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An Emergency Program of Monetary Reform for the United States - Part 2 or 2

Economics / US Economy Jun 19, 2007 - 12:22 AM GMT

By: Richard_C_Cook



The way out of the monetary dilemma, said Douglas, was not to opt for Marxism or socialism, because economic democracy cannot be achieved by another collectivist “-ism” to replace finance capitalism. Also, Marxism, like finance capitalism, assumes an economy of scarcity. It simply says that workers have a greater right to the limited supply of manufactured products than do business owners.

Douglas, by contrast, saw things through the eyes of an engineer. He saw that technology created a possibility of virtually unlimited abundance. He saw that workers' wages would fade away as a source of societal purchasing power as machines took over more of their work. But he also saw that this abundance could be distributed to those who needed and deserved it only if society took back its rightful prerogative of credit creation from the banks and made that credit available without hindrance to individuals.

Finally, Douglas saw that the distribution of credit could not be tied solely to work because many jobs would cease to exist through advancing automation. These were revolutionary ideas and remain so today. Enough people understood what Douglas was talking about that his ideas became a significant political force in Great Britain, New Zealand, Australia, and Canada. The Social Credit movement he founded still exists in those countries.

The primary method this system would use to implement public creation of credit would be through a cash stipend paid to all citizens known as a National Dividend. Because the dividend would be an expression of the sum total of the producing potential expressed as the “real credit” of the nation, it would be distributed as a book entry on a government ledger, not as a budget expenditure paid for by tax revenues. And the right to the dividend would not be tied to whether or not a person had a job.

Going back to the discussion at the beginning of this report of the $12.98 trillion 2006 GDP vs. the $9.21 trillion in purchasing power generated through wages, salaries, dividends, etc., recall that the $3.77 “gap” that should have been viewed as an overall dividend to society instead had to be financed by debt.

Now we've come full circle. It's the National Dividend of the Social Credit system that explains the gap and would in fact provide it to the residents of the nation as their rightful benefit from creating, operating, and maintaining our wondrous economy. It's society as a whole which created our economy, and we are the ones who should benefit from it.

A Social Credit system would be implemented through simple bookkeeping. The funding of the National Dividend would be drawn from a national credit account which would include all factors which give rise to production costs and create new capital assets.

The national credit account could also be used for price subsidies. Prices in the U.S. are generally too high, leading manufacturers to cut costs by shipping jobs overseas. But it is simply wrong that the hard work we do for our standard of living should turn against us and end up taking away our jobs. A program of price subsidies would allow us to stop penalizing our workers for their high levels of productivity and could be funded as another element of the National Dividend.

You might ask at this point, is a National Dividend simply having the government “give away” money created out of “nothing”? If so, it's the same “nothing” from which banks make loans under their “fractional reserve” privileges, using as a base a small collateral of customer deposits and government securities. The difference is that bank loans must be repaid, while payments under a National Dividend system would not.

Thus the National Dividend would be real money, unlike Federal Reserve Notes. These are a substandard type of money, since each one is entered into circulation only through a debt payable to a bank with interest. But the National Dividend is not “free” money. Rather it's the result of a powerful, productive, and scientific economic system that has developed over the course of centuries and today is so strong that some of its benefits can and should be made available to everyone in society without their having to work as hard to enjoy them.

A National Dividend would represent the true wealth of the community, the bounty of our incredible GDP and our amazing efficiency, of which all citizens should be the rightful beneficiaries once the business owners receive a reasonable profit. Again, it's important to realize that Social Credit is not a socialist system. Rather it is “democratic capitalism,” in contrast to the “finance capitalism” that has become so damaging.

We must realize too that while “democratic capitalism” has been talked about, and is the basis of the idea of widespread stock ownership, it has never been implemented as the driving principle of a developed economy. Rather the cream is always skimmed off the top by the financial elite through their control of credit-creation.

Again, the heart of the Social Credit program is the fact that the collateral base of the government-managed National Dividend, as with all sources of legitimate currency, would be the productive capacity of the economy expressed as GDP. This is what already stands behind “the full faith and credit of the United States.” This is the true “credit” of the nation. It's what provides the real “backing” of the currency.

Viewed from a philosophical level, the national credit, including that portion from which the National Dividend would be drawn, is the monetization of an intangible; i.e., the totality of the nation's real wealth as expressed by its laws, history, physical plant, land, resources, and the education, skills, and character of its people. Without all of these, the government could print dollars—or the banks could lend them—from here to eternity, and they would be totally useless.

Under a Social Credit system, banks would continue to function in limited ways, but they would not have the privilege of funding the entire shortfall in purchasing power of the nation.

Instead, if we'd had a Social Credit system in place, the $3.77 trillion gap in the 2006 U.S. economy between production and earnings—the bounty of our productive genius—would have been bridged by a National Dividend averaging $12,600 for every man, woman, and child (legal resident or citizen) in the nation.

Looked at from another angle, this payment has some relationship to a “basic income guarantee,” which has been advocated by many economists, politicians, and reformers in the U.S. for decades, including Milton Friedman and Dr. Martin Luther King, Jr., and which is the idea behind the current citizens' dividend of about $1,000 per resident under the Alaska Permanent Fund.

The difference between a National Dividend and a basic income guarantee is that the dividend is tied to production and consumption data and may vary from year to year. During years that the dividend fell below a designated threshold, the balance of a basic income guarantee could be provided from tax revenues. But in a highly-automated economy such as that of the U.S., the National Dividend would normally be sufficient.

One use individuals would be likely to make of their dividend would be to pay down personal, household, or student debt, though some of that debt should be written off by restoration of a more reasonable—i.e., pre-2005—federal bankruptcy law. Further, if the dividend were reduced to an average of $10,000, the additional $2,600 could be used to pay down the principle on the $8.84 trillion national debt as well. The entire debt could be retired in eleven years, with interest being funded from tax revenues as it is today.


Bankers and their apologists have always argued that any program of publicly-generated credit would cause inflation. This is nothing but propaganda.

Because a National Dividend would replace bank-credit of the same amount, it would bring the total monetary supply of the nation only up to the level of the GDP. It would not result in “more dollars chasing the same amount of goods,” but would simply bridge the gap. Not only would the National Dividend be non-inflationary, it could even be counter-inflationary by liquidating previous financial costs without creating new ones.

Besides, what is truly inflationary is the Federal Reserve's policy of creating, then deflating, asset bubbles, the latest being the housing bubble. With such bubbles, prices inflate on the way up, but only level out on the way down. This can do irreversible structural damage to the economy.

Inflation due to the housing bubble has affected not only home prices—it has also escalated rents and business leases, made it harder for people to start small businesses, and difficult for young people even to find a rented room. Meanwhile, home and property ownership is becoming a high-priced commodity available only to the rich.

This type of inflation has an immense ripple effect. What it means is that the dollars people earn can purchase less throughout the economy, because every business must operate in a building and on a parcel of land which now costs much more.

The housing bubble has been a catastrophe to democracy. With the Federal Reserve at the helm and the private banking industry in charge of credit, the dollar has lost almost 90 percent of its value since 1960. Since the early 1970s, virtually every period of economic growth has been a Federal Reserve-created bubble, with the Treasury Department helping out in the early 1990s with a strong-dollar policy that contributed to the bubble. With every cycle, more and more assets fall into the hands of the wealthy, including both U.S. and foreign investors.

Also, bank interest by itself is inflationary, because it adds to the cost of doing business at many points in the production-consumption stream. The Federal Reserve claims it is fighting inflation when it raises interest rates, but what it actually does is slow down economic activity by suppressing wages and salaries or throwing people out of work. The higher interest itself pulls in the other direction by adding to costs. Thus inflation has continued even during periods of monetary contraction, as in the1979-83 recession when the consumer price index rose almost 20 percent.

Another point on inflation is that under our system of bank-created debt-based credit, businesses inflate their prices to make paying their debt cheaper, as does the federal government. A government like ours that is deeply in debt always wants to pay with dollars of less value, so it pursues inflationary policies in order to push taxpayers into higher tax brackets. This is yet another way a bank-centered monetary system distorts real economic values and hurts working people and families.

Management of a modern producing economy the way the Federal Reserve does by raising and lowering interest rates is a travesty. With no participation by any elected official, and with the most superficial explanations, the Federal Reserve can and does alter the value of all the money in the United States. The U.S. courts, were they willing to face down the financiers who are the de facto controllers of the Federal Reserve, could easily rule that this is an unconstitutional confiscation of property without due process. At times, as in the early 1980s, when the Federal Reserve devastated the economy with interest rates of more than 20 percent, its actions are simply a crime.

Such an event can have far-reaching and even catastrophic consequences. When the Federal Reserve decided in 1979 to begin a radical escalation of interest rates to combat the inflation of the 1970s, it took the Carter administration by surprise. After President Ronald Reagan took office in 1981, the top echelons of his administration reacted to the Federal Reserve's actions with dismay.

The economy was collapsing in the worst recession since the Great Depression. But instead of confronting the Federal Reserve and its financial controllers, the Reagan administration took a series of radical actions to slash tax rates for the upper income brackets, deregulate the banking system, add huge sums to the national debt by throwing deficit-produced dollars at the military-industrial complex, and commence a new era of low-scale proxy warfare in Afghanistan, Angola, El Salvador, Nicaragua, and elsewhere known as the “Reagan doctrine.”

President Reagan was so relieved when the Federal Reserve finally relented by lowering interest rates in 1983, he declared in his 1984 reelection campaign that it was “morning in America.” But instead of facing up to and addressing the monetary actions taken by the Federal Reserve which ended up damaging our industrial infrastructure and leaving us with today's anemic “service economy,” the Reagan administration panicked and set in motion a complex series of compensating actions that ignored the underlying monetary issues.

As a current example of how the system works, in early 2006, the Federal Reserve announced an interest rate hike after data came out which showed that U.S. workers were seeing their pay go up a tenth of a percentage point higher than expected.

As a result of these kinds of interest rate increases, hundreds of thousands of people pay higher rates on their adjustable rate mortgages, foreclosures of homes increase, tens of millions pay more interest on their credit card balances, and the loans that fuel the American economy, paying for everything from raw materials to inventory and transportation, cost more. Also, business and individual bankruptcies increase, workers and salaried employees are laid off, and, in the example cited above, the stock market took a hit, with hundreds of millions of dollars of value lost in a single day, wealth that simply vanished.

The correct term for such a system is “monetary hell.”

Reducing the payment of interest to banks through monetary reform would lessen inflationary pressure and eliminate the policy whereby the Federal Reserve tries to create “price stability” on the backs of working people. Its policy, which is the essence of so-called “monetary targeting” or “monetarism,” and which is fully supported by a Congress dominated by monetary conservatives from both political parties, is really one of class warfare. As U.S. billionaire investor Warren Buffett has said, "There's class warfare, all right, but it's my class, the rich class, that's making war, and we're winning."


The method by which the Federal Reserve attempts to manipulate the economy by adjusting interest rates is not only destructive and tends to further the long-term interests of the financiers to the detriment of society, it would be completely unnecessary under a National Dividend system.

Under a National Dividend system with periodic cash stipends, most people would work anyway, but they would not have to work so much, and if they wanted to take some time off, stay home and care for children or the elderly, take lower-paid positions in education or the arts, or learn a new profession, they could do so.

At last there would be a leisure dividend. Of course this goes counter to many of our prejudices, including fundamentalist notions that man is meant to toil and suffer. In practice, of course, those who toil and suffer exclude the monetary controllers.

Another way to look at it is that a National Dividend could at last provide enough personal freedom that all our time and energy would not have to be spent just keeping our bodies fed, sheltered, and clothed. We would be free for more important cultural and spiritual pursuits. Who knows what forms society might take or what we might accomplish if the individual were liberated from the crushing demands of economic necessity?

Another prejudice to overcome is the idea that if we just “give people money” they will waste or abuse it or become alcoholics or drug addicts. But people tend to respond positively to social benefits and make the most of opportunities when presented. Slackers always must face their own consciences and generally find it easier to live up to community expectations than live as self-indulgent outcasts.

Also, neither Social Credit nor a basic income guarantee is a “free money” program. A strong, functioning economy is required. Freedom must be earned. And it has been earned in our mature, highly-developed economy.

Besides, what really turns people into alcoholics or drug addicts is a pressure-cooker economy like we have today. Maybe this is why, according to a report that came out in March 2007 by the National Center on Addiction and Substance Abuse at Columbia University, forty percent of college students are binge drinkers and twenty-three percent meet the medical criteria for substance abuse.

Part of the problem is likely that students are staring at a future of huge debts and few good jobs, where the rich rule the world and the rest struggle to survive. Financial conditions may be reflected in young peoples' attitudes, where, according to the Higher Education Research Institute, the proportion who say it is “essential” or “very important” to be “very well-off financially” grew from 41.9 percent in 1967 to 74.5 percent in 2005, and “developing a meaningful philosophy of life” dropped in importance from 85.5 percent to 45 percent. According to a Gallup survey, 55 percent “dream about getting rich,” though few ever will.

For now, let's leave it to the imagination of the reader to ponder further the social, political, and economic benefits of a national credit program, including the effects on the lives, aspirations, and attitudes of our youth. As you do so, realize that it could mitigate many of the economic causes of the drive toward war that are threatening to blow up the world in Iraq and elsewhere; i.e., competition among nations for markets and resources and use of war expenditures to create jobs and profits. It would also provide the first real opportunity in decades for economic decisions to be made on the basis of other considerations than financial profits—such as what economic policies would benefit individuals, families, or the environment.

This change could result in another dividend—the elusive “peace dividend,” where tax money saved from no longer needing to conquer the world to prop up our collapsing debt-based financial structure could be used for such urgent priorities as environmental protection and clean-up, infrastructure maintenance, and alternative energy R&D and conversion. A 50 percent cut in military expenditures would yield over $300 billion per year for these and other beneficial purposes.


Finally, a comprehensive monetary reform program could also shift a certain amount of credit creation through lending to the federal government, away from the private banking industry, which has held that monopoly in the U.S. most of the time since the creation of the Federal Reserve System. This would reflect the fact that credit should really be viewed as a publicly-regulated utility like water or electricity. Overall monetary targets could be overseen by a Monetary Control Board within the U.S. Treasury Department, as advocated by the American Monetary Institute in its model legislation, the American Monetary Act.

The logic of publicly-controlled credit is obvious. If government has the authority to charter banks to issue credit through loans against a small reserve of deposits, it could just as easily issue credit itself against a reserve of tax receipts or even against the “real credit” of the nation's GDP. Because government would not have to earn a profit on lending, it could offer credit at much lower rates of interest, only enough perhaps to cover administrative costs.

An example of how public credit can be used successfully was the Reconstruction Finance Corporation which provided the U.S. economy with billions of dollars in low-interest loans from 1932 to the early 1950s. Another example was the Home Owners Loan Corporation which took over the mortgage industry from Wall Street speculators during the New Deal and established secure home ownership through low-interest fixed-rate loans as the basis for middle class financial security. This system was eventually destroyed by the deregulation of the 1980s.

Efforts to create a new basis for public credit today could restore programs like the RFC or HOLC and lead to low or even zero-percent interest lending programs for state and local infrastructure projects through a self-capitalized federally-sponsored infrastructure bank. Funds could also be distributed from the national credit account as grants. Public credit for infrastructure investment could become a vehicle for shifting the U.S. economy back in the direction of heavy manufacturing and helping to restore our status as the world's leading industrial democracy. 

Public credit could also be used to provide or subsidize inexpensive loans at the local level for consumers, students, and small businesses. These loans could be made available at interest rates as low as one percent. Such a program could be implemented by having the federal government lend money at low interest to commercial banks from a national credit account. The banks would then use the money to fund consumer loans while charging only an additional administrative fee plus a reasonable business profit.

Through a National Dividend and publicly-regulated credit, rural and small-town America, as well as Native American communities, all of which have had the life sucked out of them by poverty and debt, would vastly benefit, as would our center cities. In fact, a rebirth of local culture and self-sustainability, which various half-hearted and heavily bureaucratized federal programs have tried unsuccessfully to address, could at last be possible.

The monetary reform program would address several of the biggest social and economic problems, including lack of income security. Without income security, we can't even start to solve many other problems, because we have to work so hard just to keep our heads above water. And more of us are going under all the time. There was a time in American life when the leaders of government and business calculated what people needed for a decent life and tried to provide for it. Those times are gone. People today have been tossed to the corporate and financial wolves.

A broad-based program based on public control of credit-creation would replace a financial system that benefits mainly the financial plutocracy with one that supports democratic values and local financial needs. It would give back control over their own lives to individuals and communities. It would immediately relieve some of the most serious sources of economic and political tension that are driving the world toward more and bigger wars. And by facilitating self-sustaining local economies both at home and abroad, the program would reduce the pressure for the large and powerful nations of the West to prey on the rest of the world.


Finally, a point should be made that would take another lengthy report to elaborate, which is that our existing economy, where GDP cannot be purchased by the cumulative national income unless it is heavily augmented by debt, is an economy operating in a straightjacket. Even with a $13 trillion GDP, it is an underperforming economy, one which is not even close to its full potential. It is another secret of high finance that its overall effect under today's conditions is actually to throttle legitimate economic activity, not facilitate it.

If the national credit were free to expand along with production, there is no reason why our GDP could not be much higher than what it is today, except that it would be distributed more democratically. This level of abundance need not be environmentally damaging, because it would include the application of technology to mitigate environmental hazards and develop new materials and processes.

The abundance would have the effect of raising the standard of living for everyone in society. The same methods could be applied in other developed and developing nations. The fact that we have not allowed science and technology to reach this level of potential is another manifestation of the misuse of financial credit to create an unnatural scarcity which benefits only the financial controllers.

Also, increased economic activity would not necessarily lead to out-of-control world population growth, as a society's birthrate tends to decrease through voluntary means as it becomes more prosperous and stable.


Viewed from the perspective of this report, world history over the last 100 years is starkly simple. The aspiration of every nation, regardless of its economic habits and ideology, has been to maintain something resembling income security for its population. This is natural; above all, people want to live.

But science and industry have made it possible to satisfy human needs without full employment, leaving the gap between purchasing power and production which this report has explained. But instead of supplying its citizens with the needed National Dividend, governments have tried to fill the gap through a welfare state based on income redistribution, through socialist state controls, through bank-furnished credit, or a combination.

No approach yet devised has resolved an inherently unstable economic situation that is endemic to a technological economy that refuses to operate on the basis of truly democratic principles.

The U.S., among nations, has had the most success in creating a measure of stability but has been able to do so only through economic domination of the rest of the world as a means of filling the production/consumption gap. This domination began with the massive loans to the European combatants during World War I, continued through the lend-lease program of World War II, and reached its zenith through the economic recovery measures after the war, the aim of which was to maintain for the U.S. a positive trade balance. Thus was formed the basis for U.S. prosperity during the 1950s and 1960s.

This trade domination began to expire with the Vietnam War and had evaporated by the 1970s. After the fall of Saigon in 1975, the only way the U.S. saw to keep its economy afloat was through the policy of dollar hegemony, where use of the dollar was established for oil trading and as a worldwide reserve currency. With the Reagan administration came the habitual resort to military power as the enforcer of U.S. financial prerogatives. This is what accounts for the period of incessant low-key warfare that has controlled U.S. policy since the late 1970s, with the “War on Terror” and the military invasions of Afghanistan and Iraq being only the latest phase.

Today, as U.S. dollar hegemony, along with our domestic economy, begin their collapse, through laws as immutable as those of physics, the threat of world war has returned. But another world war would not produce economic stability. The only way to achieve that objective is through real economic democracy as described in this report and in similar writings by other monetary reformers. But the cost of doing so, as seen by the financial and political establishment, would be to give up their near-total control of society.

In conclusion, it should be clear that this report takes an optimistic view of mankind, its aspirations and potential. And it affirms the positive value of science and technology. Human beings were created in the image of God, and God does not want us to be miserable on a planet where all can be provided for.

Obviously it would take a book to describe a complete monetary reform program to take us in this direction. This report has put forth some key concepts. For now it is enough to summarize the way out of our economic dilemmas by recommending that the federal government take the following steps:

1) Issue a $10,000 average dividend, created simply as an accounting book entry, to every U.S. legal resident or citizen (to be determined), tax-free and without reducing any other benefits currently being paid. A sensible ratio between adults and children would be calculated. A temporary system of price controls would be instituted to prevent profiteering.

2) Create a second dividend which totaled approximately $800 billion as a first installment on paying the principal on the national debt and freeze the purchase of U.S. assets by foreign holders of U.S. debt instruments until currency exchange programs can be put into place. (The dividends paid to individuals and for repayment of the national debt would equal the gap between GDP and purchasing power for 2006.)

3) Continue to issue both dividends for each future year based on the calculated gap between GDP and purchasing power.

4) Utilize the money saved from no longer having to maintain an aggressive military posture overseas to compensate for monetary problems by addressing urgent priorities such as alternative energy R&D and restore more progressive tax rates for the highest income brackets.

5) Create a self-capitalized national infrastructure bank to lend or provide grants to state and local governments for infrastructure maintenance and development with provisions for use of U.S.-made products.

6) Use federally-created credit or resources to subsidize local banks in providing low-cost credit to consumers, students, and small businesses.

7) Create a Monetary Control Board within the executive branch to regulate the U.S. monetary system, determine the amount of the National Dividend, assure the stable value of money, and oversee both private and public use of credit. (For additional provisions of the American Monetary Act, see the American Monetary Institute website at

8) Return to the more forgiving pre-2005 bankruptcy laws and offer genuine debt relief to nations which owe money to banks and international lending agencies.

9) Move toward a national system of “fair pricing” subsidies using national credit as a funding base.

10) Support the adoption of a similar monetary program for other nations of the world.

To implement this program, Congress could pass a series of laws which would have the effect of taking back the people's Constitutional prerogative over their monetary system and laying the basis for future prosperity. These laws could help to usher in a new age of humanity. In fact, the agony of degradation and violence the world is now going through may someday be seen as the birth throes of a new age of economic enlightenment. A key would be a democratic monetary system which opens the door to material abundance for all people.

We know that the financial industry which controls the economy and politics of the world might have to be persuaded to support these proposals. The chief argument may be this: Yes, you have become rich through your monopoly over credit. Yes, you preside over the economies of most of the world. But don't you see that you have bled the life out of the people who just want to live and work? Don't you see that it is their labor that is keeping you alive too? Don't you think that if society destroys itself from war, financial collapse, and pollution you might lose your own livelihood and ability to sustain yourselves?

So why don't you join us in making a better world, even if it means altering a financial system that has the momentum of centuries behind it but that today is choking the aspirations of humanity like a dead hand?

Shouldn't we make a start by addressing our economic problems rationally and democratically through a monetary reform program that benefits everyone, that properly rewards us for our miraculously productive economy, and that has a good chance of success if we embrace it with determination and hope?

The only question at this late stage may be whether economic democracy will be achieved through a process of peaceful reform, or whether it will be built on the ashes of whatever is left of world society after the likely coming catastrophe.


There is much that individuals, families, and groups can do right now to address the effects of the economic crisis in their own lives. These measures exist on the material, mental, and spiritual levels. Following is a short list:

  1. Don't borrow. What enslaves us to an economic system in a chronic state of collapse is, above all, our debts. Throw away credit cards. If it makes sense to do so, rent instead of taking out a mortgage to pay the inflated prices of today's housing. Work for a year or two and save for college. If your debts are overwhelming, don't be afraid to declare bankruptcy or look for other options. If you have money, put it into tangible assets before its value is destroyed by inflation.
  2. Think for yourself. Search for reliable information about the economic and political situation and the true reasons for wars and other forms of organized violence. Read books and turn off the TV and video games. Discuss ideas and issues with your kids, family, and friends. Start a website which expresses responsible opinions and offers help and information to others.
  3. Hone your skills. Do your own car and household repairs. Grow and cook your own food. Shop at thrift stores. If you can, raise farm animals. Take classes in handicrafts. Start your own part-time business. Take a job doing manual labor. Demand that the local schools teach practical skills to young people.
  4. Work with others on creating democratic intentional communities. Explore group housing. Live near mass transit commuting lines. Set up barter groups and consider establishing local currency systems as many people did during the 19 th century and the Great Depression. In the last two years there have been a number of new communities being started in small towns or rural areas as people have seen the writing on the wall about what may be coming to an endangered American economy.
  5. Become politically active. Register, vote, and demand honest elections. Support politicians who have integrity. Demand changes along the lines suggested in this report, as well as consumer-friendly laws and regulations, including those that favor mass transit and affordable housing. Lobby locally for public space for farmers' markets and commitments by government agencies to buy from local small business. Don't allow government to drive people out of their homes with property tax increases or to seize private property on behalf of developers.
  6. Work with schools and expect them to teach democratic ideals including economic reform. Honor those who speak truth to power and let the government know that the Bill of Rights means something to you. Demand local programs to help people avoid and get out of debt. Let the local media know that you want to see reporting on real issues and more public interest programming. Boycott companies, retailers, and media outlets that oppose reform.
  7. Remember that external circumstances have no power. We tend to be overwhelmed by the apparent strength of government, corporations, employers, banks, our credit rating, the economy, the media, armies, technology, our endangered possessions, etc. The power of these things is illusory and is based on the dualistic conceptions of the human carnal mind. In reality, God is the only source of power in the universe, and the more we realize God's presence, the less do we fear externals. Search for God within. Every person has a higher self, which is God, and which may be sought and found through prayer and meditation.


We'll give the last word to Edward Kellogg (1790-1858), an American businessman who published his ideas about monetary reform in Labor and Other Capital in 1849. Kellogg favored consumer lending at as little as one percent interest, as advocated earlier in this report. This lending would originate from a government-operated credit account he called a Safety Fund. Kellogg's ideas were well-known among American progressives during the latter part of the 19 th century and are drawing attention again today. The following excerpt is from A New Monetary System published posthumously in 1875. 

“This money power is not only the most governing and influential, but it is also the most unjust and deceitful of all earthly powers. It entails upon millions excessive toil, poverty and want, while it keeps them ignorant of the cause of their sufferings; for, with their tacit consent, it silently transfers a large share of their earnings into the hands of others, who have never lifted a finger to perform any productive labor. 

“The same power has grossly deceived our public teachers; for not being able rationally to account for the great inequalities of wealth and condition existing in society, and being expected to furnish a satisfactory explanation in some way, they tell the people that these great wrongs are providential, that they are the mysterious workings of the providence of God, that all these evils are governed and controlled by His power and goodness. 

“This method of accounting for the gross political wrongs in society has covered up and hidden from view a multitude of heinous sins. Notwithstanding the number of those who now live in luxurious idleness, performing little, if any useful labor, and the great number of those who remain idle because the scarcity of money renders it impossible for them to obtain work, yet with all these impediments, there is generally enough produced each year in each nation to give to every man, woman and child a comfortable living.

“Every person of common sense must see that God in his providence has bountifully provided for man and that there is some other power working against him, and diametrically opposed to the righteous distribution of his bounties. It is the providence of the national laws, establishing this unjust power of money, which robs the producing classes of their rights. 

“As the bounties of God are abundant, so must the money for their distribution be abundant, or they can never be justly distributed.  If the scarcity of money or its centralizing power retard the production and the distribution of the products of labor, the power of the money is unjust and oppressive, and instead of being in unison with the providence of God, it is the most powerful opponent of his righteous laws, as well as the most powerful and bitter opponent of justice and beneficence among men. 

“It would be as reasonable to expect sweet waters to flow from a bitter fountain, as to expect just distributions of property if the standard by which it is valued is unjust. We are not depicting an unknown evil. Legislators, financiers, and the producing classes all know that money is possessed of some mysterious evil power, which has never been clearly explained and defined. 

“We have intended to remove this mystery concerning the nature and operations of money, and to show what laws must be annulled, and we shall proceed to show what other laws must be enacted, in order to establish money that will be endowed with an equitable power. The evil power of money has been politically established, and it must be politically annulled. It is a public wrong, and the public must administer the remedy.”

By Richard C. Cook

Copyright 2007 Richard C. Cook
Richard C. Cook is a former federal government analyst who was one of the key figures in the investigation of the space shuttle Challenger disaster. He is author of the book - Challenger Revealed: An Insider's Account of How the Reagan Administration Caused the Greatest Tragedy of the Space Age is Richard C. Cook's personal story of how he disrupted the cover-ups surrounding the Challenger disaster.

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David Kendall
13 Jul 07, 00:58
"Real Credit", "Social Credit", "Financial Credit", "Worker Cooperatives"?

Hi again Mr. Cook,

Sorry. More stupid questions. Your main point is extremely important. But I need to understand correctly so I can tell others about it.

When you say "real credit" (versus "financial credit"), does this refer to the difference between GDP and "purchasing power" ("wages")?

Is "Social Credit" the same as "real credit"?

A fellow named Jack Rasmus estimates that more than $1-trillion is transferred from the working-class to the upper 1-percent (or much less) of the "American" population annually. Is this figure actually closer to the $3.77-trillion that you estimate? In other words, are you and Rasmus both referring to basically the same thing?


With regard to "Economic Democracy" in general, I don't see any discussion of "Worker Cooperatives" in your essays. While I don't assume you are opposed to such an idea, I wonder if you have any comment to offer in this regard. Please see David Schweickart's essay on "Economic Democracy" for details.

Along these lines, you do mention the idea of regional or locally-owned (worker-owned?) banks versus the central planning that monopolizes existing financial structures. Could you expand on this idea in future essays?


Thanks again.


David Kendall
13 Jul 07, 01:24
"Caja Laboral Popular" -- "People's Worker Bank"

"Caja Laboral Popular" -- "People's Worker Bank". This is specifically what I refer to in one of my previous questions. Seems like a really good idea, long past due. Care to comment, Mr. Cook? Is it a "good witch", or a "bad witch"?

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