The Battle for Public Control of Money

(This is the second of a series of posts about ending the right of private banks to issue money.)

The Secret of Oz (William Still 2009) primarily addresses the long battle to strip banks of their power to issue money. In the US, this struggle dates back to the Revolutionary War.

The title refers to socialist writer L. Frank Baum’s 1900 The Wonderful Wizard of Oz. According to numerous scholars, the book is loaded with symbols related to monetary reform, the core demand of the Populist movement and the 1896 and 1900 presidential bids of Populist Democrat William Jennings Bryan.

The yellow brick road represented the gold standard, the Scarecrow represented farmers and the Tin Man represented industrial workers. The Wicked Witch of the West was Cleveland banker J.D. Rockefeller and the Wicked Witch of the East New York banker J.P. Morgan. The Cowardly Lion depicted William Jennings Bryan, who abandoned the call for monetary reform. The Emerald City represented (government issued) greenback money and Dorothy’s silver slippers (changed to ruby slippers in the movie) represented Bryan’s call to introduce silver coins to ease the money shortage during the 1890s depression.

Still traces the politics of monetary reform back to 30 AD, when a Nazarene carpenter engaged in violent direct action in a Jerusalem synagogue to evict the private bankers who sold silver coins which were used to pay a compulsory temple tax.

He also explores the use of state-controlled money in the American colonies and the early United States. He focuses particular attention on periods in which private banks deliberately shrank the money supply to trigger depressions (to increase profits or achieve specific political objectives), as well as efforts by Presidents Thomas Jefferson and Andrew Jackson to end private corporate control of money.

Both Jackson and Lincoln oversaw periods in which federal and/or state government issued debt-free money.

A Warning on the Bitcoin Bubble

A Bitcoin is a type of alternative, computer-based currency known as a cryptocurrency because it uses cryptography (i.e. specialized digital security technology) to make it difficult to counterfeit. Up until a few months ago, interest in Bitcoins was limited to computer nerds seeking to opt out of the bankster-controlled monetary system. In the last few months, Bitcoins have become a hot investment as the value of a Bitcoin has shot up from $43 (when I first blogged on Bitcoins back in March) to over a thousand dollars. The value of a Bitcoin peaked at $1,200 on Dec 4. It has since dropped to $917.10

Below are three short videos presenting differing perspectives on Bitcoins.

The first is by Bill Still, the filmmaker who produced Money Masters and The Secrets of Oz. According to Still, the main reason the value of Bitcoins has gone through the roof is because China is investing its trade surplus in Bitcoins and other cryptocurrencies rather than dollars. Back in November China announced  it would cap future purchases of US dollars and treasury notes. At present, China owns $1.3 trillion of US debt.

Prior to April 2013, China was using a substantial proportion of their trade surplus to purchase gold. However after Chinese State TV aired a documentary on Bitcoins in April, the Chinese have been really bullish on Bitcoins. The video is in Chinese. To view English subtitles click on the YouTube icon to view in YouTube. The subtitle icon is fourth to the right at the bottom of the screen.

Still is obviously really bullish on cryptocurrencies, particularly the quark. In contrast the following video by Storm Clouds Gathering warns that the Bitcoins is in the throes of a speculative bubble. It also has a basic design flaw that will eventually squeeze small Bitcoin traders out of the market.

The design flaw? To enter into any transaction involving Bitcoins, a client is required to download a block chain consisting of every single Bitcoin transaction ever made. With the surge of interest in Bitcoins in the past two months, the size of the block chain reached 11 gigabytes in November. It’s expected to reach 250 gigabytes in two years. Eventually it will reach a terabyte, and small users will be totally shut out unless the system is totally restructured. At some point, it will most likely be centralized in super nodes requiring massive industrial sized servers. These super nodes will essentially function as banks, totally defeating the purpose of starting a decentralized currency.