Ever wonder why the richest nation in the world, the U.S., has become a “debtor nation”? Oh, but they’ve already told you. It’s those politicians, especially the ‘liberal’ ones who just spend too much. You know, those “tax and spend” liberals. Well, I’m no apologist for the liberals. I agree with Chris Hedges that the liberal class of politicos is essentially dead. They still talk some about their concerns for the “middle class” and “working people,” but their actions reflect the same servility to the rich and powerful as do the ‘conservative’ — the misuse of that term is a whole other story — Republicans who have been cutting taxes on the rich and shifting the costs of plutocracy to the poor for decades. So, we sure have a clue as to why we are in so much debt.
The Banksters’ Coup
The history of money and banking is far more interesting than any economics course on the topic. It is long and complicated, but the essence of how current economies have become debt-based can be condensed to some key elements in the struggle between the public purposes of money and credit, and money-lenders’ efforts to control the issuing of money and renting that money for profit. A nice summary of the key historical events can be read in Ellen Brown’s latest book, The Public Bank Solution: From Austerity to Prosperity. In that book she also explains effectively why we — both people and government — are all in such debt, but need not be.
The international private banking cartel was started with the Bank of England around the time of the American Revolution. Ultimately, the Federal Reserve was formed in the U.S. as a private banking cartel, owned by its member private banks. The Federal Reserve Act of 1913 was passed under great pressure from the major private banks in the U.S. It ceded sovereign authority for creating money to the Big Banks we know so well today. That raises important questions that are rarely discussed in public. What is money if not a public utility for making the exchange of goods and services effective? Why should a public utility be controlled by a private cartel?
Money, Sovereignty, and the Public Interest
Numerous examples of public banking throughout history demonstrate that for achieving public purposes, public banks are more effective than private banks. But rather than argue the details of why — Ellen Brown’s book does that quite well — let’s look at purpose and principle. Banks are a necessary part of any economy. An economy is a crucial component of any operating society. The public has an inherent interest in banks being operated to serve public purposes, primarily the management of the creation and circulation of money as the means for making economic exchange work and facilitating public projects.
Money is a public good; indeed, it is a public service. Contrary to the mythology foisted on the people, the value of money exists in its movement. Furthermore, it is a process, not a thing — its value is in what it represents, not what it is [paper, wooden tallies, gold, etc.]. And what it represents is credit. Stored in a vault it means nothing… except in the illusions of whoever controls the vault. Banking has become the epitome of the illusory game of acquisition of wealth. From the perspective of the citizen, however, the circulation of money is the means by which the people are able to sustain themselves over time. If “we the people” are sovereign, then why is not the monetary system owned by the public? But on to the main point.
The Debt and Deficit Scam
Simply put, because it gave up its sovereignty over the creation of money to the private banking cartel, the government borrows money from the Federal Reserve (central bank), which it created and gave the power to create money. Where does the Fed get the money it loans to the government? Why, out of thin air of course! An entry is made on an electronic ledger and money is created and loaned to the very entity — the government — that allowed that ledger [of the private banking cartel] to exist. A federal debt is created. How counter-productive — stupid — is that? The only interest this proess serves is that of the concentration of wealth in the hands of the banksters.
Well, it’s very productive for the banksters. After all, its free money to be lent out and for interest to be collected upon. Wow! We could all use some of that kind of deal. Free money to loan out and make more money on. Now, project that process into the whole economy and think of the result.
The underlying absurdity is that by structuring debt in that way, it can never be repaid. Only by continuing to expand the economy to allow more loans can the principle and interest on existing loans continue to be paid. With the recent financial collapse due to uncontrolled speculative manipulation of mortgage lending, the system was exposed for the Ponzi scheme that it is.
Is There a Way Out?
The Banksters are just too powerful to stop directly. The financial elite virtually runs the federal government. But, as they said in the 1960s, “What if they gave a war and nobody came?” Several lines of action are possible. The Bank of North Dakota — the only public bank in the nation — is a model of what states might accomplish. But municipal and county owned banks can also be formed. Local movements for local public banking are developing. Meanwhile, take your money out of those Big Banks and put it into your local credit union. Divestiture worked to stop apartheid in South Africa. It is starting to work to turn around the carbon economy. It can be a big part of the great transformation of banking from a private extractive industry to a set of public institutions serving the public interest.