We have a crazy monetary system. More than 100 years ago our government gave authority to private banks to create new money that is injected into our economy whenever they create loans. Banks also have authority to create money to buy government bonds – which literally allows them to create money out of thin air that is loaned back to the government with the obligation to pay interest.
Have you ever wondered why our national debt keeps growing and growing and growing? Have you ever wondered why household debt, mortgage debt, and student loan debt all keep rising at exponential rates? It’s because the government allows private banks to create money each time they make a new loan, and also decide where to direct those loans. No government that is charged by its Constitution to “provide for the general welfare” should give such extraordinary power and subsidies to private banks. Even when the government decides to start some program that benefits the general welfare, it has to either tax the citizens or borrow from private banks, and pay interest to the investors who buy the government bonds and notes from the private banks.
This has been the case since the government passed the Federal Reserve Act in 1913, and created the private Federal Reserve System. The Constitution grants the authority for creating money to Congress. This power to create money would allow the federal government to create its own pubic money and spend it directly into the economy on infrastructure, education, energy projects, agriculture, or whatever is needed by the citizens in the country. Instead of debt money, we would have public money. President Lincoln, in a great time of need, was able to have Congress authorize the creation of public money, known as greenbacks. They circulated along with the private bank debt money for over 100 years.
There is never enough money circulating in the economy to pay back the debts that are owed to the banks or other investors who hold government bonds and notes. There never will be, because the only way new money enters the economy is by the creation of debt-money. And there is never money created to cover the interest that is due on those debts.
A few years ago some Green Party members who were familiar with the abusive monetary system that operates in the U.S. drafted as part of the Green Party platform, a section called “Greening the Dollar” that provides for the systematic change necessary for the government to create public money, and gradually pay off its debt and provide for the needs its citizens. They also established a website as a teaching tool to inform Green Party members about our present system, and the how it can be reformed. The website is accessible here: greensformonetaryreform.org.
I had the pleasure of becoming acquainted with some of the Greens who support the need for monetary reform during some discussions by the Green Party National Committee in 2018 when platform amendments were being considered. One of the states had introduced platform amendments that would have done away with the monetary reforms that were advocated in the Green Party platform. During the discussions on the platform amendments it became clear that there were only three or four Green Party members on the National Committee that had any understanding of our present monetary system. This is not surprising because the monetary system is not taught in the schools or universities. Even students who study economics do not have the monetary system included as part of their curriculum. The monetary system is a very important part of the Green Party platform. For that reason, after defending our monetary reform platform, I offered to assist the others who were involved in the discussion in forming a new Green Party standing committee at the national level. The Green Party of Michigan was one of the sponsors that proposed the formation of the Banking and Monetary Reform Committee. It was also sponsored by the Green Party of Texas, and we were able to get it established as a permanent standing committee in 2019. Since then our committee has worked at creating a newsletter, as well as assisting in the drafting of press releases, and providing educational materials to both Green Party members and the public.
What most people also never learn about is the involvement of the big banks in using their wealth and influence to control the large corporations that seem to have overtaken the management of our everyday lives. The financial institutions not only provide debt financing, but invest in the stocks and bonds of the corporations, and are major shareholders in many of the largest corporations, including energy companies and weapons manufacturers. The major concern of the Fed is to protect the investors during a crisis. We saw that happen after the economic crash in 2008, and it is happening again during the present crisis. Each time this happens, more wealth gets shifted to the already wealthy. We are already controlled by an oligarchy that prevents any progressive candidates from running for office. We have lost our democracy because of this great shift of wealth and the control of most of the large corporations by bankers. They now also buy our politicians to support policies that enable them to increase wealth. And remember that there were no bankers prosecuted after the crash in 2008, although it was the most massive, widespread fraud that occurred in the history of the world.
Following the crash in 2008, ninety percent of Americans who contacted their representatives in Congress were opposed to spending trillions in bailing out banks. Ignoring their constituents, members of Congress enacted legislation that eventually shifted wealth from the working class to the financial sector, while millions of Americans lost their homes through foreclosure, and also lost income from their savings. Since then, Congress has quietly given the Federal Reserve System the authority to bail out banks without Congressional approval. The $6.2 Trillion the Fed has allocated so far to bail out the banks and investors began several months before the pandemic crisis. It is a foreboding of the future economic calamity that will strike the general population when the curtain is lifted.
This immense power of the banks has caused the highest inequality of wealth that has existed in the history of the country. It is now slowly killing members of our society by subjecting them to poverty, unemployment, homelessness, loss of health care, and staggering debt. And by controlling the large weapons manufacturers it directs the military spending that has resulted in a state of permanent war that absorbs more than half of the government’s discretionary spending, and has resulted in the death and displacement of millions of people.