Category Archives: money

Sovereign or Slave? How perversion of the money power has decided the issue—until now!

As I indicated in my previous post, No democracy when government has the money power, E. C. Riegel, more than 75 years ago, explained, better than anyone else I’ve encountered, the nature of money, its fundamental function, and the history and consequences of its politicization, and outlined a way of transcending the perverse and dysfunctional system that we have lived under for far too long. His work is perhaps best summarized in his book, Private Enterprise Money, from which I quoted. I continue here with further quotes that elucidate the key points of sovereignty, money and government.

Riegel’s solution involved the organization of credit clearing circles that he called “Valun Exchanges” that would be joined together in networks for exchanging goods and services. He argues, as I do, that it is the individual person that is sovereign, not any king, emperor or government, and that the power to issue money, therefore, also resides in the individual. When we realize that money is really only short-term credit, it becomes clear that it is in our power as individuals to give it or withhold it as we go about our daily business of exchanging the value (goods and services) we produce and consume.

In Chapter 9 of his book, Riegel proposes that the Valun Exchanges be organized on a “state-wise” basis. He observes that:  “The sovereign power of the citizen rises to the state government; and from there it is delegated upward to the federal government, and downward to subdivisions. We are, first of all, citizens of our respective states; and this implies citizenship also in local and national governments.” p. 139

He then recounts the history of the union of the American colonies after their separation from British rule and argues that: “The advantage in abolishing this multiplicity of monies [of the various colonies] was obvious, but the implications involved in surrendering the money issuing power to the federal government was not comprehended. The gain to all in uniformity of money unit was visualized; the loss in sovereignty thereby suffered, was not.”  p. 140

From this point onward, I will let Riegel’s words speak for themselves. All page number refer to the printed edition.

“We now realize that the money power of the private citizen is in fact his sovereignty; and that in yielding it he yields his sovereignty. Thus the transferring of the money power from the states to the federal government was the transferring of the citizens’ sovereignty to the national government, and the reducing of the state to the status of a subordinate. p. 140

“The political money system implies that the citizen will abate his natural money issuing power, and make the criterion of his exchanges and the regulation of the money system entirely dependent upon the government that he recognizes as the money power. By making the federal government the sole money issuing power, the individual states transferred the fealty of their citizens to the national government, because they became thereby dependent upon its money power. The citizen having thus had his fealty transferred to the national  government—it was taken from the state governments—and the latter are now dismayed by the increase of federal power and the commensurate subordination of state power.”

“What has actually transpired is a reversal of the intent of the federal plan whereby the national government was to be dependent upon the states for grants of power. The national government, through its money power, is now supreme and in reality holds the state governments in subjection to it. Federal fiscal policy now determines the bounds of state sovereignty. It took many years to reveal this structural weakness because, in the earlier days of the federation, the economy depended more upon the private issuance of money through the banking system, and thus federal fiscal power was dormant. The policy of the federal government up to 1932 was to leave to the banks the function of supplying money. During the Jackson administration, with the abolishment of the United States Bank, government participation in money supply reached its lowest point—with the government confining itself to the mere minting of gold and silver coins at a seigniorage charge to any one who brought the metal to the mint.” pp. 140-141.

Money Power Is Sovereignty
The states, to recapture their independence and sovereignty, must look to their citizens who, in turn, must assert their sovereignty by exercising their inherent money power. It was right that the states should have surrendered their money power; but they should have surrendered it to their citizens, and not to another government. At the time the federation was formed the nature of the money power was not understood; and it was not realized that it is the essence of sovereignty. But we know now that it is and if we wish to preserve the federation and also home rule, we must now deal intelligently with the money power.

While the states have surrendered their money power, their citizens have not. The citizens have merely failed to exercise their natural powers against which there is no prohibition in either state or federal constitutions. This is not a political issue – requiring legislation or repeal of legislation, or constitutional amendments, or any official action – but it is, nevertheless, a profound political movement; because, as the people assert their money power, their natural intimacy with their state and local governments asserts itself – since there is no other power that can step between. Today, the federal government stands between the citizen and local government, and thus alienates him.

If our states are to develop their individuality and counter the stereotyping influence of a monetary dictatorship, if local government and private enterprise are to work out their natural virtues, if democracy is to prevail in business and government, and if our federal republican system is to survive, we must meet our problems by dealing with their fundamental causes – the political money system.”

To accomplish these broad and vital aims, the Governor or some other public official should take the leadership of this cause within his state. In the absence of this, leadership must be taken by private citizens. It offers an incomparable opportunity for public service.”

While the money issuing power is inherent in every man, it can be realized only by a pact among many. Therefore, the individual is helpless, and organized action is necessary. The method of organizing a Valun Exchange should be no different from organizing any other cooperative movement.” pp. 143-144.

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The true pathway to peace, prosperity and freedom

For the past four decades E. C. Riegel has been my primary source of insight and

E,. C. Riegel

inspiration on the concepts and mechanisms of money and exchange. Writing mainly from the 1920s thru the 1940s, his is vision is acutely penetrating and his expression clear and almost poetic. For that reason I and a few others have made every effort to make his work known to a much wider audience. His most important works are freely available to be downloaded and I have listed the web links on my website under the Library menu item at https://beyondmoney.net/library/.

I realized very early in my peace and justice work, that the primary obstacle to peace, justice, and freedom, lies in the centralization of power and the concentration of wealth. Riegel and others helped me to see that the global money and banking system is the main instrument by which that is made possible. Riegel opened my eyes to the true nature of money and the fact that we the people already have in our hands the power to create true money. He pointed out that “Heretofore, economics has located the source of production at one point and the source of money at another, with the result that synchronization and balancing of issue between wealth producing power and money power were impossible.” Riegel then laid out a way to bring those two powers together, a plan which I, in all modesty, have enhanced and adapted to present conditions.

I’ve lately been in the process of preparing a document containing excerpts from Riegel’s 1944 book, Private Enterprise Money, along with my comments, much as I did years ago with my annotated précis of his book, Flight From Inflation. That may take a while to complete but I would rather not delay in sharing with my readers a little gem from pages 106 in which Riegel presciently described our present predicament. Here it is:

THE SURPRISE WEAPON

Society is in the twilight of a passing day. The state now undertakes to finance the economy, and, since a free economy is manifestly impossible where the state assumes the responsibility of supplying the money circulation, the politician is compelled to choose between fascism and communism. Under either choice liberty is abolished and the people are enslaved. As the planners all over the world adopt their devices for a managed economy, and ideologists and sloganizers prepare their implements to condition the minds of men to their control plans, and the cause of human freedom seems defenseless, there falls into the hands of the people a surprise weapon that will turn the tide of battle and give the people mastery, not only over their private affairs, but over the would-be political planners. This weapon is the people’s money power as defined in the following pages. It will change the whole course of human events into the paths of liberty, prosperity and peace.

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New Year’s Newsletter — January 2020

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The dirty secret of capitalism — and a new way forward
In this TED talk, billionaire businessman, Nick Hanauer debunks the assumptions of neo-liberal economics and shines light on the path toward a new economics that promotes a more sustainable, Hanauer_biz_tedtalks_0517prosperous and equitable society. Hanauer argues that neoliberal economic theory has sold itself to us as “unchangeable natural law, when in fact it’s social norms and constructed narratives, based on pseudo science.” He says that “If we want a new economics all we have to do is choose to have it.” Watch it here.

Of course, implementing that choice depends on “we” having enough power to tilt the political landscape back toward something closer to level. I continue to argue that E. C. Riegel had it right when he said:

We have not even made a beginning in democracy by merely putting at the westPointAdjdisposal of man an occasional ballot to choose who should be his governor under a system that is inherently paternalistic and autocratic. Man must have untrammeled command of a daily – an hourly ballot which he casts in the market place to support the things and services he desires and which he withholds from others and which he transmits to the state or denies it according as it merits his patronage. He must have the power to create this money ballot in a measure commensurate with his power to produce and serve his fellow man without hindrance from his servant, the state. The moment we limit or thwart or bias this money power, which is natural to man, and the very criterion of his sovereignty, we pervert democracy beyond the power of any political ballot or any parliament to remedy. Money power cannot be separated from democratic power without miscarriage and ensuing frustration – political and economic. Democracy implies the sovereignty of man; and, since man cannot be sovereign without the money power, there cannot be democracy under the political money system.

Until, through the assertion of his money power, man can requisition from industry all he produces, and put government under his direct patronage, human aspirations will be unattainable.
— From Private Enterprise Money.

 

How to assert our “money power” has been the substance of my work for more than 40 years. See my books, articles, presentations and interviews at my website, https://beyondmoney.net
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Presidential Debate
I took a pass on watching the January 14 Presidential debate which pitted Bernie against five establishment candidates in what was a predictably bland rehash that Tulsiwas limited in scope. I chose instead to watch the discussion between Tulsi Gabbard, Dennis Kucinich, Lawrence Lessig, and Stephen Kinzer which was live streamed on YouTube. The discussion focused on the key policy issue, the US interventionist foreign policy, and the fact that most Senators and Representatives of both parties in Congress are beholden to the military-industrial [and banking] complex, and are complicit in the immoral, illegal, and wasteful pursuit of global domination. If you missed it you can still see it at https://tulsi.to/discussion.
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All Wars Are Bankers’ Wars
Anyone who wishes to be well informed and understand civilization’s present predicament would do well to watch this video. I may not agree with all the specific details but the basic story is correct and well documented, and congruent with my argument that the global interest-based, debt-money regime that centralizes power and concentrates wealth is the primary obstacle to social justice, economic equity and peaceful relations among people and nations, and indeed, an existential threat to civilization itself. View it here.

Wishing all a happy, productive, and peaceful year,
Thomas H. Greco, Jr.

Fasten your seat belts…

1/30/1981 President Reagan and David Stockman meeting on the economy in the Oval Office

In his current subscription pitch and announcement for his new book, PEAK TRUMP: The Undrainable Swamp And The Fantasy Of MAGA, David Stockman lays out some startling facts, provides a cogent analysis, and makes some dire predictions. As President Ronald Reagan’s Budget Director and long-time political insider, Stockman should be heeded. Here are some excerpts:

“We are in a whole new ball game. The Deep State, the House Dems, the Mueller hit squad and the mainstream media are all going in for the kill.

“They are determined to take the Donald down and preserve the rule of the bipartisan establishment in favor of Empire abroad and Big Government, massive debt and Fed-fueled Bubble Finance at home.

“At the same time, the Donald is now practically handing them his political head on a platter. That’s because he has bombastically embraced the “big, fat, ugly bubble” that he so accurately harpooned during the campaign.

“But that bubble has now reached a fatal triple-top and is fixing to implode, and to take the American economy and Trump’s presidency down with it.”

Stockman says, “We are heading for the double whammy of a political/constitutional crisis and a thundering financial breakdown at the same time.” He argues that it was the failure of “the Washington/Wall Street consensus” that led to Trump’s victory in 2016, and that actions of the Federal Reserve have caused a massive asset bubble along with huge disparities of incomes and wealth.

He goes on to say that “just because Donald Trump targeted the symptoms correctly [during his campaign] that doesn’t mean he had a plan to fix the American economy or the skills and know-how to move the turgid, essentially paralyzed machinery of the Federal government.” Stockman  characterizes Trump as “a political flyweight, megalomaniacal incompetent and bile-ridden bully who stumbled into the Oval Office against all odds.” He decries the massive growth of government debt over the past four decades and boldly asserts that recession will hit the US economy before November 2020, and that “Wall Street, the US economy and the Donald’s fantasy of MAGA will come tumbling down with it.” Whether or not his timing is correct, it is clear that a political and economic shipwreck is just ahead.

Stockman decries the “bipartisan ruling class” which is “in favor of permanent war, unchained entitlements, fiscal incontinence, unsustainable debt-fueled household spending, rampant corporate financial engineering and Keynesian monetary repression and “wealth effects” based central banking that lies at the roots of our current economic malaise,” and referring to the Mueller Russiagate investigation and subsequent impeachment hearings, Stockman says, “the Donald’s fluke elevation to the Oval Office has finally caused the Deep State to come out of hiding and bare its fangs against American democracy itself.”

Stockman criticizes the Fed for “dithering” and delaying “normalization,” by which he presumably means raising interest rates and ending Fed purchases of government bonds. He also calls for “fiscal rectitude” (balanced budgets) on the part of the government, something that even his beloved Ronald Reagan was unable to pull off.

But what Stockman (and everyone else) fails to realize is that, under the interest-based debt-money regime that has prevailed throughout the modern era, it is impossible for national governments to consistently balance their budgets. Here’s why. Since money is created when banks make loans, and since interest is charged on those loans, aggregate debt increases simply with the passage of time. If growth in the money supply does not keep up with debt growth, many debtors will default and the economy will sink into recession. Thus, the banking system must find ways to keep people and corporation borrowing ever greater amounts of money. Over my lifetime I’ve seen banks roll out a succession of creative schemes. Starting with the liberalization of consumer credit following World War II (“Buy now; pay later”), then the widespread issuance of credit cards, then the introduction of “student loans,” then the easing of requirements for people to buy real estate, banks have gotten people to borrow more and more.

Then, when the private sector is all “loaned up” and cannot take on additional debt, the government must step in as “borrower of last resort.” By deficit spending, financed through the issuance of bonds, the national government, with the help of banks that buy those bonds, the money supply is expanded. (When banks buy government bonds they are making a loan to the government). And when all available funds have been sucked up, the Fed must step in as “lender of last resort” to itself buy up additional government bonds while keeping interest rates at acceptable levels. That approach, called “quantitative easing,” is what saved the global system of money and banking from total collapse in 2008 after the housing bubble burst. Thus, the government and the banking establishment are locked together in a deadly embrace and “dance of death” that is spiraling out of control.

It may very well end with a major decline and long drawn out recovery, as Stockman is predicting, but unless a new interest-free money system is implemented after the wreckage is cleared, the ultimate outcome may simply be another round of ever more extreme boom-bust cycles and political chaos.

The good news is that there are credit money innovations waiting in the wings, and now emerging, that can be rolled out, replicated, and networked together to usher in a “Butterfly Economy” and new world order of peace, justice, and human unity. For details about what the Butterfly Economy might look like, and how we might get there, see my video, The Butterfly Economy: How Communities are Building a New World From the Bottom Up, and my article, Reclaiming the Credit Commons: Towards a Butterfly Society. — t.h.g.

There once was a river …an allegorical tale about money and credit.

Written and narrated by Thomas H. Greco, Jr.

There once was a river that flowed through an arid land, and though rainfall was scant and infrequent, the river provided an abundance of cool, fresh, sweet water with which the people who lived along its banks were able to irrigate their crops and water their flocks. And the people prospered and lived in peace and harmony; and so it had been for as long as anyone could remember.

But there came a time when the water’s flow began to diminish. At first it was barely noticeable, but as time went on the water level fell ever more rapidly until there was barely enough water to keep their animals alive, much less to irrigate the fields. Day by day, the people grew more alarmed as their crops began to wither. Then the men and women of the valley came together to discuss their plight and what might be done to deal with this calamity.

Now, no one knew where the river began or where it ended. They only knew that throughout their generations, it had always been there and it had always provided a reliable supply of water from which everyone was able to draw freely.

Follow the full transcript and audio here.

My latest interview on Ellen Brown’s podcast, It’s Our Money

In Ellen’s October 10 podcast, on which I was the featured guest, I argue that our best hope for escaping the tyranny of the global banking cartel lies in creating a decentralized network of exchange in which credit is locally controlled and allocated based on personal relationships and the productive capacity of community economies (starting at 27:25). This episode begins with a report by David Jette of the California Public Banking Alliance on the landmark public banking legislation that was recently passed into law in California. David describes what this act enables and the long and arduous process of getting it passed.

https://www.podbean.com/eu/pb-tuza2-c2cf19