Column #54 MY SOLUTION TO THE "DEBT CRISIS"

(Week Nine - Saturday, Sept. 27)

I would suggest that there is an answer to the current "debt crisis" that is very straightforward and consistent with common sense. This is the time to pause, take stock of what has happened, and do some soul searching before getting stampeded into any multi-hundreds-of-billions-of-dollars "bailout" scheme that only serves to compound the mistakes of the past. In my view, there is a better way. I hereby propose the outlines of a genuine solution based on three principles.

Principle #1:

As a society we need more and more to see money, not as a means for private gain, but as a channel for serving the needs of our fellow man and taking care of the planet. This is not a mere truism or sentiment. It is the only practical way forward. The current monetary order grew out of the current monetary culture as naturally as a tree grows from its own seed, and now we are seeing the fruit thereof.

If the whole truth be told, it is not only the financiers who have entertained a measure of avarice in their hearts when it comes to money. Dare I say that virtually everyone has unduly coveted it to a degree in their own respective spheres, and acted on that impulse, at least in part, within the context of to their own opportunities? Who has not accepted what has come to them through the system as their due, while protesting against what is perceived to be the unwarranted fortune of others? I mean no judgment or accusation by this. We all have an inner conscience to which we must give an accounting, and I have my own to face.

I believe that a society-wide change of consciousness about money is possible, and would be reachable if each person strove to cultivate a right inner attitude.

Principle #2:

The "debt"-based private-bank-loan mode of money creation and issuance must be abolished, and the people must rouse themselves to reclaim their sovereign power to create and issue their own money. I don't mean to sound dogmatic on this point, but I believe that if returning the monetary franchise to the people where it rightfully belongs is not at the heart of a proposed solution, then it is no solution at all. This is a principle that cannot be compromised in any hybrid "rescue plan" without re-planting the seeds of the monetary order's, and thereby the social order's, undoing.

Public issuance of currency is not a scheme to get "free" money out of the government. Rather, it is the taking up of a responsibility that we as citizens have neglected for too long. We have allowed our monetary affairs to be taken over by a private agency, the so-called "Federal Reserve" (which is neither "Federal", nor a "Reserve"), and our own currency to be doled out on terms favorable to the private interests are represented by it. Now we will have to get serious about, not only our prerogatives as a sovereign people, but also our duties as stewards of an essential trust.

As a practical measure, the first step politically would be to repeal the Federal Reserve Act. This does not mean demolishing its buildings and telling its employees to look elsewhere for work. Rather, the skills and dedication of the workforce could be turned to good account in helping to administer a new way of handling money.

Nor does it mean abolishing private banking, or even the lending of money by banks at interest. The banks would continue to perform their necessary services, but the essential change is that they would cease to be the agencies that issue our money supply. In their new configuration they would operate more like savings-&-loans and credit unions do now.

Principle #3:

There must be established a world trading order in which the relative values of currencies are allowed to find their equitable exchange ratios through the normal processes of trade, much like water finds its own level. This would tend to happen naturally now, except that the "interest" charge that is attached to the issuance of virtually all currencies is constantly draining them of their value, thereby igniting "trade wars" by which nations feel obliged to make up for that lost value through a "positive trade balance". It is not possible for every nation to have a "positive trade balance" with every other nation. The result is that no just and stable equilibrium can be achieved in the global economy.

My proposed new world trading order would be essentially the "level playing field" that the sincere proponents of "free trade" aspire to, but cannot seem bring about. I welcome any other thoughts.

Respectfully offered, Richard Kotlarz
richkotlarz@gmail.com

The complete set of columns from this series is posted at the following websites:
http://economictree.blogspot.com/
http://www.concordresolution.org/column.htm