Posted by Ellen Brown (pictured left) on 10/10/2009 3:59:16 PM
Thanks again, Gentlemen, for engaging me in this debate! Having my own category is pretty exciting. At first I thought "Brownian" did not sound very elegant, but one reader called it "Brownian motion", which does have a colorful ring. …
For the substantive issues:
1. The hardest part of the Brownian approach for some to accept (we among them) is that gold and silver were not money apparently until the state coined the metal.
It's simply historical fact: temple accounting methods predate coins, and the coins themselves were issued by the state. It was the stamp of the sovereign on them that gave them their value.
The metal's market value was always substantially less than the sum stamped on them, because otherwise they would be smelted down for their metal content when the market price rose.
The temple-state was the beginning of civilization as we know it. In fact in many ways it was superior to "modern" civilization, which has degenerated considerably.
I was struck by this when traveling in Egypt and when visiting the British Museum in London: Egyptian civilization before the pharoahs was primitive. Then suddenly this remarkable civilization appeared full-blown, pulling off feats of architecture and math that we still can't figure out today.
The inscriptions in the British Museum note that the FIRST eras of the pharoahs were actually MORE advanced than the later ones.
How to explain that? I have my own theories, but the point is that I don't necessarily subscribe to the Darwinian law-of-the-jungle survival-of-the-fittest ideology of the Robber-Baron free market.
Some enlightened rules of the game are not only a good thing but are essential to a fair and just society. WHY are we higher than animals? Where did we get this semi-god status? I started writing on that before I saw this economic crisis brewing, and hope to return to the subject when it's resolved, assuming we're not living in caves then or chained in debt-slavery to the money masters.
2. "As free-market analysts, the problem we continue to have with the Brownian approach is that it downplays the role of private enterprise in creating money and substitutes a wise (if non-interfering) state for free-market currencies."
The model I would propose is actually more along the lines of a public accounting system, overseen by public banks that are just there to moderate and make sure all the parties keep their commitments.
People themselves create money when they take out loans. The money is extinguished when the loan is paid back, as in a community currency system. The public bank is more like a court than an "issuer" of money.
This is actually the system we have now, but the middlemen are private banks, which have been allowed to pretend they are lending pre-existing money. This gives them not only unwarranted power but serious liability when they can't balance their books because of defaults, toxic assets, etc.; and because they're always siphoning profits out of the system, it has become an unsustainable ponzi scheme.
In a publicly-owned banking system, the interest would return to the public, making it mathematically sound and sustainable.
That's all I have time for right now. Thanks again for entertaining me and my trusty Internet Knights!
Posted by Ellen Brown on 10/10/2009 4:16:41 PM
One more thing — I've been looking into UCC law. All we have now in the way of "money" derives from the law of contracts.
In the 19th century, they had "real bills" — you could use your bills of lading representing products that were still on the ship and were not to be delivered until months later, just as if they were money.
Similarly today, you could "monetize" your project that hasn't been built yet, and pay the advance off with the earnings from the project when it is built.
If it's the type of project that doesn't generate dollar earnings but improves the general quality of life, you can still monetize it. We just all pay for it collectively with a bit of inflation.
And things such as health care and higher education actually DO pay for themselves, even though they don't generate an immediate dollar income.
They allow people to work longer and better at higher paying jobs, increasing the productivity of the economy generally — as well as the tax base, assuming we're going to keep taxes in our system, which I would argue might not even be necessary.
Posted by Ellen Brown on 10/10/2009 4:28:51 PM
One last comment: all this has to do with the perception of society as a collective organism, as it was seen in the ancient temple-state.
I know that the term "collectivism" is anathema in your circles, but that is a different thing: that is the ruse of requiring people to sacrifice their own good for the supposed good of the collective, which is really the good of the controllers.
But there is another sort of collective good — the concept of the Common Wealth of our forefathers – which actually DOES serve us all better than competing to "win" at the expense of our neighbors.
When the centipede realizes that his many legs are all attached to the same body, he can get them to work together to propel the whole body forward.
Dominant Social Theme: Further useful discussion about the state and the individual with the engaging Ms. Brown. …
Free-Market Analysis: Ms. Brown has done us the courtesy of continuing the dialogue on Brownism (Brownianism?) and we find it – and her point of view – more compelling (interesting, anyway) than ever. The issue of communitarianism, as she may be expressing it, is one of the great issues of our day. It is not a hypothetical issue in our opinion because the Internet is rapidly bringing us to a time when these issues will not be theoretical at all.
Pie in-the-sky thinking about the Internet? Years ago we were accused of that. Not so much now.
Who would have thought for instance, that Fox News would ever tolerate the rhetoric of a Glenn Beck with his increasing focus on freedom and free markets? Who would have thought that much of Congress would have signed on to audit the Federal Reserve, or that continued stresses and strains would continually put the evolution of the European Union to the test (no matter the Irish vote)? Who would have thought of Time shedding its magazines or BusinessWeek potentially going for a buck.
Who would have thought that the dollar would tremble or that other countries, however timidly, would endorse a currency backed by a basket of instruments including gold? Who would have thought in fact that many would come around to the view of the Daily Bell and other hard-money sites in predicting that gold and silver would go higher still and for many years to come?
We could go on and on. We have forecast all of these issues and more (generally anyway) because we understand what happened the last time a great technological innovation – the Gutenberg Press – came into play some 500 years ago. States foundered and formal religion fractured. A new continent was Westernized. The industrial revolution came to pass.
Intellectual frameworks are important in historically sympathetic times. As we pointed out in the previous issue of the Daily Bell, the growth of human achievement is often aided by the ability of individuals to travel from one state to another when they are facing persecution at home. Just as importantly, the states should have similar cultures and similar languages. Great epochs such as the golden age of Greece, the Renaissance and of course the American experiment have resulted when these two simple requirements are met. People are at their best it seems, at least in modern societies, when they have alternative living options – which in turn makes the state less oppressive.
(A quick aside: In an email, Ms. Brown wonders why ancient Egypt seems to have degenerated culturally and intellectually over time. Without being aware of the details of Ms. Brown's case, we would point out that there were two Egyptian centers of influence at one point, the Upper and the Lower. It is certainly possible that after the merger between the Upper and the Lower, Egyptian governance became increasingly repressive, the priest class stricter and the larger culture suffered as a result. Maybe this helps explain the degeneration.)
In any event, it seems to us that freedom is an inviolable part of the human equation when it comes to achievement and prosperity. In fact, private enterprise is a key factor in improving the human predicament. Marginal utility shows us that only the market can discover prices and that any tampering with those prices is price fixing – which ALWAYS leads to a queue, inefficiencies, rationing and the eventual diminishment of prosperity for all. In the long-term socialism, whether it is applied to money or industry doesn't work (though in the short-term it can certainly bring bursts of energy and enthusiasm as any political process inevitably can).
Fortunately, the Internet is reinvigorating the work of free-market thinkers including the great Austrians such as Ludwig von Mises and FA Hayek (and of course other interesting thinkers like Ellen Brown et. al.) For this reason, Ms. Brown's perspective – that some sort of state-supervised money and a general communitarian approach to social interactions are a viable and even proven approach – provides a fascinating alternative (an alarming one in some ways), and one that we can see would be both attractive and stimulating to many. It is challenging to free-market thinking in general because it deemphasizes some core free-market arguments.
So let us pick up the mantle. To restate: It is freedom in the first instance, not money per se nor state-sponsored culture (no matter how invigorating) that gives rise to the betterment of the human condition and to richer individual (and eventually community) satisfactions. For Brownians to suggest that the state (even a temple/religious state) can be improved rather than diminished (or even improved AND diminished) is to open the door to a dialogue on how the state can best be configured – and at first blush! While this is a useful argument, it is starting in the wrong place in our opinion. The argument should begin with the ABSENCE of the state. THIS is the starting point. ANY economic interference with the marketplace begins the process of distortion. Discussion of ANY element of state control begins a temporizing process.
Of course, in reality, the state has a realistic role and there are few if any times in human history when there has been no functioning state at all, at least in the modern, post-neolithic era. But, again, the place to begin discussions about a better life is within the ambit of a private economic and socio-political environment. That is ground zero in our opinion. Also, one need not organize anyone else to begin this sort of process. There is no need to create community support. As Harry Browne has pointed out, one can create one's freedom in one's own lifetime, if one is determined to do so and focuses on oneself and the individual family unit. Such an approach, we have called "free-market thinking."
Ultimately, in this world, one is responsible first to one's self and then to one's family and larger community. These priorities may be reshuffled, but it is the INDIVIDUAL (you) who makes the final choice. We begin with ourselves – not with our neighbors, our workplaces or even our countries. We live inside of our own skins. We should be careful of outside influences that take advantage of instinctive human tribalism. Patriotism, for instance, has been used throughout the centuries to manipulate people. So have false religions that prey on the truly spiritual.
We are all communal beings and we all swim in a sea of communality (men and women alike). But to suggest as Brownians may be doing, that we start from a communal place rather than an individual one is to begin the argument, as we have suggested, at the wrong starting point. The ideal, first of all, is freedom – a free money, a free life, freedom of expression, of creativity, and freedom to build wealth within a range of personal and professional preferences.
From our dialogue with Brownians, we know that Ms. Brown and others respect much of the above perspective. But it would seem there are genuine differences between what Brownians propose and the perspective that free-market thinkers have built up over time. The place to start a discussion about the role of the state is surely at a zero point, not beyond. And the place to start a personal discussion about one's relationship to the state begins with the individual and his or her understanding of responsibilities to his family, his community and country. It begins with ONE. We take responsibility for ourselves and then we can truly offer more to others. Thanks again to all Brownians and Ms. Brown in particular for much interesting dialogue.