Money and what we can do for the USA
Truths about Money
Debt (loans) is the only way we currently get new money into circulation2. Money is not scarce! It takes a simple push of a computer keyboard to create3. The cost of this creation is ZERO ($o) except for excess inflation. There is a small cost for distribution
There is no such thing as the “National Debt”. A debt is something that has to be paid back. The U.S. has not paid its national debt off since 1835. The debt should be labeled as the: National Monetization account or the National Monetization debt account. This type of debt is not the same as you and I owing money! The only way the debt is really retired is by the Federal
Reserve Bank of New York creating new money and buying Treasuries. People think that it is still an obligation of the U.S. government, but it is too large to be paid back by increasing taxes and cutting expenses. The Treasuries are also automatically rolled over to new treasuries on maturity. The National Debt is not going to be paid back by taxes!
Over half of the debt is sitting as reserves and investments in commercial and central banks, the Social Security trust fund, insurance companies, and sovereign and pension funds. Also, money is over concentrated in the 1%. This over concentration is one reason for the current low inflationsovereign and pension funds. Also, money is over concentrated in the 1%. This over concentration is one reason for the current low inflation5.
The current Great Recession was 100% caused by the private money system, not thetax and spend fiscal systeml6. There is no historical evidence of excess inflation caused by direct government currency issue occurring in the U.S. (18th & 19th century.) Remember, the global excess or hyperinflationary incidences in the last 100 yearshave occurred with the current debt money system in place, including asset bubbles. According to research by Rogoff and Reinhart in their book:
This Time Is Different, the inflationary rate was higher in the 20th century than the 19th century7. There is no such thing as a “business cycle for an entire economy”. It is a monetary cycle8. The economy cannot grow enough to pay off the enormous compounding debt. No increase in taxes or decrease in spending can pay off this enormous amount of compounding. The global private and public debt is three times larger than the entire world economy.
Taxes do not compete with the private sector because the government spends it right back into the economy. What competes with the private sector is the sucking sound that is made when the excessive compounding interest charge of money creation moves out of private sector (Main Street) into the financial banking sector Chapter 9
REASONS FOR REFORM THE GOVERNMENT
The following reasons, not in order of importance, will hopefully convince you that we need evolutionary monetary reform by eliminating private debt creation of money, with a substantial increase in the number of distribution systems. This is, by far, the major economic issue that needs to be resolved in order to create a 21st Century Win-Win Economy:
1. Diversification dilutes the power that any one system brings to monetary creation. It eliminates the benefits of monetary creation only going to a few private citizens and one sector of the economy. Why should only one financial industry system of commercial banking have the monopolistic power of money creation and infusion when there is an unlimited demand? Wouldn’t you like to have your own printing press in your basement?
In reality, the current system of higher interest rates to control the money supply punishes the weakest, smallest players first and most severely, while the largest and more powerful enterprises are able to withstand the increased cost. The major reasons for business failures are: too much competition, mismanagement, and a lack of capital. The latter being the most commoncompetition, mismanagement, and a lack of capital. The latter being the most common3. Controlling the monetary supply based on interest punishes the entire economy. It should be controlled by volume, geography and industry, guided by inflationary statistics.
These decisions can now be made easier with our current computer power4. Diversification reduces banking favoritism, nepotism, bribes, political cronyism, shoddymanagement, criminal activity, and increases transparency.The boom/bust scenario we see in various assets, industries, and regions will be greatly reduced by not over lending in successful industries, companies, and individuals. It makes managing risks less difficult.
The current dilemma of regulation is that it is difficult to deal with borrowers when life is good. Who tells the banks not to lend to real estate when real estate is the hottest part of the economy and running up great profits? Or shipping? Or oil and gas? Or high tech? Having other systems with different objectives will more effectively control over lending, thereby reducing boom/bust scenarios within an industry or an entire economyand gas?
Or high tech? Having other systems with different objectives will more effectively control over lending, thereby reducing boom/bust scenarios within an industry or an entire economyDiversification gives more capitalistic opportunities to others, creating more owners and increasing competition, while at the same time reducing human hardship and inequality. This means growth! Offsetting one of the other major flaws of capitalism that is, “not enough competition”Section III.
The current system of bank creation of new money goes 70%+ to real estate mortgages both residential and nonresidential7. Diversification expands investment of new money, based on the ability to succeed and not solely on the ability to repay. It is also based on the quality of your talent and the need for your enterprise, rather than focusing only on the quantity of your collateral8. Diversification reduces the effects of any over lending during economic expansion. This means that the new distribution systems can divert new money from industries that do not need it, to those who do.
This allows for more lending and investing on the monetary expansion/inflation side of the equation rather than implementing a contraction. The end result is a lesser chance of recession/depression Excessive wide range defaults and bankruptcies (domestic or foreign) will not hurt the entire monetary system as much, because the monetary system is spread among many distribution systems with lesser amounts of money in each rather than a single banking system. Therefore, the monetary system will have less stress due to economic volatility. In fact, bankruptcies, defaults, and writedowns are the only ways money remains in the economy permanently, because when a bank loan is repaid, it reduces the money in circulation 10.
Diversity and transparency help control the amounts of new money issued for aggregate consumer demand (credit card, auto loans and mortgages) versus loans to businesses increasing the supply of goods and services. Having more control of the quality and quantity of new money being issued results in less chance of an over expansive money supply that creates an asset or consumer bubble economy.
Diversity can provide more capital to areas with high need, such as low-tech industries, environmental businesses, and lower income areas. Diversification provides more funds for investment Monetary policy is an art not a science! Monetary policy requires judgment at every stage of the process, from the initial formulation to the final implementation. Judgment is susceptible to human error.
If there is an error in the one major system, like the 2008 mortgage crash, it can lead to tragic consequences. With more diversified delivery systems, there is less of a chance any single judgment error will cause a substantial financial collapse