RB: Having a publicly owned central bank is not about capitalism (which turns into fascism; i.e., corporate control over the state) or socialism, it is about sovereignty. That is what Article I, Section 8 of the U.S. Constitution is about–a list of sovereign powers invested in Congress. Essentially, the Federal Reserve Act is unconstitutional. Many different economic and political systems have had public central banks. Examples are cited throughout Ellen’s work, and I provide a short diverse list in my latest book.
It’s clear reading Franklin and Jefferson and Lincoln (as well as Aristotle) that they were all aware that this is about sovereignty (there was not any real concept of socialism at that time), and its clear that the Anglo-Euro-American banking cartel understood that if the US were allowed to have a public central bank, their game would be over. I have lots of quotes supporting this in my book.
When a publicly controlled monetary system, managed in the public interest, replaces a privately controlled monetary system, managed for the profit of a few, the entire value system of such a society can undergo a very rapid evolution. An example would be the Bank of North Dakota, which is used as a mini-Fed in that state, although it cannot de facto create base money (permanent additions to the money supply), as a central bank would. But because the BND steps in during crises–such as floods, fires, drought, blight, etc.–the social fabric of the state, and the ownership of farms and businesses is much different than elsewhere. If such a bank existed at the federal level, the changes would be even more remarkable, as I discuss in my book.
So, while I appreciate all the links that you posted, they are conceived and written within the context of a privately controlled monetary system. And like you wrote in your previous email, they see capitalism as the only viable system. I would never characterize such a system as viable, based on its performance.
Bernanke’s term “helicopter money” carries the connotation as money is created ex nihilo and dropped from the sky, which is how the banking cartel views it, because they are not collecting their pound of flesh in the process. In a sovereign monetary system, the system is backed by the full faith and credit of the people, based on their labor, not on the illusory value of some commodity (precious metals or oil). Again, Franklin stresses this.
Additionally, in a sovereign system, the availability of machines, computers, robots, and artificial intelligence to eliminate menial and repetitive labor creates the opportunity to reduce the work week, provide “humanity credits” for essentials (defined by an economic bill of rights) and allow individuals the time to pursue their interests. In a privately controlled system, reducing the need for labor leads to the extermination of labor, as I explain in
my most recent article, which started this thread.
As noted earlier, this model is explained in Step 4 of
my book.
Me: You’re right Robert that it’s about sovereignty….as in “your sovereign grace”. However, how many sovereign authorities have become corrupted throughout history? Sovereignty is only one aspect of the natural philosophical concept of grace. The relevant monetary and economic aspect of grace that will insure that publicly administered banking will not be corrupted is grace as in gifting to both the individual AND commercial entities. That is why the new paradigm is Direct and Reciprocal Monetary Gifting
1) at the point of sale throughout the entirety of the economic and productive process and
2) at both its terminal ending point and the terminal expression point of any and all price inflation, i.e. final retail sale. And finally
3) in a graciously abundant enough way that “…they shall sit every man under his vine and under his fig tree; and none shall make them afraid: for the mouth of the LORD of hosts hath spoken it.” Micah 4:4
And that gracious abundance must also be sufficient to change the chronic problems of capitalism from inflation and monetary scarcity and also change it’s zeitgeist of the will to power, dominance and primarily profit to the will to freedom, cooperation and grace as in love in action…..which is grace’s most sussinct and yet encompassing definition.
GA: One problem is that while helicopter money is not inflationary, universal basic income repeats and could be inflationary. But you still work within the framework of the profit system, so I don’t see a problem with making the central bank a public bank.
We have, however, not used the private Fed to change the playing field. Since that is what we have, and it is pretty careful to control inflation, why can’t it be used to establish more equality? Even Friedman said it could be used that way.
I think public banks would serve best by warding off procyclical bank behavior which dries up credit in down times. That would be great!
Me: G,
As hyperinflation cannot occur without a compliant privately controlled central bank lending money to speculators to short the currency and retail sale is the point where the price of every item is terminally summed and production is transformed into consumption……how could a 50% discount/rebate policy there possibly be inflationary?
You can ignore me, but you can’t ignore temporal universe facts.
GA: We are far from hyperinflation. Deflation occurred in the Great Depression. My dad’s wages were cut but his bills were not. He had to park his car, in a small town, because he could not afford cash. Deflation is misery. The Fed liquidated in the Great Depression and liquidated some in the Great Recession. This deflationary action undercut sound and unsound loans. They should have provided a safety line to small business, as was done in the UK. But they didn’t.
Inflation can be a function of prosperity. Inflation is not always a function of higher costs.
Me: Of course we’re a long way from hyperinflation we are just now beginning to emerge from the slo-mo debt deflation that occurred in 2008. (actually despite this we’re potentially not that far from it because we still have a privately controlled banking and money system that could leverage up speculators to short the currency)And I’m not talking about the negative kind of deflation that must occur on a regular basis as a result of the current paradigm of Debt Only inevitably destabilizing the system. I’m talking about the planned policies at the very end of the entire legitimate economic/productive process at retail sale that would result in a 50% reduction in prices and that would consequently double everyone’s purchasing power. That of course would benefit both the individual and enterprise. That’s a true integration of the interests of opposite constituencies AKA a paradigm change.
G: You would have to have a jubilee to reduce prices by half. Wages would have to be reduced as well. But with derivatives, we cannot have a jubilee. The only non inflationary solution is one time helicopter money.
Me: If at the point of retail sale the retail merchant gave the customer a 50% discount on price and the FED or some other monetary authority mandated to do so rebated those discounts back to the merchant granting them….you’d have a 50% reduction in prices (retail sale is where production becomes consumption and so is the terminal end of the entire economic process) …and an immediate doubling of everyone’s potential purchasing power (in other words you could get $10 of goods or services for only $5. And so you’d have $5 more left over to further purchase any enterprise’s products or services so doubling the purchasing power available for their products. The enterprise still gets $10 via the rebate so they can be whole on their overhead payments and margins of profit. Pretty cool, no?
As for a debt jubilee it could still be done. Just demand that all derivatives contracts are unwound in an equitably costed way….or just declare them irrational and/or onerous and poof. If some private banks have to go poof in the process….so be it. The general populace should not have to pay for the greedy irrationality of the few.
GA: Your rebates would be a form of helicopter money but if done over time would violate the theory of money and cause inflation. As far as unwinding derivaties, that would never be permitted. Kyle Bass is right. The only solution is helicopter money.
Me: Sure we could unwind such de-stabilizing idiocies even if we didn’t have a national publicly administered banking system. If we did they’d just be cancelled. The government as sovereign money creator and destroyer does not have to make profit and no one and no enterprise is guaranteed profit. Risk, and all of that.
By tying a sufficient discount/rebate percentage monetary policy to retail sale you forever expose the quantity theory of money as being a mere and false orthodox concoction that has befuddled and stymied monetary theorists since its inception. The velocity of money’s circulation is also false and adds absolutely no purchasing power to the individual. Why? Because the classic illustration of it is false because it shows businesses spending money as if it were their individual income…..instead of what it actually is….business revenue…..that has all of the expenses including debt incurred by businesses deducted from its total.
GA: Steve, before interest on reserves, reserves being dead money, the velocity of money was an indicator. It still can be. Where do you get the idea that the quantity theory of money is nonsense? You should cite some sources.
Me: Yes, velocity is an indicator of more money being pumped into the economy, but again, it in and of itself doesn’t necessarily add a single additional dollar of purchasing power as its illustration falsely depicts.
As for the quantity theory of money is concerned it is actually a complete misnomer because the money itself is not the operant factor in inflation. The operant factor is the complete and utter freedom (read a chaotic and unbounded system) ….for businessmen to raise their prices in the hope of garnering more revenue/profit when additional money is pumped into the economy. The discount/rebate policies give the businessman a better and more ethical option because it painlessly and beneficially integrates price deflation into the system and as I have illustrated also doubles the potential purchasing power of consumers. I don’t have to quote a source because there isn’t one except myself who innovated and extended Social Credit policies so that they are elevated to the status of paradigm change instead of being merely a superior theory to the present neo-liberal macro-economics.
GA: Alrighty then. As I said, subsidizing business is fine if they pass it on. But there will be unintended consequences. Inflation can be based on expectations. But so can deflation. If you lower prices the populace may seek even lower prices.
Me: There may be things that will be needed to further protect such a system, not the least a national public banking system because history has proved private finance to be unethically problematic. As Aristotle said, “We learn by doing.”
I think the populace will be happy with finally being appropriately considered, and if businesses want to be competitive and can lower their prices even more and still be profitable….so be it.
Social Credit/Wisdomics/Gracenomics/ Gracientialism 