Democrats in Denver Should Skip One of Their Parties and Read the American Monetary Act

How are things going at the Democratic Party National Convention in Denver this week?

Are they talking about the fact that the Western world is run by an international financial elite headquartered in London, the financial capitals of mainland Europe (such as Frankfurt, Hamburg, Amsterdam, Paris, and Milan), and, of course, New York City?

Are they mentioning at their cocktail parties that the financial elite exert control over the world’s population through the cartels that make up the world’s producing economies and through the civilian and military bureaucracies who work for the governments that kow-tow to them?

Of course they know that the most important cartels are those which control energy resources. And that of these, the commodity of central importance is oil. But is any of this helping them draw conclusions regarding the doubling of oil prices during the last year or about the largest oil company profits in history?

Also, they should be drawing the right conclusions from the fact that every private and pubic enterprise operates on the basis of a money economy, though it would be more accurate to call it a credit economy. This means that whoever controls the issuance of money and credit controls the world. And the world’s monetary systems function on the basis of money and credit being introduced into circulation through loans from the banking system, loans for which interest is charged. So what should that tell them?

In fact, they should be pointing out to each other and their TV viewers that the charging of interest for the use of money is a chain around the neck of everyone on earth. Further, that these cumulative interest charges are built into the price of every product that is manufactured or consumed. And that growth of debt means price increases too.

They should be honest in making it clear that the world is a master-slave society, that the slaves are those who borrow and pay interest, that the masters are those who collect the interest, and that this unjust system has existed in one form or another for thousands of years.

The candidates and delegates are talking about the aspirations of the American people and how everyone should have an opportunity to achieve their dreams. But if the United States were a free nation, they would also be talking about a financial system that destroys people’s dreams.

Unfortunately, the highest rung the candidates and delegates have been able to reach on the ladder of modern-day slavery is the need for more jobs—but they fail to note that jobs are not only the means by which people live, but also the instruments for them to pay the heavy burden of interest the masters of finance require.

What they won’t say is that the world economy is based on usury, something religions used to consider a crime (and which Islam still does). Usury is the charging of interest for the use of money. As the religions backed off from their prohibitions of interest, usury became just excess interest. But that’s not what the word really means.

So what have over two centuries of usury done to the United States?

The best answer ever given to that question was contained in a paper entitled “Revisiting U.S. Public and Private Debt” published in January 2005 by Dr. Bob Blain, Emeritus Professor of Sociology at Southern Illinois University. The paper updated an earlier study by Dr. Blain published for the United Nations Educational, Scientific, and Cultural Organization (UNESCO) in the International Social Science Journal, November, 1987, Paris, pages 577-591.

In his paper, Dr. Blain examined the growth of total public and private debt in the U.S. Total debt includes “the debts of governments (federal, state, and local), corporations, farmers, home mortgages, and consumer, commercial, and financial debts.”

In his analysis, Dr. Blain began with data from the Bureau of Economic Analyses of the United States Department of Commerce which covered the years 1916-1976. After that year the Bureau stopped publishing the data.

The figures showed that from 1916-1976, total U.S. debt grew from $82 billion to $3,800 billion ($3.8 trillion). But most of that growth was during the last 21 years, from 1955-1976, when it began to grow exponentially. Dr. Blain wrote, “The consistency of the pattern suggests that some imperative is at work, something that requires debt to increase.”

Dr. Blain found the answer by researching American history. He wrote: “Then I read G.R. Taylor’s 1950 book, Hamilton and the National Debt, which described the debate over Alexander Hamilton’s plan to fund the new economy with borrowed money.” He continued:

The most revealing account was a speech by the first congressman from Georgia, James Jackson, on February 9, 1790, in which he predicted that adoption of Hamilton’s funding plan would lead to the explosive growth of debt. Jackson said, ‘Though our present debt be but a few millions, in the course of a single century it may be multiplied to an extent we dare not think of.1

From the very beginning, the U.S. had a monetary system based on borrowing and debt. First came the thousands of state chartered banks that began operating late in the Revolutionary War period and continued in one form or another until today. Then there were the two early central banks: the First Bank of the United States (1791-1811) and the Second Bank of the United States (1816-1836). Today’s national banking system began during the Civil War with the National Banking Acts of 1863-64. Then there is the system we are living under today, the Federal Reserve, chartered by Congress in 1913. Even during the times when the government has sold its debt directly to the public, as with war bonds, savings bonds, and Treasury notes and bills, that too has been money borrowed at interest.

Although there have been times in history when money entered into circulation other than through debt, such as with coinage and the Civil War greenbacks, those were exceptions and today are of little importance.

Dr. Blain estimated that from the time Alexander Hamilton placed the U.S. under a debt-based monetary system until today, the debt has compounded at 5.8 percent annually. The big problem with this system, he said, was “that no money was created to pay interest.” He continued:

Loans created only the principal. Interest had to be paid out of principal. So payment of interest reduced the money supply and slowed economic activity. Recovery could come only when new loans were taken out at least equal to interest paid.

Dr. Blain concluded, “As long as the money supply of a nation is created as debt costing interest, debt must grow by compound interest.” From a longer-range view, it’s a system that is constantly collapsing and that must constantly be bailed out.

Dr. Blain next sought to update his figures past the 1976 data from the Bureau of Economic Analyses. Turning to the Federal Reserve’s series on “Total Credit Market Debt Outstanding,” he found remarkably similar indicators.

He found that adding data from the Federal Reserve from 1945 to 2003 showed the “debt explosion” continuing. In 1945 total debt was $463.4 billion. In 2003 it was $44,967.7 billion ($45.0 trillion). When he projected the debt level for 2010, he arrived at a figure of $74.9 trillion. By this time the debt curve was climbing so steeply there would be almost a doubling of the amount of total debt in only nine years.

It might be argued that these figures do not take into account inflation. This is because lending at interest is the cause of inflation. The dollars still have to be repaid with interest. The problem occurs when economic growth, measured by GDP, does not keep up.

Looking at the growth of GDP from 1945 to 2003, the increase was from $223.1 billion to $10,987.9 billion, a factor of 49. But the debt ($463.4 billion vs. $44,967.7 billion) grew by a factor of 97, almost twice the rate of GDP growth. Thus the total debt burden on the economy has doubled from a ratio of 2:1 to more than 4:1 (though it was much less than that during the early days of the nation).

But with continued compound growth of debt and a slow- or no-growth state of the economy as we head into a recession, we are starting to see what Dr. Blain called an “acceleration to meltdown.” He wrote:

We are buying more and more in the same amount of time. Witness the efforts of people to get rid of their excess through yard sales, storage units, and big trash pickup days, and the massive size of what are euphemistically called landfills. While two billion people in the world lack basics such as clean water, food, and shelter, Americans throw away their microwave ovens, televisions, computers, refrigerators, furniture, and cars. Meanwhile, acceleration is applauded as increasing productivity. It’s like arguing that cancer is good because it grows.

These are the things the Democrats in Denver should be talking about, instead of going to so many parties. They should be making note that the U.S., to quote economists close to the Federal Reserve, is “functionally bankrupt.”

In fact, the debt this nation owes to the banks, to foreign creditors, and to each other can never be paid off. Further, one big reason for all of our fruitless military endeavors overseas may simply be to escape unpleasant economic realities at home. But this is pointless. Nothing creates more debt than war, as the bankers have always known.

The only solution is to adopt a monetary system that is not based on debt. Dr. Blain makes a couple of specific recommendations: 1) “Stop using percentage rates to calculate charges for the use of money”; and 2) “Congress must supply the economy with a money base that is debt-free and interest-free.”

The second point is a call for a new monetary system, not one based solely on lending by the banks or on government borrowing. One organization that has developed a blueprint for such a system is the American Monetary Institute (AMI), headquartered in Chicago. The director of the AMI is Stephen Zarlenga, author of a massive, groundbreaking work: The Lost Science of Money (AMI, 2002). Zarlenga’s assistant is Jamie Walton, a monetary reformer from New Zealand.

AMI will be holding its fourth annual conference in Chicago on September 25-28. Expected as keynote speaker is Congressman Dennis Kucinich, whose wife Elizabeth once worked as an intern at AMI. Dr. Bob Blain will be a featured speaker.

On the AMI website is a remarkable document, the American Monetary Act. The product of several years of work by Zarlenga and his network, which now includes a number of local chapters around the country, the American Monetary Act would replace today’s debt-based monetary system with one where the government spends or loans money directly into circulation.

Under the Act, the Federal Reserve would be retained as a national financial clearinghouse but would no longer be a bank of issue. The system would be overseen by a Monetary Control Board within the U.S. Treasury Department. The Act also includes a provision for a citizens’ dividend, similar in some respects to the Alaska Permanent Fund, which would inject desperately needed purchasing power into the economy without additional government debt or taxation.

Also promoting a citizens’ dividend, by the way, is Stephen Shafarman in his important new book, Peaceful, Positive Revolution (Tendril Press, 2008).

It’s the American Monetary Act the candidates and delegates in Denver should skip one of their parties to read, because it’s the only way any of their hopes for America can ever be realized. Says AMI’s Jamie Walton:

This is a crucial time. Things are happening. We have got some key media people talking and writing about our kind of reforms. The inertia is starting to yield. Things are starting to roll. The worsening conditions in 2009 will give us a once-in-a-lifetime chance to be heard above the propaganda.

  1. Annals of Congress, Vol. I, February 1790, pp. 1141-2. []

Richard C. Cook is the author of We Hold These Truths: The Hope of Monetary Reform, scheduled to appear by September 2007. A retired federal analyst, his career included service with the U.S. Civil Service Commission, the Food and Drug Administration, the Carter White House, and NASA, followed by twenty-one years with the U.S. Treasury Department. He is also author of Challenger Revealed: An Insider’s Account of How the Reagan AdministrationCaused the Greatest Tragedy of the Space Age. Read other articles by Richard, or visit Richard's website.

7 comments on this article so far ...

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  1. Joseph Danison said on August 27th, 2008 at 4:32pm #

    The failure of the progressive agenda in the US is a result of a blind spot in the progressive vision for change, which Richard Cook has been pointing to for years. What will it take for progressives to see what is hidden in plain sight?

    It’s the monetary system, stupid! Why is it that an old time conservative like Ron Paul can see what is invisible to the left advocates of social justice?

    Since the beginning of the American Republic, those who objected to Alexander Hamilton’s scheme to make the US government beholden to international financiers and speculators have recognized what came to be known in the 19th Century as the “money power”. People on their farms and in the streets understood this money power and the effect it had on their lives far better in 1808 than do people 200 years later in 2008. We do not understand the world and the way it operates as well as our ancestors did. We are much dumber.

    And there is a tragic irony here because the people of today are far more dependent on money than our progenitors for whom it was possible to live a subsistence life without money, or with very little. Many grew their own food, made their own clothing, and were self-sufficient to a degree we moderns people in our consumer society do not understand. Having no money, or very little, gave our ancestors a perspective we lack. They understood what it was and what value it could bring into their lives, and they also understood far better than we do how it was created. The politics of the 19th Century was very much concerned with money and the money power.

    So why are we so stupid today that we cannot understand one of the most basic facts of our lives? Why is it that there is no more discussion of the money power in our political debates? Why is it that we take the monetary system so much for granted?

    Why is the progressive community, those who advocate for change in the name of the people do not advocate for change of the monetary system?

    Because on the one hand, most progressives do not understand money themselves, and on the other hand, they pander to the people. Progressives do not seek to educate, which is the basis of real leadership, they pander to consumers and seek to create a better client relationship between the people and the state.

    Progressives are socialists and seek to influence the all powerful state to bestow more benefits on the people.

    In the 19th Century and from the foundation of this republic, opposition to the concentration of the money power in the hands of bankers and the heirs to Hamilton’s Federalists, came from democrats, those who believed in democratic government, in the power of the people through government by and for the people.

    Left progressives in this country do not believe in democracy, they believe in the power of the state and in the client hood of the people. Big Daddy state hands out money to all his children to make them happy consumers.

    The American Monetary Act is a piece of legislation, not a theoretical document, that returns the money power to the people’s government. It removes the money power from the private hands of the financial elite and returns it to the people’s government. The money power will then be subject to the people’s legislative body, the Congress.

    It is time for progressives to wake up and become radical. Progressive is leading us ever deeper into the New World Order. Radical is individual freedom and direct democracy. Anyone who advocates for fundamental change in the monetary system is a radical today because they are calling for freedom from domination by the privatized financial system and the financial global elite who hold us all in debt peonage.

  2. Richard C. Cook said on August 27th, 2008 at 8:26pm #

    Excellent comments by Mr. Danison. It is most interesting that the privatized monetary system run by the banks has, as its corollary, a political system based on state control of key parts of the producing economy. This is because of the way finance capitalism has developed hand-in-hand with Keynesian economics which has given us an enormous military-industrial complex as a job creation mechanism and a system of global cartel where the government acts as an enforcer in allowing the export of jobs and suppression of labor costs at home. On the other hand, a monetary system based on government control of credit would liberate businesses and individuals who could manage their financial affairs without the gigantic debt burden that has destroyed small business and family farming.

  3. Giorgio said on August 27th, 2008 at 8:40pm #

    The only solution is to adopt a monetary system that is not based on debt. Dr. Blain makes a couple of specific recommendations: 1) “Stop using percentage rates to calculate charges for the use of money”; and 2) “Congress must supply the economy with a money base that is debt-free and interest-free.”

    INTEREST-FREE??

    Such a blow would sound the death knell of the Shylocks of this world….

    There is no business like WAR business…when the Reserve Bank was created in 1913 by the US Congress soon after in 1914 WWI broke out.
    To my mind there is no better cause and effect relationship.
    The Rothschilds, the originators of the phrase “Give me control over a nation’s currency and I care not who makes its laws” I suspect were behind this Congressional decision. They were masters at playing one country off against another and using the threat of war as a means for more lending and larger profits. They made a killing in the London stock market during the Battle of Waterloo when they got insider knowledge that Napoleon was about to be beaten.

    Riddance of such shysters would be a God Sent!!
    Ron Paul advocates eliminating the Reserve bank. He admits that he does not know who runs this privately owned Bank, nor seen their faces! Quite candidly Paul says he doesn’t know whether America’s gold holdings are still there. May be the gold bars have been all secretly shipped off to Israel. Who know?

    Bring them all out, Ron, bring them all out into the spotlight! Let the World know who these sinister Top Hat, Coattailed Gentlemen are!
    Bring them all out past the identity parade and let’s see their FACES at last!

  4. Giorgio said on August 28th, 2008 at 3:22am #

    Then with Martin Luther King roar with joy:
    FREE at LAST! FREE at LAST! FREE at LAST!!!

  5. Clint Laskowski said on August 28th, 2008 at 6:32am #

    The link to the AMI site in the 5th paragraph from the bottom of the article is broken.

    Otherwise, this is an interesting and important article. Thank you!

  6. Ryan Cairns said on August 28th, 2008 at 11:38am #

    Why can’t we use psychology like they probably do in their operations? Why can’t we make this message you Patriots so passionately discuss here…marketable to the masses? I’m only a young 26 year old farmer’s son from Iowa…but I know enough to realize that people don’t need to be filled with information like we fill jars with water. No, all that needs to occur, is the sparking of curiosity and that will set people off on their own path of discovery, which may allow them to arrive at a consciousness similar to the one shared by this community. Everything is a science; everything can be studied, learned, manipulated and controlled. This message of a new, revolutionary monetary policy would ring loud and clear with the masses and invigorate them. The key lies in sparking their curiosity, packaging and framing specific ‘beginners’ bits of information related to this monumental and historical issue…that their minds can comprehend at their present state. I plan to do this. Long live the Patriot!

    -Ryan Cairns
    OEF-5 Veteran

  7. Gliscameria said on August 28th, 2008 at 2:55pm #

    It’s pretty sad when everytime you read a good idea you know it will never be implemented.