The Loan Shark Prevention Act
Unsurprisingly, CNN responded with a piece by Diego Zuluaga, described as “a policy analyst at the Cato Institute's Center for Monetary and Financial Alternatives.” His article on CNN’s web-site at least includes the health-warning that: “The opinions expressed in this commentary are his own.” Contrast Zuluaga’s piece with that of an article by Robert Hockett, contributor to Forbes magazine (hardly a socialist propaganda machine): “Americans are used to hearing politicians and pundits decry “the national debt” as a threat to long-term economic growth and financial stability. But really it is private, not public debt that has been our economy’s primary threat since wage and salary incomes began stagnating some forty years ago. The most dramatic case in point was of course the financial collapse and ensuing debt-deflation of 2008-09, rooted in exploitative “subprime” mortgage lending and related practices by the financial “services” industry. Since the crash, mortgage debt has unsurprisingly diminished somewhat – thanks in large part to mass default and ensuring foreclosures that threw millions of Americans from their homes. But other categories of private debt – notably student and consumer debt – have moved in to where mortgage debt once stood as a primary threat to middle class livelihoods and financial stability. At the time of this writing, student debt totals at over $1.5 trillion, while consumer debt has just passed the $4 trillion mark. These are record levels,the likes of which have not been seen since the fateful year of 2008. And together with continuing mortgage debt they have raised the level of aggregate household debt to over $13.5 trillion – nearly $1 trillion higher than the previous record set in … again, 2008.” Neither the CNN nor the Forbes articles above supply sufficient historical background regarding money supply in America (formerly thirteen colonies). Ten years prior to the drafting of the constitution in 1786, there had been a loose sort of formal relationship between the thirteen colonies (which at the time had the status of different countries with different currencies and laws) inscribed in a document called The Articles Of Confederation. Then, no executive (president) or judicial (supreme court) branch of government existed. The educated, wealthy people at the time (reminiscent of the philosopher-kings of Plato’s Republic) had for decades just made the laws for their individual colonies without any vote or debate. Despite this, perhaps surprisingly, the colonies prospered. According to Benjamin Franklin: “There was abundance in the Colonies, and peace was reigning on every border. It was difficult, and even impossible, to find a happier and more prosperous nation on all the surface of the globe. Comfort was prevailing in every home. The people, in general, kept the highest moral standards, and education was widely spread.” Given the lack of democracy in the Colonies of the early eighteenth century, one may wonder: how could such a relatively utopian society possibly exist (especially given the views of post-second-world-war American presidents about the necessity of spreading democracy around the world (apart from e.g. places that America gets oil from, especially Saudi Arabia)? What explains the shift from a non-Democratic pre-American colonial utopian dream, to the modern dystopian American nightmare of mass poverty, crime, mass shootings and lack of basic education? According to Benjamin Franklin the reason for the aforementioned colonial prosperity was two-fold. First, the colonies PRINTED THEIR OWN MONEY (called ‘colonial scrip’), paying no interest to any bank. Secondly, neither too much nor too little printed money was allowed to circulate – colonies controlled their money-base (and incidentally, people from such colonies could revolt against their government if e.g. the value of their money was too low – that’s not possible nowadays since government doesn’t control the value of money anymore). The (privately owned and misleadingly named) ‘Bank Of England’ had been cut off from a source of revenue from the colonies during this time. Upon their learning of the existence of colonial scrip, opposition to it arose immediately. This led to the bank’s insistence that the English Government (who were subservient to the Bank Of England) require that the colonies cease printing their own money. Although colonial scrip was ‘fiat currency’ i.e. owner’s of such currency had no right to demand to exchange it for a set amount of e.g. gold or silver, it had worked well in pre-revolutionary times. States (not banks) could control how much currency was in circulation in order to regulate its value and thereby facilitate commerce and prosperity. The key idea about fiat money is that money in general is only what people agree upon as having instrumental value – something that can be exchanged for something else that is intrinsically valuable (valued for its own sake, not as a means to getting something else). Almost anything could (and often has) been used as money historically around the world e.g. Yak dung, wooden ‘tally-sticks’ (pre-Bank Of England), gold, silver and pieces of paper with numbers on them (e.g. dollar bills). Currency backed by gold/silver was favored by banks because banks realized that there was a demand for this relatively rare commodity and that they could charge interest on loans of paper money based upon it (e.g. to governments in order to finance war on a grand scale or to businesses / individuals on a small scale). Franklin rejected the notions that private banks should control the amount of currency circulating in a country and that they should make a profit from charging interest when lending money. Not only is such profiteering (or ‘usury’) morally wrong on many conceptions of morality (religious and secular), Franklin realized that just as fiat money (bits of paper) is not intrinsically valuable, neither is gold, silver, wooden sticks, dung, etc. Although some of these things may have some other instrumental value (e.g. wooden sticks could be burnt for warmth), unless one can exchange them for goods and services which ultimately lead to something valued for its own sake e.g. happiness they have no intrinsic value. For example, (ignoring the fact that a student going to university in modern (pre-President Bernie) America is going to incur crippling debt), suppose a student is asked the question: “why do you want to go to university?” He or she naively replies: “in order to get a good degree.” “Why do you want that?” “In order to get a good job”. “Why?” “Good pay etc.” “Why do you want that?” “To be able to provide for a family and pay for nice things.” “Why?” “In order to be happy.” Suppose one then asks: “Why do you want to be happy”? The answer is that happiness is something valued for its own sake, not as a means to getting something else. Ultimately, money is only valuable if can exchange it for goods and services (which ultimately make one happy – happiness is one thing that is intrinsically valuable (justice too)). Even if bits of paper represent gold in a more convenient form to carry about, as far as human interest is concerned gold is no more intrinsically valuable than paper or Yak dung – each is only valuable to the extent that there is a demand for it. Before the revolutionary war whilst in England, Franklin noted that the richest country in the world at the time (England) had its streets covered with beggars and poor. Around 1764 the colonies were infected with the same unemployment that had blighted England. Later, upon his return to America, Franklin wrote: “The Colonies would gladly have borne the little tax on tea and other matters had it not been for the poverty caused by the bad influence of the English bankers on the Parliament, which has caused in the Colonies hatred of England and the Revolutionary War” Franklin blamed the Revolutionary War on the Bank Of England – a privately owned bank existing purely for profit, which required the English Government to try to ensure that the same sort of central bank held sway in the colonies. Thomas Jefferson (who in the Declaration Of Independence advocated the (Lockean) notion of a natural right (i.e. of the sort that others have a moral duty to respect)) wrote: “I sincerely believe that banking institutions are more dangerous to our liberties than standing armies. The issuing power should be taken from the banks and restored to the people to whom it properly belongs.” The natural right to liberty, according to Jefferson, was threatened by banking institutions even in the 18th century. James Madison, chief architect of the constitution wrote: “History records that the money-changers have used every form of abuse, intrigue, deceit and violent means possible to maintain their control over governments by controlling money and its issuance.” The Fed (in order to increase the monetary base in the economy) typically buys bonds from the U.S. Treasury, which are like I.O.U.s. To pay for the bonds, the Fed just prints money (talk about ‘money for nothing’ or the majority of the U.S. population being in ‘Dire Straits’). Then, that money is loaned out from member banks of the Federal Reserve to e.g. businesses (at interest). When the money is payed back, the share-holders of the privately owned Fed make money off the interest from the loans they supply, based on money they printed out of nothing. That is the definition of fraud. No part of government (not even the President) has jurisdiction over the federal reserve. The con the fed try to sell is that they must be independent of any political party so they can do what’s best for the nation regardless of partisan interests - they claim to be altruistic. On the contrary, the corporate duopoly work for the biggest private bank in the world (i.e. the federal reserve, currently dominating world banks). The founding fathers were opposed to the concept of banks lending money at interest (which historically has been viewed as causing the fall of the roman empire, and as being morally problematic amongst early christians - Jesus violently reacting to ‘money-lenders’ at Jewish Temples, if such stories are to be taken at face value). Corporate stooge Joe Biden (contrary to his Catholic public image) wants to maintain this big bank status quo on behalf of Wall Street, yet he espouses a slogan of ‘making America moral again’ (as nonsensical as Trump’s slogan of making America great again (MAGA)). Biden calls himself an ‘Obama-Biden’ kind of Democrat (not a Bernie or AOC kind). After Obama got elected, he increased the number of wars America was involved in from two to seven, as per a CIA initiative. That’s what Biden is there for - to continue wars round the world which benefit the elite wealthy in America. War costs money. Money is debt. The Fed creates debt. The Fed creates war.