As it is now, our central banks essentially make money out of debt. A countries’ Treasury or Ministry of Finance makes a bunch of debt bonds and sends them (usually electronically) to the central bank. A central bank deposits money, let’s say $10 billion in a commercial bank. That commercial bank gets to multiply that $10 billion dollars 9 times in loans, thanks to the magic of fractional reserve banking… As long as all the people who it lends out to put the credit the bank lends them, back into the banking system, that $10 billion can become $90 billion. With the creative mechanisms of the investment banks this was turned into making $250 billion out of the $10 billion (some banks were even multiplying fractional reserves at 30-40 times). It gets worse: In the last week of September they released so much money into the banking system that Total Fed Credit went up %22 (over and above the total created in history) IN ONE WEEK! They created over a trillion dollars in new money – $1,134,942,000,000.00!! Much of it even before the bail-out bill passed. Make an abundance of anything and its value goes down. Same with money; this is mostly how we get “inflation” which is really debasement of the value of a dollar. Now we start to see why we need a democratically issued currency by regular workers and consumers who’s interest stands in defending the value of their earnings.
The enslavement by rulers via their currency is as old as civilization, from Alexander the Great going to war to spread the use of his coins, to the word ‘pay’ finding it’s Latin root in to ‘pacify’. J.P. Morgan, with the backing of his financier sponsors, issued an intermittent currency in the Panic of 1907. They used this currency to help them consolidate control of major industries (see Pujo Committee). J.P Morgan’ private currencyalso kicked off the secret conferencing of the leading financiers, which would form the privately controlled Federal Reserve of today.
Let us normal people, who just want to be a part of our families and communities, learn from those who’ve wielded power immorally and re-apply their use of crisis. But this time using crisis to implement a democratically controlled currency. Such a peoples’ governed currency – Colonial Script – has existed in the past and is what propelled the American colonies to great wealth and self-reliance. Even with the few communications technologies of the 1700s, councils of tradesman, artisans, and merchants were able to democratically regulate the amount of currency in circulation across the States so well that their young economies became the wonder of European powers. Benjamin Franklin was asked the secret to the colonies’ success while visiting England, where he replied, “That is simple, it is our Colonial Script”. Indeed in the American Revolutionary War, Royal Navy ships dedicated to running large counterfeit operations were moored off the coasts of the colonies to debase the Colonial Script in economic warfare.
So how do we introduce such a democratically controlled system of value today to fight back against the economic warfare being waged on us? The Credit Unions, co-ops, labour unions, universities, municipalities, etc., are semi-democratic institutions which already have some economy of scale in our communities.
As common people see the governments and corporations selling out the national currencies and balance sheets to corrupt self-interests (as with the $700 Billion + bail out of Congress and the expropriation of Employment Insurance funds by the Canadian Conservatives), they will, quite rightly, question the validity of their credit at the banks and make a run on them. The problem is that only 3% of all money/credit exists in actual bills and coins for us to hold in cash and trade amongst ourselves for the real goods and services we keep our communities going with. This means that we can’t bypass the corrupt financiers without introducing our own system.
What happens with the currencies that we have today is that governments-financiers declare a monetary system and the rest of us believe in it and use it. In this crisis let’s first believe in distributed networks of councils by our fellow community members (workers and consumers). We are the ones who create the real goods and services, not the market speculators, we who have worked all our lives and earned the pensions – not the institutional fund money managers. We could simply federate our credit unions, labour unions, co-ops, universities, etc., to form our own participatory system and networks of value and productive exchange. Our democratically controlled credit unions will be the ones’ left holding much of the real assets when speculators and real-estate developers default on their financing. This will be a great basis of the real stuff of trade to form our initial democratic currency around.
People will wonder ‘well what about taxes and allocation for public services and infrastructure? Nurses and doctors can form councils to operate the health care system, road workers and engineers can work with the rest of us to allocate for and maintain roads, transit workers and riders can distribute for and run the transit system; all with various regions allocating a portion of their total communities’ wealth to these things as they decide through direct democracy.
The records exist of who did what real work and had what real assets in this corrupt system. It would be perfectly possible to just reconstitute peoples’ real savings and assets in a new democratically determined system of value. You carpenters, teachers, etc., worked for this value of pension in the old system, let’s calculate your pension in the new people’s participatory currency. This many people need homes in Greater Vancouver; Vancity, Coast Capital, and North Shore credit unions (total assets of $26 billion) hold that many houses defaulted on by speculators and then some (BC Hydro estimated that 18,000 units were vacant in 2005 – just being held by real estate speculators). Let’s house those of you without homes and get you jobs in the participatory universities, in the big urban gardens, finishing the half done speculators’ town-houses, bringing in the harvest from the defaulted farms, re-assembling and distributing the computers that are used and/or abandoned at these bankrupt offices, etc., etc.
With WiFi wireless mesh networks we can even quickly implement our own electronic confirmation of DemoCurrency (i.e., ‘DeMoney’) serial numbers, so as to absolutely prevent forgery.
Our credit union deposits aren’t even backed by the Federal Deposit Insurance programs as with the FDIC or the Bank of Canada and England. Deposits are almost always only backed by a local jurisdiction’ central credit union. Here in B.C. for example, with the 2nd biggest credit union economy in Canada, BC Central Credit Union only has $6 Billion in assets when any 3 credit unions in the province could well have over $20 billion in assets (Vancity and Coast Capital have $12 and $10 billion in assets respectively). Unfortunately the other Board members of Vancity ignored their fellow Director – Lisa Barrett – over the last few years when she called for a credit unions’ lobbying group in Ottawa so that we could’ve got a national credit union liquidity policy in place in case this very crisis came to bare.
Contact the directors of your credit unions, and articulate the idea of an economy by and for the people. When are your local institutions’ elections? Look for candidates who’ve never grasped for wealth and power and have indeed committed their lives to helping with grass roots consensus building – heck get them nominated, for often times true facilitators will not run for an office of power on their own accord. Instead of our credit unions, municipalities and universities contracting to corporations, let’s form our own participatory co-ops and purchase from each other.