Re: Why Weimar Ben Can’t Put the Inflation Genie Back in …
Home › Forums › DISCUSS › Current News & Events › Why Weimar Ben Can’t Put the Inflation Genie Back in the Bottle › Re: Why Weimar Ben Can’t Put the Inflation Genie Back in …
machinehead – I always learn something from your articles and this was no exception.
Respectfully, I offer an alternative view on how you described Lincoln’s "greenbacks."
machinehead said: Historically, the U.S. and Europe suspended the gold standard during wartime. Paper money is an instrument of war finance, removing the fiscal constraints imposed by gold. The U.S. suspended gold during the War Between the States, issuing its first greenbacks in 1863. Of course, prices inflated sharply during the war. Afterward, Congress voted in 1871 to re-insitute the prewar gold standard by 1879.
I suggest that the return of Lincoln’s greenbacks must be considered as a viable solution to our financial crisis and a positive force towards the future. Conventional history often characterizes greenbacks as being "inflationary" but do the facts really support this belief? The Baltimore Chronicle ran a recent article by Steve Lendman, here’s an interesting comment:
In 1691, Massachusetts became "the first local government to issue its own paper money…." called scrip. Other colonies followed, Pennsylvania most effectively by issuing new money without inflation or need for taxes. For over 25 years, it collected none, and at the same time, its population grew and commerce prospered. The "secret was in not issuing too much (credit), and in recycling the money back to the government in the form of principal and interest on government-issued loans."
In other words, keeping everything proportionally in balance and not having to pay interest to predatory private lenders – the very system wrecking America today and other economies run by private central banks.
Lincoln did the same thing in spite of assassination threats before his inauguration as well as "treason, insurrection, and national bankruptcy" during his first year in office. Considering what he faced, his accomplishments were remarkable, including:
- building the world’s largest army;
- defeating the South;
- turning the country into the world’s "greatest industrial giant;"
- launching the steel industry, a continental railroad system, and a new era of farm machinery and cheap tools;
- establishing free higher education;
- giving settler ownership rights and encouraging land development through the Homestead Act;
- having government support all branches of science;
- standardizing methods of mass production;
- increasing labor productivity by 50 – 75%; and
- still more "with a Treasury that was completely broke and a Congress that hadn’t been paid."
He did it by nationalizing control over banking so government could print its own money – interest free without paying usurious rates that private bankers demanded, from 24 – 36%. As a result, "the economy was jump-started with a 600 percent increase in government spending and cheap credit directed at production" – done with government-issued Greenbacks. They financed the war, paid the troops, and spurred the nation’s growth – free from the system wrecking the country today to let parasitic private banks prosper.
Lincoln looked at monetary policy as a tool for the prosperity of the people "The government should create, issue, and circulate all the currency and credit needed to satisfy the spending power of the government and the buying power of consumers. The privilege of creating and issuing money is not only the supreme prerogative of government, but it is the government’s greatest creative opportunity. The financing of all public enterprise, and the conduct of the treasury will become matters of practical administration. Money will cease to be master and will then become servant of humanity."
For example, what if the US would abolish the Fed, and issue the money directly – the interest yield could be used in lieu of all federal taxes.