We the People are Taking a Bath
Jacobin magazine ran a typical headline recently: "Only Class War Can Stop Climate Change." Really? Detroit ‘solutionary’ Grace Lee Boggs’ would disagree:
Being a victim of oppression in the United States is not enough to make you revolutionary, just as dropping out of your mother's womb is not enough to make you human. People who are full of hate and anger against their oppressors or who only see Us versus Them can make a rebellion but not a revolution. The oppressed internalize the values of the oppressor. Therefore, any group that achieves power, no matter how oppressed, is not going to act differently from their oppressors as long as they have not confronted the values that they have internalized and consciously adopted different values. (my bold)
Illustrating her point, US colonists, dreaming their lovely dream, were incapable of creating a society without massacring and enslaving. They were, after all, runaway sons of bloodthirsty, greedy Europe, and they were stuck with those customs. Us versus Them is a trap that worsens our deep divisions and cannot stop climate change.
Can humans evolve beyond Us v. Them? Iconoclastic, mystical Marshall McLuhan offers this insight on our evolution:
We form our tools and thereafter they form us.
Systems are tools. Instead of pointing to human oppressors, consider our systems. I’ll argue that the bank-credit money system has become the boss; that it oppresses us all, rich and poor. While poor people suffer cold and hunger plus trauma, depression, addiction, the billionaire class are so blindly committed to winning power that they lose their human connections altogether and become uncaring, power-seeking robots.
To build a monetary tool that supports caring for each other, first step is to fully comprehend this: bank-credit provides no pool of circulating cash for exchanging goods and services, no. It provides something more like a bathtub with faucet and drain wide open - in an earthquake! Its instability and its extractive nature have formed us over four centuries to fear poverty and humiliation and to be always grasping.
THE SHOCKING TRUTH OF BANK-CREDIT
Banks deposit NEW MONEY in your checking account by keystroke, based on your promissory note. Your IOU is the bank’s asset. Your new checking balance is its new liability. KEY CONCEPT: that deposit comes from nowhere.
So what? As you repay, your debt and the bank’s asset both shrink. POOF, the principal amount disappears from circulation, leaving behind only the interest that you scavenged from working or stealing, and the bank tucked away into its equity account. All we have for money is a sloshing mess of loans.
To keep something in the bathtub, banks must keep lending — until they get scared that borrowers can’t repay. Then they hit the brakes. 1929. 2008. When lending stops, Main St. quickly goes broke. That is the moment when banks openly rob us, foreclosing on hard-won homes and businesses. Boom—bust—repeat, is what the system calls the "business cycle," and we are supposed to accept it as normal.
The bank-credit money system is a human-made tool, which has taken control. It forces us to grow the economy, future be damned; to ignore suffering and climate change; to amass weapons. It forces us all to feel alone and anxious, our heads filled with dystopic futures, but wait!
History provides beautiful, proven solutions. People have already enjoyed long periods of prosperity using money systems that are designed to recirculate wealth instead of ruthlessly concentrating it. Your committee, caucus or local Green Party can help protect the climate and our future by calling out this perverse system. The Banking & Monetary Reform Committee invites you to integrate Greening The Dollar plank into the important work you are already doing. We welcome visitors at BMRC Thursday meetings and we offer entertaining webinars upon request.
A LEGACY OF ACTIVISM
Saving Medicare and Social Security
DEBT LIMIT CRISIS IS TIED TO SAVING MEDICARE & SOCIAL SECURITY
Medicare won’t be able to pay all its bills in 2028 (5 years away), under current funding mechanisms. The same is true for Social Security in 2035. The Congressional Budget Office(CBO) Long-term Budget Outlook projects US debts will constantly increase to at least 2050 & beyond. The current gross federal budget is projected to increase from $31 Trillion now to $52 trillion in 10 years (2033). This 66% increase is reckless & unsustainable. And it may be an under-estimate considering US propensity to get into unnecessary wars.
NEW FUNDING IS NECESSARY TO SAVE VITAL HUMAN PROGRAMS
Unless we think creatively, the 1% and their bought off lackeys in the Presidency and Congress will divide us up and gut vital human programs, while saving pork-barrel and military/surveillance boondoggles.
How can you compare a person getting $10,000–$20,000 per year on Social Security compared to adding an 11th aircraft carrier costing $13 billion? Or the 70th nuclear submarine costing nearly $3 billion each?
But the President, Congress, and billionaire media will push for more weapons and wars when the debt crisis explodes. They will protect the military and chop our vital human programs. We can’t wait till 2028 or 2035 when Medicare and Social Security will be on the chopping block.
The average American (50%-60% of the population) lives paycheck to paycheck. Many are haunted by unsteady jobs and credit card debt AVERAGING 20% in compound interest. Amazon and Home Depot now charge 30% interest. How can we break out of this Wall Street created debt trap? Just repeating the same old myths to work harder, get a 2nd or 3rd job, cut expenses even further, or read stories of how billionaires started out — does not work. We’re caught in a trick bag created by the 1%. We need some unorthodox thinking and history lessons to find out how our forefathers and foremoms counterattacked against the 1%.
GREENBACKS CAN BE A NON-DEBT CURRENCY TO FUND OUR NEEDS
In 1861, President Lincoln faced a deep national and financial crisis. In desperation Lincoln turned to a Buffalo, NY Congressman (EG Spaulding), who was head of the powerful House Ways & Means Committee and also a small-town banker. Lincoln signed the GREENBACK bill which created non-debt US currency, not borrowed from bankers. GREENBACKS paid for soldier wages, weapons and equipment and helped win the CIVIL WAR. Only $450 million were authorized and this number was not exceeded. They circulated in the economy until bankers connived to pull them out of circulation over the following decades so this innovative idea would be forgotten and not repeated. Since then, all government debt is borrowed from banks, corporations, or wealthy individuals. The resulting interest is paid from our tax dollars to the 1% elite.
GREENBACKS could be used now for funding shortfalls in vital programs, they could also be used to retire national debts slowly, help pay for long term infrastructure and other priorities. A modern form of Greenback was incorporated into the 2011 NEED ACT sponsored by US Rep. Dennis Kucinich and John Conyers. The bill never got out of Committee because financial lobbyists feared it and made sure their purchased representatives ignored it.
Americans living paycheck to paycheck need GREENBACKS now. This is a key plank of the US GREEN PARTY platform.
Stone Cold Reality
US WILL NEVER REPAY $31 TRILLION DEBT
Republicans, Democrats & media are acting as puppets & clowns as they debate raising the $31 Trillion debt ceiling. This debate has occurred 69 times in the past with no long-range solutions. The Congressional Budget Office (CBO) Long Term Budget Outlook predicts the federal budget deficit will increase from $1,4Trillion per year now to $2.7 Trillion in 10 years. CBO says Gross Federal Debt will increase from $31 Trillion now and go to $52 Trillion in 10 years (1933). This will be an increase of 66% in 10 years. This is obviously reckless and not sustainable. Moreover, US debt estimates have been frequently too low because the US enters unnecessary wars, tax theft by billionaires, and subsidies to Big Business. No one in the mass media, think tanks, schools, politicians, churches will say the obvious: The US will NEVER pay any of these Trillions back, the debts will only skyrocket until the US faces the consequences of all past spendthrift empires: Roman, British, etc.
HOW DOES THE WORLD’S RICHEST COUNTRY GET AWAY WITH THIS?
The US became a debtor nation in the Reagan era in 1985, following Reagan’s huge military increases, while cutting taxes for the 1% and large corporations in 1981 and 1986. Stated simply, huge US budget and trade deficits rob the rest of the world. The US forces the World to accept dollars for the $1+Trillion a year in oil, commodities, and cheap consumer goods sent to the US. The key weapon the US uses is the DOLLAR as the reserve currency of the world, which was the product of US victory in WWII. Now, countries are reluctant at holding huge amounts of shaky dollars.
In the early 2000s, countries such as Japan and China accepted these dollars and transformed them into Treasury bonds — both countries holding about $1.4 Trillion each. But both have decreased their Treasury holdings: Japan down by 23%, China down by 34%. Nations don’t trust the US to repay these debts. The third largest holder of US Treasury debt is sidekick Britain with holdings of $646 billion. Cayman Islands holds $283 billion for oligarchs and tax cheats. India and Germany are not even in the top 10. To fill the gap, the FED bought more and more of this Treasury debt and hid it in its bloated balance sheet, which went from $4 trillion in 2019 to $9 Trillion in 2020-2022. This bloated FED balance sheet was coupled to FED encouragement to Wall Street to lend more and thus increase the money supply. The result was sharp INFLATION WORLDWIDE in the second half of 2021.
Admitting it had created a giant error, the FED sharply increased US interest rates. Together with the Ukraine War, this led to wealth around the world fleeing to US for the high interest rates. The value of the dollar soared. Now economies around the world are suffering — Lebanon currency down 98%, Egypt down 50%, Argentine inflation at 100%, Sri Lanka raising electric rates 66% in order to try to get an IMF bank loan. Debts denominated in US dollars are almost impossible to pay with their depressed local currencies. The governments representing 85% of the world population (including India) have not sided with the US or NATO on the Ukraine War. These are warning signs of the US losing its grip on world control.
LIVING PAYCHECK TO PAYCHECK, WHILE THE 1% RAKE IN BONANZA
The 50%-60% of Americans living paycheck to paycheck could’ve grab a piece of the stock and real estate bonanza, triggered by FED and Wall Street. They also couldn’t afford to buy the sophisticated hedging and tax strategies to protect themselves from the deep stock crash of 2022. This was a product of increases in FED interest rate from one quarter of 1% to 4.5% and rising. To average people, this means credit card interest rates are now near 20%, Amazon, Home Depot 30%. These rates are usurious and not sustainable. In most states prior to the 1960s, populists, unionists and churches pressured state legislatures to enact bans on interest rates over 5%-6%. Bank lobbyists bought state legislators in target states such as South Dakota and Delaware to remove these interest rate caps. The promise was increased financial jobs for credit cards administration. Slowly, all states fell into line. Debtors in the US should consider whether their potential allies should be third world peoples facing similar debt problems or the highflyers on Wall Street or Musk, Bezos & Gates.
Although ordinary people did not benefit from the FED enabled stock and real estate bonanza during the pandemic, we faced the resulting intense INFLATION & INEQUALITY. Business analysts using IRS data reveal that 85% of the wealth gains made possible by FED action during the pandemic in 2020-22 went to the 1%.
WORKING PEOPLE FACE CONSEQUENCES OF FED RECKLESSNESS:
High inflation, uncertainty, and guessing how deep the ensuing recession/crash will be.
A WORKING PEOPLE’S PLATFORM TO COUNTERACT DEBTS
Reenact federal and state laws imposing a 6% limit on loans in the US.
To show good faith, declare US will repay $1 TRILLION on its federal debt in 2024, after changing appropriate laws.
Cut $500 billion from the federal budget from war-making budget items, such as Pentagon, CIA, NSA, nuclear weapon "modernization", foreign military aid. etc. Also cut subsidies to big business. This might even reach $1 Trillion if courageously done. Do not touch people programs.
In a crisis, innovative means must be clawed back from our hidden history. In 1862, President Lincoln faced a funding crisis in the dark hours of the Civil War. Unsure if it would work, Lincoln signed a law creating GREENBACKS, a non-debt currency conceived by US Rep. E.G. Spaulding from Buffalo, NY, who was also a banker. Greenbacks were not borrowed from bankers at interest, but freely circulated based on the productivity of the land and resourcefulness of its people. $450 million were authorized and this amount was never exceeded. It helped to win the Civil War. Bankers hated Greenbacks because they did not get their cut in interest. GREENBACKS were incorporated into The NEED Act of 2011 introduced by Rep.Dennis Kucinich and John Conyers, but never got out of Committee, because Wall Street feared it. Understanding the mess that Wall Street and its captured FED have created, maybe now the time for GREENBACKS has again arrived.
Turning on the Lights
I follow Corinne Nita and other writers on Medium because of the values expressed in their writing and the topics they choose, the economy being at the top of the list for me. For instance, this article titled Economic Deficit Theories Were Wrong, the Money Tree Exists. I loved it for the rendering of the economic pain and injustice people are feeling despite being short on the solution. Unfortunately, the quote from Margaret Thatcher, a myth supporting lie, which then led to the MMT ruse, led us right back where we started. Let me explain.
The problem of the modern economy is not a failure of a knowledge of economics; it’s a failure of a knowledge of history. — J.K. Galbraith
The Thatcher quote says,
The state has no source of money other than the money people earn.
This is a system serving lie to maintain the myth. Any sovereign government can create money, that is what sovereignty for a nation is, because money is the governing factor which is why the Constitution (Art.1 Section 8 clause 5) gives Congress the power to create money and regulate its value. Banks do not lend depositor’s money, instead banks create the money they lend and have for over 300 years. It is the struggle between governments and banks that dominates the hidden history of money and power and is what the American Revolution was fought over. We won that war militarily but lost monetarily, which is the real power, so the struggle continued.
The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks. — Lord Acton
The banks were cheating people so bad that Andrew Jackson banned the banks from creating money in the US but because he didn’t issue any US Money caused a huge depression until the ban was lifted. The struggle continued and the European banks, funding the abolitionist movement and the South, to foment a civil war to break up the US because they feared its potential to become the dominant economic power. The banks would not lend to Lincoln except at very high interest so Lincoln issued debt-free US Money, the Greenback, to fund the nation’s defense, just as the Continental had funded the Revolution, and would have issued more Greenbacks for the needs of the American people if he were not assassinated. The struggle continued.
We have won the revolution, but we have not won the power. — Salvador Allende
The Farmer’s Alliance and the progressive populist movement of the late 19th century called on the government to issue more Greenbacks to fund infrastructure and put the nation to work. That was the demand of Coxey’s Army as well, a march on the Capitol and largest protest up to that time. Books were written about the banks power and that they were trying to take over the government. There was a Congressional investigation of the Money Trust by the Pujo Committee that uncovered and mapped out a system of interlocking directorates that showed the banks controlled every industry and that JP Morgan controlled all the banks. Despite these revelations and through legislative sleight of hand, the big banks got Congress to hand them the nation’s monetary authority over to a central bank owned by the bankers, the Fed, in 1913. The struggle continued.
With control of the nation’s money the banks continued their profitable monetary shenanigans causing war and financial crises, all very profitable to them. Then they precipitated the big one in 1929 by making a huge amount of loans for a time, then withholding all loans and crashing the economy. When this happens households and businesses default on their loans and the banks pick up the real wealth collateral used to secure those loans for pennies on the dollar. It was a massive transfer of wealth from the many to the few, millions of homes, businesses, farms and 4000 small banks were sucked up by the big banker.
This was revealed by another congressional investigation by the Pecora Commission in 1933, the year the Chicago Plan was presented that would return monetary authority to the government. Rebuffed by FDR, the depression roared on and monetary reform was proposed again in 1939. Again, it was rebuffed by a Congress enriching itself off insider information and corporate largesse. World War Two, a continuation of WW1, saw massive government investment in war, all borrowed from the banks who funded, profited from, both sides of the war. The center of financial power shifted from London to New York and the American people were subjected to an uncaring social management system of schools, media and police that crushed the labor movement. The struggle continued.
The 2008 crisis provided another opportunity to expose the banker’s money system and again brought forth legislation that would change the monetary system. The National Emergency Employment Defense Act (the NEED Act HR2990) was introduced to Congress in 2011 by Dennis Kucinich, based on the previous proposals. While it took three years of vetting by the Fed lawyers before it could be introduced, it was not allowed out of committee. The NEED Act makes three critical reforms to create and protect a public (sovereign) monetary system dedicated to the public interest.
Require Congress to be the sole creator of all U.S. money; debt-free.
End the privilege of commercial banks to create money.
Transfer all remaining operations of the Fed to the U.S. Treasury.
Awareness of the monetary system and its power is growing and numerous books on the subject have been published, some to educate and elucidate, others to mislead and prevaricate. Bankers obviously want to defend their game and the MMT ruse serves that effort. MMT is the brainchild of Warren Mosler, a wealthy ex-banker, economist, and hedge fund manager who funds the teaching and promotion of MMT and funded his protégé, Stephine Kelton’s rise to prominence. MMT says we don’t need to change the system because it’s the government hesitance or unwillingness to borrow to cover the needs of the American people that is the problem. Of course, the deficit debate is political theater, and they always increase the debt, increasing the interest payments to what is now an amount reaching the annual military budget. The struggle continues.
MMT claims to be descriptive, not proscriptive, but its description is misleading. For one thing they only focus on the government spending, ignoring the rest of the economy. I won’t get into their faulty description but here is a brief description of how the monetary system works: When a bank makes you a loan, you sign a contract to pay it back with interest. The bank creates a deposit in your account for the principal amount of the loan, just by typing numbers into the ledger for your account. Only the principal of the loan is created, the interest part of the debt must be drawn from the principal of another loan. As the principal of the loan is repaid those numbers come back down as that money is extinguished. It should be noted that this is the driver of economic growth, more loans must be made for economic growth to stay ahead of interest payments.
The debt-based monetary system is a crisis generator which crashes every 10 years or so which is a transfer of wealth each time it happens. When loan payments (money destroyed) exceed loans being made (money created) the system crashes, or banks can simply withhold loans to crash it as they did in 1929. You can see this on graphs from the Fed, the vertical grey bands indicating the regular recessions and depressions. The government process of borrowing money from the banks is a more convoluted process.
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. — J. K. Galbraith
The government creates bonds which they sell to the ‘Primary Dealers’, agents of the banks who purchase the bonds for the banks to then sell on the market to investors, mostly to foreign investors. MMT will not save America. Why? Here is a hint.
A Princeton Study found that from 2009 to 2014, the two hundred most politically active companies in the U.S., all controlled by the banks, spent $5.8 billion influencing our government with lobbying and campaign contributions. Those same companies got $4.4 trillion in taxpayer support — a 750% return on their investment. That is a considerable motivation for corruption.
In fact, the banks learned long ago, as far back as the 1600s, that by far their most profitable investments were in governments. Using war debt, the banks gradually got governments to give them control of their monetary systems, giving up their sovereignty. The banks set up a central bank for each country for their own management purposes headed by the Bank of International Settlements (BIS) in Basil Switzerland. The wars are all banker’s wars, have been for a long time. When you control a government you can send it to war, very profitable for the banks. The struggle continues.
All this of course has brought forth new monetary reform efforts and groups all proposing that which has been proposed numerous times; to change the system, to stabilize the economy, and make money serve the needs of all the people and their environment instead of creating more and more uncaring billionaires. The NEED Act was drawn from the American Monetary Reform Act promoted by the American Monetary Institute, which has inspired other organizations like Positive Money UK, the Alliance for Just Money and the International Movement for Monetary Reform, a coalition of monetary reform groups emerging all around the world. The Alliance has an extensive bibliography of monetary materials to study. Christine Desan of the Harvard Law School too, is educating about money and organized a group at Harvard called Just Money that is putting on a conference in June. You have probably never heard of any of this which is a testament to the effectiveness of the system’s social management system. MMT dominates the popular monetary policy discussion, demonstrating the power of money to manipulate.
… if you control the money, you control the entire world. — Henry Kissinger
I hope this turns the lights on for you and others. I hope you will not take my word for it but will do your own research to verify what I’ve said. I hope you will look at the materials on the websites I list here. It is vital that we understand the ruling system and how to change it. I hope you will join the effort to make this monetary understanding self-evident and common knowledge. I leave you with a quote from Frederick Soddy, a Nobel laureate who got the prize for revealing the power of nuclear energy and who became a monetary reformer when he realized how the current power structure would misuse his discovery. His work was the inspiration for The Chicago Plan.
Ten centuries before Christ the ancient Greeks recognized that to issue the money was the most vital prerogative of democratic self-governance. To allow it to become a source of revenue to private issuers is to create, first, a secret and illicit arm of the government and, last, a rival power strong enough ultimately to overthrow all other forms of government.
— Frederick Soddy
This is a call to action because only with monetary reform can we hope to challenge and change the unjust power relations of the world.