[R-G] [BillTottenWeblog] Reviewing Ellen Brown's "Web of Debt" (5)

[Bill Totten]

Part Five

by Stephen Lendman

sjlendman.blogspot.com (May 15 2009)


This is the fifth of several articles on Ellen Brown's superb 2007 book
titled "Web of Debt", now updated in a December 2008 third edition. It
tells "the shocking truth about our money system, (how it) trapped us in
debt, and how we can break free". This article focuses on taking back
our money power.


Recapturing What's Ours and Turning Scarcity to Abundance

In 1952, Norman Vincent Peale (1898 - 1993) first published his most
famous book - "The Power of Positive Thinking". It sold about five
million copies and was a New York Times bestseller for 186 consecutive
weeks delivering messages like: "Never talk defeat. Use words like hope,
belief, faith, victory." FDR struck the same theme in saying: "The only
thing we have to fear is fear itself".

In 1900, Frank Baum's "The Wizard of Oz" was first published, conveying
"the notion that a life of scarcity could be transformed in an instant
into one of universal abundance ..." In real life, the secret is by
taking back our money power from the private bankers who stole it in
1913, in the middle of the night, two days before Christmas, and kept it
ever since.

Today's real cause of scarcity is that "somebody is paying interest on
most of the money in the world all of the time", and by so doing
enslaves nearly everyone in perpetual debt bondage. Meeting America's
huge debt burden requires the money supply to keep expanding, "and for
that to happen, borrowers must continually go deeper into debt,
merchants must continually raise their prices, and the odd men out in
the bankers' game of musical chairs must continue to lose their property
to the banks".

The result - inevitable wars, competition, strife, inflation, deflation,
recessions, depressions, debt bondage, poverty, and despair, while at
the same time bankers get fabulously richer and more powerful. The
obvious solution is to stop "parasitic" banks from "feeding on the
world's prosperity", but the "Witches of Wall Street" don't yield
easily. Dethroning them will take the process Francis Fox Piven
explained in her 2006 book, "Challenging Authority". She quoted Thomas
Jefferson responding to the repressive 1798 Alien and Sedition Acts saying:

"A little patience, and we shall see the reign of witches pass over,
their spells dissolve, and the people, recovering their true sight,
restore their government to its true principles".

Disruptive social actions have done it as Piven explained:

"ordinary people (have) power ... when they rise up in anger and hope,
defy the rules ... disrupt (state) institutions ... propel new issues to
the center of political debate (and force) political leaders (to) stem
voter defections by proferring reforms. These are the conditions that
produce" democratic change.


Sidestepping the Debt Web with "Parallel" Currencies

Community currencies, for example, that historically rose "spontaneously
when national (ones) were scarce, unobtainable", or in the case of
Weimar Germany worthless because of hyperinflation. "Hundreds of
communities in the United States, Canada and Europe did the same thing
during the Depression" when hard times forced creative solutions. "Like
the medieval tally, these currencies were simply credits (letting
bearers) trade (them) for an equivalent value in goods and services ..."

Today, community currencies "operate legally in more than 35 countries
..." and in North America over thirty are available in places like
Ithaca, New York where Ithaca HOUR scrip is used, saying on the back:

"This is money (entitling) the bearer to receive one hour of labor or
its negotiated value in goods and services. Please accept it, then spend
it ..."

Another example is corporate credits like airline frequent flyer miles
entitling holders to free flights and other benefits like lodging,
rental cars, restaurant meals and even groceries.

Computer technology provides other alternatives as well, without
currencies, by facilitating trades electronically. In 1981 after IBM
released its XT computer, the first electronic currency system was
devised - a Local Exchange Trading System (LETS) for recording
transactions and keeping accounts by simply having "an information
system for recording human effort". It tallied credits in and debits
out, tax and interest free, and stored electronically.

Check out these sites for more information:

-- ithacahours.com;

-- madisonhours.org;

-- communitycurrency.org; and

-- geog.le.ac.uk/ijccr.


The main drawback to these systems is they're small, local, and fail to
address the greater problem - "the mammoth debt spider that is sucking
the lifeblood from the national economy" and our well-being. Solving
that requires national currency reform - returning money creation power
to the people who own it from bankers who stole it.


Goldbugs vs Greenbackers

In 1896 at the Democratic National Convention, William Jennings Byran
railed against Goldbugs and their moneyed interests backers in support
of Greenbacker farmers and laborers saying: "You shall not crucify
mankind upon a cross of gold". The arguments went like this:

-- Bankers claimed gold was a stable medium of exchange; "sound" or
"honest" money in relatively fixed supply that couldn't be inflated by
irresponsible governments out of proportion to the demand for goods and
services;

-- Greenbackers called scarcity a drawback letting governments condone
"dishonest" money through fractional reserve banking; they'd be harmed
too many previous times not to know it; also, during the 1850s Gold
Rush, its supply and consumer prices rose sharply, did again from 1917 -
1920, and during the 1970s when gold rose from $40 an ounce to $800 and
inflation along with it.

The debate still continues, but today's goldbugs are money reformers,
not bankers who have it all going their way so why change.

As a medium of exchange, gold has serious drawbacks. In the Great
Depression, it left the country, exacerbating deflation that caused the
money supply and demand to contract. Another problem is that
productivity is linked to its availability, but more practical matters
are also relevant like needing gold bars for large purchases, something
avoided by paper, checkbook and electronic money.

In the 1990s, Harvey Barnard proposed a new currency reform idea that
included a national sales tax in lieu of the federal income tax with the
aim of zero inflation and a stable economy. The National Economic
Stabilization and Recovery Act (NESARA) he called it. His idea was for
the government to issue currency in three forms - standard silver coins,
standard gold ones, and Treasury credit notes or Greenbacks. Treasury
notes would replace Federal Reserve ones with the Federal Reserve abolished.

NESARA was never introduced in Congress and might work if enacted. But
why bother when the central problem is more simply addressed by
returning money creation power to the government as the Constitution
mandates. Paper currency isn't the problem. A private banking cartel
controlling it is what's at issue to fix. By doing it, "the water of a
free-flowing money supply can transform an arid desert of debt into the
green abundance envisioned by our forefathers". It's there for the
taking by simply "eliminating the financial parasite that is draining
our abundance away", and there's nothing complicated about doing it.


The Federal Debt

How to pay it off is the question Congress one day must address. We
can't grow our way out, but here's another way - pay it off "by turning
(government) bonds into what they should have been all along, legal tender".

Economic analyst Al Martin cites a 2001 US Treasury study showing that
US debt service may force the government to raise the personal income
tax to 65% by 2013, and if interest can't be paid, bankruptcy and
economic collapse will follow as well as for global economies within
five days. The only alternative at that point would be "through currency
(and) military might, or internal military power ..."

However, two centuries ago, Alexander Hamilton showed "that Congress
could dispose of the federal debt by 'monetizing' it, but Congress made
the mistake of delegating that function to a private banking system". It
can fix it by "buying back its own bonds with newly-issued US Notes" it
can print in limitless amounts - debt and interest free.

It's being done now - "not by the government but by the private Federal
Reserve". However, doing it leaves the bonds in circulation, with two
sets of securities (bonds and cash) instead of one. "This highly
inflationary (scheme) could be avoided" if the government just bought
back its own bonds and voided them out - a win-win arrangement for the
nation and public with only bankers losing out as they should.

It's simple to do and would be able to "extinguish the national debt
with the click of a mouse". In January 2004, the Treasury did it when it
"called" (paid off) a thirty-year bond issue prior to its due date.
Paying "in book-entry form" eliminated doing it with paper currencies or
checks and turned securities from interest-bearing to non-interest
bearing ones. Bondholders had a choice. They could take their redemption
amount in cash or not sell and get no interest.

By this method, the Treasury "can pay off the entire federal debt ... It
just has to announce that it is calling its bonds and other securities,
and that they will be paid 'in book-entry form' ". No cash is involved
and funds received can be otherwise reinvested. The process can be
accomplished gradually as securities come due. It's just a matter of
doing it along with restoring money creation power to the government and
making America democratic again, unbeholden to bankers.


Federal Debt Liquidation without Inflation

"Inflation results when the money supply increases faster than goods and
services, and replacing government securities with cash would not change
the size of the money supply". If government buys its own bonds, they
simply convert from interest-bearing notes into non-interest-bearing
legal tender (cash). The money supply remains unchanged, and there's no
inflationary impact.

That's "very different from what happens today" with the Fed buying
bonds, not voiding them out, and creating "reserves" for issuing "many
times their value in new loans". It adds new cash to the money supply -
a "highly inflationary (scheme simply avoided by having) the government
buy back its own bonds and (take) them out of circulation".

It's also a way to solve the "Social Security crisis". Resolve it by
"simply cashing out (of) federal bond holdings (in exchange for)
newly-issued US notes" with no inflationary effect because no new money
would be created. Bonds would become cash, remain in the fund, and be
used for future pay-outs.

Fed-held securities could be cashed out the same way and just as
benignly. Cash would replace bonds. They'd be voided out. The money
supply would be unchanged, and inflation would be avoided. It would work
no differently for foreign central bank held debt since bonds and cash
are the same thing and either can be held in reserve to support their
own currencies or to buy oil per the 1974 OPEC agreement.

Already sovereign debt holders are cutting back, reducing their US
securities reserves but doing it discretely so as not to be disruptive.
However, "the tide is rolling out, and US bonds will be coming back to
(our) shores whether we like it or not". At issue is who'll buy them and
whether an inflationary or non-inflationary path will be taken. So far
it's the former with all the dangers involved.


Federal Reserve-Issued "Helicopter" Money

Early in the new millennium, deflationary concerns were great enough for
Ben Bernanke to deliver a Washington 2002 speech titled: "Deflation:
Making Sure 'It' Doesn't Happen Here". He explained that lowering
interest rates isn't the sole way to inject new money into the economy.
The "US government has a new technology, called a printing press (an
electronic one), that allows it to produce as many US dollars as it
wishes at essentially no cost". The government could reflate the economy
and buy hard assets at the same time. At issue again is whether
government or private bankers do it (or local communities acting
independently) and the positive or negative effects of each choice.

Today we're banking cartel controlled, and it's "brought the system to
the brink of collapse. The privately-controlled Federal Reserve, which
was chartered specifically to 'maintain a stable currency', has allowed
the money supply to balloon out of control. The Fed manipulates the
money supply and regulates its value behind closed doors, in blatant
violation of the Constitution and the antitrust laws" with the full
faith and blessing of the administration, Congress and courts. It "can't
be held to account; it doesn't even have to explain its rationale or
reveal what is going on".

Imagine the difference if the "banking spider ... could be decapitated,
returning national (money creation) sovereignty to the people
themselves". In other words, the rightful owner.

_____

A final article addresses a people-oriented banking system.

Stephen Lendman is a Research Associate of the Centre for Research on
Globalization. He lives in Chicago and can be reached at
lendmanstephen at sbcglobal.net.

Also visit his blog site at sjlendman.blogspot.com and listen to The
Global Research News Hour on RepublicBroadcasting.org Monday - Friday at
10 am US Central time for cutting-edge discussions with distinguished
guests on world and national issues. All programs are archived for easy
listening.

http://www.globalresearch.ca/index.php?context=va&aid=13553

http://sjlendman.blogspot.com/2009/05/reviewing-ellen-browns-web-of-debt-part_15.html


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