[R-G] [BillTottenWeblog] An Open Letter to President Obama

Mon Apr 13 20:00:05 MDT 2009

Revive Lincoln's Monetary Policy

by Ellen Brown

webofdebt.com (April 08 2009)

Dear President Obama:

The world was transfixed on that remarkable day in January when, to
poetry, song, and dance, you gazed upon Abraham Lincoln's likeness at
the Lincoln Memorial and searched for wisdom to navigate these difficult
times. Indeed, you have so many things in common with that venerable
President that one might imagine you were his reincarnation in different
dress. You are both thin and wiry, brilliant speakers, appearing on the
national stage at pivotal times. Fertile imaginations could envision you
coming back dressed in that African heritage you freed, to help heal the
great scar of slavery and prove once and for all the proposition that
all men are created equal and can achieve great things if given a
fighting chance.

As Wordsworth said, however, our birth is but a sleep and a forgetting;
and if that is true, you may have forgotten a more subtle form of
slavery from which Lincoln tried less successfully to free his
countrymen. You may have forgotten it because it has been omitted from
our popular history books, leaving Americans ill-equipped to interpret
the lessons of our own past.  This letter is therefore meant to remind you.

President Obama, we are now met on another battlefield of that same
economic war that visited Lincoln and the Founding Fathers before him.
For you to finish the work Lincoln started would be a poetic triumph no
American could miss.  The fate of our economy and the nation itself may
depend on how well you understand Lincoln's monetary breakthrough, the
most far-reaching "economic stimulus plan" ever implemented by a US
President.  You can solve our economic crisis quickly and permanently,
by implementing the same economic solution that allowed Lincoln to win
the Civil War and thus save the Union from foreign economic masters.

Lincoln's Monetary Breakthrough

The bankers had Lincoln's government over a barrel, just as Wall Street
has Congress in its vice-like grip today. The North needed money to fund
a war, and the bankers were willing to lend it only under circumstances
that amounted to extortion, involving staggering interest rates of 24 to
36 percent. Lincoln saw that this would bankrupt the North and asked a
trusted colleague to research the matter and find a solution. In what
may be the best piece of advice ever given to a sitting President,
Colonel Dick Taylor of Illinois reported back that the Union had the
power under the Constitution to solve its financing problem by printing
its money as a sovereign government. Taylor said:

"Just get Congress to pass a bill authorizing the printing of full legal
tender treasury notes ... and pay your soldiers with them and go ahead
and win your war with them also. If you make them full legal tender ...
they will have the full sanction of the government and be just as good
as any money; as Congress is given that express right by the Constitution".

The Greenbacks actually were just as good as the bankers' banknotes.
Both were created on a printing press, but the banknotes had the veneer
of legitimacy because they were "backed" by gold. The catch was that
this backing was based on "fractional reserves", meaning the bankers
held only a small fraction of the gold necessary to support all the
loans represented by their banknotes. The "fractional reserve" ruse is
still used today to create the impression that bankers are lending
something other than mere debt created with accounting entries on their
books. {1}

Lincoln took Colonel Taylor's advice and funded the war by printing
paper notes backed by the credit of the government. These legal-tender
US Notes or "Greenbacks" represented receipts for labor and goods
delivered to the United States. They were paid to soldiers and suppliers
and were tradeable for goods and services of a value equivalent to their
service to the community. The Greenbacks aided the Union not only in
winning the war but in funding a period of unprecedented economic
expansion. Lincoln's government created the greatest industrial giant
the world had yet seen. The steel industry was launched, a continental
railroad system was created, a new era of farm machinery and cheap tools
was promoted, free higher education was established, government support
was provided to all branches of science, the Bureau of Mines was
organized, and labor productivity was increased by fifty to 75 percent.
The Greenback was not the only currency used to fund these achievements;
but they could not have been accomplished without it, and they could not
have been accomplished on money borrowed at the usurious rates the
bankers were attempting to extort from the North.

Lincoln succeeded in restoring the government's power to issue the
national currency, but his revolutionary monetary policy was opposed by
powerful forces. The threat to established interests was captured in an
editorial of unknown authorship, said to have been published in The
London Times in 1865:

"If that mischievous financial policy which had its origin in the North
American Republic during the late war in that country, should become
indurated down to a fixture, then that Government will furnish its own
money without cost. It will pay off its debts and be without debt. It
will become prosperous beyond precedent in the history of the civilized
governments of the world. The brains and wealth of all countries will go
to North America. That government must be destroyed or it will destroy
every monarchy on the globe."

Lincoln was assassinated in 1865. According to historian W Cleon Skousen:

"Right after the Civil War there was considerable talk about reviving
Lincoln's brief experiment with the Constitutional monetary system. Had
not the European money-trust intervened, it would have no doubt become
an established institution."

The institution that became established instead was the Federal Reserve,
a privately-owned central bank given the power in 1913 to print Federal
Reserve Notes (or dollar bills) and lend them to the government. The
government was submerged in a debt that has grown exponentially since,
until it is now an unrepayable $11 trillion. For nearly a century,
Lincoln's statue at the Lincoln Memorial has gazed out pensively across
the reflecting pool toward the Federal Reserve building, as if pondering
what the bankers had wrought since his death and how to remedy it.

Building on a Successful Tradition

Lincoln did not invent government-issued paper money. Rather, he
restored a brilliant innovation of the American colonists. According to
Benjamin Franklin, it was the colonists' home-grown paper "scrip" that
was responsible for the remarkable abundance in the colonies at a time
when England was suffering from the ravages of the Industrial
Revolution. Like with Lincoln's Greenbacks, this prosperity posed a
threat to the control of the British Crown and the emerging network of
private British banks, prompting the King to ban the colonists' paper
money and require the payment of taxes in gold. According to Franklin
and several other historians of the period, it was these onerous demands
by the Crown, and the corresponding collapse of the colonists' paper
money supply, that actually sparked the Revolutionary War. {2}

The colonists won the war but ultimately lost the money power to a
private banking cartel, one that issued another form of paper money
called "banknotes". Today the bankers' debt-based money has come to
dominate most of the economies of the world; but there are a number of
historical examples of the successful funding of economic development in
other countries simply with government-issued credit. In Australia and
New Zealand in the 1930s, the Depression conditions suffered elsewhere
were avoided by drawing on a national credit card issued by
publicly-owned central banks. The governments of the island states of
Guernsey and Jersey created thriving economies that carried no federal
debt, just by issuing their own debt-free public currencies. China has
also funded impressive internal development through a system of
state-owned banks.

Here in the United States, the state of North Dakota has a wholly
state-owned bank that creates credit on its books just as private banks
do. This credit is used to serve the needs of the community, and the
interest on loans is returned to the government. Not coincidentally,
North Dakota has a $1.2 billion budget surplus at a time when 46 of
fifty states are insolvent, an impressive achievement for a state of
isolated farmers battling challenging weather. {3} The North Dakota
prototype could be copied not only in every US state but at the federal
level.

The Perennial Inflation Question

The objection invariably raised to government-issued currency or credit
is that it would create dangerous hyperinflation. However, in none of
these models has that proven to be true. Price inflation results either
when the supply of money goes up but the supply of goods doesn't, or
when speculators devalue currencies by massive short selling, as in
those cases of Latin American hyperinflation when printing-press money
was used to pay off foreign debt. When new money is used to produce new
goods and services, price inflation does not result because supply and
demand rise together. Prices did increase during the American Civil War,
but this was attributed to the scarcity of goods common in wartime
rather than to the Greenback itself. War produces weapons rather than
consumer goods.

Today, with trillions of dollars being committed for bailouts and
stimulus plans, another objection to Lincoln's solution is likely to be,
"The US government is already printing its own money - and lots of it".
This, however, is a misconception. What the government prints are bonds
- its IOUs or debt. If the government did print dollars, instead of
borrowing them from a privately-owned central bank that prints them,
Uncle Sam would not have an eleven trillion dollar millstone hanging
around his neck. As Thomas Edison astutely observed:

"If our nation can issue a dollar bond, it can issue a dollar bill. The
element that makes the bond good, makes the bill good, also. The
difference between the bond and the bill is that the bond lets money
brokers collect twice the amount of the bond and an additional twenty
percent, whereas the currency pays nobody but those who contribute
directly in some useful way.

"It is absurd to say that our country can issue $30 million in bonds and
not $30 million in currency. Both are promises to pay, but one promise
fattens the usurers and the other helps the people."

A Wake-up Call

Henry Ford observed at about the same time:

"It is well enough that people of the nation do not understand our
banking and monetary system, for if they did, I believe there would be a
revolution before tomorrow morning".

Today we the people are starting to understand our banking and monetary
system, and we are shocked, dismayed, and furious at what we are
discovering. The wizard behind the curtain turns out to be a small group
of men pulling levers and dials, creating an illusory money scheme that,
behind all the talk and bravado, is mere smoke and mirrors. These levers
are controlled by a privately-owned, unaccountable central bank called
the Federal Reserve, which has recently dispensed billions if not
trillions in funds to its banker cronies, without revealing where these
monies are going even under Congressional inquiry or in response to
Freedom of Information Act (FOIA) requests. As Chris Powell pointed out
recently in conjunction with an FOIA request brought by Bloomberg News,
which the Fed declined to comply with:

"Any government that can disburse $2 trillion secretly, without any
accountability, is not a democratic government. It is government of, by,
and, for the bankers." {4]

There was a time when private central bankers were the heavyweights in
control, able to run their ultra-secret agenda with impunity; but that
era is coming to an end. The bankers are scrambling, trying to patch up
their crumbling creations with schemes, bailouts and sleight of hand.
That effort, however, must ultimately prove futile. As investment
adviser Rolfe Winkler said in a recent article:

"The great Ponzi scheme that is the Western World's economy has grown so
big there's simply no fixing' it. Flushing more debt through the system
would be like giving Madoff a few billion to tide him over. Or like
adding another floor to the Tower of Babel. To what end? The collapse is
already here. The question is: How much do we want it to hurt? Using the
public's purse to finance 'confidence' in a system that is already kaput
may delay the Day of Reckoning, sure, but at the cost of multiplying our
losses. Perhaps fantastically." {5}

The bankers are on the run, feverishly trying to use the collapse of the
current system to steer us toward an "Amero"-style North American
currency, or a one-world private banking system and privately-issued
global currency that they and only they control. We the people will not
accept those solutions, however, no matter how bad things get. We demand
real solutions that empower us, not further enslave us.

Abraham Lincoln had such a solution. President Obama, you can finally
bring his monetary solution to fruition. Manifest the vision of Lincoln,
Jefferson, Madison and Franklin, and we the people will make sure you
are placed in the pantheon of our greatest leaders and are revered for
all time. America's greatest days can still be ahead of us; but for this
to happen, we need to expose and root out the deceptive banking scheme
that would enslave us to a future of debt and increasing homelessness in
this great country our forefathers founded. The time has come for
democracy to rise superior to a private banking cartel and take back the
power to create money once again. Such a transformation would represent
the most epochal and empowering shift that humanity has ever seen. As
you recently said:

"This country has never responded to a crisis by sitting on the
sidelines and hoping for the best. Throughout our history we have met
every great challenge with bold action and big ideas."

Your words are a timely reminder of our long legacy of action and bold
solutions in the face of adversity. Can we do this? Yes we can.

Originally posted on Yes! Magazine Online (April 07 2008)

_____

For more information, see the writings of a variety of money reformers
including David Korten, Richard Cook, Stephen Zarlenga, Michael Hudson
and this author; articles collected at www.webofdebt.com/articles and
www.GlobalResearch.ca; the documentary videos "The Money Masters" and
"Money as Debt"; and proposed legislation by Congressman Dennis Kucinich
to nationalize the Fed, and by Congressman Ron Paul to audit it (HR 1027).

Ellen Brown developed her research skills as an attorney practicing
civil litigation in Los Angeles. In Web of Debt, her latest book, she
turns those skills to an analysis of the Federal Reserve and "the money
trust". She shows how this private cartel has usurped the power to
create money from the people themselves, and how we the people can get
it back. Her earlier books focused on the pharmaceutical cartel that
gets its power from "the money trust". Her eleven books include
Forbidden Medicine, Nature's Pharmacy (co-authored with Dr Lynne
Walker), and The Key to Ultimate Health (co-authored with Dr Richard
Hansen). Her websites are www.webofdebt.com and www.ellenbrown.com.

Notes:

1. See Ellen Brown, "Borrowing from Peter to Pay Paul: The Wall Street
Ponzi Scheme Called Fractional Reserve Banking",
www.webofdebt.com/articles (December 29 2008).

2. Congressman Charles Binderup in a 1941 speech, "How America Created
Its Own Money in 1750: How Benjamin Franklin Made New England
Prosperous". Binderup quotes historian John Twells on this point.

3. E Brown, "Turning the Tables on Wall Street: North Dakota Shows
Cash-starved States How They Can Create Their Own Credit",
www.webofdebt.com/articles (March 11 2009).

4. Chris Powell, "Fed Refuses to Disclose Recipients of $2 Trillion",
GATA (December 12 2008).

5. Rolfe Winkler, "More Debt Won't Rescue the Great American Ponzi",
Option Armageddon (March 09 2009).

_____

Special thanks to CC for his invaluable help with this article.

http://www.webofdebt.com/articles/lincoln_obama.php

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