[A-List] Reviewing Ellen Brown's "Web of Debt"

[Todd Boyle]

Bill, thanks for your research on those economic 
statistics-- that's remarkable!  Good work.

I am very sympathetic to this whole 
proposition.  But you haven't refuted my 
position: that the debt owed by the US Treas. has 
real consequences, and that the holders of the 
debt expect to be paid, and to exchange the money 
for real things. And many of the present account 
holders earned their balances fair and 
square.  The U.S. as a whole, runs very huge 
trade deficits.  It would be injustice to repudiate those debts outright.

Can't we go back and retrace every transaction, 
and identify the rotten parts-- all original 
issuances that were unearned, and the interest 
that has flowed, and the interest still flowing 
on those transactions?  The fact of all these 
bank transfers is probably still on the archive 
copies of bank records.  Or, have they "lost" them, like the nixon tapes?

At 11:26 PM 6/4/2009, Bill Totten wrote:
>Sorry Todd, but neither Ellen Brown's nor 
>Lendman's claim is excessive.  The federal debt 
>can, indeed, be eliminated without consequence 
>or pain (to the nation and its citizens, 
>although banks and other bondholders may suffer 
>the pain of the end of their parasitic 
>freeloading). I've made the calculations for 
>Japan, which shouldn't be much different than 
>any other nation. Japan's public debt has built 
>up from zero since 1968 solely because Japan's 
>government has allowed private banks to create 
>most of its currency, then borrowed most of the 
>currency those private banks created, instead of 
>creating all of that currency itself and 
>spending it into circulation. I posted the 
>calculations here earlier but can send them to you again if you wish.
>
>A summary of the results for Japan are as follows:
>
>80% of Japan's Outstanding Public Debt has been spent to service that debt
>
>30% of the taxes Japanese have paid since 1968 
>have been spent to service the public debt
>
>90% of the money created by Japan's private 
>banks has been borrowed by Japan's government
>
>75% of those borrowings have been used to service the public debt
>
>All Japan needs to do is require private banks 
>to have 100% reserves for all loans they make. 
>It already has the legal authority to do that. 
>Since the private banks have only ten percent or 
>less of reserves for their currently outstanding 
>loans, this would prevent private banks from 
>making any more loans (that is, prevent them 
>from creating any more money). Then if Japan's 
>government would create and spend into 
>circulation money at the same rate private banks 
>have done over the past forty years, Japan's 
>public debt would disappear in about forty years 
>without any increase in taxes, and taxes could 
>be reduced by about thirty percent 
>thereafter.　This wouldn't cause inflation 
>because the money created and spend into 
>circulation would supplant, not add to, money created by private banks.
>
>A faster way would be for Japan or any other 
>nation to announce it will pay no interest on 
>its outstanding bonds hereafter (starting 
>tomorrow). If that caused anyone to what to sell 
>his/her/its bonds, Japan (or any other nation) 
>could print enough money to buy them. Of course, 
>if private banks tried to sell their bonds, 
>their reserves would be reduced by the amount of 
>the bonds they sold and, since their current 
>reserves are ten percent or less than their 
>outstanding loans, that would force them to 
>reduce their outstanding loans by ten times or 
>more than the amount of the loans they sold. 
>This most likely would cause them to hold onto 
>those bonds (even though they no longer paid 
>interest) to prevent them from losing the 
>interest on the loans they've made with those 
>bonds as reserves. And if the banks did sell 
>bonds and call in loans, the government could 
>print money and loan it to the customers whose 
>loans were called in, much as FDR's 
>Reconstruction Finance Corporation did in the 1930s.
>
>Foreign nations, the other major holders of any 
>nation's bonds, would have trouble selling them 
>since each sale would reduce the value of their 
>remaining holdings (the very problem that keeps 
>China, Japan, Russia and the OPEC nations from 
>dumping their toxic US Treasury bonds now).
>
>Finally, renouncing the payment of interest on 
>outstanding bonds would wreck the nation's 
>credit ratings, making it difficult to issue new 
>bonds. But that wouldn't matter because nations 
>able to collect taxes effectively don't need to 
>borrow money because they can print all the 
>money (other than taxes) they need because 
>people will always want that money if (1) it is 
>the only money that government accepts in 
>payment of taxes and (2) it is the only money 
>that government pays for whatever it buys.
>
>Yes, indeed, the federal debt can be eliminated 
>without consequence or pain to the nation and 
>its citizens, although any president that tried 
>to do this might likely be assassinated.  Bill
>
>
>
>Lendman and Ellen Brown do a disservice by this excessive claim:
>
>At http://www.countercurrents.org/lendman060509.htm it is said,
>
> > The solution is simple but untaken. As the Constitution mandates,
> > money-creation power must "be returned to the government and the people
> > it represents". Imagine the possibilities:
> >
> > -- the federal debt could be eliminated, at least a more manageable
> > amount before it mushroomed to stratospheric levels;
>
>The public, rightly would interpret this claim as meaning that the
>federal debt can be eliminated without consequence or pain.  That's
>not true.  The truth is that the federal debt is noncancellable and
>has real consequences.  The bondholder expects that the
>paper can be exchanged for real goods and services--- isn't
>that the essence of a money system?
>
>The federal debt can only be "eliminated" by paying it down with
>money.   The money can of course be printed and issued unearned,
>without taxing the country.   Obviously that is what Ellen Brown is
>talking about.   Equally obviously such money competes for the
>available goods and services alongside existing money stock,
>creating price inflation, other things being equal.
>
>Whenever inflationary expectations arise, banks all over the world
>have complete freedom to create loans in excess of their assets,
>in the time honored way they have done for many centuries.  Their
>fake money competes with Uncle Sams' fake money.  Then you
>get down to a war between the US Fed and Treasury versus the
>global financial industry--  it happens sometimes.  The US govt
>can and does succeed in chasing down one of the hyenas and
>ripping it to pieces.   But like the lion of Africa it cannot chase all
>of the hyenas, all the time.   In fact, it cannot even kill the vast
>majority of patient and prudent hyenas who take no risks.
>
> > -- federal income taxes could as well; entirely for low and middle
> > income people and at least substantially overall;
> >
> > -- "social programs could be expanded ... without sparking runaway
> > inflation"; and
>
>Both of these claims are true, independently of how money is created.
>
>Todd
>
>Todd Boyle wrote:
>>Lendman and Ellen Brown do a disservice by this excessive claim:
>>At http://www.countercurrents.org/lendman060509.htm it is said,
>>
>>>The solution is simple but untaken. As the Constitution mandates,
>>>money-creation power must "be returned to the government and the people
>>>it represents". Imagine the possibilities:
>>>
>>>-- the federal debt could be eliminated, at least a more manageable
>>>amount before it mushroomed to stratospheric levels;
>>The public, rightly would interpret this claim as meaning that the
>>federal debt can be eliminated without consequence or pain.  That's
>>not true.  The truth is that the federal debt is noncancellable and
>>has real consequences.  The bondholder expects that the
>>paper can be exchanged for real goods and services--- isn't
>>that the essence of a money system?
>>The federal debt can only be "eliminated" by paying it down with
>>money.   The money can of course be printed and issued unearned,
>>without taxing the country.   Obviously that is what Ellen Brown is
>>talking about.   Equally obviously such money competes for the
>>available goods and services alongside existing money stock,
>>creating price inflation, other things being equal.
>>Whenever inflationary expectations arise, banks all over the world
>>have complete freedom to create loans in excess of their assets,
>>in the time honored way they have done for many centuries.  Their
>>fake money competes with Uncle Sams' fake money.  Then you
>>get down to a war between the US Fed and Treasury versus the
>>global financial industry--  it happens sometimes.  The US govt
>>can and does succeed in chasing down one of the hyenas and
>>ripping it to pieces.   But like the lion of Africa it cannot chase all
>>of the hyenas, all the time.   In fact, it cannot even kill the vast
>>majority of patient and prudent hyenas who take no risks.
>>
>>>-- federal income taxes could as well; entirely for low and middle
>>>income people and at least substantially overall;
>>>
>>>-- "social programs could be expanded ... without sparking runaway
>>>inflation"; and
>>Both of these claims are true, independently of how money is created.
>>Todd
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