By Dick Distelhorst, AMI Researcher and Chapter Leader
Burlington, Iowa. June 16, 2010.
Warren Buffet recently said, “There is a class war going on and my class is winning.” He is certainly correct. In September of 2008 when the greed and recklessness of the “too-big-to-fail” banks caused millions of U. S. citizens to lose their jobs, their homes, much of their savings, even their pensions, who did our government bail out, the big banks or the American people?
We know the answer. The Bush and the Obama administrations made trillions of dollars available to the big banks, now those same big banks are reporting all-time record profits and paying themselves huge bonuses.
There is a way to bail out the American people instead of the very wealthy and return our nation to prosperity. All we have to do is look at past history. The answers we need are there.
The best answer to the Great Depression, the “Chicago Plan” of the 1930s was a proposal which would have taken the power to create, issue and regulate money away from the privately-owned banks and return that sovereign power to the people. An even better proposal to take back our sovereign power to create, issue and regulate our money is ready for America. Read about this bill at: This legislation is the answer to ending the Great Recession. This brings us to the first three steps of “The Blueprint for Prosperity.”
Step 1: Incorporate the Federal Reserve Banks into the U. S. Treasury where all money will be created by the government as real money instead of as interest-bearing debt and spent into circulation to promote the general welfare; monitored to be neither inflationary nor deflationary.
Step 2: Eliminate Fractional Reserve Banking in a manner that makes the federal government the only entity with the power to create, issue and regulate our money, as Article I, Section 8, Clause 5 of the United States Constitution already mandates.
Step 3: Real U.S. Money will be spent into circulation, starting to rebuild our badly decayed public infrastructure which includes roads, bridges, dams, water and sewage plants, mass transit, schools, etc. This will create millions of high paying jobs. We include health care and education as part of infrastructure – human infrastructure. If the recession or depression lingers on, a stimulus check of at least $5,000 should be sent out to every American citizen immediately to start getting out of this recession by putting money back in the hands of the American people.
(To understand how these three crucial steps are demonstrated in historical case studies, read The Lost Science of Money by Stephen Zarlenga; see http:/www.monetary.org/lostscienceofmoney.html)
These three steps are the way out of the present Great Recession. All of the benefits outlined above, and many more, will appear as an interest-free, debt-free, inflation-free dividend for the American people. Under this legislation, the benefit of that creation will go to bail out the American people not to bail out the big banks.
What the “too big to fail” banks don’t want you to know is that all of their money was created in the form of debt and when they can no longer create more “debt-money” it will disappear, which means we will have to replace their debt money by spending real U. S. dollars into circulation. Then we will finally get the benefits of the money we should have created in the first place. The real money we need to spend into circulation to replace this bank “debt-money” is literally trillions and trillions of dollars. And it all will appear as a bonus or dividend for the American people. Within a few months of the passage of this legislation the present Great Recession will have ended.
One other important legislative action needs to take place in order to end this Great Recession. After the 1929 stock market crash, Congress passed the Glass-Steagall Banking Act in 1933. This Act, among other things, separated commercial banking from investment banking. The Glass-Steagall Act was repealed in 1999 by the Gramm-Leach-Bliley Financial Modernization Act. That was followed in 2000 by the Gramm Commodity Futures Modernization Act. Those two bad pieces of legislation opened the big bank gambling casino. The casino is still open. The financial reform bill now in Congress does not even mention either Act. The bill in Congress is over 1,500 pages long and does not solve the problem. The bill needed to solve the problem can be written in just two sentences. Here they are.
Repeal the Gramm-Leach-Bliley Financial Modernization act of 1999 and repeal the Gramm Commodity Futures Modernization Act of 2000. Reinstate the Glass-Steagall Banking Act of 1933. (That’s it, just two sentences, not 1,500 pages). All the nonsense you may be reading from lobbyists that Glass-Steagall is passé and no longer applicable, are efforts to allow banks to continue their casino games.
In 1932, in the midst of the Great Depression, Franklin Delano Roosevelt was elected and he started the New Deal to bail the American people and put them back to work. Here are some of the actions taken by FDR during the New Deal years. The Banking Act of 1933 (Glass-Stegall) was passed to separate commercial banking and the peoples’ deposits from Investment banking. He started the WPA (Works Progress Administration) and the CCC (Civilian Conservation Corps) to put people back to work immediately. He promoted unions and also passed the 40 hour work week and time and a half for overtime. He outlawed child labor. He passed Social Security. He introduced farm price supports and new agricultural methods promoted by his Vice President, Henry Wallace. He started unemployment insurance. And, later, during WWII he raised the progressive income tax to a top rate of 91%, this rate lasted from 1942 to 1961 when President Kennedy reduced it to 70%, a top rate that lasted until 1981 when President Reagan dropped the top rate to 28%
In 2008, in the midst of the Great Recession, Barack Obama was elected and promised us change for the better with the slogan “Yes we can!” We hoped for a new FDR who would bail out the people, but the new President bailed out the “too-big-to-fail” banks instead of the people; he then expanded War instead of ending it; and his health care plan bailed out health care insurance companies instead of the American people. Perhaps he followed bad advice from his Wall Street and Big Business advisors, only he knows why he took these actions which helped the very wealthy, not the American people.
It’s time to give President Obama the right advice. Send him a copy of this article. It’s not too late for him to change course and help rebuild the country we all love, the country with a government of the people, by the people and for the people.
Dick Distelhorst, a long time monetary reformer, is also a senior advisor to the American Monetary Institute. Dick is among the most knowledgeable Americans regarding the workings of the Federal Reserve System. He also understands fully which actions have to be taken to end this tyranny of a self declared elite. Our nation and its people cannot survive the continuance of the present privately-owned, debt-based monetary system. Either we end that system now or it will end our representative democracy. That is the stark choice now facing us. There is no doubt that the solution to our economic and social justice problems is to institute the debt-free monetary system proposed in the American Monetary and Financial Security Act. Dick is a regular presenter at the AMI Monetary Reform Conference, held annually at University Center in Downtown Chicago.