late for anyone to pretend that the U.S. government, whether under
President Barack Obama or anyone else, can divert our nation from
long-term economic decline. The U.S. is increasingly in a state
of political, economic, and moral paralysis, caught as it were between
the “rock” of protracted recession and the “hard
place” of terminal government debt.
Even if the
stock market can be shored up by more government borrowing for “stimulus”
spending, it’s a temporary reprieve, because nothing can bring
back the consumer purchasing power that was lost when the banks
stopped pumping money into the economy through out-of-control mortgage
lending. We simply no longer have the job base for people to earn
the income they need to live.
cause of the crisis is in fact the debt-based monetary system, whereby
the U.S. ruling class long ago sold out our nation and its people
to the international banking cartel of which the Rockefeller and
Morgan interests have been the chief representatives for over a
century. It was lending on a previously unheard of scale for overpriced
assets to people and businesses unable to repay that created the
bubbles that burst in 2008, not only in the housing market but also
in such areas as commercial real estate, equities, commodities,
and derivatives. It was an explosion that reverberated throughout
The Obama administration’s
response to the crisis has been to print Treasury bonds both for
the financial system bailouts and the sputtering Keynesian stimulus
that so far has gone substantially into military infrastructure.
This bond bubble is what I have referred to as “Obama’s
Last Picture Show.”
debt is fundamentally inflationary. For a generation, the U.S. dollar
has been inflating at an increasing rate, with the economy being
kept in a growth posture by selling our debt instruments abroad
or allowing foreigners holding dollars to purchase property and
other assets on our own soil. The website EconomyinCrisis.org
reports that in 2007, the most recent year for which data are
available, “foreign entities spent $267.8 billion to acquire
or establish U.S. businesses.” http://www.economyincrisis.org/articles/show/2801
are spending their dollars as fast as possible, because they are
now plummeting in value. It’s increasingly clear that sooner
rather than later, the dollar will be dumped by foreign purchasers
of bonds, particularly China, and possibly even the oil-producing
know full well that bonds denominated in dollars can never be completely
repaid, even if the bonds can be rolled over into fresh debt. It’s
this dynamic that is dragging the U.S. economy to the cliff, because
real economic growth stopped long ago when our manufacturing jobs
were exported. This is because most of the growth since Ronald Reagan
was elected president in 1980 has been only on paper through financial
bubbles. This included the dot.com bubble of the Clinton years that
blew up in 2000–2001.
the Treasury bond bubble of 2009, there is nothing left in America
to inflate. With so many jobs gone, the American family home was
the last thing of value we owned.
So the air
is going out of the tires. Americans who are struggling to work
for a living are passive spectators as their jobs, savings, health
insurance, pensions, and homes continue to erode in value or even
disappear. Last Sunday the Washington Post reported a massive
crisis in state and local government pensions. Reporter David Cho
wrote, “The financial crisis has blown a hole in the rosy forecasts
of pension funds that cover teachers, police officers and other
government employees, casting into doubt as never before whether
these public systems will be able to keep their promises to future
generations of retirees.”
So what, if
anything, can be done about it?
Well, the first
thing an intelligent physician does is diagnose the disease. Thomas
Greco, in his new book The
End of Money and the Future of Civilization (Chelsea Green:
2009), outlines the increasingly familiar story of how things got
so bad, and he tells it as well as anyone has ever done. His style
is precise and sometimes academic. Behind it, though, is a passion
for truth and the type of rock-solid integrity that refuses to sugar-coat
a very bitter pill.
More than that,
Greco writes about how to change what has gone wrong. His credentials
as an engineer, college professor, author, and consultant are impeccable.
His book is among the most important written in this decade. It
is truly a book that can alter the world and, if taken seriously,
give large numbers of people a practical way to survive the gathering
most commentators, what Greco offers is not another phony prescription
for what the financiers and government should do for us, whether
through “restarting” lending or another round of stimulus
spending. Rather it’s what we should do for ourselves, and
could do much better, if we understood what to do and if big banking
and big government just got out of the way.
As I said,
at the root is the monetary system, whose failure cannot be understood
without a history lesson. So Greco writes about the struggle between
banking and democracy that took place in the 1790s when the ink
on our new national constitution was barely dry.
It was Alexander
Hamilton, the first secretary of the treasury, who compromised the
new nation, through what he admitted was “corruption,”
by giving the wealthy speculators in Revolutionary War bonds the
benefit of federally-sponsored redemption and then by establishing
the First Bank of the United States. This early drift toward elitist
rule was opposed by Thomas Jefferson, James Madison, and others
who figured in the creation of what later became the Democratic
“While Jefferson favored a stronger union than that which emerged
under the Articles of Confederation, he was vehemently opposed to
the reconstruction of monarchic government on the American continent.”
Hamilton had said frankly that the British monarchy was the best
system of government known to man. Part of the monarchic system
was the Bank of England, which Hamilton copied when setting up the
who repudiated Hamilton’s elitist platform, was elected president
in what was then called “The Revolution of 1800.” Congress
refused to renew the Bank’s charter by a single vote when it
was up for renewal in 1811.
But the Second
Bank of the United States was chartered in 1816 due to the government
debt left behind from the War of 1812 against Great Britain. Thus
was set up what became known as the “Bank War.”
It was President
Andrew Jackson who dethroned the bankers from power by pulling government
funds out of the Second Bank in 1833. Greco writes that in Jackson’s
view: “The ‘Bank War’ was a contest for rulership
– would the United States be governed by the people through
their elected president and representatives, or by an unelected
financial elite through their central bank instrument?”
takeover began in earnest during the Civil War when Congress passed
the National Banking Acts in 1863–64 which mandated use of
government bonds as bank lending reserves, thereby creating a direct
linkage between bank profits and the debt the government was starting
to load on the shoulders of taxpayers.
fate was sealed with the passage of the Federal Reserve Act in 1913.
The deal was that the bankers would control the currency, and thereby
the nation’s economy, while the government would be provided
with an unlimited amount of inflated dollars to fight its wars.
trick of creating money out of thin air, charging interest for its
use, then forcing it down the throats of weaker nations by threat
of violence, is what has allowed the Anglo-American empire, since
the founding of the Bank of England in 1696, gradually to conquer
the world. Though President Woodrow Wilson signed the Federal Reserve
Act into law, he saw what that action meant. Greco cites Wilson
as writing: “There has come about an extraordinary and very
sinister concentration in the control of business in the country….
The great monopoly in this country is the monopoly of big credits.”
ill effects, the system has ruined the value of the currency. The
inflation caused by large issues of bank-created loans is seized
upon by the government which goes along because inflation reduces
the cost of its deficits. Investors buy Treasury bonds denominated
in Federal Reserve Notes then watch their value evaporate over time.
In fact Federal Reserve Notes have lost over 95 percent of their
value since they were first introduced.
additional inflation caused by bank-generated interest that drives
up the costs of goods and services, forcing everyone in the economy
to try to defend themselves by raising their prices to the max.
Greco spells this out too, which almost every economist in the world,
with the exception perhaps of Australia’s James Cumes, overlooks.
has other tragic effects. It was high interest rates, for instance,
that destroyed the Idaho potato industry. A farmer from that region
told me at a conference a few years ago that when interest rates
skyrocketed in the early 1980s, he asked the president of one of
the Federal Reserve Banks why they did it. The answer was they were
“ordered” to raise interest rates by the international
Make no mistake,
it’s the banking system, facilitated by the Fed, not unwary
borrowers, who brought on the collapse of 2008.
Now, in 2009,
the bankers, mainly those in the U.S., have so shattered the world
economy by debt mounted on debt that there may be no reprieve except
the creation of a slave society based on rule by the rich over the
masses of whatever peons should happen to survive the downturn and
its tragic effects on employment, health, the food and water supply,
and even our ability to cope with climate change.
establishment, expressing itself in pronouncements by organizations
like the Council on Foreign Relations, see a future, not of economic
democracy or increased financial pluralism, but consolidation of
world currencies into a small number overseen at the top by the
world’s financial oligarchy. Citing the writings of Benn Steil,
the CFR’s Director of International Economics, Greco writes:
“The ostensible plan is to reduce global exchange media to
three – one each for Europe, the Americas, and Asia. One might
reasonably suppose that at a later stage, those three would be combined
into one currency also under the control of the global banking elite.”
“The New World Order is upon us.”
justification, he even goes apocalyptic, citing The Book of Revelation
in demonstrating the import on a spiritual plane of the elitist
takeover: And he causeth all, both small and great, rich and
poor, free and bond, to receive a mark in their right hand or in
their foreheads: And that no man might buy or sell, save he that
had the mark, or the name of the beast, or the number of his name.
(Revelation 13: 16–17)
But is it really
the end, or is there a new world waiting to be born? Greco thinks
so. He speaks of the end of an era when unlimited economic growth
fed by massive influxes of debt-based money is no longer sustainable.
He writes: “That our global civilization cannot continue on
its current path seems evident…. But I think our collective
consciousness is beginning to change. We are becoming aware of limits
and are reaching that part of our evolutionary program that says,
Part of the
awareness of how to stop must focus on the institutions responsible
for the crisis. Greco praises Ron Paul for calling out the Federal
Reserve in the 2008 presidential campaign. He cites a statement
Paul made to Federal Reserve Chairman Alan Greenspan in a 2004 hearing
where Paul told Greenspan that the power of the Fed “challenges
the whole concept of freedom and liberty and sound money.”
Thus Paul and other monetary reformers, though largely ignored by
the mainstream media and political establishment, have made it clear
that change must start with what really lies at the bottom of elite
control: how money is made and who makes it.
few progressive economists, including Paul Krugman, Joseph Stiglitz,
and Robert Reich comprehend the monetary causes of today’s
disasters. Instead of demanding reforms that would make money the
proper servant of a sustainable economy, most call for more stimulus
spending; i.e., more government debt, along with “reform”
of a financial system that is corrupt down to its very DNA.
So do we really
need the bankers’ fake currency, today backed by nothing but
a federal deficit of $12 trillion and growing by the day?
we don’t, and this is what his book about. But it’s not
about doing without the necessities of life, or heading for the
hills with a gun and backpack. Nor is it about important efforts
at macro-level monetary reform like those of the American Monetary
Institute, Congressman Dennis Kucinich, or advocates for a basic
income guarantee. Rather it’s about individuals, groups, and
communities taking control of the monetary system at the grassroots
level and creating an entirely new basis for trade than bank-owed
about “a new paradigm approach to the exchange function.”
The solution, he says, “is to provide interest-free credit
to producers within the process of mutual credit clearing. That
is the process of offsetting purchases against sales within an association
of merchants, manufacturers, and workers. It will eventually include
everyone who buys and sells, or makes and receives disbursements
of any kind.”
Greco is one
of the world’s leading experts in describing alternative or
complementary currencies. These are self-regulating systems that
facilitate “reciprocal exchange,” not using government
legal tender but which are still allowed under the currency laws
so long as taxes are not evaded.
the large and growing worldwide “LETS” movement – Local
Exchange Trading Systems, like the Ithaca HOURS system in Ithaca,
New York. He describes the Swiss WIR Bank, the longest-running credit
clearing system in the world, with over 70,000 members. He writes
about the national and international barter exchanges that involve
over 400,000 businesses trading at an annual level of $10 billion.
describes the world-famous Mondragon Cooperatives from the Basque
region of Northern Spain. Started by a Roman Catholic priest in
1941, the Mondragon system, he says, is “the hub of what is
probably the most successful and progressive social cooperative
economy in modern history.”
He also tells
the inspiring story of the Argentine trading clubs – the trueques
– which, when used with “provincial bonds” issued
by regional governments, rescued that country during the 2001 economic
collapse brought on by the collusion between the Argentine government
and the International Monetary Fund.
is not new. Greco traces it to the medieval European fairs. These
exchanges are like banking clearing houses. The world’s largest
is the automated clearing house – ACH – operated by the Federal
But as Greco
points out: “The clearing process need not be restricted to
banks; it can be applied directly to transactions between buyers
and sellers of goods and services. The LETS systems that have proliferated
in communities around the world use the credit clearing process,
as do commercial trade exchanges. Credit clearing systems are, in
essence, clearing houses – but their members are businesses and
individuals instead of banks.”
currency and trading systems, says Greco, are the wave of the future.
Even though most only mount up to partial local successes, they
show what can be done. Greco likens these efforts to the Wright
Brothers’ first flight that covered 120 feet. They show, he
says, that the potential exists for local, regional, then national
and international money-free exchanges that eventually could be
joined by a single web-based trading platform. This could eventually
get rid of the corruption of debt-money altogether.
of the book is about “A Regional Economic Development Plan
Based on Credit Clearing” that shows the potential. Greco writes,
“The credit clearing exchange is the key element that enables
a community to develop a sustainable economy under local control
and to maintain a high standard of living and quality of life.”
be a real revolution. What can governments do to help? Perhaps only
by removing, as Greco recommends, the privileged position of bank
debt-money as legal tender. Instead, let bank money compete with
market-based alternative currencies and credit exchanges, if it
book is a how-to-do-it manual that updates and expands on his previous
and Debt: A Solution to the Global Crisis, New
Money for Healthy Communities, and Money:
Understanding and Creating Alternatives to Legal Tender.
Greco also operates a website
that offers advice and support to worthwhile community initiatives.
My own view
is that no one should wait to see who takes the lead in creating
the monetary and credit-clearing systems of the future. The time
is now. There is no more reason to delay. If the people of the world
do not join together in this kind of action, they can likely kiss
their economic future and perhaps their livelihoods good-bye. The
controllers of the world, those with the big money, the ones who
run the banking systems, who own the global corporations, and who
finance politicians like Obama, the Bushes, and the Clintons, are
now poised in their blindness to extinguish the light of democracy
on the planet for good.
Greco is implying
that the power of the elite is not only dated but illusory. Thus
the way to proceed is not just to oppose them. If they are opposed,
they’ll do what they always do, which is to roll out the SWAT
teams, the military in the streets, the tear gas, the sound cannon,
the concentration camps, the Patriot Acts, the torture chambers,
because that is all they know, and it’s what they do best.
The money monopoly
translates into a monopoly on violence on an ascending scale. We
know that the U.S. sells more weapons abroad than any other nation,
and we know that it is war above all that makes the bankers rich.
So let them
have their weapons and wars. With all due respect to those brave
enough to protest, it’s time for people simply to walk away
and set up their own economic and monetary systems as a prelude
to a rebirth of humanity as ethical beings in sustainable communities
The keys, says
Greco, are simple: “Promote the establishment of private complementary
exchange systems – and use them. Buy from your friends and neighbors
wherever possible. Contribute your time, energy, and money to whatever
moves things in the right direction.”
recommends that the unit of exchange for alternative currencies
be based on the value of commodities – not necessarily gold or
silver, which bankers and governments manipulate, but those commodities
readily available within a trading system. State and local governments
should do everything possible to protect, encourage, nourish, and
participate in these systems.
The irony is
that what may appear on the surface to be technical changes in how
the exchange of goods and services takes place can have such profound
effects. The answer is that systems of exchange reflect entirely
different perceptions of the world. Bank-money exchange reflects
and creates a system of elite control and human slavery. Reciprocal
credit exchange reflects and creates a democratic system on a level
monetary playing field.
points to the fact that such reform is, above all, a spiritual endeavor.
Thomas Greco has devoted decades to this quest and is one of its
foremost visionaries. In an Epilogue he writes: “We will either
learn to put aside sectarian differences, to recognize all life
as one life, to cooperate in sharing earth’s bounty, and yield
control to a higher power – or we will find ourselves embroiled
in ever-more destructive conflicts that will leave the planet in
ruins and avail only the meanest form of existence for the few,
if any, who survive.”
vision we can all strive to embrace.
originally appeared on GlobalResearch.ca.
C. Cook is a frequent contributor to GlobalResearch.ca.