Monetary Reform - Five Point Plan to End our Financial Crisis and Restore Freedom and Prosperity

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DrKrbyLuv's picture
DrKrbyLuv
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Monetary Reform - Five Point Plan to End our Financial Crisis and Restore Freedom and Prosperity

Note: H/T to okubow for the clever P =/= P + I equation (P = Principal, I = Interest) - "The equation cannot be balanced unless 'I' is zero."

I am hoping that others may be interested in discussing monetary reform.  We may not be able to do much against peak oil but we have all the tools we need to mitigate peak debt.  I offer five points as a starting place, please feel free to add any ideas and objections - all are welcome.

Preliminary Basics:

  • The private Federal Reserve must be fired if we are to have any hope of monetary reform.  Our current system is a massive scam, a Ponzi scheme designed to transfer wealth from the middle class to the top 1%.  It steals from the real economy.
  • In my suggestions, I am operating from the perspective that money should be a medium for exchange.  If you think money should be a store of wealth, feel free to suggest the how and why.

The Five Point Plan:

  1. All new money created solely by the government - the banks must lose their monopoly to create our money.  The money could be created without any debt or interest to the government.  This would eliminate the national debt.
  2. Debt free money could be spent into circulation - a great example of this is the Minnesota Transportation Act.  We are very fortunate to have the architects and promoters of this bill visit this forum often (Byron Dale & Thomas Hedin).  Basically, the bill proposes that approved transportation projects be monetized by wealth (productivity) instead of debt.  State chartered banks would provide the money free from debt and they would be profitably compensated by transaction and service fees.

    The genius of this plan is that it helps mitigate the existing P =/= (P + I) imbalance while decentralizing Washington and Wall Streets control and usury.

  3. Interest free money could be loaned into circulation - targeted programs could be funded without any interest charges.  For example, we could reduce the energy used by building and homes by 50% and the emissions by 75% by upgrading building envelopes and mechanical systems.  For more details of the plan, check this link.

    The P =/= (P + I) equation is balanced since I = 0.

  4. Interest free and partially debt free money could be loaned into circulation - similar to bullet 3 above but with only half of the principal being repaid.  This would essentially be a co-op program between the government and the people.  I would use this money to implement a new national program to get off the electrical grid.

    Most of our electrical grid was never designed to handle the current loads.  Upgrading our grid will be an astronomical expense and it adds an unnecessary parasitic load; transmission and distribution losses account for 6-8% of the generated power.  Instead, we should remove as much load as possible from the grid and generate power on site through existing clean technologies.

    The P =/= (P + I) equation is balanced with money left to mitigate part of the existing imbalance.

  5. Private banks would borrow or receive all new money from the Treasury - banks, like other businesses would incur costs in creating their product.  This would create a revenue stream for the government that could eliminate all income and employment taxes.
    • Banks could borrow new money from the Treasury at a nominal rate (maybe 1%) and mark it up with a higher percentage.  This approach may be easier to implement since it is close to our current model but it would create an imbalance of the P =/= (P + I) equation.  The imbalance could be mitigated by bullets number 2 & 3.
    • Banks could receive new money from the Treasury with transaction fees applied instead of interest.  And, banks could also be compensated by transaction fees and services.  The P =/= (P + I) equation is balanced but this would be more difficult to implement as it requires more change culturally and mechanically.

In each of the above bullet items, all new money is endowed with value and backing in the form of collateral and productivity.  This is basically what happens now but the major difference is that instead of monetizing debt, we are monetizing wealth (the lone exception is bullet 5, first approach).  And, these solutions would eliminate any need for a national debt.

If we rely on private banks to issue and control our money, as we do now, we are giving up our sovereignty.  We are a client state to the private banking system and that must stop.

Larry

GregSchleich's picture
GregSchleich
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Re: Monetary Reform - Five Point Plan to End our Financial ...

Larry

I definitely think monetary reform is the key to any real solution to the myriad problems we face, but you appear to be a lot further along than I am in choosing a path. I'm sure part of the problem is that deeply ingrained concepts are not easily abandoned, but so far I just can't seem to find any solution I don't have serious issues with - although EVERYTHING is better than what we have now! It also may not help that I have no particular background in economics or finance. As this site goes I am definitely a generalist. 

Like a lot of people here, I came to the site with a libertarian, Austrian school perspective - although I have always had some doubts about the feasibility of returning to a gold, or gold/silver standard. I'm not prepared to rule anything out yet, but I do think the concerns raised by Bill Stills, Ellen Brown, and others about the dangers of manipulation and hoarding are valid. Certainly the protracted late 19th century depressions are concerning - although fractional reserve abuse surely played a large role too. But I would argue, the Austrian Schoolers in turn raise perhaps even more troubling concerns about the ideas you favor.

You've probably seen all of this, but here's G. Edward Griffin discussing Bill Still's "The Money Masters." http://www.freedomforceinternational.org/freedomcontent.cfm?fuseaction=meetstill&refpage=issues  And here's a scathing Amazon review of Ellen Brown's "Web of Debt," by a very well informed libertarian who then takes on all comers (very effectively) in a thread which now runs to 73 comments. http://www.amazon.com/review/RKKDO8FB8FKTV/ref=cm_cr_pr_viewpnt#RKKDO8FB8FKTV Things get sufficiently heated that the reviewer, who is at first deferential to a poster purporting to be Bill Still, begins referring to him as "Bill the shill!"

What concerns me the most is that while taking power away from the bankers is a good start, I cynically believe (as I imagine you do too) that our government  has long been fully captured by special interests. And so while the elimination of interest on money creation is a very important first step, leaving Timothy Geithner, or Chris Dodd and Barney Frank in charge of the money supply is not comforting to me in the least. I believe, not only do the bankers need to be disempowered - so does the government.  Otherwise  I have no doubt they will continue in their primary function of funding wars - military and nonmilitary - (Iraq and Afghanistan, War On Poverty, W.O. Drugs, W.O. Global Terror, W.O. Global Climate Change, etc.) and rewarding their corporate benefactors.

Unfortunately I have no solid answers, but I would much prefer a system outside of the control not only of the bankers, but of the government, as well. I'm not sure how the problem of necessary saving  would be overcome, but some of the demurrage based systems are beginning to seem interesting to me. The always thoughtful Paul Grignon ("Money As Debt") has some interesting ideas http://www.digitalcoin.info/ And I'm finding Silvio Gesell's Natural Money ideas to be intriguing http://www.naturalmoney.org/short.html, Bart Klein Ikik, and http://www.newcurrency.org/blog/the-book/, Jordan Bruce Macleod. I'm thinking seriously of buying Macleod's book.

Obviously the Wall Street/Washington cartel is not going to relinquish power willingly, so we are likely going to have to build something out of the ashes of a collapse, but it's good that you're doing what you're doing, because I don't think we can afford to just be cynical critics of the system. We need to have answers too.  

Greg

 

 

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Gungnir
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Re: Monetary Reform - Five Point Plan to End our Financial ...

Actually the underpinning of the plan (while it seems like a good plan) assumes that the Government have not been corrupted.

I'm not so optimistic. Which would mean for the plan to work effectively we'd need a reform of the Federal Government, do we believe that this is peacefully possible, I have my doubts, since DC is bankrolled one way or another by Wall St. and the Banksters. Not only that but here we are less than a year into a new presidency and 3 more years to go, do we think that El Presidente is just going to go "ok guys you got a point, I'll resign and you can reform the government", now sure we have a congressional election next year so we might be able to show discontent for the current regime, but would that force Obama to quit? Unlikely in his mind he'd have 3 years to turn around the public opinion. This also assumes that the average American recognizes that they've had their wallets raided by the Federal Government to pay debts of the major banks, provide debt relief, etc. etc. You've seen the YouTube video's and interviews, where people don't know where the presidency is getting the money, they're just pleased at the hand-out.

If that plan was presented to the current federal government, it would wind up being a financial reform to the same thing, on the surface it would seem different, but underneath it would be the same thing.

To be perfectly honest regardless of the financial situation I think it's long past due to reform the federal government and return to a constitutional republic.

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DrKrbyLuv
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Re: Monetary Reform - Five Point Plan to End our Financial ...

Hello Greg,

Thanks for your well stated comments and concerns...

Greg wrote:

I came to the site with a libertarian, Austrian school perspective - although I have always had some doubts about the feasibility of returning to a gold, or gold/silver standard.

I think you're right, there are a lot of libertarian, Austrian advocates here at CM.  I think that Austrian economics is a great obstacle in gaining any consensus or understanding in the needed monetary reform.  The "gold standard" sounds like a great concept but I don't think it is desirable or doable.  As you suggested, why should we limit the economy to the scarcity of gold?  But more importantly, it just won't work - we don't have near enough gold to back our national currency.

And even if we had enough gold to start the system, the exponential growth of debt would require a gold reserve that also grows exponentially. Eventually it would fail just as it did in 1933 and 1971, both times we defaulted (1933 domestically and 1971 internationally).  Sooner or later people figure out that there isn't enough gold.

For a more detailed opinion, please see my post Austrian & Keynesian Theories Vs. Mathematical Facts

The insurmountable problem is that the United States holds very little gold - most of the worlds gold is elsewhere. The US may have as much as 8,100 metric tonnes of gold. At $1,200/troy oz, that works out to be around $312 billion.

According to Shadow Government Statistics, our total money supply (M3) is almost $15 trillion.

How do you back up $15 trillion with $312 billion in gold?

To back up $15 trillion, we would need 12.5 billion ounces or 389,000 metric tonnes of gold (at $1,200 /ounce).  So we would need to increase our reserves from 8,100 to 389,000 metric tonnes.  That is by far more gold than has ever been mined from the earth.

Greg wrote:

You've probably seen all of this, but here's G. Edward Griffin discussing Bill Still's "The Money Masters"...Things get sufficiently heated that the reviewer, who is at first deferential to a poster purporting to be Bill Still, begins referring to him as "Bill the shill!"

I'd love to comment on this but I'm not comfortable doing so.  I provided some graphics for Bill Still's new film, the "Secret of Oz" and I like to think that I helped a little (very small) with suggestions and relevant historical quotations. 

Heck, that was another project, and I've explained my involvement, so I guess I can share my opinion as to why Still was attacked by the Austrian economists.  Still said in the Money Masters:  

Bill Still said:        (link to transcript)

"Be aware of calls to return to a gold standard. Why?  Simple, because never before has so much gold been so concentrated outside of American hands.

And never before has so much gold been in the hands of international governmental bodies such as the World Bank, and the International Monetary Fund.  In fact the IMF now holds more gold than any central bank.  A gold backed currency usually brings despair to a nation.

Likewise, be aware of any plans advance for a regional or world currency, this is the international bankers Trojan Horse."

The "Austrian" theory is that we must have a PM (Precious Metals) backed system and that is one of their axioms that must hold true regardless of the quantity of PMs at hand.  I think it all comes down to one fundamental economic question; should money be a store of wealth, or should it be the medium for exchange?  

I am a big believier, that especially in bad times (when the currency is dropping over a prolonged period) in storing wealth in PMs.  But I don't see why the government or private banks are needed or wanted to handle this.  I would prefer buying and selling PMs on my own - at market prices without other costs tacked on.  And, I prefer to own my PMs as a personal asset without relying on someone else to deliver/redeeem.

Greg wrote:

What concerns me the most is that while taking power away from the bankers is a good start, I cynically believe (as I imagine you do too) that our government  has long been fully captured by special interests. And so while the elimination of interest on money creation is a very important first step, leaving Timothy Geithner, or Chris Dodd and Barney Frank in charge of the money supply is not comforting to me in the least. I believe, not only do the bankers need to be disempowered - so does the government.  Otherwise  I have no doubt they will continue in their primary function of funding wars - military and nonmilitary - (Iraq and Afghanistan, War On Poverty, W.O. Drugs, W.O. Global Terror, W.O. Global Climate Change, etc.) and rewarding their corporate benefactors.

Good stuff...you sold me!

That creates a problem with spending debt free money into circulation - who decides?  I think you are right in avoiding a centralized system as it has been corrupted by special interests.

I think the federal government must pay for itself by adding some revenue streams separate from taxes.  The biggest part of this equation is the reduction, or balance between the amount of government our economy may sustain.  The equation has to be balanced.

Greg wrote:

Obviously the Wall Street/Washington cartel is not going to relinquish power willingly, so we are likely going to have to build something out of the ashes of a collapse...

Yes sir, you have hit the mark again.  The status quo will sink the economy before implementing the needed monetary changes.  The issue is who should benefit from and control the issuance of new money - "We the People" or the international banking cartel?

I think that the federal government must pay for itself.  The creation of money is a profitable bonanza that can either enrich private banking cartels or eliminate all income and employment taxes. 

My opinion is that states must have more power in creating new money than Washington DC and Wall Street.  Washinton's deficit spending may buy votes but in doing so it destroys the economy. 

Again, thanks for commenting,

Larry

DrKrbyLuv's picture
DrKrbyLuv
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Re: Monetary Reform - Five Point Plan to End our Financial ...

Gungnir wrote:

Actually the underpinning of the plan (while it seems like a good plan) assumes that the Government have not been corrupted...If that plan was presented to the current federal government, it would wind up being a financial reform to the same thing, on the surface it would seem different, but underneath it would be the same thing.

Yes sir, draining the swamp in Washington is a necessary step, but not necessarily the first step.  They can be circumvented by initiatives at the state level.  If states could get of their fraudulent money grid, at least partially, it would go a long way to eliminating the heavy handed centralized tyranny.

I'm not saying it would be easy, but it is doable.  If people start figuring out that there are great alternatives to perpetual debt, I would hope they demand it.

Larry   

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Re: Monetary Reform - Five Point Plan to End our Financial ...

 

 In a sense the dollar is still gold / silver / oil backed.. (until comex explodes.. )  just not at a fixed rate..

 To really sever the link.. gold would have to be unavaliable at *any* price in US$ .. (see Zimbabwe.)

 

 One way to repay the debt  is to reprice the $ in terms of gold. By offering to buy/sell gold at a rate of say $100,000 per oz.

 China gets repaid with 20 Million Oz for it's 2T$ in treasuries.

 

  In order not to create too much domestic inflation, it might be a smart idea to hoover up as much gold as possible for a few years..

maybe by allowing the price to rise during hard times and supporting cash4gold schemes rather than a roosevelt style confiscation..

 *cough*

 

 

 

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Re: Monetary Reform - Five Point Plan to End our Financial ...

 

 As a corollary, either the type of gold needs to be limited to say US minted bullion, or, the price of oil would also need to rise to make gold mining either marginal or unprofitable..

 $1000 a gallon.. ? Ridiculous ??

 Remember this fact from chapter 17:   "It turns out that a gallon of gas has the equivalent energy of 500 hours of hard human labor," 

 

 So, imagine a world where energy is taken seriously, where metals are not thrown away carelessly.... 

Repricing of oil and gold would solve the economic situation, and also allow the market to adjust to peak oil and resource depletion..

 Ok, my numbers are plucked out of a hat.. maybe reduce them by 1 order of magnitude.. but the principle seems sound enough..

 

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Re: Monetary Reform - Five Point Plan to End our Financial ...

More than a few observers of our national and international financial dissolution have proposed variants of one or more of your five points.  I commend you for offering them so succinctly as a starting point for discussion. I often wonder, though, since a new monetary system is needed how many Americans are really cognizant of why, how, who and what? To my way of thinking there needs to be a vocal, even shrill, sub-population that rouses the publics awareness, educates a representative share of Americans who collectively form a movement through which to petition elected officials, or take some other action to achieve their goals. Ultimatey, and preferrably, in the near-term, that goal would be sovereignty over our currency.  

I would like to contribute the following as a necessary antecedent for your plan.  Those unfamiliar with the issue of ' how do we restore 'currency sovereignty' to the people? may need to revisit events preceeding the Revolutionary War and review the Crowns action and how our sovereignty was threatened and eventually wrested from us. 

The history of our revolution teaches us that we reacted to covert actions of the Crown to further control our commerce, wealth creation, and indeed, our very existence as colonists in a new world.  How many Americans today consider our economic plight one of crisis.  Do they see what we see, a nation in a state of financial emergency.   That's what the crown instigated when it demanded species for payment instead of colonial scrip.  The Revolutionary War was fought for control of currency as a medium of exchange. The Crown saw currency as a store of value.

We are still suffering from the Crown's control of our currency and therefore our sovereignty. What Americans need to understand is that today's Central Bank is yesterday's Crown. When the King demanded gold and silver as payment, commerce in the Colonies all but collapsed. There was not enough gold. Its supply depended upon the capacity of the Colonist to trade goods for gold or borrow from the Crown at interest.  Usury, ushered in defaults, foreclosure, rebellion and eventually revolution.

There is little practicle difference between then and now. When Americans are shown what today's financial decision makers have forced upon this society  and what the Crown forced upon the Colonists they cannot help but conclude that our sovereignty has been malapropriated by the Federal Reserve/Central Bank/Modern Crown.  

We know there are thousands of Americans who share the view that monetary policy must be radically reformed not just regulated.  Who are these people?  Where are they? Can they be organized? What will it take to get answers to these questions?

In the absence of broadscale, nationally organized opposition to the monetary status quo, we are viewed as fools whispering in the wind.

 

 

 

 

 

 

John99's picture
John99
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Re: Monetary Reform - Five Point Plan to End our Financial ...

Larry, great post as always, and I'd like to thank Greg for the link to Digital Coin (http://www.digitalcoin.info/). I was most impressed with these presentations and have to say that perhaps they could very well work.

For years I have felt we should return to the gold standard, but as a number have pointed out, the top 1% who having been milking the system for years upon years have cornered this market and are hoarding vast quantities for their own selfish purposes. I guess we could have fiery debates whether this wealth should be confiscated and given back to the public, but that's another discussion....

The greatest challenge I believe comes back to awaking the people to these issues. We know MSM is totally controlled by the bankers or their minions, so there is little to no hope there (except perhaps for Jesse Ventura's new show - Conspiracy Theory??? :-)

So, my belief is the easiest way to change the system (and its not easy at all), is to vote in a President who would enact such major banking reforms; who would take on the banking cartel in Andrew Jackson fashion and rout out the den of vipers.

Almost every politician in DC should be voted out of office and only the people can do that.

Maybe we need a whole new political party? How does one get a grass-roots movement fired up??

Thomas Hedin's picture
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Re: Monetary Reform - Five Point Plan to End our Financial ...

John99,

Reform can also be done at the state level too.  I do believe it should be done at the federal level but would probably be much easier to have real reform through the states where we can put lots of direct pressure on the state legislators, all the time.

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Re: Monetary Reform - Five Point Plan to End our Financial ...

Thomas, Excellent point - all for it, but have to get the people excited...?

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Re: Monetary Reform - Five Point Plan to End our Financial ...

Good point on getting the people excited but there is two problems I run into all the time.

1.  Most people are only interested in trying to make another buck right now, and simplely cannot focus on what is wrong with our monetary system and most of the time if they figure out how it works, only want to profit harder from it.  In other words, people only give a damn about themselves, and find it ok to screw anyone, and everyone over just so long as they have a monetary gain from it.  This is mainly driven by the severe shortage of money in the system.

2.  The banking system itself does not want it to change, so they fund a lot of completely rediculous propoganda (the problem is to much money) (more money makes your life worse, i.e. devalues it) ect.....  And the people are so ignorant about how our monetary system works they buy it all hook, line, and sinker.  What couldn't you fund if you could create all the money you ever wanted?

 

Its a tough fight, but it's better than the alternative of doing nothing.

 

Do you have any ideas?

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Re: Monetary Reform - Five Point Plan to End our Financial ...

Well Thomas, that is a timely question. As we are almost at the end of this year, I was just reviewing all the changes and awakenings on a personal level compared to a year ago now. It's pretty amazing really and the CM site has helped a lot in this regard.

I have 21 people on an email list who have been receiving my 'news alerts' sent out maybe 3 times per week, and I can continue in hope to wake one person at a time. It's a slow process yet truly I'm encouraged that at some point a critical mass will be reached.

In a sad way, I am even hopeful that the growing numbers of homeless, and hungry, and disillusioned will also awake and help to fuel a massive ground swell to change this false system of monetary slavery. And with the 'boomers' about to retire with no money in the pension system, and with a stock market likely ready to vacuum another 30+% out of middle America's savings accounts, we just might reach that critical mass sooner than later.

This is my Christmas wish - awakening.

DrKrbyLuv's picture
DrKrbyLuv
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Re: Monetary Reform - Five Point Plan to End our Financial ...

That's a great Christmas wish John99, I am hoping the same.

Here is something encouraging, the exponential growth of truth could quickly awaken the entire population (over 300 million U.S.).

If one person could awaken 2 people in a week...and those two people did the same the following week, and the next 4 did the same the following week, etc, etc.

Before the 30th week; just over half a year, the entire population of the U.S. would be awake.

I think an important message is to make sure the people you wake up understand their obligation to tell others, at least two.

Merry Christmas!

Larry

P.S. - I wonder what percent of the population it would take.  I've read that less than 5% would do it, but that seems too low.

 

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