Young people expose money creation myth

PINE

An Open Letter to the Dean of SBE and all Economics Professors at Maastricht University (UM)
https://pinemaastricht.wordpress.com/pine-open-letter/?fbclid=IwAR3Sv7A1ReZTGUsd1Ks7FiMANBXOzCybqHpedMXG6Pnd2uuUyvHhDOM7JqE

Young people are increasingly stepping up to demand systemic change on many fronts — not just ecological but economic.

Here, it’s economic students blowing a hole into arguably THE greatest financial myth of all time — that banking corporations only lend money that they have. Total and complete BS. They create it out of thin air as debt. Why does this matter? When you add the fact that most money creation in our society originates from financial institutions as debt and that corporate money creation is THE greatest example of corporatization/ privatization in our society (a mammoth corporate coup since Art 1, Sec 8 of the U.S. Constitution gives Congress the power to coin money), what we have is a political and financial system controlled by financial corporations.

We’re all in debt to financial corporations — individuals, governments, even non-financial corporations. That means we’re all serfs to financial institutions. Even if you personally have no debt, a portion of everything you buy is priced to account for the debt of the producer.

Democratizing our money system goes hand-in-hand with democratizing our political system and Constitution. Good luck trying to having a real political democracy when banking corporations can create money out of nothing and convert their financial power into political power. The FIRE (Finance, Insurance, Real Estate) industry remains #1 in legalized bribery (political donations) and right up there in lobbying. It’s been this way (sometimes dropping all the way down to #2) for a long time.

It’s also is directly connected to saving the planet. How? Under the current debt-based corporate money system, the only way to collectively to pay off debt (not just the principle, but interest — which wasn’t created by financial corporations) is to race and compete with one another in a system where there isn’t enough money to pay off our loans. We must race as fast as possible to earn as much as we can in competition with others, which for many in our economy means working at jobs which convert natural resources into stuff that can be sold/consumed as quickly as possible, which of course results in massive amounts of ecological “externalities” (trash, garbage, pollution). We absolutely MUST plunder the planet to collectively pay off our debts. Of course, it’s in the end a losing proposition for the losers of this race. The result — like addicts, more debt to pay off past debt (which of course means more interest payments due which weren’t created). It’s why we have cyclical financial bubbles and bursts of those bubbles when people/governments/non-financial corporations see more of their debt payments going to pay just the interest.

We’re now in the midst of the mother of all bubbles (what some call “the everything bubble” — the bursting of which in the next year or two will be devastating.

The alternative is publicly-created debt-free and inflation-free money. WE decide how much is created and where it should be spent, not financial corporations. Human and physical infrastructure is the priority. It’s how to fund any real Green New Deal. It’s what the NEED Act of a few years ago was all about.

Of course, we don’t have the people power to force the end of the banking coup of money creation. That must be the first step. And that’s where the #WethePeopleAmendment sponsored by #MovetoAmendcomes in. We have to take charge of our political system.

It won’t be easy.

The Second National Bank of the U.S. threatened to cause a financial depression (by calling in all their loans) when their corporate charter was not going to be renewed in the 1830’s. Cleveland’s banks threatened default of the city (and followed through) when then Mayor Dennis Kucinich refused to sell the city’s public electrical utility to CEI, the private electric utility (tied to the banks). By the way, Kucinich was the main sponsor of the NEED Act when in Congress. He gets it. We must too.

Financial corporations have the most to lose to democratize our political and monetary systems. They will both push (lobbying and political investments/contributions) and pull (call in loans) as means to disrupt, demean and distract.

What choice to we have?

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Don’t Pursue Rogue Alternatives to Fund Federal Infrastructure Plan

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“Rogue One” is not simply the title of the latest Star War film due out this week. It’s also a dead-on accurate description of the institution being suggested as the go-to source to fund President-elect Trump’s $1 trillion proposal to repair, modernize and expand our nation’s infrastructure. The institutional Rogue, Darth Vader, Death Star or Dark Side (take your pick among Star Wars metaphors) that some are seriously suggesting to provide the stimulus to our economy are super duper big banking corporations directly responsible for the financial implosion a few years ago, instead of We the People and our public power to create debt-free and interest-free money to meet our basic needs.

There’s no debate on the following:

  • Our roads, bridges, water and sewer systems, public transit systems, schools and other basic physical public structures are rapidly crumbling,
  • Bi-partisan political will exists to address infrastructure needs across the country, and,
  • President-elect Trump and his advisors, specifically Treasury Secretary nominee Steven Mnuchin and chief advisor Stephen Bannon say they are open to exploring literally all solutions to fund the program over 10 years — an approach described by Bannon as “We’re just going to throw it up against the wall and see if it sticks.”

Many claim, including the prestigious American Society of Civil Engineers, that $3.6 trillion (as estimated in 2013) is needed by 2020 to serious address our infrastructure needs. Whatever the amount, the question of how it’s going to be paid for is central.

No one supports raising taxes. This is a political non-starter.

Several of Trump’s economic advisors proposed several months ago providing tax credits to private investors. This and other ideas fall into the category of Public-Private Partnerships, which have a demonstrated history of being ineffective and expensive.

Ellen Brown in a recent article commenting on Trump’s infrastructure plan correctly asserts, “net new spending requires net new money.” There simply isn’t enough money in the current money or monetary system to fund even $1 trillion without taking it from somewhere else and, thus, causing economic pain — a “robbing Peter to pay Paul” dilemma.

The question is who, or what, should create the needed new money? That would be money created “out of this air,” which is how most new money in our society is created — not simply by printing paper notes, but by crediting a sum to a borrower in their account by computer key strokes (97% of our nation’s money is created in this way).

The U.S. Constitution allows for the public creation of money. President Lincoln took this very step to pay for the Civil War. Several hundred prominent economists urged the same strategy in their “Chicago Plan” during the 1930’s to President Roosevelt as a means to stimulate the economy out of the depression/recession (sound familiar?).

A more up-to-date and complete version of the Chicago Plan was introduced twice in Congress over the last few years — the National Emergency Employment Defense (NEED) Act, which has three critical and inter-related components:

  • Making the Federal Reserve a public agency and no longer influenced by banking corporations,
  • Ending the ability of banks to create money “out of thin air” — only able to lend what they have in their vault or able to borrow (called “fractional reserve lending”),
  • Empowering the federal government as affirmed in Article I of the U.S. Constitution to create and distribute U.S. money — specifically several trillion dollars to repair, modernize and expand our nation’s physical and human infrastructure, which would result in the employment of millions of people and paid with interest- and debt-free money.

Brown assesses in her Trump’s infrastructure article the public money option the following:

“But the current conservative Congress is likely to balk at that solution. A more acceptable alternative in that case could be to borrow from banks. Ideally, this would be the central bank, since the loan would be interest-free and could be rolled over indefinitely. But borrowing from private banks would also work, since they too simply create the money they lend on their books.”

Of course Congress is going to balk at creating public money. Banking corporations have hijacked for decades the political process via lobbyists galore and campaign contributions/investments as high as the Washington Monument. It’s a major part of the political “swamp” that Trump railed against during his campaign and that his supporters applauded.

Instead, what’s proposed is the “more acceptable alternative…to borrow from banks,” which also creates money out of thin air as debt and which, by the way, also charge interest. It’s acceptable to banking corporations all right. It should be unacceptable, though, to the millions of Americans whose futures, neighborhoods and communities were killed by the too-big-to-fail Death Star banking corporations that became even too-bigger-to-fail by profiting from home foreclosure schemes and from all taxpayers who bailed them out. There would be nothing more to the liking of the big banks that to come across as the white knights that came to the rescue of the U.S. economy when We the People could have saved ourselves.

Thomas Edison once said:

“If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good makes the bill good… If the Government issues bonds, the brokers will sell them. The bonds will be negotiable; they will be considered as gilt edged paper. Why? Because the government is behind them, but who is behind the Government? The people. Therefore it is the people who constitute the basis of Government credit. Why then cannot the people have the benefit of their own gilt-edged credit by receiving non-interest bearing currency… instead of the bankers receiving the benefit of the people’s credit in interest-bearing bonds?”

Needed are the vision, energy and commitment to resist the current corrupt and undemocratic financial and monetary institutional rogues as hard, long and deeply as possible. We shouldn’t give up or give in to the financial Dark Side when the struggle has barely begun. Needed is a positive, potent and diverse economic and political movement to demand that the NEED Act be “thrown against the wall.” Any bill that is just, sensible, practical and all-inclusive like the NEED Act should certainly stick.

We the People should alone possess the authority to create and distribute our nation’s money as we collectively decide, not banking corporations.

Keep the fictional Darth Vaders on the movie screens and financial ones out of our monetary system.

Using the Public Power to Create Money to Create Jobs, Repair Infrastructure & Reduce Debt

Audio of AFSC Monthly Conference Call Conversation

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Speaker: Joe Bongiovanni — Co-Director of the Kettle Pond Institute, second generation monetary reformer, annual speaker at the American Monetary Institute national conference.

Joe discussed the topics of money and how it’s created by banking corporations, how monetary policy connects to the economy and our lives, and why it’s important to become monetarily literate, He talks and answers questions about the National Emergency Employment Defense (NEED) Act, which if enacted would infuse debt-free money into our economy to meet our basic physical and human needs, create jobs and reduce our national debt.

http://afsc.org/audio/afsc-monthly-conference-call-conversation-joe-bongiovanni-part-1

http://afsc.org/audio/afsc-monthly-conference-call-conversation-joe-bongiovanni-part-2