The Lost Science of Money – Wars Are Won By Bankers, Not Armies

The Lost Science of Money: The Mythology of Money – The Story of Power

by Stephen Zarlinga

American Monetary Institute (2002)

Book Review

This book, by co-author of Congressman Dennis Kucinich’s HR 2990 to abolish the Federal Reserve (see HR2990: Historic Bill to Abolish the Federal Reserve), is one of the most amazing books I’ve ever read. At 775 pages, the lowest price I could find for a used copy was $225 from Alibris. Fortunately it’s also available in PDF format at The Lost Science of Money

It’s clear from Zarlenga’s extensive documentation and footnotes that the research for this book took decades. He essentially rewrites western history dating back to the ancient Sumerians. His goal is to expose and correct all the distortions and myths introduced into official history historians in the pay of merchants and bankers. Both are fiercely committed to perpetuating our current global monetary system in which private central banks create and control the money supply.

Among many others, two of the myths Zarlenga explodes are that the Roman Empire collapsed due to barbarian invasion (he demonstrates very convincingly that Rome collapsed due to a debasement of their currency) and the often repeated claim that excessive government printing of money was responsible for the deadly inflation in the early years of the Third Reich – as Zarlenga points out, it was actually the privately owned central Reichsbank that issued the money and created the inflation.

The Concept of “True Money,”

Zarlenga begins by establishing a clear difference between “true money,” which he defines as money with a fixed value set by law and “commodity money,” in which private merchants and banks issue and control the value of money. In the rare historical periods where governments have issued and controlled money by law, the result has been long periods of political stability and flourishing industry and culture.

The Romans enjoyed the longest continuous period (200 years) of monetary stability. Roman leaders maintained control of their money by prohibiting silver and gold coinage for domestic use – issuing fixed value copper and bronze coinage instead. In this way they prevented foreign merchants from capturing control of their money supply and manipulating the value of their currency.

He Who Controls the Money Controls the World

Zarlenga carefully traces how after the fall of the Roman Empire, control of western money shifted from Constantinople (after the 4^th Crusade which sacked Constantinople – see link), to Venice, to Portuguese traders in Antwerp (after they opened the trade route around the southern tip of Africa), to Amsterdam (following the civil war splitting the Netherlands into Holland and Belgium), to London (after the Dutch prince William of Orange seized the English throne). In each case, control of the money supply was far more important than military strength in consolidating political control.

Zarlinga also clarifies, though careful research, the historical role played by the Knights Templar and Jewish merchants and money lenders in the development of global monetary centers.

The Dutch Usurper Who Chartered the Bank of England

One of the sections that interested me most concerned the founding of the Bank off England – which set the global standard for all private central banks – in 1694. Previously I hadn’t realized that the Bank of England was started by a Dutch king (William of Orange), who usurped the English throne from James II. Nor that his purpose for chartering the Bank of England was to advance the interest of the Dutch merchants and bankers who initially controlled it.

“True Money” in the Americas

I also enjoyed the detailed section outlining the history of government issued money in the US. Again Zarlenga presents extensive and convincing evidence that it was the ability of colonial governors to issue their own money that enabled commerce and industry in the 13 original colonies, as well as enabling them to organize a successful war of independence against England.

Zarlenga also describes in detail the battle Jefferson, Andrew Jackson and their allies fought against the creation of a privately controlled central bank, as well as the immense popularity of the Greenback Congress issued during the Civil War – and the immense national uprising (the populist movement) launched at the end of the 19^th century to save them.

The Federal Reserve Engineers the Great Depression

Obviously the book wouldn’t be complete without a chapter on the criminal conspiracy that lead to the formation of the Federal Reserve in 1913, the Federal Reserve’s role in engineering the Great Depression 26 years later, and Roosevelt’s prolonged battle with Wall Street to implement the New Deal recovery.

Populism: America’s Largest Mass Democratic Movement

 

The Populist Moment: A Short History of the Agrarian Revolt in America

by Lawrence Goodwyn

Oxford University Press (1978)

Book Review

The Populist Moment describes the rise and fall of the 19th century populist movement, the largest mass democratic movement in US history. At its zenith during the 1896 election, the populist People’s Party had two million members.

Author Lawrence Goodwyn credits the rise of the agrarian populist movement to two major factors: 1) the unwillingness of the Eastern banking establishment to issue adequate credit to small family farmers and 2) the sudden contraction of the money supply caused by pressure on the post-Civil War government to repay bonds it floated for $450 million of treasury notes (aka Greenbacks) Lincoln used to pay for the Civil War.

Goodwyn also blames the systematic failure of commercial banks to issue adequate credit for the ultimate consolidation and centralization of farming in the US, leading to the eventual rise of industrial agriculture.

The Call to Prohibit Private Banks from Issuing Money

The populist movement started in Texas in 1878 as the Alliance. At first the group focused on forming cooperative buying committees, trade stores and crop insurance schemes to circumvent the crop-lien system that caused so many farmers to lose their land. Their chief organizing strategy was to send farmer-lecturers throughout Texas and eventually other parts of the South, Midwest and West. The banks, railroads, grain elevators and supply merchants responded by secretly conspiring to freeze them out. In turn the Alliance formed the People’s Party, whose main platform called for ending commercial banks’ ability to issue money.*

Goodwyn provides a detailed state-by-state history of the leadership struggles in the Alliance and in the People’s Party. Both made concerted efforts to reach out to Negro farmers and tenant farmers and to industrial workers, represented by the Knights of Labor and the American Federation of Labor, in the cities.

Overcoming Cultural Oppression

The book concludes by tracing the rise of the liberal and progressive movements that followed the demise of the People’s Party. The primary focus of these later movements has been to “humanize” industrial capitalism – as opposed to attacking the fundamental structure of capitalism (like populist movement). Goodwyn blames the absence of comparable mass movements in the twentieth century on the profound psychological oppression that occurs in modern industrialized society.

According to Goodwyn, the values of the corporate state totally dominates modern American intellectual life, as citizens of industrialized society are taught rules of conduct (in schools, churches and the media) that intimidate them and condition them not to rebel.  The Alliance overcame these cultural barriers by training and dispatching farmer-lecturers to teach farmers collective self-confidence and self-assertion – ie that the banks, rather than farmers themselves, were responsible for their predicament. Up to this point in time, no democratic mass movement has attempted a similar program of mass education.

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*Contrary to popular belief, money used to run the global economy isn’t issued by governments but by private banks. Although most people think banks only loan out money they hold on deposit, loans are actually  created out of thin air via a bookkeeping entry.  Because this is where roughly 97% of money comes from, private banks have ultimate control over the amount of money in circulation. They exert enormous political power by shrinking the money supply to cause recessions and expanding it to cause inflation. See How Banks Invent Money Out of Thin Air , Stripping Banks of Their Power to Issue Money and 97% Owned

The Fight Against a Jobless Economy and a Citizenless Democracy

People Get Ready: The Fight Against a Jobless Economy and a Citizenless Democracy

Robert McChesney and John Nichols (2016)

Film Review

An extremely inspiring public presentation in which McChesney and Nichols talk about their latest book (of the same name)

McChesney begins with research indicating that 50% of current jobs will be eliminated by robots and artificial intelligence in the next 10-20 years. He also talks about the inherent inability of a scarcity/profit based economic system to address this crisis.

For me, the most interesting part of his presentation was a discussion of Franklin D Roosevelt’s Second Bill of Rights.* According to McChesney, both Germany and Japan incorporated this Second Bill of Rights into their constitutions after World War II. This, in his view, explains why both countries have become economic powerhouses.

Both men talk about the crucial need to form a post-capitalist society and economic system. Nichols talks more about the large global movements which have formed to build this new system. He, like McChesney, has been surprised by the popular candidacies of Donald Trump and Bernie Sanders. The book predicts the appearance of proto-fascist and democratic socialist candidates in response to growing popular resistance movements. However neither expected it to happen so quickly.

The best part of Nichols’ talk is his discussion of the massive Luddite and Chartist movements in Britain (and the populist and progressive movements in the US) that would ultimately lead to universal suffrage, honest elections and the rise of the trade union movement.

Nichols stresses that none of these reforms resulted from the heroic efforts of a political savior – they all resulted from the dedicated and persistent mass organizing of ordinary people.

 

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*Roosevelt’s Second Bill of Rights included the basic right of all Americans to

• Employment (right to work)
• Food, clothing and leisure, via enough income to support them
• Farmers’ rights to a fair income
• Freedom from unfair competition and monopolies
• Housing
• Medical care
• Social security
• Education

 

Emancipate Yourself from Mental Slavery

“Emancipate yourself from mental slavery – none but ourselves can free our minds” – Bob Marley Redemption Song

PsyWar: the Real Battlefield is the Mind

Directed by Scott Noble (2010)

Film Review

PsyWar is about the fundamental role of propaganda in a political system that pretends to guarantee  “democracy” in a society that simultaneously promotes extreme wealth inequality.

It begins with an examination of the vital role propaganda plays in war time, with a special focus on the 2003 US invasion of Iraq and World War I. It then explores the morphing of the World War I propaganda machine into the modern public relations industry.

The film moves on to the concept of “polyarchy,” which the filmmakers maintain is the most accurate description of government in the industrial north. In a polyarchy, power is closely guarded by a wealthy elite and the population remains passive except for periodic elections in which they vote for the elites of their choice. When a tiny minority controls nearly all the wealth, “democratic” elections are only possible if the majority is systematically controlled with psychological propaganda.

Big breakthroughs in transportation and communication technology at the end of the 19th century caused a major crisis for polyarchy, as they fed the rise of popular resistance movements (eg the populist and progressive movement, International Workers of the World and militant labor movements). The response to this crisis was the public relations industry.

The Rendon Group and Perception Management

The documentary introduces us to the Rendon Group, the private “perception management” company the Bush administration paid to manage propaganda leading up to the US invasion of Iraq. Immediately after 911, the CIA paid the Rendon Group $23 million to generate anti-Iraq propaganda. They also paid them to manage “public perception” during the US bombing of Afghanistan.

The Dirty Secret Behind the US Constitution

PsyWar devotes nearly 15 minutes to the secret framing of the US Constitution by a group of rich landholders and merchants to overturn the Articles of Confederation and protect their wealth from the “tyranny of the majority.” It contrasts the system of direct democracy of the Iroquois Federation (on which the Articles of Confederation were based), where all members of society (including women) had direct input into policy decisions.

The Crisis of Capitalism

According to PsyWar the modern public relations machine performs two vital functions in maintaining the stability of our current capitalist system. The first addresses chronic overproduction. One of the main flaws of capitalism is that once a population’s basic needs are met, the need for continuing production ceases. Our ruling elite could have addressed overproduction by reducing work hours and increasing wages (as they have recently done in Sweden*), but this would have hurt profits. Instead, under the guidance of Edward Bernays (known as the father of public relations) they ramped up consumption by bombarding the masses with pro-consumption propaganda deliberately playing on their psychological insecurities.

The second major role played by modern public relations is to “manufacture consent” of the governed to their overall powerlessness and passivity. Manufacturing consent is a term coined by journalist (and former government intelligence/propaganda agent) Walter Lippmann. It was Lippman’s view that the majority of Americans are meddlesome outsiders who are totally incompetent to govern themselves.

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*In October, Sweden announced they were moving to a six-hour work day to improve productivity and improve work-life balance Sweden introduces 6 hour work day

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.

The Robber Barons Behind Neoclassical Economics

John D Rockefeller

Classical Economics as a Stratagem Against Henry George (free link)

By Mason Gaffney (2007)

Book Review-Part II

(In Part I, I discuss how Henry George’s work inspired the Populist and Progressive movements of the early 1900s and how the corporate elite struck back by inventing a new type of economics for the rich, called neoclassical economics.)

Who Paid for Neoclassical Economics to Take Over American Universities?

Gaffney’s book traces the phenomenal public support Georgism enjoyed before the tenets of neoclassical economics took hold in American universities. In addition to inspiring the Populist and Progressive movements, an LVT to fund irrigation projects in California’s Central Valley made California the top producing farm state. In 1916 the first federal income tax law was introduced by Georgist members of Congress (Henry George Jr and Warren Bailey) and included virtually no tax on wages. In 1934 Georgist Upton Sinclair was almost elected governor of California.

Gaffney also identifies the robber barons whose fortunes financed the economics departments of the major universities who went on to substitute neooclassical economics for classical economic theory. At the top of this list were

• Ezra Cornell (owner of both Western Union and Associated Press) – founder of Cornell University
• John D Rockefeller – helped found the University of Chicago and installed his cronies in its economics department.
• J. P Morgan – investment banker and early funder of Columbia University
• B&O Railroad – John Hopkins University
• Southern Pacific Railroad – Stanford University

The final section of Gaffney’s book lays out the tragic economic, political, and social consequences of allowing the Red Scare and neoclassical economics to stifle America’s movement for a single Land Value Tax:

Economic Consequences

1. The corporate elite has privatized, or is privatizing, most of the public domain (including fisheries, the public airwaves, water, offshore oil and gas, and the right to clean air) without compensation to the public.
2. The rate of saving and capital formation continues to fall rapidly. This is the main reason there is no recovery. Although profits soar, corporations have no incentive to invest in expansion and jobs. Instead they invest their profits in real estate, derivatives, and commodities speculation.
3. American capital is decayed and obsolete. The US has lost much of its steel and auto industries. Power plants and oil refineries are ancient and polluting. Most public capital (infrastructure) is old and crumbling.
4. The number of American farms has fallen from 6 million in 1920 to 1 million in 2007.
5. The USA, once so self-sufficient, has grown dangerously dependent on importing raw materials and foreign manufacturers.
6. The US financial system is a shambles, supported only by loading trillions of dollars of bad debts onto the taxpayers.
7. Real wage rates have continued to fall since 1975,
8. Unemployment has risen to chronically high levels.
9. Inequality in wealth and income continues to increase rapidly.

Political Consequences

1. The corporate elite has nullified all the Progressive Era electoral reforms by pouring money into politics and “deep lobbying,” at all levels of government, including our institutions of higher learning and our public schools.
2. The corporate elite continue to pour ever more of our tax money into prisons.

Social Consequences

1. Homelessness has risen to new heights, in spite of decades of subsidies to home-building and, favorable tax treatment of owner-occupied homes
2. Hunger is rampant.
3. Street begging, once rare, is everywhere
4. Americans have experienced a sharp loss of community, honor, duty, loyalty and patriotism.
5. In the shadow world between crime and business there is now the vast, gray underground economy that includes tax evasion, tax avoidance, and drug-dealing.
6. The US which once led the world in nearly every endeavor, has fallen far behind in infant survival, in longevity, in literacy, in numeracy, in mental health.
7. American education no longer leads the world. Privatized education in the form of commercial TV has largely superseded public education.

photo credit: cliff1066™ via photopin cc