monetaire hervorming (9) Richard C. Cook

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“Market Fundamentalism” and the Tyranny of Money by Richard C. Cook

Dandelion Salad

by Richard C. Cook
Global Research, November 25, 2007

Recommendations for Reform of the US Monetary System

    We hold these truths to be self-evident, that all men are created
equal, that they are endowed by their Creator with certain unalienable
rights, that among these are life, liberty and the pursuit of happiness.

I. What We Must Do Today

“Life, liberty, and the pursuit of happiness” are, or should be, the
fruits of democracy. But the political democracy defined by the
Declaration of Independence and the Constitution has not been achieved
because economic democracy has not been achieved. The attainment of real
economic democracy is the next task for the American people.

In the midst of the most productive economy in history, the U.S. and
much of the world today are in crisis, with stagnant or falling incomes,
rising prices, and skyrocketing debt. Many experts are predicting an
economic collapse, and people with money are scrambling for safe places
to protect it. No one in an official capacity has provided a convincing
explanation; few have even tried.

We are taught that economics is a “science” and that it operates under
unchangeable laws that are understandable only to specialists. People
speak with reverence of “market forces” as existing beyond the reach of
human intelligence and will.

None of this is true. There is no such thing as “laws” in economics.

Of course there are plenty of habits and conventions, myths and
prejudices. But the “laws” are the ones created by governments, usually
under the control of powerful people who work the levers of power to
acquire greater wealth through legislative favor. These laws are
man-made. In some cases the laws may provide benefits to those who work
for a living, but in many cases not. What we forget is that any of these
laws can be changed and that many of them should be changed.

Besides, haven’t we learned by now that what has aptly been called
“market fundamentalism” is really shorthand for the tyranny of money? It
is a fact that control of economic life, at least in most of the Western
nations, has been turned over to the monetary elite who control the
world’s industry and resources through the private issuance of credit
that originates from the privilege of fractional reserve banking.

This vestige of the financial systems of the Middle Ages allows the
banks to produce credit “out of thin air” and lend it at a profit. They
lend to consumers, businesses, investors, speculators (such as hedge
funds), and to federal, state, and local governments. Under the banking
laws, they generate this credit against a small “reserve base”
consisting of customer deposits, government debt, overnight deposits
from corporations and government agencies, and even—as has been
well-documented—by laundering the proceeds of drug dealing and other
types of crime.

The dependence of economic life on debt has assured that there has been
a steady flow of wealth from the producing economy of goods and services
into the financial web which surrounds it. Debt from lending at interest
grows at an exponential rate.

Further, every period of economic growth in the last generation has been
largely a bank-created bubble. Each time a bubble bursts, the financiers
gain more wealth by buying assets at bankruptcy prices. The latest is
the housing bubble.

Now we are about to see the bursting of an even larger bubble consisting
of stocks and other business assets. In fact, the financiers are now
positioning themselves to take advantage of a broad economic collapse.

Control of wealth by high finance is the main reason the bounty of
science and technology has not assured a better life to the majority of
the people of the world.

Politicians stand by and do nothing. In fact their campaigns are
financed by the monetary elite. Should any of them mention economic
themes that are even remotely “populist,” they are immediately denounced
by the financier-controlled press.

Despite the power of industrial processes which have the capability of
providing a decent living to everyone in the world—contrary to the myth
of global overpopulation—the world still lives under an illusion of
scarcity. This tends to justify the senseless struggle for wealth and
control of resources. But it’s one of the most glaring examples of the
condition of mass hypnotism that has weighed humanity down throughout
the ages.

Ethically, the illusion of scarcity leads to the law of the jungle,
survival of the fittest, the fight for dominance and supremacy.
“Economic man” still lives at the animal level. The higher laws of human
ethics, including the injunction to “love our neighbors as ourselves,”
have been ignored. But they need not be ignored if we wake up to the
fact that we have it in our power to live in a much different and better
world.

The present situation is just as harmful to the wealthy who hold their
fellow human beings in bondage as it is to the debtors they oppress, for
the rich as well are deprived of the benefits of living in a world where
human beings are free, happy, generous, and productive.

One answer to the problem is monetary reform, combined with the
realization that science and technology have removed the need for
everyone to work all the time just to survive. We have earned the
“leisure” and “peace” dividends that are often mentioned but have yet to
be realized.

For the last eight months I have been publishing essays on these themes
on Global Research and other internet sites. I was inspired to write and
publish these essays after I retired from the U.S. Treasury Department
following thirty-two years of working for the federal government.

My research showed that the U.S. actually had a reasonable approach to
monetary matters for much of our history. The thirteen American colonies
built a dynamic economy without the presence of a single bank.
Throughout the nineteenth century, we developed the most powerful
economy on earth without a large national debt.

Then Congress gave away its constitutional authority over money through
the Federal Reserve Act of 1913. The Sixteenth Amendment to the
Constitution which was enacted the same year, created an income tax to
pay the interest on the national debt. Throughout history, government
debt and excessive military spending have gone hand-in-hand. Not
accidentally, the Federal Reserve Act marked the beginning of the
century of world war that still afflicts us.

We now need to reclaim our monetary system before our government makes
the fatal error of engaging in more useless foreign wars, besides the
travesty in Iraq, because they continue to think that the way to solve
our internal monetary problems is taking other people’s land and
resources. This is another effect of the illusion of scarcity.

A lifetime of involvement in public finance with the federal government
has led me to call for one basic reform.

We should abolish the privately-controlled Federal Reserve as a bank of
issue and re-establish constitutional control of credit as a public
utility. Public creation of credit would be reflected in two basic
policies: 1) direct issuance of credit to citizens through a basic
income guarantee, a periodic National Dividend, and low-interest bank
lending; and 2) direct spending by government for essential
services—i.e., restoring the Greenback—combined with public low-interest
financing of infrastructure investment. Taking these steps would also
allow us to reduce much of the onerous burden of taxation at the
federal, state, and municipal levels.

Also, people who advocate a gold standard are often confused about the
definition of “fiat money,” which they deride. There are actually
different types of “fiat money.” The debt-based credit created by the
Federal Reserve, often called “fiat money,” is not money at all. It is
simply temporary credit with a lien against it for repayment with
interest. But real “fiat money,” like the Civil War Greenbacks or the
American colonial paper currency, was true democratic money that was
spent into circulation by government and was never inflationary. Rather
it allowed commerce to expand and people to prosper. This type of fiat
money is actually the key to economic democracy.

II. Monetary Reform Recommendations

The articles compiled in the essays referenced above contain numerous
recommendations for actions that would restore the issuance and
management of credit as a public utility under the Commonwealth of
American citizens as established by the U.S. Constitution. Following is
a comprehensive list of reforms.

The immediate purpose of this program would be to correct the conditions
that have brought us to the brink of economic catastrophe due to the
cession of control over credit by Congress to the private financier
elite through the Federal Reserve Act of 1913.

The unconstitutional abdication of monetary responsibility by Congress
has contributed directly to a century of world war, the near-destruction
of the U.S. as a constitutional republic, and the transfer of much of
the nation’s wealth into the hands of the monetary controllers who have
acquired it through inflating and deflating financial bubbles, by
mis-using their fractional reserve banking privileges.

The recommendations which follow would be a start in bringing about
change. A few of them have been suggested by some of the 2008
presidential candidates, though none of the candidates from either party
has presented anything close to a program this comprehensive. The
recommendations are divided into immediate, near-term, and long-term
actions. Note that monetary reform will make possible a large number of
additional economic and political changes, including a transformation of
the military posture of the U.S., since we no longer will have to fight
the rest of the world to compensate for our monetary weaknesses.

Immediate

    *

      Abolish the Federal Reserve as a bank of issue and reconstitute it
as a financial processing bureau servicing the public and private
financial sectors under the authority of the U.S. Treasury Department.
    *

      Place all U.S. monetary operations under a Monetary Control Board
that shall operate as a federal regulatory agency under the
administrative supervision of the U.S. Treasury Department.
    *

      Abolish Federal Reserve open market operations by authorizing
credit directly issued by the U.S. Treasury as collateral for all U.S.
bank lending.
    *

      Restore private banking operations in the U.S. to the “real bills”
doctrine and abolish all lending for financial asset and securities
speculation.
    *

      Outlaw hedge funds.
    *

      Replace all Federal Reserve notes by U.S. Treasury certificates.
    *

      Place the entire U.S. national debt under bankruptcy reorganization.
    *

      Authorize the executive branch to begin direct Greenback-type
funding of selected operational programs.
    *

      Establish a self-collateralized Federal Infrastructure Bank to
lend to state and local governments for long-term projects at zero
percent interest.
    *

      Restore the pre-2005 federal personal bankruptcy law.
    *

      Utilize an off-budget national credit account to issue an annual
guaranteed basic income to all legal U.S. residents in the amount of
$10,000 per adult and $5,000 per dependent child.
    *

      Establish a National Price Commission to work toward a system-wide
fair pricing policy for the U.S.
    *

      Freeze budgets and hiring for all federal government agencies,
including the military and all contractors.

Near-Term

    *

      Establish policies to maintain a stable dollar with minimal
inflation allowances.
    *

      Adopt as a primary monetary goal the backing of our currency with
domestic production within the physical economy rather than the “print,
loan, charge, and spend” policy of bank-centered monetarism.
    *

      Extend the authority of the Securities and Exchange Commission to
investigate and eliminate predatory financial practices within U.S.
capital markets that are destructive to U.S. industry, infrastructure,
and labor.
    *

      Use the findings of the National Price Commission to establish an
annual National Dividend that provides citizens with their rightful
benefits accruing from the appreciation of national productive capacity
through the application of science and technology to productive
processes. The National Dividend shall utilize the amount of the
guaranteed basic income as a floor in calculating benefits and shall
consist in both direct payments to citizens and pricing subsidies for
products sold in U.S. markets.
    *

      Establish a new federal agency to oversee and regulate mortgage
funding, assure low-interest lending for housing, and protect the
housing markets from predatory financial practices, including the
inflation and deflation of housing bubbles.
    *

      Assure funding and legislative support to implement
energy-conservation actions such as those contained in the 2005 report
of the Rocky Mountain Institute entitled, “Winning the Oil End-Game:
Innovation for Profits, Jobs, and Security.”
    *

      Provide increased federal R&D funding for hydrogen technologies
and for technologies that replace the internal combustion engine.
    *

      Provide funding for free college-level education for all U.S.
citizens.
    *

      Reverse privatization of public utilities and re-regulate on a
fair-price basis.
    *

      Protect and extend union collective bargaining rights.
    *

      Restore public service requirements for media broadcasting.
    *

      Establish public funding for all U.S. elections along with
mandatory free air time for political candidates.
    *

      Depoliticize all agencies of the executive branch from undue
corporate influence in decision-making and establish new and meaningful
programs of public access and participation.
    *

      Establish federal support mechanisms allowing community banks to
provide low-interest loans at one percent interest to small businesses
and consumers.
    *

      Utilize a federal-state partnership to establish a series of ten
regional mega-universities within the United States to serve both U.S.
and international student audiences.
    *

      Reconstitute the federal budget by eliminating programs supplanted
by the guaranteed basic income, utilization of direct Greenback-type
funding where appropriate, and selective users’ fees.
    *

      Eliminate collateralization of private sector banking with federal
debt securities. Emergency borrowing by the federal government will take
place only through direct sale of Treasury bonds.
    *

      Eliminate all federal, state, and municipal income taxes and
replace with a national sales tax.
    *

      Establish a mandatory annual income ceiling for individuals and
corporations.
    *

      Establish a mandatory national building and zoning code that
provides for affordable housing, use of renewable energy resources, and
expanded mass transit.
    *

      Recreate and revitalize the nation’s railroads.
    *

      Establish a system of universal health care that draws heavily on
concepts of lifestyle and prevention.
    *

      Establish meaningful programs of center city renewal to transform
“death zones” into vibrant centers of urban culture.
    *

      Abolish the International Monetary Fund, the World Bank, the World
Trade Organization, and the North American Free Trade Association and
replace them with an international monetary authority under the U.N.
whose function is to regulate international currency exchange to the
mutual benefit of all parties.
    *

      Place all outstanding loans by the IMF under bankruptcy
reorganization.
    *

      Support models of sustainable economic development among
developing countries.
    *

      Begin the withdrawal of U.S. military forces from overseas bases.
    *

      Outlaw all covert warfare carried out by U.S. government agencies.
    *

      Eliminate all military programs of domestic surveillance and all
overseas surveillance, detention, and torture contrary to established
international law.
    *

      Reduce U.S. arms sales abroad to essential defense requirements.
    *

      Eliminate all U.S. funding of mercenary or contractor military forces.
    *

      Reconstitute the CIA and NSA as supporters of a defensive military
posture and depoliticize their operations in order to assure accurate
professional data-gathering and analysis.
    *

      Reconstitute the State Department as an agency to support the
democratic aspirations of the people of the world.

Long-Term

    *

      Eliminate the entire U.S. national debt.
    *

      Carry out a general demilitarization of American culture.
    *

      Reduce the military budget by elimination of wars of “choice,”
abandonment of “full spectrum dominance,” and restoration of a military
devoted to multilateralist defense of the U.S.
    *

      Work with the nations of the world on establishing democratic
economic systems based on the utilization of credit as a public utility
in accordance with U.S. constitutional traditions.
    *

      Undertake reclamation and desalination programs to bring water
supplies to drought-stricken areas.
    *

      Accomplish a permanent long-term conversion to renewable energy
sources, including water-fueled hydrogen cells suitable to provide all
power needs for homes and businesses.
    *

      Refocus the U.S. space program on activities that support space
science and the economic development of space resources.

III. Conclusion

One final recommendation could be made, which would be to restore to our
citizens the money they have been forced to borrow during their
lifetimes rather than enjoy the benefit of a National Dividend which
could have been implemented decades ago. At a current estimated value of
over $12,000 per year, the lifetime amount would average around $500,000
per adult. This figure represents the amount of debt we have had to
incur, not including interest, due to a financial system that benefits
the monetary controllers, not the people of the nation.

As monetary reformers of the past have affirmed, a program like this
represents a spiritual vision. It cannot be achieved by moving pieces
around on an economic or political chessboard. It requires a new way of
looking at humanity—as individuals, who, like oneself or one’s family or
one’s nation or those of one’s religion, also have a right to a life of
abundance and security on the planet earth.

This abundance and security are both available, not by accumulating
money, power, or influence, but by looking to the spirit within and
allowing the splendor of that vision to manifest in the outer world.
This vision was reflected in ideals of our republic expressed in the
Declaration of Independence and the Constitution, and is now reflected
in the program of reform described by monetary reformers both past and
present.

Of course no one can say how much more time must pass before such a
program can be implemented. The illusion of scarcity has society in a
stranglehold. Will it take a nuclear war to get us to wake up? A
worldwide revolution? Catastrophes from pollution or global warming?

For now, enlightened individuals must do the best they can to acquire
and maintain a spiritual perspective and be prepared for the time when
conditions ripen. Measures such as getting out of debt, creating local
currency/barter systems, forming conscious communities, and acquiring
manual skills are some of the economic actions people can take to
protect themselves.

Also, people can take action through their state and local governments.
Before the Civil War we had state-owned banks. During the Depression,
cities experimented with their own currencies. The states could even
initiate a constitutional convention to amend the Constitution to
restore citizens’ monetary control.

Finally, don’t feel badly about being in debt and wanting to get out.
Almost everyone is in debt to some extent, millions of people are over
their heads in debt, and the situation is going to get worse.

But remember that before long, monetary reform based on public control
and issuance of credit will be recognized as the most fundamental
requirement of economic democracy and will be implemented. It’s been
said that the tyranny of money “is the last tyranny.” Eventually the
time may come when we will be more developed spiritually and perhaps
won’t even need money anymore.

Then people will be able to walk into any store and take what they need,
free for the asking. We’ll do what work is required just for the
enjoyment and adventure of it. No one will desire what another has
because we finally will have understood that the bounty of God’s
universe is infinite. That will be the ultimate monetary reform.

Richard C. Cook is a retired federal analyst, whose career included
service with the U.S. Civil Service Commission, the Food and Drug
Administration, the Carter White House, and NASA, followed by twenty-one
years with the U.S. Treasury Department. His articles on economics,
politics, and space policy have appeared on numerous websites. He is the
author of Challenger Revealed: An Insider’s Account of How the Reagan
Administration Caused the Greatest Tragedy of the Space Age, called by
one reviewer, “the most important spaceflight book of the last twenty
years.” His website is at www.richardccook.com.

Richard C. Cook is a frequent contributor to Global Research. Global
Research Articles by Richard C. Cook
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© Copyright Richard C. Cook , Global Research, 2007
The url address of this article is:
www.globalresearch.ca/index.php?context=va&aid=7427

Filed under: Business, Cook-Richard C., Economy, Federal Reserve, News
&-or Politics, Politics

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