News & Analysis
Black Is White, Up Is Down ... If We Want to be Free, Let Government Run Money
In a recent Working Paper entitled "The Chicago Plan Revisited" (WP/12/202), IMF staff members Jaromir Benes and Michael Kumhof spoil an otherwise interesting paper by giving an account of the monetary ideas of Adam Smith and Jeremy Bentham which conflict directly with Bentham's own writings on the subject matter. In my view, the point at issue is of fundamental importance as the world community searches for answers to the monetary chaos that has evolved in the post-Bretton Woods era of the past forty years: Do we seek answers in resurgent STATISM in monetary matters, as in the United States (Federal Reserve Board) and the European Union (European Central Bank) at present, or should we first seek to UNDERSTAND the flaws in post-Bretton Woods world monetary arrangements for which STATE and PRIVATE sector agencies are jointly responsible? – Yahoo Groups, Gunner
Dominant Social Theme: If we just give government the money power, we will be free.
Free-Market Analysis: Parts of the alternative Internet media are aflame with excitement over an IMF study recently released, entitled, "The Chicago Plan Revisited" (WP/12/202), by IMF staff members Jaromir Benes and Michael Kumhof.
As we can see from the above Yahoo Groups note, there are likely considerable problems with the IMF analysis from a historical perspective. But in this article, we will try to deal mostly with the modern argument and show once again, as we have before, why private sector money competition is the easiest and most effective way to solve the boom-bust money problem.
We never expected that many of those propagating freedom in the alternative media would suggest that the government should control money. But we've watched what we consider to be this dominant social theme build and build.
It began with Stephen Zarlenga and was advanced by Ellen Brown and her Web of Debt and then more recently a number of blogs attacking Austrian-based free-market economics.
Now, we would not maintain that every one of these actors is controlled by Money Power but the power elite is advantaged by anything to do with government dictats. The elites control the Western world and pursue their goal of world government via mercantilism, the use of government to support private interests.
The most powerful among us control government. The idea that "the people" can "take back" government is probably a canard. It is much more sensible to assume Money Power, one way or another, is BEHIND these suggestions.
Money Power does not care whether its control is exercised publicly or privately. It doesn't care whether a "bankster" is in charge of the money supply or a politician. Both can be controlled and bought.
"No one believes more firmly than Comrade Napoleon that all animals are equal. He would be only too happy to let you make your decisions for yourselves. But sometimes you might make the wrong decisions, comrades, and then where should we be?" – George Orwell, Animal Farm, Ch. 5
"Government" money is a default position of the powers-that-be. If "they" cannot control the money supply directly through facilities like the quasi-public/quasi-private Federal Reserve, they will control it through public facilities and make arguments via their surrogates for this sort of remedy.
We see this trend building once again with "The Chicago Plan Revisited." These two authors, IMF staffers, have rediscovered a plan by Irving Fisher, a monetarist, to strip banks of lending power.
Basically, Fisher's plan has similarities with Stephen Zarlenga's plan that calls for full reserve banking and for the government to spend money into existence via huge public works programs.
This is pretty much a step back from monetary crank Major Douglas of social credit fame – who at least wanted government to give people currency directly. But neither Douglas nor anyone else has a convincing argument for how much money is enough – and how much is too much.
In truth, ONLY the private market can do this via monetary competition and the free circulation of gold and silver. Only the market can set the price for money. Anything else is price-fixing and causes great booms and busts.
Freedom's enemies – sophists – will argue that every freeman's activity is a transgression against another. They will even argue that there were great booms and busts during gold-circulating societies. But when money is divorced from authoritarian control it just works better. Its booms are less monolithic. Its interest rates are variable.
But it is a logical fallacy to argue that people should be stripped of freedom because their actions might offend another. In such case let individual justice be pursued. If someone feels damaged or offended, let him or her seek personal redress.
Sophists will argue that interest is usury and ought to be banned. But why should the state interfere with freely entered-into agreements? This is authoritarian, indeed, and does not recognize the time-value of money.
Sophists will argue that gold and silver are controlled by the Rothschilds and therefore any economy using gold and silver is de facto controlled by the banksters. Of course, for several hundred years before the Civil War, the US had a gold and silver economy – and it evidently and obviously was not controlled but was in many ways quite free.
People are free to find mines and dig up their own gold and silver. Drives the elites crazy. That's why the elites are constantly trying to ban and confiscate honest money. The elites hate the free circulation of money metals.
No doubt it would please Money Power if the Federal Reserve collapsed and its functions were fully transferred to government. Nothing would change, after all.
This is probably why Silvio Gesell and Major Douglas (backers of a kind of mutual and social credit) were involved directly or tangentially with the horrible Fabian society. It pleased the socialist Fabians to propagate these schemes that depended for broad implementation on government authoritarianism.
It is why the UN backs mutual credit system LETS and why Margrit Kennedy, a patron saint of anti-interest alternative currencies, came out of UN/UNESCO. See more articles here:
Why Is the UN Installing Mutual Credit/Pure Fiat Systems Around the World?
New Book Further Confirms Eco-Affinity of Alternative Currency Proponents
Paper Money and the UN Perfect Together? More Currency and Credit Exchanges Supported by the UN
Currency and Credit Schemes Blow Up ... and Go Green
Are 'Green' Reciprocal Exchange and Credit Systems Part of a Larger Elite Promotion?
Money is really very simple and depends neither on technocratic schemes or authoritarian nostrums. Ron Paul has it right: Let money and currencies compete. Let fractional reserve banking compete with full reserve as Austrians Selgin and White have suggested. (No, Austrian economics is not monolithic, as sophists suggest.)
But within such a competition, gold and silver shall likely find a rightful place as they have throughout history.
Disregard the blandishments of sophists, of technocrats, of the IMF. There is such a thing as freedom. Free markets, to a greater or lesser degree can and do exist. Don't get caught up in schemes.
Conclusion: Black is not white. Up is not down. Government is not freedom.
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Posted by Danny B on 09/21/12 10:06 AM
I'm revisiting this thread because I found something interesting.
"The number ONE thing to remember is that Douglas wrote his ideas for a society that does NOT do overt culling."
I'm sure that we'll see more of this.
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Posted by Todd Marshall on 09/11/12 02:41 PM
People need to know how a medium of exchange is properly managed. My comments to this article can be see at:
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Todd Marshall
Plantersville, TX
Reply from The Daily Bell
Thanks for an interesting if vague response.
Presumably you believe in Gesell and major Douglas ...
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Posted by Danny B on 09/08/12 05:01 PM
"Why do people expect MORE government to make them free? "
Now, I have to be a contrarian again.
A.There is a small percentage of people who's lives are guided by their desires.
B.There is a large percentage of people who's lives are guided by their fears.
For group B, their reference point for all decisions is insecurity. They don't want more freedom. They want more support and protection. The less competent they feel at standing up on their own 2 feet,,,, the more freedom they will surrender for security.
Group A doesn't have an insecurity problem;
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I don't see either group expecting more freedom.
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Posted by dave jr on 09/08/12 11:04 AM
"I'm not in a position to know where the truth is."
@ Danny B.
Sure you are. Just see yourself, and let him continue to be honest.
Reply from The Daily Bell
Why do people expect MORE government to make them free?
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Posted by Danny B on 09/08/12 10:43 AM
Dear Bell, in response to the mention of the CAFR money, you replied, "see Gary Null"
OK, my reply is see Catherine Austin Fitts;
Click to view link
I have no special knowledge about either camp. I'm not in a position to know where the truth is.
@ dave jr,,, excellent clarity.
Reply from The Daily Bell
Gary North!
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Posted by dave jr on 09/08/12 08:44 AM
Too many 'experts' would have us believe that the monetary crises is too complicated for the free market (everyday people) to solve. I happen to believe the root cause is very simple.
Credit creates debt, and debt carries credit. There will always be a crises when the two are separated, and the act of separating them is a bubble in the making.
Free market participants would prefer a credit forward method of transacting. That is, production must happen first, then put forward to create the credit/debt nature of sound money. This is why gold and silver is naturally preferred. The production is evident in the coin. The Real Bills Doctrine respects this principle as well. The market can come up with endless ways of accounting for credit/debit and transacting parties can choose, at their own risk, which method they prefer.
When governments require producers to accept paper in exchange for their goods and services, the sound money (credit forward) is sidelined. If the producers are not allowed to decide how much credit/debit to create and when; then bubbles and catastrophe is in the making. When money is institutionalized, then markets are subject to overall manipulation and widespread miseris in the making.
Remove the Federal Reserves charter and let it stand on its own two feet. Repeal legal tender laws and let transacting parties decide their own method of exchange.
The idea that government cares deeply for the collective is a lie and excuse to control and manipulate. The corrupt members of the elite knows this and uses government and banking to control the "real economy" (you and me) safely from behind the curtain, a tapestry woven of lies and deceit.
Reply from The Daily Bell
"Remove the Federal Reserves charter and let it stand on its own two feet. Repeal legal tender laws and let transacting parties decide their own method of exchange."
Very good.
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Posted by Danny B on 09/08/12 12:38 AM
I have to take the contrarian view here. Major Douglas was not a crank,, no more than Leonardo da Vinci. Da Vinci invented the helicopter long before the materials or motive-power for it existed.
The same MAY be true for Malthus.
The Luddites were ahead of their time,too.
The number ONE thing to remember is that Douglas wrote his ideas for a society that does NOT do overt culling.
There are about a billion computers in the world working away. One can't argue that there hasn't been a huge loss of job niches.
Consider the forklift. For a dumb kid trying to enter the workforce, he could always be a stevedore. Now, he can't. There will always be people who have nothing to offer to the labor market.
The price of a house is ALWAYS relative to the wages in the same area. Everybody moved out of Detroit. The remnants have a 50 % illiteracy rate.. The price of a house reflects this.
Nature exterminates animals who reach their majority and can not support themselves. Humans don't in developed countries.
C.H. Douglas wrote a plan to support those who have no abilities to enter the labor market. One could, alternatively, concentrate the non-producers in ghettos, give them drugs, and let them kill off each other.
If society does not do systematic culling, there is always a high cost.
California has built 23 new prisons and no new universities.
You WILL pay for those who have no job niche.
But, consider the cost. The guy who broke your window and stole your $ 1000 stereo out of your car probably sold it for 50 bucks.
Many people claim that new niches will be developed that we can't imagine. This is entirely likely. There is VERY little chance that these new job niches will NEED humans.
Both Ned Ludd and C.H. Douglas will be correct eventually.
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Can you do this?
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52.5 % of Americans depend on GOV for a check. 35% of American income is from transfer payments. JOB CREATION has become an oxymoron.
Job destruction goes ever-deeper into human prerogatives;
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You can claim that Douglas is a crank. What are you going to tell young job hunters just emerging from college? What are you going to tell the thousands of PHDs who can only get menial jobs?
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The Western economies were surfing a credit bubble. This bubble has been popped partly by wage arbitrage from low wage countries. One large Chinese company has bought 500,000 robots.
Man has been displaced by machine for a long time;
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I see no future of impending job creation in our automated world,,, especially for people of limited ability. Society used to kill them off systematically in wars. That paradigm is gone.
The PTB are trying other mechanisms;
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The choice is to kill off the cogs who have no place in the machine or support them. Douglas, Ludd and Malthus all have a place in discussions.
