Now we come to the final possible action that could restore us on the path of prosperity.
(10) Restoring the power to create money to our elected representatives, as specified in the Constitution, instead of farming this out to private enterprise.
Throughout most of history, from the time of the ancient goldsmiths to the bankers and now the privately owned Federal Reserve it has been the practice of kings, emperors and presidents to borrow money from those that lend and burden their people with the high interest on the loans that ever accumulates until the collapse of the kingdom.
The United States has proved to be no exception to this practice. As of this writing we have borrowed over $14 trillion and pay around $450 billion yearly in interest. At the rate the interest is increasing it will not be long before every dollar collected through federal income tax will be owed to interest and do nothing to reduce the principle.
One has to wonder why we allowed ourselves to get into this situation when the Constitution (Section Eight) provides us with a brilliant way to escape debt and interest. It says Congress has the power “to coin money, and regulate the value thereof.”
Since Congress has Constitutional power to coin (create) money this is one of the jobs our representatives have taken upon themselves to do – right?
Not quite. It is true that the taxpayers do bear the expense of minting coins and printing paper money. The only reason the government has retained this power to themselves is because it is a costly process and bankers do not want to do it.
Only about 3% of the money supply is composed of paper or coins. Economic writer Ellen H. Brown tells us this:
“The other 97 percent exists only as data entries on computer screens, and all of this money was created by banks in the form of loans.
“The money that banks lend is not recycled from pre-existing deposits. It is new money, which did not exist until it was lent.
Thirty percent of the money created by banks with accounting entries is invested for their own accounts.”
Web of Debt by Ellen H. Brown, 2008, Page 3
So it looks like all the new money put into circulation comes from three sources.
(1) 30% of it comes from banks investing in their own pet projects.
(2) Loans to businesses and individuals.
(3) Loans to our government.
When loans are repaid the money is virtually destroyed (withdrawn from the system) and must be replaced by new loans. This is one reason that the Fed likes to make loans to the government. The money is never paid back. We only pay on the interest and leave the principle untouched.
Many people who are concerned about overspending complain that the government just prints up money that is created out of thin air, but this is a misconception. Except for a small amount of hard cash the new money the government puts into circulation is not printed or created by it but by the Federal Reserve, and, as mentioned previously, this is a private company, not owned by the people.
Here’s the situation. Our Congress, which has been granted power to create money by the Constitution, has yielded that power to a private corporation. This corporation does not even have the expense of printing money but merely enters the loans on a computer database and charges us the interest from that point on.
It is difficult to imagine an individual giving away his power in such an outrageous manner but if he did it would go something like this.
Don has a bountiful cherry tree in his back yard. Anytime he wants some cherries all he has to do is walk outside, go up to the tree and pick all he needs. Better yet he has a kid that loves to pick cherries so all Don has to do is ask the kid to go pick him some and he has all he needs.
The neighbor notices the kid picking cherries and comes up with an idea to make a profit. He approaches Don and says, “I’ll tell you what. I’ll manage your kid’s cherry picking to make sure he doesn’t pick too many or not enough. All the cherries I will have your kid deliver to you will be considered a loan and I’ll only charge you 5% of the value of the cherries until you pay the cherries back. Sometimes the rate could be more or less but we’ll settle on this amount for now. But rest assured, I’ll make sure you have cherries whenever you need them.”
Now Don’s wife hit him on the head with a frying pan that morning so he wasn’t thinking too clearly. In an extremely fussy state of mind he said, “Yes, that sounds okay, I guess.”
All of Don’s friends and family thought Don was stark raving mad but he made an agreement and decided to honor it. It wasn’t long before the problem became worse than anyone foresaw. Don was unable to make any payment on the borrowed cherries – cherries from his own backyard – so as he used additional cherries the cherry debt became greater and the interest payment became huge.
Finally, the day came that the interest on the cherries amounted to a greater value than the cherries available to pick. It was at this point that Don finally awoke to his terrible situation, but, alas, it was too late. The neighbor laid claim to full ownership of the tree but made this nice little offer. “If you come work in my back yard and take care of my garden I’ll let you have a few cherries now and then.”
Sounds silly, doesn’t it? Most of us would not consider such a raw deal even if we got whacked in the head with a frying pan. But the amazing thing that is We The People have made a similar deal with our neighbor, the Federal Reserve.
Instead of creating our own money interest free we not only let someone else do this for us but we pay them interest on what should be our own money just as Don pays interest on his own cherries.
Is it any wonder our country is in trouble when our representatives are no smarter than Don?
Now we clearly see the problem the question is this: Is there anything we can do about it?
The answer, fortunately, is yes, for there is no problem that doesn’t have a solution and there is no hole that is so deep that one cannot climb out into the fresh air and sunlight of a better life.
Read This entire series. Here are the links.
- The Economy – One Last Chapter
- Creating Sound Money
- The Gold Standard, Part 1
- The Gold Standard, Part 2
- The Gold Standard, Part 3
- The Gold Standard, Part 4
- The Gold Standard, Part 5
- The Gold Standard, Part 6
- The Gold Standard, Part 7
- The Fed and Common Sense
- Additional Points
- Alternative Currency
- Giving Away Our Power
- Parable of Money Systems
- To Fiat or Not Fiat
- Fiat Money of the Past, Part 1
- Fiat Money of the Past, Part 2
- Fiat Money of the Past, Part 3
- Fiat Money of the Past, Part 4
- Fiat Money of the Past, Part 5
- Fiat Money of the Past, Part 6
- Examining Fiat Money
- A Flawed Money System
- The Ideal Money
- A Time for All Things
- The New Greenback
- Narrowing the Focus
- People Taking Charge
- Creating Wealth
Copyright 2011 by J J Dewey
Copyright by J J Dewey
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