American Monetary Institute

American Money Scene 3-January, 2006

Dear Friends,

As I write this section, on Christmas Eve I’ve watched the late night services from Rome. Being Italian–American  and raised Catholic (though not practicing) I still enjoy the spectacle and beautiful bright images annually broadcast from St. Peters Cathedral. But what really stood out this year was the new Pope’s Christmas message and his repeatedly focusing on the theme of “The Light” - the Light as the source of Life and Love.

This is remarkable and encouraging and not consistent with his somewhat dour media image. The other part of his message that resonated was a special praising of watchful shepherds almost heroic in their protective attention and especially in their readiness to receive the “word” – their openness to hear the truth. Hopefully, this Pope may surprise us.

Since learning of the Anglican Church of England’s great role in nationalizing the Bank of England (see the end of Chapter 20 in The Lost Science of Money) I’ve understood the necessity of bringing mainline religion into the quest for monetary reform. That means the Catholics; the Anglicans and Lutherans and other Protestant groups; the Jews and the Moslems and of course the Orthodox Christians, and the Quakers, among others.

The reason this is crucial is that monetary reform is more of a moral issue than an economic one. It’s much more about fairness and justice than about utility and mathematical formulas. Since Morality is the realm in which religion holds forth and sways humanity, we have always made a special effort to bring the monetary reform message to various religious leaders.

The grand concept monetary solutions have been known for a long time and a highly encouraging aspect of monetary studies is how serious researchers arrive at very similar conclusions, whether they are from a Christian, Jewish, Islamic, or secular orientation. It is the implementation that is the big challenge and the harder part of the task and that involves a lot of work, not just the joys of intellectual speculation.

A couple of years ago we established an important contact in the Peace and Justice Commission of the Vatican with the Cardinal in charge who immediately understood the money issue, and he would repeat it back to us in more precise terms than we had given it to him. But he was ill and passed away. We continue to search for such leaders in all denominations and faiths. They are out there. Do let me know when you learn of such people.


2005: A YEAR OF SUBSTANTIAL PROGRESS FOR AMI AMI reached an important milestone in 2005 – we are now in our 10th year! We successfully launched the reform movement at the AMI Monetary Reform Conference, with 80 attendees. The good feeling that participants had during those three days was quite remarkable. Being with others who understand and are working toward these important monetary reforms was really wonderful. And here it is January – three months later and when I speak with participants on the phone, it’s still fresh in their emotions. One comment made by a number of people was simply “The best meeting I ever attended!” Many will be back in Chicago for AMI’s second annual Monetary Reform Conference this fall.

THE AMI 2006 MONETARY REFORM CONFERENCE will be held at Roosevelt University in downtown Chicago, September 21st to 24th. You are cordially invited to attend. Our goal is to make it even more informative and enjoyable a gathering than in 2005! Many speakers will return to continue developing their themes, as they are the recognized leaders in their field. We also hope to get Ralph Nader, and economist Herman Daly from the University of Maryland to this conference. A number of new speakers will come in 2006: Prof. Michael Hudson of UMKC, will discuss the necessity and shape of international monetary reform, a big topic not covered in 2005. Prof. Guido Preparata, Univ. of Washington, reviewa the  ideas of Sylvio Gesell. Prof. Trent Schroyer of Ramapo College on economic sustainability; Dr. Stephen BezruchkaPlease send the application form now. You will obtain the big early registration discount, and shows how society’s medical system degenerates where wealth concentrates; and much more – An outstanding lineup of talks and events! it greatly helps us to plan and organize this event!

One outcome of the 2005 conference is that 12 AMI Chapters are now in formation around the country: West and East Coasts; Midwest and South! The long term goal is to form one in each congressional district. As of this writing, 6 chapter meetings have already been held. Three in Burlington, Iowa, two in Chicago and one in New York. Chapter founders will mostly be drawn from participants at our conference. You are strongly encouraged to attend a Chapter meeting. Write, call or email us for details.

The same positive feeling at our conference has carried over into the Chapters – “These are people I’m glad to know and associate with” is the thought that was going through my mind.

I met with eight legislative aides, a Congressman, and a union leader in Early December. The message of monetary reform continues to resonate and  be well received by them. Instead of the normal 15 to 20 minutes most of the aides spent a full hour with me. That’s thanks to our website, which they looked up before the meetings. We leave a copy of The Lost Science of Money for their office. If you have not seen the website recently, take a look now at Its been profession- ally upgraded with streaming video of my website intro, and has Congressman Dennis Kucinich keynote talk at our conference, (Take a look. Dennis married my former assistant Elizabeth in August!). Of course he is invited back in 06. Soon as I find more help here, we’ll be able to use our website more effectively for audios and up to date commentary on monetary developments. If you’re not yet on the Internet, do whatever it takes to get on line. Your effectiveness in communicating and assisting in monetary reform or other activities will be magnified many times. Don’t let age stop you. People in their 90s can do it!

From Washington we held private meetings in Maryland and Uniontown, PA, with important activists and then addressed about 50 people in Columbus Ohio, interested in building community and in local currency matters. I focused on reforming our mis-structured national monetary system, another of their interests. Same good feeling here as I’ve described above. People concerned about our monetary problems are more humane, deeper thinkers. They are potential leaders in our present crisis.

From Columbus it was on to address environmentally oriented farmers at the Acres USA Annual Convention in Indianapolis. Charles Walthers, who addressed our conference had me talk to about 250 people on the importance of monetary reform to farmers. I focused on how it would allow the re-establishment of a sound Parity pricing program. Within that concept there is also a major element for solving the international payments problems now being mishandled by the IMF. Farmers seem to grasp the importance of the monetary system faster then others, and for good reason: as a group they have been at odds with most urban based money systems for thousand of years! I explained why they have a stake in getting the American Monetary Act passed into legislation. Excerpts from that talk will be in our spring quarterly.

Forthcoming Speaking Trips of Director Stephen Zarlenga:
I will give two talks at the Eastern Economic Association Convention in Philadelphia Feb. 25th and 26th. Then on to Washington DC for meetings with lawmakers. Back home to Kinderhook, NY, for AMI’s annual Trustee meeting. During March we’ll give talks in New York City; then at theUniversity of Maine at Orono; on to Providence Rhode Island; Boston and Springfield, Massachusetts; & the Raleigh-Durham area, North Carolina. Most of these are associated with New AMI Chapters being formed. You are all most welcome to attend. For time and place details, email me or leave a message at 518-392-5387 begin_of_the_skype_highlighting            518-392-5387      end_of_the_skype_highlighting. I’ll forward details.


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. Your help is truly appreciated!


Before we can do a thing, we must realize that we can do it!


THE AMERICAN MONETARY ACT – AMI’s legislative proposal designed to implement the reform proposed in Chapter 24 of The Lost Science of Money continues to be developed. Copies of version 9 were distributed to conference participants for comment, and a number of suggestions have come back. We’ll release version 10 for public comment in February/March on our website. Then, drawing on that wider criticism, we prepare it for introduction as a bill, and find a Congressman and a Senator to introduce it in the House and Senate.

The Act is summarized in our post conference press release:

Money Reform Plan Would Save Taxpayers $ Billions Per Year in Katrina Cleanup
“An alteration in the way money is introduced into our economy would save at least $10 billion dollars per year in the cleanup and
rebuilding aftermath of Hurricanes Katrina and Rita. If the clean-up loans last the normal 30 years, the savings will be over $250 billion,” says Stephen Zarlenga, Director of the Institute. The plan, known as The American Monetary Act was discussed at the AMI 2005 Monetary Reform Conference….

The proposed three part reform of our currency system would have the U.S. Government directly spend the money into circulation rather than the present method of allowing the banking system to create the money and then the government borrowing the money. Funding such infrastructure expenses through bonds generally doubles to triples their final cost.

The reform avoids this expense by removing the fractional reserve provision of the present system, which in effect allows the banking system to create the much needed new money that must be continually introduced into the economy, as population and economic activity expands; or when emergencies such as Katrina, or warfare require great expenditures. Under the reform only the U.S. government, not the private banking system would be allowed to create money.

“What we’re proposing is very similar to the ‘Chicago Plan’ which came out of University of Chicago economists in the 1930′s and was widely supported nationwide by the economics profession back then,” said Zarlenga.

Under the plan the government spends the new money into circulation on necessary infrastructure, including education. A presentation at the conference by the American Society of Civil Engineers pointed out the deteriorating condition of American infrastructure, which currently receives an overall grade of D, and is predicted to reach D- soon.
Most of Katrina’s Damage on New Orleans Was Avoidable
“This method of introducing new money through infrastructure creation and repair would actually have stopped most of the damage and loss of life in New Orleans because the money would have been available to repair the levees, and they would have probably held” said Zarlenga.
“Under the present private control, money goes largely into speculative bubbles, including Wall Street games and real estate” he said, “Under societal control it would go much more to promoting the general welfare. Inflation is avoided because real material wealth has been created in the process, and catastrophic loss including loss of life is prevented. – End.


The Katrina disaster also gives us a new shorthand description of Austrian economists/free market ideologues: People who think it’s smarter to spend $350 billion cleaning up a mess, rather than spend a few billion repairing infrastructure to avoid the disaster. You see the so called free market has not really provided a way to repair levees. And thousands died unnecessarily.

Bumper sticker seen by a friend: Make Levees Not War!



Our last issue described the Bush Administration’s attack on Social Security as a “hoax” and enough Americans understood, despite the Medias attempts to paint the attack in near reasonable terms. The destroyers have been repelled for the moment, and so we put off our follow-up article for when they re-appear. They will be back trying to unravel this great empowering anti-poverty program, because they are at war with decent society.

Remember billionaire speculator Warren Buffet’s recent remark “If there is class war in the United States, my class is winning.”

He was being facetious – Buffet would never describe the purposeful destruction of our most vulnerable fellow citizens and their children, by the cleverest, as “winning!” He’d probably join me in calling it cannibalism and agree that indigestion and worse is coming. But he probably would not accept my view that Buffet’s role – as speculator – is largely negative and probably less creative economically than the average bricklayer.

The important lesson for all reformers is that one cannot achieve lasting reforms if you leave the money power in private hands behind your lines! The concentration of wealth that such power spawns will be used to overwhelm the political system and eventually overturn any hard-won reforms even FDR’s, from 5 decades ago. Not to mention its tendency to make war!

Excerpts from S. Zarlenga’s Southwest Tour Talk, May, 2005

Economics: The Clandestine Religion

Masquerading as a Science

Monetary systems are concerned with the larger questions of economic justice – not just how the money system is operating but with how it could and should be operating. These are called macro-economic questions and better economists are realizing that their economics is devoid of good ideas – theories, they call them – on the really big questions.

There’s also growing awareness that we are all being targeted in economic warfare – all of us – your children and parents, friends, neighbors; since we can’t escape this struggle we’d better understand, and learn how to fight and win it!

This war is real and becomes more obvious in different ways every day. I am not referring to Iraq but to the deeper struggle over the direction of mankind that is more religious in nature. Not the fights with the religious right wing now threatening America’s political process. Those are real problems, but now we focus on a more fundamental battle with the new clandestine religion known as “economics”!

A year ago, Zbignieuw Brezinski, Carter’s National Security Advisor said the attempt to establish a new world order was doomed to failure because there was no universal religious underpinning to it as existed in the old world order – the Roman Empire, with its emperor worship and later its Christianity.

Brezinski was probably right that it would fail, but overlooked that this new order does have a universal religious belief system called Economics. It has its own god, the Market; its own priesthood of Economists; its temples, Banks until recently, clothed in ancient temple architecture.

An example of the religious nature of economics is the promotion of market as god. We are warned:

Don’t try to legislate on the market; it is stronger than our puny laws. It is omnipotent

Don’t try to regulate outcomes, the market with input from all of its participants always knows better. It is omniscient

Do the right things and the market will reward you, the wrong things and you’ll be punished. It is beneficent

Omnipotence, omniscience and beneficence are the attributes of a god, not a mere device for buying, selling and exchanging. – A strange deity that abhors morality and where even the most atheistic libertarians have been suckered into believing in the market’s “invisible hands,” like multiple Holy Ghosts.

Economics used to be based in morality. From 1100 to 1500, philosophy, religion and economics were combined in one group – the Scholastics – church philosophers including Albert the Great and Thomas Aquinas who defined morality in commercial dealings. They focused on “the just price” and on usury. Usury was not merely taking interest. It was always permitted to take interest in certain ways such as the Societas, and Census. The main condition was that there be real enterprise risk to the lender. They were really investors (see Lost Science of Money, Ch.7).

The scholastics distinguished between earning interest and the detested usury: usury being a misuse of the money system, similar to the Islamic concept of riba.

Their mentor from across the centuries was Aristotle not the bible and they drew conclusions based on his authority and on their observations; but mostly on logic and deduction, which is appropriate for moral questions.

Aristotle was the bulwark against usury writing: “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.” (1258b, politics)

Those promoting usury found it necessary to attack Aristotle. Francis Bacon attacked: “Aristotle so confident and dogmatical…barren of the production of works for the benefit of the life of man.” (works, p.850)

Jeremy Bentham’s 1787 defense of usury attacked: “… ‘to trace an error to its fountain head is to refute it’…. if our ancestors have been all along under a mistake… How came the dominion of authority over our minds?”

One would think he is going to cite the strong Old Testament admonitions against usury. But he ignores the biblical prohibitions completely; he is after Aristotle: “Aristotle: that celebrated heathen…had never been able to discover in any one piece of money any organs for generating any other such piece. Emboldened by so strong a body of negative proof he ventured… an universal proposition, that all money is in nature barren…”

Bentham foisted the present misdefinition of usury on us, as taking more interest than normal. He promoted the idea of Utilitarianism which I summarize as forget morality – utility is what counts!

Modern economists kept the scholastics’ theoretical method using deductive logic but they ditched morality in favor of Bentham’s Utilitarianism. Despite the fact that the theoretical method works better on moral questions. Despite the fact that morality – or fairness – is a most useful element in any good society. Today economics primary effect is to justify forms of usury and empower those misusing the world’s money systems.

This continues despite the fact that over a century ago the great reformer Henry George destroyed utilitarianism in one sentence, writing: “[economics]…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)

George noted the purposeful corruption of economics by: “…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 134, and 138)

Yet everywhere we look today, we see our world has come to be ruled by this new clandestine religion often referred to as Monetarism. How did it happen? Through control of the money system, society’s greatest dispenser of justice or injustice….

Power-hungry elements from ancient times to the present have dominated through the money power. Their main weapon has been the manipulation of language and thought, where definitions serve as heavy artillery….

By misdefining the nature of money, corrupt interests seized control of the money power, dominating society and deforming mankind in the process (see Lost Science of Money)

Economics has never properly defined money. They are still arguing whether money is a concrete power in commodities like gold and silver, or an interest bearing credit issued by private banks, or as we conclude from historical cases, money is an abstract social power – an institution of the law, having value because government receives it in taxes.

Economists use poor methodology – an over reliance on theoretical reasoning. We have two basic methods of gaining knowledge – through reason and through experience. Alexander Del Mar the great 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 is not 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 glaringly absent.

Fortunately, Aristotle outlined a science of money in 330BC 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 is nomos].”

Thus 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. We find these key principles used in both Greek and Roman systems….

Right from Aristotle’s time, we find evidence of the great battle over the control of money. This private vs. public struggle over the monetary power remains the main political divide to this day.

We summarize it as Adam Smith vs. Aristotle. Smith helped erect a mythology of money obscuring the science of money, 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 of money as a commodity insinuated a mythology of money into economics in 1776, from which it has not recovered. He did this despite the earlier work of Berkeley, Locke and Franklin, from 1729 to 1735, in his library which more accurately identified money’s abstract nature….

Bad as Smith was monetarily, there is now an even worse effort to completely remove the concept of money from our language and replace it with a concept of credit. Then, monetary reform will actually become “unthinkable” because we won’t have the monetary concepts necessary to frame our reform thoughts. That’s the opponent’s game plan, but the AMI won’t allow it – with your help we are reviving the concept of money!

Bye for now!  Next issue Spring, 2006

Stephen Zarlenga, Editor