Best of the Week
Most Popular
1. US Housing Market House Prices Bull Market Trend Current State - Nadeem_Walayat
2.Gold and Silver End of Week Technical, CoT and Fundamental Status - Gary_Tanashian
3.Stock Market Dow Trend Forecast - April Update - Nadeem_Walayat
4.When Will the Stock Market’s Rally Stop? - Troy_Bombardia
5.Russia and China Intend to Drain the West of Its Gold - MoneyMetals
6.BAIDU (BIDU) - Top 10 Artificial Intelligence Stocks Investing To Profit from AI Mega-trend - Nadeem_Walayat
7.Stop Feeding the Chinese Empire - ‘Belt and Road’ Trojan Horse - Richard_Mills
8.Stock Market US China Trade War Panic! Trend Forecast May 2019 Update - Nadeem_Walayat
9.US China Trade Impasse Threatens US Lithium, Rare Earth Imports - Richard_Mills
10.How to Invest in AI Stocks to Profit from the Machine Intelligence Mega-trend - Nadeem_Walayat
Last 7 days
Gold Golden 'Moment of Truth' Is Upon Us: $1,400-Plus or Not? - 18th June 19
Exceptional Times for Gold Warrant Special Attention - 18th June 19
The Stock Market Has Gone Nowhere and Volume is Low. What’s Next - 18th June 19
Silver Long-Term Trend Analysis - 18th June 19
IBM - Watson Deep Learning - AI Stocks Investing - Video - 18th June 19
Investors are Confident, Bullish and Buying Stocks, but… - 18th June 19
Gold and Silver Reversals – Impossible Not to Notice - 18th June 19
S&P 500 Stuck at 2,900, Still No Clear Direction - 17th June 19
Is Boris set to be the next Conservation leader? - 17th June 19
Clock’s Ticking on Your Chance to Profit from the Yield Curve Inversion - 17th June 19
Stock Market Rally Faltering? - 17th June 19
Johnson Vs Gove Tory Leadership Contest Grudge Match Betfair Betting - 17th June 19
Nasdaq Stock Index Prediction System Is Telling Us A Very Different Story - 17th June 19
King Dollar Rides Higher Creating Pressures On Foreign Economies - 17th June 19
Land Rover Discovery Sport Tailgate Not Working Problems Fix (70) - 17th June 19
Stock Market Outlook: is the S&P today just like 2007 or 2016? - 17th June 19
US China War - Thucydides Trap and gold - 16th June 19
Gold Stocks Bull Upleg Mounting - 16th June 19
Gold Price Seasonal Trend Analysis - Video - 16th June 19
Fethiye Market Fruit, Veg, Spices and Turkish Delight Tourist Shopping - 16th June 19
US Dollar Gold Trend Analysis - 15th June 19
Gold Stocks “Launch” is in Line With Fundamentals - 15th June 19
The Rise of Silver and Major Economic Decline - 15th June 19
Fire Insurance Claims: What Are the Things a Fire Claim Adjuster Does? - 15th June 19
How To Find A Trustworthy Casino? - 15th June 19
Boris Johnson Vs Michael Gove Tory Leadership Grudge Match - Video - 14th June 19
Gold and Silver, Precious Metals: T-Minus 3 Seconds To Liftoff! - 14th June 19
Silver Investing Trend Analysis - Video - 14th June 19
The American Dream Is Alive and Well - in China - 14th June 19
Keeping the Online Gaming Industry in Line - 14th June 19
How Acquisitions Affect Global Stocks - 14th June 19
Please Don’t Buy the Dip in Nvidia or Other Chip Stocks - 14th June 19
A Big Thing in Investor Education is Explainer Videos - 14th June 19
IRAN - The Next American War - 13th June 19
Boris Johnson Vs Michael Gove Tory Leadership Grudge Match Contest - 13th June 19
Top Best VPN Services You Can Choose For Your iPhone - 13th June 19
Tory Leadership Contest Betting Markets Forecast - Betfair - 13th June 19
US Stock Market Setting Up A Pennant Formation - 13th June 19
Which Stocks Will Lead The Cannabis Rebound? - 13th June 19
The Privatization of US Indo-Pacific Vision - Project 2049, Armitage, Budget Ploys and Taiwan Nexus - 12th June 19
Gold Price Breaks to the Upside - 12th June 19
Top Publicly Traded Casino Company Stocks for 2019 - 12th June 19
Silver Investing Trend Analysis - 12th June 19
Why Blue-Chip Dividend Stocks Aren’t as Safe as You Think - 12th June 19
Technical Analysis Shows Aug/Sept Stock Market Top Pattern Should Form - 12th June 19
FTSE 100: A Top European Index - 12th June 19
Gold Surprise! - 11th June 19
How Forex Indicators are Getting Even More Attention in the Market? - 11th June 19
Stock Market Storm Clouds on the Horizon - 11th June 19
Is Your Financial Security Based On A Double Aberration? - 11th June 19
What If Stocks Are Wrong About Interest Rate Cuts? - 11th June 19
US House Prices Yield Curve, Debt, QE4EVER! - 11th June 19
Natural Gas Moves Into Basing Zone - 11th June 19
U.S. Dollar Stall is Good for Commodities - 11th June 19
Fed Running Out of Time and Conventional Weapons - 11th June 19
Trade Wars Propelling Stock Markets to New Highs - 11th June 19
Best Travel Bags for Summer Holidays 2019, Back Sling packs, water proof, money belt, tactical - 11th June 19

Market Oracle FREE Newsletter

Gold Price Trend Forecast Summer 2019

Obama Economic Program Increases America's Bondage to Wall Street Billionaires:

Politics / Credit Crisis Bailouts Mar 23, 2009 - 07:57 AM GMT

By: Richard_C_Cook

Politics Best Financial Markets Analysis ArticleIt’s Time for a New Monetary System - This article previews the author’s new six-part video series scheduled for release April 2: “Credit as a Public Utility: The Solution to the Economic Crisis.”


The Obama administration is spending hundreds of billions of dollars trying to persuade the banking system to restart lending. Federal Reserve Chairman Ben Bernanke plans to create hundreds of billions more of new bank reserves by purchasing mortgage-related debt. With Bernanke and Treasury Secretary Timothy Geithner working together, “the initiative will seek to entice private investors, including big hedge funds, to participate by offering billions of dollars in low-interest loans to finance the purchases. The government will share the risks if the assets fall further in price.” (Martin Crutsinger, AP) Finally, President Obama is taking over the distinction of being the biggest Keynesian in history with a fiscal year 2009 deficit of $1.75 trillion.

The cancer of debt grows by the day. According to Michael Hodges’ famed “Grandfather Economic Report”: “America has become more a debt ‘junkie’ than ever before, 
with total debt of $57 trillion, and the highest debt ratio in history. That's $186, 717 per man, woman and child.”

With the federal bailouts of the financial system and the recession, the debt load has increased by $4 trillion in the last six months. What are we going to do with even more debt coming?

The growth in debt will be impossible for households to deal with when more then half a million jobs are still being lost per month. Impossible too for U.S. businesses when the drop-off of consumer spending reflects not only job loss but also a new propensity to actually save a portion of our earnings after the mortgage-based spending spree of the last decade.

The debt will be more possible to bear perhaps for the Treasury Department, which has benefited from investors searching for a safe haven so still being willing to buy Treasury bonds. This includes Treasury’s biggest current customer, the Bank of China.

Yet what does it say when the government can open its doors in the morning only if the Chinese give us permission? Secretary of State Hillary Clinton traveled to Beijing in February to be sure they still looked on us with favor and returned home to assure the president they did. But is this any way to run a country? Why can't the most productive nation on earth afford to pay for its own government?

The Obama economic program, which so-called progressives call “revolutionary,” will take us further away from, not closer to, real solutions. The massive new debt it creates can only be enforced by the courts, the police, and ultimately military power. Within the U.S., the authorities are preparing for civil unrest. Overseas, "dollar hegemony," the system by which nations like China continue to enable our massive debt, is increasingly unstable as the world bails on the dollar as its reserve currency.

When is anyone in authority going to utter the unutterable, which is that our financial collapse ultimately goes back to the fact that every dollar in circulation derives from a loan made by a bank to a producer, consumer, or the government, and that all these loans have attached to them a rental charge known as interest which is paid to the bankers’ monopoly? When will someone admit that the government’s economic recovery plan is a welfare program for Wall Street billionaires?

We live and work under a debt-based monetary system that has been in force since Congress passed the Federal Reserve Act of 1913. It’s how the system works. The government goes into debt, and the banking system then uses it as a reserve base for lending to the public.

It wasn’t always this way. In the 19th century, until the Civil War, the government lived within its means. President Thomas Jefferson balanced the federal budget for eight consecutive years, and President Andrew Jackson paid off the national debt.

Back then the government issued currency based on gold and silver, and the U.S. mint stamped precious metals into coinage for anyone who brought it through the door. Local commerce was fueled by a system of state and local banks operating on the “real bills” doctrine. Inflation was virtually unknown, and unpaid debt led swiftly to bankruptcy and a sheriff’s sale.

When the Civil War began, President Lincoln needed money fast. The New York bankers offered outrageous terms: interest at 24-34 percent. So Lincoln was authorized by Congress to print and spend Greenback money directly into circulation. Contrary to later propaganda, the Greenbacks were not inflationary. They were upheld by the Supreme Court as constitutional and remained in circulation until the early 20th century. They even spawned the Greenback Party that elected members of Congress and ran candidates for president.

But the bankers, by now centered on Wall Street, gained a foothold with the National Banking Acts of 1863 and 1864, where the banks were allowed to purchase Treasury bonds as a lending reserve. Currency issued by the state and local banks with their hard money reserves were taxed out of existence.

In 1913 the bankers’ trap snapped shut when the Federal Reserve System came into existence. After World War I, the currency inflated so much that the value of both the Greenbacks and coinage were destroyed.

A monetary system based on bank lending means constant cycles of inflation and deflation. The banks create these financial bubbles then destroy them, always to their profit. In the 19th century, the deflations were called “panics.” The Great Depression was a bank-created panic on an unprecedented scale. The collapse of 2008-2009 is the panic we’re in now, but with plenty of assets on the market at fire-sale prices for those rich enough to cash in. For instance, there was a lot of hand-wringing when Citigroup’s stock dropped to $1 a share. But those who could still buy-in saw their holdings triple in value when the stock rose to $3 a share a few days later.

The solution is not to restart huge amounts of bank lending in order to create new bubbles. Unfortunately, the Obama budget is an attempt to create such a bubble based on Treasury securities. But this bubble too will likely collapse, because there is no economic engine on the horizon strong enough to pay the debt that will be used to inflate it. The next collapse could even lead to a world war if China and other creditor nations, possibly including those of Europe, decide to enforce their claims against us.

But economists, politicians, and others who say there is no immediate solution lie. They just don’t want to tell us what the solution is.

It’s to get rid of the debt-based monetary system altogether and return to one controlled by our representative government where a substantial amount of money is spent directly without borrowing or taxation. A Greenback system for the 21st Century is contained in the draft American Monetary Act developed by the American Monetary Institute and briefed to a number of members of Congress and congressional staffers.

A Greenback-type currency would be regulated to support the needs of the real producing economy, not bank speculation, and could be used to pay off the national debt, supplement taxes to pay federal expenses, capitalize a new federal infrastructure bank, or fund alternative energy R&D.

A currency based on real U.S. money would replace debt-derived Federal Reserve Notes. It doesn't matter whether that currency is paper, gold, or electronic entries. What is important is that it exists in the right amount to conduct the business of the nation, is non-counterfeitable, is not misused for speculation, and does not have debt or interest attached to it. The Federal Reserve would remain as a processor and clearinghouse, but not a bank of issue.

Greenbacks could also be used for a basic income guarantee for citizens that would restart the economy at the grassroots level much more effectively than government top-down job creation based on more Treasury deficits. The need for consumers to borrow from banks or use credit cards even for necessities like groceries and health care would sharply decrease. I have proposed such a program through the Cook Plan that would provide citizens with a dividend in the form of vouchers in the amount of $1,000 a month. The vouchers could be used to capitalize a new network of community savings banks that would lend at the local level.

There is a good chance that the American Monetary Act will be introduced during the current session of Congress. It should be supported by anyone who cares about the future of our nation more than bankers’ profits.

By Richard C. Cook
http:// www.richardccook.com

Copyright 2009 by Richard C. Cook

Richard C. Cook is a former U.S Treasury analyst who also worked in the Carter White House and for NASA and writes on public policy issues. His new book is We Hold These Truths: The Hope of Monetary Reform (Tendril Press 2009). His website is http://www.richardccook.com He is a member of the U.S. Basic Income Guarantee Network and has been an adviser to Congressman Dennis Kucinich and the American Monetary Institute http://www.monetary.org

Richard C. Cook Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules