Send Money to Main Street, Not Wall Street

By MARK ANDERSON

Monetary issues are coming to the fore like never before. Even while Swiss voters will decide fairly soon whether to institute a Universal Basic Income — distributed to both the employed and the unemployed without means-testing — the Council on Foreign Relations is chiming in on this concept of an economic “floor.”

That’s odd. The CFR and its flagship journal Foreign Affairs are seen by most as the very essence of monopoly capitalism. The CFR has always championed the current system, which consists of what the late financial author Ferdinand Lundberg called “the money bund.” That craven clique rigs the tax code and the monetary system to solidify a trans-generational grip on “all things financial,” cloaked with the majesty of “merit.”

The CFR, founded in 1921, is soiled with the inky fingerprints of Morgan, Rockefeller, Schiff and others whose gilded surnames need only be stated to be felt. The unspoken linchpin of world control is to control the creation of money — its volume, its chief recipients and the terms of its creation. One need not fuss over all the details — except to note that money comes into existence as debt. The Federal Reserve, in concert with the commercial banks, makes money happen on the condition that the US Treasury prints the stuff, but the money must be handed over to the Fed, which funnels it back to the nation, at interest. The print job costs the Fed a few pennies per note — regardless of the note’s denomination.

The corresponding “harness” placed on the baffled masses mainly consists of the federal income tax, which has some helpful applications—except that it services the annual interest payments on the national debt, which surpass $400 billion per year. So, it’s no accident the infamous National Debt Clock is attached to the IRS building in midtown Manhattan. Yet, along comes a spider. Suddenly, the CFR wants the hoi polloi to receive money directly from the Federal Reserve. Not as a loan, but as a grant. No apparent strings attached.

Brown University “bookends” Mark Blyth and Eric Lonegran trotted out their direct-payments proposal in the Foreign Affairs journal’s September-October issue. Their article, entitled “Print Less but Transfer More: Why Central Banks Should Give Money Directly to the People,” contains, it seems, some valid points.

To wit, they wrote, “Today, most economists agree that like Japan in the late 1990s, the global economy is suffering from insufficient spending, a problem that stems from a larger failure of governance. Central banks, including the US Federal Reserve, have taken aggressive action, consistently lowering interest rates. ... They have also pumped trillions of dollars’ worth of new money into the financial system. Yet such policies have only fed a damaging cycle of booms and busts ... and now economic growth is stagnating while inequality gets worse.”

Pumping those trillions into “the financial system” means the money enters the upper economic echelons where wagering and shadowy deals rule, and little is done for Main Street. At the local level, there is a money drought. No monsoon there.

The authors added, “It’s well past time, then, for US policymakers — as well as their counterparts in other developed countries — to consider a version of [late economist Milton] Friedman’s ‘helicopter drops.’ In the short term, such cash transfers could jump-start the economy. Over the long term, they could reduce dependence on the banking system for growth and reverse the trend of rising inequality.”

The article’s heaviest impact, however, lies in what it does not say. It avoids the reality that unless monetary creation is shifted away from private central banks, then more debt is created as the money is created to deliver to citizens. So, first, we need real monetary reform—wherein money creation would be installed in the US Treasury. There, public United States Notes, not private Federal Reserve Notes, would be directly created by the government free of interest. Then, citizen payments in a basic-income scheme would truly be beneficial in a profound, dare I say revolutionary, manner.

A tad more history helps. Major Clifford H. Douglas, a Scotsman, in the early 20th century conceived of “social credit.” Social credit, soon carried forth by academics like the late Gorham Munson and several others, is a species of reform that ends the private concession on money and credit creation, switches that creation to an interest-free footing and provides a regular citizen dividend to all, with the volume of the sovereign money and credit gauged to real production data. That way, you can’t have too much money chasing too-few goods (inflation), nor too little money (deflation).

Notably, Munson (Wesleyan class of 1917) was among America’s most eloquent and durable Social Credit leaders. In 1932, he defended Social Credit in The Nation and helped form the New Economics Group of New York. Bringing these other matters forth casts the CFR proposal in its proper light, so it can be seen for the intriguing but half-baked proposal that it really is.

Mark Anderson is a veteran journalist who divides his time between Texas and Michigan. Email him at truthhound2@yahoo.com.

From The Progressive Populist, October 1, 2014