Muammar Gadaffi left a mixed legacy. His people were far better off than all the rest of Africa and most of the Arab world. But he was also a highly connected billionaire Freemason and Zionist, promoting a Gold backed all African currency, which clearly was a Money Power project.
Slowly but surely what was known to the initiated for a long time is becoming more and more mainstream: the return to the Gold Standard. Although it does not seem likely Paul will win the election, it’s far from ruled out either, so the return of the Banker’s favorite currency is very much on the agenda.
With the ascent of Ron Paul it has become very clear that the subversion of the Patriot movement through Austrian Economics and its Gold Standard is a far more serious threat than perhaps imagined. How did America’s Patriots lose its connection with their natural heritage from the Populists, calling for plentiful money?
It seems Ed Griffin might have more to do with it than we’d care to know.
It is no use introducing G. Edward Griffin. If you don’t know him, it’s highly unlikely you will be reading this. His influence on the ‘Truth/Patriot’ movement is hard to overestimate. He made a name for himself with his cancer analysis and Laetrile antidote. But his big break was ‘The Creature from Jekyll Island (1994)’, an expose on the Federal Reserve System.
Now, I don’t think I’m the only one that associates this book with Eustace Mullins’ ‘The Secrets of the Federal Reserve’. Mullins himself certainly did. And Mullins of course, was inspired and basically educated by the great Ezra Pound himself, who was then incarcerated in a mental asylum in Washington D.C.
So in this way by association I basically assumed Griffin would understand the basics of money and the Money Power’s control over it. At least the suggestion is created that Griffin is part of a tradition that has a very specific and concrete analysis of these matters.
It was only the last few years that I started to realize that Griffin, however, plugs a Gold Standard as the solution to what he considers the problem: the Federal Reserve Bank and its ‘fiat’ money.
And this is simply astonishing.
Ezra Pound was probably the greatest political commentator of the 20th century. He profoundly studied and explained the Money Power’s origins, ‘ethics’, methods, economics, sociological effects and of course its control over money.
And he didn’t call the Money Power ‘Fiat’, nor ‘Inflator’. He called her Usura.
Pound was very astute in his observations of money as a means of exchange and not a store of value. He proposed Social Credit. He also supported Gesell’s work.
And Gold? “The present war dates at least from the founding of the Bank of England at the end of the 17th century, 1694-8. Half a century later, the London usurocracy shut down on the issue of paper money by the Pennsylvania colony, A.D. 1750. This is not usually given prominence in the U.S. school histories. The 13 colonies rebelled, quite successfully, 26 years later, A.D. 1776.” According to Pound, it was the money issue (above all) that united the Allies during the second 20th-century war against Germany: “Gold. Nothing else uniting the three governments, England, Russia, United States of America. That is the interest–gold, usury, debt, monopoly, class interest, and possibly gross indifference and contempt for humanity.”
And elsewhere: “Gold is a coward. Gold is not the backbone of nations. It is their ruin. A coward, at the first breath of danger gold flows away, gold flows out of the country.”
That is the real face of Gold as Pound saw it and how right he was.
Pound, evidently, had no problems seeing the self evident: that the Gold Standards of the past and most certainly of modern history, beginning in Amsterdam, were banker operations.
Neither had Eustace Mullins, who left very little to guess in his book:
“The international gold dealings of the Federal Reserve System, and its active support in helping the League of Nations to force all the nations of Europe and South America back on the gold standard for the benefit of international gold merchants like Eugene Meyer, Jr. and Albert Strauss, is best demonstrated by a classic incident, the sterling credit of 1925.
J.E. Darling wrote, in the English periodical, “Spectator”, on January 10, 1925 that:
“Obviously, it is of the first importance to the United States to induce England to resume the gold standard as early as possible. An American controlled Gold Standard, which must inevitably result in the United States becoming the world’s supreme financial power, makes England a tributary and satellite, and New York the world’s financial centre.”
Mr. Darling fails to point out that the American people have as little to do with this as the British people, and that resumption of the gold standard by Britain would benefit only that small group of international gold merchants who own the world’s gold. No wonder that “Banker’s Magazine” gleefully remarked in July, 1925 that:
“The outstanding event of the past half year in the banking world was the restoration of the gold standard.””
So where the currently popular notion comes from that Gold is feared by the Bankers is really very hard to understand. It was certainly not the opinion of Mullins or Pound.
Of course, neither Mullins nor Pound are saints whose stories we should accept at face value. But it is strange that Griffin is associated with them. Because he clearly vehemently disagrees with both his forebears.
Griffin on Gold
On his website Griffin addresses a number of questions about his position on Gold. They are arranged in a Q & A. Let’s have a look at them.
We will not go into the stuff we already discussed with Gary North and the Daily Bell, but Griffin mentions a few more typical pro Gold arguments and we’ll deconstruct them here.
1. On Social Credit
Let’s first see how Griffin responds to the question whether Social Credit would be a better monetary system. And let’s keep in mind that Ezra Pound favored this system.
Here’s what Griffin replies:
“Fiat money remains fiat money regardless of the formulas used to determine its quantity and distribution. Social credit systems are designed by men according to formulas drafted by men and enforced by men – all of which means the system is not fixed by supply and demand but by edict – and that is not fundamentally different from the present system. Eventually, if the rules for money creation CAN be changed, they WILL be changed to the advantage of those with the power to change them and to the disadvantage of everyone else.”
Now this is the typically incredibly lame clincher that Austrian Economics is famous for. ‘It’s Fiat Money so it’s bad’. They’ll mess up the volume!
And how about 700 billion on debt service per year for the Government Mr. Griffin? How about paying 150.000 dollars in interest over a 100.000 mortgage over 30 years? Ring a bell?
Again: the blatant ignoring of Interest. Usura.
In this case damnable because Griffin MUST know about interest, when considering his predecessors.
2. On the wonders of Gold
The question he replies to is fair enough:
‘If the Banks own all the Gold, why would we want a Gold-Backed Money System?’
Now that is a very, very good question indeed. Here’s Griffin’s reply:
“The Rothschilds do not own all the gold or even close to it. Most of it is still in the ground, in the ocean, and in private hoards. Even if they did own all of it that presently is in the form of bars, that would just drive up the price and stimulate gold mining so that new supplies would quickly come into production – as now is happening around the world. When the price hits several thousands of dollars per ounce, it will be profitable to extract it from the oceans, and there is a limitless supply from that source. It’s just a question of the natural balance between supply and demand – without a committee of politicians and bankers drafting a magic formula and using coercion to redirect human resources.
Bankers may hoard gold (because they understand its value more than most people) but they have always done everything possible to prevent a gold-backed currency. If they wanted it, they could have had it long ago, but (as you may have noticed) they always have worked against it. Why is that? It’s because they can acquire far more wealth by expanding the money supply at will and collecting interest on money created out of nothing than they can by having limits on their money supply and collecting interest on a much smaller amount of gold-backed loans. Bankers love to possess gold but they hate a gold-backed currency because that limits their money supply and, thereby, limits the volume of loans.
Any system other than precious metals is dependent on human decree and manipulation. It must inevitably end up no different than any other fiat money. I am familiar with the social-credit scheme and find it lacking in merit. It is a social engineer’s fantasy. It does not line up with human nature.
Gold has always worked well as a monetary base throughout history. It can’t be improved upon. We must not fall for the line about gold being just a pretty metal, etc. It has intrinsic value even if not used for money, it does not deteriorate, it can be divided into small units and recombined again if necessary, it is scarce so it has great value in a small space, and, best of all, it can be precisely measured for purity and weight, which allows for units that are beyond human judgment and human manipulation. It is the perfect money.”
Let’s go through this point for point:
“The Rothschilds do not own all the gold or even close to it. Most of it is still in the ground, in the ocean, and in private hoards.”
Now this is a completely unprovable statement. It is just as unprovable as the idea that they DO own it all. However, since the Rothschilds CLEARLY owned the Gold Market during the 19th century, it is at least a very serious possibility that they still do today. And considering the all importance of the control of the money supply it should be completely self evident that we should not take the risk.
Even Bitcoin is better than Gold: at least we know where these Units are. We don’t know where the Gold is, so we don’t know what the Volume is, and whether someone could manipulate it.
Therefore the rationale for Gold, stable Volume, does not stand: we simply cannot know whether it can be inflated and/or deflated.
Griffin himself seems to understand his treading on quicksand, because he continues:
“Even if they did own all of it that presently is in the form of bars, that would just drive up the price and stimulate gold mining so that new supplies would quickly come into production – as now is happening around the world. When the price hits several thousands of dollars per ounce, it will be profitable to extract it from the oceans, and there is a limitless supply from that source. It’s just a question of the natural balance between supply and demand – without a committee of politicians and bankers drafting a magic formula and using coercion to redirect human resources.”
Suggesting we could break a Rothschild Monopoly if it were real.
But Ed: who do you think controls the Gold Mines?
Cooperative Unions of Sovereign Individuals? 6 Billion wide awake Citizens of the World? The White Brotherhood? Ben Fulford’s Friends?
Or perhaps the Usual Suspects?
And it’s even worse. We are supposed to go Gold because its volume cannot be increased. But if we need more we can dig it up?
Huh? What kind of logic is this?
And last: the notion that rising prices would force Gold out of hoarding. The Daily Bell is also known for spouting this ridiculous nonsense: a Monopolist doesn’t surrender his stash when the price is right! He just lets the market set the maximum price it can bear and then proceeds to rip us all off for ever at that price!
So no, there is no free market for Gold. Rothschild DOES own a decisive stake in the World’s reserves. And rising prices due to scarcity is his wet dream: he can continue his monopoly pricing operation.
It’s just incredibly upsetting and annoying that we even need to have this conversation.
Then this:
“Bankers may hoard gold (because they understand its value more than most people) but they have always done everything possible to prevent a gold-backed currency.”
This is such a blatant lie. Are we to believe that Ed Griffin did not read Eustace Mullins? Just read Mullins’ quote above. His entire book radiates an absolute disgust for a Gold Standard. Mullins time and again explains it’s a banker operation.
I can understand people reading Griffin and ignorantly touting this lie all over the Blogosphere.
But Griffin is responsible for this obfuscation of the Truth. For this clearly blatant and well considered try to extinguish Mullins’ and Pound’s message from the Truth Movement.
“If they wanted it, they could have had it long ago, but (as you may have noticed) they always have worked against it.”
Again lying. And adding another lie: they could have had it long ago.
They had it. The reason they lost it, is because the Great Depression was SO bad through artificially deflated volume WHILE ON A GOLD STANDARD, that populists in both Europe and America finally managed to force their elites to dump the Gold Standard. THAT’s what happened in the thirties.
However, they were compensated for their loss by a new monopoly, based on the printing press. In Europe, anyway, because the Dollar remained redeemable for Gold under Bretton Woods, although not for American Citizens and only in international trade.
“Bankers love to possess gold but they hate a gold-backed currency because that limits their money supply and, thereby, limits the volume of loans.“
Another example of idiotic ‘logic’. What does the size of the Money Supply matter?? Even if we would have only ONE ounce of Gold, it would suit them fine. For the reason that is always explained so beautifully by the Austrians themselves: We simply divide the Gold through all the money there is, and that’s what the one ounce will be worth. We then divide the Gold through trillion and use these small nuggets as backing for the notes that will circulate.
It is completely irrelevant how large the size of the money supply is. What matters is who owns and controls it. So he can slap interest on it.
Griffin also makes the point that bankers want to inflate the money supply because that will make them more money.
Nonsense! Bankers are interested in their share of the whole, not in nominal profits. They will prefer a billion which is half of the total over a trillion which is only a quarter of the total.
They are willing to let the total pie shrink, if they get a larger percentage of what remains.
That’s why Bankers love deflation: it shrinks the total because it destroys economic growth, leaving less for us and increasing their share of the total.
Griffin ends with a love song comprised of erroneous and or unprovable statements quite typical of Goldbugs:
“Gold has always worked well as a monetary base throughout history. It can’t be improved upon. We must not fall for the line about gold being just a pretty metal, etc. It has intrinsic value even if not used for money, it does not deteriorate, it can be divided into small units and recombined again if necessary, it is scarce so it has great value in a small space, and, best of all, it can be precisely measured for purity and weight, which allows for units that are beyond human judgment and human manipulation. It is the perfect money.”
Gold has not always worked well as money. That’s why there was almost revolution in the thirties and the elite dumped it to save their asses. That’s why the colonists went to war with Britain in 1776, because Britain’s Gold Standard was impoverishing the colonies, which had thrived under their own scrip.
That’s why Caesar ended fiat money that brought the Roman Republic to Hegemony, when he perpetrated his Plutocracy sponsored coup in 44 BC. He introduced a Gold Standard and the newly formed Empire started Rome’s decline.
That’s why millions upon millions of desperate Europeans allowed themselves to be forced from the land they inherited through generation upon generation and left for the sweatshops in the cities: because scarce Gold forced upon them by the emerging Central Banks destroyed their ancient fiat currency based economies.
That’s why Bryan so brilliantly exclaimed: “Having behind us the commercial interests and the laboring interests and all the toiling masses, we shall answer their demands for a gold standard by saying to them, you shall not press down upon the brow of labor this crown of thorns. You shall not crucify mankind upon a cross of gold.“
Many Problems, One Source
The problem is that the enemy is everywhere. GMO ‘foods’, Pharmacide, Big Oil, Empire, Feminism, Global Warming, Environmental Destruction, Famine, DU weapons, left wing radicals, right wing radicals, Consumerism, the coming Iran War and WW3, Pornography, Television and other Mass Media.
Each of these represent a major threat. As a result everybody attacking one or more of these outrages is welcomed in the Alternative Media as a valiant knight fighting Power.
But we must understand that behind all these phenomenona there is one source: the Money Power.
And the Money Power rules through control over the Money Supply. It uses this control to enslave us with Interest first and foremost, but certainly also through the boom/bust cycle.
All issues must be addressed, but they cannot be addressed before we get it right concerning the money supply!
How are we going to finance green energy, healthy food and 21st century architecture? Do you really believe going to a bank for some interest bearing credit is going to work out?
No! We need Trillions of interest free capital to clear up this mess.
The Money Power rules through control of the money supply. It enslaves us with Interest and the boom/bust cycle. We cannot allow the Truth Movement to be hijacked by change agents who make moot points about cancer and like looking a hero by exposing chemtrailing in 2010 when even the UN is already admitting large scale terra forming and Geo Engineering.
We must not fall for the idea that ‘My enemy’s enemy is my friend’.
Not so! The Money Power is well known for organizing its own opposition.
Money is All Important!
People that hide behind credible information about cancer but in the mean time plug a Gold Standard, subverting the legacy of Pound and his pupil Mullins, should not be taken seriously!
Conclusion
We have cooperated with Austrian Economics because they hate the FED, abusive Government, Fractional Reserve Banking and inflation.
But in the final analysis these are ALL red herrings. The FED is not the problem but a symptom. The Money Power does not care about the FED. It is ready to dump this vehicle. As long as it controls its successor! And it will, because its successor will oversee a Gold Standard.
Inflation is way overrated and absolutely the lesser evil compared to Deflation. Deflation comes with economic stagnation and decline, inflation is associated with economic growth.
Deflation is good for creditors, inflation good for debtors.
Abusive Government is a result of it being subverted by the Money Power. But the Money Power fears Government, because it can be liberated by the Nation to which it belongs. That’s why they want their World Government, that will know no national affiliation and will be of their making only.
Considering the horrible damage done by the Austrian Economics Mind Control operation, as witnessed by Ron Paul’s ascent, it will no longer do to see them as allies against the Powers that Be.
Ed Griffin is a particularly nasty cookie, as he clearly purposefully tries to obscure the crucial messages of Pound and Mullins. Knowing the Money Power there is every reason to suggest that this is the main reason Ed Griffin exists and why we all know about him.
Related:
Austrian Economics still is ‘Jewish’ Economics
The Ron Paul Challenge: 10 Reasons the Alternative Media is Failing this Test
What Gary North is not telling you about Interest
Discussing Gold and Interest with the Daily Bell
Faux Economics
The main reason why interest slavery goes largely unnoticed is because most of what we pay is invisible: it is included in prices. Producers cannot avoid capital costs and must pass these on to consumers.
It has been established that 45% of prices we pay are for interest on business loans or other capital costs. No less than 50% of taxes we pay go to servicing the National Debt and capital costs included in prices the Government pays. So what does the budget of a typical interest slave look like?
Here’s one from a young man, 31 years old, living in North Western Europe and working as a civil servant, making €37,200 per year. He has bought his own apartment a few years ago, so most of it is still property of the bank. He has a €10,000 credit line which he has used to decorate his place.
His monthly gross income is €3,100, of which €1,000 goes to income tax and other levies. Of this money, €500 is lost to interest on the National Debt and capital costs included in prices the Government pays.
His net income is €2,100.
Percentages differ per expenditure, depending on the capital intensity of the industry involved. The percentages in the left column are the fractions of the prices that are lost to interest.
So let’s see what his budget looks like:
| Spent | VAT | Excluding VAT | VAT lost to interest | amount lost to capital costs excl. VAT | |
| Mortgage, 100% | 450 | 0% | 450 | 0 | 450 |
| Energy, 45% | 100 | 30% | 70 | 15 | 31.5 |
| Food, 25% | 400 | 6% | 376 | 12 | 94 |
| Internet/Telecom, 50% | 100 | 19% | 81 | 9.5 | 40.5 |
| Interest payments credit, 100% | 100 | 0% | 100 | 0 | 100 |
| savings | 100 | 0% | 100 | 0 | 0 |
| Going out, 30% | 500 | 19% | 405 | 47.5 | 121.5 |
| Clothing, 30% | 100 | 19% | 81 | 9.5 | 24.3 |
| Transportation, 50% | 100 | 6% | 94 | 3 | 47 |
| Various, 45% | 150 | 19% | 121.5 | 14.25 | 54.68 |
| Totals | 2100 | 110.75 | 963.48 | ||
| VAT + Income Tax | 1221,50 | ||||
| Of which Interest | 610,75 | ||||
| Lost to Interest | 1574,23 |
Analysis:
- An astounding €1574,23 (610,75 + 963,48) of a monthly gross €3100,- income is lost to interest!
- Taxation (VAT + Income Tax) is €1221,50, but half of this, about €610,- is lost to interest the Government pays.
- Taxation (corrected for interest) + Interest takes away an incredible 75% of the disposable income.
- This example shows someone with a reasonable income, but a little less than zero net assets. This is quite common throughout the West: 50% of Americans have zero net assets or less.
- Had he rented a place instead of buying his own apartment, he would not have been better off: 75% of the rent we pay is compensation for the landlord’s capital costs.
- All percentages where available are taken from Margrit Kennedy, in the case of clothing and Telecom they have been estimated.
So while it is natural to complain of high taxes, it transpires that no less than half of taxes we pay is lost to interest. We would pay 50% less tax were there no cost for capital.
Worse still: approximately half our own disposable income is lost to interest, on top of the taxes we pay. Combined interest + tax takes 75% of our gross income.
Amazingly, a Medieval serf typically payed only 10% of his gross income to his ‘Lord’. Interest was unheard of then.
Would we end interest, our interest slave’s disposable income would triple: He would be left paying only 25% in taxes, leaving 75% for himself.
The only way we can escape being net payers of interest is by having assets ourselves. But this forces us to exploit others, to compensate for, instead of ending, being exploited ourselves. In this way the Money Power’s methods have become acceptable to the mainstream, whereas Usury has been a taboo for most of human history.
To add insult to injury: all the interest ends up with the rich: after all, they have money to lend, while the poor borrow. Margrit Kennedy also established that 80% of the population pays interest to the richest 10%. But also within the top 10% bracket the redistribution of wealth continues: the ‘poorer’ 8% pay interest to the richest 1% and eventually all ends up with the Plutocracy.
Conclusion
The Money Power has subverted almost every Government on the Globe. It has forced them to surrender their currency monopoly to the Money Power’s Central Banks. They use this monopoly to enslave both Government and us with interest and the boom/bust cycle.
It cares not whether her monopoly is paper or metal based: it owns all Gold and came to power through the Gold Standard. Gold as currency is interest bearing.
But the Government can be reconquered by the People and that’s why they want to consolidate their power in World Government and World Currency, both of which will know no national affiliation.
Our own goal must be to have interest free money. Both by reconquering Government and forcing it to end the Central Bank monopoly and by creating independent currencies, based on interest free credit. Modern Mutual Credit will destroy Federal Reserve Notes and the Euro in the market place.
World Government and Government tyranny are both Money Power projects and to defeat them an interest free money supply is a ‘sine qua non’.
Related:
On Interest
The Goal of Monetary Reform
Financial Warfare 2012: Boycott All Banks!
We can consider ourselves lucky Ron Paul is not likely to win the elections. His economics are a disaster and the Alternative Media’s credibility would suffer a horrible blow from bringing him to power. Just think of the field day the Main Stream Media would have explaining they warned us of Paul when millions take to the street to resist his destruction of the economy with his 1 trillion austerity drive.
How could our best and brightest be suckered in to supporting a Freemason wanting a Gold Standard with an austerity program the IMF would tout as an example?
The Credit Crunch is not some natural phenomenon but an all out assault by the Money Power. The solution is simple: quit their banks. To say this is irresponsible as it will worsen the crunch is ridiculous: propping up a system that only exists to enslave us is irresponsible, not disconnecting from it.
We have everything we need to shut this system down and start over in a realistic and equitable way.
We must force the hand of Government and Banking. They will never stop anyway and that’s why a Boycott is the only real way forward.
After decades of inflation and fears of Ben ‘Helicopter’ Bernanke induced hyperinflation it is probably not surprising that a wearying public is starting to wonder whether deflation would be the lesser evil.
But not only is deflation (austerity) a disaster, we are being set up to believe it’s the only alternative to rampant inflation.
It is not and it is time we bury this lie before it starts a life of its own.
Bitcoin has already shocked both the establishment and the blogosphere.
A privately controlled currency, completely independent from Government backing.
Bitcoin leads the way in many respects, but is ultimately flawed: it was built on false premises and does not address the key issue, interest.
I’m reposting this because at this point concrete solutions are crucial to the debate. When I published it first it was probably a little abstract for most, but perhaps now it is a better time to discuss these fundamental issues of Complementary Currencies.
At the related links below, the other important articles on Mutual Credit are made available.
Modern complementary currencies either allow for interest free credit, or for convertibility to euro or dollar. This explains to a large extent why interest free credit is not the norm and why Banks still exist. To compete with banking currencies in the marketplace, interest free credit (Mutual Credit) must be available in convertible form. Fortunately, the technology for this has become available.
This is the key to a new era.
At this point there are two major methods in operation for the creation of interest free ‘complementary currencies’. That is, units created by private parties instead of the State.
There are Mutual Credit based units, as used in barters worldwide, but also LETS. And there are the euro (or dollar) backed units. The US Berkshares and the German Regional Currencies are designed this way.
Each have their particular strengths: Mutual Credit allows interest free credit. Euro/dollar backed units allow convertibility which is equally important.
However, and this is the main challenge for interest free currency at this point, there are no Mutual Credit based units which are also convertible. And the euro/dollar backed units don’t allow for interest free credit.
So each has a major trump, but neither has both.
This is one of the key reasons why private interest free currency has never been able to really compete with banking units.
We have already discussed Mutual Credit, so let’s also get a basic grasp of how euro/dollar backed units are designed.
It is equally simple.
Designing Regional Currencies
1. 1 RC = 1 euro/dollar.
I.e., they use the accounting function of the dominant currency. This comes in handy for two reasons.
First, it allows price transparency. If the RC is allowed to ‘float’ it means small transactions in shops involve calculations which may change per day. Your bread will cost $2/3RC one day and $2/2,5RC the next.
It is also minimizes complications for the firm’s bookkeeping: they don’t need a second ledger and can just add up their income in RC with their dollar/euro income and pay taxes in dollar/euro over the total.
2. People can buy them with a discount, usually for around 95 cents.
It can vary from RC to RC: some will offer them for 90 cents, others for 97. But let’s stick with 95 cents here. This means buyers of the RC pay 95 cents for 1 dollar/euro of purchasing power. This gives a useful incentive to people to pay with the RC.
Businesses can sell their RCs back to its supplier for the same price: they get 95 cents back for 1 RC. This amounts to a small loss. They accepted the RC at face value (1 RC = 1 dollar/euro). But of course this invites them to try and spend the RC themselves, instead of converting back to dollar/euro and in effect taking the RC out of circulation.
3. Euro/dollar backing allows convertibility……
Because the RC is sold for dollar/euro, with a discount, there is always 95 cents for every RC in circulation. This is how convertibility is created.
4. …but it destroys interest free credit.
There can never be more RCs in circulation than the issuing organization has dollar/euro in the bank as backing. No RCs therefore can be lent out, not interest free, anyway.
This is the key limitation of this system. The Chiemgauer, which is the largest RC in Germany, circulating in and around Rosenheim, near Munchen, is a good example. They are successful, see turnover grow with 100% per annum. They cooperate with an Anthroposophical bank (GLS Bank), allowing them to offer bankaccounts in Chiemgauer. But they can’t offer interest free credit in Chiemgauer. In fact, they are one of the very few offering credit at all, but at a fairly steep price of 7%.
5. Demurrage
Still, RCs can be successful in dampening the interest drain to the plutocracy, because they do bring down capital costs. Not by interest free credit, but by making better use of available money by letting it circulate quicker.
A dollar/euro may go round 8 to 10 times a year, facilitating a total of 8 to 10 dollar/euro worth of trade.
Demurrage is a penalty on holding cash: typically about 12% per year. A demurrage will facilitate a massive increase in velocity of circulation. The famous Wörgl experiment saw its units circulate up to 130 times during the 13 months it was in operation.
This means that with the same amount of cash op to 13 times more trade can be financed, in effect slashing capital costs by more than 90%.
Now that we understand the classic method for creating euro/dollar convertibility, we can see why Mutual Credit units are not convertible: they are not backed by euro/dollar so the issuing organization does not have the cash to convert their units.
That’s why, at this point, we can have either convertibility or interest free credit but not both.
Convertibility for Mutual Credit
The problem of convertibility has haunted Mutual Credit (MC) ever since it was invented. But is it a problem? Some within the interest free community argue it isn’t. Even the sages of WIR claim lack of convertibility is not a problem and even a strength: they claim convertibility would lessen the incentive to keep business within the network.
There is some truth in that, but the medicine is worse than the disease. Because lack of convertibility forces firms to closely monitor how much of the MC units they can accept. They can accept no more than it can spend usefully in the network. More successful players in the network will at some point be forced to stop accepting the currency, until it has spent its cash reserves.
This is the basic bottleneck that all MC facilities face: the more successful players in the network have more MC income than they can plausibly spend, forcing them to limit their acceptance. Particularly prospective participants can be difficult to convince that partaking in the MC will give them business that is lucrative to them, exactly for this reason.
So making the MC unit convertible will solve that: it greatly increases the ‘liquidity’ (what it will buy) of the unit and its acceptance by the business world.
But with the advent of the internet, this problem can be easily solved, and the way forward has been shown by Bitcoin: an on-line marketplace, where participants can buy and sell MC units. Just like a FOREX exchange.
To be honest: Bitcoin beat me to it, because this is also how the Gelre will allow convertibility. But of course, Bitcoin is not credit based and although a very powerful experiment, it will prove not to be very important in the marketplace.
So what does such an on-line marketplace look like? Point for point:
1. The Mutual Credit Facility (MCF) offers the on-line trading facility.
2. It always offers 1 MC for 95 cents. In this way, businesses offering their excess MC can’t ask for more. The incentive for the public to buy them is maintained. This effectively tops the free market price for the MC at 95 cents and stops speculation or other destabilizing and unwarranted activities. Convertibility exists for one reason only: improving the scope and power of the MC, to service the public and free trade, not all sorts of silly ‘capitalist’ games.
3. The MC uses the income it obtains from selling MCs on the market place to create a ‘stabilization fund’.
MCs coming into circulation by selling them at the marketplace are not credit based. So in effect MC is morphing into a hybrid: some units are euro/dollar backed, although most still will be simply credit based.
The income from selling MCs should not be seen as income for the MCF. But as backing for outstanding MCs. And used to buy back MCs. The ‘stabilization fund’ can be used to buy back MCs especially when there is excess supply on the on-line marketplace, alleviating downward price pressures.
4. The MCs rate will be always very close to 95 cents
For several reasons. First, the agreement is that 1 MC = 1 dollar/euro. Firms must accept them one on one. Because the MCs purchasing power is always 1 dollar/euro for the consumer, the lower the rate for them at the marketplace, the higher the demand will become, with a strongly stabilizing effect.
Secondly, MCs in circulation are mostly backed by the promise to pay by debtors. These debtors are continuously paying off their debt and they need to obtain MC units for that. Either by selling their own goods and services, or buying MCs at the on-line marketplace.
Thirdly, the stabilization fund can intervene, if sudden supply shocks occur.
Finally, if the MCF goes bust (which can happen in the case of mismanagement), all outstanding MCs will be taken out of circulation by paying off outstanding debts. This can only be done by buying up all outstanding MCs via the marketplace. So everybody is more or less guaranteed to get their money back.
5. In this way a real free market price for the MC can be established
And this has many advantages. It allows for transparency and real balance between supply and demand. It can stabilize supply and demand by rising or declining prices. It also provides real information about the volume in circulation: if there is too much in circulation, chances are there will be too many MCs being offered for sale, with downward pressures on its rate. This would suggest there is too much outstanding credit, which can be easily corrected. It gives the public and the users of the money reliable information about the all over effectiveness and health of the MC.
With enough liquidity in the market it will also show what rate is really necessary. As said earlier, MCs (and Regional Currencies) are sold with a discount, varying from 3% to up to 10%. There is no real free market information available on what is the optimal percentage. And this will also vary from system to system, depending on local circumstances. The fact is: nobody knows how high this discount should be and the free market can answer this question.
6. In this way, convertibility to other free market units is also established
And this will be important, when more and more MCF’s and RCs become available.
So this is how convertibility can be obtained. Mutual Credit buying euro or other free market units. Just imagine: we’ll have printing presses, just like Ben Bernanke, and we will print money able to buy dollars, euros and Gold.
Babylon demystified. That’s why we are in this business to begin with.
Convertible Mutual Credit will finance our dreams and liberate us from usurious usurpation.
We will use it to buy back the world.
Don’t withhold your questions from us! I will answer them in the comments and we will all learn from them!
More:
Mutual Credit, the Astonishingly Simple Truth about Money Creation
Concepts of the Gelre, or: What is ‘High Powered Working Capital’?
Mutual Credit and Inflation
The Goal of Monetary Reform
The sucking up of wealth goes ever higher up the ladder.
It is not just the poorest 80% paying interest to the richest 10%.
Of the richest 10%, those gaining from the interest wealth transfer, the poorest 8% pay more than they gain from interest to the first 1%. And within the 1% the poorest 0.8% pay the richest 0.1%.
We know of the calculation that if the Rothschilds owned $50 billion in 1850 and made 5% per year on that, they would have $150 Trillion now.
Since it was widely reckoned that they controlled half the world’s economy at the time of the First World War, that sounds about right.
What Government on Earth can compare to such a power base? Is it fair to say Government is the problem, when it is so totally dominated?
Government is a problem.
The Money Power is the problem.
And it rules through Usury.
What does it matter to explain that we pay interest because of the fact that the lender can’t use the money while we do?
Of course the loan shark will have a good explanation why we should go along.
The World’s poorest 80% pay between 5 and 10 Trillion per year to the richest 10%.
In the face of that fact only one question remains: what are we going to do about it?
I will give you interest free credit if you will give me the same.
We’ll call it Mutual Credit.
More:
Daily Bell: wrapping up
Discussing Gold and Interest with the Daily Bell
The Goal of Monetary Reform
On Interest
Mutual Credit, the Astonishingly Simple Truth about Money Creation
Disconnecting from the System