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A Master-Slave Society
Democrats in Denver Should Skip One of Their Parties and Read
the American Monetary Act
By Richard C. Cook
28/08/08 "ICH"
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How are things going at the Democratic Party National Convention
in Denver this week?
Are they talking about the fact that the Western world is run by
an international financial elite headquartered in London, the
financial capitals of mainland Europe (such as Frankfurt,
Hamburg, Amsterdam, Paris, and Milan), and, of course, New York
City?
Are they mentioning at their cocktail parties that the financial
elite exert control over the world’s population through the
cartels that make up the world’s producing economies and through
the civilian and military bureaucracies who work for the
governments that kow-tow to them?
Of course they know that the most important cartels are those
which control energy resources. And that of these, the commodity
of central importance is oil. But is any of this helping them
draw conclusions regarding the doubling of oil prices during the
last year or about the largest oil company profits in history?
Also, they should be drawing the right conclusions from the fact
that every private and pubic enterprise operates on the basis of
a money economy, though it would be more accurate to call it a
credit economy. This means that whoever controls the issuance of
money and credit controls the world. And the world’s monetary
systems function on the basis of money and credit being
introduced into circulation through loans from the banking
system, loans for which interest is charged. So what should that
tell them?
In fact, they should be pointing out to each other and their TV
viewers that the charging of interest for the use of money is a
chain around the neck of everyone on earth. Further, that these
cumulative interest charges are built into the price of every
product that is manufactured or consumed. And that growth of
debt means price increases too.
They should be honest in making it clear that the world is a
master-slave society, that the slaves are those who borrow and
pay interest, that the masters are those who collect the
interest, and that this unjust system has existed in one form or
another for thousands of years.
The candidates and delegates are talking about the aspirations
of the American people and how everyone should have an
opportunity to achieve their dreams. But if the United States
were a free nation, they would also be talking about a financial
system that destroys people’s dreams.
Unfortunately, the highest rung the candidates and delegates
have been able to reach on the ladder of modern-day slavery is
the need for more jobs—but they fail to note that jobs are not
only the means by which people live, but also the instruments
for them to pay the heavy burden of interest the masters of
finance require.
What they won’t say is that the world economy is based on usury,
something religions used to consider a crime (and which Islam
still does). Usury is the charging of interest for the use of
money. As the religions backed off from their prohibitions of
interest, usury became just excess interest. But that’s not what
the word really means.
So what have over two centuries of usury done to the United
States?
The best answer ever given to that question was contained in a
paper entitled “Revisiting U.S. Public and Private Debt”
published in January 2005 by Dr. Bob Blain, Emeritus Professor
of Sociology at Southern Illinois University. The paper updated
an earlier study by Dr. Blain published for the United Nations
Educational, Scientific, and Cultural Organization (UNESCO) in
the International Social Science Journal, November, 1987, Paris,
pages 577-591.
In his paper, Dr. Blain examined the growth of total public and
private debt in the U.S. Total debt includes “the debts of
governments (federal, state, and local), corporations, farmers,
home mortgages, and consumer, commercial, and financial debts.”
In his analysis, Dr. Blain began with data from the Bureau of
Economic Analyses of the United States Department of Commerce
which covered the years 1916-1976. After that year the Bureau
stopped publishing the data.
The figures showed that from 1916-1976, total U.S. debt grew
from $82 billion to $3,800 billion ($3.8 trillion). But most of
that growth was during the last 21 years, from 1955-1976, when
it began to grow exponentially. Dr. Blain wrote, “The
consistency of the pattern suggests that some imperative is at
work, something that requires debt to increase.”
Dr. Blain found the answer by researching American history. He
wrote: “Then I read G.R. Taylor’s 1950 book, Hamilton and the
National Debt, which described the debate over Alexander
Hamilton’s plan to fund the new economy with borrowed money.” He
continued:
“The most revealing account was a speech by the first
congressman from Georgia, James Jackson, on February 9, 1790, in
which he predicted that adoption of Hamilton’s funding plan
would lead to the explosive growth of debt. Jackson said,
‘Though our present debt be but a few millions, in the course of
a single century it may be multiplied to an extent we dare not
think of.’” (Annals of Congress, Vol. I, February 1790, pp.
1141-2)
From the very beginning, the U.S. had a monetary system based on
borrowing and debt. First came the thousands of state chartered
banks that began operating late in the Revolutionary War period
and continued in one form or another until today. Then there
were the two early central banks: the First Bank of the United
States (1791-1811) and the Second Bank of the United States
(1816-1836). Today’s national banking system began during the
Civil War with the National Banking Acts of 1863-64. Then there
is the system we are living under today, the Federal Reserve,
chartered by Congress in 1913. Even during the times when the
government has sold its debt directly to the public, as with war
bonds, savings bonds, and Treasury notes and bills, that too has
been money borrowed at interest.
Although there have been times in history when money entered
into circulation other than through debt, such as with coinage
and the Civil War greenbacks, those were exceptions and today
are of little importance.
Dr. Blain estimated that from the time Alexander Hamilton placed
the U.S. under a debt-based monetary system until today, the
debt has compounded at 5.8 percent annually. The big problem
with this system, he said, was “that no money was created to pay
interest.” He continued:
“Loans created only the principal. Interest had to be paid out
of principal. So payment of interest reduced the money supply
and slowed economic activity. Recovery could come only when new
loans were taken out at least equal to interest paid.”
Dr. Blain concluded, “As long as the money supply of a nation is
created as debt costing interest, debt must grow by compound
interest.” From a longer-range view, it’s a system that is
constantly collapsing and that must constantly be bailed out.
Dr. Blain next sought to update his figures past the 1976 data
from the Bureau of Economic Analyses. Turning to the Federal
Reserve’s series on “Total Credit Market Debt Outstanding,” he
found remarkably similar indicators.
He found that adding data from the Federal Reserve from 1945 to
2003 showed the “debt explosion” continuing. In 1945 total debt
was $463.4 billion. In 2003 it was $44,967.7 billion ($45.0
trillion). When he projected the debt level for 2010, he arrived
at a figure of $74.9 trillion. By this time the debt curve was
climbing so steeply there would be almost a doubling of the
amount of total debt in only nine years.
It might be argued that these figures do not take into account
inflation. This is because lending at interest is the cause of
inflation. The dollars still have to be repaid with interest.
The problem occurs when economic growth, measured by GDP, does
not keep up.
Looking at the growth of GDP from 1945 to 2003, the increase was
from $223.1 billion to $10,987.9 billion, a factor of 49. But
the debt ($463.4 billion vs. $44,967.7 billion) grew by a factor
of 97, almost twice the rate of GDP growth. Thus the total debt
burden on the economy has doubled from a ratio of 2:1 to more
than 4:1 (though it was much less than that during the early
days of the nation).
But with continued compound growth of debt and a slow- or
no-growth state of the economy as we head into a recession, we
are starting to see what Dr. Blain called an “acceleration to
meltdown.” He wrote:
“We are buying more and more in the same amount of time. Witness
the efforts of people to get rid of their excess through yard
sales, storage units, and big trash pickup days, and the massive
size of what are euphemistically called landfills. While two
billion people in the world lack basics such as clean water,
food, and shelter, Americans throw away their microwave ovens,
televisions, computers, refrigerators, furniture, and cars.
Meanwhile, acceleration is applauded as increasing productivity.
It’s like arguing that cancer is good because it grows.”
These are the things the Democrats in Denver should be talking
about, instead of going to so many parties. They should be
making note that the U.S., to quote economists close to the
Federal Reserve, is “functionally bankrupt.”
In fact, the debt this nation owes to the banks, to foreign
creditors, and to each other can never be paid off. Further, one
big reason for all of our fruitless military endeavors overseas
may simply be to escape unpleasant economic realities at home.
But this is pointless. Nothing creates more debt than war, as
the bankers have always known.
The only solution is to adopt a monetary system that is not
based on debt. Dr. Blain makes a couple of specific
recommendations: 1) “Stop using percentage rates to calculate
charges for the use of money”; and 2) “Congress must supply the
economy with a money base that is debt-free and interest-free.”
The second point is a call for a new monetary system, not one
based solely on lending by the banks or on government borrowing.
One organization that has developed a blueprint for such a
system is the American Monetary Institute (AMI), headquartered
in Chicago. The director of the AMI is Stephen Zarlenga, author
of a massive, groundbreaking work: The Lost Science of Money
(AMI, 2002). Zarlenga’s assistant is Jamie Walton, a monetary
reformer from New Zealand.
AMI will be holding its fourth annual conference in Chicago on
September 25-28. Expected as keynote speaker is Congressman
Dennis Kucinich, whose wife Elizabeth once worked as an intern
at AMI. Dr. Bob Blain will be a featured speaker.
On the AMI website at www.monetary.org is a remarkable document,
the American Monetary Act. The product of several years of work
by Zarlenga and his network, which now includes a number of
local chapters around the country, the American Monetary Act
would replace today’s debt-based monetary system with one where
the government spends or loans money directly into circulation.
Under the Act, the Federal Reserve would be retained as a
national financial clearinghouse but would no longer be a bank
of issue. The system would be overseen by a Monetary Control
Board within the U.S. Treasury Department. The Act also includes
a provision for a citizens’ dividend, similar in some respects
to the Alaska Permanent Fund, which would inject desperately
needed purchasing power into the economy without additional
government debt or taxation.
Also promoting a citizens’ dividend, by the way, is Stephen
Shafarman in his important new book, Peaceful, Positive
Revolution. (Tendril Press, 2008)
It’s the American Monetary Act the candidates and delegates in
Denver should skip one of their parties to read, because it’s
the only way any of their hopes for America can ever be
realized. Says AMI’s Jamie Walton:
“This is a crucial time. Things are happening. We have got some
key media people talking and writing about our kind of reforms.
The inertia is starting to yield. Things are starting to roll.
The worsening conditions in 2009 will give us a
once-in-a-lifetime chance to be heard above the propaganda.”
Copyright 2008 by Richard C. Cook
Richard C. Cook is a former U.S. federal government analyst,
whose career included service with the U.S. Civil Service
Commission, the Food and Drug Administration, the Carter White
House, NASA, and the U.S. Treasury Department. He is a
contributor to the American Monetary Act. His articles on
economics, politics, and space policy have appeared in numerous
websites and print magazines. His book on monetary reform,
entitled We Hold These Truths: The Hope of Monetary Reform, will
soon be published by Tendril Press. He is the author of
Challenger Revealed: An Insider’s Account of How the Reagan
Administration Caused the Greatest Tragedy of the Space Age,
called by one reviewer, “the most important spaceflight book of
the last twenty years.” His website is www.richardccook.com.
Comments or requests to be added to his mailing list may be sent
to
WhiteLightPress@gmail.com
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