[A-List] The Single Most Important Reform

[Bill Totten]

Well said, Tony. Maybe it will easier to replace bank-created, debt 
money with government-created money free of debt than to replace 
capitalism with something else, and maybe that might be a giant step 
toward replacing capitalism with something else. Bill

Tony B. wrote:
> Just thinking out loud here....
> 
> I'm not as familiar with the Fed (though I believe it operates roughly 
> similarly) as with the Bank of Canada. The latter floats money into 
> circulation by buying bonds from the Gov't of Canada, issuing a cheque 
> drawn on itself and then printing new notes in the amount of the debt. 
> It deposits these in a commercial bank account (or accounts).
> 
> Now, the point is that it is with these new accounts that the commercial 
> banks then lend out money limited only by their reserve requirements. 
> Let's say the original amount deposited was $2 million, then by the time 
> the original 2 million is lent out successively to other banks and 
> institutions - each making loans limited only by a, say, 8% reserve 
> requirement - the total multiplier effect results in $100,000,000 of new 
> credit..new money. And it is on this money that the commercial banks 
> extract interest, i.e. on money that they created from 'nothing', and 
> received profit on for free.
> 
> Now what's worse is when these same commercial banks loan money (!) to 
> the gov't (which, because of the 'risk-based capital reserve' system 
> instituted by the Basel Accords that Canada signed onto in an ammendment 
> to the Bank Act - legislated in the dead of night - in the late '80's 
> early 90's, induced the commerical banks to load up on Bank of Canada 
> bonds in preference over the making of loans to business) 'we' the 
> citizens of Canada end up paying the private commercial banks - and 
> paying through the nose - for holding gov't debt which, of course, could 
> just have easily been held by the Bank of Canada for virtually nothing 
> (and, indeed, all minimal interest accruing to the gov't in any case).
> 
> [It was precisely this process which, due to the excessive, usorious 
> interest rates of the '80s led to the gov't of Canada acquiring roughly 
> 90% of its present debt load.]
> 
> So perhaps it is in this less literal sense (a process lately and 
> eloquently ariculated by Ellen Brown) that Rowbotham is expostulating 
> that, 'How dare the gov't claim...when they do not create any money?'
> 
> And, of course, the 'democratization' theme is the crucial point. But 
> really, can we even talk about economic (or its corollary, political) 
> 'democratization' under capitalism? Well, I guess we can talk about it - 
> but the two being entirely antithetical rather makes the discussion a 
> tad moot.
> 
> Tony
> 
> 
> 
> 
> 
> ----- Original Message ----- From: "Bill Totten" <shimogamo at ashisuto.co.jp>
> To: "The A-List" <a-list at lists.econ.utah.edu>
> Sent: Wednesday, May 06, 2009 7:39 PM
> Subject: Re: [A-List] The Single Most Important Reform
> 
> 
>> Todd, the Federal Reserve may return most of the interest it receives 
>> on US Treasury Bonds it holds, but most of those bonds are held by 
>> foreign governments and private foreign and domestic individuals and 
>> corporations. Google, for example, on "holders of US treasuries" where 
>> you will find http://www.treas.gov/tic/mfh.txt and other good informaton.
>>
>> Those foreign governments and private foreign and domestic individuals 
>> and corporations DON'T return to the US government the interest the US 
>> government pays them on those bonds. Since the US government and other 
>> governments borrow most of the money they could just as easily spend 
>> into circulation, the dominant portion of US and other nations' public 
>> debt is the cost of serving that debt, primarily the interest 
>> governments pay on that debt. Bill
>>
>>
>> Todd Boyle wrote:
>>> Thanks, Bill, for forwarding this...
>>>
>>>> by Michael Rowbotham - Prosperity (January 2002)
>>>>
>>>> ...How dare a government claim it cannot find the money to pay for 
>>>> this or
>>>> that essential service when they do not bother to create any money?
>>>
>>> Just for the record- the Federal Reserve is a classic central bank.
>>> It is a government agency and it prints money on a massive scale.
>>> The FAQ is here. 
>>> http://www.federalreserve.gov/generalinfo/faq/faqfrs.htm
>>> The Financial Statements of just the NY Fed, are at
>>> http://www.newyorkfed.org/aboutthefed/annualreports.html
>>>
>>> Does anybody on this list, first of all, dispute any of the statements
>>> in the FAQ or Financial Statements?   Do you accept that its earnings
>>> in excess of its costs are returned to the Treasury --not its member 
>>> banks?
>>> Do you then, agree, that it issues money out of nothing, "lends" it 
>>> to the
>>> Treasury at "interest" --- then, returns the "interest" to the Treasury?
>>>
>>> To me, that is called printing money.   That is NOT "money as debt".
>>>
>>> Myths die hard.  The myths we cling to, say more about us than they
>>> do about the Federal Reserve.   There's much to be reformed!
>>> But Rowbotham's proposal is laughably too simple-- that the government
>>> create money by spending it into circulation (It already does! ).
>>>
>>> His statement of the problem is also pathetic-- Doesn't see the
>>> larger global picture?   that Americans are either *privileged* to 
>>> create
>>> the world's money, or complicit in a grand theft, in the creation and
>>> export of dollars to the rest of the world, where they pile up and
>>> of course will never be repaid.   I think the imbalance in value
>>> rendered from one region of the planet to another, is the problem.
>>> The dollars are just a reflection of systemic injustice, which is
>>> maintained at the point of a gun, really.
>>>
>>> The people on the A-List need to be absolutely well informed, to be
>>> effective.  We are getting a dangerous excess of generalization
>>> and opinion, and not enough hard research here on this list...
>>> For example look at the Financial Statement of 2008 and 2007
>>> http://www.newyorkfed.org/aboutthefed/annual/annual08/NewYorkfinstmt2009.pdf 
>>> The numbers just JUMP OUT at you they are so huge!  The size of
>>> the Federal Reserve balance sheet tripled in just one year.  The
>>> Loans to depository institutions increased 7 times (2008)
>>> 300,665,000,000    (2007) 39,845,000,000 and there are
>>> whole new areas totaling $530 billion that didn't even exist 2007.
>>> Look at the liability section.  Money deposited at the Fed by member
>>> banks jumbed from 9 billion to 500 billion in one year, what the hell
>>> does that mean?  Seems, they are hoarding funds.  They either cant
>>> or wont lend, so they leave it to rot in the central bank.  This
>>> is what it looks like when the global banksters do their periodic
>>> liquidity destruction of the world, pulling liquidity out of the entire
>>> world.   In due course, after we are all bankrupt and foreclosed,
>>> they will reflood the money---down thru the channels to the banks
>>> on every corner, down to the county and city levels to control
>>> whose profits and property values explode most, decide who
>>> gets rich, and to engineer another vast flood of patronage money
>>> into the Republican Party in 2012 just exactly as it happened
>>> in 2000 and 2004.
>>>
>>> The most important reforms surely include-- opening to public
>>> scrutiny and *democratizing* the process of loan approvals.
>>> This is part and parcel of making financial transactions public.
>>> Until we break the hypnosis, the indoctrination, that people
>>> somehow need secrecy in their income and expense information,
>>> there's not going to be much progress, folks.   we need be
>>> able to login to any bank, and surf the accounts and see who
>>> is payor and payee of every transaction.
>>>
>>> todd
>>>
>>>
>>>
>>> Todd
>>
>>
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