A lively discussion ensued after the article on MPE’s take on inflation. But the basic issue remains: a misunderstanding about what determines the value of money.
I realize it’s all unpleasant.
I want to thank all who participated for the level of discussion on the previous article, both in term of content and tone of voice.
The whole discussion focused on price stability in MPE, with the MPE advocates maintaining prices will remain stable.
Whereas I stated that people could spend as many promissory notes as they had assets to back them with, this was nuanced, by the explanation that there is an organization (CMI, Common Monetary Infrastructure) that manages some issues, including checking whether people will have sufficient income to service the promissory note.
So people can spend promissory notes that they can both service and back with assets. Also, no asset can be used more than once to back a new promissory note, this is also useful to add.
What it all comes down to is this: MPE believes that the value of money is dependent on the underlying asset.
But the value of money is simply a matter of supply and demand in the economy. That’s the whole crux.
MPE implicitly assumes that there is always demand for asset backed paper. But the problem is that this paper is not very liquid. For instance: a promissory note spent to buy a new house can be paid off over the life span of the house, which could be a hundred years or even much longer.
What is the cash value of a paper asset nominally worth 100 that will mature over the coming century? 10? 20? 30 maybe?
Meanwhile, a great deal of this paper would flood the market, because in an interest-free economy people would have vastly improved creditability.
The value of money is not the underlying asset. Simple proof of that is basic debt free money. Just paper spent into circulation. There is no underlying asset. Still it has value. Why? Because we agree to use it as money and there is a certain demand for money in the economy. How much demand? It depends on how much is needed, how much is available and its price.
More money in circulation means a lower price for it and higher prices for all other assets. This is what MPE simply denies. This is also why its take on inflation is important. Interestingly, nobody addressed my basic critique that both growing volume and usury cause higher prices, not just usury. But failing to correctly address pure inflation in the economies of the West in the last few millennia, including Zimbabwe, is the basis for too many promissory notes in MPE.
While we create the money as credit, once it’s spent into circulation, it is ruled by the laws of money, not credit.
The Promissory Note versus Money as Part of the Commons
The promissory note is MPE’s answer to how the bank usurps our credit. MPE correctly concludes the bank doesn’t lend anything and that ‘their’ credit by bookkeeping is in fact our credit. The bank in fact creates the credit for us on the basis of our promise to pay. But if our promise to pay is all it takes, why do we need a bank? Let alone indentured servitude (usury) in return for exercising our right to promise to pay??
And since sovereigns and the opulent have forever paid with promises to pay, then perhaps so should we. That’s basically MPE’s take. We don’t need to go to a bank, we don’t need permission, there are just some basic rules, there must be assets and there must be enough income to service the promise.
In this way, MPE also avoids the annoying notion of debt. When using a promissory note, we are not going in debt, we are exercising our right to pay later.
Personally I believe MPE takes it too far here. Money does not exist in a vacuum. Why is money so difficult to reform? Because we need each other to make it work. My promissory note is dependent on your acceptance and vice versa. Money is an interplay of individuals. Of individuals and the ‘community’, whatever that may be.
To end the bank’s obfuscation (usurpation), we cannot just say, it’s not yours, it’s mine. Because it is ours too.
MPE, like so many, including myself, wants to avoid having to go someplace and face some technocrat and be dependent on him having a good day for you to get what you basically have a right to.
But the bottom line is: our promise to pay does imply a debt. To the community at large, who allows us to buy now and pay later. All individuals (‘the community’) allow each other this, this is the essential nature of mutual credit.
So I think it’s difficult to avoid: we will need some sort of credit facilities (not banks) who will have to manage it all. They should have clear charters and the understanding should be that within in certain rules we have a right to the credit and not because the credit facility is so good to us, but because it is our right and the credit facility only represents the community and does nothing but keeping the books for us.
But the credit facility is necessary, to make sure the assets are there, and that there is indeed the income to service the debt and, yes, to make sure the volume is managed properly.
We will have a right to credit, but not to as much credit as we like. Money is a part of the commons and it’s not unlike land and reforming land also does not mean that we just say go out there and take what you want. Simply because there is a limited supply of it.
How to manage volume?
The simple fact is: 2000 years of monetary theory and practice does not provide a clear cut formula in the sense that we can mathematically say ‘this economy needs so much money’.
But there are basic pointers. If both the volume of money and prices are rising, than most likely inflation is the cause and rising prices the effect. Deflation will cause economic contraction. Money scarcity will cause permanent depression. If money is scarce, adding money will not lead to rising prices, but to more activity.
Velocity of money is equally important to volume and the real volume of money is nominal value of the money supply times velocity of circulation. Usury slows down the velocity of money. A demurrage accelerates it.
The Money Power always makes sure money is scarce and Usury always causes money scarcity, there is never enough money to pay off interest + debt.
To manage volume, we must monitor economic activity and price levels. If activity is sluggish, money scarcity might be the problem. Add money until prices rise. If activity is still below par, there are other economic problems.
We must create as much money as stable prices allow and no less to avoid money scarcity. If economic activity grows, more money must be added to finance the extra activity, otherwise money scarcity will return and the economy will grow less than it naturally would.
This can be reasonably managed by a competent currency board. It’s not rocket science. If sufficient people in society realize what is going on, this can be managed transparently.
A Usury Free economy will see great abundance. The living standards of the many will rise several times over. But this abundance does not show by endless credit. It shows through lower prices, shorter working weeks, higher wages, self-employment, co-ownership, high levels of home ownership and low rents.
Mathematically Perfected Economy provides a high level appreciation of many monetary issues. There is great merit in Mike Montagne’s long standing efforts to address the most crucial issue of Usury, not just by analyzing the problem, but also by providing an attempt at an integral solution.
But the outright denial of the importance of ‘circular inflation’ for price levels is simply not substantiated with a real case and does nothing to address the clear and present evidence of the historical record. This shows in its management of volume of promissory notes.
This mistaken analysis of volume is quite prevalent in the wider interest-free credit community and will really have to be solved if the community is going to move on to the next level and make a real difference in the struggle against Usury.
Mutual Credit and Inflation
Interest-Free Credit (including MPE!) and the Management of Volume
How to manage the Volume of Money in Mutual CreditThe Cult of Mathematically Perfected Economy and its Ridiculous Stance on Inflation
(Left: Eleventh hour pretender Mike Montagne dreaming about how he invented both the 5000 year old struggle against Usury AND its ‘singular solution’)
Mathematically Perfected Economy invented nothing and is fatally flawed. It is ‘just’ another form of interest-free Mutual Credit, with a mindblowingly simple minded take on the all important issue of the volume of money (inflation) and is run by a blowhard of uncanny proportions to boot.
Ever since I started this blog, people have been claiming Mathematically Perfected Economy (MPE) is the ‘singular solution’ to Usury. Why? Your guess is as good as mine. MPE is just another interest-free credit proposal, like there are many, and 95% similar to several systems that have operated in the past or proposed today.
But both on this blog and on many other platforms I’ve seen Mike Montagne (the creator of MPE) maligning everybody he came across as ‘eleventh hour pretender’ and ‘plagiarist’, because they dare have some opinions on Usury and its solutions too. Of course I have not been spared his wrath either, but that’s ok: if you have not been called a plagiarizer by Montagne you count for nothing in this business.
A few months ago I posted an article on the management of volume of money and a few weeks ago I faced some of Montagne’s people on one of Facebook’s economics groups regarding this issue, and a little later himself. In fairness: talk about big mouths, blowing of steam, misrepresentation and ideology!
Should I have the choice between dealing with Libertarians and MPE drones, I’ll take the Austrianistas any day.
Unfortunately, I’ll have to fend off both………….
The Making of a Cult
How does one create a cult? Why, that’s easy!
Study of group dynamics shows that the group will automatically side with the Leader, because otherwise it’s the end of the group.
To build a cult, you take a group, become its Leader and foul-mouth everybody in the group that does not verbatim replicate your thoughts. You will scold, patronize, condescend, swear, all in front of the group, so the disobedient follower is shamed to the max if he disagrees. If a group member is loyal and faithful, he will receive praise, also in front of the group, so that the group too can affirm the good boys and girls.
This does two things: it drives away everybody who values independence, mutual respect and truth (and could thus be a problem for the Leader) and makes those that stay choose to be as blindly loyal as possible, to avoid the scorn of the Master and the taking away of privilege and group affirmation. These drones will then start to maintain group discipline by using the same tactics on those out of line. In exchange for elevated status with the group and the Leader.
It works the same everywhere, with the Jehovas, Charles Manson’s girls, Austrianism (just think of Gary North’s ‘monetary crank’!), narcissistic moms, cultish ‘personal development’ courses like Landmark, Essence/the Source and Avatar and, indeed, Mathematically Perfected Economy and its hero Mike Montagne.
Everywhere you go you find them, the obsessed Montagne MPE Minions, claiming to represent the ‘singular solution’ and even calling others plagiarists because they dare talk Usury and monetary reform without kissing Mike’s ring. Oh, and don’t dare disagree or find fault in MPE, because that lands you into real trouble!
I’ve heard of a couple of people who left because of this going on in the MPE Skype chat room and at other occasions.
So I guess it’s not surprising the interaction I had with them immediately degenerated into ‘fuck you Migchels’ and ‘you fucking maggot’.
MPE’s ridiculous stance on Inflation
Of course this kind of childish petulance can be easily overlooked, if they have the facts on their side. But this is simply not the case. It’s not even about the unmerited claims to MPE’s singular uniqueness, it’s about the very important question of volume of money and inflation.
Mathematically Perfected Economy rightly claims that usury causes rising prices. This is a well established truism, it’s very old. The initiated ancients probably already knew this. Islamic scholars have been saying it forever.
It’s simple to understand why: producers must pass on their cost for capital to their consumers.
I don’t know why Montagne claims he invented this, perhaps he discovered it independently, he did at any rate do some work on the underlying math, coming up with the P(rincipal) < P + I(nterest) equation, implying there is never enough money to pay off the debt plus interest, forcing a growing money supply.
Interestingly, this is impossible under a Gold standard, meaning that usury greatly worsens money scarcity under Gold and implying eternal deflationary pressures, off setting the upward pressures on prices that usury brings.
But, true as it may be that usury causes rising prices, MPE goes completely and utterly overboard and goes on to claim Usury is the only cause of rising prices!
Yes, you’ve read that right: MPE claims rising prices are never ever caused by a rising money supply, but says the money supply only rises to pay off ever higher interest charges and that these higher interest charges, and only these, are the cause of rising prices:
“Circulatory Inflation or hyper inflation: Never happens because the rate of circulatory deflation (caused by the interest drain, A.M.)…….. always, always, always exceeds the rate of any prior reflation by national debt, clearly evident by perpetually increasing sums of national debt upon further cycles of reflation which is indeed necessary today to service the prior sum of debt.” (Source)
Make no mistake: I’m a sucker for contrarian thought and always love it when people off handedly do away with truisms of the age. If they have the goodies to back it up, that is.
But to just simply say, as Montagne did in our discussion, that I can offer no proof ‘circulatory inflation’ (increasing volume) can cause rising prices, while ‘his’ math proves that usury does cause ‘price inflation’ (rising prices) and that thus the onus is on me to prove ‘circulatory inflation’ even exists is of course insanity. Nothing wrong with making bold claims, but nothing wrong with demanding some proof either.
When I mentioned the Continental, George Washington’s money and a famous case of money destroyed by printing, Montagne replied scornfully that I apparently didn’t know about British counterfeiting. But by saying this, he just flaunts his own ignorance. Why assume I would not know something so commonly known as British counterfeiting of the Continental?
Much worse: it matters absolutely nothing whether the money supply grows because of Government printing or counterfeiting. The counterfeit notes will be used to pay and they will effectively add to the volume of money. If Montagne claims counterfeiting caused the hyperinflation of the Continental, he implicitly admits ‘circulatory inflation’ causes rising prices!
Hyperinflation in Zimbabwe caused by Usury?
Claims Australia4MPE: we’re just being brainwashed with this ‘circulatory inflation’ meme. Usury causes all inflation, including that in Zimbabwe. Unfortunately, in a 10 minute vid, he offers absolutely zero proof for this.
So let’s have a look: did Usury cause the hyperinflation in Zimbabwe? If this is the case, it must be true that “the rate of circulatory deflation (caused by the interest drain, A.M.)…….. always, always, always exceeds the rate of any prior reflation by national debt”.
This means that interest rates must be on par with the growth of money. The interest-rate determines the rate of ‘circulatory deflation’ and the amount of new money that must be printed to off set this.
However, in 2007, a year before the hyperinflation peaked, prices rose 6,600% in Zimbabwe and interest rates were raised from 650% to………800%. Proving that Usury was only part of the cause of the rising prices and not by far enough to explain the price levels, growing eight times quicker than the interest rate would suggest. (Source)
So no: it’s simply not true that the growth of volume is always smaller than the interest-drain. It most certainly was not the case in Zimbabwe. What happened there is that Mugabe and his Central Bank just printed whatever they needed to keep their soldiers and Government employees happy. And the IMF, of course. It was rampant printing that caused the hyperinflation in Zimbabwe, not Usury.
The Housing Bubble
‘Circulatory inflation’, says MPE, can only exist when the money is not backed by assets.
What is more: MPE claims people can spend as many promissory notes (the MPE equivalent of interest-free credit) as they want, as long as they have the assets to back them.
My basic critique in the previous article was, that people would spend promissory notes on buying assets on bubbly markets, meaning they would back their promissory notes with assets at already inflated and further inflating prices.
But, Montagne merrily replies: this can never happen in MPE, because asset bubbles are caused by Usury and there is no Usury in MPE, so all promissory notes will always be backed by assets at legitimate prices!
If anything, the housing bubble, which was caused by unchecked massive credit expansion because of very low interest rates, shows what will happen if people can get all the credit they want at low prices. The volume of money will start to grow. Uncontrollably start to grow and this will lead to rising prices and this will lead to optimism and people will start saying to each other: “this will go on forever, there is a structural demand for housing”. They will see housing is going up and they don’t want to miss out, buying some more, spending some more promissory notes into circulation, leading to even more money.
This is the basic positive feedback loop that causes asset bubbles. Not Usury!
Our three problems with money are usury, the manipulation of volume (boom/bust cycle, artificial scarcity of money) and the centralized control of credit allocation, meaning it’s bankers who decide who can invest in what.
MPE solves two of these three problems. Their promissory notes will devolve the decision making to the people. It will end usury.
But it’s take on inflation is ridiculous. Completely outrageous. They offer no proof whatsoever that circulatory inflation is not a major cause of rising prices. They maintain volume can grow unhindered if backed by assets, completely negating that these assets will be inflating as they are used to back ever more promissory notes.
They offer zero proof in denying that volume is not a key cause of rising prices, notwithstanding two millennia of serious inflations and the clear correlation with rising volume in these instances. For example the inflation of the 1500′s, when the Spanish were bringing in specie from the Americas. The Continental. The Weimar inflation (where the Reichsbank was printing money to pay off the tribute the Allies demanded at Versaille). The simple minded zero proof way that they do away with Zimbabwean hyperinflation is particularly egregious, because it’s pretty easy to get the associated data.
The fact that a growing volume of money can lead to rising prices and most assuredly will lead to rising prices in extreme cases is the commonly held wisdom of the ages held by economists of many persuasions. This does not make it true in itself, but they have a strong case and a good story is needed to negate all this. This MPE simply does not offer.
It does show that Usury also can cause rising prices and I fully agree that it was Usury that was the cause of the structural rise in prices after the war. But after the war too, there were purely volume related inflations, concurrent with the Usury effect. For instance the late sixties, with the Vietnam war and the Great Society. Or the housing bubble of the previous decade.
If you start a reasonable dialogue about these issues you can expect a couple of MPE drones to insult you everywhere, from Facebook to their blogs. Montagne will call you a ‘fucking maggot’.
And for what? Simply to hide his own insecurities and his stupidly overblown ego which actually needs to believe that not only is he the only one that understands the problem, he actually was the first to even see it AND the man to find the ‘singular solution’, from which all other ‘eleventh hour pretenders’ just aim to distract!
But the simple fact is: MPE is a disaster. Its implementation would lead to horrible inflation.
Meanwhile, MPE is completely useless in the wider monetary reform movement. Its leader is incapable of normal discussion of the issues. One can imagine the field day a serious Austrian or Mainstreamer, scarce as they may be, would have should they put in sufficient effort to understand MPE’s vocabulary, so that he can actually understand what they’re saying. It would discredit the entire monetary reform movement.
Thankfully we don’t need MPE. What we need is interest-free mutual credit based money, of which MPE is just one example, or debt free demurrage money.
With properly managed volume.
The Facebook exchange about the above issue can be found in raw format in a PDF: MontagneMigchels.
(Left: the deeply troubled Karl Marx was used by the Banking Fraternity to create the evil dialectical twin to Capitalism, for the purposes of organizing the opposition and directing history)
Capitalism redistributes from the many to the few. It is a global monopoly in private hands.
Socialism then goes on to claim private property is the problem. It says this will be solved by nationalizing it. It is a monopoly in State hands.
But what good does it for the poor if the wealth is transferred from the rich to the State? Especially when we consider that the extremely wealthy have always owned the State? It is for that reason they financed Marx and the Bolshevist revolution, after all.
Capital intends to consolidate its private monopoly in State hands, in a World Government.
The problem is not private property. The problem is too much private property in too few hands. The problem is the ongoing redistribution of the private property of the many into the hands of a few. By the creation of artificial scarcity and associated high prices by Monopoly.
And the mother of all monopolies is the monopoly of money. As long as the Plutocracy can control the money supplies of the nations with its global Banking Cartel, and tax it with Usury, which is paid by the poor who need to borrow to the rich who lend, and which globally redistributes up to 10 Trillion per year to the very richest, we will never have either Justice, or Freedom.
Interest-Free Credit Now!
And here is an excellent TEDx talk by Jem Bendell on the problems of our money and the coming revolution in alternative currencies.
What in the world has happened to Brother Nathanael Kapner?
Some time ago, he came out with all guns blazing against Ron Paul’s monetary ‘reform’ program. He had been supporting him wholeheartedly for years. But he clearly awoke to the key issue: control of the money supply and Usury.
He made three videos, two denouncing Paul’s Austrianism and one with a clear call for interest-free Treasury Money, saying ‘monetary reform is the mother of all reform’.
This was a major U-turn and quite manly: to act on new insights, even after having invested quite a bit, including reputation, into a mistaken notion. It was much needed too. With his powerful voice, his videos typically get anywhere between thirty and a hundred thousand views, I considered it a bit of a watershed.
The Alternative Media still has not come to terms with the devastating blow that Ron Paul dealt to both our agenda and credibility and even now many leading outlets treat him with the respect and sycophancy he so very little deserves. We helped him disable the Movement in both the 2008 and 2012 elections and very few have recanted since, even in the face of the ever more transparent facts, including the breathtaking betrayal of supporting Romney, a move that was the plan from the very beginning.
But then the Brother simply took down the videos. Here’s the one called ‘a Plan to End the Fed‘ below. It’s now private.
And recently he posted a video called ‘a six point plan to end Jewish Rule’, without a word about monetary reform!!
Several people have been asking him for an explanation, but he doesn’t say a word.
I find this most disturbing. Something has happened, that much is clear. I’d sure like to know what.
The Ron Paul Challenge: 10 reasons why the Alternative Media is failing this test
The Ron and Rand Paul Betrayal
Five more reasons Ron Paul was a phoney all along
End the Fed: a Trojan Horse destroying the Truth Movement from within
Austrianism is Dying! Truthers Unite!
The last few months I have been very active on Facebook. It provides a good platform to share stuff and comment on articles.
This blog will of course certainly continue, but while it is well suited for serious articles and analysis, Facebook is excellent for short notes.
So if you want to keep posted on the economy, monetary reform and the struggle against Usury, be sure to like the Real Currencies page!
You can also use the Facebook plugin to your right.
The endless barrage of debt, debt, debt, makes debt-free money sound very attractive. But the problem is not debt, it’s interest and interest-free credit based money is superior to debt-free currency. On the other hand, debt-free money could easily be repaired to again be a competitive proposition.
Debt-free money is simply unbacked ‘paper’ (nowadays it’d be mostly electronic, of course) money, printed (usually) by the State. It can then either spend it into circulation itself or have the populace do it. The former is commonly referred to as the Greenback, the latter is known as Social Credit.
Interest-free credit is credit by bookkeeping. Not unlike our current fractional reserve banking system, although Mutual Credit is a simpler and superior way of creating credit, as there is no need for deposits (‘capitalization’). Hence Mutual Credit is intrinsically stable, while fractional reserve banking based lending facilities go bust routinely.
Debt-free money is spent into circulation and continues to circulate until it is retired through taxation. Interest-free credit is lent into circulation and is retired when the debt is repaid. Often the two meet. For instance: John Turmel recently gave the example of a Continental (George Washington’s debt-free money) being spent on infrastructure and retired through taxation covering the investment. In this way debt-free money is basically used as interest-free credit by the Government and the circulating Continental could be seen as the National Debt.
A noteworthy difference between interest-free credit and debt-free money is that interest-free credit can be spent as often as it is repaid, while debt-free money can only be spent once. This means interest-free credit is more flexible.
Isn’t debt a problem?
Debt as a problem is overrated. It’s not so much the debt, but the interest that is killing us. A mortgage is good example: we go into debt to buy the house, say $100k and after 30 years we have paid $250k, $150k interest. For the repaid debt we obtained a house, for the usury we got nothing.
Crucial to understand is that it is not the bank’s credit. It’s just bookkeeping and the banks keep the books for the community, who really owns the credit. It is in reality our brethren who are allowing us to buy now and pay later. Credit is automatic, when it is mutual.
In the news we hear about debt, debt, debt, but nobody is ever complaining about debt-service, while all the debt could be repaid within twenty years should we stop paying interest and use that money to pay back the principal. Why is this so?
Bankers know loans can go sour. They hate to write them off, but will gnashingly do so, if they cannot avoid it. Business is business and they are realists. But whereas a write off is a one time loss, ending interest payments would just kill their business case.
This is one of the reasons why I prefer an interest strike over debt repudiation too, except for odious debt, which should be repudiated always.
For the debt real stuff was acquired and while the bank loses when the debt is not repaid, it does not gain anything when it is: the money is just retired. It’s not the bank’s, it did not exist before the loan was taken out and disappears when the loan is repaid.
An interest strike, on the other hand, is to a bank what garlic is to a vampire.
The reason the people don’t talk about suspending interest payments to alleviate the debt quagmire is equally clear. They still don’t understand how they are being colonized through Usury. They assume interest on the debt is natural, as they were programmed to.
Having said that, debt is a bond. The lender is the master of the debtor. Less is more. Even when the lender is the community represented by an interest-free credit facility and even when the debt is for a worthy cause, like an interest-free mortgage.
So isn’t debt-free money perhaps better after all? The issue is, that classical debt-free money proposals are accompanied with Full Reserve Banking. The money would not be debt-free for long, once it is spent into circulation. Once it enters the banking system, it will not leave other than as a loan. A usurious loan. Because of the usury, a quick return of money scarcity after spending the money into circulation can also be expected.
So debt-free money in itself does not end interest-slavery. Because the money will be handled by banks, there will also be money scarcity. Not only because of the usury, but also because the bankers will keep money from circulating in the real economy, most notably to feed their gambling addiction in the international financial economy.
Furthermore, a modern economy without credit is unthinkable. People will need mortgages and even more importantly, modern business is impossible without credit. Investments can be very capital intensive and these investments would be impossible to save beforehand. People will perhaps not be too bothered with businesses paying interest, but the reality is the businesses will have to pass on these costs to their customers, being us.
Repairing Debt-Free Money
These days we can provide Full Reserve Banking without interest, through JAK banking. That’s one way of solving the usury problem with debt-free money. Savers don’t get interest on their savings, but they acquire future rights to interest-free loans if they save now and allow that money to be used for interest-free loans to others.
Probably even better is demurrage, where those with a positive balance pay ‘interest’, basically a penalty for holding money. Demurrage is based on the ways of the ancients, who used to store produce at central warehouses and got receipts in return. These receipts were used to pay others and they declined in value, because the produce in the warehouse did too.
Demurrage is designed to discourage hoarding of money. As a result, velocity of money (how quickly it changes hands) is vastly increased. Not only that, the penalty gives a clear incentive to lend interest-free, as it saves the cost of holding on to it. It is also promotes paying in advance, which also amounts to an interest-free loan. Paying up front instead of at the time of the purchase is very beneficial for the supplier, who can use the money to finance investments interest-free. So demurrage lessens the need for credit and provides interest-free credit.
The great disadvantage of demurrage is that there is little experience with it. The upside is, the experience there is, is very positive. The classic case is Wörgl, Austria, where demurrage money solved the Great Depression in 1934.
Interest-free credit is superior to debt-free money. It is more flexible and gets to the heart of the matter, which is usury. We will never be able to do without credit, but we can rule out interest on the debt.
Current debt-free proposals do not comprehensively solve usury, and thus also not money scarcity.
However, debt-free money can be decisively improved, both by interest-free JAK banking and demurrage.
There is no tutor like practice and ultimately we will have to experiment with different systems to know which is best.
The best part of the story is, that we have several ways of solving our monetary problems overnight. Only the knowledge and the will are lacking as yet and this is changing too.
(Left: William Jennings Bryan, a few months after he delivered his famous speech.)
American Populists always focused on scarcity of money. Expanding the money supply was their main goal, not Usury abolition. But Usury is the fundamental cause of money scarcity.
Money scarcity is the phenomenon of insufficient liquidity in the economy to finance all possible trades. This results in (permanently) depressed economies. Money scarcity always has been the key issue that Populist monetary reformers wanted to solve, ever since the Civil War. They proposed to add Greenback-style debt free United States notes to the money supply. But the call to monetize Silver was even more common. That was the background of Bryan’s famous ‘you shall not crucify Labor on a cross of Gold’ speech, for instance.
Gold as money is always scarce. There is never enough of it. This has been the case throughout US history. The economy grows quicker than Gold supplies and, worse, the Money Power has always controlled Gold (and Silver too, of course) and has routinely withheld massive amounts of specie from circulation.
Austrians deny money scarcity, citing Say’s law, which claims free markets will always clear. Prices will go down and suppliers unable to follow suit will just go out of business. In itself this is not untrue, but the destruction before markets clear is uncanny and leads to the premature death of millions, not to speak of the suffering of millions more who survive. Adding some liquidity to the economy is basically a no-brainer, but then the Austrians scare everybody to death with inflation fearmongering. Interestingly, warnings of inflation have always been the banker line in the past, when resisting adding money to the economy.
Money scarcity is pleasant to the Bankers. They prefer depressed economies, because it prevents the poor from becoming middle class. Bankers like cheap labor and people licking their boots for below sustenance job. The industrial revolution, which caused generation after generation to be destroyed in the sweat shops, is a typical example. Austrians will always hail the industrial revolution as that great era of wealth production, but they like to ignore that the wealth production was done by the laborers, while the wealth itself went to those providing the capital. The industrial revolution was the greatest defeat labor ever suffered against capital.
Furthermore, artificial scarcity of money raises the price of it and this obviously is to the monopolist’s liking. In this way money scarcity is as much a cause of usury as the other way around.
Causes of Money Scarcity
Money scarcity is caused by three main issues: deflation, usury and racketeering. Deflation is obvious: if the economy is operating at near max capacity and the money supply starts dwindling, markets will have to clear at a lower price level, causing recessions and depression in the worst case.
Usury is a constant drain on the money supply. Banks spend some of the interest back into the economy, but not all. They relend another part back causing even more debt and associated interest costs and indeed, worsening money scarcity. The rest is siphoned off to the financial economy (the ‘two-loop economy’), where it is used for their financial con games. Like speculating in commodities (raising prices), creating bubbles on the stock market, FOREX and of course the derivative trade, which is currently their favorite exploitative tool.
And racketeering: manipulating the volume of money. Banks routinely stop lending, saying ‘confidence is lacking’ or calling for ‘structural reform’, which unfailingly worsens the conditions of labor. In the days of metal backed currency, they simply stopped circulating their Gold and Silver. They have been at this forever. Here is a nice story about how the Venetians bankers took Silver out of circulation in the middle ages, causing the long term depression of the 14th century.
Money Scarcity and Empire
Money Scarcity is favorable to Capital, as it makes their monetary means more in demand. Labor will sacrifice greatly to avoid starvation.
However, closely associated to money scarcity is a lack of demand in the economy. Demand is lacking when production outstrips consumption. This is the case in every developed economy and has been the norm in Europe and the United States throughout modern history. This is unpleasant to Capital, because it cannot market all the goods it managed to force Labor to produce cheaply. This is what Social Crediters call the Gap. Keynes called a lack of aggregate demand.
Because of this problem, the merchant class seeks foreign markets and this was undoubtedly a key driver in Europe’s expansion during the Age of Discovery and beyond. Corporate interests looking for markets to dump their excess production still drives Empire to a large extent today.
Money scarcity is implicit in a usurious environment. This is something to keep in mind when we promote debt-free money to solve it, something we will discuss in the next article.
Interest-free money will not only see sufficient liquidity, it will also solve the basic cause of money scarcity, preventing its return.
A recent story claiming Hungary is now printing its own debt-free money has shocked the Truth community. It is false though. Some nationalist reaction is going in Hungary, but it’s a far cry from genuine monetary reform.
The story originated at the American Free Press. It was linked to at innumerable sites and took Facebook by storm, but unfortunately it is incorrect. Having asked AFP for a reaction, I was told it was an unfortunate editing slip: the story was not passed by the financial editor.
Perhaps I should have reported on this earlier, I did on Facebook a couple of times, but better late than never. Bill Still was more astute and did a solid analysis of the situation about a month ago, see below.
There is some sort of nationalist reaction going on in Hungary. The Government, led by Viktor Orban, has paid off the last outstanding 2,2 billion dollar loan to the IMF and kicked them out of the country. There were no mutual pleasantries when the IMF goons left Budapest. This did not amuse his European ‘partners’, as is also the case with his policy of gaining more influence over monetary policy. ‘Independent’ Central Banks are at the core of modern economics and politics. Surely we don’t want the people to know what Central Banks are up to? Let alone decide on monetary policy? Bankers know best.
Another issue is that Orban has made clear Hungary will not be joining the Euro for the time being. A great relief for Hungarians, but the Eurocrats consider this an uncalled for snub. Considering what happened to the Euro hostile Polish leadership only a short while ago, Orban is certainly showing a lot of courage. Taking an independent line while located between the Russia and the EU is a tricky proposition, requiring both balls and dexterity.
However, for the time being the Hungarian Forint is still produced by the Banks, as an interest-bearing debt to them. Until that changes, nothing really does.
Left: The energetic Karen Hudes
The amazing revelations by World Bank whistleblower Karen Hudes have stunned many and surely it is pretty mind blowing to hear a veteran World Bank insider validate the core of conspiracy theory: that a small group of bankers controls the whole lot, with the BIS at its apex. On the other hand: she promotes Gold based money as the solution.
The notion that a small group of bankers is controlling the world is mainstreaming like wildfire. And Karen Hudes is no small part of that. She is an experienced career banker who studied at Yale University. She is exposing massive corruption within the World Bank, where she has worked for 20 years, including mass resentment from the rest of the world in the American role in this. And she has no qualms talking about how the Federal Reserve and other major Central Banks and the IMF and BIS orchestrate the whole global economy.
A good overview of her accomplishments by Michael Snyder can be found here, a video by her that has been making the rounds is in there too.
What I really like about her style is, she is in no way impressed, let alone in a panic: she’s on the contrary very optimistic and fighting the bad guys with law suits and whistle blowing. So I, like many, am thrilled to see her take on the whole lot and wish her more power.
More Gold Porn
On the other hand, exposing the Gold racket is and remains necessary. And Hudes does promote Gold based monetary reform. I don’t mean to harm Hudes’ message here, it is an undeniable fact of life that many inspired and brilliant people have fallen for the Gold meme at some point. Let us just be grateful she’s out there and for the excuse she provides to rehash this very pressing and mainly ignored issue.
Promoting Gold as a solution for our current problems is simply promoting Money Power policy. Not that it’s a bad investment, but keeping a little Gold at the side for a rainy day is quite something else than suggesting Gold backed money.
Clearly, the Banks have been preparing a return to some sort of Gold standard. For years now, rumors about a Gold backed Yuan have been gaining momentum. FOFOA has been exposing the plans for some sort of monetary role for Gold with the Euro. Central Banks have been buying Gold in major quantities. It is the Powers that Be that control Gold. All of it.
Many different memes supporting the notion that Gold backed money is fair and will save us have been circulated over the years, to prepare us for what is coming. Nesara comes to mind, promising Gold based monetary ‘reform’. OPPT claims we will all be given some.
Austrian Economics with its great champion Ron Paul is the ultimate Money Power Gold meme, of course. They invested billions in that one, giving the Banks’ plans some sort of ‘scientific’ veneer.
The weirdest of these narratives is ‘Road to Roota’, claiming Alan Greenspan is trying to save the United States by preparing the return to Gold as money. It’s certainly true that Alan Greenspan is the most famous and influential Austrianista of them all, but the idea that he would be interested in the well being of these United States?
Gold vs. Paper is just one of their dialectics. They don’t care whether it’s the printing press or Gold that finances the economy. They own both. Alan Greenspan is just one case in point. They have routinely switched between both in the past. During WW1 most nations left the Gold standard. The Money Power reinstated it in 1925, to create the depression. Which it duly did in the thirties, when most countries again turned to the printing press, the system we have today. Gold is deflationary and deflation causes depression.
They have been getting rich by lending massive amounts of Gold to sovereigns for centuries, millennia, now.
Control of the money supply by the banks is exploited in three main ways: usury, manipulation of volume (money scarcity, the boom/bust cycle) and the power to direct the economy by deciding what to finance and not. Gold solves none of these three.
Some say Gold is ‘debt free’ money, because it is dug up and spent into circulation. But Gold mining adds only a fraction to existing Gold supplies, which would be lent into circulation by the banks at interest.
History shows that asset bubbles were the norm during Gold standards. Prices tend to decline during Gold standards and to rise during Paper standards. Deflation has the Money Power’s preference, as it kills the middle classes through protracted depression and money scarcity. Inflation encourages booms and this is better for the many. The Banking Cartel, creating a global depression, wants to use Gold to look like it’s reforming a bad situation, only to make it worse.
America is badly placed for a new Gold based currency. The Fed owns no Gold at all, is my bet. And this is no coincidence, because it has always seemed that the coup de grace for the dollar would also mean the end of Pax Americana. The end of American supremacy is an integral part of the road to global governance.
Gold prices today are heavily reliant on New York’s Commodity Exchange (COMEX), where prices are set by derivatives like Gold futures. Many players on that market are selling Gold that they have only on paper. This is how prices are manipulated. Should people start calling their bluff and insist on physical delivery, COMEX would quickly collapse and this is the great day of reckoning that seems to be unavoidable. Physical Gold prices would go through the roof, the dollar down the drain and America would be caught with her pants down.
When this happens the results for the United States will be devastating.
The Money Power are the banking families and their control grid, including the Banking Cartel, which is one massive consolidated block. To solve the situation we need to get rid of the banks and print some interest-free credit, while managing the volume properly. The money supply should grow and shrink parallel to economic activity. With local democratic control of credit allocation. This would solve all three main problems with money.
If we do that, we would end the Money Power, war, the depression, Transnationals, poverty, the Jewish Question, environmental destruction, wage slavery, the war on the family and the degeneration of the public domain. Simply by starving the beast and empowering the many.
It would vastly increase the standard of living of the great majority of mankind. It would foster an unprecedented cultural, scientific, political, economical, environmental and spiritual rebirth.