News & Analysis
Shock: Powerful British Money Man Calls for Central Bank Currency to Be Handed Out to 'the People'
A breakthrough speech on monetary policy ... Wednesday night may have marked the "emperor's new clothes" moment of the Great Recession, in which the world suddenly realizes its rulers are suffering from a delusion that doesn't have to be humored ... That such economic fatalism is nonsensical is the key message of a truly historic speech delivered on Wednesday by Adair Turner, chairman of Britain's Financial Services Authority and one of the most influential financial policymakers in the world. Turner argues that a virtually surefire method of stimulating economic activity exists today and that politicians and central bankers can no longer treat it as taboo: Newly created money should be handed out to the citizens or governments of countries that are mired in stagnation and such monetary financing of tax cuts or government spending should continue until economic activity revives. – Reuters editorial
Dominant Social Theme: If we give monopoly central banking money directly to the people, then they will be rich and the system will be perfected.
Free-Market Analysis: Among very few publications, we've been covering what we considered to be a dominant social theme regarding paper money and the state's ability to print directly for "the people." Along the way, we've received vicious attacks because, as has hard-money economist Dr. Gary North, we've pointed out that this is a fascist proscription.
We've explained as well that it is an elite dominant social theme because the current version of central banking is failing. The tiny group of elites that wants official global governance is desperate to maintain monopoly central banking, as that is the source of their unfathomable funding.
And we realized early on that they would do anything to sustain some form of central banking and had likely launched a subtle campaign to create central banking alternatives that would maintain their Money Power.
We realized one way they would try to do this would be to suggest that central banks could be utilized to print money that would bypass banks and be directly credited to individual accounts.
A whole false history of money was created to generate this potential money manifestation.
That's how directed history works, after all. If the elites want something they begin a campaign to get it via various helpful facilities. People are recruited – wittingly or not – to promote the theme. It builds like a musical composition until finally it is big enough and has reached enough people to be acted on.
And perhaps now is the moment. Perhaps now we are reaching the proverbial "critical mass."
We can see in this excerpt from a Reuters editorial by Anatole Kaletsky, above, that Adair Turner, chairman of Britain's Financial Services Authority "and one of the most influential financial policymakers in the world," has adopted the meme as his own. He is arguing that central banks should print money that is directly handed out to citizens.
Why are we not surprised? The smell of blood is in the air.
We've tracked this meme from Stephen Zarlenga, to Ellen Brown, to UN sponsored LETS (alternative currency) programs and through numerous others who have promoted it dishonestly in various guises, denying that such distributions were actually forced coercions of the kinds that Hitler and the National Socialists preferred and ultimately implemented.
But that's no surprise. The entire national socialist enterprise was organized by Western elites, from what we can tell. Elaborations have included non-usury provisions, giving yet more power to the state. The idea has been given a pedigree via various crackpot monetary theorists such as Major Douglas and Silvio Gesell, both apparently involved with the notorious Fabians.
They hated each other, of course, as such people inevitably do. Douglas called Gesell's idea for depreciating state-sanctioned money the most heinous tax ever developed. Recently hallowed Gesellian implementations of his depreciating currency have been debunked, as well they should be.
The state should not be in the charge of money. That path is paved with bones and leads directly to the charnel house. The Fabians, of course, were dedicated to the destruction of Britain and the world via socialism; state-mandated printing of monopoly central banking money is a certain way of continuing and expanding that destruction.
It cannot be emphasized enough that this idea that the all-powerful state can print and hand out money "to the people" – as Gesell and Douglas among others demanded – is the last step on the slippery slope to totalitarianism.
The state, so empowered, will devour every trace of free markets. Don't take our word for it. See for yourself:
Turner argues that a virtually surefire method of stimulating economic activity exists today and that politicians and central bankers can no longer treat it as taboo: Newly created money should be handed out to the citizens or governments of countries that are mired in stagnation and such monetary financing of tax cuts or government spending should continue until economic activity revives.
The idea of distributing free money to end deep recessions has been promoted theoretically by serious economists since the 1930s, when it was one of the few practical policies that Keynesians and monetarists agreed on. John Maynard Keynes proposed burying money in disused coal mines to be dug up by unemployed workers, while Milton Friedman suggested dropping money out of helicopters for citizens to pick up.
Friedman also argued in a 1948 paper that governments should rely solely on printed money to finance their regular cyclical deficits. More recently, as conventional policies to revive growth have faltered, with widespread disappointment about the impact of zero interest rates and quantitative easing, proposals for distributing money directly to citizens have been quietly gaining traction among critics of orthodox central banks.
I discussed this trend, sometimes described as "quantitative easing for the people," in several columns last year. A simple thought experiment shows why such "helicopter money" policies, which Turner calls overt monetary financing (OMF), would be far more effective than the conventional QE practiced by central banks today.
Consider the U.S. Federal Reserve. At present the Fed prints $85 billion of new money monthly and distributes it to banks and Wall Street investors by buying government bonds ... Now suppose instead that the Fed divided its $85 billion monthly money production into 300 million checks of $283 each and sent these to every man, woman and child in America ...
Despite its obvious effectiveness – or perhaps because of it – public discussion of helicopter money has been taboo among economic officials. The one exception was a speech by Ben Bernanke in 2002, before he became Fed chairman. This speech offered the most detailed and eloquent justification of monetary financing prior to Turner's, and it earned Bernanke the Wall Street nickname "Helicopter Ben." Since then, however, helicopter money has never been seriously mentioned by any senior official in any advanced economy. Until this week.
Ten years after the Helicopter Ben speech, Turner has broken the taboo about monetary financing. The effect on economic debate around the world could be irreversible and profound. Turner's 70-page paper presents the arguments for the many variants of helicopter money with unprecedented academic sophistication, financial detail and historical context.
Now that Turner has broken the taboo on helicopter money, the sound of monetary salvation should soon be heard round the world.
Nothing will destroy society more effectively and quickly than monopoly central bank printing of fiat paper delivered to homes across the land. The editorial also mentions that Turner manages a trick of logic by denying that such a methodology would cause tremendous inflation and then hyperinflation.
If this is the future of the monetary argument, then the power elite is desperate indeed to maintain its central banking franchise. What began as a whisper has now escalated to an insane howl, enabled by all of those who babble about mathematically perfected economies and pour their considerable scorn on free markets and free-market ideas.
This gambit is the sum result of what seems to us to be a deliberate campaign to introduce this nonsensical and dangerous idea to the general public. Just because one group of genocidal maniacs has stuck their hand into the public till doesn't mean it should be replicated for everyone else.
Sure, money COMPETITION is a good idea and would soon resolve itself, as it has before, into the circulation of gold and silver among other historical systems. And if so, we would mercifully hear less about the martyrdom of Abraham Lincoln and nonsensical claims for Benjamin Franklin's Philadelphia currency, which he himself apparently admitted would ultimately cause significant inflation.
No man can figure out how much money an economy needs. Give man the ability to print as much as can, and he will. And in doing so, he will utterly level civilization and create bloody destruction all around.
This is exactly what the top elites seem to want, of course. They can utilize the destructive chaos to declare a world government of some sort. Those who promote such monetary schemes are their enablers ... though we will give them benefit of the doubt by surmising that at least some do know – or understand – what they do.
Conclusion: The rest, who understand but promote their noxious systems nonetheless, are despicable.
Posted by Bischoff on 02/16/13 07:38 PM
DB: "Ah, now we have got to the nub of it, once more. You again defend the Philadelphia pound."
BISCHOFF: Let me retort. Among the colonial scrip currency, the one and only paper currency created against the value of Bills of Exchange (Real Bills) was the currency created by George Clymer of Philadelphia. With the background of running a successful mercantile business, he saw advantages in discounting Real Bills and circulating them in another form.
George Clymer created a colonial scrip called the "Pennsylvania Pound" which was denominated in Pounds and Shillings under an Act of Assembly of the Province of Pennsylvania in the 33rd Year of the Reign of King George II. (The 33rd Year of the Reign of King George II was 1760, the same year in which he died.)
By using the value of Real Bills to create a currency, George Clymer in essence circulated Real Bills. Real Bills are 90-day negotiable instruments which act as clearing instruments. The difference in clearing was made up by real money (specie. i.e. gold or silver). It was the paper currency known as "Pennsylvania Pound", created by George Clymer using his mercantile business in Philadelphia, which was informally known as the "Philadelphia Bank", for which Benjamin Franklin's print shop printed the paper notes known as "Bills".
It was the success and wide circulation of this paper currency throughout the North American colonies which Benjamin Franklin lauded in front of British Parliament. The success of Clymer's Pennsylvania Pound issued between 1760 and 1765 went against British mercantile interests. It was these mercantile interests which promoted an act of British parliament in 1765 which severely curtailed the use of Clymer's Pennsylvania Pound.
Clymer overcame the restrictions to discounting Real Bills forced upon him by British parliament, and the resultant setback by merging his mercantile business with that of the prominent Philadelphia merchant Meredith, whose daughter he married in 1765.
George Clymer became a fervent promoter of American independence. He was one of only three who signed both the Declaration of Independence and the Constitution of the United States. Section 10 of Articles I of the United States Constitution is his primary contribution to the writing of provisions contained in the U.S. Constitution.
In 1803, George Clymer founded a bank in Philadelphia, formally known as "The Philadelphia Bank" of which he became the first president. Its successor today is CoreStates Financial Corporation, previously known as Philadelphia National Bank (PNB), which is a United States bank holding company in the Philadelphia, Pennsylvania, metropolitan area.
The currency issued by "The Philadelphia Bank" of 1803 was a paper currency created against the value of Real Bills and denominated in U.S. Dollars. This currency was redeemable for lawful money of the United States (silver and gold).
So much for George Clymer, his merantile business informally known as the "Philadelphia Bank" issuing the "Pennsylvania Pound" paper currency denominated in pounds and shilling, and "The Philadelphia Bank" of 1803 with George Clymer as president which issued paper currency denominated in U.S. Dollars.
The paper currency to which you refer is a paper currency known as "Pennsylvania Pound" denominated in "Pounds" and "Pence" created under an Act of the General Assembly of the Commonwealth of Pennsylvania passed on March 20, 1777. This is NOT the "Pennsylvania Pound" to which I refer. This particular currency was not in circulation for 50 years as you claim. It only existed for barely 15 years. The provisions for the creation of U.S. currency were set out in the Coinage Act of 1792 and under the new provisions the issuance of the Pennsylvania Pound was suspended.
As to the mention of the "Pennsylvania Pound" by Adam Smith, it must pertain to the currency created subject to the Act by Assembly of the Province of Pennsylvania in 1760 as his book "The Wealth of Nations" was published in 1776. The "Pennsylvania Pound" to which you refer was created according to an Act of the General Assembly of the Commonwealth of Pennsylvania in 1777, one year after the publication of Adam Smith's book. Pennsylvania was by then an independent state in North America.
The 1777 Pennsylvania Pound was created as a "Bill of Credit". The sovereign Commonwealth of Pennsylvania guaranteed the value of the currency through the collection of a land value tax. Remember, in the early days of the American Republic only "land holders" were eligible to vote.
As to the valuation of land parcels, this is a system which is more than a thousand years old, going back to Anglo-Saxon England. The Anglo-Saxon shire system is reflected in our county and parish system, and in the offices of County Recorder and County Assessor.
As to the fallability of judging the value of land/location, there is on one hand the valuation appeals process, and on the other hand there is the possibility of installing a self-valuation process. So much for the fallability argument.
As to te FED, pre as well, as post 1935, it is another story.
Posted by Agent Pete 8 on 02/14/13 07:32 PM
Giving helicopter lots of $ or non-$, preferably un-owned (not-for-profit interchange provisioning) and fused by a widened, thusly much different "Pool of Intellect", could easily Smooth things out. :)
Money is just money, it is the binding we are led to lack, which we can bring back.
Tip #1: Consent x 10^9 = MANdate.
Posted by Col on 02/14/13 11:16 AM
I may mot be very smart but even i can see that if the Bank added 3 zeroes to my & everyones else's Bank Balance, then EVERYONE selling any product, commodity, car House etc would also add 3 zeroes to the item... ..
Can you say ... .. Zimbabwesque
Posted by Abu Aardvark on 02/14/13 09:22 AM
"A rose is a rose is a rose"-Gertrude Stein
"(Hyperinflatin is hyperinflation is hyperinflation"-dkmeller1
'A rose by any other name
Would never, never smell the same
And cunning is the nose that knows
An onion that's been called a rose.'
Posted by Agent Revolver on 02/14/13 08:48 AM
"to declare a world government of some sort" - and the central bank (or the bollocks of the idea of centralization) is situated in...
Oh, not Vat, please (-:
Posted by dkmeller1 on 02/14/13 08:21 AM
"A rose is a rose is a rose"-Gertrude Stein
"(Hyperinflatin is hyperinflation is hyperinflation"-dkmeller1
"The more that things change, the more they reamain the same" French proverb
"The more that things remain the same, the worse they actually become" dkmeller1
"A rose by any other name would smell as sweet" William Shakespeare
" A currency collapse by any other name would stink as badly"-dkmeller1
I could go on, but I think that I made my point!
PS- Don't these elites realize that when they destroy any remining value of their central bank "currency", they will lose THEIR wealth, position, and property as well? DKM
Posted by taxesbyanyothername on 02/14/13 07:42 AM
While any trust (paper/fiat) based currency carries the danger (inevitability) of inflation, its rate should tend to be mitigated by the existance and use of other more stable money, partiularly the most stable, namely precious metals in the form of coins. Yet this is not shown by history. The various colonial currencies nearly all inflated at enormous rates even as they circulated along-side small numbers of notes based on the Pound and coins. Conversely modern currencies are seeing less price inflation than their ridiculous rate of printing (digital increase) would indicate. Certainly that is being manipulated by the central banks in many devious and extreme ways. Yet those manipulations would seem to be ineffective without the public "going along with the game". Many economists may actually believe that they can make Keynesianism work but I can not believe that many of the general public can do so without actively lying to themselves. As in the past, bad money will drive out good. In other words, if we get competing currencies, the people hoard precious metals, or in their absence, other seemingly fairly stable currencies, and spend those they perceive as potentially losing value faster? If so then they would not be readily accepted thus going to zero or near zero value very quickly, thus limiting the number of currencies that compete. Just going with gold and silver coins seems, at least in that way, a better idea than competing currencies. I'm sure this has been covered by many "Austrians" but I do not recall encountering it.
Posted by amanfromMars on 02/14/13 01:33 AM
[blockquote]"Yes, Man from Mars, we already know that in addition to writing impossible-to-understand feedbacks (that would certainly make the average reader believe the website in question was a "wacky one") you believe that monopoly fiat central banking ought to be in the "hands of the people." We've already called you a "troll." We see no reason to retract." ….. Reply from The Daily Bell [/blockquote]
That was an excellent troll you posted, DB, if we can agree that the Wikipedia definition is the one that we recognise and accept, for you conveniently avoided all comment on the loading of banking with magic QE funds, created with the backing of nothing valuable, charged to the ignorant public for future repayment with interest charges, but not disbursed to them to create industry and economic activity and innovative enterprise.
And I currently believe that monopoly fiat central banking MOST DEFINITELY OUGHT NOT be in the "hands of the people." for they are not clever enough to be able to enable the people with the facility.
We might agree that is much better to have a small group of others tasked with that operation and one supposes that central bankers would be ideally place to perform such a mission. The fact is though, that they don't, and don't so very spectacularly and publicly, is the shame that they cannot deny is true and causes the global problems which are now overwhelming their proven limited intellectual capacity.
Or do you disagree with that viewpoint and consider it untruthful and wrong?
Posted by Bischoff on 02/14/13 01:08 AM
"... nonsensical claims for Benjamin Franklin's Philadelphia currency, which he himself apparently admitted would ultimately cause significant inflation."
Here is that word again, "apparently"...
How is it "apparent" that Benjamin Franklin predicted that the Pennsylvania Pound created against Real Bills by The Philidelphia Bank would cause significant inflation... ???
I assume that Franklin's comment appeared in a historial, credible document. If it did, I never came across such quote. I would be very appreciative, if you could supply me with a reference.
With regard to the stability of the Pennsylvania Pound, I believe Adam Smith on the matter. In his book "The Wealth of Nations" published in 1776, he specifically makes reference to the Pennsylvania Pound. He praises the fact that the value of The Philadelphia Bank's currency created against Real Bills never fell below the value of specie (Gold and Silver).
The characterization of the Pennsylvania Pound given by Adam Smith is certainly at odds with the "apparent" admission by Benjamin Franklin of the inflationary nature of the currency.
Why, if the Pennsylvania Pound created by the Philadelphia Bank was no different than any of the other colonial currencies, including the currency by the same name previously issued by the colonial government of Pennsylvania, did the British Parliament in 1765 insist that the use of the currency throughout the North American colonies be curtailed... ???
If it was such an inflationary currency, why didn't the British just let it go into its inflationary death spiral, as happened with all the colonial currencies based on the Quantity Theory of Money... ??? Why ban its use, if it was a "no good" currency... ??? Nobody was forced to use it. Yet, people had confidence in it, because it proved to be noninflationary.
George Clymer as president and his Philadelphia Bank created the Pennsylvania Pound against the value of "Real Bills" acquired by the bank at discounts and kept in the bank's vault. Long before Adam Smith made mention of it in "The Wealth of Nations", George Clymer and his Philadelphia Bank practiced the "Real Bills Doctrine" for creating currency.
Benjamin Franklin was an associate of George Clymer. It was his printing business which printed the bank notes for The Philadelphia Bank.
The claim that Benjamin Franklin ever made a comment to hint that he knew the Philadelpia Bank's paper currency would ultimately cause significant inflation, is extremely dubious.
Reply from The Daily Bell
Ah, now we have got to the nub of it, once more. You again defend the Philadelphia pound.
Granted, the issuance of Franklin's pound money comes closer to the kind of monetary competition we're in favor of, but using your own previous explanations, the bank issued money backed by Real Bills.
Like all other schemes, this one still depended on the judgment of individuals when it came to deciding how much money to issue ... and the honesty of these individuals in removing circulating coin (again your explanation) when the stock of Real Bills declined.
And here is Adam Smith on the Pound (presumably Franklin's, as you cite Smith approvingly regarding the Pennsylcania Pound):
"The government of Pennsylvania, without amassing any [gold or silver], invented a method of lending, not money indeed, but what is equivalent to money to its subjects. [It advanced] to private people at interest, upon [land as collateral], paper bills of credit…made transferable from hand to hand like bank notes, and declared by act of assembly to be legal tender in all payments…[the system] went a considerable way toward defraying the annual expense…of that…government [low taxes]. [Pennsylvania’s] paper currency…is said never to have sunk below the value of gold and silver which was current in the colony before the…issue of paper money."
Click to view link
If this indeed is an apt description of the process (which you as usual describe much differently), the question then becomes WHO VALUES THE LAND. This is the problem with all such systems. As the land has not been sold, its value is variable and constant upwards pressure over time would doubtless be applied to surveyors' estimates.
Regardless of your protestations, this system, taken as a whole, still depends on the quite fallible hand and judgement of man. That it lasted 50 years is itself not entirely remarkable. The Fed's latest iteration of monopoly fiat/paper money lasted from 1945 to 2007, when it finally blew up. That's more than 60 years.
Posted by seer on 02/14/13 12:17 AM
We are already in a currency war. However, given that most revolutions have some economic problems that causes unrest the elite have every reason to be concerned. Since the money/tokens are created out of thin air, I would suggest a better plan would be for the central Banks to "forgive" all the debt owed to them. This would reduce the national debt of all the troubled nations. The elite already are sitting on trillions anyway. Of course, China may question the game but would largely be unaffected as their tokens would be preserved and more USA deficit spending helps their economy. Countries such as Greece may cry foul.
Posted by WD on 02/13/13 11:06 PM
You seem to still be assuming that China and Russia are going to not only play along, but not take advantage of this madness. Why is that?
Posted by RR on 02/13/13 07:50 PM
I read many truthful articles here on The Daily Bell. Most of these are about important but peripheral topics like Osama Bin Laden's death etc. These articles are really unique, insightful and The Daily Bell gains in overall respect and credibility.
Then comes along an article like this one. The respect and credibility gained from many previous articles is put to good use about issues of the greatest importance.
Let us all shout down Stephen Zarlenga, Ellen Brown, UN and Hitler in the same breath.
Posted by rossbcan on 02/13/13 06:58 PM
DB: "No man can figure out how much money an economy needs. Give man the ability to print as much as can, and he will. And in doing so, he will utterly level civilization and create bloody destruction all around."
Need: you consider it an absolute neccessity, enough to overcome your natural aversion against effort to secure your "needs". "Effort" may be one of force OR fraud (including whining for entitlements, because, in truth, you don't "need" enough to work) OR honest trade. No other REAL choices.
So, "free money" is worth exactly what you pay for it, in terms of work. It will (and has, for all of history) have the effect, as DB alludes to of hyperinflation (destroying existing wealth), depriving the productive of power (ability to coerce) by exercising their purchasing power in the market.
These a$$holes clearly want to destroy civilization and, are using knowlege of "Mathematics of Rule" to do so. A dual edge sword, also points the way to save civilization:
Click to view link
Posted by Justin on 02/13/13 06:20 PM
There might be some who agitate for this harebrained idea but it will never fly. Why? Because it would make us all as gods, able to turn lead into gold, to have whatever it is we desire. Those who currently build a tower of debt that reaches to the heavens are not willing to share it.
"that is the source of their unfathomable funding."
You make it seem as if the the 'funds' are something real. No, the government is passing dud cheques, it's a scam, a rort, a credit bubble, a Ponzi scheme... .
Posted by Harry on 02/13/13 05:30 PM
Click to view link
720 million people each will receive a coincidental???? sum of 720 usd (40.000 indian rupees) each per year
India is going to do it and you can bet the money the government there is distributing is not coming from the taxpayers like more or less still is the case in the so called Western "welfare states".
Afcourse India is already suffering from from a mild case of Hyperinflation, i wonder what this new approach will do.
Posted by Harry on 02/13/13 05:14 PM
I read the comments to the original piece in Reuters and i noticed that most commenters don't get it, most people seem to think it is a swell idea.
It might be a good idea for folks and governments who are heavily indebted and who have no penny on savings at the bank, but of course this policy of flooding the streets with free money cannot have any other outcome then massive Weimar republic style hyperinflation resulting in "well everybody know what happened after the '30's weimar inflation.
Posted by gabe on 02/13/13 05:01 PM
"Ha, these days they might use it to buy gold."
of course we will need new laws to better track this money to make sure it doesn't go to buy terrorists or extremist goods like gold, food or assualt weapons.
Posted by gabe on 02/13/13 04:57 PM
The attacks on central banking by people like us can be ignored to a point... but when billionaires like Kyle Bass are pointing out the same things then the money masters have to eventually answer.
This seems to be one of their leading candidates for a "solution".
I've been following Scott Sumner at Click to view link for over a couple years now... he has become quite prominent as a proponent of NGDPLT.
Scott and his followers seem to really truly believe that more money printing will make our lives better. From their POV it seems the other problems in our government are just episodes of minor corruption and incompetence.
I don't think they are complete imbeciles... great disappointment awaits them when they eventually realize what is happening.
Posted by bionic mosquito on 02/13/13 04:34 PM
Very good, DB!
Posted by Kristen on 02/13/13 04:32 PM
With all the crazy schemes being proposed these days regarding money creation and disbursement, I am so grateful to the DB for the sound reasoning and articles, such as this one, that illuminate the true nature of these schemes. It is much appreciated.