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is likely to bring the house of cards down is that the Robber Barons
have lost control of the propaganda machine. Their intellectual foe is
the Internet, that last bastion of free speech, where even the common
blogger can find a voice. As President John Adams is quoted as saying
of the revolution of his day:
The Revolution was effected before the war commenced. The
Revolution was in the hearts and minds of the people. . . . This
radical change in the principles, opinions, sentiments, and affections
of the people, was the real American Revolution.
Today the corporate media are gradually losing control of public
opinion; but the Money Machine remains shrouded in mystery, largely
because the subject is so complex and forbidding. Richard Russell is a
respected financial analyst who has been publishing The Dow Theory
Letter for over half a century. He observes:
The creation of money is a total mystery to probably 99 percent
of the US population, and that most definitely includes the Congress
and the Senate. The takeover of US money creation by the Fed is one
of the most mysterious and ominous acts in US history. . . . The
legality of the Federal Reserve has never been “tried” before the
US Supreme Court.5

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We the people could try bringing suit before the Supreme Court;
but the courts, like the major media, are now largely under the spell of
the financial/corporate cartel. There are honest and committed judges,
congresspersons and reporters who could be approached; but to make
a real impact will take a vigorous movement from an awakened and
aroused populace ready to be heard and make a difference, a popular
force too strong to be ignored. When a certain critical mass of people
has awakened, the curtain can be thrown aside and the Wizard™s hand
can be exposed. But before we can build a movement, we need to be
ready with an action plan, an ark that will keep us afloat when the
flood hits. What sort of ark might that be? We™ll begin by looking at a
number of alternative models that have been developed around the
world.

Perpetual Christmas in Guardiagrele, Italy

One interesting experiment in alternative financing was reported
in the October 7, 2000 Wall Street Journal. It was the brainchild of
Professor Giacinto Auriti, a wealthy local academic in Guardiagrele,
Italy. According to the Journal:
Prof. Auriti . . . hopes to convince the world that central bankers
are the biggest con artists in modern history. His main thesis:
For centuries, central banks have been robbing the common man
by the way they put new money in circulation. Rather than
divide the new cash among the people, they lend it through the
banking system, at interest. This practice, he argues, makes the
central banks the money™s owners and makes everyone else their
debtors. He goes on to conclude that this debt-based money has
roughly half the purchasing power it would have if it were issued
directly to the populace, free.
To prove his thesis, Professor Auriti printed up and issued his own
debt-free bills, called simec. He agreed to trade simec for lire, and to
redeem each simec for two lire from local merchants. The result:
Armed with their simec, the townsfolk -- and later their
neighbors elsewhere in central Italy™s Abruzzo region -- stormed
participating stores to snap up smoked prosciutto, designer shoes
and other goods at just half the lire price.
“At first, people thought this can™t be true, there must be a
rip-off hidden somewhere,” says Antonella Di Cocco, a guide at
a local museum. “But once people realized that the shopkeepers
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were the only ones taking the risk, they just ran to buy all these
extravagant things they never really needed.” Often, they raided
their savings accounts in the process.
The participating shopkeepers, some of whom barely eked
out a living before the simec bonanza, couldn™t have been happier.
“Every day was Christmas,” Pietro Ricci recalls from behind the
counter of his cavernous haberdashery.
Neither Mr. Ricci nor his fellow merchants were stuck with
their simec for long. Once a week, they turned them in to Prof.
Auriti, recouping the full price of their goods.
“We doubled the money in people™s pockets, injecting blood
into a lifeless body,” says Prof. Auriti. “People were so happy,
they thought they were dreaming.”
Non-participating stores, meanwhile, remained empty week
after week. . . . By mid-August, says the professor, a total of
about 2.5 billion simec had circulated.6
The professor had primed the pump by doubling the town™s money
supply. As a result, goods that had been sitting on the shelves for lack
of purchasing power started to move. The professor himself lost money
on the deal, since he was redeeming the simec at twice what he had
charged for them; but the local merchants liked the result so much
that they eventually took over the project. When there were enough
simec in circulation for the system to work without new money, the
professor was relieved of having to put his own money into the venture.
The obvious limitation of his system is that it requires a wealthy local
benefactor to get it going. Ideally, the benefactor would be the
government itself, issuing permanent money in the form of the national
currency.

Private Silver and Gold Exchanges

An option that appeals to people concerned with the soundness of
the dollar is to trade in privately-issued precious metal coins. Private
silver and gold exchanges go back for centuries. The U.S. dollar is
defined in the Constitution in terms of silver, and at one time people
could bring their own silver to the mint to be turned into coins. In
1998, a private non-profit organization call NORFED (the National
Organization for the Repeal of the Federal Reserve Act and the Internal
Revenue Code) began issuing a currency called the Liberty Dollar,
which was backed by gold and silver. Liberty Dollars took the form of
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Chapter 35 - Stepping from Scarcity into Abundance

minted metal pieces, gold and silver certificates, and electronic
currency. Legally, said NORFED™s website, the Liberty Dollar
certificates were receipts guaranteeing that the holder had ownership
of a certain sum of silver or gold stored in a warehouse in Coeur
d™Alene, Idaho. The silver was insured and audited monthly, and the
Certificates were reported to be more difficult to counterfeit even than
Federal Reserve Notes. Liberty Dollars were marketed at a discount
and were exchanged at participating neighborhood stores dollar for
dollar with U.S. dollars. The silver that backed the NORFED
Certificates, however, was only about half the face value of the
Certificates (depending on the variable silver market). The difference
went to NORFED for its costs and to support its efforts to have the
Federal Reserve and federal income tax abolished.7
By 2006, NORFED claimed a circulation of $20 million, making
the Liberty Dollar the second most popular American currency after
Federal Reserve Notes. That was true until September 2006, when a
spokesman for the U.S. Mint declared the coins to be illegal because
they could be confused with U.S. coins. “The United States Mint is
the only entity that can produce coins,” said the spokesman. In
November 2007, the Liberty Dollar offices were raided by the FBI and
the U.S. Secret Service. The company™s owner sent an email to
supporters saying the FBI had taken not only all the gold, silver, and
platinum but almost two tons of “Ron Paul Dollars” -- commemorative
coins stamped with the likeness of Presidential candidate Ron Paul
(R-TX), the fearless champion of the money reform camp seeking to
have the Federal Reserve abolished. The FBI also seized computers
and files and froze the Liberty Dollar bank accounts. The seizure
warrant stated that it was issued for counterfeiting, money laundering,
mail fraud, wire fraud, and conspiracy.
That unsettling development underscores one of the hazards of
alternative currencies: their legal standing can be challenged. And
even if it isn™t, privately-issued money may be refused by merchants
or by banks. In an effort to remedy the legal problem, in December
2007 Ron Paul introduced “The Free Competition in Currency Act,”
a bill seeking to legalize the use of currencies that compete with the
Federal Reserve™s United States Dollar. Paul said:
One particular egregious recent example is that of the Liberty
Dollar, in which federal agents seized millions of dollars worth
of private currency held by a private mint on behalf of thousands
of people across the country. . . . We stand on the precipice of an

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unprecedented monetary collapse, and as a result many people
have begun to look for alternatives to the dollar. . . . I believe
that the American people should be free to choose the type of
currency they prefer to use. The ability of consumers to adopt
alternative currencies can help to keep the government and the
Federal Reserve honest, as the threat that further inflation will
cause more and more people to opt out of using the dollar may
restrain the government from debasing the currency.8
There are other limitations to using precious metal coins as a
currency, however, and one of them is that a substantial markup is
necessarily involved. The value stamped on the coins must be
significantly higher than the metal is worth, just to keep the coins
from being smelted for their metal content whenever the metal™s market
value goes up. But diluting the value of the currency would seem to
defeat the purpose of holding precious metals, which is to preserve
value. To remedy that problem, it has been proposed that the coins
could be stamped merely with their precious metal weight, allowing
their value to fluctuate with the “spot” market for the metal. That
solution, however, poses another set of problems. Shopkeepers
accepting the coins would have to keep checking the Internet to
determine their value.
Another obvious downside of precious metal coins is that they are
cumbersome to carry around and to trade, particularly for large trans-
actions. “GoldMoney” and “E-gold” are online precious metal ex-
changes that address this problem by providing a convenient way to
own and transfer gold without actually dealing with the physical metal.
According to the GoldMoney website, when you buy “goldgrams”
you own pure gold in a secure vault in London. GoldMoney can be
used as currency by “clicking” goldgrams online from one account to
another.9 Online gold is a hassle-free way to buy gold, making it a
good investment alternative; but it too has drawbacks as a currency.
Like gold coins, it involves a certain markup, and its value fluctuates
with the volatile gold market. (See Chart, page 346.) People on fixed
incomes with fixed rents generally prefer not to gamble. They like to
know exactly what they have in the bank.
Gold and silver are excellent ways to store value, but you don™t
need to use them as a medium of exchange. You can just buy bullion
or coins and keep them in a safe place. The gold versus fiat question is
explored further in Chapter 36.


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Chapter 35 - Stepping from Scarcity into Abundance


www.kitco.com
Gold Price 1975-2006




Community Banking: The Grameen Bank of Bangladesh

Another creative innovation in local financing is the community-
owned bank. Desperately poor people may be kept that way because
they lack the collateral to qualify for loans from private corporate banks.
Nobel Laureate Muhammad Yunus designed the Grameen (or “Vil-
lage”) Bank of Bangladesh so that ownership and control would re-
main in the hands of the borrowers. As soon as a borrower accumu-
lates sufficient savings, she buys one (and only one) share in the bank,
for the very modest sum of three U.S. dollars. The bank™s website
states that it is 92 percent owned by its borrowers, with the Bangladesh
government owning the remaining 8 percent. The interest rate for
loans is set so that after paying all expenses, the bank makes a modest
profit, which is returned to the shareholder-borrowers in the form of
dividends. The bank™s website reports that 54 percent of its borrowers
have crossed the poverty line and another 27 percent are very close to
it, beginning with loans of as little as $50.10 By August 2006, the bank
had served 5 million borrowers over a period of 25 years.11
The Grameen Bank has asserted its independence from the private
corporate banking system by providing loans to people who would
otherwise be considered bad credit risks, but the currency it lends is
still the national currency, issued by the government and controlled
by big corporate banks. Other community models operate indepen-
dently of big banks, precious metals, and the government . . . .
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Web of Debt



Chapter 36
THE COMMUNITY
CURRENCY MOVEMENT:
SIDESTEPPING THE DEBT WEB
WITH “PARALLEL” CURRENCIES


It is as ridiculous for a nation to say to its citizens, “You must
consume less because we are short of money,” as it would be for an
airline to say, “Our planes are flying, but we cannot take you because
we are short of tickets.”
-- Sheldon Emry, Billions for the Bankers, Debts for the People




M
“ oney” is a token representing value. A monetary system is
a contractual agreement among a group of people to accept

those tokens at an agreed-upon value in trade. The ideal group for
this contractual agreement is the larger community called a nation,
but if that larger group can™t be brought to the task, any smaller group
can enter into an agreement, get together and trade. Historically,
community currencies have arisen spontaneously when national
currencies were scarce or unobtainable. When the German mark
became worthless during the Weimar hyperinflation of the 1920s, many
German cities began issuing their own currencies. Hundreds of
communities in the United States, Canada and Europe did the same
thing during the Great Depression, when unemployment was so high
that people had trouble acquiring dollars. People lacked money but
had skills, and there was plenty of work to be done. Complementary
local currencies quietly co-existed along with official government
money, increasing liquidity and facilitating trade. Like the medieval
tally, these currencies were simply credits attesting that goods or services
had been received, entitling the bearer to trade the credit for an

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