Business, Criminal State, Israel lobby, Politics
Commonsense Money
January 3, 2011 by Jeff Gates · 7 Comments
Since 1913, debt has been the only way that we in the U.S. have known to create money. Choking on debt yet short on money, Americans are reeling from too much monetary theory and too little commonsense.
Those who sold us the theory also ensured recurring recessions. Each debt-induced cycle features rich-get-richer booms followed by debilitating busts. We designed our way into this mess. We can design our way out.
As yet, there’s no sign that policy-makers know a way out. Nor do their advisers. Over the past century, every economist has been educated the same. They are unable to see the real problem because the theory they were taught is the source of the problem.
The U.S. Federal Reserve model of central banking was one of America’s key exports. Every nation now “monetizes” pretty much the same way—with debt.
Good news is on the horizon from major exporting nations. Many of them are Islamic and flush with money. Much of that money originated as debt in industrialized nations.
Those nations are staggering under immense debt. Much of that debt is owed to nations where they must buy oil and gas to fuel their economies and generate funds to…repay debt.
Yet the creditors too are in a bind. Where can they prudently invest their vast pools of debt-backed money? Do they buy more U.S. government debt? Euro bonds? Do they hold their reserves in dollars, euros or pounds sterling—all debt-based?
Invest instead in commodities and they just bid up the price. That may be good news for speculators but it is not a sensible risk management strategy. So what to do? When all else fails, commonsense may yet find its way into this debate.
Tomorrow’s Commodity Today
The safest commodity is one you can control. Look at China’s control over rare earth metals. However control of that sort is a beggar-thy-neighbor approach, akin to investing in precious metals like gold or silver. Such investments miss the point—and the opportunity.
The commodity hedge for the foreseeable future is clean energy, particularly solar power due to its abundance and ease of collection. Clean energy is also what must be monetized—not debt but electrons captured by solar panels and converted to useable energy.
Monetization comes with an implied promise. To maintain value, currencies must be backed by productivity—the capacity to generate real goods and services. Productivity is what makes a financial security truly secure.
Those who designed America’s central banking system assured us that debt-based “monetization” would be backed by real productivity. That thin tether to reality was severed in 1971 when backing for the U.S. dollar shifted from precious metals to a candid slogan now stamped on U.S. currency: “In God We Trust.”
Federal Reserve Chief Alan Greenspan not only trusted Wall Street’s “financial creativity,” he also enabled it with cheap credit. Layer upon layer of cross-collateralized debt produced little more than more money for financial sophisticates. Meanwhile real people living in real communities witnessed the dismantling of the U.S. economy.
Ask around. Would those with commonsense prefer their money secured with debt or with clean energy? Which is more secure?
Those who propose we reform central banking miss the point. Why reform it when, by design, it can gradually be displaced?
Instead of relying solely on debt-backed money, why not also issue asset-backed currencies? Why not complement centralized money with decentralized monies? Instead of one-size-fits-all money, why not tailor currencies to the diverse needs of communities?
Rather than trust in God, why not put your faith in money secured by clean energy?
Commonsense Money
Total assets in sovereign wealth funds now exceed $8.1 trillion. China has reserves approaching $2.4 trillion. Oil exporters have considerably more including $1 trillion held by the United Arab Emirates and $510 billion by Norway.
As an energy exporter with large currency reserves, Russia is revisiting the wisdom of investing in other countries those funds generated by the sale of its natural resources.
With increasing frequency, political leaders are looking at the global financial crisis as an opportunity to reconsider what they monetize—and for whom. That suggests commonsense may yet find a way.
An alternative is known, available and viable with energy-backed “complementary currencies” designed to operate parallel with national currencies.
Do not expect leadership from the U.S. Those who sold us the current system retain too much control—for now. Their interest lies in more money secured by more debt. Or backed by nothing at all.
Look for this overdue innovation to emerge from cultures long wary of those who collect fixed interest regardless of the debtor’s condition. The Qur’an forbids it as “riba.” The Bible forbids it as “the pound of flesh.”
The source of this common malady is now coming sharply into focus—as is the cure.
Jeff Gates: “An alternative is known, available and viable with
energy-backed “complementary currencies” designed to
operate parallel with national currencies… Look for this
overdue innovation to emerge from cultures long wary of
those who collect fixed interest regardless of the debtor’s
condition. The Quran forbids it as “riba.” The Bible forbids it as
“the pound of flesh.” The source of this common malady is now
coming sharply into focus—as is the cure.”
Jct: Beautiful, and don’t forget the ultimate source of energy,
manpower! Which is why the Millennium Declaration C6 UNILETS
Time Standard of Money offers such hope for when all can pay
backtheir debts with cash or with time, banking will be
engineeredon Earth as it is in Heaven, no loansharking.
http://johnturmel.com/biglie.htm
[Reply]
To back all money with solar energy may take too much time.A quicker and simpler method would be to back money with services.The governement pays its officials for the services that they render to it with money it prints itself.After paying a small income tax those officials spend their salary on the market.Thus the money comes into circulation.If there is not enough money in circulation the governement can start Public Works and pay for that with more printed money.Thus every dollar is backed by services,not debt.No “gold standard” is needed and of course the fraudulent FED should be abolished.But here is the rub.The fraudulent FED is so profitable to its owners that they will use all their considerable power to prevent its abolition.The power behind the FED is of course the Jewish Banking Mafia and they know how to act.Abraham Lincoln and J.F.Kennedy tried to introduce a sane money system and both were murdered.Only a revolution can change the parasitic system.
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I never before heard of “energy-backed complementary currencies,” although Mr. Gates says they are “known,” evidently to others.
I await further (specific) information about them eagerly – perhaps in Mr. Gates’s next article. Who knows, maybe I’ll be spending it down at the corner store in another few weeks?
[Reply]
One small thought that I want to put here is regarding the concept of currency as a means of transaction. The purpose of money is to act as a facilitator of transactions and trade. In the days of barter system, wealth (anything produced through human labor & creativity) was exchanged for mutual consumption. Hence, goods were produced, traded and consumed. At the end of the trade, no additional wealth in any form was generated. For the sake of simplicity I am referring to any product or service as goods. Invariably, human effort & labor was required for wealth creation. In this bilateral trade, the obvious difficulty was that one party would not always be in need of what the other had to offer. The concept of money breaks down the bilateral trade into unilateral trades where the exchange is not simultaneous for both the parties. One party exchanges goods for money and then uses this money at a different point in time to satisfy his requirements. Hence the trade cycle is broken down in two or more parts with money acting as the intermediary. The problem with currency, as we know it presently, is that even after both the parties have completed the trade cycle and consumed the goods, the currency continues to exist. Hence, instead of being a mere facilitator of trade, currency becomes a bearer of non existent wealth and inflates the buying power in the community. This is detrimental to society in general and has been the reason for innumerable agonies through the hands of bankers.
The wealth bearing aspect of the currency can only be replaced by eliminating physical currency and having a concept of bank money which is essentially a unit used for mere accounting. Hence, we require a central database in the bank where debit/credit accounts are maintained for everyone. At the end of the trade cycle, the debits & credits get equated and hence we do not have money in the system, just like the days of barter economy. The bank in this case would assign certain level of credit to everyone, without charging interest of course, and people can use the credit to buy. This would be after checking the credit worthiness of the individuals as is done by telecom & credit card companies. This would be a replica of the barter economy on modern technological lines. Hence each person would be selling either his goods or services and would have his account debited or credited accordingly. So if I buy something from you for 100 units, I would have 100 in my debit and when I sell something I have credits in my account. In effect, this system does not produce money with artificial buying powers. The individuals create debt for themselves and they clear their debts by selling their goods or services. In the end, the account balances out. Hence, there would not be any inflation or deflation. The bank plays only the accounting role for a small fee. The onus of wealth creation would be on individuals through human labor and creativity. So, if I am a farmer and work hard to produce corn, I create wealth from God given resources and then trade it with people who have put similar efforts.
This system ensures that no person becomes wealthy due to someone else’ efforts. Labor & trade become the primary means of wealth creation. Anyone who exceeds the credit limit automatically gets barred from the system and would not be in a position to steal the fruits of others’ labor.
[Reply]
Jeff Gates Reply:
January 17th, 2011 at 11:11 pm
Thanks for your comment. Creative applications of “complementary” currencies will enable us to displace those who induced us into the debt-dependent monetization model.
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aasim hameed Reply:
January 20th, 2011 at 7:57 pm
v good assessment.
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Hi there,
The problem is riba or interest.
Money is a utility created for business. It has to be equal to equal and hand to hand. In arabia of the time of the prophet muhammad, dates were used as currency, so i know he said ‘ when a transaction takes place eg dates being exchanged for dates, they have to be equal and hand to hand. What he meant was an equal exchange of money will lead to unequality of money distribution, over a period of time of course. This is what has happened. With absolutely fraudulent paper money with arbitrarily assigned values, which can be influenced by many means, financial rip off is easy and this is what has been going on and the prophet muhammad said this is riba or interest.
So in an market deal, money excahnge has to be equal and hand to hand. This will ensure equaltiy of distribution. Anyone who is better, whose business is strong will sell more and so earn more. That should be the basis of being rich or poor and not this fraudulent entirely factitious paper money. This is fraud.
[Reply]