There is a lot to report on in this second quarterly issue of ‘The American Money Scene’.
This issue updates on the excellent progress with the AMI 2005 Monetary Reform Conference, Sept. 29th to Oct. 2nd in Chicago (see below); a report on AMI’s continuing lobbying efforts on monetary reform education in Washington, DC; some comments on the phony Social Security “crisis,” among other matters. Finally we present excerpts from a talk I gave at Radford College, to a group of philosophers which I think you’ll enjoy.
You will notice that instead of fixed publication dates, “quarterly” will mean that it will be sent out once during each quarter. This gives us publishing flexibility that is so helpful at this stage in our development and resources.
Introducing the newest AMI staff member
Miss Elizabeth Harper has had a strong interest in monetary reform for nearly a decade, is very conversant with the key monetary reforms advocated by AMI and is exceptionally capable. Elizabeth introduces herself and presents a report on our Washington activities here:
I have had a keen interest in monetary reform since the age of 19. An environmentalist at heart, I soon realized how fractional reserve banking and the monetization of credit, i.e. the private creation of money circulated as an interest bearing loan, (as opposed to the spending of publicly created debt free money into circulation) was the key reform issue when addressing so many of world’s greatest problems: from environmental and social degradation, to poverty and failing infrastructure. All of these can pay homage to the insatiable appetite of monetized systemic debt.
I have worked with the Forum for Stable Currencies at the House of Lords since 1998, looking into issues from banks foreclosing loans and hence forcing bankruptcy, through to Islamic finance and ‘the problem with riba/interest’. I used the latter as the basis for my BA (Hons) dissertation in Religious Studies and Theology, which explored religious laws against usury in the Abrahamic traditions. I kept the importance of ‘the money issue’ at the forefront of my mind during my MA in International Conflict Analysis and employment as a Community Development Worker in rural Tanzania. I also wrote a short paper on conflict resolution and monetary reform as part of my Certificate in Peace and Reconciliation Studies.
On meeting Stephen at the House of Lords in 2004 I knew, from the depth of his research and the conviction expressed in his presentation, that this was the person I was destined to work with to help take this movement forward. And here I am!
Launched into the deep end and potentially the most exciting, my first week with Stephen included his talk at the Henry George School of Social Science in New York, preparing presentation documents and arranging our Washington itinerary. My second week was spent in Washington ‘educating’.
Meetings in Washington DC, May 2-6, 2005
In all, we had meetings with a dozen legislative advisors, Ralph Naders organization, the Global Justice and Reconciliation Director at Washington Cathedral, Jubilee USA, the American Society of Civil Engineers, and Congressman Kucinich, who seems to be the embodiment of the true American dream and a real fighter for social and economic justice.
For many legislators, this was the first time that they had heard a discourse on the monetary system put forward in such a way. Overall, responses were positive.
With hard work, truthful discourse and heartfelt conviction, everything is possible! Keep up the good work everyone. Each one of you is of tremendous value and of importance to the raising of public awareness and the facilitation of real positive change.
I look forward to meeting many of you at the AMI 2005 Monetary Reform Conference in September. It is going to be great fun and of great value! I am very excited as to the opportunities that lay ahead! Elizabeth Harper
Forthcoming Speaking Trip of AMI Director
We began our Spring speaking schedule on May 7th with a small but intense meeting of Libertarian oriented persons graciously arranged by Dr. Harold Kyriazi at the University of Pittsburgh. This talk focused on AMI Paper #1, The Refutation of Carl Mengers’ Theory of the Origin of Money.
Next we speak in Glendale, California on May 23rd
Then we are in Phoenix, Arizona on May 24.
And then Albuquerque, New Mexico on May 27th .
In Kansas City, Missouri on May 31st
And in Springfield, Missouri on June 1st
Then at Southern Illinois University with Prof. Blain on June 2nd
Finally in St. Louis, Missouri on June 3rd, then back to Chicago until after our conference Sept. 29 to Oct.2nd.
For details on any speaking times and places, email us or leave a message at 518-392-5387 begin_of_the_skype_highlighting 518-392-5387 end_of_the_skype_highlighting and we will forward the details to you.
Friends please remember that continuing these speaking schedules requires some carefully spent money. You can help us in this work by buying a gift copy of ‘The Lost Science of Money’ book, or by making a direct donation. Please see the donation/order form on page 4.
Editor Stephen Zarlenga meets with Ralph Nader
I had the great good fortune to spend much of a day with Ralph Nader in Buffalo recently as he gave four speeches to various groups. Mr. Nader is exactly what his public image indicates – solid, dedicated and honest to the core. We had a chance to sit down quietly for enough time to describe AMI’s positions and objectives. My goal was to spark his interest in monetary reform. It would be wonderful if a part of that would include his speaking at our Conference this fall. We’ll see if that will be possible. I know some Democrats are still upset with Mr. Nader, but you know what – they better get over it! He has phenomenal staying power great ideas and true commitment.
Later in Washington DC, Elizabeth and I had a good meeting with the Nader organization’s long time advisor on monetary and banking matters, who gave us some good ideas on how to proceed in contacting congressional offices.
2005 AMI Monetary Reform Conference, Chicago
Sept. 30th – Oct. 2nd
I am happy to report that the AMI 2005 Monetary Reform Conference is proceeding excellently. On March 15 Bob, Ken, David and I – all speakers from the Chicago area, met at the Essex Inn to discuss and plan for the conference. We all liked the reserved conference room with its long wall of windows facing onto Grant Park at tree level.
Attendees have been steadily signing up and we are already one third to half full, with 4 ½ months to go. It is now a good time to remind you that we are offering a further early registration discount, at $195 instead of the regular $245 for registrations postmarked by June 30, 2005. Hotel and travel costs are extra, and we have arranged for group discounts.
An excellent group of speakers are now confirmed with more on the way. The two latest being Virginia Tech Economist Nic Tideman and Cay Hehner, Director of the Henry George School of Social Science in New York.
Please check the conference website for latest details at
Attendees and speakers who have not yet reserved a room at the Essex Inn should do so now, by calling the hotel directly on 1-800-621-6909 begin_of_the_skype_highlighting 1-800-621-6909 end_of_the_skype_highlighting or email email@example.com. Be sure to mention the AMI Conference to receive our discounted rates. Let us know if you want to be paired with another attendee, to receive the lowest rate of $67 per night per person.
Hopefully as AMI develops we shall be able to fund conferences mostly through our charitable mission. For now however, please understand that there are substantial costs in sponsoring the conference.
The Bush Administration’s Social Security Hoax*
It is difficult to measure the full damage done to a nation when top elements of its own leadership willfully lie to their own people for crass political advantage, as is now being done in England and America. Not only does it mislead and deceive us on the issues but it also deeply undermines trust in our leadership and in our government. Because one half of the population sees through the lies, it harms the notion of democratic process, the role of government and the rule of law.
It is painful to even report on it, but we must: The Social Security “Crisis” is a phony and cynical attempt by the Bush Administration to undermine a vital part of what’s left of our American Community and the institutions and ideals we share as a nation. These are the values that supercede our daily race for survival and help lift us out of the chase for material necessities into the higher realm of promoting human development – the form of “nation-building” that we should be doing. We direct these comments especially to the good Republicans in our audience who know better.
When these vital institutions come under attack, under a blatantly touted banner of selfishness, we should all (Republican, Democrat, Independent and others) take notice and act. It is much more than our bank accounts being threatened, it is our community at large.
The President’s Social Security “initiative” is deeply flawed and hardly deserving of comment, but we must examine some of the probable reasons for it and the unhealthy attitudes which allowed the flotation of such a pernicious public policy proposal.
This Administration’s proposals to cut Social Security benefits are perhaps best understood when viewed as a form of class warfare; a kind of rising of the rich, with all their resources, directed against the poor. It is not the first time that this has happened. The theologian/economist/historian Hilaire Belloc characterized the rise of Calvinism (Puritanism) in that way. (See ‘The Lost Science of Money’, Ch. 7)
In America it is a brazen power grab by some of the wealthiest to dominate an even larger portion of the nations’ wealth than they do now; where the top 1% is estimated to hold as much as 50% of all the wealth in America! This situation cannot, and should not be sustained. Some of them may really believe that the empty void in their souls will be filled by a few more billion dollars.
In order for people to hold the harsh view against humanity that these initiatives require, they will have convinced themselves that any good person who applies themselves and works hard would never be in a position of really needing a social security safety net. Such a situation is really unthinkable to them by blocking out of their consciousness, the problems caused by corporate thievery and pension failures such as the thousand of pensions wiped out in the Enron fraud in the Houston area.
How do “free market” advocates react to that? In front of me is the September 2002 Newsletter of the Heartland Institute where the front-page headline reads “Enron Proves Capitalism Works.” Really?!
In other words the free market was vindicated because Enron, only months before touted as one of America’s largest companies, was eventually destroyed. The market ideologues certainly did not wish harm on the pensioners, but they are pretty good at ignoring that it was not only Enron that was destroyed by the markets ineptitude at spotting fraud. It also took the innocent pensioners with it!
These are not isolated geographical events – Last week just one Federal Judge’s decision wiped out all the pension responsibilities of Chicago’s United Airlines!
If there is any problem with Social Security 30 years down the road, it will have been caused by Bushes tax cuts to the super-rich. Any such problem is easily resolved by raising the amounts of earnings subject to the social security tax.
My inclination would be to leave the current cap in place at $90- $100,000 and to then place the social security tax on all income above $300,000 per year.
Finally when one realizes that the monetary system itself can be used in resolving any shortfall far into this century, then the idea that there is a crisis becomes truly laughable. More on how this would work in our next issue.
The only Social Security crisis is the one the Bush administration itself is creating– as they did in Iraq.
*As a 501c3 organization AMI does not engage in partisan political activity. However as a 501c3 educational institution it is our public duty to identify harmful policies or initiatives from whatever source, particularly in the monetary field, where the Social Security issue is now being misrepresented. We specifically identify this problem as Republican because those are the facts, and in the hope that any nobler elements which may exist within that political party will take more responsibility in shaping their party’s proposals.
Stephen Zarlenga’s Address to the
INTERNATIONAL PHILOSOPHERS FOR PEACE CONFERENCE: Capitalism with a Human Face?
Radford College, June 25-28, 2004
The Lost Science of Money:
World Peace Through Monetary Justice
It is a great honor to address this group and I thank Professor Martin for inviting me.
What chance do philosophers really have to move the world toward peace? – Maybe a pretty good one. You’re uniquely qualified to evaluate and expose the methods of what’s become a science of conflict – a body of presumed knowledge called “Economics” encompassing many assumptions, half truths and worse that has promoted the conditions for warfare. And while positive viewpoints are found among exceptional economists, such as Herman Daly, still the dominant corrupt interests assure that they rarely get aired, let alone enacted into public policy.
Therefore economics itself must be called onto the carpet and you Philosopher Kings, in Plato’s vision, can have a crucial role in bringing this so called “science of Economics” to heel. Your dominion is to determine what constitutes knowledge and evaluate the methods of gaining it.
As guardians of clear thought you could sound the alarm when economists don’t define basic terminology on which laws affecting billions of people are based; Laws which usually bestow more privilege on wealthy predators.
As referees of valid methodology you could raise bloody hell when an Austrian School economist claims his theories can’t be disproved by mere facts! Or cry “Foul” when they smear Benjamin Franklin, arguing that he supported paper money because he would be paid for printing it!
Philosophers could flash the pinball “Tilt” warning when economists engage in incestuous self congratulation, like the Swedish Riksbank with no connection to the Nobel foundation issuing the so called Nobel Prize in economics. And shout “Time Out” when some economists keep repeating the same arguments that have already been decisively shot down, rising like Zombies to harass mankind.
Not to mention the economists probable misuse of the mathematical equal sign.
In effect philosophers alone have the standing To De-Certify Economics as a Science, pending improvements in definition, methodology, purpose and focus of study.
On the positive side, give your own awards and honors (as you do today with J.W. Smith) to those economists and schools whose work unequivocally supports economic justice and the plight of humanity.
If you were to do this in the philosophical realm and the Churches joined in from the moral sphere; legislative reforms become possible much more quickly.
The scholastics were moral economists. Not long ago, philosophy, religion and economics, were combined in one group: The Scholastics were Church philosophers including Aquinas who were deeply concerned with morality in commercial dealings. They focused on USURY, which was not merely taking interest. It was always permissible to take interest in certain ways, for example the Societas and the Census contracts. Venice used advanced financial forms for centuries without violating usury bans.
The Scholastics distinguished between earning interest, and the detested usury: USURY BEING A MISUSE OF THE MONEY SYSTEM FOR PRIVATE GAIN, similar to the Islamic concept of Riba. Jeremy Bentham foisted the present misdefinition of Usury on us, as taking more interest than normal – again the importance of definitions.
The Scholastics’ mentor from across the centuries was Aristotle and they drew conclusions based on his work and on observation; but mostly on Logic; which is appropriate for moral questions. Aristotle was the bulwark against usury:
“The most hated sort [of wealth getting], and with the greatest reason, is usury, which makes a gain out of money itself and not from the natural object of it. For money was intended to be used in exchange but not to increase at interest. And this term interest (tokos), which means the birth of money from money, is applied to the breeding of money because the offspring resembles the parent. Wherefore of all modes of getting wealth, this is the most unnatural.” (1258b, Politics)
And that is why all those promoting usury from Bacon to Bentham found it necessary to attack Aristotle.
Now the Economists have kept the Scholastics’ theoretical method but they have ditched morality in favor of utilitarianism; despite their logical approach being more suited to moral issues. Today Economics primary effect is to justify forms of usury and to empower those misusing the world’s money systems.
HENRY GEORGE DESTROYED UTILITARIANISM
Over a century ago the great reformer Henry George derided economics as:
“…a science which…seems but to justify injustice, to canonize selfishness by throwing around it the halo of utility…” (Study of Political Economy Lecture p. 6)
And he noted the purposeful corruption of economics:
“…a powerful class whose incomes could not fail to be endangered by a recognition…that what makes them…wealthy is…only robbery, must from the beginning …have beset (political Economy’s) primary step…” (SPE, 140; also see SPE: xxxviii; xxxix; 134, and 138)
But except for brief periods in the 20th century (After the Great Depression) the major religions and even philosophers seem scared of the economists. That now changes as the future horrors awaiting society under this new Market Religion become more apparent.
A GREAT PART of the injustice wreaked by economics has been done with poorly defined monetary concepts. AMI offers three conceptual steps to monetary justice:
THE FIRST CONCEPTUAL STEP is to accurately identify the nature of money. The chief failure of economics is its inability, from Adam Smith to the present to properly define money. It’s still argued whether the essence of money is a concrete power in a commodity like gold; or a credit/debit issued by private banks. Or as we conclude, is money an abstract social power – an institution of the law, having value because it is accepted in exchanges due to the sponsorship of government.
In defining money, method is crucial. We have two basic approaches to understanding money: A theoretical method based on logic and an empirical approach based on experience or history. Practitioners of the two methods normally arrive at very different conclusions. Support for commodity money or private credit money tends to be based on theory, while Historians normally want a much larger role for government.
Alexander Del Mar the great monetary historian wrote “As rule political 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 over-reliance on logic and downplaying of the facts has worsened with students sidetracked into higher mathematics of questionable use.
Aristotle defined money 2400 years ago: “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 [which in Greek was nomos] and it is in our power to change it and make it useless.”
So Aristotle identifies money as a creature of the law – an abstract social institution. Its essence is not tangible wealth, but a power to obtain wealth. This distinction between money and wealth is crucial.
Plato agreed with Aristotle and advocated fiat money for his republic: “Then they will need a market place, and a money-token for purposes of exchange.”(Republic)
Both Aristotle and Plato noted the paramount principle – the nature of money is a fiat of the law, an invention or creation of mankind. This concept is part of a ‘lost science of money’ which must be relearned as we enter the 3rd millennium if mankind is to move back from the brink of nuclear disaster, to move away from a future dominated by fraud and ugliness toward a future of justice and beauty.
Significantly, the term “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. This concept of money was probably suppressed in an ongoing struggle between oligarchic forces – a kind of “old Boy Network” relying on personal relations, arrayed against public money, and the developing, more democratic, public sphere of the Greek Polis, which introduced and controlled the nomisma payment mechanism. (LSM, Ch. 1)
THE SECOND CONCEPTUAL STEP is to realize that this “Private vs Public” battle for the control of the money power is an ongoing social battle to this day. This struggle determines how well a money system works. A good one functions fairly, helping the society create values for living. A bad one obstructs the creation of values and places special privileges to some at the disadvantage of others; promoting unfair concentrations of wealth and power, and disharmony and social strife.
The concept of money, i.e. how money is defined, determines whether the system will be publicly or privately controlled. If money is misdefined as wealth, for example gold, then the wealthy will control the Monetary System. If you are only exchanging things, then you are still in the Barter stage.
Credit can legally be made into money, but is not itself money. Money is on a higher order than Credit. It is unconditionally accepted as payment. Credit depends on the creditor remaining solvent. Real money does not promise to pay something else.
Furthermore credit expands when there is a tendency to speculation, and sharply contracts just when most needed to assure confidence. If money is misdefined as credit, then the bankers will control the system.
If money is correctly defined as an abstract legal institution then the society has a chance to democratically use the money system to promote the general welfare.
So there’s a great deal at stake in how money is defined.
THE THIRD CONCEPTUAL STEP is that we must see through the “mythology of money” created to keep the money power in private hands and not used for the benefit of the whole society. This mythology pretends that government has always abused the money power. Please realize that this is a fiction; that despite the current prejudice against government, the historical record actually shows that publicly controlled money functions better than private systems. This evidence goes back 3000 years…
Bye for now! Next issue 3rd Quarter, 2005
Stephen Zarlenga, Editor