| Subject: | [socialcredit] Richard C. Cook interview | | Date: | Tuesday, August 21, 2007 12:26:40 (-0700) | | From: | william_b_ryan <william_b_ryan @.....com>
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F_A_I_R__U_S_E__C_L_A_I_M_E_D
Renewed Interest: Analyst Ties Monetary Reform To
Social Credit Movement
Tuesday, June 12, 2007
By Nathan Diebenow, Associate Editor
Interview With
Richard C. Cook
Former Government Analyst
COLLEGE PARK, Md. — One may know Richard C. Cook from
such moments in American history as the Challenger
shuttle disaster of Jan. 28, 1986.
The NASA analyst testified after the tragedy before
the Presidential Commission on the solid rocket
booster O-ring seals that led to the demise of space
shuttle crew.
Cook’s first person account of his experiences at NASA
can be found in his book Challenger Revealed: An
Insider’s Account of How the Reagan Administration
Caused the Greatest Tragedy of the Space Age.
But he has worn other hats over his years in
government.
His career included stints with the U.S. Civil Service
Commission, the Food and Drug Administration, the
Carter White House, and NASA, followed by 21 years
with the U.S. Treasury Department.
Now retired from government work, Cook has decided to
delve back to an interest that has been on his mind
since his college days — monetary system reform.
His book on monetary reform We Hold These Truths will
be published later this year.
We recently caught up with Cook to discuss his
thoughts on monetary reform, the social credit
movement, and the effects of current U.S. monetary
policy on the world stage.
Here is that interview:
ICONOCLAST: How did you come to the realization that
the problem with the world’s economy lies in
distribution, not production?
RICHARD COOK: I had that realization when I was in
college. I went to William and Mary in Williamsburg,
Va. I was in the honor’s program. I studied a lot of
history at that time. I remember I was getting ready
to graduate. I had just been inducted into Omla Delta
Kappa which is a men’s national leadership fraternity.
I was at a lunch talking to a guy who was going into a
law school program. We started to talk, and I studied
history for a long time, and I was really pondering
over where all of the problems had come from. It had
pretty much given us a century of world war side by
side with tremendous industrial advances. That was the
contradiction that I couldn’t figure out.
I remember him saying, "We have this wonderful economy
that produces so much. What are you so concerned
about?"
I said, "Well, the real problem is distribution. Why
if we’ve got this bounty do we have so much poverty?
So many countries of the world are left out. What is
going on? Why has this happened?"
So from that point on, I just had that in my mind. I
went to work for the federal government out of
college. I started with the U.S. Service Commission.
Then I went to the Food and Drug Administration. I
ended up in the Jimmy Carter White House on a detail
where I was working for Ester Peterson who was the
special assistant to Carter for consumer affairs.
When the 1980 election came along, and it became clear
Carter was going to lose, there wasn’t much to do
anymore in the White House office where I was. So I
did a lot of reading, and I came across the writings
of the social credit movement in England. This had
been established in the 1920s. Major C.H. Douglas was
the founder of the social credit movement. It had
actually come out of the English Reform Movement that
had gone all the way back to the 1800s when they, too,
were trying to figure out where did this contradiction
come from. You know, here we have the Industrial
Revolution, and yet we have so much poverty.
Of course, the Marxists were answering it one way, but
the English Social Reformers were taking a different
kind of approach, trying to reconcile economic
democracy. That’s where Douglas came in with his
analysis of social credit where he demonstrated that
the way industry operates in a modern technological
environment is that you need fewer and fewer people to
get more and more goods. (There’s a vast literature
that the U.S. really hasn’t ever gotten into on this.)
So if you rely on wages and salaries to distribute
purchasing power, you’ll never catch up because there
aren’t enough people needing those jobs to produce
what needs to be produced.
What’s going on? What’s the contradiction? Basically
what Douglas said was that there are a whole lot of
factors that go into pricing besides wages and
salaries. The biggest one probably is the fact that to
produce at a high technologically level, corporations
have to retain a lot of their earnings, and build that
into capital equipment, plants, research, and that
sort of thing. All of those come out on the pricing
end because they’ve got to pay for it, but they don’t
come out in the purchasing power end.
Douglas then extrapolated that this gap as the benefit
society gets from this tremendous producing powerhouse
that we have, but it doesn’t ever get to people in
purchasing power, so Douglas came up with the idea of
a "National Dividend" which is a distribution of
purchasing power that is a lien on future production
rather than against past costs. I began to work this
theory out, and it really began to make sense.
Another thing Douglas pointed out is that the gap
between purchasing power and prices is filled by debt.
That’s where consumer debt comes from. That’s why
people borrow so much on their credit card. The way
countries try to get around that is to create a
positive trade balance where what is paying for the
lack of purchasing power is essentially profit we make
from overseas customers. The United States tried
really hard to have a positive trade balance after
World War II to maintain the World War II full
employment economy. We succeeded at that for about 20
years.
That was the whole purpose of the Breton Woods
agreements and the IMF and the World Bank. It was to
create overseas markets for U.S. production, but once
the other countries of the world started to grow up,
and we lost our trade balance, we were in big, big
trouble. That’s when the power of the banks and the
financial world really escalated during the 1970s.
Since the 70s, we’ve been in a system where the
Federal Reserve has tried, essentially, to create
employment or growth through a financial bubble
inflation/deflation cycle. Since the 70s, when I
really began to examine the data, it was clear that
that’s all we’ve had. The only real financial growth
we’ve had since the 70s are bubbles that expand and
deflate.
We’re in that cycle right now with the housing bubble,
and now they’ve got a new bubble going with stock
prices because they haven’t figured out the economic
fundamentals that Douglas pointed out to reconcile the
distribution/production issue. In fact, I know a lot
of people in the social credit movement now from
overseas, and they tell these stories about how in the
1930s when Roosevelt was caught in the Depression and
trying to get out of it, Douglas was in this country
trying to teach the social credit ideas to people. In
fact, he worked in Alberta, Canada, and there’s even a
story that the Quebec separatist movement began as a
social credit movement.
What they tell me is this story is about how the
British financiers were looking for somebody to
counter Douglas because the social credit movement was
becoming so powerful. That’s when they discovered John
Maynard Keynes. The whole theory of Keynesianism is
when you have government deficit financing, high
income tax, and essentially an inflationary growth
policy to constantly pay down your debt. All of this
was to counter Douglas because they saw that if
Douglas came in with the social credit and the
National Dividend, the power of the bankers and
financing the production/purchasing power gap would be
cut off at the knees. It became part of the political
issue of the century, even though nobody had ever
heard about him because the newspapers in the 1920s to
not even mention Douglas’ name in print.
Behind the scenes, this was going on, and meanwhile,
Douglas was saying, "Look, you guys are bringing on
the next world war with this policy, and I can tell
you I’ve seen a documentary of this. What’s going to
happen is that the European nations are going to
destroy each other, and the financial giant of the
world will become the United States. That is what you
were doing to yourselves." They couldn’t stop, and
they went ahead with it anyway.
So I began to study all of these things, and then when
I retired from the government in January, I finished
with my Challenger Revealed book. I re-started my
monetary research that I had done at the Treasury
where I had performed training courses and taught the
history of the monetary system. I was working with the
American Monetary Institute behind the scenes advising
them, and then I sat down and started to turn out
these articles.
ICONOCLAST: And from what I understand from your
writing, it doesn’t really matter if we have a
capitalistic or socialistic or communistic economic
system because we already have the technology to
produce what we need. The difference between these
systems is merely a shuffling of bosses among elites,
right?
COOK: Yes. Douglas said that. He said all of those
issues are management and production. They’re all the
same anyway once you take them out of the social
context and look at the actual macro-economics of the
company. They’re identical under any system, and
they’re really good. I mean, the productivity of a
modern industrial firm is incredible. It’s absolutely
incredible. It can operate just as efficiently in the
same way under any ideology.
ICONOCLAST: In your estimation, war is a function of a
country’s inability "to generate sufficient internal
purchasing power through democratic management of
credit." How would the kind of monetary policy you’re
proposing reduce "global warming" which is essentially
war on the environment?
COOK: The mitigation of global warming requires
infrastructure investment, and the question that is
always asked is the political question. If you’re in
Washington anytime anybody has a good idea, the
question is "Where is the money going to come from?"
because it requires capital investment to do about
anything. If you look at the Katrina issue, and all of
the things that should have been done or not done,
like the wetland restoration and levee construction,
that would have required a lot of capital investment.
There isn’t money for capital investment because both
our public and private infrastructure is totally
consumed with debt. We’ve got a debt overhang from all
sources. I’ve seen estimates of $8 trillion, and so
for a company to raise money or for the government to
raise money, you hit up immediately against that debt
because we have a debt-based financial system, and we
also have a corporate structure that is totally
obsessed with short-term financial profits. They’ve
got to meet a bottom line that is established by Wall
Street even though it’s not a public-traded company.
You still have your equity owners looking at the
quarterly bottom line because all they’re trying to do
is extract dividends out of it on a quarterly basis,
so they’re always looking at the short term.
So you don’t have the money available for the kind of
infrastructure investment that you need to tackle the
long-term problem like global warming, but the
knowledge exists, as I think everyone realizes, for
the mitigation of global warming. One example I like
to cite is the study by the Rocky Mountain Institute
where I think in 2005 they went through a long list of
initiatives all based on existing technology which if
we really put our investment into, it would eliminate
our dependence on foreign oil in 15 years. This study
was partly done for the Department of Defense, so
official America was aware of it. But something like
this they just can’t and won’t do because it requires
capitalization, and the people believe it’s not
available because it has so much debt attached to it
and you’re dealing with long-term investment.
Everything we do is for a short term.
Another area I like to cite is the drought in the
Mid-West that has been building for 15 or 20 years.
You probably know more about it than I do where you
are. You’ve got the aquifers being drained. You’ve got
another dust bowl coming back, and it’s becoming a
crisis. Well, there are ways in which you could work
with infrastructure to try to bring water into the
area. I mean, look at the full Mississippi Basin. They
did this with the Boulder Dam in the early 1930s on a
very small scale. It was a tremendous engineering
achievement. They put the money into the
infrastructure to deal with it. They built the
Tennessee Valley Authority in the 1930s to control
flooding and water distribution in the south. These
projects were incredibly successful. We just don’t do
investments like that anymore. We don’t do large scale
infrastructure investment because our money supply is
so dominated by private sector finance.
The cost of money is really very high. I mean, they
talk about low interest rates today, but by historic
standards, six or seven percent is way high. In the
New Deal, you had the Reconstruction Finance
Corporation funding infrastructure projects at one
percent. We could do that again today. Dennis Kucinich
has introduced an infrastructure bank bill that would
finance projects at zero percent. All it needs is
capitalization, and it can be done, but we’re so
dominated by a private financial system that it has
the whole economy by a stranglehold. We can’t come up
with the kinds of infrastructure that would be able to
mitigate global warming and other problems like that.
ICONOCLAST: So we’re at this point where, like you
said, all that is needed is capitalization but there’s
this private banking system working, so does one bring
this idea of credit as a public utility back?
COOK: Well, just a little background first. Credit as
a tool is an awesome power. Even if you go back a
thousand years and you read something like Michael
Hudson who is a historian in this area, it’s always
been regulated in some way by the government or a
chartering regulatory system.
Now, there have been times when governments have run
their own banks. Venice – The Venetian Republic – is
probably one of the best historical examples. People
don’t realize that the power of Venice in the High
Middle Ages was based upon the fact that they had
their own bank. They didn’t have to turn to private
bankers and beg for money. They would finance commerce
and government expenditures out of the Venetian bank
sometimes through loans and other times through direct
expenditure.
So the power to do that has always existed, and in
America, we probably went further than any other
country in our early history in direct government
financing. The colonial governments issued their own
currency. They printed money and then spent it and
then took it back into taxes, and that was what the
prosperity of the American colonies was built upon.
When the British Parliament abolished paper money in
1764, that produced the economic depression that led
to the revolution. During the revolution, the
Continential Congress printed and spent continental
currency which served the same purpose. People always
point to that as the great example of inflation, but
research has shown that it inflated so much because
the British were counterfeiting in New York. They were
just printing reams of continental currency and then
taking it around and spending it in the countryside,
so it lost its value. It worked very well while it
existed.
The next great example is Greenbacks which was the
money that (President Abraham) Lincoln spent directly
into circulation to keep the Civil War going. I mean,
he actually handed Greenbacks to troops, and that was
their pay, and that circulated into the economy. Very
few people realize that the Greenbacks continued to be
the primary part of the American currency until World
War I. About a third of the currency in 1900 was
Greenbacks still around from the Civil War. One of the
few things the Federal Reserve did when it came into
existence in 1913 was that it produced such a
tremendous inflation that it destroyed the Greenbacks
and destroyed most of the value of the coinage of the
United States which the government was also spending
directly into circulation. So the bankers who took
over the government and took over the financial
systems of the Federal Reserve, the first thing they
did was destroy real government currency, so the only
currency that was left was Federal Reserve notes,
which first came into existence by being lent by the
banks.
There is one other factor, too, that we should
realize. People will say, "Well, the Federal Reserve
System and bank currency allowed industrial growth,
and that’s what capitalized the growth of America into
an industrial power." That is absolutely false.
Historically, that is completely wrong. Most U.S.
industrial growth occurred through retained earnings
and still does based on the growth of science and
technology as a multiplier and then plowing your
profits back into the business. Almost all bank
lending is for speculation and consumption, not for
production. The capitalization of American industry
both in the private and the public sectors, you know,
equity and publicly-owned companies, comes from the
capital markets from people who already have money
invested in the company. It does not come through bank
lending. Bank lending gets involved when you have
leverages, mergers, and buy outs and that sort of
thing. It’s really destructive in industry.
So what I’m saying is that there are two-pronged tools
for economic growth. One is the ability of government
to directly fund activities and this includes lending
like with Kucinich’s infrastructure bank or the New
Deal Reconstruction Finance Corporation. The other
tool is to allow industry to go ahead and borrow
freely in the capital markets from people who already
have the money and to outlaw bank speculation lending
for leveraged buyouts. The tools exist. The real
blockage is political. It’s the power of the financial
industry because the people who run the country are
the financial elite. If you look at where the money is
coming from to finance all the candidates for
president this year, I mean everybody knows it’s
coming from Wall Street. Look at Ron Paul. He’s got
nothing because he’s not getting $10,000 and $20,000
donations from the Wall Street managers and financers.
That’s where John Edwards, Hillary Clinton, and Barack
Obama. I mean, look Mitt Romney. He’s got more money
than anybody and most of it is coming from financiers
and lawyers.
So it’s a political issue. The technology is there.
The knowledge is there, but the political power of the
financiers is just tremendous.
ICONOCLAST: Well, if Venezuela develops and implements
its own banking system outside of the World Bank and
the IMF, and China follows suit by not buying our debt
here in the United States, what would happen to the
U.S. economy?
COOK: Well, it would collapse. It would be an absolute
collapse. Again, you have to distinguish the producing
economy from the financial economy. The producing
economy would benefit because we’d have to start
making our own stuff again. We’d get our jobs back. It
would be great for the people of the United States.
For the financiers and the financial economy, it would
be a total collapse because the whole thing depends
upon that circular movement of dollars which is called
"dollar hegemony."
Actually, this has been going on since the 60s and
70s. The rest of the world has been growing up, and
the rest of the world has currency systems now that
are starting to stand on their own. The Yen has been
strong for a long time. Now you’ve got the Euro.
Russia has rebuilt its finances so that the Ruble is
now coming back and, of course, the Chinese Yuan.
The reason the U.S. is trying to conquer the Middle
East and maintain military control over the rest of
the world is to prop up the dollar. That’s what’s
behind it all. The U.S., if you take that away, would
be functionally bankrupt. That phrase "functionally
bankrupt" is from economists who work with the Federal
Reserve. So you take that away, and you have a
financial collapse, and it could very well result in a
world war.
ICONOCLAST: Wow. So who would be players in that? Of
course, the U.S. would be on one side, but who would
be on the other?
COOK: By what we have done by our aggressive military
policy is pushing mainly the Asian giants together.
That includes Russia, China, and India. Now, they are
also investing heavily in Latin America. The Chinese
are taking their U.S. dollars and are starting to use
them as lending and investment instruments in Africa
displacing the IMF. So the other power center in the
world is in the Asian land powers. I’m not predicting
–
ICONOCLAST: Yeah, you’re not going to pull a Douglas.
COOK: Well, this is where it’s heading, and it’s
splitting along the lines of the U.S. and the U.S. is
pulling the reigns in on Europe to get them solidly
aligned with what’s going on. We’ve already had Great
Britain in our corner with Tony Blair. Now, they’re
trying to do the same thing with France and Germany to
make sure France and Germany don’t stray off of the
NATO reservation.
The fault line is really splitting down between the
U.S. and the Asian landpowers. Right in the middle of
that fault line, of course, is the Middle East with
Iraq and Iran. Everything points to some kind of major
war, and it’s all financial to protect the financial
system.
ICONOCLAST: As you mentioned, the British forces
manipulated the currencies of the American colonies in
order to create inflation. In the last two weeks,
reports came out that said the CIA had manipulated
Iran’s currency.
COOK: Yeah, that’s a common type of covert warfare.
Well, of course, the CIA learned their trade from the
British in World War II, and the counterfeiting of
currencies has always been a tool of British
intelligence. It goes back to the American revolution,
and then you see the same thing happening when they
were involved in various escapades in the 1800s.
Financial warfare is one of the tools of the covert
world.
ICONOCLAST: The concept of a "democratic capitalism,"
you say, would eliminate these patterns of wars?
COOK: Yeah, and what it postulates is a multi-lateral
world of major regional powers that are equals.
Really, that’s how U.S. foreign policy was conducted
prior to World War I. That was the way we had our
relations with Russia in the 19th century. We’ve tried
to be co-equals with other continental powers, so
there was a lot of sympathy in exchange with Russia
and Germany. It was only with World War I when the
financiers took over America through the Federal
Reserve System that we were absorbed into the British
Imperial structure which was based upon world
financial power. That’s the game we’ve been playing
ever since, except we became the top dog through our
lending policies. We took over the center of power
from Britain. Essentially, it’s the same empire. We’re
the British Empire headquartered in America now
because it’s not an ethnic empire. It’s a financial
empire, and we use the same methods as the Bank of
England. The Federal Reserve is the Bank of England
recreated on American soil and it bases its power on a
tremendous public debt. The bigger the national debt,
the more our government is in debt, the more money
banks have to lend. It’s our debt that collateralizes
the bank.
ICONOCLAST: It seems like with this monetary system
Douglas proposed, the American empire would be
eliminated. It’s kind of like a return to our
democratic republic, and I would imagine that
somewhere along the way, it would require a
constitutional amendment naming how the government
would issue money. But how strong is this social
credit movement in the United States?
COOK: Your point about a constitutional amendment is a
good question. I think the constitution has been
pretty ambiguous, although the Supreme Court did
uphold the Greenback laws in the 1800s, so I’m not
sure you need to actually amend the constitution.
I’m part of the monetary reform movement in the U.S.
which is not huge but it is getting fairly
well-established. The most important component of that
is the American Monetary Institute <www.monetary.org>;,
and I’ve worked with them on drafting a model
legislation for monetary reform. It’s called the
American Monetary Act. It would accomplish a lot of
the purposes of the monetary reform movement that
we’ve been talking about.
They’re going to have their 3rd annual conference this
year, and it’s probably the best conference in the
world now on monetary reform. There will be a lot of
people not only from the U.S. but also from overseas
at that conference. They’ve got local chapters. They
go to Capitol Hill and brief people on congressional
staffs. They’ve met with Ron Paul, Dennis Kucinich,
and other people like that. It’s a growing movement
that is very important and their model legislation
would accomplish many of the goals we’re talking about
here.
Social credit as a movement is less well-known in the
U.S. In fact, right now, the things I have written
have probably been at least in our generation the
first writings that have tried to bring together the
social credit ideas of British nations with the
monetary reform ideas from the American tradition and
unite those to show how they are really two legs of a
similar policy. I’m in very close touch with the
social credit people, particularly in Canada and New
Zealand, where they have the most experience with
these things. I’m trying to bring together social
credit with the American Monetary Institute movement
and do the basic theoretical work. I’ve gotten
incredible response from all over the U.S. and the
world from people who understand what I’m talking
about and who are very excited about it.
You know, the ideas in monetary reform are not new,
and it’s important for people to understand. I mean,
the best monetary reformer in history was probably
Benjamin Franklin. He understood more than anybody how
it all works. He was a true genius in not just flying
a kite in a rainstorm but in understanding how nations
work and how economies worked. He was the architect of
the American colonial system.
So the ideas have been around for a long time, and
there has always been a realization that credit and
money are much too important to be left in private
hands, but we have an ideology today where
privatization and market fundamentalism are so
overwhelming and have so much wealth and power behind
them that it’s very difficult to get people to
understand that there are other ways to look at this.
What we’re trying to do is educate people about this
long tradition with knowledge and understanding about
these things that if you think about it and take a
look you’ll see that there is a much better way to do
it.
INFO
Richard C. Cook
http://www.richardccook.com
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