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ibly rapid “reflation” that began across Asia in 2003 and that
was still underway at the end of 2004. Even Japan™s moribund
economy began to reflate.
. . . In 2004, the global economy grew at the fastest rate in 30
years. Money creation by the Bank of Japan on an unprecedented
scale was perhaps the most important factor responsible for that
growth. In fact, ¥35 trillion could have made the difference
between global reflation and global deflation. How odd that it
went unnoticed.7
The Japanese experiment ended in March 2004, apparently because
no more intervention was required. The Fed had agreed to begin
raising interest rates, putting a stop to the flight from the dollar; and
strong economic growth in the United States had created higher than
anticipated tax revenues, reducing the need for supplemental budget
funding. The experiment had “worked beautifully” to reduce deflation
and provide the money for more U.S. government deficits, except for
one thing: the U.S. government was now in debt to a foreign power
for money the Japanese had created with accounting entries -- money
the U.S. government could have created itself.

Chapter 40 - Helicopter Money

Can You Trust a Pirate?

After the Japanese experiment came the Caribbean experiment,
which was discussed in Chapter 38. Joseph Stroupe, editor of Global
Events Magazine, warned in 2004:
[I]nternational support for the dollar and for related US economic
and foreign policies is noticeably weakening, at a time when it is
most needed to support an unprecedented and mushrooming
mountain load of debt. . . . The appetite of the big Asian economies
to continue buying dollar assets is waning . . . . Hence the
possibility of a Twin Towers-like vertical collapse of the US
economy is becoming greater, not lesser.8
That was the fear, but collapse was averted when “the Pirates of
the Carribean” stepped in to pick up the unsold bonds, evidently at a
substantial loss to themselves. As noted earlier, these traders must
have been fronts for the Federal Reserve itself, which alone has pockets
deep enough to pull off such a maneuver and absorb the loss. (See
Chapter 38.) The Fed manipulates markets with accounting-entry
money funneled through its “primary dealers” “ a list of about 30
investment houses authorized to trade government securities,
including Goldman Sachs, Morgan Stanley, and Merrill Lynch.9 These
banks then use the funds to buy government bonds, in the sort of
maneuver that might be called “money laundering” if it were done
privately. (See Chapter 33.)
In December 2005, M3 increased in a single week by $58.7 billion
“ a 30 percent annualized rate of growth. Financial adviser Robert
McHugh compared this increase to the hyperinflation seen in banana
republics. “This is nuts folks,” he wrote, “unless there is an incredible
risk out there we are not being told about. That is a lot of money for
the Plunge Protection Team™s arsenal to buy markets “ stocks, bonds,
currencies, whatever.”10
The question is, can this secretive private cartel be trusted with so
much unregulated power? Wouldn™t it be cheaper and safer to give
the power to create dollars to Congress itself, with full accountability
and full disclosure to the public? Congress would not have to conceal
the fact that it was financing its own debt. It would not even have to
go into debt. It could just create the money in full view in an accountable
way. The power to create money is given to Congress in the
Constitution. Debt-free government-created money was the financial
system that got the country through the American Revolution and the
Web of Debt

Civil War; the system endorsed by Franklin, Jefferson, and Lincoln;
the system that Henry Clay, Henry Carey and the American
Nationalists called the “American system.” The government could
simply acknowledge that it was pumping money into the economy. It
could explain that the economy needs the government™s money to
prevent a dollar collapse, and that the cheapest and most honest way
to do it is by creating the money directly and then spending it on
projects that “promote the general welfare.” Laundering the money
through non-producing middlemen is giving the people™s
Constitutionally-ordained money-creating power away.

The Fear of Giving Big Government Even More Power

The usual objections to returning the power to create money to
Congress are that (a) it would be inflationary, and (b) it would give a
corrupt government even more power. But as will be detailed in Chap-
ter 44, government-issued money would actually be less inflationary
than the system we have now; and it is precisely because power and
money corrupt that money creation needs to be done by a public body,
exercised in full view and with full accountability. We can watch our
congresspersons deliberating every day on C-SPAN. If the people™s
money isn™t being spent for the benefit of the people, we can vote our
representatives out.
What has allowed government to become corrupted today is that
it is actually run by the money cartel. Big Business holds all the cards,
because its affiliated banks have monopolized the business of issuing
and lending the national money supply, a function the Constitution
delegated solely to Congress. What hides behind the banner of “free
enterprise” today is a system in which giant corporate monopolies
have used their affiliated banking trusts to generate unlimited funds
to buy up competitors, the media, and the government itself, forcing
truly independent private enterprise out. Big private banks are al-
lowed to create money out of nothing, lend it at interest, foreclose on
the collateral, and determine who gets credit and who doesn™t. They
can advance massive loans to their affiliated corporations and hedge
funds, which use the money to raid competitors and manipulate mar-
If some players have the power to create money and others don™t,
the playing field is not “level” but allows some favored players to domi-
nate and coerce others. These giant cartels can be brought to heel

Chapter 40 - Helicopter Money

only by cutting off their source of power and returning it to its rightful
sovereign owners, the people themselves. Private enterprise needs
publicly-operated police, courts and laws to keep corporate predators
at bay. It also needs a system of truly national banks, in which the
power to create the money and advance the credit of the people is
retained by the people. We trust government with sweeping powers
to declare and conduct wars, provide for the general welfare, and
establish and enforce laws. Why not trust it to create the national
money supply in all its forms?
The bottom line is that somebody has to have the power to create
money. We™ve seen that gold is too scarce and too inelastic to be the
national money supply, at least without an expandable fiat-money
system to back it up; and somebody has to create that fiat system.
There are only three choices for the job: a private banking cartel, local
communities acting separately, or the collective body of the people
acting through their representative government. Today we are
operating with option #1, a private banking cartel, and it has brought
the system to the brink of collapse. The privately-controlled Federal
Reserve, which was chartered specifically to “maintain a stable
currency,” has allowed the money supply to balloon out of control.
The Fed manipulates the money supply and regulates its value behind
closed doors, in blatant violation of the Constitution and the antitrust
laws. Yet it not only can™t be held to account; it doesn™t even have to
explain its rationale or reveal what is going on.
Option #2, the local community fiat alternative, is basically the
national fiat currency alternative on a smaller scale. As one
commentator put it, what would you have more confidence in “ the
full faith and credit of Ithaca, New York (population 30,000), or the
full faith and credit of the United States? The fiat currency of the
national community has the full force of the nation behind it. And
even if the politicians in charge of managing it turn out to be no less
corrupt than private bankers, the money created by the government
will be debt-free. Shifting the power to create money to Congress can
relieve future generations of the burden of perpetual interest payments
to an elite class of financial oligarchs who have advanced nothing of
their own to earn it. The banking spider that has the country trapped
in its debt web could be decapitated, returning national sovereignty
to the people themselves.

Section VI

The great spider was lying asleep when the Lion found him . . . .
It had a great mouth, with a row of sharp teeth a foot long; but its
head was joined to the pudgy body by a neck as slender as a wasp™s
waist. This gave the Lion a hint of the best way to attack the creature.
. . . [W]ith one blow of his heavy paw, all armed with sharp claws, he
knocked the spider™s head from its body.

”The Wonderful Wizard of Oz,
“The Lion Becomes the King of Beasts”
Chapter 41 - Restoring Natonal Soverignty

Web of Debt

Chapter 41

“If I put an end to your enemy, will you bow down to me and obey
me as the King of the Forest?” inquired the Lion.
“We will do that gladly,” replied the tiger. . . .
“Take good care of these friends of mine,” said the Lion, “and I will
go at once to fight the monster.”
-- The Wonderful Wizard of Oz,
“The Lion Becomes the King of Beasts”

William Jennings Bryan, the Cowardly Lion of The Wizard of Oz,
proved his courage by challenging the banking cartel™s right to create
the national money supply. He said in the speech that won him the
Democratic nomination in 1896:
[W]e believe that the right to coin money and issue money is a function
of government. . . . Those who are opposed to this proposition tell
us that the issue of paper money is a function of the bank and
that the government ought to go out of the banking business. I
stand with Jefferson . . . and tell them, as he did, that the issue of
money is a function of the government and that the banks should go
out of the governing business. . . . [W]hen we have restored the
money of the Constitution, all other necessary reforms will be
possible, and . . . until that is done there is no reform that can be
The “money of the Constitution” was money created by the people
rather than the banks. Technically, the Constitution gave Congress
the exclusive power only to “coin” money; but the Constitution was
drafted in the eighteenth century, when most forms of money in use
Chapter 41 - Restoring Natonal Soverignty

today either did not exist or were not recognized as money. Thomas
Jefferson said that Constitutions needed to be updated to suit the times.
A contemporary version of the Constitutional provision that “Con-
gress shall have the power to coin money” would give Congress the
exclusive power to create the national currency in all its forms.i
That would mean either abolishing the Federal Reserve or making
it what most people think it now is “ a truly federal agency. If the
Federal Reserve were an arm of the U.S. government, the dollars it
generated could go directly into the U.S. Treasury, without the need
to add to a crippling federal debt by “funding” them with bonds. That
would take care of 3 percent of the U.S. money supply, but what about
the other 97 percent that is now created as commercial loans? Would
giving Congress the exclusive power to create money mean the gov-
ernment would have to go into the commercial lending business?
Perhaps, but why not? As Bryan said, banking is the government™s
business, by Constitutional mandate. At least, that part of banking is
the government™s business that involves creating new money. The
rest of the lending business could continue to be conducted privately,
just as it is now. Banks would just join those non-bank lending
institutions that do not create the money they lend but merely recycle
pre-existing funds, including finance companies, pension funds, mutual
funds, insurance companies, and securities dealers.1 Banks would do
what most people think they do now -- borrow money at a low interest
rate and lend it at a higher rate.
Returning the power to create money to the government would be
more equitable and more Constitutional than the current system, but
what would it do to bank profits? That was the concern of government
officials who reviewed such a proposal recently in England . . . .

The Fate of a British Proposal for Monetary Reform

The Bank of England was actually nationalized in 1946, but the
monetary scheme did not change much as a result. The government
took over the function of printing paper money; but in England, as in
the United States, printed paper money makes up only a very small
percentage of the money supply. The bankers still have the power to

As an aside to community currency advocates: this would not prevent local

organizations from issuing private currencies, which are not the national
medium of exchange but are contractual agreements between private parties.

Web of Debt

create money as loans, leaving them in control of the money spigots.3
In Monetary Reform: Making It Happen (2003), James Robertson
observed that 97 percent of Britain™s money supply is now created by
banks when they advance credit. The result is a grossly unfair windfall
to the banks, which get the use of money that is properly an asset of
the people. He proposed reforming the system so that it would be
illegal for banks to create money as loans, just as it is illegal to forge


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