The first step towards a common framework
Your proposal is great. So are all the ones I have seen. Here is the first order breakdown of issues – your considered comments on each point, in the context of the main observation below, would be great.
a: Central Banking in private hands charges the public perpetual compound-interest for the public's own money. Nationalizing the money creation function solves this problem of 'money as public debt'.
Your proposal, as did President Lincoln’s, addresses this. Thank you.
b: Private Central Bank is a legalized monopoly behavior that permits private banks to collude legally for 'price-fixing' the interest-rate. Thus it helps create the business cycle of expanding and contracting credit by modulating its availability in legal collusion – what I call the 'business rape cycle'. Bankers profit from this by buying up those businesses who can’t cut it, pennies to the dollar during the bust periods which dutifully follow upon the heals of boom financing periods.
Nationalizing this function, by having the government manage the availability of credit, what Thomas Edison called “the proper ratio” for money supply – not too much to prevent wild speculation, and not too little to prevent stagnation – goes to a large extent in managing this 'price-fixing' of interest-rate and availability of credit in the greater common good of the public, rather than the banking cartel's now represented by the Federal Reserve System. But government management does not entirely eliminate this aspect – because the private banks can still secretly collude in managing credit availability as they have always done, since they have the same powerful handful of owners at the top!
How does your proposal address this issue fully to eliminate this predatory 'business rape cycle' altogether – and only have naturally occurring bankruptcies?
How might one even distinguish between a predatory 'rape cycle' and a genuine business cycle? Who understands this stuff?
c: A Central Bank’s arbitrary money creation by fiat – whether the CB is public or private doesn’t matter, and which is what Greenbacks were – creates an inflationary tax. Nothing new here.
How have you addressed this inflationary tax? This tax exists in all 'national currency by fiat' systems not fully backed by an asset, or national commodity!
d: In modern industrialized societies where the demand for capital can be enormous, far more than was prevalent in agrarian or early-developing industrialized societies, as Richard Cook, the former U.S. Treasury Department employee and now a monetary reformer, argues, how can this natural inflationary tax be avoided in such a fiat money system? In the time of the Greenbacks during the Civil War, while Lincoln printed around 400 million dollars, or some say 500, that is nothing compared to what is needed today in the capital intensive public and private mega-projects. For instance, simply to set up a class-1 semiconductor fab takes a billion+ dollars.
How does your proposal address this large demand for capital that would not also pose an inflationary tax?
e: Banking itself, indeed, all of International banking, is based on fractional reserve lending. This is the real source of any banker’s continuous and perpetual wealth creation, and hence the source of their unmatched and unrivaled power.
How have you addressed this?
Can you show a method whereby the banks in the world can be made to agree to have a fractional reserve lending ratio of 1?
There is always power behind any new change. Merely having ideas isn’t enough. Take the simple currency of the United States during the colonial times: 'colonial scrip'. It worked great for the colonies until Benjamin Franklin let the cat out of the bag. It does not take rocket science to create a new monetary system. And there can be any number of these, based on the number of peoples on the planet. The best one yet is that proposed by Thomas Edison for Henry Ford's Muscle Shoals project which can be read in the NYT of December 6, 1921.
The reality-space must reality check proposals. From what I have seen, most are pie in the sky – no existing power will permit it. And if one feels that idealism rooted in platitudes is a solution space, then surely the Ten Commandments, as the Golden Rule, would have been sufficient. If sensible power-wielding industrialists like Henry Ford and Thomas Edison can fail despite their commonsense, one must pay attention to the fact that it isn't a lack of good solutions which is hijacking away earth's populations into perpetual debt. The “moneychangers” power entrenched in the system is enormous. Very good people are wasting very precious time designing new systems that are unrealizable, unimplementable, not because they may lack good qualities, but because the banksters won't voluntarily permit a diminution in their power.
Please see the following Project Humanbeingsfirst analyses to comprehend the enormous power of entrenched systems, and the absence of any balancing power that can efficaciously counter it. There is full bipartisan support for all significant aspects of status quo among America's (and indeed the Western world's) ruling elite:
Given the afore-stated reality-space of entrenched power which not only controls the Federal Reserve System, but also all national politics, including both the Executive and the Legislature, Project Humanbeingsfirst has instead decided to focus on forensically dissecting the existing overarching system to understand its key pivot points. Instead of taking on the entire system, to take on some key pivot points – like yanking a tiny wire out of a million dollar Ferrari to disable it. In order to do so effectively, one would need to plant trees under whose shade one will likely never sit! For short of a bloody revolution, this is a project for the long haul.
That requires more than just making paper proposals! Please see the afore-cited “Response to 'Sign Petition for a Monetary System That Puts People First - Open Letter to G-20'” and “The entrenched notion of Public Debt in America – will take a gestalt shift to overcome! A seeding–prose for Collaboration.” The overarching key points are mainly two, one related to building a consensus, the second related to funding a prime-mover into existence:
1) If one separates monetary policy from economic policy, mechanisms of money from economic policies that use them, identify desirable characteristics of the monetary system where much of the common-ground exists, and avoid pontificating economic policies upon which there is much divisiveness, more effective coalitions can be constructed.
2) Is there no one in the world who can put down a 100 million dollars towards creating the equivalent of a 'Ford Foundation' to fight on the side of monetary reform? That is what it will take to merely seed a real power-game.
The author, an ordinary researcher and writer on contemporary geopolitics, a minor justice activist, grew up in Pakistan, studied EECS at MIT, engineered for a while in high-tech Silicon Valley (patents here), and retired early to pursue other responsible interests. His maiden 2003 book was rejected by six publishers and can be read on the web at http://PrisonersoftheCave.org. He may be reached at http://Humanbeingsfirst.org. Verbatim reproduction license at http://www.humanbeingsfirst.org#Copyright.
Towards a Common Standard Benchmark for evaluating all Monetary Reform Proposals