(Week 4 - Saturday Aug. 23)
Some people have asked me, "What about the Greens and Ralph Nader?" As America's "third-party" alternative, many have looked to the Greens as a pivotal movement around which a force for fundamental change could possibly gather. In my view, there has been some basis for this hope.
The Greens have for the most part not been involved in the movement for monetary transformation on the Federal level. They have attracted a fair number of activists for local currencies, barter networks, land trusts, and the like, but they have largely stayed clear of taking on the issue of national currency reform.
I was for a time a member of the Green Party, and found the people there to be a fine and dedicated group of souls who talked a great deal about economic issues, but the conversation rarely extended to the nature of money. My Green friends would tell me that this obscure "banking issue" I seemed to be so obsessed with was all very interesting, but right now we have starving people to feed, wars to stop, and a planet to save, so it would just have to wait. I was never able to get them as a group to consider that perhaps this "banking issue" was in fact the very engine that was driving all those problems, and to leave it unaddressed would only insure our ultimate inability to effect transformative change.
The Greens would do well to reclaim the historical roots of their own party. They have an antecedent namesake in the Greenback Party, which was, in fact, a key player in the anti-bank-money populist movement of the late 19th and early 20th centuries. There is an evolution that has proceeded from the populist parties, through the farmer/labor movements, to the progressive/liberal/grassroots politics of more recent times, of which the Green Party is a prime beneficiary. They have a genuine heritage on the monetary issue, if they will awaken to and embrace it. It represents their authentic vehicle to break out of the perceived disgruntled-left-wing-of-the-Democratic-Party ghetto.
The Greens at this point are sometimes deemed to be a radical left-wing import, and not fully American. By re-invoking the true issues of the American Revolution, as opposed to the conventional jingoistic mythology, it could move to the very highest and most patriotic ground. From that pinnacle there is no major constituency it could not speak to. There is no argument from the "major parties" it could not trump. This is a historic opportunity.
The groundwork that has already been laid down by Ralph Nader should be taken a critical step further. He is in the eyes of many the most famous, expert and eloquent (though sometimes a bit demagogic) spokesman on the predations of corporate practice, yet I have never heard him say a word about the ruler of them all, the corporation (Federal Reserve) which has been unconstitutionally granted the charter for money creation. I can't be sure he has never done so, but clearly it has not been the centerpiece of his efforts. Without making it so, the rest of his heroic labors may find limited success on particular issues, but are doomed to overall futility, as it will leave corporate money power still "enthroned" (as Lincoln had warned about).
If Nader and the Green Party had truly picked up on the monetary issue, they would have had the formula for a truly revolutionary program that could transcend all regions of the political and ideological spectrum. The money-creation franchise is the linchpin of the entire globalist corporate order, and it would all come undone if it were removed.
With Ralph Nader as its presidential candidate, the Greens emerged briefly as a force to be reckoned with in American politics in the late '90s. Since then the party has declined, and Nader has moved on to independent runs for the presidency in 2004 and 2008. It would appear that whatever opportunity the Greens and Nader had to be that political force for monetary redemption in America has been largely dissipated. Still, for the sake of the country, one can only hope that it could return?
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
Saturday, August 23, 2008
Friday, August 22, 2008
Column #23 WHAT ABOUT DENNIS KUCINICH?
(Week 4 - Friday Aug. 22)
Some people have asked me – "What about Dennis Kucinich?" Has he not also addressed the monetary issue in the course of his campaigns? My answer it yes, but not in the deep, central and consistent manner that is required to plant it effectively in the American consciousness (overcoming, in the process, his marginalization in many people's minds as a politician of the "extreme left").
As someone who followed the political scene, I had taken notice of Kucinich's career from his days as boy-wonder candidate for the office of mayor of Cleveland. He was for a time a national curiosity. His slight stature, impish looks, outspoken views and tender age (elected to city council at age 23, to mayor at 31; youngest ever for a major American city) earned him the moniker "Dennis the Menace" from the media, who seemed determined to not take him seriously.
In the first year of Kucinich's term he ran afoul of the financial establishment by refusing to sell the Muny Light, the publicly-owned electric utility, to a private competitor (whose directorates and finances were thoroughly interlocked with the banks) as a precondition for the extension of credit to the city to roll over its previously abused finances. The result was that Cleveland's loans were called in, and the city entered into default.
Kucinich was, to all appearances, committing political suicide in the early stage of a most promising career, and he did in fact lose his bid for reelection in '79. Worse still, he became a pariah in his hometown, couldn't find a job, nearly lost his home, and commenced on an inward journey that took him into the deserts of New Mexico.
He emerged fundamentally changed, and eventually returned to the political fray in Ohio, where the wisdom of his principled action, and courageous nature of his sacrifice was starting to be appreciated; so much so that he adopted as his campaign symbol a light bulb. His vindication was complete when in 1998 the city council gave him an award "in recognition for his courage and foresight." He was elected to the state Senate in '94, and to the U.S. House of Representatives in '96. Since then he has become a leader on the national stage, and made runs for the Democratic nomination for President in 2004 and 2008, from which he has established a modest, but dedicated, base of political support across the nation.
By wildly serendipitous circumstance, Kucinich met and married Elizabeth Harper, the close aid of Steve Zarlenga, who just happens to be by some accounts (mine included) the preeminent monetary scientist and historian of our time. Now Kucinich, who had demonstrated his instincts and proved his metal by facing down the banking system, had formed a close relationship, through his wife, with the person who could perhaps teach him more about money that almost anyone else on the planet.
Kucinich learned much from Zarlenga, and became the keynote speaker at a monetary conference sponsored by his American Monetary Institute in Chicago in 2005 (a link to the video can be accessed on the AMI website).
This is a dream situation. All the pieces are there. In my estimation, however, the potential of the situation has not (yet anyway) been realized. I don't know all the reasons why. It seems to me that Kucinich has the character, knowledge and brilliance to effectively introduce the monetary question into the political scene in a profound way, but for some reason he has not as fully embraced and embodied the issue as he might. It remained a marginal and infrequently-mentioned topic even in his 2008 campaign, and it was not fully developed or adequately featured on his website.
I still have hope that Dennis Kucinich will one day emerge as one of the key voices that will reintroduce the issue of money to the American political discourse.
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
Some people have asked me – "What about Dennis Kucinich?" Has he not also addressed the monetary issue in the course of his campaigns? My answer it yes, but not in the deep, central and consistent manner that is required to plant it effectively in the American consciousness (overcoming, in the process, his marginalization in many people's minds as a politician of the "extreme left").
As someone who followed the political scene, I had taken notice of Kucinich's career from his days as boy-wonder candidate for the office of mayor of Cleveland. He was for a time a national curiosity. His slight stature, impish looks, outspoken views and tender age (elected to city council at age 23, to mayor at 31; youngest ever for a major American city) earned him the moniker "Dennis the Menace" from the media, who seemed determined to not take him seriously.
In the first year of Kucinich's term he ran afoul of the financial establishment by refusing to sell the Muny Light, the publicly-owned electric utility, to a private competitor (whose directorates and finances were thoroughly interlocked with the banks) as a precondition for the extension of credit to the city to roll over its previously abused finances. The result was that Cleveland's loans were called in, and the city entered into default.
Kucinich was, to all appearances, committing political suicide in the early stage of a most promising career, and he did in fact lose his bid for reelection in '79. Worse still, he became a pariah in his hometown, couldn't find a job, nearly lost his home, and commenced on an inward journey that took him into the deserts of New Mexico.
He emerged fundamentally changed, and eventually returned to the political fray in Ohio, where the wisdom of his principled action, and courageous nature of his sacrifice was starting to be appreciated; so much so that he adopted as his campaign symbol a light bulb. His vindication was complete when in 1998 the city council gave him an award "in recognition for his courage and foresight." He was elected to the state Senate in '94, and to the U.S. House of Representatives in '96. Since then he has become a leader on the national stage, and made runs for the Democratic nomination for President in 2004 and 2008, from which he has established a modest, but dedicated, base of political support across the nation.
By wildly serendipitous circumstance, Kucinich met and married Elizabeth Harper, the close aid of Steve Zarlenga, who just happens to be by some accounts (mine included) the preeminent monetary scientist and historian of our time. Now Kucinich, who had demonstrated his instincts and proved his metal by facing down the banking system, had formed a close relationship, through his wife, with the person who could perhaps teach him more about money that almost anyone else on the planet.
Kucinich learned much from Zarlenga, and became the keynote speaker at a monetary conference sponsored by his American Monetary Institute in Chicago in 2005 (a link to the video can be accessed on the AMI website).
This is a dream situation. All the pieces are there. In my estimation, however, the potential of the situation has not (yet anyway) been realized. I don't know all the reasons why. It seems to me that Kucinich has the character, knowledge and brilliance to effectively introduce the monetary question into the political scene in a profound way, but for some reason he has not as fully embraced and embodied the issue as he might. It remained a marginal and infrequently-mentioned topic even in his 2008 campaign, and it was not fully developed or adequately featured on his website.
I still have hope that Dennis Kucinich will one day emerge as one of the key voices that will reintroduce the issue of money to the American political discourse.
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
Thursday, August 21, 2008
Column #22 WHAT ABOUT RON PAUL?
(Week 4 - Thursday Aug. 21)
Many people have asked me – "What about Ron Paul?" Is he not talking in a fundamental way about the monetary issue you are saying is missing from the political discourse? Indeed he is, but his proposed answer to the monetary question would, in my view, only make the situation as bad, or worse.
Ron Paul is a congressman from Texas, and until very recently was a candidate for the Republican nomination for President. He is unique in that he is extremely knowledgeable and articulate about the monetary system, and has built much of his campaign around his proposal to repeal the Federal Reserve Act, and re-establish the monetary system on a different (in his view "constitutional") basis.
On a personal level, he impresses me as someone who is genuinely committed on the issue, and has the courage of his convictions. I find his informed outspokenness to be a breath of fresh air in the gaff-averse, talking-point-oriented modern political scene.
He is something of a throwback to an era when there were many learned and eloquent voices in the political arena who carried on a classic debate about what ought to be the basis for how this nation creates, issues and controls its money, and how it all relates to the ideals of the American Revolution. That debate has so completely disappeared from the scene that Paul comes off to many as an anachronism (one whose time has passed).
The notion that he is somehow passé is belied by extraordinary grassroots support he inspired during the campaign, especially from young people. He was beyond doubt a political phenomenon. Paul espouses many strongly held positions that together are characteristic of what is often described as a Libertarian worldview (he was in fact the 1988 Libertarian candidate for President).
He is adamantly pro-life, anti-gun-control, opposed to all but the most minimal involvement of the government in private matters, a foe of the Patriot Act, against the entanglement of the country in the affairs of other nations, and a staunch opponent of the War in Iraq. There are many analysts on the political scene who attribute Paul's surprising appeal to his unabashed and principled stance on these issues, and no doubt there is an element of truth to that. In my experience, though, the congressman has also touched a deep nerve in the American psyche about money. For this reason I heartily welcome his contribution to the political discourse.
That said, there is also an aspect of his program that I find highly problematic, and that has to do with the specific change in the monetary system he proposes. Stated succinctly, he feels that the true alternative to a currency based on "debt," (i.e. borrowed into circulation from a private banking system), is one in that is "backed by gold."
The debate over whether the currency of a nation should be based on gold, or the fiat of the sovereign (in the American case the sovereign being we the people through our government) is one that goes back to ancient times. This is obviously too big a story to tell in detail in this short article.
Suffice it to say that the question had a formative effect in the emergence, shaping and preservation of the American nation. For example, as the Civil War was breaking out President Lincoln was pressured to borrow the money to fight it from the banking system, reportedly at interest rates ranging from 24 to 36%. Lincoln wisely rejected that advice, and instead had the U.S. Treasury issue United States Notes, a currency that came to be known as the "greenbacks."
The policy was deemed so successful, and proved to be so popular, that the nation emerged from the war with a solid majority of the people favoring the greenback as the basis for the money supply. By many accounts this led to a great deal of intrigue by which the will of the people was allegedly subverted, and the nation was denied its preferred money due to the influence of bankers who advocated that the currency be based on gold ("hard money" they called it).
This so outraged the public that a host of "populist" parties emerged (some becoming very influential and scoring major electoral victories), plus major pro-greenback factions coalesced in both the Democratic and Republican parties. Indeed, in the half-century after the Civil War the dominant issue on the political scene by a wide margin was who was going to have control over the creation, issuance and regulation of money, and on what terms.
At the 1896 Democratic convention in Chicago a relatively unknown senator from Nebraska, William Jennings Bryan, gave what is widely recognized one of the most eloquent and impassioned orations in the annals of American history. Known now as the "Cross of Gold" speech, it ended with the words – "Having behind us the producing masses of this nation and the world, supported by the commercial interests, the laboring interests and the toilers everywhere, we will answer their demand for a gold standard by saying to them: You shall not press down upon the brow of labor this crown of thorns, you shall not crucify mankind upon a cross of gold."
The thunderous approval that arose from that hall catapulted Bryan from being an obscure "prairie populist," to the Presidential nominee of his party that year, and in two subsequent election cycles. Has Ron Paul forgotten this chapter of our history? I would love to hear his thoughts on the matter.
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
Many people have asked me – "What about Ron Paul?" Is he not talking in a fundamental way about the monetary issue you are saying is missing from the political discourse? Indeed he is, but his proposed answer to the monetary question would, in my view, only make the situation as bad, or worse.
Ron Paul is a congressman from Texas, and until very recently was a candidate for the Republican nomination for President. He is unique in that he is extremely knowledgeable and articulate about the monetary system, and has built much of his campaign around his proposal to repeal the Federal Reserve Act, and re-establish the monetary system on a different (in his view "constitutional") basis.
On a personal level, he impresses me as someone who is genuinely committed on the issue, and has the courage of his convictions. I find his informed outspokenness to be a breath of fresh air in the gaff-averse, talking-point-oriented modern political scene.
He is something of a throwback to an era when there were many learned and eloquent voices in the political arena who carried on a classic debate about what ought to be the basis for how this nation creates, issues and controls its money, and how it all relates to the ideals of the American Revolution. That debate has so completely disappeared from the scene that Paul comes off to many as an anachronism (one whose time has passed).
The notion that he is somehow passé is belied by extraordinary grassroots support he inspired during the campaign, especially from young people. He was beyond doubt a political phenomenon. Paul espouses many strongly held positions that together are characteristic of what is often described as a Libertarian worldview (he was in fact the 1988 Libertarian candidate for President).
He is adamantly pro-life, anti-gun-control, opposed to all but the most minimal involvement of the government in private matters, a foe of the Patriot Act, against the entanglement of the country in the affairs of other nations, and a staunch opponent of the War in Iraq. There are many analysts on the political scene who attribute Paul's surprising appeal to his unabashed and principled stance on these issues, and no doubt there is an element of truth to that. In my experience, though, the congressman has also touched a deep nerve in the American psyche about money. For this reason I heartily welcome his contribution to the political discourse.
That said, there is also an aspect of his program that I find highly problematic, and that has to do with the specific change in the monetary system he proposes. Stated succinctly, he feels that the true alternative to a currency based on "debt," (i.e. borrowed into circulation from a private banking system), is one in that is "backed by gold."
The debate over whether the currency of a nation should be based on gold, or the fiat of the sovereign (in the American case the sovereign being we the people through our government) is one that goes back to ancient times. This is obviously too big a story to tell in detail in this short article.
Suffice it to say that the question had a formative effect in the emergence, shaping and preservation of the American nation. For example, as the Civil War was breaking out President Lincoln was pressured to borrow the money to fight it from the banking system, reportedly at interest rates ranging from 24 to 36%. Lincoln wisely rejected that advice, and instead had the U.S. Treasury issue United States Notes, a currency that came to be known as the "greenbacks."
The policy was deemed so successful, and proved to be so popular, that the nation emerged from the war with a solid majority of the people favoring the greenback as the basis for the money supply. By many accounts this led to a great deal of intrigue by which the will of the people was allegedly subverted, and the nation was denied its preferred money due to the influence of bankers who advocated that the currency be based on gold ("hard money" they called it).
This so outraged the public that a host of "populist" parties emerged (some becoming very influential and scoring major electoral victories), plus major pro-greenback factions coalesced in both the Democratic and Republican parties. Indeed, in the half-century after the Civil War the dominant issue on the political scene by a wide margin was who was going to have control over the creation, issuance and regulation of money, and on what terms.
At the 1896 Democratic convention in Chicago a relatively unknown senator from Nebraska, William Jennings Bryan, gave what is widely recognized one of the most eloquent and impassioned orations in the annals of American history. Known now as the "Cross of Gold" speech, it ended with the words – "Having behind us the producing masses of this nation and the world, supported by the commercial interests, the laboring interests and the toilers everywhere, we will answer their demand for a gold standard by saying to them: You shall not press down upon the brow of labor this crown of thorns, you shall not crucify mankind upon a cross of gold."
The thunderous approval that arose from that hall catapulted Bryan from being an obscure "prairie populist," to the Presidential nominee of his party that year, and in two subsequent election cycles. Has Ron Paul forgotten this chapter of our history? I would love to hear his thoughts on the matter.
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
Wednesday, August 20, 2008
Column #21 WHY TAXING & SPENDING ADJUSTMENTS CANNOT ELIMINATE "THE DEFICIT"
(Week 4 Wednesday Aug. 20)
In yesterday's column I said that there is no combination of taxing and spending priorities that will remedy the Federal "debt" problem. This statement is contrary to conventional economic wisdom, to put it mildly. To make my case I would direct the reader's attention to the private bank loan transaction by which our money comes into being.
We as a sovereign nation have the right, power and responsibility to issue our own money supply as a public good and an essential feature of the commons. The public body to whom this task naturally falls is the Federal government. Unfortunately the people who compose the Federal government have long since been pressured into abrogating that essential trust to private interests, and we the people have not held them accountable because, to a great extent, we too have been influenced in ways that are contrary to our true welfare.
Now if the nation needs a money supply with which to conduct its commerce, it cannot turn to its government, but is obliged to go to the banks. As private businesses, banks work for a profit. They are happy to "loan" to the nation its circulating medium, but on the condition that they get paid back more than they "loan." If a nation (as for a person) borrows at "interest" the money it needs to live on, it follows that it can only slide ever deeper into "debt."
It makes little difference to the banker whether the "borrowing" is done by persons from the private or the public sector. The overriding fact of life within our present system is that someone has to bite the bullet and take on more "debt." The struggle over who that will ultimately be is the hidden engine that drives the fractious nature of our political life. There are compelling factors that make it virtually certain that it will fall to the Federal government to do much of the borrowing. The taxing and spending policies of a President can affect this balance, but realistically only to a limited extent.
It should be noted that private banks within the Federal Reserve System are controlled by what is called a "fractional reserve formula." This is a pyramid scheme that is too complex to describe in detail in this short article, but one of its features is that the money borrowed into circulation by the Federal government and deposited in banks forms the "fractional reserve" base upon which the banking system can create new money. This means that there has to exist a Federal "debt" for the system, as it is designed, to even function.
It is not mandatory that the Federal government assume as large a share of the taking on of national "indebtedness" as it has done, but it remains a fact that the private and public sectors combined must take on more "debt" at a continuously increasing rate for the nation to avoid a contraction of the money supply, which can only lead to economic recession, and eventually depression.
The rate of Federal "debt" aggregation does in fact increase or decrease from time to time, as when deficit spending increased for theReagan/Bush/Bush years, and decreased during the Clinton presidency. It should be noted, however, that there were underlying social, monetary and political cycles that were driving the numbers associated with these periods, and the relative size of the Federal deficit had little to do with how quickly the country as a whole was sinking into "debt."
For complex reasons, during the Clinton administration the private sector took on "debt" at a rapid rate, and so the government did not have to. During the Reagan/Bush/Bush years, in contrast, private borrowing decreased and the government found itself in the position of having to step in as the borrower of last resort to keep the economy supplied with enough money.
None of these Presidents, as far as I can see, ever gave any indications that they understood the economic wave that they in their turn were riding. Instead, their spokespersons spent their energies manufacturing spin by which they attempted to take credit for whatever favorable numbers emerged, and explain away those that put them in a bad light.
In the meantime, the nation continued its uninterrupted combined private and public descent into "debt," and has arrived now at a point of reckoning where the situation can no longer be denied or papered over. This is what McCain and Obama need to be talking about.
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
In yesterday's column I said that there is no combination of taxing and spending priorities that will remedy the Federal "debt" problem. This statement is contrary to conventional economic wisdom, to put it mildly. To make my case I would direct the reader's attention to the private bank loan transaction by which our money comes into being.
We as a sovereign nation have the right, power and responsibility to issue our own money supply as a public good and an essential feature of the commons. The public body to whom this task naturally falls is the Federal government. Unfortunately the people who compose the Federal government have long since been pressured into abrogating that essential trust to private interests, and we the people have not held them accountable because, to a great extent, we too have been influenced in ways that are contrary to our true welfare.
Now if the nation needs a money supply with which to conduct its commerce, it cannot turn to its government, but is obliged to go to the banks. As private businesses, banks work for a profit. They are happy to "loan" to the nation its circulating medium, but on the condition that they get paid back more than they "loan." If a nation (as for a person) borrows at "interest" the money it needs to live on, it follows that it can only slide ever deeper into "debt."
It makes little difference to the banker whether the "borrowing" is done by persons from the private or the public sector. The overriding fact of life within our present system is that someone has to bite the bullet and take on more "debt." The struggle over who that will ultimately be is the hidden engine that drives the fractious nature of our political life. There are compelling factors that make it virtually certain that it will fall to the Federal government to do much of the borrowing. The taxing and spending policies of a President can affect this balance, but realistically only to a limited extent.
It should be noted that private banks within the Federal Reserve System are controlled by what is called a "fractional reserve formula." This is a pyramid scheme that is too complex to describe in detail in this short article, but one of its features is that the money borrowed into circulation by the Federal government and deposited in banks forms the "fractional reserve" base upon which the banking system can create new money. This means that there has to exist a Federal "debt" for the system, as it is designed, to even function.
It is not mandatory that the Federal government assume as large a share of the taking on of national "indebtedness" as it has done, but it remains a fact that the private and public sectors combined must take on more "debt" at a continuously increasing rate for the nation to avoid a contraction of the money supply, which can only lead to economic recession, and eventually depression.
The rate of Federal "debt" aggregation does in fact increase or decrease from time to time, as when deficit spending increased for theReagan/Bush/Bush years, and decreased during the Clinton presidency. It should be noted, however, that there were underlying social, monetary and political cycles that were driving the numbers associated with these periods, and the relative size of the Federal deficit had little to do with how quickly the country as a whole was sinking into "debt."
For complex reasons, during the Clinton administration the private sector took on "debt" at a rapid rate, and so the government did not have to. During the Reagan/Bush/Bush years, in contrast, private borrowing decreased and the government found itself in the position of having to step in as the borrower of last resort to keep the economy supplied with enough money.
None of these Presidents, as far as I can see, ever gave any indications that they understood the economic wave that they in their turn were riding. Instead, their spokespersons spent their energies manufacturing spin by which they attempted to take credit for whatever favorable numbers emerged, and explain away those that put them in a bad light.
In the meantime, the nation continued its uninterrupted combined private and public descent into "debt," and has arrived now at a point of reckoning where the situation can no longer be denied or papered over. This is what McCain and Obama need to be talking about.
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
Tuesday, August 19, 2008
Column #20 WHAT THE CANDIDATES DON'T "GET"
(Week 4 - Tuesday Aug. 19)
There is an area of critical public concern that John McCain, Barack Obama, and the entire lot of candidates for Federal office (Congress, Senate, Presidency) will no doubt hold forth on endlessly, but it is also true that virtually none of them have a clue as to how to resolve it. "It's the economy, S#*/@d!" The form this issue most commonly takes is an obsession with how to deal with the yearly Federal "deficit" and mounting Federal "debt." The range of other economic issues will be derivatives, more-or-less, of the alarm over the rising national tide of red ink.
We will be admonished by each candidate that the government is taking in too little revenue and/or spending too much money. With virtually a single voice they will tell us that when we come to our senses and start running the Federal government more "like a business," then we will get our economic house in order. Typically, each will claim to have discerned the taxing and spending priorities that will allow us to "grow the economy" so we can "turn the corner" and "start paying down the debt" so "our children won't have to."
This is truly a laudable intent, but an utter mischaracterization of the problem. There is no combination of taxing and spending priorities that will remedy the so-called "debt" problem. The "debt" does not come from "taxing-&-spending," and no variation thereof will fix it.
Our unquestioning attachment to this framing of the "national debt" issue, and the whole array of ideologies, notions and interests that have grown up around it, is the great rock upon which the political process, ship of state, and best intentions of we the people are foundering. If that were not so, why has no generation of elected public servants virtually in the last century succeeded in "turning the corner on debt"? Is the answer as simple as saying that the category of human beings we call "politicians" (and whom we elect and re-elect) is uniquely corrupt beyond any capability of answering their calling, or does blaming politicians too often excuse us from having to think more deeply on the matter?
We the electorate are frequently admonished as to how we can't pay down the "debt" because we have not achieved enough "economic growth." In the century-almost since the establishment of the Federal Reserve System, the U.S. economy has in real terms experienced an ongoing explosion of economic production that quantitatively dwarfs the increase of any nation (perhaps all nations combined) before it, and now threatens to overwhelm the capacities of the earth on which we depend. Why, then, has not this "growth" enabled us to "grow" out of the "debt." Why does the "debt" evidently increase in lockstep with the "growth." Is more "growth" the answer?
The United States is a sovereign nation with the right to issue its own money supply. There is no cost in doing so, regardless of the amount issued (except for the incidental material cost of handling whatever medium of currency is deemed to be most convenient).
To say that the overall economy of a nation that has the power to issue its own money supply, can also be in "debt" within the circle of its own domestic production-&-consumption cycle is a contradiction in terms. People within an economy can be in debt to each other, but how can an economy be in "debt" to itself? How can a free people who are conscious of what they are doing hold themselves in "debt" bondage? Stranger still, why, supposedly, is it necessary to sell bonds to foreigners so that we can get enough money to circulate as purchasing power in our own domestic marketplace to cover the cost of the products we ourselves make? Stated more succinctly, why are we not richer for all our wealth, instead of poorer by all this "debt"?
These are the questions that McCain and Obama need to be able to answer. I will offer my own suggested answers in very succinct terms as these columns unfold.
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
There is an area of critical public concern that John McCain, Barack Obama, and the entire lot of candidates for Federal office (Congress, Senate, Presidency) will no doubt hold forth on endlessly, but it is also true that virtually none of them have a clue as to how to resolve it. "It's the economy, S#*/@d!" The form this issue most commonly takes is an obsession with how to deal with the yearly Federal "deficit" and mounting Federal "debt." The range of other economic issues will be derivatives, more-or-less, of the alarm over the rising national tide of red ink.
We will be admonished by each candidate that the government is taking in too little revenue and/or spending too much money. With virtually a single voice they will tell us that when we come to our senses and start running the Federal government more "like a business," then we will get our economic house in order. Typically, each will claim to have discerned the taxing and spending priorities that will allow us to "grow the economy" so we can "turn the corner" and "start paying down the debt" so "our children won't have to."
This is truly a laudable intent, but an utter mischaracterization of the problem. There is no combination of taxing and spending priorities that will remedy the so-called "debt" problem. The "debt" does not come from "taxing-&-spending," and no variation thereof will fix it.
Our unquestioning attachment to this framing of the "national debt" issue, and the whole array of ideologies, notions and interests that have grown up around it, is the great rock upon which the political process, ship of state, and best intentions of we the people are foundering. If that were not so, why has no generation of elected public servants virtually in the last century succeeded in "turning the corner on debt"? Is the answer as simple as saying that the category of human beings we call "politicians" (and whom we elect and re-elect) is uniquely corrupt beyond any capability of answering their calling, or does blaming politicians too often excuse us from having to think more deeply on the matter?
We the electorate are frequently admonished as to how we can't pay down the "debt" because we have not achieved enough "economic growth." In the century-almost since the establishment of the Federal Reserve System, the U.S. economy has in real terms experienced an ongoing explosion of economic production that quantitatively dwarfs the increase of any nation (perhaps all nations combined) before it, and now threatens to overwhelm the capacities of the earth on which we depend. Why, then, has not this "growth" enabled us to "grow" out of the "debt." Why does the "debt" evidently increase in lockstep with the "growth." Is more "growth" the answer?
The United States is a sovereign nation with the right to issue its own money supply. There is no cost in doing so, regardless of the amount issued (except for the incidental material cost of handling whatever medium of currency is deemed to be most convenient).
To say that the overall economy of a nation that has the power to issue its own money supply, can also be in "debt" within the circle of its own domestic production-&-consumption cycle is a contradiction in terms. People within an economy can be in debt to each other, but how can an economy be in "debt" to itself? How can a free people who are conscious of what they are doing hold themselves in "debt" bondage? Stranger still, why, supposedly, is it necessary to sell bonds to foreigners so that we can get enough money to circulate as purchasing power in our own domestic marketplace to cover the cost of the products we ourselves make? Stated more succinctly, why are we not richer for all our wealth, instead of poorer by all this "debt"?
These are the questions that McCain and Obama need to be able to answer. I will offer my own suggested answers in very succinct terms as these columns unfold.
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
Monday, August 18, 2008
Column #19 McCAIN & OBAMA
(Week 4 - Monday Aug. 18)
On Saturday evening the nation was presented with its first one-to-one encounter between the presumptive Presidential nominees for the two major parties, John McCain and Barack Obama. It was a unique "faceoff" in that the two candidates never actually sat across from each other, but came to the stage in alternate one-hour sessions (decided by the luck of the draw), each answering an identical set of questions from the same interviewer, Rick Warren, pastor of Saddleback Church in Lake Forest, California.
The form of the event lent itself to a direct comparison of the two men, but without the posturing and sparring that dominates the dynamics of more conventional political debates. In their respective ways each acquitted himself well. Each delivered what I perceived to be intelligent and heartfelt responses, and the reception by the audience appeared to be genuinely warm for both. The event was, it might be said, the American political pageant at its challenging, but congenial, best.
Within the context of their respective worldviews, I found the words of both to be credible in all categories except for one; i.e. almost anything having to do with money and the economy. My remarks here are in no way motivated by a desire to cast a shadow on the abilities and good faith of these two men. On the contrary, on issues related to the economy, as on others, they seemed to be bright and sincere. What then, the reader might fairly ask, is this writer talking about?
It is my experience that when it comes to money and economics, virtually the whole of the American political discourse lives within a strange through-the-looking-glass realm where nothing is what it is purported to be (readers may by now have gotten a feeling for what I mean in the columns that have preceded this one).
This may seem to be a bold statement, but, I suggest, it is easy to document from the newspaper headlines of the present, and of the last half-century or more. Candidates for Federal office (Congressman, Senator, President) claim, election cycle after election cycle, that if the nation would only adopt their particular nuance of taxing and spending priorities, we would at last turn the corner on "the deficit," and in turn the other intractable economic dilemmas of our times. Some combination of those presented get elected, but when the next cycle rolls around, the problems are still there, only worse. We hear, in repackaged form, the same purported remedies and earnestly delivered promises all over again. I would suggest that we as a nation cannot afford to go much further without coming to a realization of what is wrong.
Candidates for office, almost without exception, treat the economic question as if it were fiscal (i.e. budgetary) in nature; i.e. as if its problems could be remedied by adopting some particular combination of taxing and spending policies; be they liberal, conservative or any variation thereof. I would suggest that this is an illusion. The "deficit" is not a fiscal problem. It is a monetary problem; i.e. related to the way we as a society create, issue and control our money. Prudent budgetary practice is well, but if by the very mode by which our society gets its money it always comes up short in the ability to pay its bills, then no conceivable combination of taxing and spending parameters is going to remedy the shortfall.
Neither McCain or Obama give any indication whatsoever that they understand the true nature of the problem, which is not surprising since almost no other candidate on the American scene in the last half-century has done so either (there was a time when many, and the mass of the electorate, clearly did). The extent to which the economy was addressed in the Saddleback event was disappointingly brief (Obama hardly touched upon it), but the candidates' positions are easily ascertainable from other sources, and the candidates' websites themselves.
So, what specifically is it that the McCain and Obama need to become aware of to be effective with respect to their economic intentions? We will address that in the next column.
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
On Saturday evening the nation was presented with its first one-to-one encounter between the presumptive Presidential nominees for the two major parties, John McCain and Barack Obama. It was a unique "faceoff" in that the two candidates never actually sat across from each other, but came to the stage in alternate one-hour sessions (decided by the luck of the draw), each answering an identical set of questions from the same interviewer, Rick Warren, pastor of Saddleback Church in Lake Forest, California.
The form of the event lent itself to a direct comparison of the two men, but without the posturing and sparring that dominates the dynamics of more conventional political debates. In their respective ways each acquitted himself well. Each delivered what I perceived to be intelligent and heartfelt responses, and the reception by the audience appeared to be genuinely warm for both. The event was, it might be said, the American political pageant at its challenging, but congenial, best.
Within the context of their respective worldviews, I found the words of both to be credible in all categories except for one; i.e. almost anything having to do with money and the economy. My remarks here are in no way motivated by a desire to cast a shadow on the abilities and good faith of these two men. On the contrary, on issues related to the economy, as on others, they seemed to be bright and sincere. What then, the reader might fairly ask, is this writer talking about?
It is my experience that when it comes to money and economics, virtually the whole of the American political discourse lives within a strange through-the-looking-glass realm where nothing is what it is purported to be (readers may by now have gotten a feeling for what I mean in the columns that have preceded this one).
This may seem to be a bold statement, but, I suggest, it is easy to document from the newspaper headlines of the present, and of the last half-century or more. Candidates for Federal office (Congressman, Senator, President) claim, election cycle after election cycle, that if the nation would only adopt their particular nuance of taxing and spending priorities, we would at last turn the corner on "the deficit," and in turn the other intractable economic dilemmas of our times. Some combination of those presented get elected, but when the next cycle rolls around, the problems are still there, only worse. We hear, in repackaged form, the same purported remedies and earnestly delivered promises all over again. I would suggest that we as a nation cannot afford to go much further without coming to a realization of what is wrong.
Candidates for office, almost without exception, treat the economic question as if it were fiscal (i.e. budgetary) in nature; i.e. as if its problems could be remedied by adopting some particular combination of taxing and spending policies; be they liberal, conservative or any variation thereof. I would suggest that this is an illusion. The "deficit" is not a fiscal problem. It is a monetary problem; i.e. related to the way we as a society create, issue and control our money. Prudent budgetary practice is well, but if by the very mode by which our society gets its money it always comes up short in the ability to pay its bills, then no conceivable combination of taxing and spending parameters is going to remedy the shortfall.
Neither McCain or Obama give any indication whatsoever that they understand the true nature of the problem, which is not surprising since almost no other candidate on the American scene in the last half-century has done so either (there was a time when many, and the mass of the electorate, clearly did). The extent to which the economy was addressed in the Saddleback event was disappointingly brief (Obama hardly touched upon it), but the candidates' positions are easily ascertainable from other sources, and the candidates' websites themselves.
So, what specifically is it that the McCain and Obama need to become aware of to be effective with respect to their economic intentions? We will address that in the next column.
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
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