Talk to the TOES
(The Other Economic Summit)
Meeting Counter to the G8 Meeting, Sea Island,
June 8-10, 2004
REMOVING STRUCTURAL INJUSTICE
FROM OUR MONEY SYSTEM
By Stephen Zarlenga
Note: The Bush Administration massed 20,000 troops in the area to ostensibly protect the meeting from terrorists, but actually to suppress dissent. A few days before the meeting they “loudly” shipped 2,000 body bags into the area, to “take away the corpses.”
It’s an honor to address TOES on monetary reform. Thank you Susan Hunt and Trent Schroye. Since the money system is society’s greatest dispenser of justice or injustice, monetary reform is of paramount importance. Other reforms can and will be quickly reversed if America’s Money Power – the control of our monetary system remains in private hands. Just as Roosevelts’ reforms are being attacked and undone today.
Now what does it mean to say that our money system is structurally unjust?
“Structure” means the institutions, laws and regulations that determine what is money; how it’s introduced or removed from circulation; and who controls these decisions for what purposes.
A just or good money system functions fairly, helping the society create values for living. A bad or unjust one obstructs the creation of values; gives special privileges to some to the disadvantage of others; causes unfair concentrations of wealth and power; and leads to social strife and eventually warfare.
Now our present Federal Reserve System, despite some ambiguity, is essentially privately owned and controlled. Money is created whenever banks decide to make new loans. They determine who gets it and how it’ll be used. This power to create money is the most awesome privilege granted in the US.
Such great privilege obviously demands responsibility. But look at the results of our privately controlled system: Unheard of wealth concentrates in very few, largely undeserving hands. Americans work harder and produce more than ever, but increasingly fall into debt and bankruptcy, while corruption rules and predators plunder society by merely shuffling papers! One percent of the population now claims ownership of around 50% of the wealth. This destroys American Democracy.
And see what a privately controlled money system has done to our infrastructure. The American Society of Civil Engineers annually grades ten infrastructure sections: Education is F; Hazardous Waste is D-; (see table) An average grade of D! Two trillion $ of work needed to bring it all up to acceptable levels.
This is not only unjust and perverse while so many Americans are out of work, – it’s stupid! The other G8 members wouldn’t allow this in their countries. We’d be laughed away from the G8 table if the other 7 members knew this! This neglect of infrastructure alone demonstrates that our money and banking system is a miserable failure.
The Big Lie
We’re Told We Don’t Have The Money to repair infrastructure and the many other problems in our society. We’re told that the only way to get the money is to raise taxes, or to borrow it from the wealthy and increase the national debt. But this is not true. Its A Mythology of Money that has been created to keep the society from correctly using its monetary power, keeping it in private hands.
But We know better from 3000 years of history. We know the money system itself can and should be used to provide the funding.
That’s how we won the Revolution and got our country in the first place by printing the Continental Currency. That’s how we kept our country together in the Civil War – by printing the Greenbacks. Though both of them have been smeared, they served our nation well.
But the Mythology of Money tells us that we can’t do this because it would be inflationary.
That is a Myth! When resources exist and millions of unemployed need jobs, then to print government money for infrastructure is NOT inflationary because the infrastructure created by putting men to work adds real value to the economy and real efficiency to all those working in the economy. For example when the Erie Canal was built it lowered the cost of shipping goods from New York to the Midwest from $114 a ton down to $10 a ton. And far more value has come out of Hoover Damn than it cost. The nearly unlimited funds that went into NASA in the 1960’s created the computer industries on which our economy is presently based.
When is printing paper money inflationary? When it is thrown into warfare as we are now doing. It then mainly destroys infrastructure and people and commerce and that will be inflationary – and deadly.
To Reform Our System And Re-Assert Societal Control over the money mechanism we have to understand how it was STOLEN in the first place. Few shots were fired in this monetary coup d’etat. It’s always relied on bribery but its main weapon has been The Manipulation of Language through obscure theories on the nature of money. By misdefining the concept of money, corrupt interests grabbed control of society’s Money Power and in turn the society itself.
The latest form of this attack is an effort to completely remove the concept of money from the English language and replace it with a concept of credit!
So a Prerequisite of reform is to first accurately identify the nature of money. This is best done in historical cases emphasizing actual experience over questionable theory. The main failure of economics is its inability, from Adam Smith to the present to properly define money. They still argue whether the nature of money is a concrete power in a commodity like gold; or a credit issued by private banks; or a government issued token.
Much confusion would have been avoided had these fellows paid some attention to Aristotle, the way the Scholastics did.
Aristotle gave the culmination of Greek thought and experiment on money in 340 BC:
“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. Not a commodity from nature but an abstract social institution. Its essence isn’t tangible wealth, but a power to obtain wealth – A Crucial distinction between money and wealth. (LSM, Ch.1)
Plato Agreed and advocated fiat money for his Republic:
“Then they will need a market place, and a money-token for purposes of exchange.”(Republic)
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 suppressed in an ongoing struggle between oligarchic forces – a kind of “old Boy Network” – 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)
This struggle for the Money Power from at least Aristotle’s time continues to the present day. Public vs Private control has always been the key political question on money. That determines whether it serves society or the few in control.
Furthermore the concept of money – how money is defined – determines whether the system will be under publicly or private control. If money is misdefined as wealth, for example gold, then the wealthy will control the monetary System.
Credit can legally be made into money, as it has been in America, but it’s not itself money. Money is always 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 later.
Furthermore Credit expands when speculation is rampant, 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 identified as an abstract legal institution as done by Aristotle, and by the American Monetary Institute, then the society has a chance to direct the money system to promote the general welfare. So there’s a great deal at stake in just how a society defines money.
AT THIS POINT I’ll give the conclusions of whats needed to reform our system, and afterward present as many of the reasons for it as time allows. Then I won’t worry about running out of time. The printed speech will have the rest.
Here Are The Needed Institutional Reforms:
First: Nationalize the Federal Reserve System as the Bank of England was
nationalized in 1946. Reconstitute the Fed within the US Treasury, to eventually evolve into a fourth branch of government, on a par with the executive, judicial and legislative branches. Only our government would create money.
What would such government money look like? Well you have some in your pockets right now. Coin Vs Paper Money example. Whats the main difference? Both fiat moneys – not a dollars worth of paper or a quarters’ worth of metal. They are both fiat moneys. But the paper note is created through a private banking system and requires debt and interest payments. The coin is minted interest free and debt free by our government.
Second: Remove the privilege which banks presently have to create money. They continue to be private companies but can only lend what has been deposited with them. In doing this through an elegant process we automatically turn all the previously issued bank credit into real American money. 100% reserves are reached not by calling in loans and thereby wrecking the economy but by increasing reserves. The banks borrow them from our government and thereafter pay interest on them to our government.
Third: Provide for automatic, constitutionally determined government money creation, starting with the 2 trillion $ which that American Society Of Civil Engineers tell us is needed to bring our infrastructure up to acceptable levels. From there we go forward carefully determining how to best run the monetary system, and thoughtfully use Aristotle’s method, we learn by doing.
What Difference would it make? Government money can go into infrastructure; Better life and good jobs. Things like education, safer roads, clean water and health care and social security. Private money tends to go into speculation and gambling and useless mergers and acquisition games thereby concentrating wealth to the present obscene levels.
Reconstituting the money power in government provides Society with two great benefits: the interest on the creation of money is available to defray the cost of running government and secondly control over how the money is used allows the power to be directed to solving pressing problems rather than being concentrated in useless speculation.
I’d Like to open it up to questions now and then resume with more historical background.
Now I must give you some history – it’s the easiest way to understand.
First Two Ancient Cases of money reflecting Aristotle’s concept:
First Lycurgus 8th century BC monetary reform when Sparta’s wealth became overly concentrated. He posted 29 armed volunteers to spread fear in the marketplace. Lycurgus banned using gold and silver and used iron slugs for money. Furthermore those iron pieces were dipped in vinegar while hot, to render them brittle and purposely destroy any commodity value that they had as iron! They received their value through legal sanction. This nomisma system lasted over 3 centuries and Sparta became a premier power. It faltered when Sparta’s involvement in empire regressed her back to gold and silver money and they lost the science of money.
Republican Rome similarly based her money on copper, isolating herself from the East and “disenfranchising” the gold/silver hoards and therefore much of the power of the East. Gold could be traded as merchandise; but without the monetary power, the ability of the East to control Rome’s money was reduced and she had a better chance to control her destiny and rise to greatness. Roman Nomisma, were bronze discs legally valued far above their commodity content through the law.
Rome won the Punic wars, but they destroyed her money system and she regressed to Eastern moneys- first to silver, and then Julius Caesar established a gold standard using the weight system of the ancient temples. The growth of plutocracy accelerated; wealth concentrated in its hands and the population degenerated into slavery. Adopting the East’s money caused power and even the Empire’s headquarters to shift eastward to Byzantium.
The breakdown of law and money operated one upon the other for centuries in a downward spiral of societal decay. The concept of money regressed to crude metallism and the science of money was lost again, especially in the West.
Skipping ahead 15 centuries (see the Lost Science of Money book for what happenned in the meantime, https://monetary.org/the-lost-science-of-money/buy-the-book/)
From time to time elements of this monetary knowledge surfaced as in England’s 1601 Mixt Money’s Case, or Philosopher George Berkeley’s 1735 book Querest.
THE SCIENCE wasn’t recovered until 1690 in the American Colonies, where money was publicly controlled and successfully used to benefit society. And then in 1694 in the formation of the privately controlled Bank of England where the science was grossly misused, spawning warfare and famine.
From here forward, the speech materials also appear at our website in a “Brief Monetary History of the US”.