Ellen Brown on the Efficiencies of the State and the Progress of Her Public Banking Vision
The Daily Bell is pleased to present an exclusive interview by Ellen Brown.
Introduction: Ellen Brown developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest book, she turns those skills to an analysis of the Federal Reserve and "the money trust." She shows how this private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Brown developed an interest in the developing world and its problems while living abroad for eleven years in Kenya, Honduras, Guatemala and Nicaragua. She returned to practicing law when she was asked to join the legal team of a popular Tijuana healer with an innovative cancer therapy, who was targeted by the chemotherapy industry in the 1990s. That experience produced her book Forbidden Medicine, which traces the suppression of natural health treatments to the same corrupting influences that have captured the money system. Brown's eleven books include the bestselling Nature's Pharmacy, co-authored with Dr. Lynne Walker, which has sold 285,000 copies.
Daily Bell: Hello again. We've interviewed you before. But for those unfamiliar, please give us a sense of how you came to be interested in monetary issues and how you came to write Web of Debt.
Ellen Brown: As Mike Whitney says, I'm really just a writer in search of a good subject. My first degree was in English literature from Berkeley, but when I figured out that I couldn't make a living as a writer in my twenties I went to law school (UCLA). I married another law student, practiced civil litigation for 10 years in L.A. and had two delightful children. My husband (now ex-husband) finally burned out on Beverly Hills law and signed up to be a lawyer for USAID, taking us abroad for 11 years – to Kenya, Honduras, Guatemala and Nicaragua – giving me a chance to try my hand at writing again. I wrote 10 books on health and the politics of health, including one co-authored bestseller that sold 285,000 copies ("Nature's Pharmacy").
I jumped from there into economics after reading Ed Griffin's "World Without Cancer," linking the pharmaceutical cartel to the banking cartel, which actually got its power through the private creation of money. When I discovered that "The Wizard of Oz" was written as a monetary allegory, growing out of the populist money reform movement of the 1890s, I had the plot line to make a dry subject interesting, and I proceeded to write.
I spent six years exploring the issues and perfecting my prose, until the two Bear Stearns hedge funds collapsed in June 2007, when I figured it was time to forget about art and rush to press. "Web of Debt" was in print two weeks later, self-published by print on demand through Lightning Source.
Daily Bell: For those new to this subject, what is Web of Debt's main thesis?
Ellen Brown: The thesis is that the power to create money has been usurped by a private international banking cartel, which issues our money as debt and lends it back to us at interest. The cartel makes it appear that governments are creating our money, and governments get blamed when things go wrong; but they are actually just pawns of the cartel. We the people can get back our government and our republic only by reclaiming the power to create our own money. We can use the same credit system that private banks use, but administered as a public utility, monitored and overseen by public servants on the model of libraries and courts. To be a sustainable system, profits need to be returned to the community rather than siphoned off into private coffers.
Daily Bell: Can you expand on debt-based money versus money that is issued into the economy without debt – and why the latter is preferable. Some would say the latter exercise comes with debt as well ...
Ellen Brown: I don't think debt is necessarily bad. The flip side of debt is credit, which is a very good thing. Inventing credit is probably the most innovative thing bankers ever did. But because the Italian bankers who first came up with that scheme were on a gold-based system, they had to do it essentially by cheating, pretending to have more money than they actually had. There would be periodic runs on the banks and the system would collapse. A public banking system would acknowledge credit to be just a legal agreement to pay over time. Creditworthy borrowers would get credit. Their access to credit needn't be contingent on someone else's agreement to give it up. The system would be mathematically sustainable.
Daily Bell: Let's back up. You believe that gold and silver only circulated as money once government got involved? True? Can you expand on this?
Ellen Brown: I think that's true by definition. Webster's dictionary defines a "coin" as "a usually flat piece of metal issued by governmental authority as money." Wikipedia says: "King Croesus, ruler of Lydia (560–546 BC), began issuing the first true gold coins, . . . with a standardized purity, for general circulation. They were quite crude, and were made of electrum, a naturally occurring pale yellow mixture of gold and silver."
Daily Bell: What about ancient archeology showing drowned cities off the coast of India?
Ellen Brown: I made an effort to look that up, since you asked; but I could find nothing to support your contention. If you would point me to some specific research, I could formulate a better answer. My research indicates that Indian gold coins came in later, and like coins generally were issued by the government. Here's what came up on a quick search:
"Although the world's first coins were Greek coins made in Lydia about 640 BC, it seems clear that India and China both invented coins independently within a few centuries of the Lydians. The earliest Indian coins were silver, and it was not until about 100 AD that the Kushan emperor Vima Kadaphises introduced the first Indian gold coin, which was a gold dinar bearing the image of Shiva."
Daily Bell: What makes you think that gold and silver, mined together as electrum, were not a store of value prior to the temple period?
Ellen Brown: Define the temple period please. The Sumerian temple period? That would be the third millennium B.C. The Sumerians did not use coins as money. Rather, they had what could be characterized as the first public banking system, based on accounting entries on cuneiform tablets. To say gold and silver were a store of value is a bit vague. Gold wedding rings are a store of value, but I wouldn't classify them as money.
Daily Bell: Why do you believe that government is superior to the free market?
Ellen Brown: Why do you believe that I believe government is superior to the free market? I believe government is necessary to have a free market. Otherwise you have the law of the jungle, the exploitation of the weak by the strong.
Daily Bell: Do you believe that government is effective at all levels big and small?
Ellen Brown: Without meaning to be rude, I have to say I'm slapping my forehead at some of these questions. Government can be effective at a variety of levels. Not all government is effective. Some government is very ineffective. It depends largely on the political structure.
Daily Bell: Do you believe in central banking so long as it is publicly controlled?
Ellen Brown: A publicly-owned central bank can be very effective in serving the people. The Commonwealth Bank of Australia is my favorite model. Not all publicly-owned banks, however, are effective for that purpose. I often hear British money reformers complaining that the publicly-owned Bank of England is still serving the interests of the private banking establishment, just as when it was private. It is public in name only.
Daily Bell: Do you believe that government was responsible for a good deal of mayhem in the 20th century?
Ellen Brown: Sure, but somebody manipulates governments into wars and other mayhem. I believe a government could be structured so that it actually served the people; but first, it would have to recapture control of its monetary system. Few governments are in that position today.
Daily Bell: Do you believe in the Invisible Hand? Do you believe in Misesian human action. How can you reconcile it with your preference for government decision-making.
Ellen Brown: You'll have to define your terms. I'd say the Invisible Hand that is at work right now is chiefly the hand of Goldman Sachs.
Daily Bell: OK, what are some triumphs of big government in your opinion?
Ellen Brown: National highway systems, bridges, waterways, dams, FDIC insurance, Medicare and social security, to name a few. If you doubt the latter two, consider what life was like in the depression of the 1890s, when there was no Medicare or social security, and people froze in the fields or starved. My grandmother, for whom I was named, died in Detroit during the Great Depression at age 42, trying to self-abort her eighth child, at a time when my grandfather was an unemployed auto worker and they could barely feed the other seven. My father was the oldest child and supported the family on a paper route. He never really recovered from that traumatic period. I suspect he is hovering about and prodding me on.
Daily Bell: Do you still believe the DARPA and the US federal government invented the Internet.
Ellen Brown: So says Wikipedia, http://en.wikipedia.org/wiki/History_of_the_Internet. I read an interesting article that I can't find now called something like, "The Government Does Some Things Right," I think in the L.A. Times. It said the inventor of the internet went from one major private company to another and got rejected for funding. Only the government was willing to do research for its own sake, just because it was a good idea, simply to see what could be developed from it.
Daily Bell: You've used China and India as examples of public central banking in a positive sense. Yet both these countries have terrible inflation now. (As in too much money.) How do you respond to that?
Ellen Brown: China and India are the fastest growing economies in the world. They are hot investor targets, so money has been flowing in, both as foreign currency and as credit expansion for new projects. This is largely speculative investment, which has driven up prices because goods and services have not increased in tandem.
As Max Keiser observed recently, India is suffering more from inflated prices in commodities than we are because food and staples are a substantially larger proportion of the average Indian's budget than of ours. Commodities are going up for a variety of reasons, including (a) heavy competition for these scarce goods from developing countries, whose economies are growing much faster than ours; (b) in the case of soaring food prices, disastrous weather patterns; (c) the flight of "hot money" from the real estate market, which has nowhere else to go; (d) speculation, which is fanning the flames; (e) the growth of ETFs, which have made it easy for ordinary investors to jump in and out of commodities; and (f) the U.S. dollar carry trade created by the extremely low interest rates made available by the Fed to its banking constituents following the credit crisis of 2008.
Daily Bell: Define inflation.
Ellen Brown: There are two types of inflation, price inflation (an increase in prices over time) and inflation of the money supply (an increase in the amount of money circulating in the economy). These are often confused. Individual prices may be going up (as commodities are today), yet the overall money supply may be falling (as it is today). Many factors can be involved in price inflation. An excess of demand (money) over supply (goods and services) is one possibility; but price inflation can also result from an increase in costs (including interest costs, scarcity of raw materials, etc.) or from speculation, with "hot money" rushing from one investment to another and competitively driving prices up.
Daily Bell: Is it monetary?
Ellen Brown: The question needs to be refined. "Monetary" means pertaining to money, which inflation obviously does.
Daily Bell: Is the US money supply shrinking in your view?
Ellen Brown: Yes. According to the New York Times of September 2010, it is shrinking at the fastest rate since the Great Depression. See http://www.nytimes.com/2010/09/12/opinion/12bove.html
Daily Bell: Why is that?
Ellen Brown: Per the NY Times, it's because banks are making fewer loans, largely because capital requirements have been raised. My proposed solution would be to supplement the supply of credit through state-owned banks, which have huge potential capital and deposit bases that can be leveraged into credit for local needs.
Daily Bell: How do you define the money supply?
Ellen Brown: I'll go with the NY Times: MZM (the liquid money supply in the economy); M1, M2, M3 (the broadest measure).
Daily Bell: How do you define deflation?
Ellen Brown: A shrinking MZM, creating insufficient liquidity to maintain business and productivity at optimum levels.
Daily Bell: Are you aware that some of your supporters want to shift the responsibility for printing money from the Fed to the Treasury in America? Do you agree with this?
Ellen Brown: I'm aware of a particular school of money reform that you may be talking about, but I doubt they would look charitably on being called my supporters. My own preferred alternative would be to nationalize the Federal Reserve.
Of course you realize that money is not actually printed by the Fed. It is printed by the Bureau of Engraving and Printing, which is already part of the Department of the Treasury. http://www.moneyfactory.gov/aboutthebep.html.
Daily Bell: Do you believe your movement has been penetrated by military intelligence?
Ellen Brown: Not to my knowledge. I don't know why they would take an interest. I haven't even seen any Wall Street bankers take an interest. The opposition so far all seems to be from the other money reformers!
Daily Bell: Hard money economist Dr. North has made many criticisms of your work. How do you respond?
Ellen Brown: I haven't actually spent much time reading Dr. North's theories. He said in an email that I was a threat to the Tea Party movement, that his intent was to destroy me, and that there would be no compromise, so I've decided that arguing with him is an unproductive venture. He can have his theories and I'll have mine; may the best human win. If you want to present me with a particular criticism, I could respond to that. ***
Daily Bell: You've stated that you will no longer use Benjamin Franklin's Pennsylvania money or the Nazi era as examples of successful public money. What will you use?
Ellen Brown: Au contraire, I will definitely continue to use the Pennsylvania colonial bank, America's first publicly-owned bank, as an example. I think it's an excellent model. It wasn't "Benjamin Franklin's money" though; the bank was established by the Quakers, who came from England. Franklin just saw how well it worked and wrote about it in glowing terms. I won't mention 1930s Germany unless it comes up, because it's too controversial. My favorite modern-day models are the Bank of North Dakota and the Commonwealth Bank of Australia.
Daily Bell: How can anyone know how much money is enough money? Or when to stop lending in your paradigm?
Ellen Brown: Lending is an organic process, responding to the needs of the borrowers. Contrary to popular belief, banks do not lend their own money or their depositors' money; they create new money on their books every time they make a loan. I think lending is a much more natural and efficient way to get new money into the money supply than to have an independent body trying to dictate what the economy needs. But private banking institutions have proven they cannot be trusted with this powerful tool. Except for coins, which are a very marginal part of the money supply, all money today is just credit – the credit of the people. It should be a public utility, administered through publicly-owned banks.
Daily Bell: Won't your paradigm end up injecting too much money into the economy nonetheless?
Ellen Brown: No. Loans grow organically in response to the demands of trade, and that credit-money disappears when the loans are paid off. When demand for loans is low, the money supply shrinks naturally. You may be thinking of the paradigm of another school, which in your last article you referred to as representing a "Brownian Schism." I'm flattered, but they actually came first.
Daily Bell: How will you value the land and other goods used to secure the loan?
Ellen Brown: Just as bankers do now. I'm not talking about putting politicians in charge of running the banks. Publicly-owned banks are run by bankers, just as privately-owned banks are. See, e.g., the very well run Bank of North Dakota. The Commonwealth Bank of Australia worked so well because it was set up by a professional banker who decided to apply his insider knowledge to serve the public interest. Knowing that banks simply created credit on their books, he proceeded to finance massive infrastructure with this sort of book-created credit – and it worked, brilliantly well.
Daily Bell: Who will make the decisions? Won't they inevitably be corrupted?
Ellen Brown: What decisions? The question is too vague. At the Bank of North Dakota, the decision to advance loans is made by professional loan officers, just as it is elsewhere. Creditworthy borrowers get loans.
Daily Bell: Didn't Franklin disown state money as inflationary before he died?
Ellen Brown: Not to my knowledge. Anyway, it was set up by the Quakers. He just wrote about it.
Daily Bell: Why not fight for freedom instead of government intervention?
Ellen Brown: I am fighting for freedom – freedom from a corrupt banking monopoly that collects tribute for letting us use our own public credit. Freedom from starvation and disease resulting from an artificial scarcity imposed by a private monopoly over the creation of money and credit.
Daily Bell: What do you think is responsible for human progress – individual human action or government?
Ellen Brown: Both are obviously responsible. Without government you would not have roads, bridges, court systems, etc. Government sets the rules and provides a protective umbrella under which individual human endeavor can bear fruit.
Daily Bell: Does government create and invent things?
Ellen Brown: Sure, many things. My brother comes to mind. He has degrees in physics and engineering and works for SLAC, the Stanford Linear Accelerator Center, a government-funded agency. It says in its mission statement:
"SLAC programs explore the ultimate structure and dynamics of matter and the properties of energy, space and time – at the smallest and largest scales, in the fastest processes and at the highest energies – through robust scientific programs, excellent accelerator based user facilities and valuable partnerships."
Government researchers can do "pure research" -- research for its own sake – because they aren't focused on quarterly profits. My brother took reduced pay at a government job for that reason: he did not want to sell out to industry. Mondragon, a large and very successful cooperative in France, has a "department of good ideas," where people can go with their creative inventions and get them developed.
Daily Bell: What makes you think that a government based public money system wouldn't be taken over by powerful private forces just like this one has been? We call it mercantilism. If you give government power, won't the wealthiest end up with their hands on the levers of government?
Ellen Brown: That hasn't happened in North Dakota, which currently has the only state-owned bank in the country. Certainly a public institution that returns its profits to the public, which has full public accountability and transparency, and employs civil servants who make no bonuses or commissions for churning loans, has a better chance of serving the public than the corrupt private system we have now.
Daily Bell: Isn't there a small group of Anglo-American banking families that has hijacked the West and intends to build a world government?
Ellen Brown: So I have read.
Daily Bell: Would you be in favor of one world government?
Ellen Brown: Definitely not of the sort projected by that group. I think national and state sovereignty is very important, particularly in matters of money. But the internet and global trade are increasingly bringing us closer together, and we probably do need some sort of international rules to keep things running smoothly. For example, I think there needs to be a global yardstick for measuring the value of currencies against each other – not the "floating" exchange rates we have now, which are subject to speculative manipulation, but something based on the real cost of goods and services in each country. I have a chapter on that in Web of Debt, including a proposed model.
Daily Bell: OK, thanks for answering the tough questions again. How is your movement doing?
Ellen Brown: Very well, thank you! I did two presentations in the California Bay Area in December, which generated so much interest that we have just launched a Public Banking Institute to follow though. The website is http://www.publicbankinginstitute.org.
Daily Bell: Are banks being established in the US that conform to your model?
Ellen Brown: Not yet, but legislation is pending or being proposed in a number of states, and there has been a great deal of interest in the idea. That's why we set up the Public Banking Institute -- to handle inquiries, do research, generate literature, and advise interested groups.
Daily Bell: Where do you go from here?
Ellen Brown: I'm trying to get another book out on public banking, but I seriously need a staff. My mother's caregiver used to do some computer work for me, but she has moved on to become a nurse practitioner. Hopefully the Public Banking Institute will relieve me of some of my networking functions.
Daily Bell: What recent books and articles would you refer our readers to?
Ellen Brown: I used to be an avid reader of books but I no longer have time! My own articles are posted here: http://www.webofdebt.com/articles
Ellen Brown: The latest is posted on Huffington Post here: THE FED HAS SPOKEN: NO BAILOUT FOR MAIN STREET
Daily Bell: Thank you for your time and courtesy as always.
Ellen Brown: And thank you for yours!
***Editor's Note: In fact, Ellen Brown did respond in detail to Gary North (see feedback thread, below, for link). The back and forth is considerable – and detailed. In the After Thoughts below we have tried to focus on a larger overview to try to return the discussion to the simplest and most fundamental issue, which is state control versus the free market.
We thank Ms. Ellen Brown once again for her time and patience in exploring the subject of public banking. We have often stated it might be better than what we have now, and she makes her usual eloquent case for her views. Of course being free-market thinkers our preferred system would be one of private or free-banking, which would surely include gold and silver as money. Since she mentions the Bank of North Dakota, we thought we might expand on that institution. Here's an excerpt from a Huffington Post/AP article that describes the bank:
Bank Of North Dakota: America's Only 'Socialist' Bank Is Thriving During Downturn ... The Bank of North Dakota serves as an economic development agency and "banker's bank" that lessens the loan risks of private banks and helps them finance larger projects. It offers cheap loans to farmers, students and businesses. The bank had almost $4 billion in assets and a $2.67 billion loan portfolio at the end of last year, according to its most recent quarterly financial report. It made $58.1 million in profits in 2009, setting a record for the sixth straight year. During the last decade, the bank funneled almost $300 million in profits to North Dakota's treasury.
The bank has the advantage of being the repository for most state funds, which can be used for loans and occasional relief for private banks that need a jolt of cash during sluggish credit markets. "We think of ourselves as kind of a little mini-Federal Reserve," Hardmeyer said. The state earns roughly 0.25 percent less interest than state agencies would get from a commercial institution. The bank also pays no state or federal taxes and has no deposit insurance; North Dakota taxpayers are on the hook for any losses.
The article provides the following history:
The Bank of North Dakota was a cornerstone of the agenda of the Nonpartisan League, a farmers' political insurgency spawned by anger about outside control of North Dakota's credit and grain markets. Founded in 1915 by A.C. Townley, who became a Socialist Party organizer after he went broke raising flax in western North Dakota, the NPL advocated state-owned banks to provide low-interest farm loans, along with state flour mills, grain elevators, meatpacking houses and hail insurance. Supporters gained control of the legislature and the governorship within five years. The movement's power quickly waned, but two of its state-owned businesses survived – the Bank of North Dakota and a state flour mill and grain elevator in Grand Forks.
From the 1940s until the early 1960s, the bank served mostly as a public funds depository and municipal bond buyer, said Rozanne Enerson Junker, author of a 1989 history of the bank. Its economic development activity has greatly expanded since. Gary Petersen, president of the Lakeside State Bank of New Town, a community on the Fort Berthold Indian Reservation in northwestern North Dakota, said the state bank is often willing to take a stake in local development projects. "In my experience, you make a contact with the (Bank of North Dakota), and their question is, 'How do we get this done?'" Petersen said. "They're not looking at ways to knock it down."
From the above we learn the provenance of the Bank of North Dakota was "socialist" and that currently, if there is a problem with the bank or its loans, "the taxpayer is on the hook." We are not sure how much of an improvement this is from the current banking system except the bank's loans are apparently lower-cost than commercial banks and the bank seems locally oriented.
Nonetheless, as Ellen Brown informs us above, the state-banking movement is alive and well. So, in fact is another kind of public banking movement supported by Stephen Zarlenga, director of the American Monetary Institute who can also lay claim to triumph (along these lines) with Congressman Dennis Kucinich's (D, Ohio, 10th District) introduction of the National Emergency Employment Defense Act of 2010, abbreviated NEED. The bill number is HR6550. We wrote about Zarlenga recently (in "Brownian Schism") as follows:
Zarlenga has been toiling arduously in the sovereign money pits, convinced, like Ellen Brown, that if the US government itself prints fiat-money that the problems of the day will gradually fade and prosperity will reign once more. The Kucinich bill calls for the Treasury to take over the functions of the Federal Reserve and basically issue debt-free money. It is a bill that parallels much of what Zarlenga has been campaigning for (along with Ellen Brown) for a number of years. Here, condensed, is what Zarlenga proposes for the US's monetary economy:
• Put the Federal Reserve System into the U.S. Treasury.
• Stop the banking system from creating any part of the money supply.
• Create new money as needed by spending it on public infrastructure, including human infrastructure, e.g. education and health care.
• Genuine monetary reform is the solution to the nation's fiscal problems and that can only be achieved at the national level.
In an email sent out on the 18th of December, Zarlenga celebrates NEED as follows: "While the bill focuses on our unemployment crisis, the remedy proposed contains all the essential monetary measures being proposed by the American Monetary Institute in the American Monetary Act. These are what decades of research and centuries of experience have shown to be necessary to end the economic crisis in a just and sustainable way, and place the U.S. money system under our constitutional checks and balances. Yes it can be done!"
While both Zarlenga and Brown agree that money ought to be issued debt-free, the two have had a falling out over Ellen Brown's advocacy of sovereign money at a state-banking level, which Zarlenga believes only confuses the issue. Actually the issue is made more confusing because Ms. Brown has been a proponent of Zarlenga's theories about money and has acknowledged his primacy.
In an interview with the Daily Bell, she stated: "We need to set up our own public banks, which cannot run short of ‘the full faith and credit of the United States' because they ARE the United States (or whatever local government is setting them up). In the U.S., we should nationalize the Federal Reserve and let it operate like a real government-owned bank, issuing money and credit on behalf of the public for infrastructure and other government expenditures. States could also set up their own credit mechanisms by setting up their own banks."
Despite Ellen Brown's backing for his ideas, Zarlenga disagrees on this head. He does not believe that states ought to issue money (through any mechanism) and even believes the idea to be unconstitutional. Ms. Brown now returns fire. In a feedback yesterday was kind enough to inform us that she had abandoned her notion of sovereign money at the federal level because of the complexities involved. She is now focused specifically on states – especially North Dakota.
In our interview, above, Ellen Brown once again reaffirms her perspective regarding sovereign money at a FEDERAL level by stating the Federal Reserve ought to be nationalized – so she has apparently changed her mind regarding this issue. Also, in a feedback to a long ago article, we recall her writing she'd decided to stop using the Franklin/Pennsylvania public bank example (along with pre-war Germany) because of questions raised about it. In the interview above she indicates she still intends to use it.
Following all this is a little confusing and apparently is destined to remain so. (See the back-and-forth between Brown and North for confirmation of this perception.) It is complicated further by Zarlenga who wants the Treasury to take over Fed duties and is adamant that Ellen Brown's ideas about state banking are unconstitutional. But maybe that's unfair. Ellen Brown believes her ideas are entirely constitutional and is obviously trying to put them into practice, just as Zarlenga is.
We've pursued the issue of public money with Ellen Brown (more than Zarlenga) because she has been gracious about sharing her time and ideas with us and because we think she is a strong – highly visible – proponent for her views. While it is a bit difficult to grasp the subtleties of what she (and Zarlenga) is generally proposing (even with all that has been written on the subject), we will do our best to summarize, as follows:
At root, the argument (Brown and Zarlenga) is that the "state" ought to be in charge of the price and quantity of money, not a "private cartel" such as the Federal Reserve (even though the Federal Reserve is a quasi-public institution). Presumably, if those administering the money are honest and incorruptible then businesses will be fairly and economically funded and terrible booms and busts will be avoided.
Here are counterarguments. If the state wishes to spend more than it has, those in charge of these banks can still be tasked to raise money (thus stimulating spending and mal-investments) by issuing out more money than is actually needed. Thus the boom/bust business cycle in our opinion would still hold sway. China and India, for instance, have sovereign banks and inflation is becoming a terrible problem in these two large countries. Ellen Brown provides us with many reasons why these two countries have price inflation problems but in our view the basic problem is simple: too much paper money printed by the central banks of each government. Central banks are inflation machines. Nationalizing them doesn't alleviate the problem.
Certainly, it boils down to individual preference. Brown and Zarlenga want the state to control money while libertarians want money to be controlled by individuals within the context of a free market. Central banks would not exist in such an arrangement except privately as clearinghouses without the color of government power.
In a free-market gold and silver are dug up from the ground and circulate freely. Banks, private partnerships or equity pools would generate capital for business ventures. Banks might offer fractional reserve currency or not, depending on market acceptance. This informal and unstructured setup is apt to provide better results (and less of a boom/bust cycle) than a formal banking structure in our view. Real Bills would no doubt circulate in such a free-banking environment as well.
It is really that simple. Would money be more expensive than under Ellen Brown's proposals? Perhaps – or perhaps not. It would depend no doubt on the market; but eventually we would have to believe, price inflation would become a problem as it always does when government is involved. The bottom line with all of this has to do with whether people want free-market money or money issued out by the state. Given governments' recent track records, we wonder why anyone would want to set up yet a new bureaucracy.
We would also note that Ellen Brown makes a number of statements supporting government and government efficiency. As libertarians we generally disagree with them. The Internet's popularity resulted from the invention of the PC, which was a private elaboration. The Great Depression in our view as created by Federal Reserve policies and aggravated by the misguided laws and regulations of the Roosevelt administration. We don't believe that Social Security in particular is an effective government program in the long term or that it will provide much of an aid to Baby Boomers later in life.
We don't believe government is effective because it lacks the competition that disciplines the private market. We don't believe in government solutions to private problems generally. We believe with George Washington that government is "dangerous as fire." We don't believe that government has ever created anything of much worth and that most of what government provides or elaborates on is borrowed from the private sector and then repackaged – badly.
We hope the interview with Ellen Brown has clarified some points that were previously unclear despite the long dialogue that the Bell has had with her – especially on the role of government. We will continue to follow the progress of her ideas at the Huffington Post and elsewhere.
Edited on date of publication.
Posted by Richard CB Johnsson on 01/16/11 03:31 AM
"Ellen Brown: Why do you believe that I believe government is superior to the free market? I believe government is necessary to have a free market. Otherwise you have the law of the jungle, the exploitation of the weak by the strong."
But do you have to have a monopolist Gov't? Isn't it exactly the monopoly power that is abused by the strong against the weak? I only wish you would dig just a little bit deeper, Ellen Brown.
Posted by Texaninsweden on 01/16/11 05:13 AM
Interesting, I also followed the same path as Ellen from Natural Medicine " Pharma " Banking Cartels. Ed Griffins World Without Cancer is a great springboard. I have created a website in Sweden to help inform the Swedish people about B 17:
Click to view link
Click to view link
I would suggest Brown and people that follow her ideas take a few more steps to realize that only a Open Competition of Currencies can defeat the Monopoly of the Money Creators. The evil is not the people who control the Monopoly it is the Monopoly of Creating Money that makes you evil. I do not care how good your intentions are in the outset here is an amended quote that i think sums it up 'The absolute control of the creation of money corrupts absolutely.'
Much of what Ellen is saying has been said before by Gertrude Coogan in the Money Creators, read here:
Click to view link
And the history of money can be read here, The Babylonian Woe by David Astle:
Click to view link
The only way to defeat the monopoly of the money creators is to abolish the monopoly, choosing new masters of the monopoly only confuses and worsen the situation.
Reply from The Daily Bell
Thanks for the links.
Posted by Clive Edwards on 01/16/11 05:31 AM
Bravo! What a sparkling interview. As close as we'll ever get to such a discussion between Jefferson (the DB) and Madison, er, Franklin (EB).
In truth, I would settle for either rather than the merchantile kleptocracy we have today.
Posted by PeterJB on 01/16/11 05:34 AM
"A publicly-owned central bank can be very effective in serving the people. The Commonwealth Bank of Australia is my favorite model."
Something seriously wrong with this statement as the Reserve Bank of Australia is the National Central Bank as of 1960 and there is something weird about the faith expressed in government; but interesting
Posted by Mikeck on 01/16/11 05:35 AM
Let me see if I have this right, politicians have the power to end the FED tomorrow, but they like the result of it's actions so much that they refuse to do so. However, we can trust them to do what the FED does now...something does not seem quite right about that.
I know of nothing that works better because of government involvement; therefore, competitive currencies, wherein the one that is the favorite of the marketplace wins out, seems like a much better alternative. I still use Liberty Dollars from time to time, but not nearly as much as I did before the criminal government drummed up some bogus charges and shut them down. Also, Ghresham's law is having it's effect.
Yes, it works in North Dakota and if that is what those good folks want, that's great. However, I do not trust the politicians of Virginia with the power to create "money" at will any more than I trust the politicians in DC or bankers in general with that power. I may have stated this here before, but it bears repeating, no one should have the "authority" to create at will something that others can obtain only through individual effort.
Now that I've gotten that out of the way, I can go back and read the rest of the interview.
Posted by TexanInSweden on 01/16/11 05:40 AM
to use an example of governments inability to regulate or control something I think the FDA reigning in Big Pharma should be a shining example to Ms Brown why we cannot trust government. They merely become the lapdogs and puppets of money power.
Posted by Bobby on 01/16/11 05:51 AM
"That government is best which governs least" H D Thoreau
On the Duty of Civil Disobedience
Posted by V. Heddins on 01/16/11 06:20 AM
I like Ellen Brown more and more as I hear her. Good read !
Posted by Ramon S on 01/16/11 06:24 AM
Ellen Brown: I haven't actually spent much time reading Dr. North's theories.
Ms. Brown, As Dr. North's theories are grounded in sound (Austrian) economics, maybe you should actually take a look.
You imply these are "his" theories but many others of us here and out there deeply believe in them as well. We will continue to challenge you until you convince us you understand real (individualistic human action) economics.
In my opinion, you do not understand such (thereby avoiding Dr. North's challenges on the pretext of rudeness), and have a very misplaced faith in government as "us" when, in fact, it is "them".
I know you mean well but your recommended course of action is not a solution and, unfortunately, your followers are devoting a tremendous amount of valuable energy/enthusiasm for change into the wrong pathway.
Posted by Vauung on 01/16/11 06:29 AM
Fascist banking 101. Enlightening, if depressing.
Posted by George Sign on 01/16/11 06:31 AM
"We don't believe government is effective". That says it all for me. I agree totally.
I'm afraid Ellen Brown and Max Keiser (her fan) are symptoms of the light-weight thinking that inhabits the Internet. The Web is populated by everyone and anyone that has an "idea" and a book or radio/tv programme to get out.
Keiser must be loved by the "elite" as his rants against them become more comical everyday and serve to deflect the anger of the confused public. Ellen Brown is a regular on the Max Keiser show because she has the same shrill simplistic outlook.
Unfortunately as they become popular they then become mainstream. It is then that the brainless
politicians ever seeking the popular vote latch-on to their un-proven theories.
Central Banks, Governments and Religions are all control mechanisms to exploit the human need for safety and to belong. Most people want to be controlled because they fear the actual process of taking control of their lives. People never realise that by giving up their individual rights and freedoms they become more vulnerable than if they were to be self-determining individuals.
Gold and Silver are the keys for individuals to be free from these despots.
Posted by Adam on 01/16/11 07:22 AM
DB: 'At root, the argument (Brown and Zarlenga) is that the "state" ought to be in charge of the price and quantity of money, not a "private cartel"'
What is the difference??
"The State" is a collection of PRIVATE individuals.
A "private cartel" is a collection of PRIVATE individuals.
Each of us is a PRIVATE individual. And if we aren't ALL PRIVATE individuals, then are we PUBLIC individuals, are we slaves?
When you say "The State" should do something, you are saying one or more private individuals should do something on your behalf or everyone's behalf. This is what *you* say.
If you are a statist, you will argue that *this* chosen private individual has more virtue than *that* private individual and so *this* private individual should decide over *that* private individual what is to be done.
Implicit in the premises of your statist argument is that *you* have the necessary virtue to choose *this* private individual with greater virtue than your own, yet that *your* knowledge of morality and virtue is imperfect in comparison to *this* other private individual who you elect to make decisions for *you*. How then given *your* imperfect virtue are *you* then trusted to decide upon the virtues of another? How then is your statist argument not simply an appeal to the virtue of a category called 'leaders' given that *you* admit in the very premises of your argument that *you* lack the necessary virtue to compare *this* private individual to *that* private individual, given that *you* admit to having no firm grasp of universal ethics and morality?
YOU admit this! YOU admit this lack of knowledge and yet you then claim it! This admission is implicit in the premises of *your* own argument! An argument that ASKS to be disregarded outright in it's own premises! Else, if *you* do possess the necessary virtue to decide leaders, why then are *you* not the leader??
Dear fellow feedbackers, can we not see what an enormous waste of time this 'argument' is?
Can we not see that any argument that we are not ALL private individuals is an argument that some of us should be slaves?
Can we not see that PRIVATE individuals will always control the price and quantity of money no matter what argument we have?
Can we not see that Ms Brown's 'arguments' are simply psychological defenses against the anxiety she feels at the prospect of NOT being a slave, against the anxiety of admitting to having been enslaved to an ideology called "statism" and to mass nouns like "we", "public", "state" and "government"?
Is Ms Brown not a PRIVATE individual? Are you really wise to counsel the advice of a willing slave?
Posted by Kevin Beck on 01/16/11 07:55 AM
I think that we would be better off with competing currencies. For one thing, it would make it difficult to enforce the income tax!
I also think that there is a problem with the idea of legally-enforced foreign exchange agreements (fixed currency exchange rates).
Ms. Brown seems to see any standard of exchange needs to be set by some government agency, instead of the marketplace. It should not be any government's business what I should be allowed to sell my goods for; it should only be up to me to cover my costs of business, since that is what I am in business to do. If I want to insist my customers must pay me in specie, that should be my legally-eforceable right. Government is only entitled to enforce that right.
Posted by Heuristic on 01/16/11 07:56 AM
The salient point is that Ellen Brown advocates her socialist banking scheme because as she says it makes government more efficient.
No libertarian, even if he has only made a cursory effort at being consistent, would want "more efficient" government. We need government to be so inefficient that it breaks down altogether.
A statist would want more efficient government.
Therefore Brown is fundamentally not libertarian but statist and when she speaks of freedom it is a cover for another agenda. Similarly, the people who support her are letting us know that they are statists. You don't need to examine the scheme itself.
Posted by Ellen Brown on 01/16/11 08:09 AM
Thanks Daily Bell. Swamped with work here, but just one clarification. I haven't changed my mind on who should issue "sovereign money." I've never said the states should issue their own currency.
I said they should own their own banks, which could issue credit as all banks do. Bank credit is where virtually all our money comes from today.
Rather than borrowing from Wall Street at 5% interest, states could borrow from their own banks effectively interest-free, since they would own the bank and would get the interest back; and they could generate significant amounts of credit for their credit-strapped municipalities.
The Bank of North Dakota has $4000 per capita. If the Bank of California had $4K/per capita, in a state of 37 million people, it would have $142 billion in credit to dispense, if deposits to loans were scaled as in the BND.
Reply from The Daily Bell
"Rather than borrowing from Wall Street at 5% interest, states could borrow from their own banks effectively interest-free, since they would own the bank and would get the interest back; and they could generate significant amounts of credit for their credit-strapped municipalities."
Thanks for the clarification. Not sure we indicated that a state would issue its own currency, though certainly Franklin's Pennyslvania did...
You may be referring to this line from a previous Bell article:
"While both Zarlenga and Brown agree that money ought to be issued debt-free, the two have had a falling out over Ellen Brown's advocacy of sovereign money at a state-banking level, which Zarlenga believes only confuses the issue."
Of course, the "sovereign money" can be printed at the Federal level and used at the state level. It doesn't have to be special "state" money.
Posted by Steve on 01/16/11 08:13 AM
DB, thank you so much for this interview with Ellen. She presents herself very well.
Part of what I think we are all struggling with is how to get from here to there? How we do get from a money system controlled by an elite banking cartel to a money system that is more rational and market-based?
As you wrote in your article one the Perpetual Wars and Employment yesterday, it's fine to say "Close all the bases and bring all the soldiers home."
Now what do you do with the huge number of people who are dedicated to continuing offensive action? (I distinguish between offensive and defensive; we'll still need a small fraction of these people to carry out true defense.)
Similarly, in the case of money, the power elite have it all; even Peter Schiff and Ron Paul recognize the danger of abolishing the Fed and realizing that the power to create money might end up in the hands of the politicians.
Robert Wenzel often preaches that the Federal Government should sell of "Federal" lands and assets to pay off the debt. Well... who will have the "money" to buy those assets?
What I find appealing about Ellen's idea is that at least money power is (literally) closer to my home. I live an hours drive from my State capital. I have access to these people. She advocates the State's exercising their power, and folks, right now, the only hope we have of reigning in the Federal government lies with the sovereign States. If that's gone already, nothing will stop our march to tyranny.
DB, you point out many problems with the current system and they are all accurate, but in my mind the BIG problem with the Fed is that it is unaccountable and unaudited. Ron Paul is trying to fix that. Accountability will damage it's power; that is why the Fed is fighting it so hard.
This is my long-winded way of saying: Could Ellen's idea be a way point on the journey to a free market-based money system?
Reply from The Daily Bell
We've suggested it might be better than what the US has now for just the reasons you point to. But ultimately, it uses the "state" as a solution to private problems. What is truly private is always going to be more efficient and fair than what is public.
Posted by EDD on 01/16/11 08:45 AM
DB: "In a free-market gold and silver are dug up from the ground and circulate freely. Banks, private partnerships or equity pools would generate capital for business ventures. Banks might offer fractional reserve currency or not, depending on market acceptance".
I, too, believe this to be the best approach to independent wealth free from manipulation of an elite group. An example of removing control from an elite was illustrated by the actions of President Andrew Jackson, for which he was almost impeached. When one resists the 'moneyed power', that one has to endure the enmity of said group. The following two paragraphs are excerpted from Wikipedia.
"In 1835, Jackson managed to reduce the federal debt to only $33,733.05, the lowest it had been since the first fiscal year of 1791. By implementing a tariff and limits on terms of elected officials President Jackson remains the only president in United States history to have paid off the national debt.
"Some causes include the economic policies of President Andrew Jackson who created the Specie Circular by executive order and also refused to renew the charter of Second Bank of the United States, resulting in the withdrawal of government funds from that bank".
This quote from Mikeck : ("Let me see if I have this right, politicians have the power to end the FED tomorrow, but they like the result of it's actions so much that they refuse to do so. However, we can trust them to do what the FED does now...something does not seem quite right about that"), hits the nail squarely on the head.
Let's examine part of this quote, "but they like the result of it's actions so much that they refuse to do so". When history is examined, it becomes obvious that it is not so much 'that they refuse to do so', but that they 'fear' to do so. It takes an individual with high moral tendencies to confront this energy.
With that in mind, let's look at how manipulation occurs:
"The mighty strength of the House of Rothschild was based on a variety of important factors:
(A) Complete secrecy resulting from total family control of all business dealings;
(B) An uncanny, one could almost say a supernatural ability to see what lay ahead and to take full advantage of it. The whole family was driven by an insatiable lust for the accumulation of wealth and power, and
(C) Total ruthlessness in all business dealings"
(Click to view link
The above quotes is a prime example and the basis for control by the PE. Continuing on with this thread, we will now examine how it takes but just a few pawns to serve the interests of this select few. One example is illustrated by the life and goals of Cecil Rhodes, part of which is excerpted below, again from Wikipedia:
"In October 1871, Rhodes and his brother Herbert left the colony for the diamond fields of Kimberley. Financed by N M Rothschild & Sons, over the next 17 years Rhodes succeeded in buying up all the smaller diamond mining operations in the Kimberley area. His monopoly of the world's diamond supply was sealed in 1889 through a strategic partnership with the London-based Diamond Syndicate. They agreed to control world supply to maintain high prices.
"He was greatly influenced by John Ruskin's inaugural lecture at Oxford, which reinforced his own attachment to the cause of British imperialism
"Eventually he was inspired to develop his scholarship scheme: "Wherever you turn your eye"except in science"an Oxford man is at the top of the tree".
"While attending Oriel College, Rhodes became a Freemason in the Apollo University Lodge. Although initially he did not approve of the organization, he continued to be a Freemason until his death in 1902. The failures of the Freemasons, in his mind, later caused him to envisage his own secret society with the goal of bringing the entire world under British rule
"Rhodes said of the British, "I contend that we are the first race in the world and that the more of the world we inhabit the better it is for the human race." He wanted to make the British Empire a superpower in which all of the British-dominated countries in the empire, including Canada, Australia, New Zealand, and Cape Colony, would be represented in the British Parliament
"Rhodes included American students as eligible for the Rhodes scholarships. He said that he wanted to breed an American elite of philosopher-kings who would have the United States rejoin the British Empire".
My hope is that this essay helps to support the DB position of how the PE controls the memes and position itself for intended consequences. Cecil Rhodes set up a scholarship to influence individuals to commit to his 'ideals'. A thorough search will reveal that many of those who are under the influence of said ideals have become an integral part of the establishment as it exists today. This includes politicians, media, academia and other professions.
Conspiracy? When one has the initiative to question, (why culturally we are in the present circumstances nationally and internationally), can there be any other conclusion drawn?
The DB has been questioned by previous feedbackers why they have not named those in 'the loop'. I have intended this post to be brief, and a complete study presented would be an extensive post but believe the above synopsis will help to establish credibility of issues presented by the DB.
Thanks to the DB for a platform where these issues can be discussed, and thanks to all who have posted in the feedback section as I have gained much to add to my opinions.
Reply from The Daily Bell
Thanks for the post and links.
Posted by Sovereignjim on 01/16/11 09:48 AM
You all must understand how the PE controls the political process. This must be changed before we allow the Government to issue money.
E-mail me at
jdwdjw@Click to view link
and I will send you an e-mail copy of my book that defines and offers the solution for our political control dilemma.
Posted by John Danforth on 01/16/11 10:08 AM
A few things;
The GUN in the room. Imagine having to kiss the hind end of a surly, underpaid, permanent government clerk to get a loan, after your politicians have just made a major speech about the glowing post-industrial 'green' economy they will grow.
(Tell me you haven't heard this speech or seen millions poured down the rat-hole of 'green energy' to supplicants of the State. And they don't even directly control your bank account, YET.)
The GUN in the room. Your measly little machine shop means nothing to those in power, who will now control your future and monitor your EVERY transaction. "We consider using XYZ as a suppler to threaten your ability to perform. Your credit risk will be favorably affected if you use a dependable supplier like ABC."
The GUN in the room. "Creditworthy borrowers would get credit. Their access to credit needn't be contingent on someone else's agreement to give it up." Meaning THEY will decide if you're creditworthy, which must (supposedly) be figured on your prospects for success in the marketplace, which they control based on political considerations, with the power of the gun.
Those who are politically favored will get 'credit', while those who actually produce wealth will not be consulted on how 'their' money will be invested. The power of the gun separates the influence of legitimately earned wealth from those who earn it, transferring it to those who constantly pronounce their implacable hatred of those who succeed by honest trade. "You're not the boss of me." "Oh, yeah? Well just you wait!"
The GUN in the room. We are asked to hand our economic freedom over to an entity that has a huge advantage in economy of scale over private entities--at the business of killing people. The printing-press is obsolete, a computer keyboard will be used to finance the killing machine--an order of magnitude larger than at present, if this is even imaginable. When the state controls issuance of credit, your children will march with the regiment if they want to eat.
Any scheme that separates value from money, that separates private property ownership from money, that imprisons the economy by controlling money, that consists of counterfeiting by a gang of armed thugs, is the mortal enemy of the hapless people. State control over money means State control over everything. Including YOU.
This needs repeating: "Their access to credit needn't be contingent on someone else's agreement to give it up." Think about this in all its ramifications. It deserves an entire article by itself.
We have seen the results of this kind of Statist premise. Choosing not to use the concentration camps as an example does not erase them from our minds.
This insane scheme is tantamount to economic terrorism. I find myself agreeing more and more with Gary North's stance on this. It IS a threat, and it is THAT KIND of threat.
Posted by John Blenkins on 01/16/11 10:13 AM
@George Sign. Rather surprised at your sweeping statement that Max Kieser et al view is shrill and simplistic.Just because a view becomes popular and gains traction does not in its self make it simplistic.
Just ask JP Morgan whose manipulation of the silver short market has been blown of course by Max's buy silver campaign.
Much of the blatant fraud and theft by Banksters that never sees the light of day in the MSM is highlighted on the Kieser show.As it is on these halloed pages.
The DB concedes that Ms Brown's desire to have Gov own print and distribute money may well be better than the current mess we find our selves in. This to me indicates that TDB a publication strong on Austrian economics and the free market unencumbered by regulation accepts that the situation is so bad it would be hard
for gov to do much worse.
The fire can look attractive viewed from the sizzling frying pan.There is a growing call to end the FED to be replaced by gov, frying pan/fire.
At least if gov was in charge they would be fully accountable and could be kicked out.Or that at least is part of the sales pitch.
Problem is govt are unable to restrain themselves and always thirst for more power and control. On the other hand the banking cartels aided by the color of law have gifted us FRB debt created out of fresh air.
That privatise profits and socialise losses. The Tarp rip off was banksters holding their hand in the shape a gun to there own heads wearing financial suicide vests. "Bail us out or The World gets blown up along with us" Ha and the govt don't negotiate with terrorists!
So along comes the tax payer bails them out biting down hard on austerity.That forced liquidity adding insult to injury when this
years bonuses show the giant jump is sales of luxury goods.
If the banks done so well that must mean the overall economy is getting better. Not a chance its back to charades as normal.
Shortly after the banksters take delivery of their Porches and Rolex they are going to ask for changes in the law or a new bailout or more likely both. see link.
The Stakes Are Huge: There's Another Bank Crash Looming, and We Must Prevent Another Bailout
Click to view link
The housing bubble plus the worst recession since the Great Depression has created a foreclosure crisis of gargantuan proportions.
Soros has admitted the dollar is on its way out as the worlds reserve currency in a controlled demolishion (9/11 style).
I doubt it will be gently controlled there is much more profit in a flash Click to view linkvalue the dollar by 50%-70% at the same time oil and food price inflation makes a one dollar loaf of bread
cost go to what $5,$10,$20 a loaf. In such chaos and destitute desperation most will want a one world currency and gov. A drowning man will cling to anything.
The sunny uplands of a free market and Austrian economics are but a fantasy in the present rigged game.
The law as we know it has too go to even start to get a free market.TPTB and paid for govt are not going to hand over a level playing field where a free market can flourish. Short of a complete clear out we are F***ED without a kiss.
Reply from The Daily Bell
Kaiser is apparently a big proponent of global warming, so there is distrust of him in the Libertarian community.