It's better to be a slave to the Private Banking Industry???

Hellyer barely touches on just what is likely to happen if gov'ts were to have the ability to issue "debt-free" money - he brings up that then they could fund all sorts of social programs, etc., instead of just "required" programs such as wars.

IMO, "debt-free" money ONLY works if there is some other fool-proof (even damn-fool-proof) mechanism to prevent the gov't from inflating the money supply beyond the expansion rate of the economy. Our current system demonstrates that even within the constraints of debt-backed money, the gov't is perfectly happy to inflate in order to give "freebies" to voters and others who keep them in power - it is frightening to imagine what would happen if they were not so constrained. Didn't the gov't of Zimbabwe issue debt-free money?

Even if you only inflate the money up to the limit of the expansion rate of the economy, >>it is still a theft<<.

The fact that the economy expanded is due to someone's work; and when a government prints more money, they claim that new value for themselves and their friends (those who get the first access to the money).
The value is effectively taken from those who actually expanded the economy, as well as from everyone who had any cash, thus the loss of value due to government thievery is spread across the entire population.

The government should only get money through plain vanilla taxes, no money printing, no nothing, and the simpler the tax code is, the better. And then it should not spend more than it receives in taxes.

On the topic of Canada, we own our central bank, yet we fail to use it fully and instead borrow large sums of money from private banks. It doesn't make sense. Watch Bill Still's previous Still Report for more on this and the Canadian banking system in general. Great video.

SR 43 Victoria Grant

The posts above indicate a deep distrust of government - that if the issuance of credit were a government function, it would act in a manner adverse to the interest of its constituents, or favoring some constituents over others. Indeed, they have a point. It is beyond dispute that the U.S. Congress often acts as panderers, growing a national debt at well beyond the rate of GDP growth. But let us look at how for-profit banking has behaved. Has it limited credit growth to the rate of economic expansion? No. Could we so constrain it via regulation, that it would. If history is an indicator (and we have no other), it is doubtful that any regulatory action would be durable. So, what is the real dilemma here? It is a loss of faith in democracy. There is this fear that the mob would put in power spendthrifts who would, over time, destroy the value of the currency. I suggest that it is precisely the distance between monetary and fiscal policy that has facilitated current deficit spending binges.

Has the independent Federal Reserve system acted in the public's interest. Cash for trash, anyone? Indeed, the Fed has facilitated a national debt that threatens to ruin the country. You see, under the current system, that debt must be continuously rolled over and in time rates will rise and that debt burden will become harder and harder to bear. Is that outcome so preferable to inflation, which would provide a feedback mechanism for federal monetary policy which would certainly become a political issue if Mr. Hellyer's ideas were put in place.

Karl, I must admit that it is a tad odd to this socialist that I find more agreement on monetary policy emanating from your website, which is well to the right of center, than from the more "liberal" sites I peruse which tend to have faith in regulation. BTW - Mr. Hellyer's 2 to 1 reserve ratio is a bit less radical than your 1 for 1 proposal, making you a tad to his left. OK, I didn't intend that as a criticism, just an amusing observation. If you can't tell, I absolutely loved Hellyer's ideas. Thanks for posting it.

Here is a very informative video about monetary history which discusses the Canadian system a little. Especially note the chart at about 15:00, and at about 50:00 he discusses the creation of the Canadian central bank.

http://www.youtube.com/watch?v=JeIljifA8....



The next one in the series, a lecture by Jim Grant,
http://www.youtube.com/watch?v=pRipVd5wx....

where he says the original legislation wouldn't have been so bad, would have been properly elastic, except...


These were posted in some previous Ticker thread and seem appropriate here.

The view in the Still report, seems naive to me, and related to the present system, something like, "let's just have an inflationary boom extending out to infinity and all will be well".

Karl's endorsed version, government issued money combined with his $1 of capital plan which seems very close to the asset based money discussed in the first video, is a much better plan.

Steelhead23 wrote..

So, what is the real dilemma here? It is a loss of faith in democracy. There is this fear that the mob would put in power spendthrifts who would, over time, destroy the value of the currency

This is the natural state of things. There's no "loss of faith", there never was reason for faith. Find an example where this didn't happen.

The best you can do is not have your government guarantee that private debts backed by promises of future production are as good as debt backed by something that exists today. They hand-wave at that today with the FDIC, but we can see in Europe and in the US, government debt gets special treatment from the government, even though it's backed by nothing that exists today.

That's how I understand "One Dollar of Capital" to be useful, and that might result in enough incentive for 51% to keep the spendthrifts at bay for a little while.

Lanny, thank you. The above 8 minute video is amazing from a 12 year old. 12 years old and kicked out a speech like that from memory and knowledge. How much money has been paid in interest towards any national debt in any system over the years? Who has the money been paid to and at what cost? The United States national debt is now around 15.7 Trillion. If my memory is correct over half of this national debt has been interest. The debate can go on and on which system is the best and how to apply it. Debt free money can be very bad with politics and etc. Debt based also has its costs as well. I own Karl's book and Bill Still's book and etc. as well. 1000's of pages are at debate and need to dealt with, but math is going to be dealt with either way. Someone has to eat the cost of the expense either way if they cannot be paid back. It is inevitable that if this can not be dealt with on obligations than someone else will HAVE to eat the cost of the whole system.