UNISONActive is an unofficial blog produced by UNISON activists for UNISON activists. Bringing news, briefings and events from a progressive left perspective.

Friday, 29 July 2011

US Debt Crisis & Return of the Greenback

Americans no longer have a government “of the people, by the people, for the people.” They have a government run by and for corporations and the banks who have monopolized the business of issuing the national money supply, a function the Constitution delegated solely to Congress.

What hides behind the banner of “free enterprise” today is a system in which giant corporate monopolies have used their affiliated banking trusts to generate unlimited funds to buy up competitors, the media, and the government itself, forcing truly independent enterprise out.

Giant banks are allowed to create money out of nothing, lend it at interest, foreclose on the collateral, and determine who gets credit and who doesn’t. They can advance massive loans to their affiliated corporations and hedge funds, which use the money to raid competitors and manipulate markets. If some players have the power to create money and others don’t, the playing field is not “level” but allows some favoured players to dominate and coerce others.

These giant cartels can be brought to heel only by cutting off their source of power – the power to create money — and returning it to its rightful sovereign owners, the people themselves.

Two independent monetary systems have competed for dominance in the United States ever since they were a collection of colonies. In provincial America, paper money was issued by local governments.

In England at the same time, paper banknotes were issued and lent privately by banks, headed by the Bank of England, the first private central bank.

The major flaw in the private banking system was that the banks created the principal but not the interest necessary to pay back their loans, so more money was always owed back than was put into the money supply, requiring more loans to be taken out to cover the interest, spiralling the people into debt.

The most effective and efficient of the American colonial systems was in Pennsylvania, where a publicly-owned bank issued paper money and lent it to farmers. The money returned to the government with interest, preventing inflation; and to keep enough money in the system to prevent the debt spiral of the private banking system, the government issued and spent a sum of money on public works as well.

The Pennsylvania system worked so well that it completely funded the provincial government without taxes or inflation. Benjamin Franklin and others maintained that the chief reason for the American Revolution was that Parliament forbade the colonies from issuing their own money. Paper money issued by the Revolutionary government got the colonists through the war, but the British heavily counterfeited the Continental currency as a deliberate war tactic, and by the end of the war it had been inflated so much that it was nearly worthless.

Fear of inflation led the Continental Congress to completely omit paper money from the Constitution, which does not say who can issue it or under what circumstances. The private banks filled the breach, and by 1913 the U.S. had the same private central banking system that England had.

It is time for Americans to refind their revolutionary past and reestablished the system for which their forbear’s fought and died: real, debt-free, publicly-issued U.S. money. http://webofdebt.wordpress.com/monetary-proposal/

A state-owned central bank funded public projects that put people back to work, at a time when most of the rest of the world is struggling with a depression brought on by a global shortage of bank-created money. Today we are all facing the same sort of bank-created credit crisis, and it could be resolved in the same way.

President Obama takes much from Abraham Lincoln, as the US government runs out of money, he should enact these wise words...."The government should create, issue and circulate all the currency and credits needed to satisfy the spending power of the government and the buying power of consumers. By adoption of these principles, the taxpayers will be saved immense sums of interest. Money will cease to be master and become the servant of humanity." Abraham Lincoln, US President 1861-5.

This is what Lincoln did during the Civil War. Faced with the bankers demanding massive interest for money to pay for the republic's war effort he decided to print his own and so came to be the Greenback dollar (so called because at the time the dollar was blue): http://en.wikipedia.org/wiki/United_States_Note