The study of money, above all other fields in economics, is the one in which complexity is used to disguise truth or to evade truth, not to reveal it.
– John Kenneth Galbraith
BMRC 2020 Annual National Meeting Presentation
By Banking and Monetary Reform Committee
Revolutions take back the money THE MONEY POWER REVOLUTION
From Private Debt to Public Money
Friday, July 10 at 4:00pm Eastern- 1:00pm Pacific
Joe Bongiovanni will explicate: The People Want Their Money Back!
Sue Peters will frame out The Cares Act: How the Fed Bails out the Wealthy
Howard Switzer will tie it all together in The Money Power Revolution
Register to attend the 2020 virtual
Green Party National Convention
July 9, 10 and 11, and sign up for our workshop!
Follow The (CARES) Money
By Sue Peters, GPNY
In response to the shutdown of the economy, Congress passed the CARES Act. To date, Congress has appropriated $670 billion in funds to aid small businesses with Small Business Administration (SBA) loans. Also in the CARES Act, Congress appropriated $454 billion in funds for larger businesses, states, and municipalities. These funds, however, do not go to a federal agency like the SBA. These funds go to the Federal Reserve Banks (Fed Banks).
What has not been explained to the American people is that the $670 billion for small businesses is dwarfed by the $454 billion for larger businesses. How? The Fed Banks have the legal power to turn that $454 billion into $4.54 trillion! This is possible because our monetary system is based on debt creation: every time a commercial bank “lends,” the bank is creating a deposit in the borrower’s account. The bank simply types in the amount in the borrower’s account. This is called bank credit, and we use it as money. The fact that our “money supply” is usury, generating interest every second to the banks, is a well-kept secret. The U.S. Constitution placed the power to create money with Congress, but slowly over time, thru legal means, this power was handed over to private bank corporations that create bank credit for our money supply.
But what about “our” central bank, the Fed? No help there. The Fed is composed of twelve regional Fed Banks, all of which are privately owned corporations. All their shares are owned by the member commercial banks. The bigger the bank, like JP Morgan Chase, the more shares. All twelve websites of the Fed Banks end in .org (not .gov).
But one always reads, “The Fed is printing money.” Just like banks create bank credit for our use, the Fed Banks create reserve credit for the banks’ use. We move bank credit from one account to another by depositing a check; the Fed Banks move reserves from one member’s reserve account to another when “clearing” that check. But the two circuits never mingle. We use the one; banks use the other.
So, what is the purpose of Fed Banks reserves? Historically, reserves were government-issued money, but that is no longer true. Today, reserves are Fed Bank-created credit; banks make as many loans as they want to, and Fed Banks create reserves for them. Reserves are created to support the usury of the banks. For example, before the 2008 financial crisis, the banks had created huge amounts of mortgage loans, packaging these financial contracts as mortgage-backed securities (MBS) for sale. Banks and their corporate customers bought them. When the underlying loans began to default, the MBS market price began to drop steeply. Banks and their corporate customers were in danger of insolvency. So the Fed Banks stepped in, created reserves, and bought the crappy MBS securities at full face value from the banks and their corporate investors. This saved the banking system and our money supply of bank credit.
Today, the Fed Banks are ready to save the system again: when you shut down a world economy based on bank credit, debt cannot be paid. The Fed Banks have set up eight new lending and purchasing facilities. They will create reserves to make loans, with debt securities as collateral, or buy the debt securities outright. The reserves will go to banks, who will make the loans or buy the debt securities from issuers or investors using bank credit. This time, the debt securities will come from banks, corporations, money market funds, states, municipalities, hedge funds, and more. So the $450 billion from the Treasury becomes trillions to bail out our bank credit system and our debt economy. Again. But this time the debt burden has gotten much bigger. Hold on to your hats. We need a brand new system.
US Rep. Gregory Meek (NY State) to Federal Reserve Bank Chairman Powell: “. . . small business can’t qualify for debt. They need equity, not debt.” FED Chairman Powell: “More debt may not be the answer, but debt is what we do.” (6-30-20, Congressional hearing)
Usury
The abuse of monetary authority for personal gain. All the great religions and philosophers condemned it and Dante’s Inferno described it as An extraordinarily efficient form of violence by which one does the most damage with the least amount of effort.
A Review of All Wars are Bankers’ Wars (documentary)
by Kevin McCormick, GPTX
. the more you study this the more you will realize all the wars are wars for the bankers, the private central bankers.
Well, not exactly – but on the right track. By casting central bankers as diabolical evil geniuses who direct world events from the shadows, this documentary becomes a farcical diatribe. The power and position of the “central bankers” is assumed, but not explained. No doubt there are many examples of wars, assassinations, and other mendacious activities of central bankers, but how this differs from ancient Greece, Rome, or European history, or indeed the Mourning Wars of native Americans is not explained. All Wars Are Bankers Wars could be a propaganda piece by the Jacksonian opponents of the Second Bank of the United States, a political grouping which also supported white supremacy, manifest destiny, and the Mexican-American War begun by President Polk.
Medics helping wounded soldiers France, 1944
Despite straying from the basic thesis to include complaints against environmental protections, this documentary is an indictment of the modern private central bank system. There are some memorable quotes, such as “war is the banker’s richest harvest.” (minute 36:50) and “rule by manufactured illusion of debt is no more legitimate a system of governance than rule by divine right or rule by slavery.” (minute 41:07) If these finance elites are powerful, then they are inevitably connected to world events. But this association is not sufficient to prove that these bankers are the motive force behind war, poverty, and national decline. Nevertheless, the documentary is probably worthwhile for those who have not yet seen it. (There is a 64 page transcript, which would probably get a D grade in history class.)
When I began this fight . . . I believed that we were enjoying a system of popular government in the United States. By the time the fight was ended, I understood that the country was being run by plunderers in the interest of capital. (p. 22)
The elite bankers understand that money and debt can be the medium of a political hierarchy, which is a point that is completely missed by the conspiracy theorists. The elite bankers are able to focus on the top of the political hierarchy pyramid and gain practical control, while they have enough of the population involved in the status quo that their debt-money system has the support needed to block reform or revolution.
This political hierarchy acts like any hierarchy—it has doctrines, enforces internal discipline, is intolerant of alternatives, seeks to eliminate outside competition and ultimately to achieve total domination. So it is not just a few elite operators causing these problems. The banking elites are among the leaders of a political organization which, through control of money, is capable of marshaling resources and organizing activity to dominate societies and create an empire.
The relationship between the state and the banking system is central to understanding this topic. In modern banking, money is created by adding to deposit accounts in exchange for loan obligations. Money is created by debt and has validity in terms of debt repayment. The state supports bank money by giving it legal tender status, requiring it for tax payments, and maintaining large public debts. For the public, debts are created and money issued only when repayment is likely, such as real estate loans, automobile loans, consumer debt, and debts of established business operations. In each case, government power through legal actions can enforce repayment, but there is also a complex system of incentives for repayment to maintain social status and economic relationships.
A central goal of this system is making debt-created bank money an absolute necessity of life. The corporate agenda is funded while the humanitarian agenda is impoverished. There is no tolerance for communal or shared arrangements and there is sustained opposition to social support such as social security, medicare, medicaid, public education, and public transportation. Social welfare is provided to corporations and business enterprises, which are the most significant and reliable borrowers. Alternative means of money distribution such as Universal Basic Income, or of resource distribution, such as public health care, would be effective competition and reduce the control of the bank-money based hierarchy.
All Wars are Bankers Wars approaches the political question when it briefly describes the banking religion (minute 32). But apparently the documentary author cannot bring himself to adequately describe the religion or to implicate the many supporters of the status quo who make the banker agenda possible. Then the video gives the remedy of a “state-issued, value-based currency.” The necessity of a “value-based” currency is never substantiated. I take it as a gold standard argument — that there must be something else besides the money itself. This obscures the nature of money as a societal, cultural construction and confuses the proper implementation and management of a monetary system. Like a gold standard which has only worked intermittently and tends to be controlled by the wealthy, the “value-based” requirement is a subterfuge for a different form of elite control.
In contrast, a state-issued currency has been accepted as legitimate for many centuries and is provided for in the United States Constitution. In order to achieve any lasting release from central bank domination, the power to create and issue money must be taken away from private interests and placed firmly under the control of public democratic institutions.
There are practical questions to answer for a state-issued public money system to succeed. We must also explore how a state issued currency would function. What is the just and proper method of issuance? What is the policy of taxation? How would the system prevent environmental destruction, social injustice, and warfare? The public discussion should move beyond indicting the aristocratic central bank to an exploration of the appropriate policies for a monetary system in the era of climate change and energy transformation.
The actual American experience with government issued money is perhaps our best source of historical reference. As Stephen Zarlenga states:
First, from its beginnings the US has been a great monetary laboratory. Most of our history is marked by monetary crises, with relatively brief periods of monetary peace. Almost every conceivable monetary solution has been tried at some time here, and the results recorded.
Second, America has been a nation of fiat paper money. Our development was inseparable from paper money, right from colonial days. Without it there would not be a United States. The colonies relied on colonial paper money for their development. We then gained our independence and later maintained the union with government issued paper money.
The Lost Science of Money p.367
The Greenback currency issued in the American Civil War is the closest historical example to a modern fiat currency. Experience shows that Congress was able to issue a fixed amount and to maintain that amount, not devolving into reckless and inflationary issuance, and avoiding crippling national debt. While it was the necessity of war that prompted the creation and issuance of the Greenback, the United States Note currency continued to circulate for a century, until the 1960s.
Confederate dead – Battle of Chancellorsville, May 1863
The success of the Greenback was its undoing. The Greenback saved the Union, but did not transform the politics. The capitalist interests of Wall Street secured the passage of the National Bank Acts of 1863 and 1864, which gave private banks the ability to regain control over the national monetary system. Following that, the banking interests have consistently limited circulation of Greenback currency by replacing U.S. notes with their own bank notes and by expanding the national debt. The historical lesson is: to control the money of a modern society is to have control of the society itself.
Union victory in the “Second American Revolution” was a triumph of the “investing section” alone. Acting through their servile instrument, the Republican Party, eastern businessmen crammed through Congress a legislative program which subordinated public interest to private profit and ushered in a reign of predatory capitalism.
. . . .
The Granger movement, Greenbackism, the free silver and Populist crusades, were in turn all manifestations of agrarian resistance to capitalist control and exploitation.
Irwin Unger, The Greenback Era p. 4
Today, we live under the aristocratic corporate culture traced back to the Bank of England—private debt-money issued for private profit by exploiting the public and the environment. If anything is to be learned from All Wars Are Bankers Wars it is that the ability to create and issue money must be under the control of public and democratic institutions.
Money exists not by nature but by law. – Aristotle
What is Money?
By Joe Bongiovanni, GPVAA – The Money Apprentice
Let’s begin our study of money with this question—because everywhere, inquiring minds want to know—what is money?
What serves as money isn’t derived from either a natural or a man-made material of any kind, and its study is virtually absent from our entire education system. Like Political Economy and Civics.
The most commonly heard response throws a ‘curveball’ into considering our question. ‘Money ain’t real’ they say. ‘Banks create money out of thin air.’ (fingers snap).
Hard to argue. This response is more valid than not, though hardly instructional. A better understanding is gained by knowing that money itself is indeed not ‘physical,’ but socially-derived. Yes, We the People created it. By law. $US money is our ‘national’ agreement, our societal construct. It provides our nation the ability to exchange goods and services among wealth producers and consumers. What we call ‘money’ today is termed among money-scientists and historians as our ‘national circulating medium of exchange’. The ‘power of money’ ($US) is to impart real “purchasing power” to its holder, be it in the form of paper ($) notes or merely private bank account ‘credit’ balances—legally denominated in ($US).
Understanding money’s ‘social’ origin harkens us back to a new starting point for understanding money — that all money is, and must be, created out of nothing … or thin air. Otherwise we won’t have it to purchase our food and shelter.
So, if we agree, more questions might arise — “Who then should, create and issue the nation’s money? Why so? And how so?” Why is it that the private banks issue all our money today(?). Why does the government have to borrow its own money?
For later.
But, first, what does history teach us about what money is?
Money, according to Nobel prize winner Dr. Frederick Soddy (The Role of Money – Routledge Publishing; 1934) first provides the (capital) means for wealth production, via debts. Later, fingers-crossed, money – via incomes - is available to pay those debts and to spread the national wealth. The role of money in the national economy, per Soddy, is to distribute the national wealth. For better, or worse.
In The Lost Science of Money ( The American Monetary Institute Charitable Trust (2002)) – author Stephen Zarlenga presents some considered, historic notions on ‘what money is’ in the final Chapter (24). Zarlenga reviews the learned opinions on money by Aristotle, Plato, Paulus, Berkeley, Locke, Franklin, by American monetary historian Alexander Del Mar, and by German Chartalist author Georg F. Knapp,
Then, Zarlenga opines on the topic – We accept these concepts and add : Money’s essence (apart from whatever is used to signify it), is an abstract social power embodied in law as an unconditional means of payment.
This, then informs us on what is the essence of what we call money. The means of payment. An abstract, agreed-upon social construct with many special qualities — legalized by society under our national Money Statutes . That’s what our money ‘is.’
I hope this small collection of thoughts on money, along with my own ‘work-in-progress’ opinions can provide a semblance of understanding of what money is, today. From here maybe we can discuss the existing social, legal and political framework of our national money System. Hopefully a discussion of alternatives might arise. Or, perhaps not.
Next time.
THE MOST IMPORTANT HISTORY IS THE HISTORY YOU DON’T KNOW:
The Pecora Commission
In 1933 Anthony Pecora headed The Pecora Commission investigation which uncovered a wide range of abusive practices and conflicts of interest on the part of banks and bank affiliates that caused the 1929 crash. To be clear they just stopped lending after blowing up a radio and automobile stock bubble which crashed the economy and allowed them to then pick up all the assets used for collateral for pennies on the dollar — millions of homes, farms and businesses as well as 4000 banks in 1933 alone. The debt-money system inflates and crashes every 10-12 years which is blamed on business. When the system crashes, loans default and the real wealth collateral is collected by the banks. In 2008 5.5 million lost their homes to the banks for resale. Then, as now, no one was prosecuted.
