| Subject: | [socialcredit] From Richard Cook | | Date: | Wednesday, May 30, 2007 09:10:17 (-0700) | | From: | MODERATOR <socredus @.....com>
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Attached in PDF format is the full text of Richard
Cook's latest Internet posting. I invite replies from
Richard and the other list participants to my
comments.
The first two thirds of the posting is a historical
narrative that I believe heavily sources to Stephen
Zarlenga's work. As such, it contains many
Greenbacker fabrications from the latter half of the
nineteenth century. We've already discussed the bogus
Lincoln quotes a year or two ago on this list.
I would like to see a citation to a verifiable and
credible source for this from Richard's article:
"In 1913 the Federal Reserve System was created by an
act of Congress signed by President Woodrow Wilson. He
later regretted doing so, saying 'I have unwittingly
ruined my country.'"
I am very skeptical that Wilson ever actually said
this.
I append below the text from the final third of
Richard's article, headed "analysis and conclusions."
His first proposal is to eliminate all (or "at least
ninety percent") of taxation, federal, state and
local--with the federal government spending money into
circulation, and granting funds to the other
governments for their operations and infrastructure
projects. "Interest free" loans are part of the mix.
If I have not accurately summarized this first
proposal, I would hope that Richard would correct me.
Now, at the very least, this would result in an
enormous and accumulating influx of money into the
economic system, inasmuch as government services in
their totality in monetary terms comprise presently
something in the neighborhood of one third to one half
of the GDP. It is difficult to see how this great
continuing influx of money could possibly be sustained
without great distortions to the pricing structure.
Beyond this practical difficulty, I am very much
concerned that this would enormously concentrate
political power into the federal government over the
entire nation. The constitutionally mandated balance
of powers between the federal, state and local
governments would be destroyed.
Forgotten also is that the requirement for taxation is
a check on the power of government. The government is
not only required to levy the tax in an democratic and
open environment, it must also collect it--both
difficult tasks in a constitutional republic.
The ability of the government to borrow, particularly
at the federal level, is an erosion on that check.
I have less objection to Richard's second proposal,
which involves the social credit dividend and retail
discount. Except for this question to Richard:
You state:
"The average National Dividend per person would
probably exceed $12,000 per year under today's
economic conditions."
How do you arrive at this number?
-----------------------------------------------------
ANALYSIS AND CONCLUSIONS
Perhaps the most consequential event of U.S. history
during the twentieth century took place when the
private banking system was given control of the U.S.
economy in 1913 through the passage of the Federal
Reserve Act. Those who accomplished this were not only
Americans but also financiers from Great Britain and
continental Europe. The Federal Reserve today
continues as a branch of international finance.
Since then this system has produced nearly a century
of almost constant warfare, the ascent to power of the
military-industrial complex/national security state,
periodic creation and destruction of gigantic
financial bubbles, and the erosion of ninety-five
percent of the value of the U.S. dollar. The vast
productive resources of the U.S. and the talents and
hard work of its people have been used by the
financiers for these purposes.
Side-by-side have been tremendous advances in science,
technology, and medicine, and a longer human life
span. But much of the investment that has produced
these benefits has come through public expenditures
from tax revenues, supporting, for instance, the large
state research universities, or from private
corporations which draw on funding from retained
earnings and the capital markets.
Bank credit, by contrast, has historically been
oriented toward asset purchases and speculation,
especially real estate and business acquisitions,
toward purchase of consumer goods by people who lack
ready money to meet their needs, toward the profits
drawn from capital gains fed by inflation, and toward
purchase of federal government securities and lending
to foreign governments. In the case of lending to
governments, naturally the greatest profits are made
at times of financial distress and war.
It is extremely important to understand that most of
these transactions are essentially non-productive in
an economic sense, involve gigantic sums of money
created from "nothing" through the bankers' fractional
reserve privileges, and have little in common with the
type of investment in the producing economy that takes
place through the capital markets.
A typical case involves the purchase of a business by
investors who borrow large sums of money to close the
deal, then sell off assets, fire many of the
employees, and slash the benefits of those who remain.
They then use the profits from the business to repay
their loans or sell the stripped-down company to other
parties. This strategy is especially appealing to
equity funds and is called "restructuring."
This type of financial corruption in which the banks
and investment funds are complicit has become common
over the last twenty-five years. It's another area
where "market" forces are said to be at work.
The history of credit shows its power to draw forth
work on the part of men and women who need to exchange
goods and services among themselves in order to live.
But as this report dramatizes, credit can be used for
divergent purposes. Like electricity, it is neither
good nor evil. It can be used or misused. Electricity
can electrocute prisoners or bring light to cities.
Credit in the wrong hands can start wars but used
properly can accomplish miracles of science.
Today the U.S. is in great peril. Through the failed
war in Iraq and the barbaric manner in which it has
been carried out, our standing in the world has never
been lower. As stated in the beginning of this report,
our economy is wracked with debt. This debt is growing
exponentially through compound interest.
In fact our producing economy has been wrecked by
monetary madness. Our working population is poorer
every day even as the Federal Reserve pours out
trillions of dollars in new debt and the incomes of
the financial magnates soar. According to a recent
report from the Bank for International Settlements,
money is even being lent to hedge funds which are
betting on our economic decline. We are looking at a
potential system-wide collapse on a scale never before
seen in history.
Further, the dollar hegemony we have used so cleverly
to float our national debt has come back to haunt us
as we see China using the dollars they have acquired,
through exploitation of their own domestic workforce
in producing the goods that fill the shelves of our
Walmarts, to buy up assets around the world-in Asia,
Africa, Latin America, and now in the U.S. Economists
who work for the Federal Reserve have advocated in
print the sale of U.S. properties to China as a way of
dealing with the "functional bankruptcy" of the U.S.
government.
China is already dictating trade policies to us. Soon
they will be dictating political policies as well.
Companies like IBM, GE, and General Motors are
boosting their stock prices by building factories in
China to sell Chinese workers consumer goods. It's
great for the stockholders of those corporations. It's
death for the U.S. workers who have no jobs and no
money to buy the necessities of life except through
more credit card charges.
This brings us full circle to where this report began,
for "market" economics is nothing more than the abuse
of what should be a public good for just such selfish
purposes. That is why a powerful economy such as we
have built over the last several generations can do so
much harm along with the obvious benefits. It's the
result of monetary policies where what we were told
were "market" forces were in reality the expression of
unbridled greed by a financial sector that is totally
out of control.
We now need to return to the recognition that money
and credit truly are public utilities as recognized
during colonial days and at the times of great crises
such as the Revolutionary War, the Civil War, and the
New Deal.
Today we are in a similar crisis, when the solution is
the same as it has been in the past. It is for the
commonwealth of Americans, acting through their
elected representatives, to exert their constitutional
prerogatives in controlling the nation's supply of
money and credit.
In other reports published over the last several
weeks, the author has made a number of suggestions of
the steps that now should be taken. These steps follow
the guidelines of numerous monetary reformers of the
past but can generally be summarized in two major
provisions:
1. We should spend sufficient credit into existence to
supply the basic operating expenses of government at
all levels without recourse to either taxes or
borrowing. At least ninety percent of all taxes could
be eliminated. The only taxes that should be retained
would be those in the form of user fees for
infrastructure operations and maintenance and those
levied only for dire emergencies. Capital expenses for
infrastructure construction at the federal, state, and
local levels should be financed through a
self-capitalized national infrastructure bank lending
at zero-interest. Operating on a national scale, such
a bank could begin to rebuild our job base starting at
the state and local levels. A public program of direct
government expenditures as described herein would be
as effective, as timely, far less inflationary, and
much cheaper than creating new public debt by
borrowing credit created "out of thin air" by the
banking system.
2. The endemic gap between prices and purchasing power
in an advanced economic system in reality is the
"leisure dividend" that we never received from our
amazing producing economy. That gap should now be
filled by a non-taxable National Dividend of two
types. One would be a cash stipend paid to all
citizens which would also serve the purpose of
eliminating poverty by providing everyone with a basic
income guarantee. The remainder of the National
Dividend would consist of an overall pricing subsidy,
whereby a designated proportion of all purchases,
including home building expenses, would be rebated to
consumers. The average National Dividend per person
would probably exceed $12,000 per year under today's
economic conditions. It would be a calculated value
charged against a government ledger but would be
off-budget, with no need to finance it with taxation
or borrowing. The calculation of this dividend was
outlined by the author in his recent report, "An
Emergency Program of Monetary Reform for the United
States."
The theory of this program of monetary reform derives
from two principal sources. One is the worldwide
National Dividend movement founded almost a century
ago by Scottish engineer Major C.H. Douglas. The other
is the program of monetary reform based on direct
government spending set forth by groups like the
American Monetary Institute in its model legislation,
the American Monetary Act, to which the author of this
report has contributed.
In Great Britain, similar work is being done by the
Bromsgrove Group and other reformers. The monetary
reform movement is worldwide. Through his previous
reports the author has received positive support and
feedback from many countries, including Poland, Italy,
India, Australia, Canada, Germany, New Zealand, and
others.
The top priority of the reform program would be to use
public credit to rebuild the producing economy which
has been wrecked by the phony ideology of "market"
economics and the inept and self-serving manipulation
of the money supply by the Federal Reserve and the
banks.
Direct funding of government expenditures would remove
the banking system from the business of financing a
massive government debt. Implementation of a National
Dividend would establish the balance between
production and consumption which the banks failed to
do through creation of huge quantities of consumer
debt to compensate for shipping our manufacturing
capabilities to China and other foreign countries.
Both measures would go a long away toward shifting the
basis of our economy from one that uses debt for
making war and transferring wealth to the upper income
brackets to one that uses public control of credit to
facilitate peace, domestic harmony, and economic
democracy.
Once these major steps were taken, other measures
could be instituted that would also reflect the status
of credit as a public utility. These include the ready
availability of low cost credit for consumers, small
businesses, and students; the ability of capital
markets to function without the destructive overhang
of predatory financial methods; the elimination of all
bank lending for speculation, including purchase of
securities on margin, leveraged buyouts, and leveraged
hedge funds and derivatives trading; restoration of a
liberal bankruptcy law and the writing off much of the
debt currently in place that can never be repaid,
including student debt and debt held by developing
nations; the elimination of fractional reserve banking
by requiring that bank lending in excess of deposits
be done only with credit purchased from a central
government authority; the creation of a fair and
structured system of international finance and
investment to replace the tragically failed system of
dollar hegemony; and a plan to restructure the
national debt that would pay off private and foreign
creditors but eliminate Treasury securities as bank
collateral.
Such a program of reform would be far-reaching, but it
would be based on the best traditions of America, and
it would work. Above all, it would allow us as
citizens of the American constitutional commonwealth
to take back our country from the control of national
and international finance. The same could be done by
other countries. The technical know-how for
accomplishing this program exists. A scaled-down
banking system would still exist, but the tail would
no longer wag the dog.
What we need now is for the public to wake up to the
urgent need for change and for the political
leadership at all levels of government to step up and
make it happen. Standing in the way is the near-total
control of the mass media and the major political
parties by the monetary elite. Given such control,
only a grass-roots movement among millions of
concerned people can have an impact.
Of course it is much easier to suffer in silence,
especially if people are uncertain about where their
economic interests lie. But the hour is late. The U.S.
is in great danger, particularly if our leaders
continue to project our internal economic problems
onto external enemies. What we need is a monetary
system based on our best constitutional traditions
that will allow us to resume our place as a great
industrial democracy and live in peace with the rest
of the world. The time for action is now.
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