Money has traditionally been made out of something which satisfied the needs of most people to feel and touch something before they believe it exists. These days, virtually all money is electronic information--how far am I from my credit card limit, etc. Money isn't something found in Fort Knox. Money is instructions to a memory unit somewhere. When people discover this it usually makes them very angry. This anger takes many forms but it usually sounds like "You mean I am supposed to shut down my government services (Greece, Spain, etc.) and sell my children into perpetual poverty (Ireland, etc) because some computer chip flipped out?"
The other big reason folks become enraged over the subject of money is the practice of fractional banking. When someone goes for a loan, a moneylender is allowed to loan out multiples of his capitalized base. What this means in practice is that the money a borrower must work to pay back--for 30 YEARS if a home mortgage--is created by a few keystrokes. A banker spends a few minutes and a few cents worth of electricity to "create" the value you spend a significant fraction of your working life to create.
No wonder bankers can pay themselves billion dollar bonuses while the rest of us struggle to pay the rent. No wonder banks own all the big buildings in town. No wonder they think those of us who labor to keep the machinery of life running are not very smart and that they are true lords of the universe. If you can pull off a scam like fractional banking and make the results stick, you probably ARE smarter than the fools who let you get away with it.
Anyway, my take on money was gathered from at least thirty years of listening to the various debates with a microfine bullshit detector in place at all times. The debates about money pretty much defined political debate since before USA was USA. The history of the debate alone just blows me away.
Famous Quotations on Money
“The Federal Reserve (privately owned banks) is one of the most corrupt institutions the world has ever seen.” -- Senator Louis T. McFadden (Chairman of the U.S. Banking and Currency Commission)
“If two parties, instead of being a bank and an individual, were an individual and an individual, they could not inflate the circulating medium by a loan transaction, for the simple reason that the lender could not lend what he didn’t have, as banks can and do….Only commercial banks and trust companies can lend money which they manufacture by lending it.” -- Professor Irving Fisher, Yale University, in his book, 100% Money
“The people can and will be furnished with a currency as safe as their own Government. Money will cease to be master and become the servant of humanity. Democracy will rise superior to money power.” -- Abraham Lincoln
“Permit me to issue and control the money of a nation, and I care not who makes it’s laws…” -- Mayer Amschel Rothschild
“All the perplexities, confusion, and distress in America arise, not from the defects in the Constitution or confederation, not from want of honour or virtue, so much as from downright ignorance of the nature of coin, credit and circulation.” -- President John Adams
“I believe the banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a monied aristocracy that has set the Government at defiance. The issuing power should be taken from the banks restored to the people to whom it properly belongs.” -- President Thomas Jefferson
If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them (around the banks), will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered. -- Thomas Jefferson
“Whoever controls the volume of money in any country is absolute master of all industry and commerce.” -- President James Garfield
“If Congress has the right under the Constitution to issue paper money, it was given to be used by themselves, not to be delegated to individuals or corporations.” -- President Andrew Jackson moreAs if to prove that USA can still talk about monetary options with the best of them, we have the Platinum Coins. This is better than a new recipe for apple pie.
The Platinum Coin Option
By Matthew Yglesias on Jul 28, 2011 at 5:35 pm
I keep hesitating to write about this because it sounds insane, but Jack Balkin’s a professor at Yale Law School so I’ll let him say it:
Sovereign governments such as the United States can print new money. However, there’s a statutory limit to the amount of paper currency that can be in circulation at any one time. Ironically, there’s no similar limit on the amount of coinage. A little-known statute gives the secretary of the Treasury the authority to issue platinum coins in any denomination. So some commentators have suggested that the Treasury create two $1 trillion coins, deposit them in its account in the Federal Reserve and write checks on the proceeds.
It’s right here in 31 USC § 5112 “Denominations, specifications, and design of coins.” It’s super-prescriptive about all kinds of things until you get to section (k):
(k) The Secretary may mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time.
It actually seems to me that there’s a colorable argument that President Obama is legally obliged to order Secretary Geithner to order the mint to start creating large denomination platinum coins. The debt ceiling is legally binding. We can’t borrow any more money. But at the same time, the Social Security Act is still valid. There are appropriations bills that extend through September. The assumption is that starting August 2, the Treasury will start “prioritizing” payments. But whence the legal authority to do that. By contrast, the legal authority to mint platinum coins is right there in the statute. This would, I assume, lead to a downgrading of American sovereign debt. more