Category Archives: The Political Money System

America’s shrinking democracy

Prof. Peter Dale Scott is an astute observer of social and political phenomena. In his recent article, The Doomsday Project, Deep Events, and the Shrinking of American Democracy, he provides what I think is a very useful analysis of the present crisis in American government, which has serious implications for money, banking, and the shift toward a sustainable economy.

Here is an excerpt:

I would like in this essay to go further and propose a framework to analyze the on-going forces underlying all of the most important deep events, and how they have contributed to the political ascendance of what used to be called the military-industrial complex.  I hope to describe certain impersonal governing laws that determine the socio-dynamics of all large-scale societies (often called empires) that deploy their surplus of power to expand beyond their own borders and force their will on other peoples. This process of expansion generates predictable trends of behavior in the institutions of all such societies, and also in the individuals competing for advancement in those institutions. In America it has converted the military-industrial complex from a threat at the margins of the established civil order, to a pervasive force dominating that order.

With this framework I hope to persuade readers that in some respects our recent history is simpler than it appears on the surface and in the media. Our society, by its very economic successes and consequent expansion, has been breeding impersonal forces both outside and within itself that are changing it from a bottom-up elective democracy into a top-down empire. And among these forces are those that produce deep events.

I am far from alone in seeing this degradation of America’s policies and political processes. A similar pattern, reflecting the degradation of earlier empires, was described at length by the late Chalmers Johnson:

The evidence is building up that in the decade following the end of the Cold War, the United States largely abandoned a reliance on diplomacy, economic aid, international law, and multilateral institutions in carrying out its foreign policies and resorted much of the time to bluster, military force, and financial manipulation.

But my analysis goes beyond that of Johnson, Kevin Phillips, Andrew Bacevich, and other analysts, in proposing that three major deep events – Dallas, Watergate, and 9/11 – were not just part of this degradation of American democracy, but played a significant role in shaping it.

As author Michael Lind has observed, there have for a long time been two prevailing and different political cultures in America, underlying political differences in the American public, and even dividing different sectors of the American government.  One culture is predominantly egalitarian and democratic, working for the legal consolidation of human rights both at home and abroad. The other, less recognized but with deep historical roots, prioritizes and teaches the use of repressive violence against both domestic and Third World populations to maintain “order.”

To some extent these two mindsets are found in all societies. They correspond to two opposing modes of power and governance that were defined by Hannah Arendt as “persuasion through arguments” versus “coercion by force.” Arendt, following Thucydides, traced these to the common Greek way of handling domestic affairs, which was persuasion (πείθειν) as well as the common way of handling foreign affairs, which was force and violence (βία).”

Writing amid the protests and riots of the 1960s, Arendt feared that traditional authority was at risk, threatened (in her eyes) by the contemporary “loss of tradition and of religion.” A half century later, I would argue that a far greater danger to social equilibrium comes now from those on the right who invoke authority in the name of tradition and religion. With America’s huge expansion into the enterprise of covertly dominating and exploiting the rest of the world, the open processes of persuasion, which have been America’s traditional ideal for handling domestic affairs, have increasingly tilted towards top-down violence.

This tilt towards violent or repressive power is defended rhetorically as a means to preserve social stability, but in fact it threatens it. As Kevin Phillips and others have demonstrated, empires built on violent or repressive power tend to rise and then fall, often with surprising rapidity.  Underlying the discussion in this essay is the thesis that repressive power is unstable, creating dialectical forces both within and outside its system. Externally, repressive power helps create its own enemies, as happened with Britain (in India), France (in Indochina) and the Netherlands (in Indonesia).

Read the full essay here.

Republicans will likely propose that states declare bankruptcy

According to a Reuters article, former House speaker Newt Gingrich is saying that legislation to allow states to declare bankruptcy will soon be introduced in Congress. The evident purpose is, not to stiff the banks, but to allow state governments to renege on their obligations to pension funds. Some excerpts below.–t.h.g.

But the legislation will likely face an uphill battle with Democrats still in control of the Senate and the White House.

Because states are sovereign, they cannot declare bankruptcy as cities can, and most have provisions in their constitutions that make defaulting on debt next to impossible.

And California — a state which Gingrich said would likely turn to Congress for financial help along with New York and Illinois — said on Friday it has no interest in using bankruptcy to solve its fiscal problems.

Read more here.

Let the sun shine in: Wikileaks to reveal banking secrets of the rich

There is a big difference between legitimate privacy concerns and secrets that enable fraud, malfeasance, and criminal activity. According to this article in The New Zealand Herald, Wikileaks will shortly publish information that promises to expose some of the latter.–t.h.g.

WikiLeaks: Banking secrets of rich leaked

5:30 AM Monday Jan 17, 2011

The overseas bank account details of 2000 “high-net worth” individuals and corporations – detailing widespread possible tax evasion – will be handed to WikiLeaks tomorrow.

The organisation is receiving the details from the most important and boldest whistleblower in Swiss banking history, Rudolf Elmer, two days before he goes on trial in his native Switzerland.

British and American individuals and companies are among those whose details are on CDs to be presented to WikiLeaks in London.

They include about 40 politicians, Elmer says.

Elmer, who after his press conference will return to Switzerland from exile in Mauritius to face trial, is a former chief operating officer in the Cayman Islands for the Julius Baer bank, which accuses him of stealing the information.

He is also – at a time when the activities of banks are a matter of public concern – one of a small band of employees and executives seeking to blow the whistle on what they see as unprofessional, immoral and even potentially criminal activity by powerful international financial institutions.

Switzerland is a fortress of banking and financial services, but is famously secretive and expert in concealing wealth from all over the world for tax evasion and other extra-legal purposes.

Elmer says he is revealing the information ” to educate society”.

He says his list includes “high-net worth individuals, multinational conglomerates and financial institutions – hedge funds”.

They are said to be “using secrecy as a screen to hide behind in order to avoid paying tax”.

They come from the US, Britain, Germany, Austria and Asia.

Clients include “business people, politicians, people who have made their living in the arts and multinational conglomerates – from both sides of the Atlantic”.

Elmer says: “Well-known pillars of society will hold investment portfolios and may include houses, trading companies, artwork, yachts, jewellery, horses, and so on.

“What I am objecting to is not one particular bank, but a system of structures,” he said.

“I have worked for major banks other than Julius Baer, and the one thing on which I am absolutely clear is that the banks know, and the big boys know, that money is being secreted away for tax-evasion purposes, and other things such as money-laundering.”

Elmer was held in custody for 30 days in 2005, and is charged with breaking Swiss bank secrecy laws, forging documents and sending threatening messages to two Baer officials.

Elmer says: “I agree with privacy in banking for the person in the street, and legitimate activity, but in these instances privacy is being abused so that big people can get big banking organisations to service them. The normal, hard-working taxpayer is being abused also.”

The names on the CDs will not be made public, just as a list of 15 clients that Elmer gave WikiLeaks in 2008 has remained undisclosed.

– OBSERVER

 

States beginning to assert their money power

Bills have recently been introduced in several states to try to address the money problem. In an article that appeared in Financialsense.com, Robert Kientz describes actions that are occurring in several states. It is unclear how much support the various bills might have, or what their chances of passage might be, but Kientz implies that the state of Virginia has already taken official action to at least study the matter of using alternative payment media other than Federal Reserve currency. He says:

Virginia announced yesterday that the state would commission a study of alternative currencies including gold and silver in House Joint Resolution No. 557. A selected quote from Resolution 557:

WHEREAS, the Supreme Court of the United States in Lane County v. Oregon, 74 U.S. (7 Wallace) 71, 76-78 (1869), and Hagar v. Reclamation District No. 108, 111 U.S. 701, 706 (1884), has ruled that the States may adopt whatever currency they desire for the purposes of performing their sovereign governmental functions, even to the extent of adopting gold and silver coin for those purposes while refusing to employ a currency not redeemable in gold or silver coin that Congress has designated “legal tender”;

Such actions are a hopeful sign that the money power, and the political power that goes along with it, are devolving away from Wall Street and Washington and back to our states and communities. The states have a powerful weapon in the form of the United States Constitution, which declares that, no state shall make any thing but gold and silver Coin a Tender in Payment of Debts.

Of the two metals, I much prefer silver as the value standard, for several reasons. My main objection to gold is that it is closely held by a few banks and governments that are able to manipulate its market price, and thus manipulate the economy if gold were to play a major monetary role. Silver is much more abundant and widely held, and while present market mechanisms enable a few entities to manipulate its market price, I think parallel  mechanisms can be put into place that would assure a freer market giving silver a more stable value. Ideally, however, trading entities will ultimately adopt an objective value measure using a composite commodity standard composed of a “market basket” of basic commodities.

Keynes was not wrong in calling gold “a barbarous relic,” but that’s not the whole story. We must also recognize that central banks, legal tender laws, and credit monopolies are relics even more barbarous than gold. The separation of money and state must ultimately be gained in order to have a truly free and harmonious society.

Ron Paul calls for competition in currency, attacks central bank’s “independence” as “unaccountability.”

Submitted by cpowell on 09:44AM ET Monday, January 10, 2011. Section:Daily Dispatches

Toward Sensible Monetary Policy

By U.S. Rep. Ron Paul
Monday,January 10, 2011

http://paul.house.gov/index.php?option=com_content&view=article&id=1816:…

Last week the 112th Congress was sworn in. I am pleased that I will be chairing the Monetary Policy Subcommittee of the Financial Services Committee, which has oversight of the Federal Reserve. Obviously, this position will facilitate my efforts to ensure that the Fed provides the American people with more information about what they have been doing with and to our money.

Not surprisingly, since my chairmanship was announced, apologists for the Fed have been recycling the old canard about how increased transparency threatens the Fed’s so-called political independence.

By independence, they are referring to the Fed’s ability to greatly impact the economy with virtually no meaningful oversight. We only recently learned that the bankers at the Fed were able to use the latest financial crisis to bail out Wall Street cronies and foreign central banks with billions of dollars that were created and wasted, instead of appropriated and voted on by representatives of the people.

The Fed and its supporters in Congress fought even this small bit of transparency and without this one-time provision in the financial reform act forcing disclosure, we would still not have this information. Indeed, we are in the dark on so much of what the Fed has done. This is extremely dangerous for our country, yet this power and secrecy are defended as some kind of public good, which is patently ridiculous.

Our government is based on a system of checks and balances. With no check on the Fed, it is no surprise it has thrown the economy wildly off balance.

The solution is not to re-inflate the bubbles the Fed created, or to continue to devalue the currency, or to throw billions at failing banks and corporations. The solution is to return sanity and freedom to monetary policy. Forcing the entire country to use a medium of exchange that is subject to the whims of elite bankers and their cronies on Wall Street is not sanity. Hoping that an unchecked, all-powerful, behemoth banking cartel will solve any economic problem is not sanity.

The problems the Fed was created to solve now look miniscule compared to the problems it has created. If “political independence” erodes the purchasing power of the currency by 98 percent and destabilizes the economy with radical booms and busts, all while increasing unemployment and tipping us ever closer to hyperinflation, perhaps it is time to try a little transparency and accountability instead. Better still — we should try giving the people true economic freedom.

Make no mistake: The Fed is not truly independent of political pressure. Its chair is appointed by the president, and it is a creature of Congress. Congress has a duty, albeit a neglected one, to exercise oversight of the Fed. However, even if it was politically independent, it is not independent of the influences of Wall Street. One has to look only at the revolving door between the Fed and the big banks to know that. Disclosures on TARP funds confirm this.

It is nothing short of cruel and criminal for Congress to stand idly by while the life savings of Americans are inflated away to nothing. It is high time that Congress insist on getting complete information on what the Fed has been doing, and for whom. My hope is that exposing the truth will demonstrate the insanity of the status quo and more people will call for sensible changes, such as legalizing competing currencies.

U.S. in an Inflationary Depression

This 2010 recap from the National Inflation Association makes it clear that we are in the midst of an inflationary depression.

Judge Napolitano challenges elite bankers on Fox News

I’m no big fan of Fox News, but this is a surprisingly good segment. Judge Napolitano in the five minute speech does a pretty good job of telling “The Plain Truth of the Federal Reserve” (12/21/10), and our present economic and financial predicament. He pretty much follows what I said in the first part of my latest book, The End of Money and the Future of Civilization.

Now someone needs to ask him to read the second part to discover workable solutions. — t.h.g.

http://www.youtube.com/v/CUUZ4D7OcT4?fs=1&hl=en_US

“Inside Job,” the story of the looting of America

Inside Job is a recently released documentary film about the causes of the present financial crisis. I’ve not yet seen it, but from all indications it’s a blockbuster that exposes massive criminal fraud and malfeasance by both Wall Street and Washington. Watch this video as Dylan Ratigan on  MSNBC speaks with the film’s director and Professor William Black.

http://www.youtube.com/v/ffHFjlqIzKE?fs=1&hl=en_US

At last, central banking and legal tender are once again subject to real political debate and public scrutiny.

In what seems to me to have been an unlikely turn of events, Congressman Ron Paul of Texas has been appointed to chair the House Subcommittee for Monetary Policy in the new Congress. In one sense this seems like very good news, on the other hand, it raises some serious questions about the oligarchy’s ultimate game plan.

Ron Paul is undoubtedly one of the few politicians who understands money and banking, but he has some serious blind spots, and call me cynical, but I think that politics at the federal level has been so thoroughly corrupted that I have little hope that anything that promotes the common good can ever come out of Congress.

Still, I strongly recommend that everyone watch the following C-span interview in which Congressman Paul outlines his agenda. It does not go as far as it needs to, but it is an agenda that I, for the most part, endorse.

According to Brendan Trainor, Rep. Paul in this interview makes the following points. I have highlighted what I consider to be the most urgent and important ones (in red).

  • Ron will start by requesting the information that is now due from the Fed from the watered down version of the “Audit the Fed” bill that was passed by Congress.
  • Ron will submit his more robust version of the Bill to Audit the Fed in Congress again.
  • Ron is aware of the twin dangers of his attack on the FED. Criticism of the FED could result in a reactionary attempt to create an even more centralized monetary system, or else “some of my allies who are critical of the FED” who Ron now public-ally calls “GREENBACKERS”, will push for Congressional issue of fiat money. Both of these outcomes have to be guarded against (by those few of us who understand the debate in the first place.)
  • Ron explicitly defends the proposition that the market should be regulating finance, not the regulators. The Market does a better job of regulation than the government. This counter-intuitive idea does require a limited government involvement (not to discount the anarcho-capitalist alternative) that will require
    an atmosphere of “law and order, NOT regulation“.
  • Market regulation through “law and order” means that banks and financial institutions are subject only to ordinary business law: That is, they are free to operate as they please, but they must fulfill their contracts and must not engage in fraud. If they cannot fulfill their contracts, they are to be shut down, not bailed out. Their assets are to be distributed to their creditors (bankruptcy).
  • The surest way to END THE FED is the peaceful, gradual method of eliminating, not the FED directly, but legal tender laws. Allow people once more to use GOLD CONTRACTS and other means of using alternative currencies and specie in domestic business contracts. Let the fiat paper dollar compete with the people’s choice: constitutional “honest money”.
  • Ron correctly deflects the usual straw man criticisms directed at him by those who favor central planning in monetary policy. ie
  • There were numerous financial panics before the FED was created. Yes, there were. But those panics were the result of “artificial conditions” and in any event were allowed to play themselves out by liquidation of the bad debts and bad contracts without government interventions up to the recession of 1920-21. That was the last recession that was handled without government intervention. It was a sharp recession, where unemployment reached nearly 20%. However, because President Warren G Harding did NOTHING, except cut government spending and taxes, the recession was OVER IN A YEAR.
  • If the FED does not intervene, the Recessions will be worse. The corollary of the first objection. Yes, the recessions may at times be worse, but they will be shorter. The so called “Panics” of the pre Fed era rarely lasted more than a year or two, and then the economy fully recovered. The interventionist policies starting with the Great Depression ( a ten year depression) and this one now only prolong the recessions, and in the end, the underlying causes are NOT addressed, leading to a new “BUSINESS CYCLE”.
  • Attacking the FED will harm the US DOLLAR hegemony. Ron: I want to protect the dollar, but within the context of markets. Markets are ultimately stronger than the central banks attempts to shore up the dollar, and nothing the central banks can do will overcome that fact. The Market, in the end, will out.
  • Fiscal policy (Congress) is more important than Monetary policy (the Fed) Ron: they work hand in glove. The Fed basically enables the Congress to spend exorbitantly by creating fiat money to cover them. We have to end the Wars and Global Empire, and we have to end the limitless welfare state as well. IOW, we do have to address fiscal policy, but at the same time, address its enabler, the FED.

Ron explicitly puts forward the idea that the BUSINESS CYCLE as we have known it can be ended. NOT with more regulation, certainly not with more “Central Planning” (that ultimately leads to Socialism, and we know THAT doesn’t work) , but ended  with the limited government ideal (classical liberalism.)

[A major blind spot is the failure to pinpoint interest/usury as the cause of financial imbalance that leads to the “business cycle.”—t.h.g.]

Definitely a radical agenda, led by a peace loving man. Let us all work to explain his ideas as this year’s economic policy drama unfolds. The attacks from the left and the RINO Republican establishment will be vicious and loud. Those of us who understand the monetary debate are few and our voices have few MSM outlets . Even monetarist libertarians will attack Ron. We must resist them to the best of our abilities, by explaining his policies whenever we can.

Brendan

[Another major blind spot is the size and market dominance of firms like Goldman Sachs, Citicorp, J.P. Morgan Chase, Bank of America, etc. Government needs to set the rules of the game to prevent such megalithic financial firms from emerging and manipulating markets. At the very least the Glass-Steagall law should be reinstituted. It also needs to pass legislation that encourages the development of mutual companies and cooperatives in the financial sector. That would be a complete reversal of the policies of recent decades.] — t.h.g.

Plunder beyond belief, FED reluctantly shows the smoking gun.

I have for decades been trying to explain the parasitic nature of the global financial regime and the political order that has become subservient to it. Now, the evidence has become so overwhelmingly obvious that even the most dubious and somnambulistic amongst us cannot ignore its meaning.

On December 5 I posted an item that included Senator Bernie Sanders’ courageous speech about the class war that is being waged against virtually everyone by the super-wealthy elite. In that speech, the Senator referenced the long awaited report from the FED that Congress has demanded. This report has started a firestorm involving even the mainstream financial media.

In this recent article, David DeGraw, lays it all out in detail (Wall Street’s Pentagon Papers: Biggest Financial Scam in World History) with numbers and quotes from various sources. Please read it.

Now it is up to us to do something about it.

What can be done? My book, The End of Money and the Future of Civilization, lays out prescriptions for communities, grassroots organizations, businesses, and governments. The time to act is now!