How to Get Your Country Out of Trouble

By TLB Contributor: Steve Cook.

The smartest thing Congress could do right now is refuse to renew the Fed. The history of how the dominion of the Fed over the labours of Man came into being is an interesting one: a tale of intrigue, cabal and venality that would make a good thriller, albeit without an – as yet – happy ending. Unfortunately that tale of woe is beyond the scope of this article, although I have tried to sketch it out for you in my free book The Worm in the Apple.

Be all that as it may, I expect a largely suborned Congress to further aid and abet the continued decline of America and shove a great nation deeper into trouble by getting a renewal of the Fed onto the statute books without a fight and probably while no-one is looking. After all, why bite the venal hand that feeds you?

Perhaps I am being unkind to Congress. I do not happen to think that all members of Congress are criminals. Many are decent men and women trying to do their best for their country. However, it is easy for more nefarious individuals to pull the wool over the eyes of someone who does not really understand economics or the underlying simplicity of a monstrous scam that sits, hidden behind a smoke screen of complexity, at the root of what is laughingly called “the money system”.

In similar vein, I don’t think many of them even understand what the word “money” means. I’d be willing to bet that if you asked each individual member of Congress – or indeed almost anybody – for a clear and concise definition of the word “money” – an alarmingly high number would not be able to give you a definition. What you will get is a lot of mumbling and waffle and a great many different or even conflicting definitions.

It would be an interesting exercise.

The point I’m driving at here though is that what we face, and what the more sincere members of Congress face, is a monstrous and bewildering tower of complexity on the subject of money, on the subject of economics and on the subject of governance that quite deliberately hides from us the underlying simplicities.

Thus we are duped into thinking these subjects are inherently complicated and best left to some high-priesthood of experts. But they are not inherently difficult at all. If you refuse to be suckered into the complexities or buried under a sticky avalanche of waffle, you can understand and think with these things and thus be able to see through the lies and scams being foisted upon you daily by an elite aristocracy of con men and shysters. It ain’t – appearances to the contrary – rocket science but God forbid that ordinary people should ever have such power!

These subjects, then, are not inherently complex or abstruse but are made to look like they are. Similarly, how to run a country for the benefit of ALL the people or how to dig it out of trouble or how to make it flourish and prosper resolves down to simple principles that people can observe for themselves and is not all that difficult to figure out.

A great deal of it is common sense. However, simple common sense and policies that benefit all men can be in short supply when policy-making or problem-solving are ultimately in the hands of people who are running a scam so as to gratify themselves through their high-priests “advise” politicians who are as confused as everybody else.

You are unlikely to get much in the way of problem-solving if you are guided by the very people who are doing quite nicely from having created the problem in the first place. It would be a very different story were the problem-solving firmly in the hands of people who are genuinely trying to solve the problem to the benefit of their fellow human beings and who have no vested interest other than wishing to have a decent, stable and prosperous country or world to live in.

So, in order to keep this article reasonably brief I’m going to cut straight to the chase and suggest a few measures that any government that is truly and solely interested in serving ALL the people could do tomorrow if it was of a mind to and which would precipitate a boom beyond all imagining.

And I say “beyond all imagining” not because it is impossible or beyond the wit of Man but because no-one has encouraged you to imagine it, lest you become unwilling to put up with the third-rate, mis-managed mess that has been foisted on you.

But next, I’ll try to give you an outline of the basic scam.

First, the Underlying Cause of the Problem The problem with our economy is that the government does not create money. Most people assume that it does but in fact it long ago handed that privilege – the privilege of creating money – to banking institutions. Banking institutions create money out of nothing and then enter that new money into circulation by lending it to you and me, business, governments and so forth.

Those loans are made at interest so that every time money is created and entered into the economy, it does so as a debt and MORE DEBT THAN MONEY IS CREATED.

Our economy runs on debt, not money. There is virtually no true money, per the proper definition of money, in circulation! That it is called money does not make it money any more than putting kerosene in the gas tank and calling it gas will make it gas. Call it gas all you like, believe that it is gas all you like but the car still won’t run properly.

And that in a nutshell is the fundamental flaw that underpins the economic trouble we are having, our decline, instability, relentlessly escalating debt, money scarcity and declining standard of living.

Let’s go over that again:

Money is our means of exchange. It is the agreed-upon system of tokens or symbols we use to pass back and forth among ourselves in lieu of actual goods, but confident that at any time we can exchange money for real goods. Being able to exchange it for real goods is what gives it its value.

Someone has to create money. If nobody created it, it would not exist. But who creates it?

Currently banks create it. They simply “print” it, so to speak.

But having been created, how does it get into circulation so that it can be passed around among people?

Currently, the method of getting newly created money into circulation is that banks, having “printed” it, then lend it to borrowers. The borrowers then take the money loaned to them and spend it. Thus it enters circulation.

But each time the bank lends out money it has just created, it charges interest. The interest it charges comprises its profit on printing money and lending it.

You can see from this that as they do this, banks do not create wealth. They create the means of exchange by which one acquires the goods and services of the community and it is these goods and services that comprise wealth. Yet, without creating any wealth themselves, they have, through the interest they charge, the means to acquire the wealth others have created. Over time it makes them very rich and it also delivers into their hands, through their sole privilege of creating money and controlling its distribution through the mechanics of lending, complete power over all economic life. That includes the whip-hand over government itself and in a nutshell you have here the mechanism by which we wind up with a banking/corporate echelon “senior” to the government you elected.

Each time newly created money is gotten into circulation by lending it to someone, interest is added and that someone then owes more money than he borrowed. In other words, more debt has been created than money with which to pay back the debt.

This has produced many adverse effects that give us all a hard time, a few of them are:

There is more debt in existence (far more) than money. While this idiotic system continues we will never, collectively, get out of debt. Ever.

When an economy expands, through increased population or more goods produced and coming onto the market, the money supply, the stock of circulating money, must be increased along with it. But in the current system, if we increase the money supply – through the mechanics of lending – we increase the overall debt by an even greater amount. This is why in periods of economic boom, levels of debt soar.

The existence of money depends upon people, businesses and governments carrying debt.

In order for money to exist someone (or many “someones”) has to be in debt and they have to carry more debt than they have money.

For one person or group to get out of debt or reduce their debt, someone else must go deeper into debt if the volume of money circulating in the economy is to be maintained.

Money enters the economy through three main channels of borrowing: borrowing by the consumer, borrowing by industry, borrowing by government. If, for example, a credit squeeze restricts borrowing by the consumer and industry, there is an increased pressure on government to borrow so as to prevent the money supply shrinking (recession). If government tries to reduce its own borrowing, the pressure increases upon the consumer and industry to borrow.

A “credit squeeze” or “austerity measures,” in that they seek to reduce borrowing, bring about a decline in the stock of circulating money. Money becomes scarcer. Money scarcity is known as recession. This is why nations that seek to “balance their books” or “pay off their debts!” (measures that would not be unreasonable if we had a proper, sensible money system) quickly wind up with a collapsed economy and a lot of unhappy citizens.

Understanding that basic “why” of our trouble enables us to come up with a simple plan for national economic recovery, which will enable us to extricate ourselves from the mire in which we are stuck, turn around our national fortunes and bring about a boom beyond all imagining.

Much of this is covered in Abraham Lincoln’s Monetary Policy so these are far from new ideas.

Bear in mind that whatever trouble we have, it is rarely an inability to produce in abundance all the food, clothing, furniture, computers, roads, houses, schools and so forth we need. We can produce any amount of these things and so the potential for material wealth is there. In fact we are currently operating well below that potential. Just look at how many otherwise productive people are unemployed or how many people and resources are locked into the creation of items that are not wealth, such as tanks and missiles (you can’t live in them or eat them) and which are devoted to the destruction of wealth.

There is a difference, for example, between being hungry because the crops won’t grow and being hungry because we don’t have the money to buy crops that either have been grown or can be grown.

What is scarce in a recession is money and thus our ability to express demand for what we want because money is the thing we use to express our demand. And so businesses go bust due to a “decline in demand”. But it is not people’s desire for industry’s products that has suddenly, inexplicably waned. What has happened is a relative scarcity of money.

If you haven’t got the money you can’t buy the dishwasher and if you can’t buy the dishwasher, the dishwasher manufacturer can’t sell it and so goes out of business, no matter that the dishwasher exists, nor how much you want the dishwasher and how much he wants to sell it to you!

Okay, so now we have a very simple in-a-nutshell description of what is causing us all this needless trouble. Buried deep under a mountain of jargon, waffle and gobbledegook, this is the fault that must be corrected if we wish the economy to run right in service of our needs. And correcting the fault will at the same time cut the strings and levers by which the global elite exerts control over the affairs of Man.

But how can we do that?

With countries such as Greece, Italy, Spain, the UK and even that mighty economic powerhouse, USA, in severe trouble with debt and their governments spouting economic gobbledygook and fiddling the books whilst Rome burns, their citizens could do themselves a favour by demanding the following:

1.) Immediately remove from private banking institutions the right to create money. Banks will retain the right to lend money but may only lend money they actually have on deposit and may not create money out of thin air in order to lend it.

2.) Immediately restore to government – and to democratically elected, accountable government only – the responsibility of creating money according to the economy’s need for money so as to ensure and facilitate the smooth exchange between producers and consumers of goods and services. The supply of money to the economy is to be conducted as a service to the people that supports their efforts to produce and to exchange with one another what they have produced.

3.) Immediately set up an autonomous Agency whose sole right and duty is to calculate the economy’s need for money. Charge that Agency with the duty of correctly calculating money supply. The yardstick by which that correctness must be measured is: KEEP THE PURCHASING POWER OF THE CURRENCY STABLE.

4.) The above-mentioned Agency will not have the power to create money. Its sole function will be that of calculating how much new money must be created and then instructing government to create it.

5.) Government will be obliged and bound by law to create and spend into the economy new money as instructed by the above mentioned autonomous Agency. The Agency may only instruct government as to how much money it must create and spend. It may not instruct government on what it spends the money.

6.) Government must spend (and never lend) into circulation exactly the amount it is instructed to spend. It may spend it on roads, schools, pensions, subsidies and so forth, whatever it decides to spend it on according to the priorities, policies and the mandate upon which it was elected to office. A wise government will spend in the direction of increasing production and reduction of the tax burden.

7.) Government must spend the aforementioned newly-created money into its home economy so as to ensure it enters circulation in the economy. It may not use newly created money to buy imports. For example, if it wishes to spend $10 billion into circulation by building a new bridge, it must hire indigenous contractors who buy indigenous materials from indigenous suppliers wherever possible. Thus, through the purchase of materials and the payment of wages, new money will enter the economy WITHOUT A DEBT BEHIND IT and will then circulate. Further, this will greatly help the employment and prosperity of indigenous people and businesses.

8.) New money created by government according to the calculations of the fully autonomous money-calculation Agency and spent into the economy will constitute a new, additional source of revenue for government with which to finance its various projects in service of the people.

9.) If it wishes to increase its revenues without increasing taxation, government will be able to do so by helping the people increase the production of goods and services, in other words by nurturing and facilitating the creation of the increased wealth of the community. This is in contrast to the current system in which the government collection of revenue inhibits the wealth of the community. The more government can help make a benign environment for human enterprise, for the producer and the honest citizen, the more it supports and encourages the citizen in his efforts to create wealth, the more revenue it will have.

10.) Immediately abolish all taxation (income tax, VAT, death duty, stamp duty, road tax, tax on fuel and so forth.) Replace the currently unwieldy and expensive-to-administer tax system (whose complexity has the sole purpose of hiding from the people exactly how much tax they are paying) with a SINGLE PURCHASE TAX.

11) The levying of a single purchase tax will enable the people to know as they pay it exactly how much they are paying. Whether the level of purchase tax be set at 25% or 10% by government or raised or lowered by government, the people will be able to see it clearly and assess and decide upon the performance of their government in managing the nation’s financial affairs. It will thus be impossible for government to hide taxes or its own incompetence, overspending or economic mis-management. Thus, consumption will be taxed but all production will not be taxed anywhere at any time. All wages and profits will be received free of any tax and the citizen or business will only pay tax as and when they buy goods and services. As tax will be paid only when goods are bought, it will be impossible for anyone to evade taxes, either through illegal means or the hiring of creative accountants. The wealthy will naturally pay more tax than those less well off insofar as they buy more goods and luxury items. Whatever the percentage set for the purchase tax, it will be applied uniformly to all purchases. Moreover, as the system will be simple, requiring only that a percentage be added to purchase prices and only points of sale will be required to present tax accounts, the administrative cost and burden of tax collection will be vastly reduced. The majority of citizens will never need to be involved with tax authorities at all. Those who, being points of sale, are required to deal with tax authorities will find a much greater simplicity than the current system of tax returns.

12.) The spending of new money into the economy to offset the tax burden, coupled with the abolition of all taxation upon income and its replacement with a simple purchase tax, will remove from the citizen much of the burden of taxation that has until now so stifled his efforts to prosper. Quite possibly in a blossoming economy free of wasteful expenditure, it may even be feasible to reduce the rate of purchase tax to zero and to do so would be optimum.

13.) Banks will return to their primary function of safeguarding and investing the money of their savers. Banking cartels will no longer be able to manipulate the economy and the fortunes of the citizen through the manipulation of interest rates or the money supply. The hidden whip hand held by banking cartels over elected governments and entire nations will be removed.

14.) The abandonment of the system of producing money as debt, with interest on the debt being in effect a toll or tax one pays (to private banks) for the privilege of using the nation’s means of exchange, will also reduce the debt burden placed upon the citizen and industry. Whereas the current system requires escalating levels of borrowing in order to sustain a money supply, the new system will see a vast reduction in the pressure on the citizen, industry and government to borrow.

The cost of repaying loans at interest currently comprises a significant component of the costs borne by the citizen, industry and government and thus exerts an upward pressure on taxes and prices. This will diminish and hopefully vanish from the economic landscape. To give a very crude example: if government wishes to build a bridge that costs $10 billion dollars, under the current system, it usually borrows that $10 then repays it at interest over many years. More often than not, it winds up repaying around $20 billion to the lender. In other words, it pays for two bridges in order to build one bridge. More precisely, as the revenue to repay the loans is extracted from the tax payer, the tax payer pays for two bridges in order to have one bridge! Where newly-created money is used to build that bridge, we will have one bridge that costs the price of one bridge, and that cost will not be passed on to the tax payer at all.

These measures will remove the debt burden from the citizen, industry and the government and enable those who manage their affairs well to be truly solvent. They will also remove the tax burden that penalizes production and inhibits enterprise and the hidden influence upon government of the money powers.

There are of course other ills in our society that also need to be corrected and the above measures will not of themselves bring about a Utopia. However, we can at least remove needless economic constraints and debt slavery from Man’s road and make him much freer to focus on various workable measures to solve problems of survival.

As for those other measures, I’ll try to cover them briefly in future articles because the fact is there exist almost breathtaking possibilities for the improvement of our fortunes as a civilization, so much that can be done, GIVEN THE WILL to do them.

The will has been missing for a long time, consigning us to misery and decline that need not be happening at all.

Remove from your road men who do not have that will and replace them with men who do.

And things will work out.

Acknowledgements I am indebted to the late Dr Edward Hamlyn for introducing me to the principles of monetary reform, the economist Michael Rowbotham and his masterful and enlightened work Grip of Death, and to Abraham Lincoln for his Monetary Policy

BIO Steve Cook is the author of several works of fiction and non-fiction, humor and non-humor. Please visit his blog at http://stevecookwriter.blogspot.co.uk where you can also get a free download of The Worm in the Apple.

Please visit his free satirical newspaper, The Daily Scare, at http://daily-scare.blogspot.co.uk His facebook page is at http://www.facebook.com/stephencookwriter