by Ellen Brown
[column width="47%" padding="6%"] Besides the imploding banking system, a second tower is now poised to fall. The U.S. federal debt is approaching the point at which just the interest on it will be more than the taxpayers can afford to pay; and just when foreign investors are most needed to support this debt, China and other creditors are threatening to demand not only the interest but the principal back on their hefty loans. The Ponzi scheme has reached its mathematical limits, forcing another paradigm shift if the economy is to survive. Will the collapse of the debt-based house of cards be the end of the world as we know it? Or will it be the way through the looking glass, a clarion call for change? We can step out of the tornado into debtors’ prison, or we can step into the cornucopia of a money system based on the ingenuity and productivity that are the true wealth of a nation and its people.
Home at Last
In the happy ending to our modern monetary fairytale, Congress takes back the power to create money in all its forms, including the money created with accounting entries by private banks. Highlights of this satisfying ending include:
• Elimination of personal income taxes, allowing workers to keep their wages, putting spending money in people’s pockets, stimulating economic growth.
• Elimination of a mounting federal debt that must otherwise burden and bind future generations.
• The availability of funds for a whole range of government services that have always been needed but could not be afforded under the “fractional reserve” system, including improved education, environmental cleanup and preservation, universal health care, restoration of infrastructure, independent medical research, and development of alternative energy sources.
• A social security system that is sufficiently funded to support retirees, replacing private pensions that keep workers chained to unfulfilling jobs and keep employers unable to compete in international markets.
• Elimination of the depressions of the “business cycle” that have resulted when interest rates and reserve requirements have been manipulated by the Fed to rein in out-of-control debt bubbles.
• The availability of loans at interest rates that are not subject to unpredictable manipulation by a private central bank but remain modest and fixed, something borrowers can rely on in making their business decisions and in calculating their risks.
• Elimination of the aggressive currency devaluations and economic warfare necessary to sustain a money supply built on debt. Exchange rates become stable, the U.S. dollar becomes self-sustaining, and the United States and other countries become self-reliant, trading freely with their neighbors without being dependent on foreign creditors or having to dominate and control other countries and markets.
This happy ending is well within the realm of possibility, but it won’t happen unless we the people get our boots on and start marching. We have become conditioned by our television sets to expect some hero politician to save the day, but the hero never appears, because both sides dominating the debate are controlled by the banking and industrial cartel. Nothing will happen until we wake up, get organized, and form a plan. What sort of plan? The platform of a revamped Populist/Greenback/American Nationalist/Whig Party might include:
1. A bill to update the Constitutional provision that “Congress shall have the power to coin money” so that it reads, “Congress shall have the power to create the national currency in all its forms, including not only coins and paper dollars but the nation’s credit issued as commercial loans.”
2. A call for an independent audit of the Federal Reserve and the giant banks that own it, including an investigation of:
• The creation of money through “open market operations,”
• The market manipulations of the Plunge Protection Team and the Counterparty Risk Management Policy Group,
• The massive derivatives positions of a small handful of mega-banks and their use to rig markets, and
• The use of “creative accounting” to mask bank insolvency. Any banks found to be insolvent would be delivered into FDIC receivership and to the disposal of Congress.
3. Repeal of the Sixteenth Amendment to the Constitution, construed as authorizing a federal income tax.
4. Either repeal of the Federal Reserve Act as in violation of the Constitution, or amendment of the Act to make the Federal Reserve a truly federal agency, administered by the U.S. Treasury.
5. Public acquisition of a network of banks to serve as local bank branches of the newly-federalized banking system, [/column]
either by FDIC takeover of insolvent banks or by the purchase of viable banks with newly-issued U.S. currency. Besides serving depository banking functions, these national banks would be authorized to service the credit needs of the public by advancing the “full faith and credit of the United States” as loans. Any interest charged on advances of the national credit would be returned to the Treasury, to be used in place of taxes.
6. Elimination of money creation by private “fractional reserve” lending. Private lending would be limited either to recycling existing funds or to lending new funds borrowed from the newly federalized Federal Reserve.
7. Authorization for the Treasury to buy back and retire all of its outstanding federal debt, using newly-issued U.S. Notes or Federal Reserve Notes. This could be done gradually over a period of years as the securities came due. In most cases it could be done online, without physical paper transfers.
8. Advances of interest-free credit to state and local governments for rebuilding infrastructure and other public projects. Congress might also consider authorizing interest-free credit to private parties for properly monitored purposes involving the production of real goods and services (no speculation or shorting).
9. Authorization for Congress, acting through the Treasury, to issue new currency annually to be spent on programs that promoted the general welfare. To prevent inflation, the new currency could be spent only on programs that contributed new goods and services to the economy, keeping supply in balance with demand; and issues of new currency would be capped by some ceiling -- the unused productive capacity of the national work force, or the difference between the Gross Domestic Product and the nation’s purchasing power (wages and spendable income). Computer models might be run first to determine how rapidly the new money could safely be infused into the economy.
10. Authorization for Congress to fund programs that would return money to the Treasury in place of taxes, including the development of cheap effective energy alternatives(wind, solar, ocean wave, etc.) that could be sold to the public for a fee, and affordable public housing that returned rents to the government.
11. Regulation and control of the exploding derivatives crisis, either by imposing a modest .25 percent tax on all derivative trades in order to track and regulate them, or by imposing an outright ban on derivatives trading. If the handful of banks responsible for 97 percent of all derivative trades were found after audit to be insolvent, they could be put into receivership and their derivative trades could be unwound by the FDIC as receiver.
12. Initiation of a new round of international agreements modeled on the Bretton Woods Accords, addressing the following monetary issues, among others:
• The pegging of national currency exchange rates to the value either of an agreed-upon standardized price index or an agreed upon “basket” of commodities;
• International regulation of, or elimination of, speculation in derivatives, short sales, and other forms of trading that are used to manipulate markets;
• Interest-free loans of a global currency issued Greenback-style by a truly democratic international congress, on the model of the Special Drawing Rights of the International Monetary Fund; and
• The elimination of burdensome and unfair international debts. This could be done by simply writing the debts off the books of the issuing banks, reversing the sleight of hand by which the loan money was created in the first place.
13. Other domestic reforms that might be addressed include publicly-financed elections, verifiable paper trails for all voting machines, media reform to break up monopoly ownership, lobby reform, sustainable energy development, basic universal health coverage, reinstating farm parity pricing, and reinstating and strengthening the securities laws.
Like the earlier Greenback and Populist Parties, this grassroots political party might not win any major elections; but it could raise awareness, and when the deluge hit, it could provide an ark. We need to spark a revolution in the popular understanding of money and banking while free speech is still available on the Internet, in independent media [like The Reader] and in books. New ideas and alternatives need to be communicated and put into action before the door to our debtors’ prison slams shut. The place to begin is in the neighborhood, with brainstorming sessions in living rooms in the Populist tradition. The Populists were the people, and what they sought was a people’s currency. Reviving the “American system” of government-issued money would not represent a radical departure from the American tradition. It would represent a radical return. Like Dorothy from the American Classic Wizard of Oz, we the people would finally have come home.
Ellen Brown, J.D. is an attorney and author of eleven books, including the bestselling Web of Debt  in which she traces the history and evolution of the current private, privileged banking oligarchy and maps how it has usurped the power to create money from the people themselves, and how we the people can get it back. Brown has written nearly 100 articles on this subject since Web of Debt was first published, and is the inspiration and thought leader behind the Public Banking Institute where she serves as Chairman and President. She holds degrees from UC Berkeley and UCLA School of Law. Learn more at www.PublicBankingInstitute.org, www.EllenBrown.com and www.WebOfDebt.com/articles. To join the Public Banking Institute Conference 2013, held June 2-4, visit www.PublicBankingInAmerica.org