the surplus, if any, in the real economy. And unlike the model we constructed, where the surplus is converted into a beautiful palace, in our world, the surplus is used only to buy existing assets. That is, the surplus ends up not in the hands of producers – farmers or manufacturers – but in the hands of asset holders. And they get the full value of this currency before it falls down in value. In other words, the rich becomes richer.

    No go figure why Chartelism is discouraged in our classrooms.

    • Thanks: Truth Vigilante
    • Replies: @Jon Chance
  5. Anon[156] • Disclaimer says:

    What a surprise, another foreign disinfo agent trying to push disastrous economic policies on the USA. “Go for infrastructure, Cbina did it!!!” And wasted a ton of money for nothing.

    If you’re pushing supply side economics for the USA you’re either Chinese or Russian paid, or brainwashed. Pick one, because you definitely don’t have any dignity. Speaking directly to you, Ellen Brown.

    • Replies: @Abbybwood
  6. Anonymous[331] • Disclaimer says:

    one commentator stated the USA has given \$24 Billion to support the government of Ukraine in its bid against Russia, I do not know the number. Whatever is the number it is significant and probably high enough to be a factor in accounting for the source of inflation. .
    Then there is sanctions against Russia with compliance made mandatory to NATO member nations. In other words, no one can buy cheap Russia oil or gas any more. NordStream I is nearly shut down because of sanctions and Nordstream II has been denied a permit by Germany to operate. So there is little to no gas flowing from Russia to Europe through Germany, by order of the sanctions imposed against Russia for its special military operation under way in Ukraine. This restriction on gas has pushed the price of things through the roof.. Less and less oil, increases the price of oil that is sold.. I think I disagree with Ellen Brown, because I believe more and more currency increases (inflates the market) price of goods, especially food and necessary household goods as having more dollars to buy the same quantity of goods, means the willing buyers will bid the price up according to the dollars the bidder has available. There are too many dollars available to buy the same goods. Reduce the dollars available, will increase seller competition for the fewer buyer dollars, so sellers will lower prices I believe.

    Today I heard something I would like confirmation on.. I heard three western global corporations directly own or indirectly control 66% of the farm land in Ukraine. Is that right? Can anyone confirm that?

    But inflation is not the problem, the problem is the entire economy is built on a market that is is inflated by monopoly powers. The price of goods and services are increased when the private for profit providers of goods and services have monopoly powers. That is, only those private providers with monopoly power can produce, only those private corporations with monopoly power can sell, and in a monopoly controlled market, buyers can only find for sale goods and services from those providers who have monopoly power over the raw materials, over tools, plants and hardware and software that are used in the construction or production of the goods and services? So those with monopoly powers raise their prices, to ensure profits, as no one is allowed to compete with those who have monopoly powers(intangible assets) . Monopoly means they can do as they please about producing goods and about pricing the goods they produce.

    What are monopoly powers, they copyrights to methods, instructions, know how and software, contracts with governments, deeds to real estate, patents to inventions and methods of production and equipment used in production. These monopoly powers are invented by government from hot thin air. That is governments pass laws, that make different kinds of monopoly powers. and private interest use the monopoly powers to make money.
    There is the copyright law, there is the patent law, their is the trademark law, and so on. Each one of the laws creates from nothing monopoly power (exclusive use and exclusive rights to produce and sell bestowed by law into the ownership of private parties (usually fictional entities like corporations, partnerships and the like)). Without competition those private producers and sellers with monopoly power tend to raise the price of goods and services they offer to consumers in markets.

    to reduce the inflation, it is necessary only to revoke the laws that made and bestowed on private persons monopoly powers. Things like copyright law, trademark laws, deeds real estate not personally used by the owner, and trademark laws need to be removed from the books; in order to cause prices of most goods and services and foods to fall.
    These are my analysis to explain the current inflation. I agree with the fed, raising interest will tend to slow the domestic economy but there are many things besides interest rate to be considered. IANAE.

    • Replies: @Munknorr
  7. The core philosophy of the globalist is that the solution to any crisis, regardless of its nature, is to expand the power of the central government. As that genius of political economy, Rahm Emanuel, once said “never let a crisis go to waste.”

    So the solution to our current inflation crisis is to expand the FedGov? Clearly wrong. And what will this new Infrastructure Bank do? Create more debt in a world that is already drowning in it. That’s the ticket. The house is on fire and the good counselor wants to throw more gas on it.

    And the good counselor started out so well.

    Milton Friedman: inflation is always and everywhere a monetary phenomenon—too much money chasing too few goods. But that equation has three variables: … “orthodox” economists, …seem to be focusing only on the “demand” variable.

    Why does the Federal Reserve focus only on interest rates? Because they can’t do anything about velocity nor supply of goods. But, oh boy, can our Ruling Class oppressors do plenty about the other two. The problem is the Ruling Class is making the problem worse. Just two examples to make my point.

    Example 1 Velocity: Russian sanctions devalue the USD, driving up interest rates and inflation. The Ruling Class decided that closing Russia out of the SWIFT system and stealing their reserves of USD would bring that country to its knees in retaliation for protecting itself from Western aggression in the Donbas. The RUB is now stronger against the USD than it was before these ill-considered sanctions, but worse than that, the sanctions have triggered a nascent and growing trend in the Global South and Global East toward moving away from the USD as both bank reserves and transactional currency. A big reason that the Fed has been able to issue USD so profligately in the past is that foreigners were willing to hold them. The rest of the world has seen the anti-Russian sanctions and realized that if the US can do that to Russia, they can do that to them and they are dumping the dollar. And this devalues the USD, driving up interest rates and inflation.

    Example 2 Supply of Goods: Green Masochism reduces the supplies or energy and food. Replacing nuclear and coal with windmills and solar panels, doesn’t just cause environmental damage and blight natural landscapes. It replaces energy dense sources with fictional ones. Energy supplies are reduced and since energy goes into everything, the supplies of everything else we consume are reduced, including food. One of the reasons that the planet now supports 7 billion people is the Haber-Bosch process for synthesizing ammonia which goes into fertilizer. This process requires high pressures and temperatures which require usually natural gas. A quote from science direct.com.

    The Haber–Bosch process for synthetic ammonia production has been one of the most impactful inventions in human history because it made bread from air, thereby facilitating a dramatic increase in the world population.

    Conclusion: The Ruling Class increases the velocity of money by causing the rest of the world to dump USD and reduces the supply of goods by replacing real energy sources with fictional ones. Now you see why the Fed has to increase interest rates. And creating more credit money via a new government bank is at least consistent with the other two Ruling Class initiatives in that it would tend to aggravate the problem.

    Here’s my modest proposal. Anybody who has gotten their Juris Doctor should suffer a lifetime ban from participation in public policy.

    • Agree: RoatanBill
  8. Jon Chance says: • Website

    What is the purpose of “banks”?

    If we possessed legitimate governments with genuine public treasuries, all money (like United States Notes) would be issued by public treasuries, and all this money would be fully backed by sovereign national territory (Location Value Rent).

    Every adult citizen would receive our full National Citizens Dividend (over \$30,000/year per citizen), and “inflation” (currency devaluation) would not exist.

    [MORE]

    “It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”

    – Henry Ford

    “If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks will deprive the people of all property until their children wake up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.”

    – Thomas Jefferson in the debate over the Re-charter of the Bank Bill (1809)

    “I believe that banking institutions are more dangerous to our liberties than standing armies.”

    – Thomas Jefferson

    “History records that the money-changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and its issuance.”

    – James Madison

    “The Government should create, issue, and circulate all the currency and credits needed to satisfy the spending power of the Government and the buying power of consumers. By the adoption of these principles, the taxpayers will be saved immense sums of interest. Money will cease to be master and become the servant of humanity.”

    – Abraham Lincoln

    http://www.themoneymasters.com/the-money-masters/famous-quotations-on-banking

    “The study of money, above all other fields in economics, is one in which complexity is used to disguise truth or to evade truth, not to reveal it. The process by which money is created is so simple that the mind is repelled. Where something so important is involved, a deeper mystery seems only decent.”

    – John Kenneth Galbraith

    “But here is the point: If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good makes the bill good, also. It is absurd to say our nation can issue bonds and cannot issue currency. Both are promises to pay, but one fattens the usurer and the other helps the people.”

    – Thomas Edison

    “To put it bluntly, Jews are stealing over \$30,000/year per citizen from our National Citizens Dividend. Anyone can do the math. Genuine money — such as United States Notes — is simply a representation of sovereign national territory (Location Value Rent). No ‘social services’ need be provided by our governments because all citizens are millionaires. Socialism is the billionaires’ best friend. It was invented to save their ‘bank’ corporations.”

    – Jon Chance

    The Pyramid of Power

    Who Rules Today’s “Governments”?

    1 – Bank of England (1694-today) https://edu.bankofengland.co.uk/about/history

    2 – Rothschild (1769-today) https://www.rothschildarchive.org/exhibitions/timeline

    3 – Brotherhood of the Covenant (1843-today) https://www.bnaibrith.org/175th.html

    4 – WZO (1897-today) https://www.wzo.org.il

    5 – Federal Reserve Bank (1913-today) https://www.newyorkfed.org/aboutthefed/history_article.html

    6 – CFR (1921-today) https://www.cfr.org/book/continuing-inquiry

    7 – CCP (1921-today) http://english.www.gov.cn/19thcpccongress

    8 – BIS (1930-today) https://www.bis.org/about/history.htm

    9 – World Bank Group (1944-today) https://www.worldbank.org/en/about/history

    10 – UN (1945-today) https://www.un.org/en/about-un

    11 – ISIS (1948-today) https://www.mossad.gov.il/eng/history/Pages/default.aspx

    12 – NATO (1949-today) https://www.nato.int/nato-welcome/index.html

    13 – Bilderberg Group (1954-today) https://www.bilderbergmeetings.org/background/brief-history

    14 – EU (1967-today) https://europarlamentti.info/en/European-union/history

    15 – Trilateral Commission (1973-today) https://trilateral.org/page/3/about-trilateral

    16 – ECB (1988-today) https://www.ecb.europa.eu/ecb/history/html/index.en.html

    17 – AIIB (2015-today) https://www.aiib.org/en/about-aiib/index.html

    Welcome to the COVID WORLD ORDER.

    https://PlandemicSeries.com

    Which way out?

    First US Constitution:

    “All charges of war, and all other expenses that shall be incurred for the common defense or general welfare, and allowed by the United States in Congress assembled, shall be defrayed out of a common treasury, which shall be supplied by the several States in proportion to the value of all land within each State….”

    https://avalon.law.yale.edu/18th_century/artconf.asp#art8

    • Replies: @RoatanBill
  9. anon[254] • Disclaimer says:

    This isn’t about interest rates. It is about state-owned banks. A good idea whose time is come.

    • Replies: @Ellen Brown
  10. Jon Chance says: • Website
    @Old Brown Fool

    Why bother with coinage?

    Why bother with “banks”?

    Why impose any taxation?

    Why not issue all money (like United States Notes) from public treasuries as our National Citizens Dividend fully backed by sovereign national territory (Location Value Rent)?

    Every month, public treasuries will collect Location Value Rent (not tax), spend a minimal amount (less than ten percent) for government costs, and distribute the remaining ninety percent or more (>90%) as our National Citizens Dividend.

    Zero taxation.

    Zero inflation.

    Zero poverty.

    Zero “banks”.

    Thinking is the dismissal of irrelevancies.

    First US Constitution:

    https://avalon.law.yale.edu/18th_century/artconf.asp#art8

    • Replies: @Old Brown Fool
  11. Jim H says:

    ‘The “American System” of government-issued money and credit …’ — Ellen Brown

    Ellen Brown doesn’t cite the most basic, incontrovertible fact about inflation: since the Federal Reserve started operations, it has destroyed over 95% of the dollar’s former purchasing power.

    Government-issued currency has been so disastrous, so dysfunctional, that cryptocurrency was invented to impose hard limits on issuance that government refuses to impose on itself [cf. ‘quantitative easing’].

    Likewise, government-issued credit reflects the passions of the legacy Democrat and Republican parties. They ‘compromise’ by funding each other’s pet projects, whether it’s \$7,500 subsidies of costly EVs for rich toffs (Manchin’s latest bill) or showering \$60 billion worth of arms on the Ukies.

    Government, having no profit motive or discipline, cannot invest. Despite diligently following its Five Year Plans, the former Soviet Union went bankrupt after ‘investing’ in too many value subtraction enterprises, producing uncompetitive, substandard products that nobody wanted.

    In the 1960s, the US fedgov thought it a brilliant idea to ‘invest’ in Soviet-style high-rise public housing projects. These became such loci of blight and dysfunction that many have since been demolished. That’s ‘government investment’ in a nutshell.

    Ellen Brown is a true believer in the seductive myth of ‘good government.’ No amount of evidence can ever dissuade her from advocating the nationalization of banking and credit, and placing it in the thoughtful hands of our great friends and benefactors, the Democrat and Republican parties.

    That’s sarcasm, by the way.

    • Thanks: Bill Jones
    • Replies: @Old Brown Fool
  12. MLK says:

    I won’t belabor it because no one listens. But here is some food for thought in short form.

    The Fed is fighting (and winning) a turf war. It and its members possess the greatest asset on the planet: the US dollar (USD). A literal license to print money. In fact, digital conjuring means saving the 0.15 cents it costs to create a \$100 bill.

    The USG is the Reserve for the world. It currently has no peer as currency, providing price discovery, and as a Safe Haven.

    For our purposes, let’s stick to recent history. The Fed’s dominion has been challenged since 9/11. A sanctions regime under the rubric of the GWOT developed into a fully politicized assault on The Fed’s authority under Obama. All bets were off once the illegitimate Biden regime was installed.

    It initiated a full assault on The Fed and the USD through Treasury/DOJ sanctions on individuals, entities, and in February Russia’s sovereign assets. This is to say nothing of the attempt to install that lady communist on the Fed board.

    Believe me, I am no fan of the Fed, but in this case it is on the side of the angels in fighting back against the Davos cult and its Build Back Better plan to drive the West back to the 11th C.

    The attempt to destroy the Supreme Court was visible whereas the one on the Fed was not. Thus it’s a good analogue to assess the state of play. In 2021, The Court issued an unusual number of unanimous rulings. After being successfully intimidated out of hearing any election (steal) cases, it assiduously avoided adding any fuel to the Court Packing fire. With the danger easing, this term the Court is delivering payback to the Administrative State.

    Of course the Fed is engaged in a rate raising conceit. Attacking regulatory supply side driven inflation (e.g. Green New Deal; Sanctions against Russia) by reducing demand. That’s the Fed refusing to play ball, let alone lay down to institutional infiltration and destruction.

    With inflation raging at 40 year plus highs, and no end in sight because it’s by design to quadruple energy prices and this is what they’ve wrought with just the double completed, the Fed has the excuse to keep raising rates.

    Powell told Biden’s handlers what time it was at this meeting he had with Biden. He would continue to raise rates in the face of raging inflation created by design by the administration. This caused the administration to abort its plan to Soviet-style change the data to avoid the recession designation. They had to go to the current half-assed back up plan, changing the definition of recession like they did with vaccines, and blaming the Fed for it.

    • Replies: @RoatanBill
    , @Ellen Brown
  13. Emslander says:

    This woman is what they now call an economist, like Michael Hudson. Very sad, indeed.

    Everyone pretending to know something about economics ought to be forced to read Thomas Sowell’s book on basic economics. The first chapter explains pricing in pure classic terms. I bought one for each of my children so they would never go around saying things like this lady writes, above.

    Demand and Supply are represented by two curves on a graph for each product in an economy. Price is ALWAYS set at the point where the demand curve and the supply curve, when laid over each other on the same chart, cross. Increased money in the system, whether the money is represented by gold or by S&H stamps, merely pushes the crossing point further out on the money axis, the bottom axis. The vertical axis is the amount of a product sold.

    Talking about “increasing supply” or “decreasing demand” are entirely irrelevant. Those are factors determined by the flexibility of the curves for each product.

    Miss Brown seems to think that more money created by government debt will somehow bring down inflation. She makes her type of debt (productive lending) sound like it’s a better kind of government spending and maybe it is, but it still increases money in the system, which makes for more inflation.

    When all the money in the system is based on debt, higher interest rates will decrease debt, either by making it less attractive to borrowers or by causing defaults. When the defaults begin, they will roll down the line like a bull whip being snapped. Money in the system will decrease by multiples.

    Deflation is what the great depression was all about and that was brought on by defaults in every sector of the economy that had succumbed to FED policies.

    Hamilton’s banks caused much of the same whipsaw effect in the 1840’s as did Lincolns greenbacks in the 1870’s. No one likes to talk about those depressions, but they took place because of the policies heralded by Ms. Brown in this article.

    Allow interest rates to go to the level that they represent actual risk of lending and the system will correct itself within six months.

    • Thanks: Bill Jones
  14. John Quincey Adams did not become President of the US until 1825….

  15. @Jon Chance

    You’re asking for money from nothing which is the problem the world is facing now. It does not solve the problem of how this magic “money” is spent into the economy. It is gov’t that will spend that bullshit currency to enrich itself and its hangers on. This is a slight variation to the existing system that just cuts out the middleman central bank.

    Why is it that anyone can invent money without labor? Why is it that some politician, who most people agree is lower than whale shit in morals, gets to spend what doesn’t exist? How is this sane?

    When a miner digs gold and silver out of the ground, his labor gives value to the metals. He converted food and muscle power into metal. That metal has intrinsic value due to labor. That’s why gold and silver have been money for thousands of years and any attempt to create it out of nothing inevitably fails because the entire endeavor was a lie that was forced on to the population at the point of a gun.

    • Replies: @DevilAdvocate
  16. @Zachary Smith

    I only know a moderate amount about inflation but what she is saying is ‘pure nonsense’ as you call it. Her article is mainly about how big government needs to do something different in the way they control the economy. The real solution is for the government to stop big spending, stop passing laws to favor large corporations, stop climate nonsense, and stop interfering in peoples lives. The Ellen Browns of this world will never ask for less government and more freedom. She has no solution to any problem only more of the same iron fist in your face.

  17. Ellen Brown writes:

    Rather than Volcker’s solution, what we need is that pioneered by Alexander Hamilton, Abraham Lincoln, and Franklin D. Roosevelt, who pulled us out of similar crises with public banking institutions designed to stimulate infrastructure and development.

    What ? FDR pulled us out of similar crises ? You have to be joking.

    Admittedly, via massive government intervention and spending on boondoggles, Herbert Hoover turned a garden variety recession into a severe one.
    But the fact remains that FDR did everything that Hoover did, with added compound interest and turned that severe recession into the prolonged Great Depression – that America did not extricate itself from until AFTER WWII.

    And what’s with using Abraham Lincoln as a role model for what should be done ?

    By your own admission Ms Brown :

    After the Second BUS was shut down, Abraham Lincoln’s government issued Greenbacks (U.S. Notes) directly, funding both the Civil War and extensive infrastructure and development.

    I don’t recall any infrastructure of note being built during the ‘War of Northern Aggression’ (which is sometimes wrongly termed as the ‘American Civil War’).

    Let’s face it, Lincoln’s government issued Greenbacks funded the murderous rampages of the Union Army, the wanton destruction of innocent civilians, their cities and towns in the Confederate states.

    IN SUMMARY: Absent Lincoln being able to issue Greenbacks, he would have been incapable of waging that pointless war.
    In that case, he would have SUED FOR PEACE and countless hundreds of thousands of lives would’ve been spared.

    Ms Brown also writes:

    The Commonwealth Bank of Australia (CBA), founded in 1911, followed the Hamiltonian model The CBA funded major national development and Australia’s participation in World War I, simply with national credit issued by the bank.

    Once again, absent the funding from the CBA, Australia would not have been able to fund a goodly portion of its participation in this pointless war on behalf of the Angl0-Zionist empire.

    As an Australian myself, I found it particularly egregious that Australia was involved in this war when we didn’t have a dog in the race.

    Worse still, we allied ourselves with the BAD GUYS.

    Anyone with half a brain that has studied WWI and the circumstances that led to it will know that the war was orchestrated to bring down a potential rival that threatened British hegemony.
    The Germans did everything humanly possible to avoid said conflict.

    There is a reason that Kaiser Wilhelm II was called ‘The Peacemaker’ prior to the commencement of hostilities – although you would never know that if you’d been indoctrinated from the torrent of Zio dictated propaganda in the Zio owned publishing industry that’s been written about the Kaiser over these last 100 years or so.

    BOTTOM LINE: There is ONLY one solution for the U.S to avoid the coming inflationary depression.
    And that is to do a ‘Paul Volcker’ and hike the Fed Funds rate to over 20 %.

    Yes, it will cause a massive recession and many businesses (zombie businesses that should never have started in the first place because they lacked a viable business model and would never have been able to qualify for a loan if a market rate of interest existed), and individuals (who recklessly overleveraged themselves) will go bust and there will be colossal hardship.
    But when you’re a heroin addict the ONLY solution is rehab and the detox period will be very difficult.
    Remember, the detox is the REMEDY for a full recovery. It was the years of getting high on heroin that was what made you sick.

    Similarly, the coming recession that the 20% or more Fed Funds Rate will bring is the CURE.
    It is the detox that economy badly needs an is well overdue.
    The reckless fiscal and monetary policies from successive governments in the past are WHAT MADE AMERICA SICK.
    The sky high interest rates will ultimately MAKE AMERICA HEALTHY AGAIN.

    Lastly, the hare-brained suggestion from Ms Brown that an ‘Infrastructure Bank’ will be the cure-all that returns America to prosperity is something that only an economically illiterate socialist would make.

    Just think about it. WHO would be running this Infrastructure Bank ?

    Why of course it would be incompetent bureaucrats and cronies of the government of the day.
    ie: people that couldn’t run a profitable Fish & Chips shop (or any viable commercial venture in their entire lives), will be entrusted in picking winners and losers in projects that will run into the hundreds of billions or even trillions in aggregate.

    Said expenditure will INVARIABLY be squandered as ‘career academics’ that have NO REAL WORLD PRIVATE SECTOR EXPERIENCE invest in things like Green Energy boondoggles that have no chance of being commercially viable.

    In the words of the brilliant Bill Bonner:

    When an industry is only profitable with government backing, it means that the industry uses resources – labour, energy, raw materials – and turns them into finished products that are worth less than the inputs required to make them.
    The more of these zombie industries the government supports, the poorer the society becomes.

    Ans so it proved to be under FDR’s New Deal as wealth was squandered on one unproductive venture after another.

    • Agree: Bill Jones, Mark G.
    • Thanks: Joe Levantine, Emslander
    • Replies: @Si1ver1ock
    , @Joe Levantine
  18. At least part of the inflation we have now is what you might call Claw-back Inflation.

    Let’s take Saudi Arabia for example, when they shut down the world economy, it left a big hole in the Saudi budget. (Remember when oil went to minus \$25?) After restarting the world economy, the Saudis now need / want to recoup their Shutdown losses.

    They recoup their losses by jacking prices up higher than before the shutdown and keeping them there for a period of time, until the hole in their budget is filled (and maybe a little extra for their trouble.) Other businesses do the same, Hence the rise in prices.

    So, various businesses that are able, are passing on the cost of The Shutdown. You could call this Pass Through Inflation or Pass On Inflation.

    One interesting thing here, is that, this is unique. As far as I know, no one has ever shut down the world economy for an extended period of time and then restarted it. Economists should look closely. There may be other new phenomena to be discovered in this singular event.

    That said, Ms. Brown is on the right track as usual. The American System of Political Economy as practiced by Hamilton has proven itself time and again.

  19. The zionist privately owned FED is the primary cause of the inflation that we are having , the FED caused this with their policy of money creation and the dedicated destruction of the dollar aka federal reserve notes and raising interest rates to supposedly fight inflation is like pouring gasoline on a fire to put it out, this is the destruction of the American way of life and the American people.

    The FED is unconstitutional and is a communist tool to destroy America, it is 1 of the 10 planks of the communist manifesto and should be abolished.

    • Agree: Thim
  20. @MLK

    I won’t belabor it because no one listens.

    That’s because you make no sense.

    • Replies: @MLK
  21. @Truth Vigilante

    Admittedly, via massive government intervention and spending on boondoggles, Herbert Hoover turned a garden variety recession into a severe one

    This is not the history I’ve read. The Great Depression was a massive world-wide deflationary spiral. Herbert Hoover was just pissing into a hurricane. A hurricane that shook the world.

    Also, Abraham Lincoln whatever is other faults, preserved the Union and emancipated the slaves.

    The purpose of government is not the same a merchant selling Fish & Chips. It’s purpose is to bind the country together. Like it says here:

    We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

    America is super state, a nonpareil among the nations of the world.

    People like Hamilton, Lincoln and FDR made it so.

    • Replies: @Jim H
  22. The rate hikes works.

    But not with 28 trillions of debt. USA cannot afford 20% rate on 28 trillions for a year.

    It worked in the 70s because the national debt was so low.

    Simple.

    This is also the case with Japan, with any other country with huge national debt.

    • Agree: Agent76
  23. MLK says:
    @RoatanBill

    Maybe so. What are you struggling to understand?

    • Replies: @RoatanBill
  24. nsa says:

    This article is just nonsense. The hysterical reaction to the covid wu-wu resulted in a 2 trillion dollar GDP shortfall. So the PTBs created 6 trillion dollars of fiat helicopter money. Surprise, surprise….the result was massive argentina style inflation.

  25. @Emslander

    You wrote:

    This woman is what they now call an economist, like Michael Hudson. Very sad, indeed.

    Everyone pretending to know something about economics ought to be forced to read Thomas Sowell’s book on basic economics.

    AND ….

    Allow interest rates to go to the level that they represent actual risk of lending and the system will correct itself within six months.

    These are just two pearls of wisdom among many I could have highlighted from your comment.
    Superb stuff.

    • Thanks: Emslander
  26. @Astuteobservor II

    But not with 28 trillions of debt. USA cannot afford 20% rate on 28 trillions for a year.

    Agreed – it can’t afford it.

    So what happens when an entity cannot meet its obligations ?

    Of course it is has NO other option than to do the honest thing. ie: default or come to an arrangement with it’s creditors where it agrees to pay say 20 cents on the dollar.

  27. @Notsofast

    Only abolition of the Fed will abolish inflation, since the Fed is the creation engine of inflation.

    https://www.lewrockwell.com/?s=gary+north+ellen+brown

    • Agree: Robert Dolan, Notsofast
    • Thanks: Mark G.
  28. Agent76 says:

    Feb 18, 2021 Global debt soars to 356% of GDP

    The world’s debt-to-GDP ratio rose to 356% in 2020, a new report from the Institute of International Finance finds, up 35 percentage points from where it stood in 2019, as countries saw their economies shrink and issued an ocean of debt to stay afloat.

    https://www.axios.com/2021/02/18/global-debt-gdp

    June 10, 2022 Consumer Costs Jump 8.6% In May, Driven By Record Gas Prices

    According to the U.S. Department of Labor, consumer prices climbed 8.6% in May over the same period last year, the largest increase since 1981. From April to May, costs jumped 1%, a sharp increase over the 0.3% spike from March to April.

    https://heartlanddailynews.com/2022/06/consumer-costs-jump-8-6-in-may-driven-by-record-gas-prices/

  29. @Si1ver1ock

    Comments like this from Sliver-Lock show he’s absolutely clueless:

    That said, Ms. Brown is on the right track as usual. The American System of Political Economy as practiced by Hamilton has proven itself time and again.

    and ….

    America is super state, a nonpareil among the nations of the world.

    People like Hamilton, Lincoln and FDR made it so.

    .

    Let me rephrase the last bit to more accurately reflect the degradation America is exhibiting:

    People like Hamilton, FDR and Lincoln have made the U.S a Socialist Shit-hole Surveillance State a nonpareil.

    As for the first part, the American System of Political Economy (after the formation of the ZOG owned Federal Reserve at which point the U.S stopped being a bastion of Capitalism), has proven itself time and again that it can exponentially increase the number of destitute and homeless in those tent cities that are springing up everywhere and send any surplus to live under freeway overpasses.

    Job well done ‘American System of Political Economy’.

    • Agree: Joe Levantine
  30. @Jon Chance

    I gave a simple model to show that new surplus in the economy needs new currency (not money); and new currency created silently redirects that new surplus, to wherever the hands holding the new money direct it to (if the king instead gave the newly minted coins to another contractor to celebrate the birthday of his favourite concubine, that surplus is spent on celebrations, right?). It does not mean I endorse it. Generally, fiat currencies are vulnerable to a lot of manipulations, as we have seen in this half a century since 1971. However, given the current scenario, it is very difficult to get the governments to give up their stupid idea of borrowing currency into existence. Even if we wean them away, they will jump at its country cousin, MMT – where the government prints new currency into existence (it at least spares the population from paying perpetual interest). What we need is a currency that cannot be manipulated by the governments, and generally, gold served that purpose better than most other things. But even gold standard is vulnerable to fractional banking.

    As for your idea of collecting surplus value of the land, it has one major drawback, namely, land and real estate should pay enough income to meet the tax demanded, and usually they do not. Let us take a concrete example; suppose I buy a house in New York State for \$ 1 million; and after one year, let us say the value has increased to \$1.1 million; now the surplus is \$100k; and the government taxes a portion of it, let us say 10% – \$10,000; that house should give me this much income, only then I can meet the tax demand. Else, the only way I can pay the tax is by selling the house. I can rent it out, and earn this money, of course, but then I should have another house to live in; if this is the only house I have, I cannot earn any income out of it, and I will be forced to sell it to pay the taxes. So, if this proposal is enacted, all those people who have a valuable real estate but no commensurate income (retirees, widows, minor children, etc) have to only sell it off and move out. Real estate will become the monopoly of only those who can afford to meet the taxation – meaning someone with a lot of income.

    • Replies: @Jon Chance
  31. @Jim H

    The only time the American Government issued some currency without backing – fiat – was the greenbacks issued during the Civil War; by 1878, they were backed by gold, and thus became “sound money”; they did not fall in value till 1913 – they held the same value of \$20 for an ounce of gold for these 35 years; so, all the destruction in the value of Dollar since 1913 is solely due to the debt-based currency, and not due to any government-issued currency. That debt-currency was created by the FED, and I doubt if the American Constitution permits it at all.

    • Replies: @Jim H
  32. TG says:

    And don’t forget demand. By opening the borders to unlimited third-world immigration, the massive increase in population is massively feeling demand – but of course, while dumping more people into the economy guarantees an increase in demand, it does not GUARANTEE an increase in supply. (Example A: India. Example B: Pakistan. etc.etc.).

    Jamming in more people, crippling supply, and now crushing wages with high interest rates to “fight inflation.” This is the ruling class declaring all-out war on the working class.

  33. “ The CBA funded major national development and Australia’s participation in World War I, simply with national credit issued by the bank.”

    And so did the Federal Reserve with respect to financing American entry in WWI and all other wars.

    What Miss Brown advocates with respect t to lending to boost the supply side of the equation has already been advocated by the brilliant German economist Richard Werner. Werner trashed the concept of the Phillips Curve by proving that inflation is not necessarily inversely correlated with employment if the banking loans are used for productive investment. In fact as long as productivity grows more than the aggregate debt, prices should fall notwithstanding the lending rate.

    Where I disagree with Miss Brown is about the means to of achieving the lofty goal of boosting productivity. Miss Brown argues for the Hamiltonian banking which is bound to create money out of thin air. Money creation can be through commercial banks using the fractional lending system to expand the money supply way beyond the total of the bank capital and the sum of its deposits, or through central banking monetizing credit instruments such as treasury bills, or through capitalization by debt converted into equity. The problem with this approach is that it will only increase the severity of the business cycle by massively expanding the money supply to a point where even if the banking credit finances productive investments, the malinvestment will eventually materialize into excess capacity something the Japanese did in the eighties with the excessive expansion of their industrial capacity. The solution is to simply leave market forces settle the rate of interest through supply and demand or to tie the money supply to the rate of growth in productivity or to a tangible asset like gold or silver or a basket of commodities that are not subject to be created at the whims of central bankers and their political accessories that are the primary cause behind the crime of creating the worst debt bubble by hiding behind pseudo Keynesianism.

    If it weren’t for the role of central banking, wars like the Vietnam war would not be possible for the only way to finance them would be for governments to increase taxes at the risk of creating recessions.

    The idea of an infrastructure or development banks is good as long as it is run by individuals who are totally disconnected from the government. These banks can finance projects and recoup their investment through Build Operate Transfer, and transfer should be to a party other than the corrupt governments.

    Andrew Jackson’s epitaph “ I killed The Bank” could have been the salvation of the US and world economy had it not been erased into the memory hole of history. Fractional banking and central banking are the root cause of the financial hydra that has allowed most governments to spend beyond their capacity and societies to live beyond their means by creating a debt bubble that can be solved either by outright default or by stealthy inflation or by the worst of them all “ you will own nothing but you will be happy” of the illustrious Claus Schwab.

  34. Jim H says:
    @Si1ver1ock

    ‘America is super state, a nonpareil among the nations of the world.

    People like Hamilton, Lincoln and FDR made it so.’ — Si1ver1ock

    US-fuckin-A!

    That’s why we’re whippin’ the Russians’ asses in Ukraine, and the pathetic little bitches are desperately begging us to stop.

    Oh, wait …

    • Replies: @Si1ver1ock
    , @Si1ver1ock
  35. @MLK

    You have created a word salad that has no logical thread. I’ll take just the top two paragraphs as an example of where you make no sense.

    The Fed is fighting (and winning) a turf war. It and its members possess the greatest asset on the planet: the US dollar (USD). A literal license to print money.

    The Fed is in the process of fighting inflation in name only with interest rates that can’t possibly fight an inflation rate multiple times as large. In the next few months, the Fed will reverse course and start QE again as the pain of even modest interest rates crater the housing market and gov’t bonds. The definition of inflation is too much currency chasing too few goods and services. The only thing that can reduce the rate of inflation is to destroy some of the currency in circulation and there’s no attempt at doing that since the latest bills in congress just added another \$870 billion in taxes and spending.

    The Dollar is a debt instrument and the US has the largest debt, a completely unpayable debt, on the planet. There is no asset there. The Dollar is currency, it is not money. Part of the definition of money is a store of value. The Dollar is inflating away any remaining value it has and might get to hyperinflation in the not too distant future.

    The USG is the Reserve for the world. It currently has no peer as currency, providing price discovery, and as a Safe Haven.

    The Dollar is losing its reserve currency status over time and now is involved in 59% of the worlds transaction from 71% in 2000. Nations are dedollarizing, a new word made up to apply a label to a declining currency. The Ruble is this year’s best performing currency. China and Russia are causing a large swath of the world to transact in their own currencies to further reduce the Dollars dominance in trade settlement. The dollars safe haven status is only as the perceived cleanest dirty shirt in the laundry. That perception is the only thing holding it up. Since the Dollar is so involved in world affairs, any significant shock anywhere in the world will be felt by the Dollar as the next Lehman moment.

    • Agree: Joe Levantine, Notsofast
    • Disagree: Emslander
  36. Jim H says:
    @Old Brown Fool

    ‘All the destruction in the value of Dollar since 1913 is solely due to the debt-based currency, and not due to any government-issued currency.’ — Old Brown Fool

    ‘Government-issued’ also applies to the hybrid Federal Reserve, whose board members are nominated by the president, and whose Federal Reserve Notes bear the signature of the Secretary of the Treasury.

    Check out its website: https://www.federalreserve.gov

    To your point about debt-based currency, Treasury securities first exceeded gold in the Fed’s balance sheet during WW II. No surprise that wartime inflation, suppressed by price controls and rationing, took off with a vengeance in 1946 and ripped higher all the way to 1981.

    Now Federal Reserve gold holdings are a mere footnote, compared to the \$9 trillion of Treasury and mortgage debt it holds.

    We are in complete agreement that the Constitution — drafted during a miserable post-Revolutionary War period when the extant scrip currency “wasn’t worth a continental” — never contemplated the epic debauchment of the dollar committed by the patently illegitimate Federal Reserve and its PhD Econ ‘intellectual yet idiots,’ who should be clapped into stocks in Lafayette Park so we can hurl rotten fruit at their moronic mugs.

    • Replies: @Old Brown Fool
  37. @Truth Vigilante

    Thank you for the truth gems that you have dug from the unknown history by the pseudo intellectuals who lack a holistic approach to analyzing issues courtesy of their indoctrination through a tunnel vision not much unlike the blinkers on a mule’s bridle.

    Making heroes of people like Hamilton, Lincoln and FDR is a gaffe that even the genuine intellectual Mathew Ehret falls into. Without history revisionism, mankind will never learn from the mistakes and follies of history where academia makes the aforementioned personalities such a boon to human society.

    • Replies: @Truth Vigilante
  38. @Jim H

    America was given great gifts, which it has squandered.

  39. Anonymous[559] • Disclaimer says:

    Ellen Brown -Isn’t this what the Nationalist Socialists did in Germany?

    • Replies: @J. Alfred Powell
  40. Thomasina says:
    @Astuteobservor II

    “USA cannot afford 20% rate on 28 trillions for a year.”

    Most of that trillions of debt was not bought at 20%, but at rates of between 1, 2 and 3%. And these low rates of interest were only made possible by manipulation (quantitative easing, MBS, etc.).

    It is only any NEW debt that would require higher interest rates.

    And that’s when you have a choice: gee, do I take on expensive new debt, or do I tighten my belt?

    Cheap credit is what got us into this mess. It’s what created the worldwide debt bubbles. Those bubbles need to pop.

    • Replies: @Emslander
  41. @RoatanBill

    “ Since the Dollar is so involved in world affairs, any significant shock anywhere in the world will be felt by the Dollar as the next Lehman moment.”

    Suing for peace with Russia and China is the most logical way to avoid this Dollar scenario. Unfortunately, all the ZOG of the U.S. is doing is up the ante.

    • Replies: @RoatanBill
  42. @Jim H

    The US is not at war with Russia. If the US did go to war with Russia, much of the planet could be left uninhabitable.

    One of the things that make the current situation dangerous is that Russians monitoring missiles near their borders or even coming onto their territory have to decide if they might be nuclear missiles.

    If they (the missiles) trip alarms in the Russian version of NORAD, the situation could get tense very quickly.

  43. @Joe Levantine

    No one is listening any longer. The US has its trajectory all planned out and so does Russia and China. There’s no diplomacy going on as that has been relegated to a failed exercise precipitated by the US.

    This is going nowhere but to further escalation of violence. The Russians aren’t going to back down and the US is just going to mission creep this incident until the US and Russia are open adversaries. The European “leaders” haven’t a single set of balls between them. If they had any sense at all, they would be shutting down US bases and telling the US to get out while apologizing to Russia for their recent stupidity. The arrogance of the EU leadership is going to ruin their economies and set them up for another continent wide war.

    I’m also getting the feeling that the Pelosi stunt is going to end in a shooting match. From the Chinese perspective, with US war ships heading toward them, coupled with the long standing provocations, what can they think but this is a ploy to move US weapons system along side China’s territory; a trojan horse exercise.

    • Agree: Joe Levantine
  44. The QUANTITATIVE EASING highly accommodative monetary policy of the privately-controlled FEDERAL RESERVE BANK is entirely to blame for INFLATION.

    The Federal Reserve Bank is an Organized Crime Syndicate that is using monetary policy to inflate asset bubbles that mainly benefit the billionaires and the top ten percent loot holders. The billionaires and the top ten percent loot holders get the asset price inflation and regular Americans of modest means get the price inflation in housing, food, fuel, and much else besides.

    The “normal” federal funds rate is 6 percent. How about the privately-controlled Federal Reserve Bank immediately raise the federal funds rate to 6 percent? The globalizer shysters who own the Federal Reserve Bank sent out their former head shyster, Janet Yellen, to spread the word that 4 percent is the new “normal” federal funds rate.

    Paul Volcker got the federal funds rate over 20 percent in 1981 to wipe out inflation. American patriots could quickly retake control of the government if Federal Reserve Bank Chairman Powell immediately put the federal funds rate at 6 percent. The asset bubbles in real estate, bonds, and stocks would implode instantaneously.

    Remember, the shyster central bankers in the United States kept wage inflation in check by sending factory jobs overseas and by importing cheap labor in the form of mass immigration. The central banker shysters then used financialization to massively transfer wealth from the middle to the plutocrats.

    The percentage of corporate profits going to labor has plummeted in the last few decades.

    The baby boomers must be financially liquidated. The baby boomers should have been financially wiped out back in 2008, but the Federal Reserve Bank bailed them out.

    Zero Interest Rate Policy; asset purchases; money printing; dollar swaps; ballooning the balance sheet of the privately-controlled Federal Reserve Bank with worthless mortgage-backed securities; all this was done to save the greedy baby boomers. The baby boomers used mass immigration, globalization, financialization and monetary extremism to steal the future away from future generations.

    The baby boomers are evil and will deserve the curses of those who come after.

    Andrew Jackson understood the money-grubbing shysters behind central banking; the baby boomers are Nicholas Biddle in generational form.

    NATIONALIZE THE FEDERAL RESERVE BANK NOW!

    QUANTITATIVE TIGHTENING NOW!

    ASSET BUBBLE OBLITERATION TO SAVE THE WHITE CORE AMERICAN NATION!

  45. Emslander says:
    @RoatanBill

    See comment #13, above.

    Paul Volker solved inflation in the eighties because Ronald Reagan allowed him to raise interest rates to astronomical levels and then Reagan took the heat for the temporarily slowed economy. It fixed things for forty years. Reagan was re-elected in 1984 by the largest margin in history.

    Courage and single-mindedness can fix this system again. The losers will be those who ought to lose, and the winners will be disciplined people who lived within their means and even saved money.

    • Replies: @RoatanBill
  46. ricpic says:

    Stop your insane spending you insane gubmint freaks!

  47. Emslander says:
    @Thomasina

    Yes, the biggest phony spendthrift operation on earth will collapse when it has to roll over its \$30T of 1% debt into 20% debt and that’s a good thing. The peoples of the world will live safe from death and destruction rained down on them by the decisions of women experiencing PMS.

  48. Remember, in 1981, Fed Chairman Volcker and the rancid globalizer shyster bankers knew there would be a debt binge after Volcker got the federal funds rate to 20 percent to extinguish inflation.

    Volcker most assuredly did set the stage for the Big Bond Bubble by moving the federal funds rate up to 20 percent in 1981. A private agent– Fed Chair Volcker — at a private banker consortium — the Fed — moved the federal funds rate to 20 percent and deliberately imploded all the asset bubbles and that killed the inflation that had been caused by prior decisions of the Fed. Once the asset bubbles were imploded and the inflation tamed and the economy contracted and the debts expunged or renegotiated, that was when the Big Bond Bubble kicked off.

    I say raise the federal funds rate to 20 percent like Volcker did in 1981, and implode all the asset bubbles, especially in stocks, bonds and real estate.

    I only care about monetary policy for its political and power interactions. The JEW/WASP Ruling Class of the American Empire has used monetary policy to buy off certain generational cohorts and to enrich themselves and to pauperize others.

    When this current asset bubble pops, the plutocrats and Upper Middle Class and the Baby Boomers will be legally but forcibly removed from the USA without any chance of going to another European Christian nation.

    White Core America is the new political party that will act like the Virginia Company did by muscling out the plutocrats and the corporations and by nationalizing the Federal Reserve Bank.

    White Core America will repudiate hundreds of trillions of dollars of government and corporate debt and private debt.

    White Core America will be the modern Virginia Company that advances the interests of the European Christian ancestral core of the USA.

    WHIP

    INFLATION

    NOW

    HOW?

    QUANTITATIVE TIGHTENING AND DEBT REPUDIATIONS

    DEBT JUBILEE FOR YOU AND ME!

  49. Harvard’s Rogoff says the Fed should go to 5 percent federal funds rate to reduce inflation.

    Harvard’s Rogoff Wants To be A Bear

    The answer to that is if you are going to be a bear, be a GRIZZLY BEAR or a POLAR BEAR or a KODIAK BEAR.

    5 percent federal funds rate is being a raccoon knocking over a garbage can.

    My modest proposal to stamp out inflation is to jump the federal funds rate to 6 percent then to 10 percent then to 20 percent and that ought to stamp out inflation plenty.

    Go FULL VOLCKER quantitative tightening and pop the asset bubbles in stocks and bonds and real estate and WHIP INFLATION NOW(WIN).

  50. @Emslander

    If interest rates went to a few points above real inflation, that would be around 16%. At that rate, the trillions in gov’t debt couldn’t be rolled over endlessly. The whole thing would collapse because it would be unsustainable.

    At some point, the Fed will print to hyperinflation levels to repay debt with currency of nearly no value since that is the most common approach used by other gov’t that have hit the wall. The current phony QT will revert to QE before year end if world wide monetary collapse isn’t triggered by the BOJ or ECB before hand. It could also be China’s real estate sector that takes their banks down.

    At best, the world can forestall collapse, but can’t stop it. The fiat systems are nearing an end, especially the Dollar since at some point all no longer needed Dollars for foreign exchange will flood the US market ratcheting up inflationary pressure the Fed has no control over.

    • Replies: @H. L. M
  51. Save you from inflation?
    Save your life!
    Your self chosen and tolerated elites are running a war in the middle of Europe!
    !
    All voters (democrats & repooplicans) – 40 % of mature population – are accountable for that too.
    The Jew’s nigger in Jew Yolk was just told to announce: Wall Street is collapsing.
    https://nypost.com/2022/07/28/eric-adams-refutes-biden-says-us-is-in-recession/
    Russia is canceling the Alaskan land “lend-lease”.
    Latin America had enough of the JewS since decades, if not centuries;
    China & India too have “a long memory” abaout the Anglo-American crimes against their people.
    Most of the world hates Jewmerica and wants nothing more than its destruction.
    America’s elites want the nuclear war to hide their crimes against humanity, so they are negatively inflating everything, not just money.
    The Chinese Army has been told time and again – and again today – to prepare for war against the JewS while you are fumbling with your fake dollars and mindfucking about inflation. Inflation = Judaism.

  52. Ellen Brown says: • Website
    @MLK

    Thanks. I actually agree with that. It’s Tom Luongo’s thesis. The Fed board isn’t stupid, so they must have another agenda — taking down the World Economic Forum’s Great Reset, per Luongo.

    • Replies: @MLK
  53. Ellen Brown says: • Website
    @anon

    Thanks. This is a tough crowd!

    • Replies: @Grieved
  54. This filthy crook lawyer Fed Chairman named Jay Powell, who does the bidding of the globalizer plutocrats and the top ten percent loot holders, is tiptoeing down the Fed balance sheet asset maturity line like a fop.

    Quantitative Tightening should be to start with 6 percent federal funds rate and then 10 percent and top it off with a Volcker 20 percent federal funds rate. Quantitative Tightening should be a flea market type fire sale of the asset portfolio of the Fed, but this Baby Boomer goon Jay Powell just reduced the Fed’s asset portfolio by a measly 25 billion.

    25 billion dollars is what the American Empire’s ruling class sends to that rathole Ukraine so Zellynesky can spread around the loot — walking around money. The ruling class probably gave Zellynesky 25 billion dollars for socks and shirts and some canned ham.

  55. H. L. M says:
    @RoatanBill

    Are you sure you’re not an economist?

    Seriously though, at this point I’m having trouble peering into the future.

    But there’s no doubt in my mind that the parasite guild has it all figured out with multiple backup plans in place.

  56. MLK says:
    @Ellen Brown

    Quite right, I had thought of including a link to one of Tom’s articles. However, I don’t think he picks up on the turf war the Fed has been fighting.

    The Russia sanctions were a Treasury/DOJ bright idea. I’m convinced the Fed wants them reversed and for the USD to be depoliticized, if you will.

    I think the Fed reached the end of their rope when Treasury/DOJ sanctioned Putin’s reputed mistress and made a big announcement about it. Say what you will about Obama, he really taught Democrats and their Permanent Government allies how to pull off these exercises in national humiliation.

  57. Thim says:

    A generation ago most Chinese lived comfortably out on the land. They were able to support many children.

    Today most Chinese live in tiny box apartments, with a huge mortage, electric, water, internet bills plus wireless bills. They have to pay for all their food, as it cannot be grown in a tiny apartment. They cannot afford to have children, and increasingly are too poor to marry.

    The author says the Chinese were amongst the poorest in the world and are now rich. Strange, isn’t it, how schills for central banking invert reality?

    And oh yes, they built a railroad, like we did 200 years ago. A railroad, wow. How 19th century.

    The CCP has ruined a great, high civilization.

  58. Jim H says:

    ‘Rather than making money harder to get, the government needs to focus on the supply side of the equation, stimulating local production to bring supply levels up.’ — Ellen Brown

    And here they go, with the Chips & Science Act:

    ‘About \$52 billion will go to microchip manufacturers to incentivize construction of domestic semiconductor fabrication plants.

    ‘The bill also includes about \$100 billion in authorizations over five years for programs such as expanding the National Science Foundation’s work and establishing regional technology hubs to support start-ups in areas of the country that haven’t traditionally drawn big funding for tech.

    ‘Commerce Secretary Gina Raimondo [promised] to ensure that funding in the legislation is not used to enrich big companies. She promised to invest in American jobs and minority-owned businesses’ — WaPo

    Savor, comrades, the rich contradictions. Semiconductor fabs cost billions. So of course most of Big Gov’s funding must enrich Big Tech. That’s axiomatic.

    But to assuage progressive sensibilities, more billions will be unnecessarily sprinkled on smaller businesses, minority-owned businesses, LGBTQ-owned businesses.

    And to secure enough votes in Clowngress, ‘regional technology hubs’ will be plunked down in unlikely backwaters. You’ll recognize this model from defense contracting, where parts of costly aircraft are produced in every Congressional district, resulting in hundred-million-dollar planes that are way too valuable to risk in actual, you know, combat or something.

    ‘Chips ‘n Sciency’ is classic government ‘investment’ — first and foremost, making the rich richer; paying off aggrieved minorities; inefficiently dispersing production to garner votes; and ultimately, churning out overpriced products that are hopelessly uncompetitive in global markets.

    These are what the late Jane Jacobs used to call ‘transactions of decline.’ The American Empire is dying; Chips ‘n Sciency will give it a vigorous push downhill on a steep icy driveway.

    • Agree: RoatanBill
  59. Miro23 says:
    @RoatanBill

    The Dollar is losing its reserve currency status over time and now is involved in 59% of the worlds transaction from 71% in 2000. Nations are dedollarizing, a new word made up to apply a label to a declining currency.

    Just as a thought experiment. Suppose the US disappeared tomorrow. In other words, no physical North America or Canada – just a continuous Atlantic and Pacific ocean. What effect would that have?

    China would continue producing and exporting to Europe and the rest of the world. Europe would run its own European foreign policy and get a new free speech media. Maybe even agree on a Europe First policy.

    Europeans, Asians and Russians would agree on a new weighted international currency – for example a World Euro and agree a SWIFT type financial settlement system.

    All current wars in the Middle East, Ukraine + Taiwan provocations would stop with an outbreak of peace.

    The ROW (Rest Of the World) would likely develop their own independent internet/search engines.

    In fact a better world than we have at present.

    • Agree: RoatanBill
  60. Munknorr says:
    @Anonymous

    Today I heard something I would like confirmation on.. I heard three western global corporations directly own or indirectly control 66% of the farm land in Ukraine. Is that right? Can anyone confirm that?

    That’s plausible.
    Contrary to the will of the population in 2020 Ukraine Adopted a Land Reform, so a [partial] depopulation by war is very convenient.

    Starting in July 2021, agricultural land will be available for sale to individuals and to legal entities beginning in 2024.
    https://www.trade.gov/market-intelligence/ukraine-adopts-land-reform

  61. Mevashir says:

    Great article Ellen. But so long as this country is run by far right Catholic bureaucrats who are taught from infancy to hate anything vaguely socialistic that caters to the common good, it will never happen. This country is run like a southern plantation, relying on exploiting labor to create surplus value. Remember please that the Vatican was one of only two governments that recognized the Confederacy, and Lincoln was shot by a conspiracy of rabid slaving Catholics.

  62. Grieved says:
    @Ellen Brown

    It can be a pretty smart crowd on many issues, but obviously money isn’t one of them. Lots of ideology being thrown here – I wouldn’t take these comments as being very meaningful.

    Thank your for your unremitting advocacy for money as a public utility. I appreciate the career you’ve spent bringing clarity to financial matters deliberately made obscure.

  63. What’s the role for 30 years plus of suppressing wage growth by exporting are manufacturing base (mostly to China) and importing cheap labor to do all the dirty jobs? Did we deliberately suppress normal inflation and put all eggs into one basket? It’s like we created a drought ridden forest all to ready to burst into flame. COVID policies stopped production and messed up the supply chain and free government money was like pouring gasoline on the entire thing. Then Russian sanctions lit the final fuse.

  64. @Emslander

    This woman is what they now call an economist, like Michael Hudson.

    How politically incorrect of you. I’d like to suggest a more positive sounding alternative – economics is easily as important and accurate as phrenology, alchemy and astrology.

    • Replies: @Old Brown Fool
    , @Emslander
  65. Hoyeru says:

    who are these people that write these “articles”???? it reads as if it was written by a 1st year college student essay. She doesn’t even make the distinction between real money and currency. Why should I even read this sophomoric crap?? UNZ’s editors should really vet the so called articles that get published here much much better.

    • Agree: Emslander
  66. You cannot compare China to the West. In China the Government works for the people, to improve their lives. In the West the regimes work for the rich, the owners of the societies, including politics. A recession is simply a means to increase inequality and elite wealth and power.

  67. Lincoln’s Greenbacks were money issued by the US Treasury according to Constitutional empowerment. It was a PUBLIC BANKING operation. Hamilton’s Bank was nothing of the kind. It was privately owned in an arrangement little different from the Fed. It “securitized” federal debt by buying bonds to form its capital base. These bonds paid interest, in gold, to the Bank’s private owners. Lincoln’s Greenbacks required no such public payment to the small coterie of wealthy private bank owners. More, by “fractional banking” the private owners of private banks compound their (fictitious) resources many times, and the incomes they draw from loaning them out. In this, the Federal government has transferred to private ownership the power to create money granted to the people’s government under the constitution. Moreover, and even more damagingly, this transfers to private owners the discretionary power over how much money to create (by mathematical sleight of hand — “fractional banking”), when to create it and WHERE TO INVEST IT. These decisions inevitably serve the interests of the private consolidated wealth of it owners, and not at all the public interest, the “general welfare” which the constitution designates as the proper object of government operations.

    I am shocked and dismayed to see Ellen Brown fail to make — indeed work to obscure — this fundamental difference. There is much in her work that I like, and approve, and admire. But this very seriously misleading mis-step disturbs me. What has happened to Ms. Brown?

    • Thanks: Truth Vigilante
  68. @Anonymous

    It’s what nine of the thirteen original American colonies did quite successfully. The British Crown legislation to put an end to it was a major factor in precipitating the American resolution.

    And it’s notice the fundamental illogic and bad faith in the question posed in comment #39.

    Did Hitler use light bulbs? Are all light bulbs and light bulb users therefore damned? This comment’s line of covert, twisted mis-argument betrays vicious bad faith.

    • Replies: @Anonymous
  69. @Joe Levantine

    Joe, when it comes to the output of truth gems, you’re doing pretty well yourself I’ve noticed.

    • Thanks: Joe Levantine
  70. @Grieved

    Hey ‘Grieved’, I’m aggrieved that you’d be saying something as stupid as this (at least the second half of this comment):

    It [the UR commentariat] can be a pretty smart crowd on many issues, but obviously money isn’t one of them.

    Clearly, ‘financial literacy’ isn’t one of your strong points.
    Also, I’ve noted some ‘projection’ on your part by referencing ideology, when it is evident that you have an ideological fixation of your own by aligning yourself with Ellen Brown’s leftist agenda.

  71. @RoatanBill

    Why is it that anyone can invent money without labor? Why is it that some politician, who most people agree is lower than whale shit in morals, gets to spend what doesn’t exist? How is this sane?

    Let’s suppose you want to hire a building contractor to make your house. You ask for proposals and only two make them.
    The 1st one asks for \$600.000 and requires from you to pay him only when the job is fully completed.
    The 2nd one asks for \$300.000 but requires a 50% advance payment, so that he can buy materials, hire people, etc.
    Which one will you pick ?

  72. @Jim H

    Why I distinguish between the Government-issued Greenbacks and the bankster-cartel- issued fiat promissory notes is because the former does not carry the shackles of permanent interest payable to the banker till the end of the world. In that way at least the Greenbacks were better. Bankster hates Greenbacks more than it hates gold standard. Because Greenbacks completely free the government from the clutches of the bankster cartel. Of course it is not Gold Standard.

  73. Emslander says:
    @RoatanBill

    I have to take issue with the idea that economics is a worthless study. There’ve been a number of good classical economists. I mentioned Sowell. I’d also mention the author of the basic text on economics of the sixties, Robert Samuelson. Art Laffer is a great economist, as was Walter Williams.

    The good economists work to explain what happens in a natural setting where people set up a system of production and trade, knowing that resources are always limited. By understanding reality, the policymakers can be encouraged to stay within the bounds of human beings working to do what’s best for themselves and their families.

    The so-called economists like this Brown and her pal Hudson don’t recognize reality but think they can alter reality and shape human nature. They want to exploit the work of human beings for their own sick ends. Those people are Bolsheviks. They hide behind the discipline of economics to disseminate their psychologically distorted interior desires. They assume always that some elitist pack of central rulers using the forces of government can create paradise on earth.

  74. @DevilAdvocate

    Neither. Since the 2nd guy claims he can do the job for half, #1 is a rip off. The 2nd guy has no funds, so he’s too risky to trust.

    I don’t see the relevance to my statement. You have something in mind, so answer your own question and proceed with the point you’re trying to make.

  75. @Emslander

    Ask any economist to prove what (s)he says is true. I don’t mean a pile of hand waving bullshit, but empirical evidence that what’s claimed has some basis in reality. Economists are philosophers that dream up theories that screw up economies for the benefit of the ruling mafia (gov’t) and the fraudulent banking system. Their entire reason for existing is to help the gov’t and bankers cheat the rest of us.

    Economists have no actual knowledge. They have their opinions which have no more value than anyone else’s. That they get their partners in crime to issue them degrees in opinion just indicates that they are akin to a religion spouting their creed.

    No one needs an economist in a sound money system. Economists are only needed when fake money has to be argued over. They work for the gov’t and finance sector to dream up how to cheat one party for the benefit of the other in a constant back and forth that keeps them employed while the entire system they work within screws the average person.

    Show me an economist that wants to end central banking, end fiat currencies, end the entire concept of national currencies and champions sound money. Their entire discipline depends on recommending the directing of resources from here to there as though they know something the rest of us don’t. Economics is an outright fraud that has corrupted the world’s finances to the point that we are now facing a judgement day for all the swindles they helped create.

    • Disagree: Emslander
    • Replies: @Truth Vigilante
  76. @J. Alfred Powell

    The constitution says: To coin Money; it doesn’t say to print it. That indicates metals are to be used, not a paper substitute. The use of something with intrinsic value was indicated, not something concocted out of thin air.

    By conveniently ignoring what the constitution actually says, your entire argument falls apart.

    • Replies: @J. Alfred Powell
  77. @Grieved

    Spend some time viewing Mike Maloney’s “Hidden Secrets Of Money”, available on YouTube, to begin to understand how ignorant your comment is.

    • Agree: Truth Vigilante
  78. @RoatanBill

    I don’t see the relevance to my statement. You have something in mind, so answer your own question and proceed with the point you’re trying to make.

    Surely I have.
    But before I answer, let’s restate a bit my question:
    #1 proposes for \$400.000
    #2 proposes for \$300.000, and you know he is reliable, a hard worker and has proven himself before. And he has some funds, but not enough to start the job.

  79. Jon Chance says: • Website
    @Old Brown Fool

    A National Citizens Dividend of \$30,000/year per adult citizen is sufficient for every citizen to afford high-quality housing, food, energy, healthcare, and education provided in a competitive market.

    Less-productive, less-affluent citizens will naturally gravitate toward lower-demand rural locations. More-productive, more-affluent citizens will naturally gravitate toward higher-demand urban locations.

    Many people, such as myself, will choose to live in rural locations and invest our dividend in high-quality equities and business ventures.

    There will be no perceived need for bonds or “banks”, no perceived need for taxation, no perceived need for government funding of “social services”, and no perceived need for wars of aggression.

    There will be no significant “public debt”, no significant “inflation” (currency devaluation), and no poverty.

    Who wins? Who loses?

    Examine nations such as Denmark, Norway, Switzerland, and Taiwan.

    https://HenryGeorge.Org

    • Replies: @Old Brown Fool
  80. @Jon Chance

    I am very well aware of this proposal; the Globalists call it Universal Basic Income. When too much wealth gets concentrated in too few hands, others are so bankrupt as not able to run their basic life. Then the Bankster lends them “money” to meet their cost of existence, and sucks interest for it; but a point comes when the masses do not have anything left worth sucking. But the oligarch is producing a lot of things meant for these masses. Then the Bankster has no option but to give some coupons free to the chattel (are they even citizens anymore?) to buy things and thus send those coupons to the oligarch, who will encash them with the Bankster. “You will own nothing, but you will be happy”. The Globalist lowlife won’t tell you if all of us own nothing, who will own the things that we rent?

    As for Henry George, I accept the bulk of his philosophy, including protective tariffs. If there are no barriers around your country, nothing can stop the wealth from flowing away.

    As for money, I would settle for a money backed by metals – not just gold, but also silver, copper or whatever metal that is plenty enough to meet the requirements of the economy, all simultaneously. Better still, why can’t we issue money with constant purchasing power – that of electricity? A unit of money should always be worth a certain units of energy. If all these fail, then I will reluctantly settle for a government issued fiat. (the trouble with the Govt -fiat is that the government may issue it in excess quantities, and then the only way to retain their value is by taxing the rich in unimaginable tax rates – 90% and more; because the only way to retain the purchasing power of a currency is to soak out the excess currency in circulation through direct taxation. Reagan could not grasp it, and he cut the taxes for the rich, and his successors were no brighter, and lo and behold – dollar lost its value quickly, and there arose a phenomenal number of oligarchs sitting over billions and trillions).

    As I said earlier, the greatest question before the economists in the early 20th Century was whether medium of exchange should also be the store of value; and the widely accepted answer was, “No, not necessary”. The Greatest Question before the 21st Century economists is, Who should have the power to create new money, and how much money should be created?. It is a complex question, and not easy to answer in simple terms. But the very survival of all our countries lies in answering this question. The Bronze Age civilization failed because it could not introduce the concept of money, and instead relied on a central clearing house; the Classical Age civilization failed because it could not understand that debts need to be waived off periodically. and here we are, failing to understand the fundamental qualities of money.

    • Replies: @Jon Chance
  81. Anonymous[559] • Disclaimer says:
    @J. Alfred Powell

    I ain’t saying nationalist socialism is bad or good, I’m just stating a fact. Don’t get so jumpy!

    • Replies: @J. Alfred Powell
  82. Jon Chance says: • Website
    @Old Brown Fool

    National Citizens Dividend is the OPPOSITE of Universal Basic Income.

    UBI is “Universal” and “Basic” and derived from taxation (theft).

    National Citizens Dividend is none of these things.

    Money is a representation of territory (Location Value Rent).

    The quantity of a nation’s money should remain fixed to the quantity of a nation’s territory. The purchasing power of each unit of a nation’s money should remain fixed to the average Location Value Rent (LVR) of the nation’s territory.

    The price of silver, gold, petroleum, electricity, corn, and other common commodities should be compared and contrasted with the nation’s monetary unit that represents average Location Value Rent.

    The First US Constitution (Articles of Confederation) got it right in Article 8:

    https://avalon.law.yale.edu/18th_century/artconf.asp#art8

    • Replies: @Old Brown Fool
  83. @Emslander

    That ‘Disagree’ button you so courageously pushed completely refuted everything I stated.

    Well done.

  84. @J. Alfred Powell

    I am shocked and dismayed to see Ellen Brown fail to make — indeed work to obscure — this fundamental difference …. this very seriously misleading miss-step disturbs me. What has happened to Ms. Brown?

    Yes, upon reading that, an unbiased observer would come to the inescapable conclusion that Ellen Brown, like the pseudo economist Michael Brown, was pursuing a Talmudic agenda.

  85. @DevilAdvocate

    The 1st one asks for \$600,000 [to build your house] and requires from you to pay him only when the job is fully completed.
    The 2nd one asks for \$300,000 but requires a 50% advance payment, so that he can buy materials, hire people, etc.

    Well, it all depends on the circumstances.

    Let’s assume this scenario is playing out in the not-too-distant-future in the U.S, and we’ll also assume that the home construction will take 6 months.

    As we all know, the U.S is about to enter an inflationary depression with every likelihood that hyperinflation may take hold.

    In that case, we may have a situation where inflation is running at 50-100% per month.
    In that scenario, accepting the \$600,000 offer with payment at completion is the obvious choice*.

    (*NOTE: Even if inflation was running at 15% per month, because of the effects of compounding, if you do the figures you’ll see that it still works out cheaper to go for the \$600K option at completion rather than the former which will cost you significantly more).

    • Replies: @DevilAdvocate
  86. @Emslander

    The so-called economists like this Brown and her pal Hudson don’t recognise reality but think they can alter reality and shape human nature. They want to exploit the work of human beings for their own sick ends. Those people are Bolsheviks.

    They hide behind the discipline of economics to disseminate their psychologically distorted interior desires. They assume always that some elitist pack of central rulers using the forces of government can create paradise on earth.

    Masterfully summarised – I could not have said it better.

    Meanwhile, you also said this:

    Art Laffer is a great economist, as was Walter Williams.

    I have a lot of admiration for Walter Williams and would recommend him to anyone.
    As for Art Laffer, let’s see how he did in predicting the 2008 GFC (8 min video below).
    But first, here’s some background info before you watch the video:

    In 2006 Peter Schiff made a bet with Art Laffer on Larry Kudlow’s TV show that the economy was headed for a crash. Art Laffer said it was in great shape and that there was nothing to worry about. The stakes were a penny and a note from the loser admitting he was wrong.

    To this day Art has delivered neither the penny nor the note. Art is once again claiming the U.S. economy is in great shape,. and advocates giving control of the Fed to President Trump to keep it that way. He is a wrong now as he was back in 2006.

    Oh dear, it seems that Laffer was far from prescient. Let’s face it, he’s no Peter Schiff.

  87. @RoatanBill

    You wrote:

    Economists have no actual knowledge …. No one needs an economist in a sound money system …. and …

    Show me an economist that wants to end central banking, end fiat currencies, end the entire concept of national currencies and champions sound money. Their entire discipline depends on recommending the directing of resources from here to there as though they know something the rest of us don’t. Economics is an outright fraud that has corrupted the world’s finances to the point that we are now facing a judgement day for all the swindles they helped create.

    You’re absolutely right …. EXCEPT for the Austrian School of Economic thought that the likes of Libertarians Dr Ron Paul, Peter Schiff and REAL economists like the internationally acclaimed Hans-Hermann Hoppe subscribe to.

    The fact is, the Austrian School constantly advocates for:

    1) An END to the Federal Reserve and central banking
    2) The end of fiat currencies
    3) The return of sound money

    RoatanBill, do you think it’s just a coincidence that Peter Schiff predicted the 2008 GFC, (not only that it was going to happen but the degree to which it would be a cataclysm like NO MAN ON EARTH) ? Scroll up to the 8 min video in my previous comment responding to Emslander and see for yourself.

    Is it a coincidence that Dr Ron Paul predicted the subprime housing crisis YEARS in advance ?
    Watch this 5 min video:

    Bottom Line: WHERE were the Keynesian economists like Michael Hudson and Ellen Brown in the lead up to the 2008 GFC and WHERE were their predictions of the coming meltdown.

    ANSWER: They were nowhere. They were absolutely CLUELESS about the coming catastrophe.

    I am STUNNED how, despite Michael Hudson’s piss-poor track record of predicting not a single economic crisis in advance, whilst advocating for policies that would EXACERBATE any crisis and impoverish America, how Ron Unz keeps inviting this incompetent voodoo economist back on UR to peddle his claptrap.

    What leaves me FLABBERGASTED even more is that there are some foolish commentators here in UR that actually defend Hudson’s juvenile economic ideas – like one Mofo called Bill (who conveniently uses the handle MofoBill when commenting so he’s easy to identify).

    Wake up UR readers (and you too Ron Unz). Ron, WHY don’t you get Austrian School Economists and/or Peter Schiff to contribute here, so that the readers can learn some REAL economics and prepare themselves for the inflationary depression that is headed our way.

    Ellen Brown, I know you’ve had some favourable things to say about Michael Hudson in the past and that you’ve gravitated in his orbit but here’s your chance to do the right thing and learn some REAL ECONOMICS.
    The first step to that end is distancing yourself from Michael Hudson and his foolishness.
    I wish you well in that endeavour.

    • Replies: @Jon Chance
    , @RoatanBill
  88. Jon Chance says: • Website
    @Truth Vigilante

    Socialism is the billionaires’ best friend.

    Ron Paul and the so-called “Austrians” are promoting Global Corporate Socialism, not genuine Libertarian economics.

    Examine Progress & Poverty by Henry George and Fools’ Gold by Robert Carroll:

    https://freerepublic.com/focus/news/674984/posts

    Common Sense — Thomas Paine

    https://www.amazon.com/Common-Sense-Thomas-Paine-audiobook/dp/B07VHDWHR6

  89. @Truth Vigilante

    I’m well aware of Peter Schiff and attempt to listen to him on his channel every so often, but the man can talk the handle off a shit pot (New York expression for someone who talks too much). When he’s a guest on some other channel, answering specific questions, he’s much better and gets to the point quicker. I agree that he’s head and shoulders above the famous economists that are almost constantly wrong on everything, especially that Krugman idiot. I really like Alasdair Macleod. He’s a regular on many precious metals channels.

    My beef with all economists is that they pretend to have knowledge that’s just opinion, even the Austrians. The entire discipline is little more than trying to quantify human nature, an impossibility. I think the only reason the Austrians exist is to counter the rest of the 29 variations of economics listed here:
    https://en.wikipedia.org/wiki/Schools_of_economic_thought

    Anyone can have an opinion on anything and state it. Economists want their opinions to shape societies and have succeeded to destroy honest money and empower the mafias of the world, like the US, Russia and China to exist in their present form. It’s only through asinine ideas like national currencies, fractional reserve banking, calling theft taxes, etc that the world got to its present sorry state.

    Any discipline that can list 29 flavors is just bullshit. You don’t see 29 different opinions on E=I*R from Electrical Engineers or an argument over is water H2O from the Chemical Engineers, etc. Engineering is applied science and is what built everything we see. The humanities and social sciences have no facts, just opinions and demand we listen to them because their church gave them a fraudulent degree.

    I don’t put much stock in predictions. I predict the Dollar is headed for oblivion, but the real trick is when and why. No one can know that since it will be some black swan event to trigger the collapse. I’ll be as right as Schiff someday because both he and I predict the same thing constantly.

    • Thanks: Truth Vigilante
  90. Ellen Brown’s article claims that setting up an Infrastructure Bank will go a long way to remedying America’s woes, when all it will do is squander resources and add yet another layer of parasitic and inefficient bureaucracy to the already bloated system that exists.

    Let’s face it, even the title of the article (‘Interest Rate Hikes Will Not Save Us from Inflation’) is the exact opposite of what we should do – seeing as Paul Volcker PROVED four decades ago that a MASSIVE INCREASE in the Fed Funds Rate will break the back of inflation.

    Meanwhile, someone who I’ve long admired and who absolutely knows what needs to be done to get America back on track, is the font of wisdom Doug Casey.

    Here is his solution:

    https://www.lewrockwell.com/2022/07/doug-casey/heres-what-the-government-should-really-do-in-the-greater-depression/

    Some choice excerpts from the article below:

    1. Allow collapse of bankrupt entities. They’re uneconomic (as their bankruptcy has proven), their managements are overpaid and are proven incompetents. The bailout money going into them is simply wasted. Most of the real wealth now owned by the bankrupt will still exist. It will simply change ownership.

    If you allow the collapse of unprofitable enterprises without changing the conditions that created the problem, recovery is going to be even harder. So…

    2. Deregulate. Contrary to what almost everyone thinks, the main purpose of regulation is not to protect consumers but to entrench the current order. Regulation prevents new institutions from arising quickly and cheaply.
    Does the Department of Agriculture really need 100,000 employees to regulate fewer than two million farms in the U.S.?

    Has the Department of Energy, created in 1977 to somehow solve a temporary crisis, done anything of value with its 110,000 employees and contractors and \$32 billion annual budget?

    How about the terminally corrupt Bureau of Indian Affairs, which has outlived whatever usefulness it might have had by 100 years.

    The FTC, SEC, FCC, FAA, DOT, HHS, HUD, Labor, Commerce, serve little or no useful public purpose. Eliminate them and the entire economy would blossom – except for the parasitical lobbying and legal trades. There are hundreds of agencies like these. Most aren’t just useless. They’re actively destructive.

    Lastly, I’ve seen numerous people in the UR commentariat say that it is impossible for the Fed to jack up the Fed Funds Rate to Paul Volcker levels because the debt is so immense.

    DEAD WRONG !! Of course you can do it.

    Doug Casey explains how (with the added benefits that would flow if America stopped the disastrous foreign policy and belligerent military misadventures):

    5. Default on the national debt. I realise this is a shocker, unless you recall that the debt will never be paid anyway. And why should the next several generations have to pay for the stupidity of their parents?

    A default sounds dishonourable—and it is, in civil society. But government is different. It hasn’t been “We the People” for a long time; it’s now a self-dealing behemoth, run by cronies. It’s like a building with a rotten foundation—better to bring it down with a controlled demolition, than wait for it fall unpredictably.

    Governments default all the time, though most defaults are subtle, through inflation. In an outright default, however, the only people who get hurt are those who lent money to an institution that can only repay them by stealing money from others. They should be punished.

    6. Disentangle and disengage. The entanglements the U.S. needs to escape prominently include the UN and NATO. The U.S. combat troops now in over 100 foreign countries can come home. They’re not “defending” anything, except for local collaborators, and are just picking up bad habits and antagonising the locals.

    The U.S. spends more money on the military than most other countries in the world put together. Since the government is bankrupt, spending on the military and its sport wars significantly adds to the economy’s problems.

    • Agree: RoatanBill
  91. @Jon Chance

    I do understand that what you are saying is not coupons or promissory notes, but profit shared with people. But my concern is something else – what if private hands continue hold money creation in their hands.

  92. Jon Chance says: • Website

    If we possessed legitimate governments with genuine public treasuries, all money — like United States Notes — would be issued by public treasuries.

    Anyone can offer credit or coins or other types of non-LVR currency. But only public treasuries can issue genuine money fully backed by sovereign national territory (Location Value Rent).

    https://HenryGeorge.Org

    Legitimate governments must be reestablished. Counterfeiters must be prosecuted.

    All problems must be rooted out at their source. Superficial reforms are a destructive waste of time.

    https://avalon.law.yale.edu/18th_century/virginia.asp

    • Replies: @Justvisiting
  93. @Truth Vigilante

    Inflation at 15% per month (or higher) is a very rare occurrence in normal developed economies.

    So nobody wants to answer the obvious, which is to pick the 2nd contractor.
    And I explain the idea behind my questions:
    You just substitute “yourself” for “the one responsible for issuing money”, and the “building contractor” for any individual or company who needs money (credit) to make any kind of project.
    Then you see the logic (and the advantage) of using a fiat money system, against one where all money must be backed by something which already exists.

    In case #1, your development is dependent on finding someone willing to invest his (hard) resources on your project. This is a crippling limitation for an economy.
    In case #2, you just need someone who allows you some “margin” before you start producing the real assets. And who works inside a global system where every actor is compliant with the validity of this credit, and makes you responsible for achieving the results you are proposing.

    Now, you can criticise all the bad actors who try to blow the system and take unfair advantage. That’s right.
    But you can’t unvalidate the system, who works if every part (or at least a great majority) assumes their part in responsibility.

    • Replies: @Truth Vigilante
  94. @Jon Chance

    Legitimate governments must be reestablished.

    Maybe I am just getting too cynical in my old age, but the term “legitimate government” makes about as much sense to me as a “healthy Unicorn”.

    I do not think homo sapiens is capable of “good government”.

    It is just not in our DNA.

    There are too many high performing sociopaths and they refuse to self-identify so we can put them in quarantine.

    • Agree: RoatanBill
    • Replies: @Jon Chance
  95. @DevilAdvocate

    Inflation at 15% per month (or higher) is a very rare occurrence in normal developed economies.

    What you say is true.
    But the fiscal and monetary profligacy of the U.S is without precedent in all of human history so expect an inflationary backlash of similar proportion.

    You just substitute “yourself” for “the one responsible for issuing money” …. Then you see the logic (and the advantage) of using a fiat money system, against one where all money must be backed by something which already exists.

    Of course a fiat system may work for a while if those at the helm are responsible and don’t indulge in an orgy of money creation.
    But in a democracy fiat is doomed to fail because the insatiable masses will always vote in a new party that promises copious quantities of ‘free stuff’.

    You also write:

    In case #1, your development is dependent on finding someone willing to invest his (hard) resources on your project. This is a crippling limitation for an economy

    .

    If your project is viable, there will always be venture capitalists that will be willing to fund it.
    If your business model is poor and the lenders assess a high likelihood that you’ll default, they won’t lend to you in the first place.

    Far from being a ‘crippling limitation’ on the economy, it will in fact be the EXACT OPPOSITE. ie: growth rates will increase and said society will be more prosperous.
    More importantly, to the extent that future recessions occur in boom/bust cycles, they will be shorter and milder because there won’t be nearly the amount of defaults and bad loans to be liquidated seeing as borrowers were assessed more prudently. ie: said borrowers had a buffer of savings and reserves to draw upon when interest rates rose and had more skin in the game* which protected the creditors against loss.

    (* For example: During the lead up to the subprime mortgage crisis that caused the 2008 GFC, borrowers were given home loans with no – or minimal – deposits down.
    ie: there were such things as NINJA loans (NINJA = No Income, No Job, Assets for many approved applicants).
    Under the hard money system, loans are more likely to be lent to viable entities and thus less precious capital is squandered on ventures that make society poorer, as is the case now.

    Under a sound money system creditors would more likely require that borrowers put down a 20% deposit before even considering approving a home loan for example.
    This way, even if house prices were to fall 20% and the borrower defaulted, said lenders could foreclose on the property and unload it without loss).

    Bear in mind that even under a Gold Standard, fractional reserve banking still existed so banks could [and did] create money to a significant degree.
    But, because the financial system was tethered to gold, said ‘new money’ conjured into existence could not be created recklessly in copious quantities.

    • Agree: RoatanBill
    • Replies: @DevilAdvocate
  96. @RoatanBill

    Congress can issue a \$10 trillion dollar platinum coin and make paper change.

    Witlessness is no excuse for rudeness, either.

    • Replies: @RoatanBill
  97. @Anonymous

    The comment is diversionary. It has no bearing on the subject under discussion.

  98. Jon Chance says: • Website
    @Justvisiting

    Perhaps you’re suggesting that sociopaths are geneticially determined, and perhaps we are.

    As a Viking-Saxon-Khazarian-Phoenecian hybrid, I’d probably fail the test.

    But the success of some nations at some times in history illustrates the degree of socioeconomic “perfection” that, in my view, is probably attainable and desirable for some nations.

    “Global perfection” is not what I hope for. That’s a “Judeo-Christian” obsession that needs to be curbed.

    Just a decent place for productive people to live with the civil liberties that most of us expect from decent and legitimate self-governing nation-states, like the Swiss Confederation, seems reasonable.

    Why not strive to be better?

    • Replies: @Justvisiting
  99. @J. Alfred Powell

    I see you’re just an argumentative dim bulb with thin skin. Issuing paper money isn’t in the constitution so making paper money change isn’t supported either. You fail again.

    My reply to you had absolutely no rudeness in it, just facts. That you can feign offense so easily indicates to me someone not used to being challenged or someone manufacturing offense when none existed just to use as an excuse to be rude. If you want rude, I can certainly oblige, but prefer not to as long as I’m dealing with a reasonable person.

  100. @Truth Vigilante

    Of course a fiat system may work for a while if those at the helm are responsible and don’t indulge in an orgy of money creation.
    But in a democracy fiat is doomed to fail because the insatiable masses will always vote in a new party that promises copious quantities of ‘free stuff’.

    I agree.
    I see the discussion is divided between two fields: the realists, who state a fiat system is impossible, and the idealists, who defend the system could work (and even very well).
    Usually I side with the realists (as most people here in UR) for the majority of matters discussed here.
    But about this issue, I just wanted to state that a fiat system is not impossible due to some intrinsic incoherence. It could work well in an educated society, less selfish and oriented to the general development of their citizens.

    If your project is viable, there will always be venture capitalists that will be willing to fund it.

    In theory yes. But resources are always limited, at least in regard to the potential for development.
    I have no serious numbers, but my estimate would be that available venture capitalists resources can fund maybe 20 or 30% of all possible viable good projects, at a given moment.

    (* For example: During the lead up to the subprime mortgage crisis that caused the 2008 GFC, borrowers were given home loans with no – or minimal – deposits down.
    ie: there were such things as NINJA loans (NINJA = No Income, No Job, Assets for many approved applicants).

    That was indeed very reckless…

    Under a sound money system creditors would more likely require that borrowers put down a 20% deposit before even considering approving a home loan for example.
    This way, even if house prices were to fall 20% and the borrower defaulted, said lenders could foreclose on the property and unload it without loss).

    That looks a sound practice.

    Bear in mind that even under a Gold Standard, fractional reserve banking still existed so banks could [and did] create money to a significant degree.

    Now that is my turn to avow my ignorance on that aspect.
    So that means a gold system allows for a partial fiat system, within certain limits.

    • Replies: @Truth Vigilante
  101. @RoatanBill

    Please see my comment #96 above and subsequent thread.

  102. @Jon Chance

    the degree of socioeconomic “perfection” that, in my view, is probably attainable and desirable for some nations.

    It is doable for some places for a limited period of time.

    But–homo sapiens has proven incapable of long-term reasonable and fair self-rule.

    I don’t think it can be fixed.

  103. @DevilAdvocate

    Now that is my turn to avow my ignorance on that aspect.
    So that means a gold system allows for a partial fiat system, within certain limits.

    Bear in mind that Nixon only took the U.S off the Gold standard in 1971. Prior to that fractional-reserve banking had been going on for centuries.

    The following is from Wikipedia:

    History

    Fractional-reserve banking predates the existence of governmental monetary authorities and originated with bankers’ realisation that generally not all depositors demand payment at the same time. In the past, savers looking to keep their coins and valuables in safekeeping depositories deposited gold and silver at goldsmiths, receiving in exchange a note for their deposit (see Bank of Amsterdam). These notes gained acceptance as a medium of exchange for commercial transactions and thus became an early form of circulating paper money. As the notes were used directly in trade, the goldsmiths observed that people would not usually redeem all their notes at the same time, and they saw the opportunity to invest their coin reserves in interest-bearing loans and bills. This generated income for the goldsmiths but left them with more notes on issue than reserves with which to pay them. A process was started that altered the role of the goldsmiths from passive guardians of bullion, charging fees for safe storage, to interest-paying and interest-earning banks. Thus fractional-reserve banking was born.

    If creditors (note holders of gold originally deposited) lost faith in the ability of a bank to pay their notes, however, many would try to redeem their notes at the same time. If, in response, a bank could not raise enough funds by calling in loans or selling bills, the bank would either go into insolvency or default on its notes. Such a situation is called a bank run and caused the demise of many early banks.

    Pay particular attention to the last paragraph of the blockquote above.

    ie: ‘IF creditors lost faith in the ability …. ‘.

    And why would creditors lose faith in the ability of a bank to pay their notes ?
    Generally, because said bank had been RECKLESS in the degree to which it created currency relative to the amount of gold it held to back it up with.

    Said system worked BEAUTIFULLY when the world was on the Classical Gold Standard (the two centuries or more prior to WWI) and still reasonably well during the bastardised gold standards between the wars and post Bretton Woods.

    And, to the extent that a particular bank got into trouble, the government could step in and back said bank with its gold reserves and prevent any bank runs that were caused by malicious gossip etc.
    If said bank was found to be creating money recklessly, the government could have legislation drawn up prior to that which stated that said bank could be nationalised and all its assets confiscated (or at least sufficient assets taken to compensate the taxpayer for any losses sustained by the government).

    This ‘government intervention’ would not be taken through its proxy (the central bank), because central banks will hopefully be abolished in that ideal world.

    No, the treasury department of the government, which is printing the money and taking care of all financial matters and overseeing the private banks to ensure prudent lending standards, would be handling this issue.

    • Replies: @DevilAdvocate
  104. True, it’s a supply of goods issue. Interest rates won’t help.

    But I can’t agree on Hamilton. The first bank he created (literally First Bank of US), was put to rest when congress wisely refused to renew its charter. Its successor, the Second Bank, was ended by Andrew Jackson, who was elected on a “No Bank” platform. And that was it for nearly seventy years… until the bankers came up with a even more ingenious scam to line their pockets with… the Federal Reserve.

  105. @Truth Vigilante

    And why would creditors lose faith in the ability of a bank to pay their notes ?
    Generally, because said bank had been RECKLESS in the degree to which it created currency relative to the amount of gold it held to back it up with.

    I think we can agree upon what is at stake here.
    It’s the DEGREE to which an “excess” of currency created beyond the strict backing by gold that defines if this pratice is reckless or not.
    Not just a simple degree, in terms of a certain %, fixed arbitrarily, but taking in account the economic players who need that credit to start their ventures. This degree must relate with the soundness and responsibility of those players and their projects.
    And this may be quite variable from one country to another, from one area to another. For example, in a country where most people are educated and have a high social sense of responsibility towards their society, this degree may be much higher than in another country where most people embark easily in schemes of consumer spending on useless things and luxuries.

  106. acudoc1949 says: • Website

    The current model of banking and currency is based on the Bank of England model, founded in 1694. Benjamin Franklin stated that the main reason for the American Revolutionary War was the insistence by George III that the American colonies accept Bank of England banknotes, which were issued as promissory notes, rather than use the increasingly successful American fiat script, issued by the colonies in the CORRECT quantity and not bearing debt! We must be prepared for a new monetary system, an honest one, when our present debt-based banking cartel collapses. Kindly read and critique this proposed Constitutional Amendment. But first, a little background…

    From “The Truth in Money Book” by Theodore R. Thorsen and Richard F Warner:
    QUOTE Someone had to borrow at usury to bring that money [checkbook balances, bills and coins] into existence. The money goes out of existence as the usury and the debt principal are paid back to the bank. These amounts are huge: several billion dollars go out of existence each day. [Actually this money goes into the reserve accounts of the Federal Reserve Banks, out of the hands of the public! This book was first printed in November 1980. The amounts which are withdrawn presently are much larger.] If the money is not replaced with new loans, a shortage occurs. Soon individuals and businesses experience serious cash flow problems. These result in more and more loan applications to banks—the only place where money is being created to replenish the supply” UNQUOTE

    Here is one possible solution—-To Hell with Fractional-Reserve Debt-Based Banking Constitutional Amendment

    [MORE]

    (1) Rescind the Federal Reserve Act of 1913 and rename existing Federal Reserve notes and check book balances, in all U.S. banking and credit-creating institutions as well as foreign holdings of dollars, on a 1-to-1 basis, as U.S. Treasury Dollars and U.S.Treasury-Denominated bank balances. All currently existing financial contracts of the Federal Reserve Banking System, including United States Treasury Bills, Notes, Bonds, and Inflation-Protected Securities, remain in effect.

    (2) Henceforward, ex nihilo credit creation by banking and financial institutions in the United States is prohibited. Loans are required to originate from previous savings of U.S. Treasury Dollars and U.S. Treasury-Denominated bank balances, which for each loan are held in and paid from specific sequestered loan accounts by the various financial institutions, with interest charges and term limits for each loan to be determined solely by the contracting parties. Non-cash reserves held in the regional Federal Reserve Banks in accounts of the member institutions of the Federal Reserve System no longer form the basis for credit creation and are extinguished via accounting erasure. Any further payments of principal and interest on currently-existing promissory notes owned by any bank are required to be distributed to holders of savings accounts and checking accounts in that bank in a manner to be determined by each bank, such procedures to be transparent to savings or checking account holders at that bank in terms of amount and frequency of payment. Regional Federal Reserve Banks continue to provide check-clearing operations for the member banks.

    (3) Monetary transactions of the regional Federal Reserve banks or of its member banks with international banks, including the Bank of International Settlements and the International Monetary Fund, can not include ex nihilo credit creation.

    (4) The U.S. Treasury supplies Treasury Dollars as needed to any member bank of the Federal Reserve system to satisfy demands for cash by deposit and savings account holders in excess of cash reserves held by banks at the time of enactment of this amendment.

    (5) Fund the U.S. government and its agencies and projects directly via Treasury Dollars authorized by the Congress in its yearly federal budget. The borrowing of money from the Federal Reserve system of banks or from other institutions or individuals to pay for federal government expenditures is prohibited. All outstanding Treasury Securities are henceforward redeemed on demand via payment with U.S. Treasury Dollars.

    (6) Abolish the Federal Income Tax on individuals, corporations, and business enterprises while maintaining a social security tax on individual incomes. Social security retirement revenues are strictly sequestered in Federal Government Retirement Accounts held by the U.S. Treasury and managed by the Social Security Administration. The Sixteenth Amendment to the U.S. Constitution is hereby rescinded and the Internal Revenue Service disbanded.

    (7) Institute a federal sales tax with a varying yearly tax rate adjusted by the U.S. Congress in session, the sole aim of such adjustments being to maintain a stable or decreasing Consumer Price Index based on data collected by the Federal Government. Any such federal sales taxes taken in by the Federal Government are extinguished from the currency supply to keep the Consumer Price Index stable or decreasing and are not utilized for further funding.

    (8) Article 1, Section 8, Clause 1 of the U.S. Constitution is amended to read as follows: The Congress shall have Power to collect customs duties on imports and exports, uniformly applied throughout the United States, and to provide for the Defence and general Welfare of the United States.

    (9) Article 1, Section 8, Clause 2 of the U. S. Constitution is rescinded.

    (10) The adoption of this amendment does not prohibit the use by the citizens of the United States of any alternative currencies they should choose to use in their private or commercial transactions, provided both parties to the transaction agree to the medium of exchange.

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