It’s remarkable how nervous I get when calling Washington Journal on C-Span. I have no problem getting on a stage and speaking my mind. I make part of my living doing voice-overs –selling people things I don’t necessarily believe in. But get me on the phone talking to the whole country and my voice retreats to near-pubescent form and I can hardly make my thoughts become words. But anyway…..
This last Monday morning C-Span’s Washington Journal featured Don Peck, assistant Editor of The Atlantic, on for his latest article “How a New Jobless Era Will Transform America”. The thrust of his article was really pushed aside as callers to the program kept arguing about Obama’s stimulus package and other attempts to make the economy better. Peck was on the side of the stimulus. This brought a rash of callers against it–usually making the argument that we are placing the burden on future generations. I’m personally not against government stimulus–especially when directed at our infrastructure. But I do have a problem with the unsustainable economic system that restricts the government’s ability to spend money intelligently when necessary. So I called and surprisingly made it in as the last caller of the day:
To be fair–I don’t think Don Peck is qualified to respond to my comment. He probably didn’t even understand what I was saying. To think otherwise would require believing him a shill for the Federal Reserve, and I am not making that accusation. His response is the rote message of those given positions like his with no real understanding of how money is created in this economic system. If he understood what I was saying, he might answer “Yes–this would be the best thing that could happen, but because of (insert excuse) it won’t”.
For those that are ignorant, like Don Peck, I will briefly attempt to fill you in:
The U.S. government has two ways of getting the money it wants to spend: taxes (plus fees and tariffs) and borrowing. Of course, borrowing occurs when the government wants to spend more than it takes in in taxes and fees. To do this the government issues bonds and treasury bills backed by the faith in their ability to extract payments from the public and American businesses in the future. This system has been in place since 1913. At this point, our debt (of over 14 trillion) breaks down like this: About 1/4 is owed to foreign countries. Another 1/4 is owed to mutual funds, private savings bonds, private pension funds, state and local government pension funds, insurance companies, and other investors. And about 1/2 is owed to the Federal Reserve stock-holding member banks. These are basically all of the biggest banks in the country –you know–the ones we recently bailed out. And these member banks don’t just get 1/2 of the interest payments we make every year in the form of taxes, they also get to split up the profit the Fed makes on issuing new loan credits.
Why is it like this? Well, when examining the history one can take either the official government position or the conspiratorial view. The government says that in 1913 we set up The Fed to stop inflationary bubbles and money panics from spiking the American economy. The idea sold to the public was that we needed stable big money entities like Chase and Rockefeller to back up our Dollar. Without them we’d be doomed to continuous cycles of panic. The conspiracy theory is that the big banks engineered the panics to convince the government to let them have their way and set up the Fed for their own benefit.
Does this matter today? Not really. Whether you believe in the honesty of bankers in 1913 or the conspiracy theories surrounding them doesn’t matter today. What matters is that after nearly 100 years, the American Dollar has proven that it doesn’t need private backers to make it work. After all this time it should be apparent that the American people are what backs this currency. We’re all grown up now. We don’t need big banker Daddy’s blessing any more…..In fact, we had to bail Dad out of bankruptcy recently.
If a government can issue bonds, treasury bills and other I.O.U’s, why can it not simply create money? The answer is it can. And it can do it without creating debt. In this modern age, there is no reason (other than the greed of some elites) for a prosperous country to have any National Debt at all.
There is a lot more to this idea of making money work for The People instead of enslaving them. I encourage you learn about it. I also encourage you and everyone call shows like Washington Journal, radio shows, etc. and make this idea heard far and wide.
….Even if it makes you feel nervous.