UNDERSTANDING MONEY

How to Issue a Powerful New Currency and Reclaim Our Sovereignty

BY John G. Root, Jr.

                                                                                                                 Edited By Thomas F. Finnell

This work belongs to the creative commons and may be reproduced and distributed by any means as long as it is not altered and is properly attributed with title and author and “johngrootjr.blogspot”.

"All the perplexities, confusion and distress in America arise not from defects in their Constitution or Confederation, nor from want of honor or virtue, so much as downright ignorance of the nature of coin, credit, and circulation."             John Adams
(from a 1787 letter to Thomas Jefferson) i

This quote is the theme of this booklet. We need to understand money!

"The study of money, above all other fields in economics, is one in which complexity is used to disguise truth or to evade truth, not to reveal it. The process by which banks create money is so simple the mind is repelled. With something so important, a deeper mystery seems only decent."                                                              John Kenneth Galbraith ii

• Is the truth evaded and disguised? Is there a deeper mystery?
• Is the monetary system fundamentally flawed? Is there another way to understand money?
• When we understand money, we will know that we, as a society, or community, can have all the money needed to pay for everything we consider worthwhile.
• When we understand money, we will know that money is an accounting system.
• When we understand money, we will know that it is the goods and services that are valuable and not the money. The money represents the valuable goods and services. Money makes them commensurate so that we can exchange them. Money is the means of exchange.
• When we understand money, we will know that there are only natural limits, such as people with a desire to do something, the capability to do it, and the availability of the natural resources with which to do it.
• When we understand money, we will know that any shortage of money is artificial.

“There can't be too many people or too little work to be done, only a shortage of money with which to pay for it”                                                                 Benjamin Franklin iii

“There are people capable of and willing to do the work – people who have the skills and the knowledge to achieve these things. Our problems are not caused by a scarcity of people or ideas. There are even organizations who have the skills to hire the people and put them to work. This could all be done. What is missing? Everyone is waiting for money!”                                                          Bernard Lietaer “The Future of  Money”

Once we understand money, we will know that we have only credit and not money!

On January 24, 1939, Robert H. Hemphill, credit Manager of the Federal Reserve Bank of Atlanta stated:

"If all the bank loans were paid no one would have a bank deposit and there would not be a dollar of coin or currency in circulation. This is a staggering thought. We are completely dependent on the commercial banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the banks create ample synthetic money we are prosperous: if not, we starve. We are absolutely without a permanent money system. When one gets a complete grasp of the picture the tragic absurdity of our hopeless position is almost incredible, but there it is. It (the banking problem) is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defects remedied very soon." iv

When we understand money, we will know that bubbles and crashes, recessions and depressions are entirely engineered by the banking system through expanding and contracting the money supply.

"When the President signs this act, the invisible government by the money power -- proven to exist by the Monetary Trust Investigation v -- will be legalized. The new law will create inflation whenever the trusts want inflation. From now on, depressions will be scientifically created. " Congressman Charles A. Lindbergh Sr. , 1913 regarding the powers of the Federal Reserve System vi

Once we understand money, we will know that inflation is caused by the banking system on purpose and on rare occasions deflation is as well.

"By this means government may secretly and unobserved, confiscate the wealth of the people, and not one man in a million will detect the theft". Lord John Maynard Keynes
(the father of 'Keynesian Economics',in his book “The Economic Consequences of the Peace”) vii

When we understand money, we will know that interest is a feature of the monetary system which automatically transfers the wealth from the vast majority of us who pay more interest than we receive to the very few who receive more interest than they pay.

Once we understand money, we will know why every country is in debt and to whom.

When we understand money, we will know that the US and world monetary system is controlled by International Bankers for their benefit, and that it automatically transfers the wealth from us to them.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland; a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."  

                                                                      Carroll Quigley “Tragedy and Hope” 1963

(Bill Clinton's mentor at Georgetown University)

Once we understand Money. we will know the Banking Secret.
"The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was ever invented.
Banking was conceived in iniquity and born in sin. Bankers own the Earth. Take it away from them, but leave them the power to create money, and with the flick of the pen they will create enough money to buy it back again...
Take this great power away from them and all great fortunes like mine will disappear, and they ought to disappear, for then this would be a better and happier world to live in. But if you want to continue to be slaves of the banks and pay the cost of your own slavery, then let bankers continue to create money and control

    Sir Josiah Stamp, Director, Bank of England 1928-1941
(reputed to be the 2nd richest man in Britain at the time) from lecture he gave at the University of Texas viii

When we understand money, we will know that the deception is based on gold being money, and that when it is we suffer and when money is an accounting system we are prosperous.

Once we understand money, we will know that our well being depends almost entirely on who issues the currency.

"We have, in this country, one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board. This evil institution has impoverished the people of the United States and has practically bankrupted our government. It has done this through the corrupt practices of the moneyed vultures who control it."                                                              Congressman Louis T. McFadden in 1932 (Rep. Pa) ix

When we understand money, we will know why Congress continually borrows more money and why the interest on the National Debt will soon require the entire proceeds of the taxes we pay.

Once we understand money we will know how absurd it is that whenever we seek to increase the national wealth we also increase the national debt.

• Did you know that about half the price you pay for things is interest? x
• Did you know that banks do not lend you their money, but “monetize” your promise to pay? Did you know that if everyone repaid all their loans there would be no money?
• Did you know that the permanent money supply is the National Debt because, since the days of Andrew Jackson, it has never been paid off? Do you expect it will ever will be paid off?
• Did you know that almost all the popular assumptions about money, how it is created, and who controls it, are wrong?

SOVEREIGNTY

Throughout history the sovereign has always issued the currency. One can discover who the sovereign is by understanding the monetary system in a particular place and time. The issue of sovereignty is of paramount importance in understanding money because money is so powerful in allowing you to shape the world in your image. When Meyer Amschel Rothschild said: “Permit me to issue the currency of a nation and I care not who makes its laws” xi, he was expressing this insight. If historians would follow the money – who financed whom – we would have a very different picture of how our society arose and how and why it continues as it does. This is the main fact which is obscure in conventional history and it has to do with the banking secret. You can discover the truth of it by reviewing the bailout in light of these insights: Wall Street Banks got themselves in trouble and so they told Congress to borrow enough money from them (initially $700 Billion – now 1.5 to 3 Trillion) to give to them (to bail them out) so that they could lend it back to us! Congress complied over the strenuous objection of the American people, with some polls showing the opposition to the bail out at 98%, and I haven't seen a poll that was less than 67% opposition. The head of the Congressional Oversight Commission for the Toxic Asset Relief Fund, TARP, Elizabeth Warren, has said on major media that she can't find out who got what and why xii, and Bloomberg Financial News has tried to find out what the Federal Reserve did and can't because the Federal Reserve has never been audited and is under no obligation to reveal what it does or why xiii. Who is in charge? The Wall Street banks and the Federal Reserve or the Congress and the American people? Are we the sovereign? Are the Too Big To Fail Banks the hidden sovereign?

BENJAMIN FRANKLIN

Colonial Scrip: Principles of a Fiat Paper Currency

In the American Colonies there was a chronic shortage of gold and silver coins. However, the native people would honor the gifts the colonists gave them, such as muskets and knives, horses and domesticated animals with wampum (shells strung together to form belts, bracelets, etc.), and the colonists could spend that wampum with the Indians for food and pelts and so wampum also became an accepted form of money. In most of the colonies, wampum was legal tender and one could pay taxes with it. What would become money generally was up in the air until Benjamin Franklin attended an Iroquois Nation Pow-Wow when he was a young man. He was very inspired by the separation of powers he found in their governance, which was an inspiration for our republic. While he was there a brave came into the camp laden down with Wampum which he proceeded to give to the chief who distributed it to all the chiefs of the tribes and clans. The chief recognized the question Ben Franklin had and explained to him that in Indian culture wampum is not money, but is used to make flags and belts to commemorate and remember all the events and gifts that are given during the year. “Of course, there always has to be enough wampum to make all the ceremonial mementos we use to honor our gifts to each other.”

Ben Franklin realized in that instant that “There always has to be enough money for all the transactions the people want to make”. He became a major advocate of fiat paper money, called Colonial Scrip, and attributed the prosperity the colonists enjoyed, to its use.
When Franklin was in England representing the colonists he was dismayed to discover the unemployment and poverty and alms houses and debtors prisons there. It was explained to him that there was a population explosion and too many people without enough work. He wrote:
“There is abundance in the Colonies, and peace is reigning on every border. It is difficult, and even impossible, to find a happier and more prosperous nation on all the surface of the globe. Comfort prevails in every home. The people, in general, keep the highest moral standards, and education is widely spread… We have no poor houses in the Colonies; and if we had some, there would be nobody to put in them, since there is, in the Colonies, not a single unemployed person, neither beggars nor tramps.”

This was not the case in England, which had the Bank of England and a debt-based monetary system in place – and where debtors who could not afford to pay their debts were often thrown in jail. There was plenty of poverty in the streets of London and elsewhere. Here, Franklin explains the difference between England and her colonies:

“In the colonies, we issue our own paper money. It is called ‘Colonial Scrip.’ We issue it in proper proportion to make the goods pass easily from the producers to the consumers. In this manner, creating ourselves our own paper money, we control its purchasing power and have no interest to pay to anyone… You see, a legitimate government can both spend and lend money into circulation, while banks can only lend significant amounts of their promissory bank notes, for they can neither give away nor spend but a tiny fraction of the money the people need. Thus, when your bankers here in England place money in circulation, there is always a debt principal to be returned and usury to be paid. The result is that you have always too little credit in circulation to give the workers full employment. You do not have too many workers, you have too little money in circulation, and that which circulates, all bears the endless burden of unpayable debt and usury.”

Soon enough, however, the Bank of England had Parliament impose restrictions on the Colonies’ issuance of Colonial Scrip. The first law was enacted in 1751, with more restrictive measures in place by 1763. Colonial Scrip became illegal tender, and British Parliament declared that all taxes could only be paid in coin. Poverty and unemployment began to plague the colonies just as it had in England, because the operating medium had been cut in half and there were insufficient quantities of money to pay for goods and work. Indeed, this was the cause of the Revolutionary War, and not the Stamp Act or a tax on tea, as is taught in all history text books.

“The Colonies would gladly have borne the little tax on tea and other matters had it not been the poverty caused by the bad influence of the English bankers on the Parliament, which has caused in the Colonies hatred of England and the Revolutionary War.”                   – Benjamin Franklin xiv

One of the first Acts of the Continental Congress was to issue Continentals as the currency of the Colonies. It was the issuing of the Continentals that gave tangible evidence that the Colonies were united, and Continentals financed the Revolution. What is not taught in conventional history is that the British counterfeited more than twice the amount authorized by the Congress and after the War the currency lost its value until it was practically worthless. xv When it came time to write the Constitution there was a general sense that coin was much more reliable than paper scrip and so the relevant paragraph reads: Congress shall have the authority “To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;”. To this day Congress issues the coins, debt free.

ABRAHAM LINCOLN

Abraham Lincoln on the subject of Constitutional Money; from an address to Congress in 1865 xvi

“Money is the creature of law and the creation of the original issue of money should be maintained as the exclusive monopoly of national Government.
Money possesses no value to the State other than that given to it by circulation.
Capital has its proper place and is entitled to every protection. The wages of men should be recognized in the structure of and in the social order as more important than the wages of money.

No duty is more imperative for the Government than the duty it owes the People to furnish them with a sound and uniform currency, and of regulating the circulation of the medium of exchange so that labor will be protected from a vicious currency, and commerce will be facilitated by cheap and safe exchanges.
The available supply of Gold and Silver being wholly inadequate to permit the issuance of coins of intrinsic value or paper currency convertible into coin in the volume required to serve the needs of the People, some other basis for the issue of currency must be developed, and some means other than that of convertibility into coin must be developed to prevent undue fluctuation in the value of paper currency or any other substitute for money of intrinsic value that may come into use.

The monetary needs of increasing numbers of People advancing towards higher standards of living can and should be met by the Government. Such needs can be served by the issue of National Currency and Credit through the operation of a National Banking system .The circulation of a medium of exchange issued and backed by the Government can be properly regulated and redundancy of issue avoided by withdrawing from circulation such amounts as may be necessary by Taxation, Redeposit, and otherwise. Government has the power to regulate the currency and credit of the Nation.

Government should stand behind its currency and credit and the Bank deposits of the Nation. No individual should suffer a loss of money through depreciation or inflated currency or Bank bankruptcy.
Government, possessing the power to create and issue currency and credit as money and enjoying the right to withdraw both currency and credit from circulation by Taxation and otherwise,need not and should not borrow capital at interest as a means of financing Governmental work and public enterprise. The Government should create, issue, and circulate all the currency and credit needed to satisfy the spending power of the Government and the buying power of the consumers. The privilege of creating and issuing money is not only the supreme prerogative of Government, but it is the Governments greatest creative opportunity.
By the adoption of these principles the long felt want for a uniform medium will be satisfied. The taxpayers will be saved immense sums of interest, discounts, and exchanges. The financing of all public enterprise, the maintenance of stable Government and ordered progress, and the conduct of the Treasury will become matters of practical administration. The people can and will be furnished with a currency as safe as their own Government. Money will cease to be master and become the servant of humanity. Democracy will rise superior to the money power.”

There appeared in The London Times during the Civil War the following from Otto Von Bismarck:
"If that mischievous financial policy, which had its origin in the North American Republic (the public issue of usury- free currency called Greenbacks), should become indurated down to a fixture, then that Government will furnish its own money without cost. It will pay off debts and be without a debt. It will have all the money necessary to carry on its commerce. It will become prosperous beyond precedent in the history of the civilized governments of the world. The brains and wealth of all countries will go to North America. That government must be destroyed or it will destroy every monarchy on the globe."
In 1876, Bismarck explained further:
"The division of the United States into federations of equal force was decided long before the Civil War by the high financial powers of Europe. These bankers were afraid that the United States, if they remained in one block and as one nation, would attain economic and financial independence which would upset their financial dominance over the world. The voice of the Rothschild's prevailed. They saw tremendous booty if they could substitute two feeble democracies, indebted to the financiers, for the vigorous Republic which was practically self-providing. Therefore, they started their emissaries in order to exploit the question of slavery . . .
Lincoln's personality surprised them. His being a candidate had not troubled them; they thought to easily dupe a woodcutter. But Lincoln read their plots and understood that the South was not the worst foe, but the financiers."

Lincoln agreed:
"I have two great enemies, the southern army in front of me and the financial institutions in the rear. Of the two, the one in the rear is the greatest enemy." xvii

EDISON AND FORD

In December 1921, the American industrialist Henry Ford and the inventor Thomas Edison visited the Muscle Shoals nitrate and water power projects near Florence, Alabama. They used the opportunity to articulate at length upon their alternative money theories, which were published in 2 reports which appeared in The New York Times on December 4, 1921 and December 6, 1921.

Objecting to the fact that the Government planned, as usual, to raise the money by issuing bonds which would be bought by the banking and non-banking sector -- which would then have to be paid back with money raised from taxes, and with interest added -- they proposed instead that the Government simply create the currency it required and spend it into society through this public project.

Thomas Edison made it plain in the following excerpt from The New York Times, December 6, 1921 issue ("Ford Sees Wealth In Muscle Shoals"). Here, the reporter is quoting Edison:

"That is to say, under the old way any time we wish to add to the national wealth we are compelled to add to the national debt. Now, that is what Henry Ford wants to prevent. He thinks it is stupid, and so do I, that for the loan of $30,000,000 of their own money the people of the United States should be compelled to pay $66,000,000 -- that is what it amounts to, with interest. People who will not turn a shovelful of dirt nor contribute a pound of material will collect more money from the United States than will the people who supply the material and do the work. That is the terrible thing about interest. In all our great bond issues the interest is always greater than the principal. All of the great public works cost more than twice the actual cost, on that account. Under the present system of doing business we simply add 120 to 150 per cent, to the stated cost.

"But here is the point: If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good makes the bill good. The difference between the bond and the bill is that the bond lets the money brokers collect twice the amount of the bond and an additional 20 per cent, whereas the currency pays nobody but those who directly contribute to Muscle Shoals in some useful way.

" ... if the Government issues currency, it provides itself with enough money to increase the national wealth at Muscles Shoals without disturbing the business of the rest of the country. And in doing this it increases its income without adding a penny to its debt.

"It is absurd to say that our country can issue $30,000,000 in bonds and not $30,000,000 in currency. Both are promises to pay; but one promise fattens the usurer, and the other helps the people. If the currency issued by the Government were no good, then the bonds issued would be no good either. It is a terrible situation when the Government, to increase the national wealth, must go into debt and submit to ruinous interest charges at the hands of men who control the fictitious values of gold.
"Look at it another way. If the Government issues bonds, the brokers will sell them. The bonds will be negotiable; they will be considered as gilt edged paper. Why? Because the government is behind them, but who is behind the Government? The people! Therefore it is the people who constitute the basis of Government credit. Why then cannot the people have the benefit of their own gilt-edged credit by receiving non-interest bearing currency on Muscle Shoals, instead of the bankers receiving the benefit of the people's credit in interest-bearing bonds?" xviii

WILLIAM JENNINGS BRYAN

The most famous speech in American political history was delivered by William Jennings Bryan on July 9, 1896, at the Democratic National Convention in Chicago. Two paragraphs contain the nub!

“We say in our platform that we believe that the right to coin money and issue money is a function of government. We believe it. We believe it is a part of sovereignty and can no more with safety be delegated to private individuals than can the power to make penal statutes or levy laws for taxation.
Mr. Jefferson, who was once regarded as good Democratic authority, seems to have a different opinion from the gentleman who has addressed us on the part of the minority. Those who are opposed to this proposition tell us that the issue of paper money is a function of the bank and that the government ought to go out of the banking business. I stand with Jefferson rather than with them, and tell them, as he did, that the issue of money is a function of the government and that the banks should go out of the governing business.” xix

FRANKLIN DELANO ROOSEVELT

"In politics, nothing happens by accident. If it happens, you can bet it was planned that way."                                                                                                    Franklin D. Roosevelt xx

               (why didn't he tell us by whom or add “by the Money Power?”)

So how did it happen that we lost our understanding of money and our government lost the power to issue the currency? This is the history of the goldsmiths and how they became bankers!

THE BANKING SECRET REVEALED

During the Middle Ages, when the great Cathedrals were being built and the towns and cities were growing, money was mostly gold and silver coins and market money xxi . As trade between towns and cities grew, transporting gold was dangerous and problematic. Gold can be easily stolen, it can be debased and weighing it is problematic. However, a receipt for gold stored with a Goldsmith was for a specific weight and purity, and as long as the goldsmith had a good reputation, the receipt, or claim check, was better than gold, because the purity and weight were assured. The receipt for gold – being as good as gold – was safe and convenient, and receipts for gold were easily signed over to the seller and thus circulated as money, especially for the larger transactions. In order to understand how the modern banking system arose and why Sir Josiah Stamp says it was conceived in iniquity and born in sin, one must fully grasp the deception that took place.
Some Goldsmiths became bankers when they lent receipts for gold they did not have and charged interest. Lending a receipt for gold you do not have and charging interest, means, of course, that you can create money out of the confidence people have in you and receive interest (something for nothing). This is the most lucrative con there is. Pretend you have gold, lend a “good as gold” receipt for gold you don't have, and charge interest! It is the very definition of a confidence trick! In order to get away with this deception it is essential that it not be discovered. This is the banking secret. Pretend you have money to lend, issue a claim check as a loan, (it is as good as gold), and claim interest! But, if you doubt that the receipt is as good as gold you will want the gold. If many people cash in their receipts the Goldsmith will run out of gold because he has lent many times more receipts for gold than he has in stock, either his own or his depositors. As you can easily imagine would happen the banking Goldsmiths banded together in a secret society to support each other. If there is a run on the bank, the Goldsmith closes his shop until his secret society brothers can supply him with enough gold to meet the demand and save the deception. Of course, banking goldsmiths and then bankers can pretend to have as much money as they reckon they can get away with. They pretend to have money and spend it on whatever they think is important, and the most important thing to spend it on is maintaining the deception. I won’t describe here all the things the bankers secret society have put in place to maintain the deception, but it is nothing less than this society and world. At one point they did agreed to pay interest on deposits and depositors were thus co-opted into the system. The whole system was legalized in England with the establishment of the Bank of England in 1694 and in America by the Federal Reserve System in 1913. If you are amazed that you didn’t know the banking secret, then you know how successful they have been at keeping it secret.
There is something very appealing about interest. Interest enables us to let our money work for us. That appeal keeps us co-opted. You are probably planning to retire on the money you saved your whole life. But you know that the value of your investments are at the mercy of the bankers. How much did you just lose? Where did that value go?
Also, we are willing to pay the interest because the Banking Goldsmiths, being able to create money to lend, can enable a borrower to do something that would otherwise not be possible. If gold and silver are money, then money is scarce because gold and silver are scarce. You can't organize a business, or mount a trading expedition unless you can accumulate enough gold and silver, and, since there is only so much gold and silver you mostly can't do it. But, if you can borrow money created beyond the actual amount of the gold and silver available, then you can create a new business or mount a trading expedition. By expanding the money supply Bankers enabled the Age of Discovery and then the Industrial Revolution. But, Bankers gave rise to the society we live in today because they determine what is credit worthy. You can only borrow money for what bankers agree to! And through it all they receive the interest on the money they pretended to have and lent you, and they spend that interest to manage society for their benefit and to protect the banking secret!

WHERE DO THE BANKS GET THE MONEY THEY LEND YOU?

Banks do not have money to lend. When we borrow money from a bank we assume that the money we are borrowing comes from what the banks have, or the deposits others have, in the bank. This is natural, because when you lend someone money, you have to lend them some of your own money. Banks do not lend us their own assets, or money they earned, the way we do when we make a loan to someone, rather, banks issue, or create, the money they lend you when you promise to pay it back. Banks monetize your promise to pay! Your debt, your promise to pay, becomes their asset. Your promise to pay is valuable. When your promise to pay is backed by a mortgage or collateral your promise to pay is more valuable because the mortgage is easier to enforce than an IOU. In banking circles this is a well known fact, but it is not the way it is usually represented. However, describing it this way makes it clear that you provide everything of value when you borrow from the bank and the bank provides nothing of its own. Put differently, when you borrow from the bank your promise to pay becomes their asset and your liability and the money they create with an accounting entry, and deposit in your account, is their liability and your asset. And you have to pay them interest, which for a typical mortgage will be more than the principle, so twice as much as you borrowed; and, if you default on the loan, they get the valuable things you acquired with the loan!

IS THIS LEGAL?

Yes, it is legal. The whole financial system is based on it. It is called Fractional Reserve Banking and it became legal with the Federal Reserve Act of 1913. The Federal Reserve issues the currency - our legal tender - to the Federal Government on the basis of the Federal Government's promise to pay! The member banks which own the Federal Reserve use their deposits with the Fed as the basis for their right to create the money they lend you. They keep a fractional reserve, a fraction of their deposits, as a reserve and create money as loans to whatever multiple of their deposits the Fed has decreed (usually between 6 and 30 times as much as they have on deposit) The courts have been enforcing this system ever since.

IS IT CONSTITUTIONAL?

No! The Constitution gives Congress the authority to issue the currency, debt free and interest free, and to regulate its value. Since the Federal Reserve was established by an act of Congress and not by an amendment to the constitution, it is still an unconstitutional law. Understanding money will help us remedy such acts of treason by Congress. Our constitutional rights are not granted to us by the Constitution, they are inalienable rights. We institute government to secure our inalienable rights. When we understand money we will know that we have the inalienable right to issue the currency as a common good.

IS IT SECRET?

Yes! It is the "banking secret". As Henry Ford once said:
“It is well enough that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”

and Marshall McLuhan:
“Only the small secrets need to be protected. The big ones are kept secret by public incredulity.”


UNDERSTANDING MONEY

These are bold statements. They probably create a strong desire in you to dismiss them and the author. If they are true then your world view must change, your understanding of how the world works must be radically revised. If you re-read the first one: When you understand money, you will know that we, as a society or a community, can have all the money we need to accomplish everything we consider worthwhile, then you will know why it is worthwhile to suspend your disbelief, summon your courage and proceed. In thinking about the above quotes it could be helpful to remember that your world view is made up of the concepts you use to explain your perceptions. Please remember that you are under no obligation to accept the ready made concepts from the culture, the media or your education. You can, and hopefully will, hold those concepts at bay and entertain the concepts presented here. Do the ideas presented here give you more freedom? Will the concepts presented here increase your capacity to love your neighbor and the world? Will understanding money – as presented here – give us a society to benefit everyone? Will understanding money allow us to heal the environment, end poverty and create a lasting peace? Please bear these questions in mind as you study this material. You have nothing to lose and everything to gain!

Economics is called the dismal science for a very good reason. The concepts that it uses to explain human behavior are not accurate, it is not an empirical science but an ideological one. What do Adam Smith and Karl Marx have in common? They both maintain that only gold is money! That idea is wrong and that idea serves only bankers. In order to develop a true social science of economics we will need to start with what is self-evident.

Human Nature of Exchange

The self-evident concept, which underpins all the rest of the ideas, is in three parts:

1. Something is economic if it can be exchanged at a price. If it seems reasonable to you that something should have a price and be exchanged as part of daily life, then it is economic. So, for example, family relationships are not economic, nor is religious experience. Our rights are not for sale. Culture and education are less clear. Most of our culture does not support itself from admission prices alone, and education is inadequately funded by tuition. Without raising the issue of how they should be funded, it is clear that in someway culture and education are not economic in the same way that goods and services are. What is the value of an educated population or an inspired individual? But, it is easy to agree that all the goods and services we provide for each other to satisfy our material needs and wants should have a price tag and are therefore exchangeable. Economics is about the production, distribution and consumption of goods and services through exchange. Exchange is the essence of economics. It is through the exchange process that goods and services go from production to distribution to consumption. Each step along the way they are exchanged at a price.

2. It lies in our nature as human beings that we make an exchange when we judge that the exchange will make us better off. If we look at exchange exactly we can see this. We make an exchange – what I have for what you have – when we make the judgment that – at the agreed price – we will be better off. Both parties to the exchange do this, and so exchange makes both parties better off. When I walk into a store I am aware of what I have (in the form of money) and the store has already determined, by determining the prices on the things it sells, that it will be better off if I buy anything for sale there at the stated price. So I look at the items I need or want with their prices, and mindful of what I have, I select things to buy, making the judgment that at the stated prices I will be better off for buying them. When I leave the store, having paid for my purchases, I am better off and the store is better off. That is the nature of exchange. It is perhaps a little clearer when the buyer and seller negotiate a price. When they agree a price it is because they both reckon they will be better off as a result of the exchange. If they can't agree a mutually beneficial price, they forgo the exchange.
The exchanges that I make, that you make, that everyone makes are made because they make us better off. Therefore, in the aggregate, it is reasonable to expect that all the exchanges will make everyone increasingly better off. The increase is due to human nature, not the difference in nature between the human beings who are party to the exchange. The increase results from our being together in a society and an economy in which there is plenty to exchange, - people providing goods and services for each other that we need or want, resulting in exchanges that make both parties better off and in the aggregate everyone better off.
There are instances of fraud and deceit, which in retrospect mean that the exchange was not advantageous to one of the parties, but those are the exception, not the rule. The prices may conceal horrendously unjust circumstances, sweat shops, war, environmental damage, etc. but those facts do not change the principle. If you want to change those things then the understanding of money presented here will put us in a position to heal ourselves and the planet.

3. Are we increasingly better off? xxii If not, why not? Might there be something which is siphoning off or appropriating the increase? Could it be that the surplus is being siphoned off by interest? Should interest be a feature of the monetary system? What are the consequences of the idea that your money can work for you? What is real wealth? What is phantom wealth? What is money?

Money as Power

Money gives us a claim on the resources and labor of society – the goods and services that make up the economy. We need money to live and the more we have the better we live. And, the more we have, the greater our claim on the productivity of society and the greater our ability to shape society as we would like it to be. If very few people have control of half the entire income of the planet then the power imbalance is so extreme it is not unreasonable to believe they created this society.

Money as Measure

To measure value we use dollars and cents, much as we use hours and minutes or feet and inches. We use dollars and cents to measure the value of all the goods and services available in the economy so that we can compare them to each other and make reasonable decisions about what to buy or sell and at what price. The dollars and cents as prices are crucial to making decisions about which exchanges will make us better off.

Money as Means of Exchange

The dollars and cents we use to measure value make all the goods and services commensurate and thus exchangeable. To effect the exchanges, we use a device or instrument we call money. The difference between the measure (dollars and cents) and the instrument we use to make exchanges is similar to the difference between hours and minutes and our watch or clock. The watch or clock makes the hours and minutes useful, the money makes the dollars and cents useful. Let us bear that in mind. Dollars and cents are not money, they are the units of the measure of value. Money is the device that allows us to make use of them.

Money as Commodity

Gold and Silver have traditionally been thought of as money, but they are commodities and as such they are scarce and subject to market forces. A valuable commodity can’t also be the measure of value for everything else without distorting the value of all the other goods and services. A commodity never has and never will be as good as money for effecting exchanges. For many centuries now, there has not been enough gold or silver to function as money and the convertibility of bank notes to gold has always been a fraud. When money is thought of as a commodity, or a stand in for a commodity, then it can be thought of as valuable in itself. But you don't want the money, you want what the money will buy! Money is not valuable in itself, it only represents value.

Money as Legal Tender or Fiat of the Law

Money is either legal tender or it is a commodity, but not both. When gold is legal tender its face value has to be more than its commodity value for it to function as money. If the value of gold or silver rises above the gold or silver coin's value as legal tender it ceases to function as money and becomes gold or silver! When gold or silver coins are money, their intrinsic value is irrelevant to their function as money. And, of course, when paper notes are legal tender their lack of intrinsic value is irrelevant in their use as money. Money, legal tender, is a fiat of the law, provided by the sovereign, the king or Congress. The association of gold or silver with money has been used by the bankers to confuse the issue of what money is since the dawn of civilization. Because it is easy to understand that a commodity like gold could be scarce or abundant it is easy to imagine why there might be too little or too much money.

Money as Accounting

The transfer of money by check or debit card between bank accounts in the banking system makes it clear that money is not physical but rather a matter of accounting. Federal Reserve Notes are a very small percentage of the money in circulation. We use banks to settle the accounts between us. When I write a check or swipe my debit card I am instructing the bank to settle the account between me and the merchant. I get the merchant's goods, the merchant gets my money, via the bank. It is called checkbook or deposit money and the whole banking secret is based on it. When we use paper money we don't need banks, but banks provide the accounting services or account settlement services we need for our complex commerce.

How is Money Created?

Now we get to what the Federal Reserve has called money mechanics xxiii. All the money in circulation, except coins, is created by banks as credit, as IOUs, as the principal of a loan. The borrower’s promise to pay becomes an asset of the bank against which it creates a liability, the money it “lends” us. Money is created with accounting entries, assets and liabilities. Promises to pay and loans. When we lend someone money we have to lend them our money, but banks create the money that they lend us. Did you think that banks lend us their money or their depositors money? Did we commit to leave our money “on deposit” for 30 years? As you know, this is the banking secret. Banks create almost all the money in circulation, and they do it as debt to us and corporations and then they collect interest, and with a typical mortgage we will repay twice or more than we borrowed!

Credit Money

Almost all of what we think of as money is created as the principal of a loan. From the bank’s point of view, the asset is the promise to pay and the liability is the loan “money”. As the loan is repaid the bank’s asset is reduced and the corresponding liability – the “money” - is reduced, until both the asset and the “money” are extinguished when the loan is repaid. If that is hard to grasp remember that it is all accounting entries. There is nothing but accounting entries. Your promise to pay is an accounting entry, the “money” deposited in your account is an accounting entry. One goes down so does the other! When the loan is paid the asset ceases to exist and the money is extinguished. If everyone paid off their loans there would be no money. That can't be! But from the logic of the system one can see that it is. The permanent money supply must therefore be the debt that no one expects will ever be repaid; i.e. the Federal Debt.


Money as Credit

A promise to pay, or an IOU, is, by its very definition, not the money, but an obligation to provide money according to the terms of the promise. In the abstract world of money as credit, a promise to lend you a car is considered the same as lending you a car. This is absurd, because in the real world a promise to lend you a car does you no good if you need a car. This does, however, illustrate how a fiction can be implemented in the real world, or how important the concepts that make up our consciousness are in creating the reality we live in.

Interest

What we think of as money is created as the principal of a loan which must be repaid with interest. Where, in this system, is the money to pay the interest ever created? All the money to pay the interest must come from new loans, which in turn bear interest. Some economists have estimated that 50% of the prices we pay for things is interest. Most of us (98%) pay more interest than we receive and a very few (2%) receive more interest than they pay. Interest concentrates the wealth in the hands of the few.

Circulation

The loan money will circulate in the economy facilitating many exchanges before it is extinguished as it is used to repay the principle of a loan. The money paid as interest will also be spent and circulate in the economy. Circulation, however, only extends the time frame until the money is eventually extinguished as it repays principle.

Consequences

Only coins are issued as money. All the rest of the money is issued as debt or credit. With what shall we pay? More promises? If all the “money” is created as debt and is extinguished as the debt is repaid, where is the permanent money supply? The permanent money supply has to be the debt that no one expects will ever be repaid! Do you expect the Federal Debt will ever be repaid? The Federal Debt is the permanent money supply! All the funds collected from the income tax will soon be insufficient to pay the interest on the Federal Debt! Because of the design of the system there is always more money owed than exists. Everyone must go deeper into to debt to provide the money to pay the interest. This makes money scarce, one might say that money is the only scarce resource. Interest automatically transfers the wealth from the 98% of us who pay more interest than they earn, to the 2% who receive more interest than they pay. In order to keep up with the interest owed the financial system has to continually grow.

More Consequences

At what point does the interest on the Federal Debt become unpayable? As a result of the bailouts (more debt) interest will soon be the single largest expense in the Federal Budget!6 The current 11.6 Trillion Dollar debt costs about $700 billion in interest each year! Who is “earning” that interest? Is it reasonable that the money center banks that caused the financial crisis that required the bailout should receive the bailout money and the interest on the increased Federal Debt that was used to pay the bailout? However, increasing the Federal Debt was necessary to increase the permanent money supply to lessen the effect of the credit crunch.

The Growth Imperative

Compound interest makes it necessary that the financial system grow whether or not this relates to growth in the real economy. The rule of 72 states that money “earning” 1% will take 72 years to double. If I am receiving 6% on my money it will take 12 years for it to double. The short term thinking that most companies are forced into is a requirement of the monetary system because of compound interest. The net present value and discounted cash flow calculations are based on what money could be “earning” as loans. Corporate raiders have demonstrated this many times by buying up a well run company with a lot of equity by borrowing money to free up the equity by turning the equity into debt . The forest is worth more clear cut now than in 20 years simply because the money realized when invested in debt and left to compound grows faster than the trees!

It is the thought that the money is valuable in itself that allows this fiction. The money can't possibly grow faster than the real goods and services it represents. But our society is based on this fiction and it will continue to impoverish us and destroy the planet until we recognize that it is fiction, or phantom wealth.

Sovereignty

During colonial times the question of sovereignty was in the forefront of the peoples minds. There is a wonderful sense of security in having a King who is responsible for the well being of society. If we are loyal to the King, the King will take care of us. He is the lawgiver, he protects us. The passing of the sovereignty from the King to the People was what the American Revolution was all about. We are responsible for us. We instituted a government to secure our inalienable rights. The government serves us.

Real Money

Real money is, and can only ever be, the circulating medium of exchange issued by the sovereign to serve the needs of the people. Real money is a public good not a private privilege. Real money measures value and enables us to effect exchanges, and benefits everyone equally. Real money is a fiat of the law. The US has not had real money since the Lincoln Administration issued Greenbacks, and for the year or so that Kennedy issued silver certificates.

Who is the Sovereign?

Are we the people the sovereign? Are the Banks which issue the currency as debt the sovereign? What if we decide once again that we the people are sovereign and reclaim the power to issue the currency? Do you think we would issue it as debt bearing un-payable interest? Or would we spend it into circulation to pay for the government services we as the sovereign people democratically decide are needed?

United States Money

The Federal Government could, and has in the past, issued the currency to pay for the legitimate goods and services the government is charged with providing. A debt and interest free currency spent into circulation would obviate the need for taxes and, if the statistics gathered by the Commerce Department and the Federal Reserve were used to regulate the money supply so that the value of the dollar remained constant, there would be no inflation or boom or bust ‘business’ cycle and no growth imperative. Contrary to the myth, Government issued real money has been absolutely reliable in the past. And we could make sure it would be again.

The Science of Money

Money is a public good like any other measure. It needs to be regulated to ensure that it is a reliable measure. More money in circulation than is justified by the goods and services available and prices rise, or the money becomes less valuable; less money in circulation than needed and prices fall, people can’t pay their debts, products can’t be sold, etc. What is a recession or depression? Did something change as far as the resources, skills and willingness to work are concerned? No, the only change is a shrinking of the money in circulation so there is no longer enough circulating medium to make all the payments that were being made before the shrinkage. The science of money is the regulation of the money supply so that prices remain stable. The money is not valuable in itself. It represents and makes commensurate the value of the real goods and services in the economy. Good data collection, which we have, is all that is needed to regulate the money supply and keep prices stable.

Capitalization

Issuing real money to capitalize an enterprise or build infrastructure, or any other need that requires a large amount of capital, as in the Muscle Shoals example Henry Ford and Thomas Edison referred to, may become the most creative opportunity (as Lincoln said) for community banking in which the people are sovereign. Because “raising the money” is not an issue, i.e. we understand that we can just issue it, the process whereby the people decide what to fund and how that will be managed, etc. will be a wonderful opportunity to exercise our new found sovereignty. What values will be evident in what we decide to capitalize? From the point of view of the science of money the new capital will either be properly represented by what it was spent on and increase the community wealth, and therefore require the issue of more money to represent the increase, or if it fails, the money created will not properly represent what happened, and that much money will need to be withdrawn from circulation to keep the value of the money constant. Being able to issue real money to capitalize projects we believe in will give new meaning to the phrase: Government of the people, by the people, for the people. Please let this sink in: Real money means that there will be no shortage of money. Everything we as a community decides is worthwhile can be done. The limitations are all real. Are there people willing and capable of doing it and are the natural resources needed available? If so, let us, as the sovereign, issue the money to accomplish it!

What Can We Do?

If you believe that there is still a possibility of rescuing our sovereignty from the privately owned Federal Reserve and Bank for International Settlements through the existing political process, then there are numerous reforms worth supporting.

The American Monetary Institute’s American Monetary Act, would authorize Congress to take over the Federal Reserve and issue United States Notes debt and interest free to rebuild the infrastructure and provide the money for Health Care and other needed services. Dennis Kucinich is an advocate of this approach.

The Fellowship of the Commons is conducting the Great Campaign to establish an alternative governing system, along the lines of Jefferson's Ward Republics, and to establish Commons Trusts, including a Currency Trust to assure there is always enough money for what is democratically determined to be worthwhile, Richard DeVoe. the founder director, is a dynamic campaign director and his concept of integretism speaks to the heart and gives great hope that this can be done.

The Social Credit movement would issue the currency directly to the people, which would create a democracy of consumers served by an aristocracy of producers, and would distribute a national dividend. It has achieved political power in various places, such as New Zealand, but without a greater general understanding of money the social credit party is usually maligned and defeated.

North Dakota has over a $1 Billion budget surplus and has its own bank, owned by the state and not part of the Federal Reserve, so chartering State Banks similar to the Bank of North Dakota is a possible idea, which Ellen Brown writes about often,

Paul Grignon is working on a proposal for digital money, called digital coin, or perpetual coin and credit coin which could be worth supporting. His videos “Money as Debt” and “Money as Debt II, Promises Unleashed” and “The Essence of Money” are indispensable for understanding money.

Edgar Kahn's time dollar is available to us right now – There is a time bank in the Berkshires which is part of the Co-Act Currency Net and which you can join at: http://community.timebanks.org/findtimebanks.php.
Also available from the Co-Act website: www.co-act.org.

However, if you believe that it is up to us to think globally and act locally then you can support the establishment of the Common Good Bank and participate in developing a local depositors association.

Common Good Bank

The Society to Benefit Everyone, Inc. is a charitable company which developed and is promoting the establishment of the Common Good Bank with divisions in local communities all across the US and eventually the world. The Common Good Bank is designed to bring a just abundance and environmental healing to every community that establishes a division, and to do it quickly and surely. Common Good Banks are designed to create a society to benefit everyone. The Common Good Bank is not another bank with a social mission, rather it is a social mission with a BANK! The Common Good Bank offers a transition that returns our sovereignty to us and will allow us to issue the currency debt and interest free to pay for those things which we agree will benefit our community, our region, our country and the world.

Join Us

Go to www.commongoodbank.com Watch the video and read all about the plans for establishing the Common Good Bank. Sign up as a future depositor, investor, partner, etc. Attend our organizing meetings and donate, whatever feels right for you! You can find, or become, a local Community Division Organizer at the website.

Find out More

Web of Debt by Ellen Brown
Agenda for a New Economy by David Korten
The Lost Science of Money by Stephen Zerlanga.

The Future of Money by Bernard Lietaer
MODERN MONEY MECHANICS-A Workbook on Bank Reserves and Deposit Expansion http://www.rayservers.com/images/ModernMoneyMechanics.pdf
Money as Debt – video available at video.google.com
Money as Debt II -- Promises Unleashed    available at moneyasdebt.net
Digital Coin, Perpetual Coin and Credit Coin, at www.digitalmoney.info
Watch the videos, especially “The Essence of Money, A Medieval Tale”!


NOTES
i http://quotes.liberty-tree.ca/quotes_by/john+adams
ii John Kenneth Galbraith (1908-2002), Professor of Economics at Harvard, writing in 'Money: Whence it came, where it went' (1975).
iii http://www.planetization.org/prosperity.htm This is a paraphrase from a radio address that Charles Binderup – Congressman from Nebraska gave in 1941. John Twells, an historian, is the reputed source.
The following quote from Ben Franklin's Autobiography substantiates the veracity of the story. From Part XXIV
"About this time there was a cry among the people for more paper money, only fifteen thousand pounds being extant in the province, and that soon to be sunk. The wealthy inhabitants oppos'd any addition, being against all paper currency,from an apprehension that it would depreciate, as it had done in New England, to the prejudice of all creditors. We had discuss'd this point in our Junto, where I was on the side of an addition, being persuaded that the first small sum struck in 1723 had done much good by increasing the trade, employment, and number of inhabitants in the province, since I now saw all the old houses inhabited, and many new ones building; whereas I remembered well, that when I first walk'd about the streets of Philadelphia, eating my roll, I saw most of the houses in Walnut street, between Second and Front streets, with bills on their doors, "To be let"; and many likewise in Chestnut street and other streets, which made me then think the inhabitants of the city were deserting it one after another.
Our debates possess'd me so fully of the subject, that I wrote and printed an anonymous pamphlet on it, entitled "The Nature and Necessity of a Paper Currency." It was well receiv'd by the common people in general; but the rich men dislik'd it, for it increas'd and strengthen'd the clamor for more money, and they happening to have no writers among them that were able to answer it, their opposition slacken'd, and the point was carried by a majority in the House. My friends there, who conceiv'd I had been of some service, thought fit to reward me by employing me in printing the money; a very profitable jobb and a great help to me. This was another advantage gain'd by my being able to write.The utility of this currency became by time and experience so evident as never afterwards to be much disputed; so that it grew soon to fifty-five thousand pounds, and in 1739 to eighty thousand pounds, since which it arose during war to upwards of three hundred and fifty thousand pounds, trade, building, and inhabitants all the while increasing, till I now think there are limits beyond which the quantity may be hurtful."
The pamphlet on “The Nature and Necessity of a Paper Currency” can be found here: http://etext.lib.virginia/etcbin/toccer-new2?id=FraMode.sgm&images=images/modeng &data/texts/english/modeng/parsed&tag=public&part=a
iv http://www.apfn.org/Mind_Control/money/root.htm
v http://en.wikipedia.org/wiki/Pujo_Committee The deception around the establishment of the Federal Reserve is very difficult to believe. The money trust, or money power, wrote the Federal Reserve Act in secret and it got passed because they pretended to oppose it and it was billed as the taking over of the money power by the Federal Government.
vi http://quotes.liberty-tree.ca/quotes_by/charles+a.+lindbergh,+sr.
vii http://en.wikipedia.org/wiki/The_Economic_Consequences_of_the_Peace
viii http://en.wikipedia.org/wiki/Josiah_Stamp,_1st_Baron_Stamp
ix http://en.wikipedia.org/wiki/Louis_Thomas_McFadden
x I ran across this statistic but have not been able to find it again. It is, however, obvious.
xi http://www.brainyquote.com/quotes/quotes/m/mayeramsch170274.html
xii http://www.huffingtonpost.com/2009/04/16/elizabeth-warren-makes-jo_n_187635.html
xiii http://www.bloomberg.com/apps/news?pid=20601087&sid=apx7XNLnZZlc
xiv see iii There is a lot of obfuscation about this. Shays rebellion according to comtemporary accounts, for example, was about the inadequate money supply, and the resulting inability of people to pay their debts. This was a well known problem in those days.
xv Web of Debt by Ellen Brown pages 43 to 45 including how the British Bankers used speculation (similar to naked short sales) to make the Continentals worthless.
xvi There is no reliable source for this quote. The leading author on Lincoln's economic views, Gabor Borrit, who wrote Lincoln and theEconomics of the American Dream has reviewed it and declared that it accurately represents Lincoln's views.
xvii Ellen Brown and many others use these quotes. In Web of Debt it is explained on pages 91 to 93
xviii This article can be downloaded as a pdf from the NY Times website:
xix http://query.nytimes.com/mem/archive-free/pdf?_r=1&res=9C04E0D7103EEE3ABC4E53DFB467838A639EDE
xx What I found interesting is that only when you extract the quoted parts do you get the full impact. The article tilts the whole issue towards whether or not Henry Ford should lease Muscle Shoals when it is completed because he would be able to run it better than a Government Agency!
xxi Market Money is beautifully explained in Paul Grignon's video: “The Essence of Money, A Medieval Tale” which can be found at www.digitalcoin.inf
xxii Elizabeth Warren's book “The Two Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke” lays it out
xxiii MODERN MONEY MECHANICS -- A Workbook on Bank Reserves and Deposit Expansion  http://www.rayservers.com/images/ModernMoneyMechanics.pdf

APPENDIX A       COMMON GOOD BANK

A Social Mission with a Bank!

COMMON GOOD BANKS WILL BE DIFFERENT
• All profits go to schools and other nonprofits.
• Depositors decide what the bank should invest in.
• Free local credit card processing for local businesses.
• Micro-loans for new businesses and community projects.
• Full range of secure, FDIC insured banking services.
• Committed to sustainability and economic justice.

Watch the Video The video on the common good bank(dot)com website explains how the Common Good Bank can create a local currency among all its members that exists only in the bank and which therefore does not require any of the inconvenience of a paper currency. The exchange between Local Currency and Federal Reserve Credit money is explicit on your monthly bank statement. The Common Good Bank can create real money for those purposes its depositor owners vote for.

Design

All of the innovations of the Common Good Bank are proven in other settings, the combination is unique to the design of this bank. The Common Good Bank was designed by the Society to Benefit Everyone (S2BE) to provide a sure and rapidly deployable remedy to our debt based monetary system for any community that cares to implement one.

Direct Democracy

Our winner take all democratic system is so easily gamed that we often feel cheated, that we have no real choice. The democratic system designed into the Common Good Bank cannot be easily subverted. It is based on one person one vote, 100% participation and ranked choice or instant runoff voting. One person one vote, not number of shares owned, assures all the participants are equally empowered. You appoint a proxy whose vote counts for you if you don't vote yourself, and if your proxy doesn't vote their proxy's vote counts for all three of you, etc.. You may change your proxy at any time and those who are the proxies for the most people become trusted persons, because they are trusted by the most depositor/owners, and they manage the affairs of the local division of the bank. When you vote, you rank the choices, first, second, third, etc. or none. The choice with the fewest first choice votes is eliminated and the second choice becomes first choice on those ballots and they are counted again. This process of ranked voting or instant runoff, assures that the most preferred choice wins. This system makes democracy direct and effective and eliminates the ways the existing system can be manipulated.
Directing the Bank

Common Good Bank stock is designed to be like a 30 day Certificate of Deposit, and pays the inflation rate. Minimum investment is $10. This gives you your right to vote, one person one vote, it also makes you a member of the depositors association which directs your community division of the bank.
What kinds of projects should the bank lend to? Rank the choices! Which schools and charities should the bank give its profits to? Allocate 100 virtual pennies! What projects should we issue local currency to support? What ideas do you have that would make for a society that benefits everyone? You get the idea! All major decisions of the Common Good Bank local community divisions are voted on by its depositors, all decisions affecting the Common Good Bank as such are made by its Board of Directors just as in a conventional bank.

Establishing the Bank

The Common Good Finance Corporation was established by the Society to Benefit Everyone to oversee the chartering of the Common Good Bank. Currently the Common Good Finance Corporation is raising money to charter the bank. While this is underway it is helpful for the process to sign up as many depositors, businesses and nonprofits as possible. To become a local Community Division we will need a minimum of 75 depositors; at least one business that will be able to provide cash for depositors using their Common Good Bank card (like a debit card) and at least one nonprofit willing to assist depositors with the paper work. It will also be helpful to have many businesses offering a discount to depositors. Half of the discount goes to the benefit of the depositor and half to the Community Fund of the local division. Half of the Community Fund is granted locally and half is granted somewhere else in the world – we want a society to benefit everyone.

Take Action

Go to the Common Good Bank . com website and sign up as a future depositor and please make a donation! (As little as a dollar or as much as a million)
The website is broad and deep – you are sure to find what you are looking for, if not call or email:  
John G Root Jr. Home: 413 528 3102 Cell: 413 329 3200

email: johngrootjr@gmail.com
(Blog: johngrootjr.blogspot.com Website: www.co-act.org

and www.justabundance.org)

COGNITIVE DISSONANCE

As you think about all these ideas and their implications it can be helpful to understand cognitive dissonance.
Here is the description from Wikipedia.

Cognitive dissonance is an uncomfortable feeling caused by holding two contradictory ideas simultaneously. The "ideas" or "cognitions" in question may include attitudes and beliefs, and also the awareness of one's behavior. The theory of cognitive dissonance proposes that people have a motivational drive to reduce dissonance by changing their attitudes, beliefs, and behaviors, or by justifying or rationalizing their attitudes, beliefs, and behaviors. Cognitive dissonance theory is one of the most influential and extensively studied theories in social psysychology.
Cognitive Dissonance normally occurs when a person perceives a logical inconsistency among his or her cognitions. This happens when one idea implies the opposite of another. For example, a belief in animal rights could be interpreted as inconsistent with eating meat or wearing fur. Noticing the contradiction would lead to dissonance, which could be experienced as anxiety, guilt , shame, anger, embarrassment, stress, and other negative emotional states. When people's ideas are consistent with each other, they are in a state of harmony, or consonance. If cognitions are unrelated, they are categorized as irrelevant to each other and do not lead to dissonance.
A powerful cause of dissonance is an idea in conflict with a fundamental element of the self- concept, such as "I am a good person" or "I made the right decision." The anxiety that comes with the possibility of having made a bad decision can lead to rationalization , the tendency to create additional reasons or justifications to support one's choices. A person who just spent too much money on a new car might decide that the new vehicle is much less likely to break down than his or her old car. This belief may or may not be true, but it would likely reduce dissonance and make the person feel better. Dissonance can also lead to confirmation bias, the denial of disconfirming evidence, and other ego defense mechanisms.

APPENDIX B

Now you are in a position to appreciate this piece from Punch, the British humor magazine - from the issue of April 3, 1957.

Q: What are banks for?
A: To make money.
Q: For the customers?
A: For the banks.
Q: Why doesn't bank advertising mention this?
A: It would not be in good taste. But it is mentioned by implication in references to reserves of $249,000,000,000 or thereabouts. That is the money they have made.
Q: Out of the customers?
A: I suppose so.
Q: They also mention Assets of $500,000,000,000 or thereabouts. Have they made that too?
A: Not exactly. That is the money they use to make money.
Q: I see. And they keep it in a safe somewhere?
A: Not at all. They lend it to customers.
Q: Then they haven't got it?
A: No.
Q: Then how is it Assets?
A: They maintain that it would be if they got it back.
Q: But they must have some money in a safe somewhere?
A: Yes, usually $500,000,000,000 or thereabouts. This is called Liabilities.
Q: But if they've got it, how can they be liable for it?
A: Because it isn't theirs.
Q: Then why do they have it?
A: It has been lent to them by customers.
Q: You mean customers lend banks money?
A: In effect. They put money into their accounts, so it is really lent to the banks.
Q: And what do the banks do with it?
A: Lend it to other customers.
Q: But you said that money they lent to other people was Assets?
A: Yes.
Q: Then Assets and Liabilities must be the same thing?
A: You can't really say that.
Q: But you've just said it! If I put $100 into my account the bank is liable to have to pay it back, so it's Liabilities. But they go and lend it to someone else, and he is liable to have to pay it back, so it's Assets. It's the same $100 isn't it?
A: Yes, but....
Q: Then it cancels out. It means, doesn't it, that banks haven't really any money at all?
A: Theoretically......
Q: Never mind theoretically! And if they haven't any money, where do they get their Reserves of $249,000,000,000 or thereabouts??
A: I told you. That is the money they have made.
Q: How?
A: Well, when they lend your $100 to someone they charge him interest.
Q: How much?
A: It depends on the Bank Rate. Say five and a-half percent. That's their profit.
Q: Why isn't it my profit? Isn't it my money?
A: It's the theory of banking practice that.........
Q: When I lend them my $100 why don't I charge them interest?
A: You do.
Q: You don't say. How much?
A: It depends on the Bank Rate. Say a half percent.
Q: Grasping of me, rather?
A: But that's only if you're not going to draw the money out again.
Q: But of course I'm going to draw the money out again! If I hadn't wanted to draw it out again I could have buried it in the garden!
A: They wouldn't like you to draw it out again.
Q: Why not? If I keep it there you say it's a Liability. Wouldn't they be glad if I reduced their Liabilities by removing it?
A: No. Because if you remove it they can't lend it to anyone else.
Q: But if I wanted to remove it they'd have to let me?
A: Certainly.
Q: But suppose they've already lent it to another customer?
A: Then they'll let you have some other customer’s money.
Q: But suppose he wants his too....and they've already let me have it?
A: You're being purposely obtuse.
Q: I think I'm being acute. What if everyone wanted their money all at once?
A: It's the theory of banking practice that they never would.
Q: So what banks bank on, is not having to meet their commitments?
A: I wouldn't say that.
Q: Naturally. Well, if there's nothing else you think you can tell me....?
A: Quite so. Now you can go off and open a banking account!
Q: Just one last question.
A: Of course.
Q: Wouldn't I do better to go off and open up a bank


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Manmade Causes of Worldwide Economic Disaster 
Centuries ago Mayer Amschel Rothschild, founder of the Rothschild Dynasty, said: “Give me the power to issue a nation’s money, and I care not who writes the laws.” 
Money is a necessary ingredient in the advancement of civilization itself. As a store of value and a medium of exchange, money is vastly more convenient and flexible than any system of barter, which is the only alternative. Money facilitates division of labor, specialization by individuals according to their talents, and organization of human activity into complex patterns necessary for advancement in virtually all realms of endeavor. It even helps to make possible economies of scale and other efficiencies which raise human productivity far beyond the levels required for mere survival. This makes it possible for a society to support artistic and other cultural advancements by which a civilization becomes more refined and rich. 
In short, money is the economic glue which holds a society together. If it is honest, stable and unmanipulated, money plays a neutral role which is equally beneficial to all members of society. By working hard, for example, a person may earn more than is needed immediately to pay for whatever he buys from others. The excess can be saved, then spent whenever desired to meet an extraordinary expense, buy something special, or retire from work and live off the fruits of past labor. Money earned reflects work which is valued by society and for which one is paid. It is this role of money as the economic common denominator of society that makes it such a tool of immense power - Satanic power - in the wrong hands. He who issues a nation’s money can create out of thin air what all the rest of us have to earn by honest labor. The issuer of money thus acquires unparalleled power over other individuals, since at the stroke of a pen he can make others wealthy who cooperate in advancing his fraudulent schemes. In any society there are always more than enough individuals available who are eager to be comfortably corrupted in this way, and it is they who are helped into positions of governmental power. That is what Rothschild meant when he said, “I care not who writes the laws.” The power to issue money is the power to shape government to one’s own ends. If one has the power to issue a nation’s money, then he also has the power to change its value. This changes the yardstick by which every single economic transaction in a society is measured, and is a way to steal from an entire society at once. He who sets aside the excess fruits of his labor in the form of money is robbed if, when he is ready to use it later, it is no longer worth the same amount. That is happening today in the United States, of course; it is called inflation. By the time of the American Revolution, Rothschild financial power in Europe, and especially in Britain, was great. The Stamp Tax and other oppressive measures which helped trigger the Revolution bore the signature of King George, but they originated in the House of Rothschild. The Revolution broke the former colonies free of Rothschild money control. The framers of the United States Constitution well understood the evils of corrupt, privately issued money. Therefore they refused to countenance the creation of any type of privately owned central bank. Instead, they gave the United States Congress the constitutional duty to issue and regulate the nation’s money. The theory was that since Congress represents all the people, congressional control of our money should be the fairest and most equitable system possible. 
From then until the early Twentieth Century, there were repeated attempts by the Rothschild interests to re-establish their lost money power here, either directly or indirectly. One example was the Bank of the United States, whose charter was cancelled by President Andrew Jackson in 1832. Likewise the Civil War involved, not just questions of slavery and states’ rights, but also a strong component of struggle over the issuance of money. But once again the attempt failed, thanks partly to intervention by the Russian Navy at a critical tide in the war to prevent Britain and France from dismembering the war-torn United States. 
For doing that, Russia was slated for destruction by the Rothschild interests. It was also decided that the best way to regain control over America’s money was from within. To that end the Rothschilds lent support to several promising groups within the United States, spawning the era of the “robber barons.” Out of that group, the Rockefellers soon rose to the top. In 1913 the Rothschilds finally saw the creation of what they had sought here in the United States: a privately owned central banking system, called the Federal Reserve System. It was a joint venture involving very heavy participation - in fact a lead role - by the increasingly powerful Rockefeller interests. But at least the Rothschilds at last had their foot back in the door for control of America’s currency. In 1917 the Rothschilds accomplished their other goal, the destruction of Christian Russia, by way of the Bolshevik Revolution. As in the case of the Federal Reserve System, the basic concept was Rothschild-inspired . . . but it was Rockefeller muscle that made the plan a success. Having started out as Rothschild proteges, the Rockefeller Cartel had risen already to the status of partners. And during the decades that followed - especially after World War II - the Rockefellers pulled ahead and eclipsed Rothschild power on the world stage. That situation continued until the end of the 1970’s. Now, with the collapse of the family Rockefeller Dynasty, the balance between the Rockefeller and Rothschild factions is in a state of flux, with both struggling for renewed supremacy. 
The Federal Reserve System was sold to the public as a prescription for improved economic stability. But the record shows that the stock market crash of 1929 and the ensuing Great Depression were brought about in large part by deliberate Federal Reserve actions. The Great Bull Market of the 1920’s was set in motion and sustained for most of a decade by means of easy credit. By 1929 the towering stock market was resting upon a huge, wobbly foundation of credit - that is, debt. The Federal Reserve Board then destroyed that foundation over a matter of mere months by severely contracting credit. The excuse given was designed to sound good, namely a crackdown on harmful speculation. But the real and predictable effect was to cause masses of investors to be suddenly unable to cover their “margin” stock-market purchases, forcing them to sell stock to raise cash. The sell-off thus triggered fed upon itself, while the Federal Reserve Board did nothing to halt the plunge. The stock market crashed. 
Having set economic disaster in motion, the Federal Reserve Board soon thereafter made sure that it would mushroom into an all-out depression. This was brought about, not by the stock market crash itself, but by the failure of the American banking system afterward. A key purpose of the Federal Reserve System is supposed to be the preservation of banking stability, by stepping in as the lender of last resort (among other things) to prevent a localized banking problem from spreading. But in the early 1930’s, a then-major bank - the United States Bank of New York - collapsed while the Federal Reserve System steadfastly refused to lift a finger to stop it. This created a chain reaction which pulled down additional banks, which dragged down still others, and so on. The Federal Reserve System, far from stopping this process, had set it in motion and did not intervene as it progressed. This plunged America and then the entire world into the Great Depression of the 1930’s. 
To most people a depression is an unmitigated disaster. It is hard to imagine that anyone could benefit from it, much less bring it about deliberately. But for the money controllers and their wealthy allies, the Great Depression provided enormous opportunities for increased wealth and power. Knowing what was coming, they were able to avoid the crushing financial losses which befell everyone else. Then during the depths of the Depression, they were in a position to buy up companies, real estate and other assets at a penny on the dollar. When the economy revived later on, these assets regained their value, producing vast profits for their new owners. Ironically, by using their money control to plunge the American economy into disaster, the moneychangers set the stage for still greater expansion of their authority over America’s monetary system. When President Franklin D. Roosevelt took office in 1933, he launched a series of sweeping moves that began with the declaration of a bank holiday. The United States was taken off the gold standard. Americans were required to turn in all of their gold coins. Title to America’s gold was then handed over - as a gift! - to the Federal Reserve System. However, the Federal Reserve System was relieved of any need to spend time and money to take care of the gold which it now owned, as the US Treasury Department was made physical custodian of the gold. 
The Federal Reserve System became freer than ever to tinker with America’s economy by printing paper and controlling credit. The freedom grew steadily over the years as gold backing for the dollar was decreased. In 1968 President Johnson signed into law an act removing the final 25% gold backing requirement from the dollar. In 1971 President Nixon closed the international gold window, discontinuing settlement of international debts in gold. This left the United States dollar purely a piece of paper, totally divorced from gold or anything else of intrinsic value. This is an ideal situation for the money controllers, made to order for manipulation to enrich themselves at everyone else’s expense. Since the dollar has been a worldwide reserve currency since 1944, this means that everyone on earth is victimized by the dollar manipulation now underway in the US. 
From 1971 onward, inflation has been an ever-increasing problem in the United States and therefore worldwide. Each time it is damped down temporarily, it is slowed at the expense of rising unemployment and slumping economic activity. When the economy revives, inflation soon takes off again to new and higher levels. The Federal Reserve Board, claiming (as in 1929) to be looking out for our best interests, responds with crushing new interest rates that reach new historical highs. Again unemployment shoots up, without ever having quite recovered from the previous cycle. Cycle after cycle, inflation and economic stagnation both keep getting worse. The balance between the two conditions keeps shifting back and forth, but both inflation and stagnation are with us continually and simultaneously. We are caught in the “stagflation” era foreseen by Dr. Beter in his 1973 book, The Conspiracy Against the Dollar. The crumbling of the once powerful United States economy is a direct consequence, and an intended one, of the destruction of the dollar itself which is underway. The time will come when the dollar will collapse altogether, and with it the economy of the United States and much of the world as we know it. At that point the same thing will have to be done that has always been done when other currencies have collapsed. There will have to be a new currency - a new dollar - with something behind it to restore confidence. The one commodity which has been a reliable, universally accepted basis for monetary confidence for thousands of years is gold. And so, gold will have to be used in setting up a new system of stable international currencies, including a new dollar. Meanwhile there will come a period of international monetary turbulence during which only gold or strongly gold-backed currencies will be trusted. During that period of time, assets measured in dollars will shrivel - as they are already doing now, at a less frantic pace. Those who have cornered the world’s gold supply will be in a perfect position to vastly expand their own holdings and power. And so, contrary to the official books of the US Treasury Department and the Federal Reserve System, America’s monetary gold hoard has been largely spirited away. It began in 1961 under the London Gold Pool Agreement: for seven years enormous loads of American monetary gold were hemorrhaged out of Fort Knox and other depositories and sent overseas. In addition there have been secret shipments of gold which are not reflected in official records at all. 
Through their control and manipulation of money - specifically the United States dollar - the moneychangers are stealing vast amounts of what countless millions have worked hard to produce. And just as they did in 1929 and afterward, they are again positioning themselves to set off economic disaster worldwide.
Summarized from the Dr. Peter David Beter AUDIO LETTER®