Debt-damned economics: either learn monetary reform, or kiss your assets goodbye (6 of 7)

The following is my high school teaching assignment for Advanced Placement Macroeconomics students (available as extra credit for other classes) on how money is created. I offer this for non-profit use; divided into seven sections:

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5. Historical struggle between government-issued money and private bank-issued credit

“The treasury, lacking confidence in the country, delivered itself bound hand and foot to bold and bankrupt adventurers and bankers pretender to be money-holders, whom it could have crushed at any moment. …Yet there is no hope of relief from the legislators who have immediate control over this subject. As little seems to be known of the principles of political economy as if nothing had ever been written or practiced on the subject, or as was known in old times, when the (bankers) had their rulers under the hammer. It is an evil, therefore, which we must make up our minds to meet and to endure as those of hurricanes, earthquakes and other casualties: let us turn over therefore another leaf.” – Thomas Jefferson, October 16, 1815 letter to Gallatin. Letters and Addresses, edit. William Parker, (New York: 1905).

“The real truth of the matter is, as you and I know, that a financial element in the larger centers has owned the Government ever since the days of Andrew Jackson — and I am not wholly excepting the Administration of W.W. (Woodrow Wilson). The country is going through a repetition of Jackson’s fight with the Bank of the United States — only on a far bigger and broader basis.” Franklin Roosevelt, letter to Col. Edward Mandell House (21 November 1933); as quoted in F.D.R.: His Personal Letters, 1928-1945, edited by Elliott Roosevelt (New York: Duell, Sloan and Pearce, 1950), pg. 373.

As you can imagine, privately-owned banks would love to have the legal right to create and manage a nation’s money. This authority gives a whole new meaning to “taking your work home with you.”

For an excellent comprehensive history, watch The Money Masters online (made in 1996: among many) and/or read the transcript. I highly recommend that you watch the beginning of The Money Masters; if you like what you learn, keep watching. The entire video is 3.5 hours, and divided into easy-to-watch chapters. A short written parable might also help: The Money Myth Exploded (46). The bottom-line of the history is a centuries-long struggle of wealthy bankers who have endeavored for the ultimate banking job. In the US, this struggle was won by the banks with the passage of the Federal Reserve Act in 1913. This allowed for the legal practice of fractional reserve banking and a monetary system of perpetual debt.

For this section, either watch at least 30 minutes of The Money Masters (you can skip forward, if you wish, and watch any section you want), or read the Money Myth Exploded analogy. If you’re not sure which to choose, I suggest Masters over Myth.

Next, we’ll consider the alternative envisioned by many of America’s brightest historical figures.

Endnote:

46 Even, L. The money myth exploded: http://www.michaeljournal.org/myth.htm

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