Slashdot Mirror

This allowed them to print money with nothing backing it.

Money is always backed by human labor, if you go back far enough. Money-backed-by-stuff doesn't work anymore, because stuff no longer needs (very much) human labor to create. I wrote a letter to the editor back when the crazies in Congress were fighting over their lines-in-the-sand (debt ceiling), so I'll just quote myself here:

Money is nothing more than a medium that allows humans to exchange their labors.

Gold used to be the western world's standard form of money... People would dedicate their lives to extracting it from the earth.

Gold extracted with human labor was traded for mining supplies created by human labor... Gold spread from the mine into every corner of the economy.

Gold-as-money had it's problems, of course. The gold rushes (California, Alaska, etc) flooded the economy with extra gold...

Then someone figured out how to extract gold from the earth with Caterpillars and chemistry instead of shovels and slush boxes. The process of disconnecting the government's currency from gold started during the Civil War, with Lincoln's Greenbacks... progressed with FDR's gold freeze... and ended with the de-pegging of the dollar under Nixon.

-fixing the government's finances

The folks at Monetary.org and those who advocate Publicly-owned Banks are on the right track, methinks. There are some more important articles at the bottom of my blog post about fixing the governments finances - "bailout for the people", "money and the crisis of civilization", and "I want the earth plus 5%". .

There have only been a few times that the United State's debt was paid off. Economic depression immediately followed.

The problem is that money is borrowed into existance. No new debt == no new money.

Presidential candidate Ron Paul has a good temporary solution for the debt ceiling: start tearing up the bonds that are held by the Federal Reserve. The Fed returns the interest paid on these bonds to the treasury anyways...

Read about this option in Ellen Brown's recent piece, QE2 Shocker: The Whole $600 Billion Wound Up Offshore

thanks for responding (these stories usually die after 12 hours...). It's been a while since I read those two links - it's always a rush to get something posted when one of these stories comes up where I have something to say, lest my comment get buried 1/2 way down the page. :)

Your pdf mentions that since the 70's, nearly all regulation and tax structures have been based on 'trickle down'. Well, we know how well that works (not at all).

The Federal Reserve system was started in 1913. The oligarchy has had a good idea of how to rig the game (the economy) for their benefit. Some decades they give a little, so the next they can accumulate more.

If you liked the first two links, I also suggest Ellen Brown's book, Web of Debt, and also her blog: http://webofdebt.wordpress.com/.

Was about to submit this comment, then another site came to mind: The American Monetary Institute is worth recommending too.

Thanks again. :)

The only state that's NOT having budget problems is North Dakota. Ellen Brown says North Dakota is sitting pretty because they own the Bank of North Dakota.

See How the Nation’s Only State-Owned Bank Became the Envy of Wall Street.

All the other states are slaves to their financiers on Wall Street. For example, the City of Phoenix (Arizona) borrowed a billion dollars over the past 5 years to build out the water system. Now the water department wants to raise an extra $24million a year by raising water fees... 'Cause the usury always gets paid first.

I calculate that the interest charge on a billion dollars a year (at 5%) is $50million. If Arizona owned a bank like North Dakota, the Bank of Arizona would have financed the Phoenix water expansion (at, say, 3%). Most of the $50million the city is now bleeding out to Wall Street would instead be flowing into the state's treasury.

The financial crisis is easily fixable, with the right solutions. Money and the Crisis of Civilization, and ... Richard Clark's A Bailout for the People are also on my recommended reading list.

Well said. I'd give you a +1 if I had a point.

protektor's second-to-last link has a chart that illustrates the problem well:

http://www.heritage.org/budgetchartbook/federal-revenue-sources

Rich people may pay all the income tax, but everyone else pays just as much for "social security" and Medicare.

Don't mean to imply that I support changing the tax rates or the cap or anything like that. I support fixing the banking system, a bailout for the people, as it were.

Ellen Brown's site is good too.

US destroyed its industry and "outsourced" it to China.

Actually there's still a lot of good stuff that's made in the US. It's just the labor-intensive jobs - whatever tasks that can't be easily automated - that've been exported to Mexico, Central America, and China.

For example, about a year and a half ago I met a man who owns a machine shop... His buisness was making tubular parts for telescopes. Mostly he just loads raw material and watches over his machines as the computer tells them what to do... 20 years ago an employee would have been required for each one.

Pinky's Brain (grandparent post) had a very good point about stimulus checks for all citizens. No more of this 1 in 7 on foodstamps crap - everyone should get foodstamps, or a guaranteed basic income.

There's always work to be done, it's just a matter of organization, and matching available hands with tasks. Money is the organizing principle that allows us to value other peoples' labor. The true distortion in the economy comes from allowing privately owned banks to expand the money supply by a factor of 10+ by making loans. The Fed's recent Quantitative Easing policy is a step in the right direction, because it finally creates a little bit of interest-free money (90% of the money the Treasury pays on the $600 billion in bonds that the Fed will buy will be returned to the treasury - see Ellen Brown's What's Really Behind QE2?).

hope that helps. :)

It seems to me that Governments should wield the power to make money, and politicians should debate about where to spend the newly created money.

But as it is, in the UK, the United States, and elsewhere, banks create money, and decide who to loan it to. Governments have no other choice but to levy taxes on the economy.

Like Colbert said in his testimony about migrant farm workers (8:54), the political game is all about power, and the biggest economic power of all is "who gets to create money first." Whatever happened to that bill to 'Audit the Federal Reserve" (which is owned by private member banks)? I haven't kept up... Whatever you think about the Fed, at least its profits are returned to the U.S. Treasury now.

Richard C. Cook's Bailout for the People (pdf) has a really nice overview of an economic system that would work for the benefit of everyone...

Some other sites:
http://www.monetary.org/
http://www.webofdebt.com/

While that's one approach, it still doesn't address the fundamental problem: banks create the money supply by making loans. No loans, no money.

The investing class have the technical development of the world in a stranglehold: they feed money to developments that pay good dividends, and starve projects which would make their other investments obsolete.

Ellen Brown advocates publicly owned banks to finance public infrastructure projects. Here's a post about financing an energy revolution:

Out of the Ashes of GM: The Phoenix of Renewable Energy

The 1.45 billion is not part of the budget, it is not being paid by tax payers at this point, it is a loan from a bank (not the feds) that the feds are insuring.

And who gets to keep the interest on the loan? If the feds are guaranteeing the loan, shouldn't they get the interest too?

It's like the recent changes to student loans. For the last few decades, banks issued any student a loan. If they didn't pay up, they went and got their hunk of flesh from Uncle Sam. When the student did pay up, the banks kept 100% of the profit. This was recently changed so that the government is officially in the banking business (for students).

If "we the people" had a publicly-owned bank for energy development, $2 billion would generate $20 billion in new loans for clean energy projects. See SUSTAINABLE ENERGY DEVELOPMENT: HOW COSTS CAN BE CUT IN HALF and OUT OF THE ASHES OF GM: THE PHOENIX OF RENEWABLE ENERGY, for example.

The 1.45 billion is not part of the budget, it is not being paid by tax payers at this point, it is a loan from a bank (not the feds) that the feds are insuring.

And who gets to keep the interest on the loan? If the feds are guaranteeing the loan, shouldn't they get the interest too?

It's like the recent changes to student loans. For the last few decades, banks issued any student a loan. If they didn't pay up, they went and got their hunk of flesh from Uncle Sam. When the student did pay up, the banks kept 100% of the profit. This was recently changed so that the government is officially in the banking business (for students).

If "we the people" had a publicly-owned bank for energy development, $2 billion would generate $20 billion in new loans for clean energy projects. See SUSTAINABLE ENERGY DEVELOPMENT: HOW COSTS CAN BE CUT IN HALF and OUT OF THE ASHES OF GM: THE PHOENIX OF RENEWABLE ENERGY, for example.

The 1.45 billion is not part of the budget, it is not being paid by tax payers at this point, it is a loan from a bank (not the feds) that the feds are insuring.

And who gets to keep the interest on the loan? If the feds are guaranteeing the loan, shouldn't they get the interest too?

It's like the recent changes to student loans. For the last few decades, banks issued any student a loan. If they didn't pay up, they went and got their hunk of flesh from Uncle Sam. When the student did pay up, the banks kept 100% of the profit. This was recently changed so that the government is officially in the banking business (for students).

If "we the people" had a publicly-owned bank for energy development, $2 billion would generate $20 billion in new loans for clean energy projects. See SUSTAINABLE ENERGY DEVELOPMENT: HOW COSTS CAN BE CUT IN HALF and OUT OF THE ASHES OF GM: THE PHOENIX OF RENEWABLE ENERGY, for example.

I keep showing up to work ever day, so I beleive that the US economy isn't a lost cause. I'm doing my part to keep the ship from sinking.

I once asked a wise man, "what is money?" After a moment he said that money is how you value someone else's time.

Ron Paul is right about some things, including the vileness of the Federal Reserve system, but he's wrong in that gold != money.

- to help people prepare to ride-out the impending storm

Sure...

- to help people convince voters to vote-in people who will attempt to control the crash

Most elections of any significance are rigged. While Rand Paul wasn't supposed to win his Senate primary, I'm sure the corporate media kingmakers are thinking about how they can influence the election. It'll be interesting to see how that one turns out.

Anyways, I suggest Ellen Brown's site for more on the money problem. I also like her blog posts...

If you are going to claim that a government agency is defrauding you,

The "Federal" Reserve is NOT a government agency: it's a public-private partnership. The Senate confirms the board of govenors. Member banks own the Federal Reserve's stock, and earn 6% per year return. It wasn't until the 1960's that excess profits were turned over to the Department of the Treasury.

For the government, the difference between borrowing credit created with accounting entries from a private bank and borrowing the same sort of credit from the Federal Reserve is that borrowing from the Fed is nearly interest-free. That is true today, but it has not always been true. Congressman Wright Patman, Chairman of the House Banking and Currency Committee, wrote in a 1964 treatise called A Primer on Money:

“The Federal Reserve Banks create money out of thin air to buy Government Bonds from the U.S. Treasury . . . [creating] out of nothing a . . . debt which the American people are obliged to pay with interest.”

Patman was outraged at the inequity of this practice and boldly agitated for Congress to nationalize the privately-owned Federal Reserve, a move that would have allowed the government to issue the national money supply directly. Needless to say, however, this proposal met with strong opposition. Nationalization did not happen, but the Fed did have to compromise. According to Jerry Voorhis:

“As a direct result of logical and relentless agitation by members of Congress, led by Congressman Wright Patman as well as by other competent monetary experts, the Federal Reserve began to pay to the U.S. Treasury a considerable part of its earnings from interest on government securities. This was done without public notice and few people, even today, know that it is being done. It was done, quite obviously, as acknowledgment that the Federal Reserve Banks were acting on the one hand as a national bank of issue, creating the nation’s money, but on the other hand charging the nation interest on its own credit – which no true national bank of issue could conceivably, or with any show of justice, dare to do.”

--Monetize This!

Nothing good comes from letting private banks create the money supply.

Good points, all. I just have a short comment.

NAFTA and treaties with various third-world countries have destroyed the American manufacturing base.

You're surely talking about the massive loss in manufacturing jobs in the U.S. over the past 30+ years. While many of these job losses are due to so-called "free trade" treaties, automation via computers has also taken many jobs. Cool stuff is still made in the U.S., just not a whole lot of consumer-grade stuff.

For example, I met a man about 6 months ago who has a machine shop that makes tubes for telescopes and other similar projects. IIRC, he employed himself and his wife. 25 years ago, he would have needed a machinist for each machine in his shop...

The American economy will not recover until those treaties are abandoned and manufacturing comes back to America.

I think the problem is debt. The American economy will not recover until the debt problem is resolved. Once that's accomplished (possibly via state-owned banks), the economy will quickly take care of itself.

Before resorting to ad-hominem, make sure you actually know what's going on.