|
For the economists to ponder. An 1816 problem of crumbling sea walls and
poor road conditions in the island state of Guernsey in the British Channel
Islands is solved by printing money. The government issued interest free loans
which were issued for various infrastructural repairs and public
facilities, resulting in a reinvigorated economy with no inflation.
Investing in people as the best approach to prosperity is in
stark contrast to the "spirit" of commerce today. Below from Sam
Smith's
Progressive Review, Sept. 29/05
Natalia
HOW TO PAY FOR A NEW NEW ORLEANS
ELEVEN YEARS ago the Progressive Review ran a remarkable article by Bob Blain in which it was proposed that the government free itself of servitude to the private banking system and start printing money to pay for public works that add to the wealth of the nation. If this seems zany, consider this: every time you use a credit card you are allowing some bank to print money. Why do only bankers have this privilege and not the US government? In part because the media - from Fox News to NPR - won't let anyone even mention so at odds with their distorted notion of how our economy works The whole article is well worth reading especially since one of the prime examples Blain gives involves the island of Guernsey printing money to rebuild its sea walls i.e. a sort of levee for land above sea level. . . BOB BLAIN, THE PROGRESSIVE REVIEW, 1994 - Guernsey is an island state located among the British Channel Islands about 75 miles south of Great Britain. In 1816 its sea walls were crumbling, its roads were muddy and only 4 1/2 feet wide. Guernsey's debt was 19,000 pounds. The island's annual income was 3,000 pounds of which 2,400 had to be used to pay interest on its debt. Not surprisingly, people were leaving Guernsey and there was little employment. Then the government created and loaned new, interest-free state notes worth 6,000 pounds. Some 4,000 pounds were used to start the repairs of the sea walls. In 1820, another 4,500 pounds was issued, again interest-free. In 1821, another 10,000; 1824, 5,000; 1826, 20,000. By 1837, 50,000 pounds had been issued interest free for the primary use of projects like sea walls, roads, the marketplace, churches, and colleges. This sum more than doubled the island's money supply during this thirteen year period, but there was no inflation. In the year 1914, as the British restricted the expansion of their money supply due to World War I, the people of Guernsey commenced to issue another 142,000 pounds over the next four years and never looked back. By 1958, over 542,000 pounds had been issued, all without inflation. A visitor to the island that year later wrote: "I returned from Guernsey last weekend. It is a fascinating little island. There are about 60,000 permanent residents on the island. The average family owns 3.3 cars, their unemployment rate is zero and their standard of living is very high. There is no public debt. There is a surplus of public funds which earn interest. The Guernsey Treasury increased the Ml of the island by 40 percent in the last three-year period, and this increase did not do anything to inflation. The price for a gallon of gasoline in England translates to about $5US whereas, the price in Guernsey is about $2US. Contrary to the teachings of current economics in all higher institutions, inflation is not related to the volume of money but rather to the size of the commercial debt." http://www.prorev.com/sovreign.htm SAM SMITH'S GREAT AMERICAN POLITICAL REPAIR MANUAL, 1997 - A report of the island's States Office in June 1946 notes that island leaders frequently commented that these public works could not have been carried out without the issues, that they had been accomplished without interest costs, and that as a result "the influx of visitors was increased, commerce was stimulated, and the prosperity of the Island vastly improved." By 1943, nearly a half million pounds worth of notes belonged to the public and was so valued that much of it was being hoarded in people's homes, awaiting the island's liberation from the Germans. About the same time that Guernsey started to fix its sea walls the town of Glasgow, Scotland, borrowed 60,000 pounds to build a fruit market. The Guernsey sea walls were repaid in ten years, the fruit market loan took 139. In the first part of the the 20th century, Glasgow paid over a quarter million pounds in interest alone on this ancient project. How did Guernsey avoid the fiscal disaster that conventional economics prescribed for it? First and foremost by understanding that when you build roads or sea walls or colleges or houses, you are not reducing your society's wealth. In fact, if you do it right, you are creating something that will add to its wealth. The money that was created was simply backed by public works rather than gold or "full faith and credit." It was, in fact, based on something more solid than the dollar bills in our wallets today. In contrast, tacking on an interest charge to public works -- as we do in the US -- creates no new wealth, but merely transfers claims on existing wealth from debtors to creditors. [The cagey burghers of the Channel Islands are no longer interested in this form of financing. The islands have instead become off-shore havens for major banks and for the megarich.] JAMES GIBB STUART - he idea of credit creation by Government has already been used effectively on several well-documented historical occasions. In 1865 Abraham Lincoln himself ordered the creation of 460 million dollars to finance the latter stages of the American Civil War. In August 1914 Lloyd George, then Chancellor of the Exchequer, printed 300 million pounds sterling to rescue the British banks from a war-induced liquidity crisis. And from 1911 to 1923 Sir Denison Miller, Governor of the Australian Commonwealth Bank, made regular issues of debt-free government money to preside over the most prosperous period in his country's history. Given that these and similar recorded instances of state-created debt-free money were successful, the next obvious question is to ask why they were not perpetuated. And the short answer is that banking opposition was already too formidable. . . The bankers maintained that creating credit at will, without debts to be paid back or interest to be levied, can become reckless and undisciplined, resulting in inflation and a debauching of the currency. In certain conditions that can be so, and we should be aware of it. But let us also consider the consequences of following the bankers' protocol, and accepting that all new money be created as an interest-bearing debt upon the community. These consequences are all about us. They are seen today in the economic cut-backs that governments are adopting right across the hemisphere to meet some convergence criteria and cut their public spending. . . Governments and large corporations destroy natural amenities and indiscriminately loot Earth's treasure house of non-recyclable energy and resources, all because of the costs and the pressures of servicing and sustaining the debt. Because debt and the credit monopoly place us under bankerist control, rather than political control, democracy itself is downgraded, losing that independence of spirit and action to which all free peoples aspire. Sir Robert Menzies, Prime Minister of Australia in the 1960s, said that "there can be no independence without financial independence". No people is truly sovereign which does not have control of its own money. Our governments do not have that control when they have to borrow from the banking system to create new resources. Politicians elected under the people's mandate find themselves beholden to bankers and financiers, who are beholden to no-one. Hence the current distrust of politics and politicians. There is a malaise at the heart of society, and politicians no longer have the means of tackling it, because they do not seem to know how to take back control of the people's money. . . We need to break the bankers' credit monopoly, and establish a non-inflationary procedure whereby an elected government can create a proportion of its own new money. Promptly, we are told by the banking lobby that it just cannot be, that debt-free money is vastly inflationary, and that the only "sound" money is bank money, borrowed at interest. But ironically the facts of economic history tell otherwise. . . It is only within a debt-money system that chronic inflation has ever occurred, beginning with the first recorded inflation which destroyed http://www.prosperityuk.com/prosperity/articles/bigissue.html |||||||||||||||||||||||||||||||||||||||||||||||||||||||| HOW TO PAY FOR A NEW NEW ORLEANS ELEVEN YEARS ago the Progressive Review ran a remarkable article by Bob Blain in which it was proposed that the government free itself of servitude to the private banking system and start printing money to pay for public works that add to the wealth of the nation. If this seems zany, consider this: every time you use a credit card you are allowing some bank to print money. Why do only bankers have this privilege and not the US government? In part because the media - from Fox News to NPR - won't let anyone even mention so at odds with their distorted notion of how our economy works The whole article is well worth reading especially since one of the prime examples Blain gives involves the island of Guernsey printing money to rebuild its sea walls i.e. a sort of levee for land above sea level. . . BOB BLAIN, THE PROGRESSIVE REVIEW, 1994 - Guernsey is an island state located among the British Channel Islands about 75 miles south of Great Britain. In 1816 its sea walls were crumbling, its roads were muddy and only 4 1/2 feet wide. Guernsey's debt was 19,000 pounds. The island's annual income was 3,000 pounds of which 2,400 had to be used to pay interest on its debt. Not surprisingly, people were leaving Guernsey and there was little employment. Then the government created and loaned new, interest-free state notes worth 6,000 pounds. Some 4,000 pounds were used to start the repairs of the sea walls. In 1820, another 4,500 pounds was issued, again interest-free. In 1821, another 10,000; 1824, 5,000; 1826, 20,000. By 1837, 50,000 pounds had been issued interest free for the primary use of projects like sea walls, roads, the marketplace, churches, and colleges. This sum more than doubled the island's money supply during this thirteen year period, but there was no inflation. In the year 1914, as the British restricted the expansion of their money supply due to World War I, the people of Guernsey commenced to issue another 142,000 pounds over the next four years and never looked back. By 1958, over 542,000 pounds had been issued, all without inflation. A visitor to the island that year later wrote: "I returned from Guernsey last weekend. It is a fascinating little island. There are about 60,000 permanent residents on the island. The average family owns 3.3 cars, their unemployment rate is zero and their standard of living is very high. There is no public debt. There is a surplus of public funds which earn interest. The Guernsey Treasury increased the Ml of the island by 40 percent in the last three-year period, and this increase did not do anything to inflation. The price for a gallon of gasoline in England translates to about $5US whereas, the price in Guernsey is about $2US. Contrary to the teachings of current economics in all higher institutions, inflation is not related to the volume of money but rather to the size of the commercial debt." http://www.prorev.com/sovreign.htm SAM SMITH'S GREAT AMERICAN POLITICAL REPAIR MANUAL, 1997 - A report of the island's States Office in June 1946 notes that island leaders frequently commented that these public works could not have been carried out without the issues, that they had been accomplished without interest costs, and that as a result "the influx of visitors was increased, commerce was stimulated, and the prosperity of the Island vastly improved." By 1943, nearly a half million pounds worth of notes belonged to the public and was so valued that much of it was being hoarded in people's homes, awaiting the island's liberation from the Germans. About the same time that Guernsey started to fix its sea walls the town of Glasgow, Scotland, borrowed 60,000 pounds to build a fruit market. The Guernsey sea walls were repaid in ten years, the fruit market loan took 139. In the first part of the the 20th century, Glasgow paid over a quarter million pounds in interest alone on this ancient project. How did Guernsey avoid the fiscal disaster that conventional economics prescribed for it? First and foremost by understanding that when you build roads or sea walls or colleges or houses, you are not reducing your society's wealth. In fact, if you do it right, you are creating something that will add to its wealth. The money that was created was simply backed by public works rather than gold or "full faith and credit." It was, in fact, based on something more solid than the dollar bills in our wallets today. In contrast, tacking on an interest charge to public works -- as we do in the US -- creates no new wealth, but merely transfers claims on existing wealth from debtors to creditors. [The cagey burghers of the Channel Islands are no longer interested in this form of financing. The islands have instead become off-shore havens for major banks and for the megarich.] JAMES GIBB STUART - he idea of credit creation by Government has already been used effectively on several well-documented historical occasions. In 1865 Abraham Lincoln himself ordered the creation of 460 million dollars to finance the latter stages of the American Civil War. In August 1914 Lloyd George, then Chancellor of the Exchequer, printed 300 million pounds sterling to rescue the British banks from a war-induced liquidity crisis. And from 1911 to 1923 Sir Denison Miller, Governor of the Australian Commonwealth Bank, made regular issues of debt-free government money to preside over the most prosperous period in his country's history. Given that these and similar recorded instances of state-created debt-free money were successful, the next obvious question is to ask why they were not perpetuated. And the short answer is that banking opposition was already too formidable. . . The bankers maintained that creating credit at will, without debts to be paid back or interest to be levied, can become reckless and undisciplined, resulting in inflation and a debauching of the currency. In certain conditions that can be so, and we should be aware of it. But let us also consider the consequences of following the bankers' protocol, and accepting that all new money be created as an interest-bearing debt upon the community. These consequences are all about us. They are seen today in the economic cut-backs that governments are adopting right across the hemisphere to meet some convergence criteria and cut their public spending. . . Governments and large corporations destroy natural amenities and indiscriminately loot Earth's treasure house of non-recyclable energy and resources, all because of the costs and the pressures of servicing and sustaining the debt. Because debt and the credit monopoly place us under bankerist control, rather than political control, democracy itself is downgraded, losing that independence of spirit and action to which all free peoples aspire. Sir Robert Menzies, Prime Minister of Australia in the 1960s, said that "there can be no independence without financial independence". No people is truly sovereign which does not have control of its own money. Our governments do not have that control when they have to borrow from the banking system to create new resources. Politicians elected under the people's mandate find themselves beholden to bankers and financiers, who are beholden to no-one. Hence the current distrust of politics and politicians. There is a malaise at the heart of society, and politicians no longer have the means of tackling it, because they do not seem to know how to take back control of the people's money. . . We need to break the bankers' credit monopoly, and establish a non-inflationary procedure whereby an elected government can create a proportion of its own new money. Promptly, we are told by the banking lobby that it just cannot be, that debt-free money is vastly inflationary, and that the only "sound" money is bank money, borrowed at interest. But ironically the facts of economic history tell otherwise. . . It is only within a debt-money system that chronic inflation has ever occurred, beginning with the first recorded inflation which destroyed http://www.prosperityuk.com/prosperity/articles/bigissue.html |||||||||||||||||||||||||||||||||||||||||||||||||||||||| All mail scanned by NAV
|
_______________________________________________ Futurework mailing list [email protected] http://fes.uwaterloo.ca/mailman/listinfo/futurework
