You can't regulate pirates

I don't think anyone here would disagree. This pretty much tells us where we are. And it's so easy for politicians to use wedge/hotbutton issues to divide us and divert our collective attention. Where do we go from here?

Poet

Fits and spurts and fits and spurts and dying gasps and fits and spurts as we move towards Waltons.

I think we'll end up with our very own Sulla with proscriptions and then a strong Imperator before it really all falls apart and opens the door for ?Mandarin? to become our Mad Max language in about 60-80 years.

Reminds me of my favorite passage from Frédéric Bastiat's "The Law" (1848)

Property and Plunder

Man can live and satisfy his wants only by ceaseless labor; by the ceaseless application of his faculties to natural resources. This process is the origin of property.

But it is also true that a man may live and satisfy his wants by seizing and consuming the products of the labor of others. This process is the origin of plunder.

Now since man is naturally inclined to avoid pain — and since labor is pain in itself — it follows that men will resort to plunder whenever plunder is easier than work. History shows this quite clearly. And under these conditions, neither religion nor morality can stop it.

When, then, does plunder stop? It stops when it becomes more painful and more dangerous than labor.

It is evident, then, that the proper purpose of law is to use the power of its collective force to stop this fatal tendency to plunder instead of to work. All the measures of the law should protect property and punish plunder.

But, generally, the law is made by one man or one class of men. And since law cannot operate without the sanction and support of a dominating force, this force must be entrusted to those who make the laws.

This fact, combined with the fatal tendency that exists in the heart of man to satisfy his wants with the least possible effort, explains the almost universal perversion of the law. Thus it is easy to understand how law, instead of checking injustice, becomes the invincible weapon of injustice. It is easy to understand why the law is used by the legislator to destroy in varying degrees among the rest of the people, their personal independence by slavery, their liberty by oppression, and their property by plunder. This is done for the benefit of the person who makes the law, and in proportion to the power that he holds.

land2341 wrote:

That is why I suspect, that barring outside intervention the US will slide into genteel decline with an ever worsening standard of living and declining rights but few will notice until it is all gone and our grand children wonder what the hey we were thinking. 

+1

Travlin, et al,

First off, I do not feel "baited" in any way - it is welcome and refreshing to be engaged in a friendly discussion on such an important issue.  Unlike the other 2Es, our monetary system is man made and can be changed by man.

Travlin wrote:

My concern is this – “Under the current system when the government spends more than its income it officially acknowledges a debt that supposedly should be repaid, and incurs the penalty of interest payments. … If the government printed the money directly we would indeed avoid interest and the obligation to repay the debt, so there would be no brake at all on  government spending.”

I don't think that interest obligations or debt have curtailed government over-spending.  The tacit agreement between our country and the banking monopoly has been that the principal on the national debt never needs repaid.  As a result, the national debt is growing exponentially.

I contend that under our current system, government MUST run deficits.  As I mentioned before, all money is temporary...it is created by debt and destroyed upon principal debt repayment.  If the private sector is not borrowing enough to at least offset the amount of money being destroyed; then the government must act as the borrower of last resort to keep the money supply from diminishing.

We find ourselves at a point where the private sector cannot borrow enough as there aren't enough willing and worthy borrowers.  Government deficits have become a necessity as can be observed by the fact that our money supply is the national debt (both just over $13 trillion).

I think a "brake" on government "over spending" can only be achieved if a system is implemented that no longer makes the government the borrower of last resort.  The U.S. Treasury should create all new money but I don't think they should be the distributors of that money.  Private and state chartered banks should fulfill that role.  I would prohibit the federal government from running a deficit, it would be bound by the revenues it receives.

If an emergency arises, and a deficit is required, congress should be compelled to levy taxes to pay for the deficit.  Currently, there is no cost accountability or restraint as we simply push our deficits to future generations.

Travlin wrote:

As I understand it, the Constitution specifically limited the federal government to issuing coins of precious metal...

I think the constitution falls short of clearly articulating monetary principles.  But we have what we have, so I'll try to respond to your concern. 

Section 8, Powers of Congress, "To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures...To borrow money on the credit of the United States."  One thing that seems clear to me is that only congress may create money, not private banks.

Congress has the power to mint coins which is different than "issuing paper money, checkbook money, accounting-entry money, or electronic money – the forms of money used most often today."  And, congress alone has the power to borrow against the credit of the U.S. - this may be done by printing bonds or paper money, both are forms of credit.

It does not say that coins must be made of precious metals.  We assume that because of different clause, Article I, Section 10, Clause 1, States Rights, No State shall...coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debt."  Clearly, states  are required to pay all debts with gold and silver...but I don't think it has ever happened. 

An argument can be made that the state provision implies that congress must make all coins from silver and gold but it doesn't say that.  And, we know that the U.S. has minted coins made of nickel, copper and zinc.  

Regardless, coins are different than credit forms of money; most notably paper and checkbook money.

Travlin wrote:

...because many of the founding fathers witnessed or had disastrous experiences with government issued paper money, particularly the Continental dollars used to finance the revolution.

Yes, there were problems with Continental dollars.  The Continentals were PM backed, they were to be redeemed in gold and silver.  The problem was that the U.S. didn't have any gold or silver in which to redeem the money.  Had they been "credit dollars" (incorrectly called fiat) it would not have been a problem.  Well, it may have been a problem as the Brits counterfeited large volumes of money in successfully diluting the money.  So, I guess I should say it wouldn't have been as big a problem.

I should note that Colonial scrip is different than the "Continental dollars" (called continentals) that were quickly printed to back the war effort.  Colonial scrip was hugely successful, especially in Pennsylvania and Massachusetts.

Whoever controls the volume of money in any country is absolute master of all industry and commerce.  - James A. Garfield

Larry

I can't spell my way out of a wet paper bag.  Here is one trick you can use on CM.com.  Before sending hit the "Disable rich-text" button.  It is not very readable but for some reason, when looking at your post in raw format, it will do a spell check for you.

Secondary topic -- Regarding history, the constitution, and money powers

Travlin wrote:

In general, the Constitution defined the powers of the federal government, set a few specific limits on the states, and said all other powers were reserved to the states or the people. I don’t see that a private bank is prohibited from creating money through the fractional reserve system by the constitution.

Section 8, Powers of Congress, "...To borrow money on the credit of the United States."

This power is uniquely relegated to congress and I suggest that we are violating this provision by allowing banks to use the credit of the United States in creating money.  Ultimately, all privately created Federal Reserve Notes are backed by the people and property of the United States.  Our credit is being used by private member banks of the federal reserve system. 

If banks simply recycled the money they lend, then they would not be using our national credit.  For example, a bank could pay depositors for the use of their money in re-lending it to others as is traditionally done with savings and loans (thrifts) and credit unions.  Or a bank could lend their own money.

Congress draws from our credit when they print bonds.  If these bonds were used to buy something tangible, like natural resources from another country or entity, then it would be logical as we are receiving something of equal value in return.  But it makes no sense to issue bonds to borrow our own money from private banks.  Instead of printing bonds, we should be printing dollars.

Congressman Wright Patman, a champion monetary reformer, explains:

“When our Federal Government, that has the exclusive power to create money, creates that money and then goes into the open market and borrows it and pays interest for the use of its own money, it occurs to me that that is going too far. I have never yet had anyone who could, through the use of logic and reason, justify the Federal Government borrowing the use of its own money… I am saying to you in all sincerity, and with all the earnestness that I possess, it is absolutely wrong for the Government to issue interest-bearing obligations. It is not only wrong: it is extravagant. It is not only extravagant, it is wasteful. It is absolutely unnecessary.

Now, I believe the system should be changed. The Constitution of the United States does not give the banks the power to create money. The Constitution says that Congress shall have the power to create money, but now, under our system, we will sell bonds to commercial banks and obtain credit from those banks.

I believe the time will come when people will demand that this be changed. I believe the time will come in this country when they will actually blame you and me and everyone else connected with this Congress for sitting idly by and permitting such an idiotic system to continue. I make that statement after years of study.”

Travlin wrote:

I stand by my statement that this was, “… because many of the founding fathers witnessed or had disastrous experiences with government issued paper money …”. I concede the part about the Continental dollars. This statement is based, among other sources, on the book The Creature From Jekyll Island, by Edward Griffin, which was seminal to Chris’s awakening.

Byron Dale, Modern Money Secrets, puts a needed perspective on our nations first attempt at issuing money.  

"The Continental Congress did not have any authority to tax (only states held the power to tax).  On May 11, 1775, John Hancock of Massachusetts placed before congress a plan to raise funds for the colonies' fight for independence.  The plan revolved around the idea of printing and issuing continental currency promising to pay Spanish Milled Silver dollars.

Why would honest men issue the paper promise to pay gold and silver if they had the gold and silver?  [If they had the coins, wouldn't they have used them instead?]  The Continental Congress did not have the Spanish Milled dollars or the gold or silver bullion to give to the holder."

This has been a problem that has plagued redeemable paper currency since our beginning - there has never been enough gold and silver available to back up our currency.  The fraudulent system works until people become suspicious and begin attempting to redeem the currency.  We saw this in the 1930's when the gold standard was dropped by the United States and most of the world.  Unfortunately, paper money was associated by some to fraud but they are two separate issues.  

Perhaps the bigger problem with the continentals was British counterfeiting.  In the 1770's, paper money was easy to duplicate.  The value of the money could be easily diluted and the British used this tactic, economic warfare, against the colonies.  According to Ellen Brown "Thomas Jefferson estimated that counterfeiting added $200 to the money supply, effectively doubling it: and later historians thought this figure was quite low."

Continental paper money was condemned by many not because of it's potential, but rather, it had been fraudulently backed and ripe for counterfeiting.

Benjamin Franklin claims that he offered a superior plan but congress did not accept it.  Instead of backing the money with precious metals that the government didn't have, he suggested that land was a much better means to back a currency.

One critical point missed by Griffin is that the colonies fought the Revolutionary War primarily over the right to issue and control their own money.  For more info, see my post "Hidden History: According to Benjamin Franklin, the real reason for the Revolutionary War has been hid from you."

Travlin wrote:

This statement is based, among other sources, on the book The Creature From Jekyll Island, by Edward Griffin, which was seminal to Chris’s awakening.

Many wake up to our predatory, privately owned, banking monopoly called the Federal Reserve, through Griffin's "The Creature From Jekyll Island" but I would suggest that the seminal work was done by Eustace Mullins much earlier.  Yamaguchy (unfortunately his "historical resource" website is gone) explained "Mr. Mullins was about the only conspiracy writer/bookseller who set foot and spent time in the library. All those booksellers of the past 50 years who blab about Jekyll Island and the Federal Reserve are living and making money off Eustace Mullins' work.  Not one of the 20th century conspiracy booksellers knows anything about the Greenback Party, its two election campaigns, Peter Cooper, Weaver, Berkey, Emery, Donnelly, the “Anti-Monopolist” and the 20 year war with the money power after 1865. And they know even less about what went on in the Congress in the 1830s."

He makes his point harshly but I agree, Mullins was a diligent researcher and his work was largely plagiarized by others without recognition.  His books "Secrets of the Federal Reserve" and "A Study of the Federal Reserve" are still the best books on the history of the Federal Reserve.

Travlin wrote:

Here is a question for you. Many of them also hated banks. Yet they still allowed them to function and did not give the federal government a clear power to create money. Why do you think this happened?

The private banking powers of England began attacking the United States even before the Revolutionary War was decided.  They have used every form of treachery imaginable, from bribes to wars in their quest to control governments.  The bigger goal is to eliminate nation states and bring on a new world government run by them.  Is this a conspiracy theory?  No, it's a conspiracy fact as the evidence is overwhelming...but that's another story.

Thanks for the great discussion...I'll try to respond to your Primary topic – Regarding your proposal for the federal government to issue money post shortly.

Larry

Travlin wrote in response:
This is from your post 7. Can you document this statement?  It sounds accurate to me, and I would like to use it myself if I could back it up.

I based this estimate on a total U.S. debt and unfunded liabilities of around $100 trillion which I thought was a little low but the math was easy.  Recently, Bloomberg ran an article "U.S. Is Bankrupt and We Don't Even Know It" by Laurence Kotlikoff: 

Based on the CBO’s data, I calculate a fiscal gap of $202 trillion, which is more than 15 times the official debt. This gargantuan discrepancy between our “official” debt and our actual net indebtedness isn’t surprising. It reflects what economists call the labeling problem. Congress has been very careful over the years to label most of its liabilities “unofficial” to keep them off the books and far in the future.

If $202 trillion is accurate, then each new born American would be on the hook for $673,333 dollars (202 Trillion / 300 million Americans).  Over double my estimate.

I had a few questions for you...

1)  Would it be safe to say that you fear that if government exercised it's power in directly issuing money, they would over-spend?  The alternative is to provide a "brake" in spending by making the government borrow to cover deficits which is what we have been doing for the past 100 years.  Given the amount of debt and liabilities, do you think the current system has restrained government spending - if so, by how much?

2)  The federal government may use our credit in issuing bonds or dollars.  Both are equally backed by the people and property of the United States.  Why on earth would we borrow our own money by issuing bonds?  The national debt is optional.  Most of our income tax is needed to pay unnecessary debt, how can you justify this?

3)  The banks are using the credit of the United States to back the money they create for virtually free (along with a borrower's IOU and collateral).  Why don't they pay us a usage fee if they are using our credit?

4)  I think you would agree that the United States is insolvent and close to bankruptcy.  If you were in charge, would you allow the U.S. to go bankrupt under this system, or would you directly issue the money, debt free, to start digging us out of this hole?

On a different note, you mentioned you've had a keen interest in history for several decades.  Me too, I was a civil war buff for many years.  Do you have any periods of history that you enjoy the most?

Larry