Why do we need democratic control of the money supply?
send comments to: JeffHeaton@OccupytheElections.org
With a Sustainable California State Bank (SCSB) the citizens and legislature of California will have the capital base to lend many billions of dollars to the state itself at zero percent interest. The Sustainable California State Bank will also have trillions of dollars to lend towards the creation of a sustainable and stable economy in California.
Spending and lending adequate amounts of capital towards sustainable infrastructure improvements will have the effect of increasing productivity and demand at the same time. As the number of middle class jobs increases both the production and consumption of goods and services will also increase. Economic history has shown us that when debt free money is wisely invested into the commons the result is neither inflation or deflation.
These days the total interest payments on a house cost more than the original price of the home. When interest payments are near zero percent the total cost of paying for a home is close to the original sales price. The accumulation of debt in the form of interest payments to Wall Street Banks is leading to the death of the middle class in America.
Our current monetary system is based in debt. Money is only created by increasing debt. As a result there is never enough principal to pay back the original debt. Accumulation of debt (interest) is strangling the private economy and governments. Debt (interest) is overwhelming productivity and job creation. As more and more income and tax revenues go towards interest payments the economy will continue to slow down.
Right now the money supply is decreasing. As that trend continues there will be less jobs and less money available to start a business, to buy a car or pay taxes. Home prices will continue to drop which will lead to more lay-offs and on and on. Decreasing tax revenues will lead to more public sector lay-offs.
Many people falsely believe that lending or spending vast amounts of money for infrastructure improvements will also lead to unsustainable inflation. This belief is totally untrue. It is true that vast amounts of additional debt is unsustainable. But vast amounts of spending (without debt) on the commons will lead to prolonged stability.
Resources that are spent on increasing productivity will also create more jobs. A working person with more cash in their pocket will purchase more goods and services. As long as the money supply increases along with productivity than prices will remain steady.
The current monetary policy of the Federal Reserve is to stimulate the economy by funding huge bonuses (corporate welfare) for the top wealthiest 1% of the population. This approach does not stimulate production on main street. Most wealthy individuals hoard a large percentage of their wealth (resources) in the form of speculative Investments that produce very little. Investments in Wall Street do not increase middle class jobs.
The only true measure of a healthy society is the sustainability of the commons. When individuals are allowed to accumulate (hoard) wealth at the expense of the commons the result is inequality and social degradation. Parasites suck the nutrients out of a host. When a parasite sucks too many nutrients from the host, the host and parasite both die.
Stable prices in a growing economy will lead to an affluent society. Inflation and deflation allow a very small number of investors (capitalist) to make large profits from leveraged investments. Inflation and deflation hurt poor and middle class families. Leveraged investments lead to much higher levels of instability.
When the banks were deregulated in the late 1990s lenders artificially pushed up the value of housing by making home loans very cheap and easy to obtain. Money center banks did not care if borrowers would ever pay back their loans. The housing bubble was clearly unsustainable yet Wall Street banksters were given a free pass to destroy the primary source of retirement equity for the entire middle class.
When the money supply increases based on real earned income instead of corporate welfare housing prices will not crash.
Deregulation also allowed Wall Street banksters to gamble in the leveraged derivatives market. Leverage investments always crash. There is no such thing as a leverage investment that does not crash. When a segment of the derivatives market crashed it dried up the availability of home loans. With easy credit gone the housing bubble also popped.
With a Sustainable California State Bank under democratic control these problems will not occur.
Bankers who work for the state will not receive benefits for short sightedness and greed. A banker who is also a civil servant will not be rewarded by timid and feeble shareholders with huge bonuses for over leveraging the bank’s assets. If banking policies cause inflation or deflation than those civil servants will be fired or voted out of office. We the people will demand fiscal responsibility.
There will always be corrupt bureaucrats. But the amount of corruption at a sustainable state bank will pale in comparison to the amount of misery leveraged onto tax payers backs by the shadow banking system.
We were told that the federal government was bailing out the too-big-too-fail banks with $700 billion dollars in emergency TARP loans. We recently found out the Federal Reserve spent over $16 trillion dollars bailing out the banks! Many of the banks bailed-out where not even US banks!
To achieve democratic control of the money supply the average voting citizen will have to become more informed. In a truly democratic society there will be endless debate about fiscal policy. Over time citizens will begin to understand how fiscal policy affects our day to day lives. If home prices go up too fast a lot of citizens will figure out the relationship between state bank policies and the cost of a home. If home prices fall and gasoline prices go up than citizens will get the connection.
What would they get?
A Sustainable California State Bank will be able to make the adjustments necessary to meet the needs of our citizens. In a deflationary crisis all state bank mortgages could be written down until empty housing units are filled with people who can afford to live in them. At some point we will be back to a steady housing market. In a steady housing market builders will build homes based on the true demand. Sustainable jobs will lead to a steady demand and a steady supply. Extreme inflation and deflation will be become a thing of the past.
Gasoline prices are going up because speculators are concerned about the future availability of declining oil supplies. One approach is for the Sustainable California State Bank to offer low interest loans to all entrepreneurs who develop alternative approaches to meet our transportation needs. More alternative fuels and modes of transportation will cause the price of oil to go back down relative to supply. Over time renewable energy will take the lead without the scourge of runaway inflation.
These important decisions are political and should be subject to endless public debate. Our limited participation in the political process has led to legislative gridlock. Our government is unable to respond to a crisis with significant fiscal reform. The availability of the Internet will naturally increase political participation for the average citizen. Democracy is on the increase.
We need a Sustainable California State Bank where the board of directors are elected by the voting citizens. This will put the board of directors into the unique position of being able to respond to any fiscal crisis that threatens out economic sovereignty.
Many citizens believe that “our manufacturing jobs have been sent overseas and they will never come back.” A Sustainable California State Bank could initiate lending policies that encourage manufacturing jobs to return to California.
The SCSB board of directors could direct bank officers to make low interest loans available to businesses that create the kind of sustainable jobs that Californians want. We must plan for our future and initiate a manufacturing and service sector that meets the challenging realities of the 21st century.
For example the SCSB could offer near zero interest loans to qualified Californian companies that build and install solar energy systems and other renewable energy and recycling systems that exploit our many diverse natural resources. All investments in our hard working and well educated populace will benefit a wide variety of Californian's far into the future.
Green energy installations will save Californian’s the cost of buying dirty electricity for generations to come. Producing local clean energy means the savings will be spent into the local communities. This will have a multiplier effect and create many millions of additional jobs.
More employment will lead to more state tax revenues that will benefit the public sector. The mission statement of the SCSB is to steadily improve the overall health of the environment and citizens of California. This policy will also improve productivity, raise wages and reduce stress.
For the average middle class family a Sustainable California State Bank will clearly be a win win. Super wealthy transnational banksters and investors will have less leverage to hoard wealth and compete for limited resources. We the People understand it is time to move on from a dying get rich quick fantasy.
The federal government and state legislatures are unable to accomplish true fiscal reform. The current political structure has been corrupted by greed and the bribes of foreign owned corporations. Our government is unable to make decisions that benefit the vast majority of middle class citizens. We are stuck in quicksand and sinking fast.
By creating a Sustainable California State Bank with a board of directors that is elected by the citizens we will have direct democratic control of the money supply. Currently a cartel of private banks called the Federal Reserve has absolute control of the money supply. Sustainable State banks will finally put an end to the Federal Reserve’s unfair monopoly and concentration of power. We have anti-trust laws that date back to the early part of the last century. State Banks are the first step to enforcing our anti-trust laws.