Column #72 - PRIVATE BANK MONEY: THE STRANGE SUPERSTITION OF OUR AGE

(Week 12 - Saturday, Nov. 1)

Christopher Hollis, British economist and guest professor at Notre Dame University, observed:

"Indeed the historian has to record that in almost every age there was some superstition or other of utter unreason which strangely occupied the minds of men, otherwise of activity and vigor . . . We are sometimes ready to congratulate ourselves that our age has outgrown all superstitions. But the historian of the future will, I fancy, reckon in the same class . . . the strange superstition that, whenever money is invented, a percentage must be paid forever afterwards as a propitiation to a banker. It is on that superstition that the whole empire of Mammon is built."

Private bank money is the "strange superstition" of our time. It behooves we modern scientific sophisticates to ask ourselves if we as a civilization have fallen for an assumption that is as unscientific as the flat-earthery of an earlier time. Frederick Soddy, a British scientist and Nobel Laureate in Chemistry, was appalled by the anomalies caused by the usury-based monetary system. He wrote,

"The sensationalism of the scientific prophet could hardly imagine anything so sensational as this. A nation dowered with every necessary requisite for an abundant life is too poor to distribute its wealth, and is idle and deteriorates not because it does not need it, but because it cannot buy it."

Such thoughts precipitated an inquiry on his part which resulted in what many consider to be a classic volume, Wealth, Virtual Wealth and Debt. This treatise compares economics with physical science. The creation of real wealth, he reasoned, always involves the expenditure of energy, and must conform to the laws of thermodynamics, whereas to set up "debt" paper as the source of wealth turns reality on its head. Among his many insights was the conclusion that,

"If we reasoned similarly in physics, we should probably discover that weight possessed the property of levitation."

My observation is that in our "enlightened" era, denial, especially when related to money, is perhaps the strongest human failing. I can imagine a time in the future when our descendents (for whom we are so ostentatious about not wanting to pass on our "debt"), will come to their senses and dispel the bank-money bogeyman back to the irrationality from which he came, and wonder in amazement how an age of "science" could ever have believed in him. They will regard with horror the terrible price we were willing to pay, rather than relinquish our attachment to this pernicious notion.

In my view, the so-called "national debt" is a phantom. By taking it at face value, and arguing within an arena circumscribed by its own ostensible terms ("loan", "debt", "interest", "pay back", etc) , howbeit even "against" it, we effectively legitimize its chicanery and cement it as a fixture of our intellectual landscape. Our reflexive hand-wringing on this "issue" needlessly traumatizes our children into believing this abstraction is real, and unintentionally programs them into an acquiescence to a dead-end future. We do untold violence to their prospects, their psyches and their hopes, however unintentionally, because we are reluctant to break our denial on this.

If We-the-People were to wake up to the reality that the "national debt" is a made-up construct, and that it could be de-constructed, there would be a new world in the morning. What is more, the sky would not fall, and the whole financial mess the nation finds itself in could begin to be resolved directly, systematically, transparently and without default to anyone.

Monetarily speaking the way forward is straightforward. It begins with the restoration of the money creation franchise to the public sector. It continues with the deflation of the "debt" bubble (not a paying of the "debt") by the redemption as they come due of already outstanding U.S. bonds with real money (United States Notes; as per the "Greenback"). It is completed with the scrapping of the fractional reserve formula, and the redefining of all "credit money" already issued as legal money.

The playing out of the transition is bigger and more complex than this of course, but eminently doable. This may sound like a preposterous vision, but, I would suggest, it is not. It only seems so because our minds have been trained out of the ability to even entertain such fits of common sense by the cumulative force of our "debt-money" rooted acculturation.

Next week the citizens of the nation will enter the voting booth in what is widely billed as a "pivotal election that will determine the future of our children's future." In spite of what has come to be years of strenuous campaigning at a cost of hundreds of millions of dollars, the issue of money is not even represented by anyone on the ballot in any definitive way. Whatever the turnout, and whoever the victors, this is a great tragedy for our nation. It was not always so. Let us resolve that it never be again.

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