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>America Facing Depression and Bankruptcy

>by Stephen Lendman

sjlendman.blogspot.com (August 27 2010)

Long-time economic, political and market analyst Bob Chapman publishes the International Forecaster, offering incisive analysis absent through mainstream sources, especially important now given America’s deepening economic crisis getting harder to conceal as evidence mounts.

His August 25 issue says the following:

Twenty countries (including America) are headed into bankruptcy and more will follow. That brings up the subject of state debt in the US. America has been in an inflationary depression for eighteen months. States have been cutting back for two years, but still face huge budget gaps required to be closed … 2011 will be a terrible year (with) eighty percent of states expect(ing) deficits of more than $200 billion. 2012 looks even worse. Most worrisome, there is no recovery and there never has been … the US economy and financial system is comatose. The worst is yet to come and will hit hard on arrival.

On August 24, economist David Rosenberg said, “Now (I’ll) tell you why this is a depression, and not just some garden-variety recession”, what he’s been repeating for months unlike few others, corporate analysts claiming the fall 2007 downturn “ended sometime last year”. Not so, it’s deepened, growing evidence providing more clarity.

Offering a historical perspective, Rosenberg said the Great Depression wasn’t marked by declining GDP each quarter. The 1929 to 1933 recession lasted four years, followed by recovery and another “deep downturn” in 1937 and 1938.

During the first one, “there were no fewer than six – six! – quarterly bounces in GDP data”, averaging eight percent at an annual rate, accompanied by sharp market increases, then declines confirming false positives. So “guess what? We may be reliving history (now). If you’re keeping score, we have recorded four quarterly advances in real GDP”, averaging only three percent. The late 1930s reversal showed “how fragile the post-bubble recovery really was”, a faux one again repeated in a weaker economy now than then, one headed for serious trouble ahead, harming millions more Americans as a result.

The Fed cut interest rates to near zero with no effect, at best buying time, resolving nothing. “Then the Fed tripled the size of its balance sheet – again with little sustained impetus to a broken financial system”.

Weeks back, then confirmed with new data, Rosenberg stressed weakness, numerous indicators turning down, including production, retail sales, consumer confidence, and housing, a bellwether industry impacting the entire economy. New reports show it’s collapsing, some readings to record lows, others disturbingly weak throughout the country.

July existing home sales dropped 26%, the largest monthly decline since records began in 1968, bringing annualized sales back to 1995 levels, and signaling worse trouble ahead. Other housing data confirm the malaise, including new home sales, housing starts and permits.

As worrisome were increasing layoffs and first-time unemployment claims hitting 500,000, flashing red for trouble nearly three years after the initial downturn, combined with a near-22% unemployment rate, not the bogus ten percent headline number, the 1980 calculation reengineered to conceal weakness like all other fake economic data, putting lipstick on an economy, increasingly looking and smelling more like a pig, a sick one.

According to Rosenberg, You know you are in a depression when:

Congress (extends) jobless benefits seven times (in the past two years) when almost half (of those) unemployed have been looking for at least a half year;

the adult male unemployment rate (25 – 54 years) hit a post-World War Two (high and still tops) the 1982 peak, the worst then since the Great Depression;

youth unemployment is stuck near 25%, and for inner-city black youths it’s eighty percent or higher; these developments will have profound long-term consequences – social, economic and political;

the depression’s fiscal costs keep mounting, the federal deficit soaring with no end to it in sight;

for over a year into a supposed recovery, the Fed still contemplates new ways to stimulate growth, its tool, of course, printing money (funny money, or as one analyst calls it, “toilet paper”) and quantitative easing, compounding the deficit, or the equivalent of throwing fuel on a fire instead of monetary and fiscal sanity plus sound economy policies to extinguish it;

after two years of record trillion dollar plus deficits to kick-start the economy, interest rates are shockingly low, flashing weakness, not strength; to wit, on August 24, the five-year note was 1.36%, seven-year at $1.95%, ten-year at 2.50%, and thirty-year at 3.57%; as well as thirty-year fixed mortgage rates at record lows below 4.5% (4.42% on August 24), despite no fewer than eight (government) programs to put a floor under the housing market; we’re in big trouble when (Washington) can expend so many resources (on) one sector in vain;

the FDIC keeps shuttering more banks; again, the carnage keeps spreading, yet most economists cling tenaciously an economic recovery theme, at most hit by a soft patch; Rosenberg’s response – “Some recovery (when) the private credit market is basically defunct … what replaced it was rampant government intervention (buying time) by trying to (put) a floor under the economy”; once it stops, and it will, they’ll be no hiding the dire truth, and no end of pain for growing millions.

The Worst Is Yet to Come

Financial expert and investor safety advocate Martin Weiss began warning about a major economic decline long before it began and keeps at it, citing evidence most analysts downplay or ignore, including:

America’s worst ever housing depression showing no signs of abating; since January 2006, housing starts alone have plunged from 2.3 million annually to a recent 477,000 low that may not yet reflect a bottom because demand is so weak for this bellwether industry;

record long-term unemployment, its worst since first officially tabulated over sixty years ago; and

the most chronic credit squeeze ever recorded … suffer(ing) its deepest plunge since World War Two.

As a result, he sees deepening economic trouble ahead, no matter what steps the administration, Congress or the Fed undertake. He expects little more stimulus, just another futile central bank attempt to print money (lots of it) to buy time. “These paper dollars will not create real prosperity”, just an illusory, “temporary, false prosperity”, but none at all for most people, hung out to dry on their own.

He also expects a sovereign debt crisis to hammer Europe and the US, saying America’s plight exceeds the dire situation of PIIGS countries (Portugal, Italy, Ireland, Greece and Spain), citing the Bank of International Settlements (the central bank of central bankers) saying US debt will hit 400% of GDP, more than triple Greece’s burden at 129% that plunged the country into (undeclared) bankruptcy. Indeed the worst for America is yet to come.

America Is Already Bankrupt

Boston University Economics Professor Laurence Kotlikoff explains it in his August 10 article, titled “US Is Bankrupt and We Don’t Even Know It”, saying:

Let’s get real. The US is bankrupt. Neither spending more nor taxing less will help the country pay its bills.

What’s needed, he says, is reengineering the economy by “radically simplify(ing) its tax, healthcare, retirement and financial systemsn…” Revitalization depends on it with unfunded liabilities topping $110 trillion and growing. Even the IMF is worried, saying “closing (America’s) fiscal gap requires a permanent annual fiscal adjustment equal to about fourteen percent of US GDP”, meaning, of course, from working households, not corporate interests or national security, the most glaring areas needing reform.

The fiscal gap represents “the difference between projected spending (including debt service) and projected revenue in all future years. (It’s) the government’s credit-card bill and each year’s fourteen percent GDP is the interest on that bill.”

When it’s not paid, it increases the balance owed. And each trillion the Fed prints bailing out bankers compounds it. Make them pay, not the public they robbed, starting with shutting them down, breaking them up, seizing their assets, and nationalizing them for the collective good.

Kotlikoff is scary saying “Uncle Sam’s Ponzi scheme will stop, (perhaps) in a very nasty manner”, citing three possibilities:

(1) massive benefit cuts on retirees;

(2) huge tax increases hitting working Americans hardest, and/or

(3) printing vast amounts of money ad infinitum until debt overload crashes the economy eventually.

Calling America “Worse than Greece”, he believes “Most likely we will see a combination of all three responses with dramatic increases in poverty, tax(es), interest rates and consumer prices”, the path we’re on heading us for the worst of all possible worlds.

Based on the latest Congressional Budget Office (CBO) data, he calculates a $202 trillion fiscal gap – “more than fifteen times the official debt” because Congress “label(s) most of its liabilities ‘unofficial’ to keep them off the books, (out of sight) and far in the future” to concern other officials, not them. Labeling, of course, isn’t fixing. It’s just concealing unpleasant realities, letting others, not them, face the music in out years.

Current federal revenue totals $14.9% of GDP, the IMF saying that closing it requires “an immediate and permanent doubling of our personal-income, corporate and federal taxes as well as the payroll levy set down in the Federal Insurance Contribution Act”.

Such policy would produce a five percent surplus this year, the IMF prescribing ad infinitum fiscal austerity, saying delay will make it tougher ahead. “Is the IMF bonkers?” Not at all, just preferential, wanting workers, not special interests hit hardest, the way it’s raped and mauled economies for years, serving capital, not people, now aiming at America, the biggest plum of all ripe for plucking with millions of vulnerable households, easy pickings for the powerful, harming, not relieving their needs by:

cutting wages and benefits;

destroying, not creating jobs; privatizing everything for private gain; and

turning America into Guatemala, a corporatist’s dream.

Indeed let’s get real. Bad policy begets bad results, and bad solutions makes it worse. For sure, America is “broke and can no longer afford no-pain, all-gain ‘solutions’ “

It needs responsible ones, too many to list, but here’s a few:

* end imperial wars and a bloated defense budget;

* reinvent government to make it responsive to public needs and democratic values;

* make offenders pay most, starting with Wall Street, defense contractors, Big Oil, Big Pharma, Agribusiness, and other corporate predators profiting at public expense for decades;

* make now the time for payback, assuring their victims fair and equitable reimbursements;

* reinvigorate industrial America;

* end Wall Street’s financial chokehold;

* return money creation power to Congress as the Constitution mandates;

* encourage publicly-owned state banks like North Dakota’s, making it prosperous when most states are debt-strapped and faltering;

* create full-time, good-paying jobs with benefits; don’t destroy them;

* bring back those offshored;

* protect homeowners from foreclosure;

* re-institute progressive taxes, including a Tobin tax (perhaps one percent) on all speculative financial transactions, a millionaire’s/Wall Street bank levy generating a huge windfall, enough to smack if not close the budget gap, making those most able pay; for example, the Bank for International Settlements estimated annual 2008 global over-the-counter derivatives trading at $743 trillion; a one percent tax would yield $7.43 trillion, and if taxes curbed speculation, the take would still be enormous;

* dismantle corporate predators;

* think small and local, not big and global;

* reinstitute financial, environmental, and other consumer-friendly regulations;

* get money out of politics;

* end the two-party monopoly;

* institutionalize a free, open, fair media and Internet;

* assure equitable social benefits for all, including universal, single-payer health care, government-supported public and higher education, and more; and

* reinvigorate an eroding democracy before it’s too late to matter.

Responsible policies, all of the above and more, will reinvigorate America. The unsustainable fiscal crisis is reason enough to do it.

_____

Stephen Lendman lives in Chicago and can be reached at lendmanstephen@sbcglobal.net. Also visit his blog site at sjlendman.blogspot.com and listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network Thursdays at 10 am US Central time and Saturdays and Sundays at noon. All programs are archived for easy listening: http://www.progressiveradionetwork.com/the-progressive-news-hour/.

http://sjlendman.blogspot.com/2010/08/america-facing-depression-and.html

Bill Totten http://www.ashisuto.co.jp/english/

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>Creating New Money

2010/08/31 1 comment

>Some Frequently Asked Questions

by James Robertson

Prosperity (January 2003)

In the introduction to Creating New Money (2000), co-authored by Joseph Huber and James Robertson, which we reviewed here the (then) Executive Director of the New Economics Foundation Ed Mayo, wrote, “We look forward to monetary reform moving to the centre stage of public and policy debate in the way that eco-taxes, stakeholding and debt cancellation have done”.

Here James Robertson presents a short summary of answers to frequently asked questions on the reform proposed in his book.

1. What exactly is debt free money?

Debt-free money is exactly what it says. It is not an interest-free debt. It does not have to be paid back. It is money created and issued as a gift.

2. How is debt-free money to be issued?

The amount of debt-free money to be created and put into circulation at intervals, in order to increase the money supply, should be decided by an agency of the state and given to the government to be spent into circulation. In the present situation, this agency will be the central bank, in a further stage in its continuing historical evolution as a central monetary authority. As it already does in the UK, it will make its decisions on a professional basis, independently of elected politicians but in accordance with objectives published by them.

3. If the new money is deposited in banks, what’s to stop them issuing more credit on the back of it?

It will be made illegal for anyone other than the central bank to create new non-cash money (traditionally known as “credit”), just as it already is illegal to counterfeit and forge new notes and coins. Banks and all others who lend money will have to lend money that exists already. It will either be theirs already or they will have borrowed it from elsewhere. In Creating New Money we spell out what this will mean.

4. How will the new money be repayable?

Non-cash money issued in the new way will not have to be repaid. It will remain in circulation. On any occasion when it becomes necessary to reduce the money supply, the central bank will require the government to pay the required sum to it out of tax revenues and will then destroy it, by returning it whence it originally came – that is, by wiping it off the books and turning it back into thin air.

5. Will it cut the cost of government investment?

It could do, yes. The government could use this money for investment. But alternatively it could use it to cut taxes, or to cut the existing level of government debt, or to increase spending on public services like education, health, et cetera. So there probably won’t be enough of this money to cover all the government’s investment needs, and some government borrowing will still be necessary. But the commercial banks will no longer be allowed to create money out of thin air in order to lend it to the government at interest.

6. Why isn’t it inflationary?

Controlling the growth of the money supply by having a professional agency of the state deciding directly how much it should be increased, rather than indirectly, as at present, by regulating the price at which borrowers borrow from banks and banks lend to borrowers, will give better control of inflation – and bring other important economic and social benefits as well.

Please print out, photocopy and distribute these articles. Also copy and paste them to emails, and circulate widely, and please include all the essential contact information below. Thank you.

Essential Further Reading:

PROSPERITY: Freedom from Debt Slavery is a four-page quarterly Journal which campaigns for publicly-created debt-free money. PROSPERITY is edited and published by Alistair McConnachie and a four-issue subscription is available for GBP 10 payable to PROSPERITY at 268 Bath Street, Glasgow, Scotland, UK, G2 4JR. Tel: 0141 332 2214; Fax: 0141 353 6900, Email: contactus@ProsperityUK.com http://www.ProsperityUK.com. All back-issues are still available: http://www.prosperityuk.com/prosperity/subs/subscribe.html

The forty-page Report, Clarifying our Money Reform Proposals, launched at the 2006 Bromsgrove Conference, is available for GBP 10 payable to PROSPERITY and is essential reading for beginners.

The Grip of Death: A Study of Modern Money, Debt Slavery and Destructive Economics by Michael Rowbotham (Jon Carpenter Publishing, 1998). Available from PROSPERITY.

Goodbye America! Globalisation, Debt and the Dollar Empire by Michael Rowbotham (Jon Carpenter Publishing, 2000). Available from PROSPERITY.

Creating New Money: A Monetary Reform for the Information Age by Joseph Huber and James Robertson (New Economics Foundation, 2000). Available from PROSPERITY.

http://www.prosperityuk.com/prosperity/articles/cmfaqs.html

Bill Totten http://www.ashisuto.co.jp/english/

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>Creating New Money (2000) by James Robertson

>A Book Review

by Alistair McConnachie

Prosperity (August 2000)

Many people today think that the State creates all the money in circulation. It doesn’t. Almost all money in circulation, around 97%, is created by the banking sector “out of nothing” and circulates as electronic and cheque book money – see Prosperity, April 2000 for the process by which money comes into circulation: http://www.prosperityuk.com/prosperity/articles/moneymake.html

The three per cent created by the State is the notes and coins, and the only cost to the taxpayer is the relatively insignificant cost of minting. However, taxpayers benefit directly because an amount equivalent to the face value of those notes and coins is spent by the State, into the economy, as a direct, debt-free input.

It would not be practical to return to a state of affairs where everyone dealt in cash. But if the State can issue money debt-free in the form of cash then it can extend that principle and issue electronic money in the same way also.

This would mean that when the State found itself short of money raised from taxes then – instead of printing Treasury Bonds, selling them to the banking and non-banking sector in order to raise money, and then having to pay them back when they become due, and with interest attached, and with money that has been raised from taxpayers and the sale of even more Bonds – it could simply create the money required “out of nothing”, in the way that banks create money today, and spend it into society as public revenue.

Instead of the benefits of our money system accruing to banking interests, it would accrue to the whole of society. That is a just and democratic goal worth aiming for.

A new and valuable book from the New Economics Foundation entitled Creating New Money: A Monetary Reform for the Information Age, by Joseph Huber and James Robertson, makes the case that the value created by issuing new money should be a common, not a private, resource. New money should be put into circulation as public spending, not as profit making loans by commercial banks, and that the result would be equivalent to twelve per cent off income tax.

The authors term this seigniorage reform and it is twofold:

1. A Central Bank should create the amount of new non-cash money (as well as cash) it decides is needed to increase the money supply. It should credit it to the government as public revenue. Government should then put it into circulation as public spending. In deciding how much new money to create, a central bank should operate with a high degree of independence from the government.

2. It should be illegal for anyone else to create new money denominated in the official currency. Commercial banks will then be excluded from money creation. They will be limited to credit-broking as other financial intermediaries are – borrowing, but no longer creating, the money they need to lend.

This reform will restore seigniorage, that is, the prerogative of the State to issue money, and to capture the value that arises from issuing it, and use it as public revenue.

This reform will mean that the whole stock of national currency circulating in the economy will have been issued by the central bank, including all money in everyone’s current accounts, together with everyone’s cash.

They argue that this reform will not only bring benefits in terms of increased public revenue, but will also bring lower interest rates and lower inflation.

It will create greater economic stability, by enabling the central bank to smooth out the peaks and troughs of business cycles more effectively than it does today.

It will have administrative benefits also, as it will be easy to calculate how much money there is. Instead of monetary statistics such as M0, M1, M2, M3, M3 extended, and M4, there will simply be one amount of plain money M.

It will make the system more understandable and transparent and will make it easier for more people to participate in economic policy debate.

The book is a very thorough presentation of the authors’ case including chapters on implications for public finance, banking, and, especially useful, replies to suggested objections. At only 92 pages, it is also easily and quickly read.

The authors state that support for money reform will be needed from the following helpful list:

– politicians and public officials, not necessarily connected with banking and financial affairs;

– the banking industry itself, the central banks, and other national and international monetary and banking institutions;

– the community of respected monetary academics, monetary historians and other specialist monetary and banking experts;

– the wider community of individuals, NGOs [Non-Governmental Organisations] and pressure groups, who are committed to the support of proposals for greater economic efficiency which involve a fairer sharing of resources, but who may as yet be unfamiliar with – the relevance of monetary reform; and

– the community of already committed supporters of monetary reform.

Ed Mayo, the Executive Director of the New Economics Foundation writes in his introduction, “We look forward to monetary reform moving to the centre stage of public and policy debate in the way that eco-taxes, stakeholding and debt cancellation have done”.

This book is an immensely important and significant step towards that goal.

See also James Robertson’s articles:

Creating New Money: Some Frequently Asked Questions
http://www.prosperityuk.com/prosperity/articles/cmfaqs.html

A Summary of Seigniorage Reform
http://www.prosperityuk.com/prosperity/articles/sumsr.html

Creating New Money is available for GBP 7.95 from The New Economics Foundation, 3 Jonathan Street, London, SE11 5NH. Tel: 0207 820 6300.

James Robertson’s presentation at “The Alternative Mansion House Speech 2000”, on 15 June 2000, entitled Financial and Monetary Policies for an Enabling State, is on the web at www.neweconomics.org/mansionhouse.html

http://www.prosperityuk.com/prosperity/revus/crnewm.html

Bill Totten http://www.ashisuto.co.jp/english/

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>A Summary of Seigniorage Reform

>by James Robertson

Prosperity (April 2003)

The following is from the Speaking Notes of James Robertson, co-author of Creating New Money (2000), for his address at the Earth Emergency meeting, London School of Economics, May 07 2003, entitled Monetary Reform, Economic Justice and Political Democracy.

Creating New Money is reviewed here: http://www.prosperityuk.com/prosperity/revus/crnewm.html. It is available from the New Economics Foundation, 3 Jonathan Street, London, SE11 5NH, Tel: 020 7820 6300.

People all over the world have become increasingly aware that money is power, and that our institutions of money and finance use their power to exploit people and keep them dependent.

This threatens the 200-year progress of political democracy across the world. The credibility of political democracy is being eroded by the power of money.

Money should provide a fair scoring system for our economic activities. But the scoring system it provides today is systematically perverse and corrupt.

* It rewards undesirable activities

* It penalises desirable ones

* It biases economic activity against the poor in favour of the rich

* It frustrates desirable change

* It compels people to work for purposes not of their own choosing, for people and organisations and nations richer and more powerful than themselves

NGOs and other campaigners for change are beginning to see monetary and financial reform as essential for

* genuine democracy,

* poverty reduction,

* healthier societies,

* renewable energy,

* sustainable development in agriculture and transport,

* more local production to meet local needs,

* and so on – you name it.

So the “Earth Emergency Call To Action” at the Johannesburg World Summit on Sustainable Development last year included a demand for reform of worldwide monetary and financial systems.

That is, in fact, a historic challenge now facing the world at every level – local, national, international and global.

Monetary reform is about currencies. Taxation, public spending, and other aspects of finance are related and very important, but separate.

My subject this evening is reform of the ‘mainstream’ monetary system, which includes official currencies like the dollar, pound, euro, et cetera.

And the need for an official currency that is genuinely global, to provide the world’s peoples with money that will support fair dealing between them.

I also strongly support the development of local and other complementary currencies, like LETS, co-existing with official currencies.

Key Questions

There are some key questions to keep in mind when we think about monetary reform.

1. Who should create the money supply?

2. Should money be created as debt, by lending it into existence as interest-bearing loans?

3. Is there a difference between money and credit?

UK National Monetary Reform

Less than five per cent of today’s national money supply has been created debt-free by public service agencies – in the form of banknotes by the Bank of England and coins by the Royal Mint – and over 95% has been created by commercial banks.

The commercial banks create the non-cash money out of thin air, calling it credit and writing it into their customers’ current accounts as profit-making loans.

That gives them over twenty billion GBP a year in interest, while the taxpayer gets less than three billion GBP a year from the issue of banknotes and coins.

However, if

* the commercial banks were prohibited from creating non-cash money,

* and if the Bank of England took on responsibility for creating it,

* and if the Bank of England were to give the money debt-free to the government to spend into circulation, the result would be extra public revenue of about 45 billion GBP a year.

That is the reform proposed in Creating New Money: A Monetary Reform for the Information Age (New Economics Foundation, London, 2000 – download from www.neweconomics.org ).

Among other things this reform would mean that:

1. Taxation and government debt could be reduced, or public spending could be increased, by up to 45 billion GBP a year.

2. The value of a common resource – the national money supply – would become a source of public revenue rather than private profit. That would remove an economic injustice.

3. Withdrawing the present hidden subsidy to the banks would result in a freer market for money and finance, a more competitive banking industry, and better service to bank customers.

4. A debt-free money supply would help to reduce present levels of public and private debt, which are partly caused by the fact that virtually all the money we use has been created as debt that has to be repaid with interest.

5. The economy would become more stable. Banks want to lend more and bank customers want to borrow more at the peaks of the business cycle and less in the troughs. So now, when the amount of money put into circulation depends on how much the banks are lending, booms and busts are automatically amplified.

6. The central bank would be better able to control the money supply and inflation if it itself decided and directly created the quantity of new money entering the economy. It now tries to control inflation indirectly, by raising the interest rates at which people can borrow from banks. But raising costs in that way actually helps to cause inflation – as well as directly damaging people and businesses.

Seigniorage Reform

We called this reform “seigniorage reform”.

Seigniorage was the profit made by monarchs and local rulers from minting and issuing coins.

The proposed reform will restore to today’s democratic state the prerogative of collecting as public revenue the profit arising from putting the national money supply into circulation.

Some opponents of this reform, including MPs who should know better, have claimed that the money the banks create isn’t really money, it’s only credit – although official monetary statistics and monetary policy-makers recognise it as constituting over 95% of the money supply.

In fact, the reform will exactly parallel the nineteenth-century reform which led to paper banknotes being recognised as money, along with gold coins and bullion.

Banknotes, along with coins, are now “cash”. British banknotes still say “I promise to pay …”, but that is a meaningless survival from past history. Everyone knows that banknotes are not just credit notes. They are cash, and there is nothing they could be redeemed in except themselves or other banknotes and coins of the same value.

So the answer to the question about the difference between money and credit is that, when what was originally credit has become widely used as a means of payment, it has become money and is money.

That happened to paper banknotes in the nineteenth century. It has happened to electronic credits in bank accounts now. The continuing creation of this kind of money by private sector profit-making companies is now an anachronism – a throwback to an earlier time.

Seigniorage and the Global Economy

Just as, under the proposed national reform, the benefit from creating national-currency money would go to the national community as a whole, so a comparable global reform would benefit the world community as a whole.

The present use of the US dollar and other national currencies like the yen, the euro and the pound as so-called ‘reserve currencies’, would be replaced by a world currency issued by a world monetary authority.

The profit from issuing it would be public revenue to be spent on behalf of the world community by the UN or a similar body.

Criticism of the ‘dollar hegemony’ of the United States is growing. For example, three reports:

1. “To build up reserves, poor countries have to borrow hard currency from the US at interest rates as high as eighteen per cent and lend it back to the US in the form of Treasury Bonds at three per cent interest”. (R Greenhill and A Pettifor, “The United States as a HIPC [heavily indebted prosperous country] – how the poor are financing the rich”, NEF, 2002)

2. “The dollar is a global monetary instrument that the United States, and only the United States, can produce by fiat [that is, out of thin air] … World trade is now a game in which the US produces dollars and the rest of the world produces things that dollars can buy. The world’s interlinked economies compete in exports to capture dollars needed to service dollar-denominated foreign debts and accumulate dollar reserves.” (Henry C K Liu, “US Dollar Hegemony Has Got To Go”, Asia Times Online Co Ltd, 2002)

3. Studies by Richard Douthwaite and the Irish NGO Feasta confirm that the total annual subsidy (or ‘tribute’) received by the US from the rest of the world from dollar seigniorage is at least $400 billion a year. This has been justified by one Pentagon analyst as a payment by the rest of the world to the US as the ‘policeman’ who keeps world order! (The Foundation for the Economics of Sustainability, 9 Lower Rathmines Road, Dublin 6, Republic of Ireland; feasta@anu.ie http://www.feasta.org)

Studies like these demonstrate the need for international monetary reform to serve the interests of the world community as a whole.

As international campaigning grows stronger for reform on these lines, it will help to strengthen the pressure for comparable reform at national level.

Recommendations

1. Study this fascinating topic for yourselves. It is on the move.

2. Help to persuade groups like WDM, FOE, Christian Aid and many others to get into it seriously.

3. Write to your MPs about it. For example, ask them to support EDM 854. It “calls upon the Government and the Treasury Select Committee to commission and publish independent reviews on the procedures for and benefits of increasing the proportion of publicly created money in the economy”.

Please print out, photocopy and distribute these articles. Also copy and paste them to emails, and circulate widely, and please include all the essential contact information below. Thank you.

Essential Further Reading:

PROSPERITY: Freedom from Debt Slavery is a four-page quarterly Journal which campaigns for publicly-created debt-free money. PROSPERITY is edited and published by Alistair McConnachie and a four-issue subscription is available for GBP 10 payable to PROSPERITY at 268 Bath Street, Glasgow, Scotland, UK, G2 4JR. Tel: 0141 332 2214; Fax: 0141 353 6900, Email: contactus@ProsperityUK.com http://www.ProsperityUK.com. All back-issues are still available: http://www.prosperityuk.com/prosperity/subs/subscribe.html

The forty-page Report, Clarifying our Money Reform Proposals, launched at the 2006 Bromsgrove Conference, is available for GBP 10 payable to PROSPERITY and is essential reading for beginners.

The Grip of Death: A Study of Modern Money, Debt Slavery and Destructive Economics by Michael Rowbotham (Jon Carpenter Publishing, 1998). Available from PROSPERITY.

Goodbye America! Globalisation, Debt and the Dollar Empire by Michael Rowbotham, (Jon Carpenter Publishing, 2000). Available from PROSPERITY.

Creating New Money: A Monetary Reform for the Information Age by Joseph Huber and James Robertson (New Economics Foundation, 2000). Available from PROSPERITY.

http://www.prosperityuk.com/prosperity/articles/sumsr.html

Bill Totten http://www.ashisuto.co.jp/english/

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>Google Can Use Toilet to Track Your Movements

Categories: Uncategorized

>The Government Can Use GPS to Track Your Moves

>by Adam Cohen

time.com (August 25 2010)

Government agents can sneak onto your property in the middle of the night, put a GPS device on the bottom of your car and keep track of everywhere you go. This doesn’t violate your Fourth Amendment rights, because you do not have any reasonable expectation of privacy in your own driveway – and no reasonable expectation that the government isn’t tracking your movements.

That is the bizarre – and scary – rule that now applies in California and eight other Western states. The US Court of Appeals for the Ninth Circuit, which covers this vast jurisdiction, recently decided the government can monitor you in this way virtually anytime it wants – with no need for a search warrant. {1}

It is a dangerous decision – one that, as the dissenting judges warned, could turn America into the sort of totalitarian state imagined by George Orwell. It is particularly offensive because the judges added insult to injury with some shocking class bias: the little personal privacy that still exists, the court suggested, should belong mainly to the rich.

This case began in 2007, when Drug Enforcement Administration (DEA) agents decided to monitor Juan Pineda-Moreno, an Oregon resident who they suspected was growing marijuana. They snuck onto his property in the middle of the night and found his Jeep in his driveway, a few feet from his trailer home. Then they attached a GPS tracking device to the vehicle’s underside.

After Pineda-Moreno challenged the DEA’s actions, a three-judge panel of the Ninth Circuit ruled in January that it was all perfectly legal. More disturbingly, a larger group of judges on the circuit, who were subsequently asked to reconsider the ruling, decided this month to let it stand. (Pineda-Moreno has pleaded guilty conditionally to conspiracy to manufacture marijuana and manufacturing marijuana while appealing the denial of his motion to suppress evidence obtained with the help of GPS.)

In fact, the government violated Pineda-Moreno’s privacy rights in two different ways. For starters, the invasion of his driveway was wrong. The courts have long held that people have a reasonable expectation of privacy in their homes and in the “curtilage”, a fancy legal term for the area around the home. The government’s intrusion on property just a few feet away was clearly in this zone of privacy.

The judges veered into offensiveness when they explained why Pineda-Moreno’s driveway was not private. It was open to strangers, they said, such as delivery people and neighborhood children, who could wander across it uninvited. {2}

Chief Judge Alex Kozinski, who dissented from this month’s decision refusing to reconsider the case, pointed out whose homes are not open to strangers: rich people’s. The court’s ruling, he said, means that people who protect their homes with electric gates, fences and security booths have a large protected zone of privacy around their homes. People who cannot afford such barriers have to put up with the government sneaking around at night.

Judge Kozinski is a leading conservative, appointed by President Ronald Reagan, but in his dissent he came across as a raging liberal. “There’s been much talk about diversity on the bench, but there’s one kind of diversity that doesn’t exist”, he wrote. “No truly poor people are appointed as federal judges, or as state judges for that matter”. The judges in the majority, he charged, were guilty of “cultural elitism”. {3}

The court went on to make a second terrible decision about privacy: that once a GPS device has been planted, the government is free to use it to track people without getting a warrant. There is a major battle under way in the federal and state courts over this issue, and the stakes are high. After all, if government agents can track people with secretly planted GPS devices virtually anytime they want, without having to go to a court for a warrant, we are one step closer to a classic police state – with technology taking on the role of the KGB or the East German Stasi.

Fortunately, other courts are coming to a different conclusion from the Ninth Circuit’s – including the influential US Court of Appeals for the District of Columbia Circuit. That court ruled, also this month, that tracking for an extended period of time with GPS is an invasion of privacy that requires a warrant. The issue is likely to end up in the Supreme Court.

In these highly partisan times, GPS monitoring is a subject that has both conservatives and liberals worried. The US Court of Appeals for the District of Columbia Circuit’s pro-privacy ruling was unanimous – decided by judges appointed by Presidents Ronald Reagan, George W Bush and Bill Clinton.

Plenty of liberals have objected to this kind of spying, but it is the conservative Chief Judge Kozinski who has done so most passionately. “1984 may have come a bit later than predicted, but it’s here at last”, he lamented in his dissent. And invoking Orwell’s totalitarian dystopia where privacy is essentially nonexistent, he warned: “Some day, soon, we may wake up and find we’re living in Oceania”.

Links:

{1} See a TIME photoessay on Cannabis Culture: http://www.time.com/time/photogallery/0,29307,1899641,00.html

{2} See the misadventures of the CIA: http://www.time.com/time/photogallery/0,29307,1918651,00.html

{3} Read about one man’s efforts to escape the surveillance state: http://www.time.com/time/business/article/0,8599,1976541,00.html

{4} Comment on this story: http://www.time.com/time/nation/article/0,8599,2013150,00.html#comments
_____

Cohen, a lawyer, is a former TIME writer and a former member of the New York Times editorial board.

Copyright (c) 2010 Time Inc. All rights reserved. Reproduction in whole or in part without permission is prohibited.

http://www.time.com/time/nation/article/0,8599,2013150,00.html?artId=2013150?contType=article?chn=us#ixzz0xig4ImAv

Bill Totten http://www.ashisuto.co.jp/english/

Categories: Uncategorized

>US Strategy: Control the World by Controlling the Internet

>A Chinese Perspective

by Chen Baoguo

Global Times (August 23 2010)

Global Research (August 24 2010)

US controls threaten Internet freedom

In May 2009, Microsoft announced on its website that they would turn off the Windows Live Messenger service for Cuba, Syria, Iran, Sudan and North Korea, in accordance with US legislation.

In January 2010, Google, the company which owns the largest Internet information resources, declared that in order to establish a more open Internet environment, they had to abandon the Chinese market.

What is even more worrying is that Senator Joseph Lieberman, chairman of US Homeland Security Committee, recently presented to the US Senate a bill titled “Protecting Cyberspace as a National Asset”.

To control the world by controlling the Internet has been a dominant strategy of the US.

From the network infrastructure protection of the Clinton era to the network anti-terrorism of the Bush era and to the “network deterrence” of the Obama era, the national information security strategy of the US has evolved from a preventative strategy to a preemptive one.

Meanwhile, the methodology has moved from trying to control Internet hardware to control of Internet content.

The ultimate goal is for the US to hold the ability to open and shut parts of the Internet at will.

In 1993, the Clinton administration proposed to build up “the national information infrastructure” and listed six possible enemies who might attack US key network infrastructure, including sovereign states, economic competitors, as well as all kinds of criminals, hackers, terrorists and insiders. It was a defensive strategy.

After the 9/11 attacks, the Bush administration officially upgraded Internet security to the strategic height of national security. Anti-terrorism was the theme of Internet security during the Bush era.

In 2004, the US cut off the “.ly” domain name by using the root server, resulting in Libya’s disappearance in Internet for three days. It generated worldwide criticism of the US hegemony on the Internet and concerns over Internet security.

In 2009, according to the network security assessment announced by Obama, the threat to the Internet had become one of the most serious economic and military threats that the US was confronted with.

Obama made two important decisions.

The first was to cut conventional weapons, including the F22 fighters, while the second was to build up network commands and substantially increase investment in network offensive weapons.

So far the network security strategy of the Obama administration has been “focusing on attack and assisting with deterrence”.

At present, the five core areas of Internet infrastructure are monopolized by US Information Technology (“IT”) giants, including high-performance computers, operating systems, database technologies, network switching technologies and information resource libraries.

Across the world, around 92 percent of personal computers and eighty percent of super computers use Intel chips, while 92 percent of personal computers use Microsoft operating systems, and 98 percent of core server technology lies in the hands of IBM and Hewlett-Packard.

Meanwhile, ninety percent of database software is controlled by Oracle and Microsoft, and 94 percent of core patented network switching technology is held by US companies.

After the control of Internet infrastructure and hardware and software systems, the US is now turning to Internet content.

The US government has adopted macro-control and focus-funding to actively use IT giants to create a global Internet infrastructure which could be manipulated by the US.

The US actively promotes the participation of IT giants in Internet content control work.

In May 2009, Microsoft announced on its website that they would turn off the Windows Live Messenger service for Cuba, Syria, Iran, Sudan and North Korea, in accordance with US legislation.

In January 2010, Google, the company which owns the largest Internet information resources, declared that in order to establish a more open Internet environment, they had to abandon the Chinese market.

What is even more worrying is that Senator Joseph Lieberman, chairman of US Homeland Security Committee, recently presented to the US Senate a bill titled “Protecting Cyberspace as a National Asset.”

Under this proposal, whenever an emergency occurs in the US, the president could order Google, Yahoo and other search engine operators to suspend Internet services.

And other US-based Internet service providers could also be under the control of the president when “Internet security emergencies” occur.

If so, the US president would officially have the power to open or close the Internet.

Although there is no international law to regulate Internet sovereignty, the Internet is founded to benefit all mankind across the globe.

If the US, which invented and controls the Internet, cut off or shut down the Internet in the name of national security, it would certainly neglect and violate the interests and benefits of international netizens.

_____

The author is a researcher at the Development Research Center of the State Council of China.

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Bill Totten http://www.ashisuto.co.jp/english/

Categories: Uncategorized