[A-List] The Single Most Important Reform
tal1 at cogeco.ca
Fri May 8 18:56:31 MDT 2009
I hear ya. And I reckon that change by reform rather than revolution seems
like the easiest, perhaps even the only, route. Still, this is a theme that,
both historically and at present, is rife with contention. Certainly
democratizing the banking system would count as a 'little
revolution'...though I still have a hard time visualizing how it could come
about given its central role within present-day capitalist social and
----- Original Message -----
From: "Bill Totten" <shimogamo at ashisuto.co.jp>
To: "The A-List" <a-list at lists.econ.utah.edu>
Sent: Friday, May 08, 2009 7:02 PM
Subject: Re: [A-List] The Single Most Important Reform
> 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
>> ----- 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
>>> 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.
>>>> The Financial Statements of just the NY Fed, are at
>>>> 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
>>>> Do you then, agree, that it issues money out of nothing, "lends" it to
>>>> Treasury at "interest" --- then, returns the "interest" to the
>>>> 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
>>>> 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
>>>> 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.
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