It’s a great pleasure to inaugurate these promised quarterly reports to AMI supporters and readers of The Lost Science of Money book. They will keep you updated on events and progress at AMI and on significant monetary and economic developments at the national and international levels.
This first issue announces AMI’s Monetary Reform Conference to be held in Sept./Oct. 2005 in Chicago (see below). Also a report on AMI’s first lobbying efforts to directly educate Senatorial and Congressional aides in Washington, DC, on the money question.
One of our goals is to help create a form of “community” of discussion and outlook regarding the monetary reform questions that we face as a nation. In doing this we’ll all be reminded that we’re not alone; that real progress is being made and more is on the way.
This forum will also help answer any questions you may have and ALL are invited to send ANY questions or comments on these subjects. Let me know what you enjoy reading about. Occasionally information relevant to various markets will be discussed. We’ll continue to send these by regular post, but I strongly urge all to get on the Internet – its convenient and everyone should have email.
The U.S. & International Money Scene
We received the following important question:
Q: “I think there seems to be a great deal of wolf-crying about the decline in the dollar’s value. At what point do you think it would become worrisome? What are the real warning signs, in your opinion?” from L.D. in Maine.
Answer: There is normally some “crying wolf” connected with investments as market manipulators try to stampede participants into unwise buying or selling activity. But now something more ominous is occurring as it becomes apparent that we are seriously bogged down in Iraq, both morally and militarily. “We” made a mess of it.
Financially it’s not just a question of the heavy spending and deficits, but it’s a matter of how the money is created and where the money is being spent. If the massive deficits were going into infrastructure, education, medical attention and the creation of the many needed values for our society, in my opinion we’d have a large net gain in terms of more abundant goods, higher working efficiency, and a far less frustrated citizenry across the whole political spectrum.
Neither would such productive spending be likely to cause long-term inflation, because of the resulting production. However, spend the same money on warfare, and you get all the negative fiscal results, with very little positive productive feedback.
of bringing new goods and services into existence, you blow up and destroy existing infrastructure along with newly built weapons systems that don’t create values for life. That will be inflationary. Combine this with a massive misplaced tax cut for the wealthy, and you create a fiscal crisis.
In the process lives are destroyed – not only of our opponents – but our own young men and women at the brutal sharp edge of warfare.
Furthermore, if the money used to fund infrastructure and more positive spending (or even to fund the warfare!) came into existence as government created money (as described in The Lost Science of Money), then it would not add to any national debt or require interest payments into perpetuity. Instead, the warfare is being funded through money privately created as loans in our banking system. Such funding does add to the national debt and to never-ending interest payments on it.
Such funding creates a huge incentive for war on the part of the financial houses getting the interest. Although they would make as much if the loans went into good infrastructure projects, it is only the “emergency” of warfare that makes such huge deficits politically possible, in the existing falsehoods that dominate economic thought.
Add in all the corrupt interests with their various motives (for example: the Oil lobby; the group referred to as the neo-conservatives, who are not really conservatives at all; the religious fanatics who welcome Armageddon as a means of bringing Jesus back to Earth; those who mistakenly thought they could control China’s growth by controlling her oil supply; etc.) and you get a hypocritical coalition for warfare.
The real warning sign that long-term, damage might occur to America, and the value of the $ in terms of other currencies such as the Euro, or commodities like gold, already took place on November 2nd when the U.S. political process couldn’t shake this war coalition!
This became clear in the gold market on election day, when it appeared early that John Kerry won the election, the price of gold plunged $8 an ounce, and the EURO fell also. When George Bush was declared the winner, both gold and the EURO recovered to new highs, showing that international markets expect continued financial disruptions from this administrations’ policies.
Some Background: The AMI isn’t an investment advisory but comments occasionally on markets, as part of our educational process. For example in our interview with Gold Newsletter in 2000 posted at the AMI website, we said gold would be rising from $272 per ounce, after having been personally negative on the gold market since 1987. A few months ago, after it reached $430 an ounce, I told people to leave that market. Now with the election-day action and increased international frustration, gold around $340 an ounce again can be considered for an investment hedge because: When central banks are not co-operating (e.g. as under this administrations’ foreign policy) speculators can have substantial influence on the gold price. Also some Western elements are inappropriately pushing Moslems toward gold money as part of the attack on Islam, and some Moslem groups are taking the bait. Also China or others might be provoked to rattle the international situation through the gold price. Also the potential for another “911” attack; etc, etc, etc. But all this can change quickly as it started to do on election day.
And remember, everything that might make gold interesting for a while, as an investment also makes gold unsuitable as money. Don’t confuse the two, as the goldbugs always do.
As you know from The Lost Science of Money book, Money is an abstract social power, it is not wealth itself, but can be exchanged for wealth; it’s essence is a legal power, not a commodity or tangible good. And our attention must remain focused on researching and reforming an unjust monetary system, not on speculation. Speculation is easy.
Regarding the EURO, Europe’s money managers designed it to equal $1. See page 646 in The Lost Science of Money book where we noted that the EURO would rise from 82 cents and then oscillate around $1. Thanks to the Iraq war it stopped oscillating around $1, and its up to $1.35. We also noted there the potential not only for monetary conflict with Europe but for military conflict with Europe. Hard as that was to imagine in 2002, and is still hard to imagine now, the past year has seen such conflict become more likely as we already moved into the propaganda phase of such conflict.
The Only Superpower?
We’ve been lulled into complacency as the “only remaining superpower,” but that is nonsense. Any country with a few dozen nuclear weapons is a superpower, or enough of a power. Russia still has several thousand. England has some thousands. France at least several hundred. Israel maybe a few hundred; China – enough; India, Pakistan, N. Korea!
The fact is that three or four nuclear hits on our country ends America as we know it. We wouldn’t recognize what the U.S. would become. Even so, we’d have no choice but to rebuild. (AMI’s focus under such conditions would be to rebuild using a properly structured monetary system. To that end, The Lost Science of Money book is printed on 300 year paper.)
Thanks partly to the high oil price, Russia has been given the means of financing its state activities, and establishing a viable taxation system. Putin hasn’t bought the free-market line that downed Gorbachev. He’s undoing the fraudulent privatization schemes that threw Russia into chaos for a decade and decimated her Army and Navy leaving mainly her nuclear missiles. Schemes that reduced life expectancies and literally buried its victims. In a reaction against corrupt market excesses, Putin, if he stays alive, has the power to re-establish some form of totalitarianism. These are seriously dangerous times and we all need to start behaving more intelligently.
Recent Speaking Trips of AMI Director Stephen Zarlenga:
December 4th, 2003 – Washington, DC, Talk to the U.S. Treasury on How The Lost Science of Money Can Help Solve the States Fiscal Crisis. (This talk was mailed to supporters in January 2003. For another, send an addressed envelope and a couple of bucks for postage and we’ll send it. The talk was well received by senior members and staff at the U.S. Treasury, in the operations section responsible for making the place run; not the political section. Several senior advisors, concerned over recent developments, had already concluded that the U.S. issued Greenback is the correct mechanism to go with, though they weren’t aware of its long successful history and successful testing in the real world during crises and wartime periods. Friends, these people were normal middle class people trying to do their jobs as well as possible under increasingly difficult circumstances. I am reporting to you that the problem is not in the U.S. Treasury – the problem is in the banking and “finance” system, and the private control over America’s monetary system. That’s what has to change.
February, 2004 – West Coast Trip: Idaho; Spokane; Portland, Sacramento; San Francisco; Los Angeles.
The talks began at the economics department at Washington State University at Pullman, and were well received everywhere. From Sacramento on, we addressed the local Henry George Schools of Social Sciences. George, the great 19th century economic justice reformer was an enlightened “Greenbacker.”
May, 04 – London – talk at the House of Lords to monetary reform group; Edinburg; Geneva, Switzerland, May 4-12:
The speaking schedule in England was a fast-paced one – a high-level experience, with 5 talks, starting Tuesday May 4th at the House of Lords – a talk sponsored by MP Austin Mitchell. Spoke for two hours to a group very conversant with monetary reform including several Lords and MP’s; and leaders from England’s religious establishment.
I described both the Science of Money, which empowers society to use its monetary power to solve pressing social and economic needs, as well as the mythology of money designed to block the proper use of the monetary mechanism.
When I mentioned that a high level effort was underway to remove the concept of money from the English language and replace it with a notion of credit instead, I noticed an immediate “electric” reaction from about half a dozen people around the room, who understood this process of language control.
The second talk was Wednesday at the Open Table Lunch at the Friends House (Quakers) in London where I met several interesting young reformers and Ken Palmerton himself came into town from the North country. That evening I addressed Lord Sudeley’s discussion group, the “Monday Club” at London’s Carlton House (Churchill memorabilia everywhere). My talk was titled The Usury Problem Remains. It’s at our web site. On Thursday it was back to the House of Lords to speak to the Forum On Stable Currencies, sponsored by Lord Ahmed. This Forum is a grouping of monetary reformers who managed to remain loosely affiliated over the years thanks largely to the efforts of Canon Peter Challen and Sabine Mcneil. Their task there could be compared to “herding cats,” in that every viewpoint is strongly represented (but interestingly I found no gold bugs – the Brits are beyond that mistake).
On Friday I spoke at the Henry George Foundation in London. A full house thanks to Georgists Peter Gibb and Toby Lloyd. Then they flew me up to Edinburgh for half a day to speak at the foundations Reformers’ Book Shop. As we left England news of the Iraqi prison horrors was becoming widely known, with the Brits utterly dismayed to have any connection with it, and it struck me that the U.S. will not for a long time be considered the “leader” of the free world. Such unnecessary damage to our country! In Geneva, Switzerland, I gave a talk to the Young President’s and Chief Executives Organization.
Our next issue will report on the following talks: May, 2004 – International Philosophers for Peace Conference, at Radford University, Virginia; June, 04 – TOES – The Other Economic Summit, Contra the G8 Ministers Meeting at Sea Island Georgia.
Friends, maintaining this speaking schedule takes a lot of energy and some carefully spent money. You can help us continue this work by purchasing a gift copy of The Lost Science of Money, or making a direct donation. We now also accept donations of computer Laptops. Please see the donation/order form on page 4 of this bulletin, or order the book online at https://monetary.org/buy-the-book/
AMI Monetary Reform Conference Scheduled for September
30th – Oct. 2nd , 2005
We are scheduling our 2005 Monetary Reform Conference for Sept./Oct. in Chicago. It will feature talks and discussions with recognized monetary thinkers and reformers from the U.S. and around the world. There will be two and a half days of “Blue Ribbon” individual presentations and panel groups of recognized well informed Researchers, some Academics, Reformers and politically experienced specialists in the drive for economic justice; including substantial time for audience questions and discussions.
This conference is open to the public, and in order to properly organize the event the AMI requires a minimum donation from each attendee of $225. This will include two coffee breaks per day and a gala celebration dinner. There will be a downtown Chicago tour.
We say minimum donation because affluent attendees who want to help out with a larger donation are encouraged to do so. Their names will be listed in a conference honor roll, or they may remain anonymous. We encourage their being listed, as our society needs to develop such mechanisms to honor those who are truly helping advance humankind.
For early registrations by March 1st the required donation is $175, a $50 savings. To register now or to be kept up to date on conference details please fill in the form on page 4. Full refunds are available until June 1st, and will afterward be pro-rated downward to a 10% refund on September 30th. Hotel and travel costs are extra, and we’ll arrange for group discounts. Join us for both a great time and the latest information.
Ami Initiates Lobbying Activities in Washington DC
On December 6th and 7th we began our program for the direct education on the money question of Senatorial and Congressional aides in our nations capital. I didn’t know what to expect, but can report the reception was universally positive at the offices visited.
Everyone quickly grasped the issue and its importance and most were visibly appreciative of gaining the insights from our presentation, and they asked the right questions. One normally gets 15 minutes with aides, but we got as much as an hour; and during a hectic period. As with my experience speaking at the U.S. Treasury, I was impressed with the sincere efforts to get the facts and understand how they applied to public policy.
I’d say that there is more accessibility to our government than many of us believe. Now I have no illusions that when push comes to shove, corrupt vested interests are not going to be toppled by my little presentation to these aides, yet now in these offices, a new and seriously taken element has been added. The justifying ideology behind our unjust money system is challenged. If public support comes into the formula, I think we have a chance, especially during a crisis period to see real monetary reforms enacted.
We are now committed to two trips a year, and will double that if your support makes it possible. Your donations matter more than you might think, because we’ve learned to operate very frugally.
At each meeting, the aides asked whether there’s a bill to support? Thanks to the efforts of a very devoted monetary theorist in DC with a deep historical grounding in monetary/legal matters – I could briefly show them a copy of the legislation now under preparation, to encompass into law, AMI’s monetary proposals described in Chapter 24. It will take a while to get it into shape for public comment, and then they’ll get a copy. The seriousness of the bill was evident from the layout of the draft. We’ll send it out for comment, when ready.
A signed copy of my book The Lost Science of Money was left with each office for the Congressman or Senator or aides to refer to.
Here is the first section of my Bromsgrove speech, delivered at Birmingham, England Oct. 12-14, 2004:
The War of Private Vs Public Control of Society’s Money Power: The Order of Battle – Adam Smith vs Aristotle
A main arena of human struggle is over the monetary control of societies. It’s exercised through obscure theories where corrupt interests have misdefined the nature of money to seize control of the money power, dominating society and deforming humanity in the process.
The money system is society’s greatest dispenser of justice or injustice. A good one functions fairly, helping create values for life. A bad, unjust one obstructs the creation of values; gives special privileges to some and disadvantage to others causing unfair concentrations of wealth and power; leading to social strife and eventually warfare and a thousand unforeseen bad consequences – physical AND Spiritual.
Because great power is exercised through money, power-hungry elements from ancient times to the present pursued the political ambition to dominate through the Money Power. Their main weapon has been the manipulation of language and thought, where definitions serve as heavy artillery. Those benefiting from the corruption see that “professionals” are financed to promote their viewpoint with economic “theories.”
One reason economists have failed mankind so badly is their poor methodology – an over-reliance on theoretical reasoning. Alexander Del Mar , world’s greatest monetary historian noted:
“As a rule economists…don’t take the trouble to study the history of money; it is much easier to imagine it and to deduce the principles of this imaginary knowledge.”
This failure becomes staggering when combined with their reluctance to accurately define the terms of their theories.
This isn’t new – in 1827 Malthus wrote a book to complain about poor DEFINITIONS IN POLITICAL ECONOMY, noting: “It is quite astonishing that Political Economists of reputation should be inclined to resort to any kind of illustration however clumsy and inapplicable, rather than refer to money.”
But when Malthus presented 60 “better” definitions; a definition of money is conspicuously absent.
Aristotle’s Science Of Money
We can trace the money battle back to Aristotle’s time and even then it was fought through control of language and media. He outlined a science of money still valid today:
“All goods must therefore be measured by some one thing…now this unit is in truth, demand, which holds all things together…but money has become by convention a sort of representative of demand; and this is why it has the name nomisma – because it exists not by nature, but by law or binding custom (which in Greek was nomos) and it is in our power to change it and make it useless.”
Aristotle identified money as an abstract legal power – a social invention. Its essence is not tangible wealth, but a power to obtain wealth – A crucial distinction. Plato agreed and advocated such fiat money for his Republic:
“They will need a market place, and a money-token for purposes of exchange.”
Aristotle outlines the science and Plato’s writings are in full agreement. Moreover we find these key principles actually employed in both Greek and Roman Systems.
Aristotle explained that money is not a commodity And in clear demonstration of that principle, the Spartans purposely destroyed the commodity value of their iron money, dipping it in vinegar while hot.
He explained that society can legally create the money and can also make it useless. In clear demonstration Roman law set the value of their fiat copper money and Rome decried some money as useless during the Punic Wars, demonetizing the copper money held by towns wavering in allegiance.
Battle of private vs government money
Evidence of a fight over the money in Aristotle’s time is that his term for money –“nomisma” is seldom found in early Greek texts. It’s in Herodotus in the 400s BC, but not again until Aristotle, over a hundred years later. We think the nomisma concept was suppressed in an ongoing struggle between the oligarchy – a kind of private “old Boy Network” – arrayed against public money, and the more democratic, public sphere of the Greek Polis, which introduced and controlled the new nomisma payment mechanism.
This private vs public struggle has continued to today! In Aristotles Greece it was the Old Oligarchy vs the Polis.
In Rome it became the plutocracy versus Rome. After the Punic wars weakened Rome’s money system, she regressed to silver then gold, and then civil war contenders privately issued coinage. Wealth concentrated and the general population regressed into slavery. The breakdown of Law and money worked the one upon the other for centuries in a downward spiral of societal decay. Even commodity money came close to vanishing in the dark ages in the West.
In England the struggle became the goldsmiths vs the Monarchy representing society. Later it was the Bank of England vs. Society.
Until then England’s money power was in the Monarch’s hands. But from that point, bank of England credits would be substituted in place of public money. This promoted a confusion between credit, and money, to this day. But they are different things. Credit depends on the creditor remaining solvent. Real money does not promise to pay something else. Money is on a higher order than Credit.
Those behind the Bank of England obscured the real source of the Bank’s power – ITS LEGAL PRIVILEGE – its notes were accepted in payments to the government. Recovering the science of money, for the private profit of a small group produced harmful results: 120 years of continuous warfare spawned an unpayable national debt leading to excessive taxation leading to horrors like the Irish Potato Famine. Before then, when a nation’s money system was used for taxation, the revenue generally aided the society. But the Bank of England concentrated society’s resources in the wrong hands, crippling the possibility for government to function properly, leading to a growing contempt of government.
Today it’s still the bankers versus the society. In philosophical shorthand it can be expressed as Adam Smith, or present day Economics vs Aristotle. But the battle remains Private Money vs. Public Money. The outcome determines whether the money system operates to serve the few in control, or the whole society.
What Determines the Outcome?
It’s determined by society’s concept of money – its definition of money. Mankind can live under various forms of government from dictatorship to republic, but the best systems are those in harmony with human nature. Likewise many things can be made into money,
but the best will be the ones in harmony with the nature of money.
Don’t confuse money with tangible wealth. If commodities are improperly monetized by law it removes the money power from society and places it into the hands of the wealthy.
Don’t confuse money with credit. If private credits are improperly monetized by law that gives great privilege to those whose credits have been monetized, to the detriment of the whole society. The money system then becomes an engine of injustice.
Accountants have confused this by calling different things by the same name. When money is placed into an account, it can be recorded as a credit there, but that does not make the nature of money a credit. Monetizing private credit removes the monetary power from society and places it into the hands of the bankers.
Today there is an effort to remove the concept of money from our language and replace it with a concept of credit.
Adam Smith vs. Aristotle
Smith helped erect a Mythology of Money obscuring the science of money. History and thought shows moneys essence to be an abstract legal power, but economists still argue whether it should be a commodity like gold; or a private credit issued by banks. Economics has never properly defined money!
The “father of economics” himself – Adam Smith – promoted this confusion by attacking the legal concept of money in his definition: “By the money price of goods it is to be observed, I understand always, the quantity of pure gold or silver for which they are sold, without any regard to denomination of the coin.”
Smith’s primitive misdefinition insinuated a mythology of money into economics in 1776, from which it has not recovered. He did this despite the work of Berkeley, Locke and Franklin, from 1729 to 1735, which more accurately identified money’s abstract nature.
The Bank of England had advanced to abstract money; not in theory, but in practice. Smith regressed in theory from coinage (moneta) to ponderata – metal by weight – where the concept of money had been before the Romans arrived. His theory applied to their practice caused confusion and created mystery to this day. Interestingly, Marx did no better.
A priesthood of economists was recruited, trained and rewarded to promote the myths; ignoring the evidence to the contrary; disregarding its bad effects on the people. Thus the great 19th century English reformer Thomas Michael Sadler observed: “Economists are the Pests of Society and the persecutors of the poor.”
Of course there are some rare good economists who realize that “macro-economics is bunk,” and we welcome them to the battle for monetary reform.
Bye for now! Next issue March, 2005. Stephen Zarlenga, editor