1637 – HOLLAND SUSPENDS ALL CONTRACTS DURING TULIPMANIA BUBBLE
Tulip mania or tulipomania (1636-37) was a period during which contract prices for new tulip bulbs in Holland exceeded more than 10 times the annual income of a skilled craftsman. It is generally considered the first recorded speculative bubble (or economic bubble). People from all walks of life sold homes and land at low prices just to speculate on the rising tulip prices. Prices suddenly collapsed in February 1637. By March, tulip prices had crashed by 90 percent or more. There were widespread defaults on purchased contracts. Long-term economic decline followed. The suspension of contracts gave the seller the right to sell contracted bulbs at market prices.
[NOTE: The current stock market is divorced from economic reality — just like the tulips of Holland were. The mania is not as intense and the drop won’t be as severe, but it is a bubble nonetheless.]
2009 – COMMENT BY DICK DURBIN, US SENATOR, ILLINOIS
“And the banks — hard to believe in a time when we’re facing a banking crisis that many of the banks created — are still the most powerful lobby on Capitol Hill. And they frankly own the place.”
What was a refreshing bit of true reality in 2009 is even truer today. The finance, insurance and real estate (FIRE) sector tops all sectors in political campaign contributions (or are they investments?) to Washington politicians. The return on their investments are substantial – no indictments of top bankers responsible for the 2008 sub-prime crisis and financial implosion, bailouts galore…and, of course the continuation of the license to print debt money that is loaned to the US – at interest.
1947 – DEATH OF IRVING FISHER, PROFESSOR AND ECONOMIST
“Thus our national circulating medium is now at the mercy of loan transactions of banks, which lend, not money, but promises to supply money they do not possess. ”
2006 – DEATH OF JOHN KENNETH GALBRAITH, AMERICAN ECONOMIST, PUBLIC OFFICIAL AND DIPLOMAT
“In numerous years following the Civil War, the Federal Government ran a heavy surplus. But it could not pay off its debt, retire its securities, because to do so meant there would be no more bonds to back the national bank notes. The pay off the debt was to destroy the money supply.”
The same is true today. Since most money is created as debt via loans (to individuals, corporations and the government), paying off the debt would reduce the money supply. A severe depression would inevitable result since not enough money would exist to permit all our economic transactions. The solution is not to “reform” our debt-based money system, but to replace it with a system where money is created debt-free.
2014 – IMF APPROVES $17.01 BILLION LOAN TO UKRAINE IN EXCHANGE FOR “ECONOMIC REFORMS”
The IMF money comes with stringent terms, what used to be called “Structural Adjustment Programs,” which includes spending cuts, privatization/corporatization of public assets, laying off of public employees, increased prices and debt restructuring. IMF loans in essence transfer economic sovereignty domestically to international bankers. In the case of Ukraine, the requirements include a 50 percent increase in the price of gas for households, as well as a quick pension reform and lower government spending.
The World Bank warned on April 10 that the loan terms set by the IMF would cut 2014 consumption in Ukraine by 8 percent, as well as erode capital investment.
1871 — KNOX V LEE US SUPREME COURT DECISION
This decision was one of several popularly known “Legal Tender Cases” during this period (the others were Hepburn v. Griswold and Julliard v Greenman). The Supreme Court reversed their earlier decision in Hepburn v. Griswold (1870). The decision upheld the Legal Tender Act declaring that making paper money legal tender did not conflict with US Constitution (Article 1). The decision allowed debtors to repay debts in Greenbacks rather than gold or silver.
2012— TALK FEDERAL RESERVE GOVERNOR DANIEL TARULLO AT THE COUNCIL OF FOREIGN RELATIONS
“It is sobering to recognize that, more than four years after the failure of Bear Stearns began the acute phase of the financial crisis, so much remains to be done–in implementing reforms that have already been developed, in modifying or supplementing these reforms as needed, and in fashioning a reform program to address shadow banking concerns. For some time my concern has been that the momentum generated during the crisis will wane or be redirected to other issues before reforms have been completed.” [Note: The political influence of financial corporations has prevented any serious banking and monetary reforms from being passed. Those that were passed have been watered-down during the implementation phase out of public spotlight thanks to intense lobbying from the same financial corporations]
1939 – TESTIMONY OF GRAHAM TOWERS, GOVERNOR OF THE BANK OF CANADA (1934-54) BEFORE CANADIAN SELECT STANDING COMMITTEE ON BANKING AND COMMERCE
Question: “But there is no question about it, that banks create that medium of exchange?” [i.e., bank deposits]
Towers: “That is right. That is what they are for.”
Question: “And they issue that medium of exchange when they purchase securities or make loans?”
Towers: “That is the banking business, just in the way that a steel plant makes steel.” (p. 287)
Towers testified that just as steel corporations create steel, banking corporations create money. The difference is that steel corporations start with iron ore and apply labor and technology. Banks, by contrast, create money out of thin air…as debt.
Why this calendar? Many people have questions about the root causes of our economic problems. Some questions involve money, banks and debt. How is money created? Why do banks control its quantity? How has the money system been used to liberate (not often) and oppress (most often) us? And how can the money system be “democratized” to rebuild our economy and society, create jobs and reduce debt? Our goal is to inform, intrigue and inspire through bite size weekly postings listing important events and quotes from prominent individuals (both past and present) on money, banking and how the money system can help people and the planet. We hope the sharing of bits of buried history will illuminate monetary and banking issues and empower you with others to create real economic and political justice. This calendar is a project of the Northeast Ohio American Friends Service Committee. Adele Looney, Phyllis Titus, Donna Schall, Leah Davis, Alice Francini, Deb Jose and Greg Coleridge helped in its development. Please forward this to others and encourage them to subscribe. To subscribe/unsubscribe or to comment on any entry, email email@example.com