CGB Understanding Money Booklet Rev 3

8/3/2019 CGB Understanding Money Booklet Rev 3

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This is still a draft, editorial suggestions welcome at:[email protected]

Campaign for aCommon Good EconomyRealDemocracy. RealMoney. RealPower.

The tangible benefits of

UNDERSTANDINGMONEY

&

BANKINGfor theCOMMON GOOD

By

John G Root Jr

This work belongs to the creative commons and may be reproduced and distributed by any means as long as it is not

altered and is properly attributed with title and author and johngrootjr.blogspot.com. December 5, 2011

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UNDERSTANDING MONEY

"All the perplexities, confusion and distress in America arise not from defects in their Constitution orConfederation, nor from want of honor or virtue, so much as downright ignorance of the nature of coin, credit,and circulation."

John Adams (from a 1787 letter to Thomas Jefferson)1

This quote is the theme of this campaign. We need to understand money!

And I sincerely believe, with you, that banking establishments are more dangerous than standingarmies; and that the principle of spending money to be paid by posterity, under the name of funding, is

but swindling futurity on a large scale. 2"Bank-paper must be suppressed, and the circulatingmedium must be restored to the nation to whom it belongs."3

Thomas Jefferson

"The study of money, above all other fields in economics, is one in which complexity is used to disguise

truth or to evade truth, not to reveal it. The process by which banks create money is so simple the mind

is repelled. With something so important, a deeper mystery seems only decent."John Kenneth Galbraith4

Is the truth evaded and disguised? Are banking establishments more dangerous than standingarmies? Is there a deeper mystery? Is the monetary system fundamentally flawed? Is there anotherway to understand money?

When we understand money, we will know that we, as a society, or community, can have

all the money needed to pay for everything we consider worthwhile.

When we understand money, we will know that money is an accounting system.

Once we understand money, we will know that it is the goods and services that are valuable andnot the money. The money represents the valuable goods and services. Money makes themcommensurate so that we can exchange them. Money is the means of exchange.

When we understand money, we will know that there are only natural limits, such as peoplewith a desire to do something, the capability to do it, and the availability of the natural resources withwhich to do it.

When we understand money, we will know that any shortage of money is artificial.There can't be too many people or too little work to be done, only a shortage of money with which to

pay for it. Benjamin Franklin5

There are people capable of and willing to do the work people who have the skills and the knowledge

to achieve these things. Our problems are not caused by a scarcity of people or ideas. There are even

organizations who have the skills to hire the people and put them to work. This could all be done.

What is missing? Everyone is waiting for money!

Bernard Lietaer The Future of Money

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Once we understand the monetary system, we will know that we have only credit and nomoney! And we will understand how determining of society that is.

On January 24, 1939, Robert H. Hemphill, credit Manager of the Federal Reserve Bank ofAtlanta, stated: "If all the bank loans were paid no one would have a bank deposit and there wouldnot be a dollar of coin or currency in circulation. This is a staggering thought. We are completelydependent on the commercial banks. Someone has to borrow every dollar we have in circulation, cash

or credit. If the banks create ample synthetic money we are prosperous: if not, we starve. We are

absolutely without a permanent money system. When one gets a complete grasp of the picture thetragic absurdity of our hopeless position is almost incredible, but there it is. It (the banking problem) is

the most important subject intelligent persons can investigate and reflect upon. It is so important that

our present civilization may collapse unless it becomes widely understood and the defects remediedvery soon."6 (That all our money is borrowed is explained in detail later on.)

When we understand money, we will know that bubbles and crashes, recessions and depressionsare entirely engineered by the banking system through expanding and contracting the money supplywith easy or tight credit.

"When the President signs this act, the invisible government by the money power -- proven toexist by the Monetary Trust Investigation7-- will be legalized. The new law will create inflation

whenever the trusts want inflation. From now on, depressions will be scientifically created."

Congressman Charles A. Lindbergh Sr. , 1913 regarding the powers of the Federal Reserve System8.

Once we understand money, we will know that inflation is caused by the banking system onpurpose and on rare occasions deflation is as well.

"By this means government may secretly and unobserved, confiscate the wealth of the people, and not

one man in a million will detect the theft."

British Lord John Maynard Keynes (the father of 'Keynesian Economics' in his book The EconomicConsequences of the Peace)9

When we understand money, we will know that interest is a feature of the monetary system that

automatically transfers the wealth from the vast majority of us who pay more interest than we receiveto the very few who receive more interest than they pay.

Once we understand money, we will know why every country is in debt and to whom.

When we understand money, we will know that the U.S. and world monetary system iscontrolled by International Bankers for their benefit, and that it automatically transfers the wealth from

us to them.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create aworld system of financial control in private hands able to dominate the political system of each country

and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the

central banks of the world acting in concert, by secret agreements arrived at in frequent meetings andconferences. The apex of the systems was to be the Bank for International Settlements in Basel,

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Switzerland, a private bank owned and controlled by the world's central banks which were themselves

private corporations. Each central bank, in the hands of men like Montagu Morgan of the Bank of

England, Benjamin Strong of the New York Federal Reserve Bank, Charles Rist of the Bank of France,and Hjalmar Schacht of the Reichsbank, sought to dominate its government by its ability to control

Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the

country, and to influence cooperative politicians by subsequent economic rewards in the business

world."

Carrol Quigley Tragedy and Hope 1963 Bill Clinton's mentor at Georgetown University

Once we understand money, we will know the Banking Secret.

The modern banking system manufactures money out of nothing. The process is perhaps the

most astounding piece of sleight of hand that was ever invented.Banking was conceived in iniquity and born in sin. Bankers own the Earth. Take it away from

them, but leave them the power to create money, and with the flick of the pen they will create enough

money to buy it back again...Take this great power away from them and all great fortunes like mine will disappear, and they

ought to disappear, for then this would be a better and happier world to live in. But if you want to

continue to be slaves of the banks and pay the cost of your own slavery, then let bankers continue to

create money and control credit.

Sir Josiah Stamp, Director, Bank of England 1928-1941 (reputed to be the 2nd richest man in Britain atthe time) from a lecture he gave at the University of Texas10.

When we understand money, we will know that the deception is based on gold being money,and that when it is we suffer and when money is an accounting system we are prosperous.

Once we understand money, we will know that our well-being depends almost entirely on whoissues the currency. Who should issue the currency?

"We have, in this country, one of the most corrupt institutions the world has ever known. I referto the Federal Reserve Board. This evil institution has impoverished the people of the United States

and has practically bankrupted our government. It has done this through the corrupt practices of the

moneyed vultures who control it."

Congressman Louis T. McFadden in 1932 (Rep. Pa)11

When we understand money, we will know why Congress continually borrows more money andwhy the interest on the National Debt may soon require the entire proceeds of the taxes we pay.

Once we understand money we will know how absurd it is that whenever we seek to increasethe national wealth we also increase the national debt.

Did you know that about half the price you pay for things is interest?12

Did you know that banks do not lend you their money, but monetize your promise to pay?Did you know that if everyone repaid all their loans there would be no money?Did you know that the permanent money supply is the National Debt because, since the days of

Andrew Jackson, it has never been paid off. Do you expect it will ever be paid off?Did you know that almost all the popular assumptions about money, how it is created, and who

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controls it, are wrong?

SOVEREIGNTY

Throughout history the sovereign has always issued the currency. One can discover who thesovereign is by understanding the monetary system in a particular place and time. The issue ofsovereignty is of paramount importance in understanding money because money is so powerful inallowing one to shape the world in one's image. When Meyer Amschel Rothschild said: Permit meto issue the currency of a nation and I care not who makes its laws,13, he was expressing this insight.If historians would follow the money who financed whom we would have a very different pictureof how our society arose and how and why it continues as it does. This is the main fact which isobscure in conventional history and it has to do with the banking secret. You can discover the truth ofit by reviewing the recent bailout of 2009 in light of these insights: Wall Street Banks got themselvesin trouble by having the banking regulations repealed so they could pretend that bets were assets.When the bets went against them and they were bankrupt they told Congress to borrow enough moneyfrom them (initially $700 Billion now 1.5 to 3 Trillion) to give to them (to bail them out, or makethem solvent,) so that they could lend it back to us! Congress complied over the strenuous objection ofthe American people, with some polls showing the opposition to the bailout at 98%, and I haven't seena poll that was less than 67% opposition. The head of the Congressional Oversight Commission for theToxic Asset Relief Program, TARP, Elizabeth Warren, has said on major media that she can't find outwho got what and why,14and Bloomberg Financial News has tried to find out what the Federal Reservedid, and can't, because the Federal Reserve has never been audited and is under no obligation to revealwhat it does or why15. Who is in charge? The Wall Street banks and the Federal Reserve, or theCongress and the American people? Are we the sovereign? Are the Too Big To Fail Banks thehidden sovereign?

Was there a time when the people were sovereign and issued the currency? Since this is the crux of thematter let us look at two times in American history when the currency was issued debt and interest free.The first was during Colonial times and the following story about Benjamin Franklin illustrates thisvery nicely. The second time was when the Lincoln Administration issued Greenbacks.

BENJAMIN FRANKLIN

Colonial Scrip: Principles of a Fiat Paper Currency16

In the American Colonies there was a chronic shortage of gold and silver coins. However, thenative people would honor the gifts the colonists gave them, such as muskets and knives, horses anddomesticated animals, with wampum (shells strung together to form belts, bracelets, etc.), and thecolonists could spend that wampum with the Indians for food and pelts; and so wampum also becamean accepted form of money. In most of the colonies, wampum was legal tender and one could pay taxeswith it. What would become money generally was up in the air until Benjamin Franklin attended anIroquois Nation powwow when he was a young man. He was very inspired by the separation of powershe found in their governance, which was an inspiration for our republic. While he was there a brave

came into the camp laden down with wampum, which he proceeded to give to the chief who distributedit to all the chiefs of the tribes and clans. The chief recognized the question Ben Franklin had andexplained to him that in Indian culture wampum is not money, but is used to make flags and belts tocommemorate and remember all the events and gifts that are given during the year. Of course, therealways has to be enough wampum to make all the ceremonial momentos we use to honor our gifts toeach other. Ben Franklin realized in that instant that there always has to be enough money for all thetransactions the people want to make. He became a major advocate of fiat paper money, called

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Colonial Scrip, and attributed the prosperity the colonists enjoyed, to its use.When Franklin was in England representing the colonists he was dismayed to discover the

unemployment and poverty and alms houses and debtors prisons there. It was explained to him thatthere was a population explosion and too many people without enough work. He wrote: There isabundance in the Colonies, and peace is reigning on every border. It is difficult, and even impossible,to find a happier and more prosperous nation on all the surface of the globe. Comfort prevails in everyhome. The people, in general, keep the highest moral standards, and education is widely spread Wehave no poor houses in the Colonies; and if we had some, there would be nobody to put in them, sincethere is, in the Colonies, not a single unemployed person, neither beggars nor tramps.

This was not the case in England, which had the Bank of England and a debt-based monetarysystem in place and where debtors who could not afford to pay their debts were often thrown in jail.There was plenty of poverty in the streets of London and elsewhere. Here, Franklin explains thedifference between England and her colonies:

In the colonies, we issue our own paper money. It is called Colonial Scrip. We issue it in

proper proportion to make the goods pass easily from the producers to the consumers. In this manner,

creating ourselves our own paper money, we control its purchasing power and have no interest to payto anyone You see, a legitimate government can both spend and lend money into circulation, while

banks can only lend significant amounts of their promissory bank notes, for they can neither give away

nor spend but a tiny fraction of the money the people need. Thus, when your bankers here in England

place money in circulation, there is always a debt principal to be returned and usury to be paid. Theresult is that you have always too little credit in circulation to give the workers full employment. You do

not have too many workers, you have too little money in circulation, and that which circulates, all

bears the endless burden of unpayable debt and usury.

Soon enough, however, the Bank of England had Parliament impose restrictions on theColonies issuance of Colonial Scrip. The first law was enacted in 1751, with more restrictive measuresin place by 1763. Colonial Scrip became illegal tender, and the British Parliament declared that alltaxes could only be paid in coin. Poverty and unemployment began to plague the colonies just as it hadin England, because the operating medium had been cut in half and there were insufficient quantities ofmoney to pay for goods and work. Indeed, this was the cause of the Revolutionary War, and not theStamp Act or a tax on tea, as is taught in all history text books.

The Colonies would gladly have borne the little tax on tea and other matters had it not been the

poverty caused by the bad influence of the English bankers on the Parliament, which has caused in

the Colonies hatred of England and the Revolutionary War. Benjamin Franklin17

One of the first Acts of the Continental Congress was to issue Continentals as the currency ofthe Colonies. It was the issuing of the Continentals that gave tangible evidence that the Colonies wereunited, and Continentals financed the Revolution. What is not taught in conventional history is that theBritish counterfeited more than twice the amount (perhaps 8 times) authorized by the Congress andafter the War the currency lost its value until it was practically worthless.18 When it came time to writethe Constitution there was a general sense that coin was much more reliable than paper scrip and so the

relevant paragraph reads: Congress shall have the authority To coin Money, regulate the Valuethereof, and of foreign Coin, and fix the Standard of Weights and Measures;. To this day Congressissues the coins, debt free.

ANDREW JACKSON and the Battle for the Bank

Andrew Jackson ran for president with the slogan Andrew Jackson and no Bank. He vetoed therenewal of the Central Bank charter after declaring about the central bankers: You are a den of thieves

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and vipers and I will roust you out! America had no central bank, but private banks issued their owndebt based currency. The Government did not issue currency directly until Abraham Lincoln.

ABRAHAM LINCOLN

Abraham Lincoln on the subject of Constitutional Money; from an address to Congress in186519

Money is the creature of law and the creation of the original issue of money should bemaintained as the exclusive monopoly of national Government.

Money possesses no value to the State other than that given to it by circulation.Capital has its proper place and is entitled to every protection. The wages of men should be

recognized in the structure of and in the social order as more important than the wages of money.No duty is more imperative for the Government than the duty it owes the People to furnish them

with a sound and uniform currency, and of regulating the circulation of the medium of exchange so thatlabor will be protected from a vicious currency, and commerce will be facilitated by cheap and safeexchanges.

The available supply of Gold and Silver being wholly inadequate to permit the issuance of coinsof intrinsic value or paper currency convertible into coin in the volume required to serve the needs ofthe People, some other basis for the issue of currency must be developed, and some means other thanthat of convertibility into coin must be developed to prevent undue fluctuation in the value of papercurrency or any other substitute for money of intrinsic value that may come into use.

The monetary needs of increasing numbers of People advancing towards higher standards ofliving can and should be met by the Government. Such needs can be served by the issue of NationalCurrency and Credit through the operation of a National Banking system .The circulation of a mediumof exchange issued and backed by the Government can be properly regulated and redundancy of issueavoided by withdrawing from circulation such amounts as may be necessary by Taxation, Redeposit,and otherwise. Government has the power to regulate the currency and credit of the Nation.

Government should stand behind its currency and credit and the Bank deposits of the Nation.No individual should suffer a loss of money through depreciation or inflated currency or Bankbankruptcy.

Government, possessing the power to create and issue currency and credit as money andenjoying the right to withdraw both currency and credit from circulation by Taxation and otherwise,need not and should not borrow capital at interest as a means of financing Governmental work andpublic enterprise. The Government should create, issue, and circulate all the currency and credit neededto satisfy the spending power of the Government and the buying power of the consumers. The privilegeof creating and issuing money is not only the supreme prerogative of Government, but it is theGovernments greatest creative opportunity.

By the adoption of these principles the long felt want for a uniform medium will be satisfied.The taxpayers will be saved immense sums of interest, discounts, and exchanges. The financing of allpublic enterprise, the maintenance of stable Government and ordered progress, and the conduct of theTreasury will become matters of practical administration. The people can and will be furnished with a

currency as safe as their own Government. Money will cease to be master and become the servant ofhumanity. Democracy will rise superior to the money power.

There appeared in The London Times during the Civil War the following from Otto VonBismarck:

"If that mischievous financial policy, which had its origin in the North American Republic (thepublic issue of usury-free currency called Greenbacks) should become indurated down to a fixture, then

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that Government will furnish its own money without cost. It will pay off debts and be without a debt. Itwill have all the money necessary to carry on its commerce. It will become prosperous beyondprecedent in the history of the civilized governments of the world. The brains and wealth of allcountries will go to North America. That government must be destroyed or it will destroy everymonarchy on the globe."

In 1876, Bismarck explained further: "The division of the United States into federations ofequal force was decided long before the Civil War by the high financial powers of Europe. Thesebankers were afraid that the United States, if they remained in one block and as one nation, wouldattain economic and financial independence which would upset their financial dominance over theworld. The voice of the Rothschild's prevailed. They saw tremendous booty if they could substitute twofeeble democracies, indebted to the financiers, for the vigorous Republic which was practically self-providing. Therefore, they started their emissaries in order to exploit the question of slavery . . .Lincoln's personality surprised them. His being a candidate had not troubled them; they thought toeasily dupe a woodcutter. But Lincoln read their plots and understood that the South was not the worstfoe, but the financiers."

Lincoln agreed: "I have two great enemies, the southern army in front of me and the financialinstitutions in the rear. Of the two, the one in the rear is the greatest enemy."20 and

"As a result of the war, corporations have been enthroned and an era of corruption in high places willfollow, and the money power of the country will endeavor to prolong its reign by working upon theprejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed. Ifeel at this moment more anxiety for the safety of my country than ever before, even in the midst ofwar. God grant that my suspicions may prove groundless." : U.S. President Abraham Lincoln, Nov. 21,1864 - (letter to Col. William F. Elkins) - Ref: The Lincoln Encyclopedia, Archer H. Shaw (Macmillan,1950, NY)

After the success of the Greenbacks the Populists arose as a monetary reform movement, butthey ended up concentrating on establishing a silver standard, because silver was plentiful and gold wasscarce, and this culminated in the campaign of 1896.

WILLIAM JENNING BRYAN

The most famous speech in American political history was delivered by William Jennings Bryanon July 9, 1896, at the Democratic National Convention in Chicago. Two paragraphs contain the nub!

We say in our platform that we believe that the right to coin money and issue money is afunction of government. We believe it. We believe it is a part of sovereignty and can no more withsafety be delegated to private individuals than can the power to make penal statutes or levy laws fortaxation.

Mr. Jefferson, who was once regarded as good Democratic authority, seems to have a

different opinion from the gentleman who has addressed us on the part of the minority. Those who

are opposed to this proposition tell us that the issue of paper money is a function of the bank and

that the government ought to go out of the banking business. I stand with Jefferson rather than with

them, and tell them, as he did, that the issue of money is a function of the government and that the

banks should go out of the governing business.21

However, William Jennings Bryan was duped into supporting the Federal Reserve Act, because he waspersuaded that it represented a takeover of the private banks by the Federal Government.

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In this story about Edison and Ford we can see that there has been an awareness of the problem atvarious times since the establishment of the Federal Reserve System.

EDISON AND FORD

Henry Ford and the inventor Thomas Edison visited the Muscle Shoals nitrate and water powerprojects near Florence, Alabama. They used the opportunity to articulate at length upon their alternativemoney theories, which were published in 2 reports which appeared in The New York Times onDecember 4, 1921 and December 6, 1921.

Objecting to the fact that the Government planned, as usual, to raise the money by issuing bondswhich would be bought by the banking and non-banking sector -- which would then have to be paidback with money raised from taxes, and with interest added -- they proposed instead that theGovernment simply create the currency it required and spend it into society through this public project.

Thomas Edison made it plain in the following excerpt from The New York Times, December 6,1921 issue ("Ford Sees Wealth In Muscle Shoals"). Here, the reporter is quoting Edison:"That is to say, under the old way any time we wish to add to the national wealth we are compelled toadd to the national debt.

"Now, that is what Henry Ford wants to prevent. He thinks it is stupid, and so do I, that for theloan of $30,000,000 of their own money the people of the United States should be compelled to pay$66,000,000 -- that is what it amounts to, with interest. People who will not turn a shovelful of dirt norcontribute a pound of material will collect more money from the United States than will the people whosupply the material and do the work. That is the terrible thing about interest. In all our great bond issuesthe interest is always greater than the principal. All of the great public works cost more than twice theactual cost, on that account. Under the present system of doing business we simply add 120 to 150 percent, to the stated cost."But here is the point: If our nation can issue a dollar bond, it can issue a dollar bill. The element thatmakes the bond good makes the bill good. The difference between the bond and the bill is that the bondlets the money brokers collect twice the amount of the bond and an additional 20 per cent, whereas thecurrency pays nobody but those who directly contribute to Muscle Shoals in some useful way.

" ... if the Government issues currency, it provides itself with enough money to increase thenational wealth at Muscles Shoals without disturbing the business of the rest of the country. And indoing this it increases its income without adding a penny to its debt.

"Look at it another way. If the Government issues bonds, the brokers will sell them.

The bonds will be negotiable; they will be considered as gilt edged paper. Why? Because the

government is behind them, but who is behind the Government? The people. Therefore it is the

people who constitute the basis of Government credit. Why then cannot the people have the

benefit of their own gilt-edged credit by receiving non-interest bearing currency on Muscle

Shoals, instead of the bankers receiving the benefit of the people's credit in interest-bearing

bonds?"22

What is particularly interesting about the article is that if you read the whole thing (at the link in theappendix) you come away with the impression that it is about whether Henry Ford should manageMussel Shoals because he could do it better than the government. The article does not emphasize themonetary issue and somehow one is given the impression that the monetary issue is irrelevant. I find itfascinating that this continues to this day. How does the news media continue to obfuscate theobvious?

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FRANKLIN DELANO ROOSEVELT

In politics, nothing happens by accident. If it happens, you can bet it was planned that way.

Franklin D. Roosevelt23 (why didn't he tell us by whom or add by the Money Power?) Youmay remember that it was Roosevelt who confiscated all the gold of the people and turned it over to theInternational Banking Cartel, and then raised the price, and it was Roosevelt who established the modelof the Government running an ever increasing deficit. There is evidence that Roosevelt presided overthe bankruptcy of the US, and the state of emergency that he declared in order to confiscate the goldhas never ended.

So how did it happen that we lost our understanding of money and our government lost the power toissue the currency? This is the history of the goldsmiths and how they became bankers!

THE BANKING SECRET REVEALED

During the Middle Ages, when the great Cathedrals were being built and the towns and citieswere growing, money was mostly gold and silver coins and self issued credit called market money24. Astrade between towns and cities grew, transporting gold was dangerous and problematic. Gold can beeasily stolen, it can be debased and weighing it is problematic. However, a receipt for gold stored witha Goldsmith was for a specific weight and purity, and as long as the goldsmith had a good reputation,the receipt, or claim check, was better than gold, because the purity and weight were assured. Thereceipt for gold being as good as gold was safe and convenient, and receipts for gold were easilysigned over by the buyer to the seller and thus circulated as money, especially for the largertransactions. In order to understand how the modern banking system arose and why Sir Josiah Stampsays it was conceived in iniquity and born in sin, one must fully grasp the deception that took place.

Some Goldsmiths became bankers when they lent receipts for gold they did not have andcharged interest. Lending a receipt for gold you do not have and charging interest, means, of course,that you can create money out of the confidence people have in you and receive interest (something fornothing). This is the most lucrative con there is. Pretend you have gold, lend a good as gold receiptfor gold you don't have, and charge interest! It is the very definition of a confidence trick! In order toget away with this deception it is essential that it not be discovered. This is the banking secret. Pretendyou have money to lend, issue a claim check as a loan, (it is as good as gold), and claim interest! But,if you doubt that the receipt is as good as gold you will want the gold. If many people cash in theirreceipts the Goldsmith will run out of gold because he has lent many times more receipts for gold thanhe has in stock, either his own or his depositors. As you can easily imagine would happen the bankingGoldsmiths banded together in a secret society to support each other. If there is a run on the bank, theGoldsmith closes his shop until his secret society brothers can supply him with enough gold to meet thedemand and save the deception. Of course, banking goldsmiths and then bankers can pretend to have asmuch money as they reckon they can get away with. They pretend to have money, lend it and spend theinterest on whatever they think is important, and the most important thing to spend it on is maintaining

the deception. I wont describe here all the things the bankers secret society have put in place tomaintain the deception, but it is nothing less than this society and world. At one point they did agree topay interest on deposits and depositors were thus co-opted into the system. The whole system waslegalized in England with the establishment of the Bank of England in 1694 and in America by theFederal Reserve System in 1913. If you are amazed that you didnt know the banking secret, then youknow how successful they have been at keeping it secret.

There is something very appealing about interest. Interest enables us to let our money work for

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us. That appeal keeps us co-opted. You are probably planning to retire on the money you saved yourwhole life. But you know that the value of your investments are at the mercy of the bankers. Howmuch did you just lose? Where did that value go?

Also, if you can borrow money created beyond the actual amount of the gold and silveravailable, then you can create a new business or mount a trading expedition. By expanding the moneysupply Bankers enabled the Age of Discovery and then the Industrial Revolution. But, Bankers gaverise to the society we live in today because they determine what is credit worthy. You can only borrowmoney for what bankers agree to! And through it all they receive the interest on the money theypretended to have and lent you, and they spend that interest to manage society for their benefit and toprotect the banking secret! Have they succeeded in organizing society so that you don't understandmoney and accept a system that continuously impoverishes us and enriches them? Would you ratherhave debt and interest free money, created by us for our benefit? Ultimately this is what common goodbanking is all about.

WHERE DO THE BANKS GET THE MONEY THEY LEND YOU?

Banks do not have money to lend. When we borrow money from a bank we assume that themoney we are borrowing comes from what the banks have, or the deposits others have, in the bank.This is natural, because when you lend someone money, you have to lend them some of your ownmoney. Banks do not lend us their own assets, or money they earned, the way we do when we make aloan to someone, rather, banks issue, or create, the money they lend you when you promise to pay itback. Banks monetize your promise to pay! Your debt, your promise to pay, becomes their asset. Yourpromise to pay is valuable. When your promise to pay is backed by a mortgage or collateral yourpromise to pay is more valuable because the mortgage is easier to enforce than an IOU. In bankingcircles this is a well known fact, but it is not the way it is usually represented. However, describing itthis way makes it clear that you provide everything of value when you borrow from the bank and thebank provides nothing of its own. Put differently, when you borrow from the bank your promise to paybecomes their asset and your liability and the money they create with an accounting entry, and depositin your account, is their liability and your asset. And you have to pay them interest, which for a typicalmortgage will be more than the principle, so twice as much as you borrowed; and, if you default on theloan, they get the valuable things you acquired with the loan!

IS THIS LEGAL?

Yes, it is legal. The whole financial system is based on it. It is called Fractional ReserveBanking and it became legal with the Federal Reserve Act of 1913. The Federal Reserve issues thecurrency - our legal tender - to the Federal Government on the basis of the Federal Government'spromise to pay! The member banks which own the Federal Reserve use their deposits with the Fed asthe basis for their right to create the money they lend you. They keep a fractional reserve, a fraction oftheir deposits, as a reserve and create money as loans to whatever multiple of their deposits the Fed hasdecreed (usually between 6 and 30 times as much as they have on deposit) The courts have beenenforcing this system ever since.

IS IT CONSTITUTIONAL?

No! The Constitution gives Congress the authority to issue the currency, debt free and interestfree, and to regulate its value. Since the Federal Reserve was established by an act of Congress and notby an amendment to the constitution, it is still an unconstitutional law. Understanding money willhelp us remedy such acts of treason by Congress. Our constitutional rights are not granted to us by theConstitution, they are inalienable rights. We institute government to secure our inalienable rights.

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When we understand money we will know that we have the inalienable right to issue the currency as acommon good.

IS IT A SECRET?

Yes! It is the "banking secret". As Henry Ford and Andrew Jackson before him, said: It iswell enough that the people of the nation do not understand our banking and monetary system, for ifthey did, I believe there would be a revolution before tomorrow morning. and Marshall McLuhan:Only the small secrets need to be protected. The big ones are kept secret by public incredulity.

UNDERSTANDING MONEY

These are bold statements. They probably create a strong desire in you to dismiss them and theauthor. If they are true then your world view must change, your understanding of how the world worksmust be radically revised. If you re-read the first statement: When we understand money, we willknow that we, as a society, or community, can have all the money needed to pay for everything we

consider worthwhile. then you will know why it is worthwhile to suspend your disbelief, summon yourcourage and proceed. In thinking about the above quotes it could be helpful to remember that yourworld view is made up of the concepts you use to explain your perceptions. Please remember that youare under no obligation to accept the ready made concepts from the culture, the media or youreducation. You can, and hopefully will, hold those concepts at bay and entertain the concepts presentedhere. Do the ideas presented here give you more freedom? Will the concepts presented here increaseyour capacity to love your neighbor and the world? Will understanding money as presented here give us a society to benefit everyone? Will understanding money allow us to heal the environment, endpoverty and create a lasting peace? Please bear these questions in mind as you study this material. Youhave nothing to lose and everything to gain!

Economics is called the dismal science for a very good reason. The concepts that it uses toexplain human behavior are not accurate, it is not an empirical science but an ideological one 25. Whatdo Adam Smith and Karl Marx have in common? They both maintain that only gold is money! Thatidea is wrong and that idea serves only bankers. The promulgation of the ideas of both Adam Smith andKarl Marx were funded by the owners of the Bank of England26. Since economics, as it is taughtnowadays, is ideological and obscures the debt based monetary system, we will need to develop a truesocial science of economics. To make a beginning with this we need to start with what is self-evident.

Human Nature of Exchange

The self-evident concept, which underpins all the rest of these ideas, is in three parts:1. Economics is about the production, distribution and consumption of goods and services

through exchange. Exchange is the essence of economics. It is through the exchange process thatgoods and services go from production to distribution to consumption. Each step along the way theyare exchanged at a price.

2. It lies in our nature as human beings that we make an exchange when we judge that theexchange will make us better off. If we look at exchange exactly we can see this. We make anexchange what I have for what you have when we make the judgment that at the agreed price we will be better off. Both parties to the exchange do this, and so exchange makes both parties betteroff. When I walk into a store I am aware of what I have (in the form of money) and the store hasalready determined, by determining the prices on the things it sells, that it will be better off if I buyanything for sale there at the stated price. So I look at the items I need or want with their prices, and

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mindful of what I have, I select things to buy, making the judgment that at the stated prices I will bebetter off for buying them. When I leave the store, having paid for my purchases, I am better off andthe store is better off. That is the nature of exchange. It is perhaps a little clearer when the buyer andseller negotiate a price. When they agree a price it is because they both reckon they will be better off asa result of the exchange. If they can not agree a mutually beneficial price, they forgo the exchange.

The exchanges that I make, that you make, that everyone makes are made because they make usbetter off. Therefore, in the aggregate, it is reasonable to expect that all the exchanges will makeeveryone increasingly better off. The increase is due to human nature, not the difference in naturebetween the human beings who are party to the exchange. The increase results from our being togetherin a society and an economy in which there is plenty to exchange, - people providing goods andservices for each other that we need or want, resulting in exchanges that make both parties better offand in the aggregate everyone better off.

3. Are we increasingly better off?27 Do we all enjoy a rising standard of living? If not, whynot? Might there be something which is siphoning off or appropriating the increase? Could it be thatthe surplus is being siphoned off by interest? Should interest be a feature of the monetary system?What are the consequences of the idea that your money can work for you? What is real wealth? Whatis phantom wealth? What is money?

Money as Power

Money gives us a claim on the resources and labor of society the goods and services thatmake up the economy. We need money to live and the more we have the better we live. And, the morewe have, the greater our claim on the productivity of society and the greater our ability to shape societyas we would like it to be. If very few people (1/10 of 1%) have control of half the entire income of theplanet then the power imbalance is so extreme it is not unreasonable to believe they created this society.If we, as the sovereigns, reclaimed the power to issue the currency for what we democratically decideis beneficial, then it is easy to imagine an environmentally sustainable, peaceful world, with anequitable distribution of the wealth. Money is power, and with the money power in the hands of 1/10

of 1% of the people the power imbalance needs to be addressed before we destroy the planet. It isimperative that we understand money!

Money as Measure

To measure value we use dollars and cents, much as we use hours and minutes or feet andinches. We use dollars and cents to measure the value of all the goods and services available in theeconomy so that we can compare them to each other and make reasonable decisions about what to buyor sell and at what price. The dollars and cents as prices are crucial to making decisions about whichexchanges will make us better off.

Money as Means of Exchange

The dollars and cents we use to measure value make all the goods and services commensurateand thus exchangeable. To effect the exchanges, we use a device or instrument we call money. Thedifference between the measure (dollars and cents) and the instrument we use to make exchanges issimilar to the difference between hours and minutes and our watch or clock. The watch or clock makesthe hours and minutes useful, the money makes the dollars and cents useful. Let us bear that in mind.Dollars and cents are not money, they are the units of the measure of value. Money is the device thatallows us to make use of them.

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Money as Commodity

Gold and Silver have traditionally been thought of as money, but they are commodities and assuch they are scarce and subject to market forces. A valuable commodity cant also be the measure ofvalue for everything else without distorting the value of all the other goods and services. A commoditynever has and never will be as good as money for effecting exchanges. For many centuries now, therehas not been enough gold or silver to function as money and the convertibility of bank notes to gold hasalways been a fraud. When money is thought of as a commodity, or a stand in for a commodity, then itcan be thought of as valuable in itself. But you don't want the money, you want what the money willbuy! Money is not valuable in itself, it only represents value.

Money as Legal Tender or Fiat of the Law

Money is either legal tender or it is a commodity, but not both. When gold is legal tender itsface value has to be more than its commodity value for it to function as money. If the value of gold orsilver rises above the gold or silver coin's value as legal tender it ceases to function as money andbecomes gold or silver! When gold or silver coins are money, their intrinsic value is irrelevant to theirfunction as money. And, of course, when paper notes are legal tender their lack of intrinsic value isirrelevant in their use as money. Money, legal tender, is a fiat of the law, provided by the law giver.The association of gold or silver with money has been used by the bankers to confuse the issue of whatmoney is since the dawn of civilization. Because it is easy to understand that a commodity like goldcould be scarce or abundant it is easy to imagine why there might be too little or too much money.

Money as Accounting

The transfer of money by check or debit card between bank accounts in the banking systemmakes it clear that money is not physical but rather a matter of accounting. Federal Reserve Notes are avery small percentage of the money in circulation. We use banks to settle the accounts between us.When I write a check or swipe my debit or credit card I am instructing the bank to settle the accountbetween me and the merchant. I get the merchant's goods, the merchant gets my money, via the bank. Itis called checkbook or deposit money and the whole banking secret is based on it. When we use papermoney we don't need banks, but banks provide the accounting services and account settlement serviceswe need for our complex commerce. Also, banks make it possible to conceal the difference betweenmoney and credit. Because of the accounting aspect of money, it is easy to conceal the fact that there isno money, only credit.

Barter and Mutual Credit

All of the above becomes abundantly clear when one looks at modern barter systems, especiallythose that use mutual credit as money and dollars and cents as the unit of value. By placing goods andservices, for which there is a demand, into the barter network at a price expressed in dollars and cents,businesses can use the value of their offerings to trade or buy anything else being offered in the

barter market. Trading money (mutual credit), not Federal Reserve money, is used to represent theofferings. The trading money is accounting for the real goods and services being bought and sold.Trading money, valued in dollars and cents, is the means of exchange. A new member is given credit(and a credit limit) and their account is debited or credited with each sale or purchase. The money isobviously all accounting!

Savings and Interest

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A major appeal of gold and silver as money is as a store of value. If the value of the gold andsilver is intrinsic then when the face value of the coins drops below the metallic value, the money isstill valuable as gold or silver and thus effectively stores value. This is also the source of the idea thatinterest or usury is legitimate and that your money can work for you. If you lend money at interest,because it is valuable in itself (gold or silver), not just accounting for real goods and services, then itcan seem reasonable to expect a return. However, because the money is really how we account for thereal things that are valuable this distorts the economic process and transfers the wealth to lenders. Ifthe value of the money were maintained, the money would retain its value and would store value untilneeded in the future. If money were understood as accounting, an equity stake in an enterprise wouldprovide for the desired increase from saving or storing surplus value and remain related to the realworld fortunes of that enterprise. Interest accrues regardless of what happens in the real world and istherefore entirely abstract. It is a legally sanctioned abstraction that automatically transfers the wealthfrom those who pay more interest than they receive to those who receive more interest than they pay.

How is Money Created?

Now we get to what the Federal Reserve has called money mechanics28. All the money incirculation, except coins, is created by banks as credit, as IOUs, as the principal of a loan. Theborrowers promise to pay becomes an asset of the bank against which it creates a liability, the money itlends us. Money is created with accounting entries, assets and liabilities. Promises to pay and loans.When we lend someone money we have to lend them our money, but banks create the money that theylend us. Did you think that banks lend us their money or their depositors money? Did we commit toleave our money on deposit for 30 years? As you know, this is the banking secret. Banks createalmost all the money in circulation, and they do it as debt to them and then they collect interest, andwith a typical mortgage we will repay twice or more than we borrowed! That is one house for us and abigger one for the bank, simply because we consent to the system because we don't understand it!

Credit Money

Almost all of what we think of as money is created as the principal of a loan. From the banks

point of view, the asset is the promise to pay and the liability is the loan money. As the loan is repaidthe banks asset is reduced and the corresponding liability the money - is reduced, until both theasset and the money are extinguished when the loan is repaid. If that is hard to grasp remember thatit is all accounting entries. There is nothing but accounting entries. Your promise to pay is anaccounting entry, the money deposited in your account is an accounting entry. One goes down sodoes the other! When the loan is paid the asset ceases to exist and the money is extinguished. Ifeveryone paid off their loans there would be no money. This is another of the banking secrets, whicharises from the logic of the system itself. The permanent money supply must therefore be the debt thatis never repaid; i.e. the Federal Debt.

Money as Credit

A promise to pay, or an IOU, is, by its very definition, not the money, but an obligation toprovide money according to the terms of the promise. In the abstract world of money as credit, apromise to lend you a car is considered the same as lending you a car. This is absurd, because in thereal world a promise to lend you a car does you no good if you need a car. This does, however,illustrate how a fiction can be implemented in the real world, or how important the concepts that makeup our consciousness are in creating the reality we live in.

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Interest

What we think of as money is created as the principal of a loan which must be repaid withinterest. Where, in this system, is the money to pay the interest ever created? All the money to pay theinterest must come from new loans, which in turn bear interest. Some economists have estimated that50% of the prices we pay for things is interest. Most of us (98%) pay more interest than we receive anda very few (2%) receive more interest than they pay. Interest automatically concentrates the wealth inthe hands of the few.

Circulation

The loan money will circulate in the economy facilitating many exchanges before it isextinguished as it is used to repay the principle of a loan. The money paid as interest will also be spentand circulate in the economy. Circulation, however, only extends the time frame until the money iseventually extinguished as it repays principle. Because the interest circulates as money also, the effectof interest is really the question as to whether the recipient deserves the claim on our labor andresources it represents. Certainly if you or I lend money we can feel justified in receiving interest, butthe banks? What did they do to earn the interest?

Consequences

Only coins are issued as money. All the rest of the money is issued as debt or credit. With whatshall we pay? More promises? If all the money is created as debt and is extinguished as the debt isrepaid, where is the permanent money supply? The permanent money supply has to be the debt that noone expects will ever be repaid! Do you expect the Federal Debt will ever be repaid? The Federal Debtis the permanent money supply! All the funds collected from the income tax will soon be insufficientto pay the interest on the Federal Debt! Because of the design of the system there is always moremoney owed than exists. Everyone must go deeper into to debt to provide the money to pay theinterest. This makes money scarce, one might say that money is the only scarce resource. Interestautomatically transfers the wealth from the 98% of us who pay more interest than they earn, to the 2%who receive more interest than they pay. In order to keep up with the interest owed the financialsystem has to continually grow. New debt has to continually be incurred to provide the money to paythe interest.

More Consequences

At what point does the interest on the Federal Debt become un-payable? As a result of thebailouts (more debt) interest will soon be the single largest expense in the Federal Budget! The current11.6 Trillion Dollar debt costs about $700 billion in interest each year. Who is earning that interest?Is it reasonable that the money center banks that caused the financial crisis that required the bailoutshould receive the bailout money and the interest on the increased Federal Debt that was used to paythe bailout? However, increasing the Federal Debt was necessary to increase the permanent moneysupply to lessen the effect of the credit crunch.

The Growth Imperative

Compound interest makes it necessary that the financial system grow whether or not this relatesto growth in the real economy. The rule of 72 states that money earning 1% will take 72 years todouble. If I am receiving 6% on my money it will take 12 years for it to double. The short termthinking that most companies are forced into is a requirement of the monetary system because ofcompound interest. The net present value and discounted cash flow calculations are based on what

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money could be earning as loans. Corporate raiders have demonstrated this many times by buyingup a well run company with a lot of equity by borrowing money to monetize the equity and thus turnthe equity into debt . The forest is worth more clear cut now than in 20 years simply because themoney realized when invested in debt and left to compound grows faster than the trees!

It is the thought that the money is valuable in itself that allows this fiction. The money can'tpossibly grow faster than the real goods and services it represents. But our society is based on thisfiction and it will continue to impoverish us and destroy the planet until we recognize that it is fiction,or phantom wealth29.

Sovereignty

During colonial times the question of sovereignty was in the forefront of the peoples minds.There is a wonderful sense of security in having a King who is responsible for the well being of society.If we are loyal to the King, the King will take care of us. He is the lawgiver, he protects us. Thepassing of the sovereignty from the King to the People was what the American Revolution was allabout. We are responsible for us. We instituted a government to secure our inalienable rights. We areresponsible to assure that the government serves us. Is it time to reclaim our sovereignty and issue themoney so that we control the economy, so that money represents reality? Is it time for us to issuemoney as a public good, a measure of value and means of exchange?

Real Money

Real money is, and can only ever be, the circulating medium of exchange issued by thesovereign to serve the needs of the people. Real money is a public good not a private privilege. Realmoney measures value and enables us to effect exchanges, and benefits everyone equally. Real moneyis a fiat of the law. The US has not had real money since the Lincoln Administration issuedGreenbacks, and for the year or so that Kennedy issued silver certificates.

Who is the Sovereign?

Are we the people the sovereign? Are the Banks which issue the currency as debt the sovereign?What if we decide once again that we the people are sovereign and reclaim the power to issue thecurrency? Do you think we would issue it as debt bearing un-payable interest? Or would we spend itinto circulation to pay for the government services we as the sovereign people democratically decideare needed? When we understand money we will issue the right amount to represent the real wealthcreated by all the people! And as the commonwealth increases due to all the exchanges, more moneywill have to be issued to account for the due-to-human-nature increase from exchanges.

United States Money

The Federal Government could, and has in the past, issued the currency to pay for the legitimategoods and services the government is charged with providing. A debt and interest free currency spentinto circulation would obviate the need for taxes. The statistics gathered by the Commerce Departmentand the Federal Reserve can be used to regulate the money supply so that the value of the dollar

remains constant, and therefore there would be no inflation or boom or bust business cycle and nogrowth imperative. Contrary to the myth, Government issued real money has been absolutely reliablein the past. And we could make sure it would be again.

The Science of Money

Money is a public good like any other measure. It needs to be regulated to ensure that it is areliable measure. More money in circulation than is justified by the goods and services available and

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prices rise, or the money becomes less valuable; less money in circulation than needed and prices fall,people cant pay their debts, products cant be sold, unemployment rises, etc. What is a recession ordepression? Did something change as far as the resources, skills and willingness to work areconcerned? No, the only change is a shrinking of the money in circulation so there is no longer enoughcirculating medium to make all the payments that were being made before the shrinkage. The scienceof money is the regulation of the money supply so that prices remain stable. The money is not valuablein itself. It represents and makes commensurate the value of the real goods and services in theeconomy. Good data collection, which we have, is all that is needed to regulate the money supply andkeep prices stable. The science of money may have been lost as public knowledge, but it is not lost asa private banking secret. The science of money, the effect of increasing and decreasing the moneysupply, is well known to the central bankers and they continuously take advantage of our ignorance.

Capitalization

Issuing real money to capitalize an enterprise or build infrastructure, or any other need thatrequires a large amount of capital, as in the Muscle Shoals example Henry Ford and Thomas Edisonreferred to, may become the most creative opportunity (as Lincoln said) for community banking inwhich the people are sovereign. Because raising the money is not an issue, i.e. we understand thatwe can just issue it to increase the commonwealth, the process whereby the people decide what to fundand how that will be managed, etc. will be a wonderful opportunity to exercise our new foundsovereignty. What values will be evident in what we decide to capitalize? If we are truly able toexpress our collective will through a well designed democratic process we can be confident that societywould reflect the values we hold dear. However, from the point of view of the science of money thenew capital will either be properly represented by what it was spent on and increase the communitywealth, and therefore require the issue of more money to represent the increase, or if the enterprisefails, the money created will not properly represent what happened, and that much money will need tobe withdrawn from circulation to keep the value of the money constant. Being able to issue real moneyto capitalize projects we believe in will give new meaning to the phrase: Government of the people,by the people, for the people. Please let this sink in: Real money means that there will be no shortageof money. Everything we as a community decide is worthwhile can be done. The question is not:Where will you get the needed money? but rather: Are there people willing and capable of doing itand is it a sustainable use of the needed natural resources? If so, let us, as the sovereign, issue themoney to accomplish it!

What Can We Do?

Understanding money gives us numerous possibilities for reform. Because the money issue isso central to the way that society is organized it is very difficult to imagine how profoundly beneficialissuing real money will be. Imagine that the amount of money in circulation is equal to all the goodsand services that are available and that the distribution of the money, and therefore the goods andservices, is just, because it was decided by we the people not the international banking cartel. Nowimagine that we, as a community or society, want to do something we consider worthwhile, such as

convert the economy to renewable energy. We don't have to borrow the money to do it, we don't haveto raise taxes, we just issue the money! Assuming that what we issue the money for, does increase thecommon wealth, then, the most pressing question becomes what shall we do with the surplus thatarises from the human nature of exchange? This is so huge that everything changes when youcontemplate it.

National Proposals

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I am aware of four proposals for reform of the monetary system at the national level. If youbelieve that there is still a possibility of rescuing our sovereignty from the privately owned FederalReserve and Bank for International Settlements through the existing political process, then these areworth supporting.

The American Monetary Institute has written legislation, The American Monetary Act thatwould authorize Congress to take over the Federal Reserve and issue United States Notes debt andinterest free to rebuild the infrastructure and provide the money for Health Care and other neededservices30. Dennis Kucinich is an advocate of this approach. This is Stephen Zarlenga's approach andis based on his book The Lost Science of Money. Zarlenga says: Money is an abstract social powerbased in law and whatever government accepts in payment of taxes will be money. Go to:http://www.monetary.org/for more on this.

NESARA is a proposal supported by the those who believe that only gold is real money, whichwould authorize Congress to re-monetize gold and issue gold certificates as the lawful (fiat) money.The value of gold would be legally determined based on the amount of gold backing the currency.Gold coins as well as 100% gold backed gold certificates would be the currency and banking would bethe same as we imagine it to be, where banks settle the accounts between us (check clearing) but couldonly lend money they actually had on deposit. NESARA is flexible in that it would allow an expansionof the money supply through fractional reserve lending, but the reserve would be real. The result of thecredit creation/money supply expansion, would be the periodic revaluation of the gold backing it! Goto: http://www.nesara.us/pages/home.htmlto learn more about NESARA

Social Credit is a proposal going back to the time of the creation of the Federal Reserve Systemthat is based on the Congress issuing the currency (as fiat of the law) to represent the value of the realgoods and services in the economy and distributing the resulting surplus through a dividend paid toeveryone. Instead of paying taxes, we receive a dividend for being a participant in the economy. Therationale for this is that the economy is created by both producers and consumers and consumers needthe buying power necessary to buy everything that is offered. Social Credit would create a democracyof consumers served by an aristocracy of producers. Under a social credit regime the money would beissued to the people so they can buy the products of the economy, not to the producers so they canproduce. Social Credit is currently most ably represented by the Michael Journal. Go to:http://www.michaeljournal.org/10lessons.htmand download the book (don't be put off by the religiouselement, it is not essential, but the morality and fairness it represents is) The Wikipedia article onsocial credit is also helpful.

Digital Coin is a proposal by Paul Grignon for a self regulating money system based on theinternet. It consists of perpetual coin (digital) which is the measure of value and is kept in limitedsupply so that it maintains its value, and credit coin (digital) which is self issued credit by the providersof goods and services. Perpetual coin represents the existing economy and credit coin is issued byproducers to finance their operations. The credit coin circulates at a varying discount to perpetual coinand is redeemed when it pays for goods or services of the issuer, with the greatest discount beingoffered when the coin is most advantageously redeemed. There are a number of videos by Paul

Grignon that are wonderful explanations of much presented in this booklet, including Money asDebt, Money as Debt II, Promises Unleashed, The Essence of Money, A Medieval Tale andDigital Coin, all available at www.digitalcoin.info

Local Currencies

The complementary currency movement is widespread and growing. A most interesting aspectof local currencies is that the design of the currency gives very different experiences. So, for example,

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the experience of using Ithaca hours or Berkshares, or time dollars, is very different.One of the best known of the local currencies is Berkshares. The rationale for Berkshares is that theyoffer a discount for shopping locally and are redeemable for Federal Reserve credit. This makes it easyfor businesses to accept them and easy for consumers to use. Berkshares notes are beautifully designedand reflect the rich cultural heritage of the area, with portraits of famous local people. However,Berkshares have to be bought at local banks. $100 gets you BS105 and can be cashed in again. Theyare not being issued directly or as credit and so are really a discount coupon on the dollar, an incentiveto buy locally.

Mutual Credit Associations

Business to business barter networks, LETS (Local Exchange Trading Systems) and mutualcredit clearing systems are all examples of money as accounting being practiced in many places aroundthe world. When you join the network you are able to buy and sell from members of the network withcredit the members extend to each other. Generally speaking these systems are very successful whenthe number of participants is large enough and includes enough opportunities for people to earn creditsby selling their labor or expertise. In Switzerland there is such a system called the WIR which hasoperated successfully since the Great Depression with the number of transactions done in WIRincreasing whenever there is a shortage of Swiss Francs and decreasing as SF become more plentifulagain.

Common Good Bank

However, if you believe that it is up to us to think globally and act locally then you can support

the establishment of the Common Good Bank and participate in developing a Common Good

Community.

The Society to Benefit Everyone, Inc., doing business as Common Good Finance, is a charitablecompany which developed and is promoting the establishment of the Common Good Bank with localbranches, common good communities, all across the US and eventually the world. The Common GoodBank is designed to bring a just abundance and environmental healing to every community thatestablishes a common good community, and to do it quickly and surely. The Common Good Bank isdesigned to create a society to benefit everyone. The Common Good Bank is not another bank with asocial mission, rather it is a social mission with a BANK! The Common Good Bank is a revolutionwith a bank. The Common Good Bank offers a transition that returns our sovereignty to us and willallow us to issue the currency debt and interest free to pay for those things which we agree will benefitour community, our region, our country and the world.

Join Us

Visit the website: www.commongoodbank.com and read all about the plans for establishing theCommon Good Bank. Sign up as a Founding Member. Attend our organizing meetings and donate tofund our campaign for a common good economy, pledge a loan to charter the bank and pledge to buy a

share of the bank when it is chartered. Donate and pledge whatever feels right for you! You can find alocal Common Good Community Organizer, or become one, at the website.

Find out More

Web of Debtby Ellen BrownAgenda for a New Economy by David KortenThe Lost Science of Money by Stephen Zerlanga.

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The Future of Money by Bernard LietaerThe End of Money and the Future of Civilization by Thomas GrecoMoney as Debt video available at video.google.comMoney as Debt II Promises Unleashedavailable at moneyasdebt.netDigital Coin, Perpetual Coin and Credit Coin, at www.digitalmoney.info Watch the videos, especiallyThe Essence of Money, A Medieval Tale!Andwww.commongoodbank.com

COMMON GOOD BANK

It is OUR bank, WE decide!

COMMON GOOD BANKS WILL BE DIFFERENT.All profits go to schools and other nonprofits.Owners decide what the bank should invest in.Free local credit card processing for local businesses.Micro-loans for new businesses and community projects.Full range of secure, FDIC insured banking services.Committed to sustainability and economic justice.

Study the Website

The commongoodbank.com website is deep. It explains how the Common Good Bank systemwill work, how it can create a local currency among all its members that exists only in the bank andwhich therefore does not require any of the inconvenience of a paper currency. The exchange betweenthe mutual credit of the Common Good Community and Federal Reserve Credit is explicit on yourmonthly bank statement. The Common Good Bank can create money for those purposes its depositorowners vote for, and exchange it for Federal Reserve credit so it can be spent anywhere.

Design

All of the innovations of the Common Good Bank are proven in other settings, the combinationis unique to the design of this bank. The Common Good Bank was designed by the Society to BenefitEveryone and is being promoted under the name Common Good Finance to provide a sure and rapidlydeployable remedy to our debt based monetary system for any community that cares to implement one.

Direct Democracy

Our winner take all democratic system is so easily gamed that we often feel cheated, that wehave no real choice. The democratic system designed into the Common Good Bank cannot be easilysubverted. It is based on face to face meetings, one person one vote, 100% participation and rankedchoice or instant runoff voting (liquid democracy). One person one vote, not number of shares owned,assures all the participants are equally empowered. You appoint a proxy whose vote counts for you ifyou don't vote yourself, and if your proxy doesn't vote their proxy's vote counts for all three of you, etc.

You may change your proxy at any time and those who are the proxies for the most people becometrusted persons, because they are trusted by the most owners, and they direct the affairs of the localbranch of the bank. When you vote, you rank the choices, first, second, third, etc. or none. The choicewith the fewest first choice votes is eliminated and the second choice becomes first choice on thoseballots and they are counted again. This process of ranked choice voting including Condorcet pairs,together with other methods, assures that the most preferred choice wins. This system lets democracytend towards consensus and makes democracy direct and effective and eliminates the ways the existing

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system can be manipulated.

Directing the Bank

Common Good Bank stock will be owned by Common Good Finance, which is the not forprofit membership organization that has designed and will charter the bank. Your membership givesyou your right to vote, one person one vote, it also makes you a member of your common goodcommunity branch of the bank. Common Good Finance is governed by representation from themembers up and the board down. It is designed to allow leadership to bubble up from themembership.

What kinds of projects should the bank lend to? Rank the choices! Which schools and charitiesshould the bank give its profits to? Allocate 100 virtual pennies! What projects should we issue localmoney to support? What ideas do you have that would make for a society that benefits everyone? Youget the idea! All major decisions of the Common Good Bank branches are discussed in meetings andvoted on by its owners, all decisions affecting the Common Good Bank as such are made by its Boardof Directors just as in a conventional bank, except for distribution of profits which is determined by apenny (percentage) vote.

Establishing the Bank

Common Good Finance oversees the chartering of the Common Good Bank. CurrentlyCommon Good Finance is seeking Founding Members to donate to the Campaign for a Common GoodEconomy, to lend interest free to charter the bank and pledge to capitalize the bank when it is chartered.Finding Founding Members in the Pioneer Valley and Berkshires of Massachusetts is critical toestablishing the bank. However, to become a local Common Good Community once the bank ischartered will only require a minimum of 75 businesses and individuals, with at least one business thatwill be able to provide cash for depositors using their Common Good Bank card (like a debit card) andat least one nonprofit willing to assist depositors with the paper work. It will also be helpful to havemany businesses offering a discount to depositors. Half of the discount goes to the benefit of thedepositor and half to the Community Fund of the local CGC. Half of the Community Fund is grantedlocally and half is granted somewhere else in the world we want a society to benefit everyone.

Capital and Grants

Common Good Communities will have the opportunity to develop a real social science ofeconomics since they will be able to visualize the economic process. Economics is about theproduction, distribution and consumption of material goods and services by bringing the intellectualcapital of the culture to bear on transforming nature. The intellectual capital was created by those whoconsumed the material goods and services in the pursuit of science, art and religion. Material goodsand services create surpluses or profits and can be appropriately funded by issuing capital (loans andequity) that can be returned to the issuer through the surplus values resulting from exchange. Thesurplus value can then be granted to increase the culture (education, art and religion in their broadestsense). So we can visualize the process as issuing capital to create the material goods and services

which generate a surplus that can be granted to create cultural values by consuming the material goodsand services. The intellectual capital currently available is such that capital properly issued will createthe solution to all the problems we experience that result from money being debt based and scarce! Dowe have all the ideas and technologies needed to replace fossil fuels, and end the wars for oil? Ofcourse we do. All we need to do is capitalize them! When we issue the money for what we decide willgive expression to our values, everything changes.

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Take Action and sign up as a Founding Member. Go towww.commongoodbank.com

Cognitive Dissonance

As you think about all these ideas and their implications it can be helpful to understand cognitivedissonance. Here is the description from Wikipedia.

Cognitive Dissonance is an uncomfortable feeling caused by holding two contradictory ideassimultaneously. The "ideas" or "cognitions" in question may include attitudes andbeliefs, and also theawareness of one'sbehavior. The theory of cognitive dissonance proposes that people have amotivational drive to reduce dissonance by changing their attitudes, beliefs, and behaviors, or byjustifying or rationalizing their attitudes, beliefs, and behaviors. [1] Cognitive dissonance theory is oneof the most influential and extensively studied theories in social psysychology. Cognitive Dissonancenormally occurs when a person perceives a logical inconsistency among his or her cognitions. Thishappens when one idea implies the opposite of another. For example, a belief in animal rights could beinterpreted as inconsistent with eating meat or wearing fur. Noticing the contradiction would lead todissonance, which could be experienced as anxiety, guilt, shame,anger,embarrassment, stress, andother negative emotional states. When people's ideas are consistent with each other, they are in a stateof harmony, or consonance. If cognitions are unrelated, they are categorized as irrelevant to each otherand do not lead to dissonance.

A powerful cause of dissonance is an idea in conflict with a fundamental element of the self-concept,such as "I am a good person" or "I made the right decision." The anxiety that comes with the possibilityof having made a bad decision can lead to rationalization, the tendency to create additional reasons orjustifications to support one's choices. A person who just spent too much money on a new car mightdecide that the new vehicle is much less likely to break down than his or her old car. This belief may ormay not be true, but it would likely reduce dissonance and make the person feel better. Dissonance canalso lead to confirmation bias, the denial of disconfirming evidence, and otherego defensemechanisms.

Now you are in a position to appreciate this piece of humor from Punch, the British humourmagazine from the issue of April 3, 195731

Q: What are banks for? A: To make money. Q: For the customers? A: For the banks.Q: Why doesn't bank advertising mention this? A: It would not be in good taste. But it ismentioned by implication in references to reserves of $249,000,000,000 or thereabouts. That isthe money they have made. Q: Out of the customers? A: I suppose so. Q: They also mentionAssets of $500,000,000,000 or thereabouts. Have they made that too? A: Not exactly. That is themoney they use to make money. Q: I see. And they keep it in a safe somewhere?A: Not at all. They lend it to customers. Q: Then they haven't got it? A: No. Q: Then how isit Assets? A: They maintain that it would be if they got it back. Q: But they must have somemoney in a safe somewhere? A: Yes, usually $500,000,000,000 or thereabouts. This is called

Liabilities. Q: But if they've got it, how can they be liable for it? A: Because it isn't theirs.Q: Then why do they have it? A: It has been lent to them by customers. Q: You meancustomers lend banks money? A: In effect. They put money into their accounts, so it is reallylent to the banks. Q: And what do the banks do with it? A: Lend it to other customers.Q: But you said that money they lent to other people was Assets? A: Yes. Q: Then Assetsand Liabilities must be the same thing? A: You can't really say that. Q: But you've just said it!If I put $100 into my account the bank is liable to have to pay it back, so it's Liabilities. But they

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http://www.commongoodbank.com/http://www.commongoodbank.com/http://en.wikipedia.org/wiki/Ideahttp://en.wikipedia.org/wiki/Attitude_(psychology)http://en.wikipedia.org/wiki/Beliefhttp://en.wikipedia.org/wiki/Beliefhttp://en.wikipedia.org/wiki/Behaviorhttp://en.wikipedia.org/wiki/Behaviorhttp://en.wikipedia.org/wiki/Drive_theoryhttp://en.wikipedia.org/wiki/Cognitive_dissonance%22%20%5Cl%20%22ite_note-0http://en.wikipedia.org/wiki/Social_psychology_(psychology)http://en.wikipedia.org/wiki/Anxietyhttp://en.wikipedia.org/wiki/Guilthttp://en.wikipedia.org/wiki/Shamehttp://en.wikipedia.org/wiki/Angerhttp://en.wikipedia.org/wiki/Angerhttp://en.wikipedia.org/wiki/Angerhttp://en.wikipedia.org/wiki/Embarrassmenthttp://en.wikipedia.org/wiki/Stress_(biological)http://en.wikipedia.org/wiki/Emotionhttp://en.wikipedia.org/wiki/Self-concepthttp://en.wikipedia.org/wiki/Rationalization_(psychology)http://en.wikipedia.org/wiki/Rationalization_(psychology)http://en.wikipedia.org/wiki/Confirmation_biashttp://en.wikipedia.org/wiki/Denialhttp://en.wikipedia.org/wiki/Ego_defensehttp://www.commongoodbank.com/http://en.wikipedia.org/wiki/Ideahttp://en.wikipedia.org/wiki/Attitude_(psychology)http://en.wikipedia.org/wiki/Beliefhttp://en.wikipedia.org/wiki/Behaviorhttp://en.wikipedia.org/wiki/Drive_theoryhttp://en.wikipedia.org/wiki/Cognitive_dissonance%22%20%5Cl%20%22ite_note-0http://en.wikipedia.org/wiki/Social_psychology_(psychology)http://en.wikipedia.org/wiki/Anxietyhttp://en.wikipedia.org/wiki/Guilthttp://en.wikipedia.org/wiki/Shamehttp://en.wikipedia.org/wiki/Angerhttp://en.wikipedia.org/wiki/Embarrassmenthttp://en.wikipedia.org/wiki/Stress_(biological)http://en.wikipedia.org/wiki/Emotionhttp://en.wikipedia.org/wiki/Self-concepthttp://en.wikipedia.org/wiki/Rationalization_(psychology)http://en.wikipedia.org/wiki/Confirmation_biashttp://en.wikipedia.org/wiki/Denialhttp://en.wikipedia.org/wiki/Ego_defense


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go and lend it to someone else, and he is liable to have to pay it back, so it's Assets. It's the same$100 isn't it? A: Yes, but.... Q: Then it cancels out. It means, doesn't it, that banks haven'treally any money at all? A: Theoretically...... Q: Never mind theoretically! And if they haven'tany money, where do they get their Reserves of $249,000,000,000 or thereabouts??A: I told you. That is the money they have made. Q: How? A: Well, when they lend your$100 to someone they charge him interest. Q: How much? A: It depends on the Bank Rate.Say five and a-half percent. That's their profit. Q: Why isn't it my profit? Isn't it my money?A: It's the theory of banking practice that......... Q: When I lend them my $100 why don't Icharge them interest? A: You do. Q: You don't say. How much? A: It depends on the BankRate. Say a half percent. Q: Grasping of me, rather? A: But that's only if you're not going todraw the money out again. Q: But of course I'm going to draw the money out again! If I hadn'twanted to draw it out again I could have buried it in the garden! A: They wouldn't like you todraw it out again. Q: Why not? If I keep it there you say it's a Liability. Wouldn't they be glad ifI reduced their Liabilities by removing it? A: No. Because if you remove it they can't lend it toanyone else. Q: But if I wanted to remove it they'd have to let me? A: Certainly. Q: Butsuppose they've already lent it to another customer? A: Then they'll let you have some othercustomer's money. Q: But suppose he wants his too....and they've already let me have it?A: You're being purposely obtuse. Q: I think I'm being acute. What if everyone wanted theirmoney all at once? A: It's the theory of banking practice that they never would.Q: So what banks bank on, is not having to meet their commitments? A: I wouldn't say that. Q:Naturally. Well, if there's nothing else you think you can tell me....?A: Quite so. Now you can go off and open a banking account! Q: Just one last question.A: Of course. Q: Wouldn't I do better to go off and open up a bank?

Of course, and that is just what we need to do! Charter a Common Good Bank and exercise oursovereignty. Then we can create a just abundance, heal the environment and assure that our mostcherished values are reflected in our economy. In the mean time there is:

R CreditsTM

R Credits is a new local money system proposed to launch in Greenfield, MA in March 2012.R Credits combines features from successful alternative credit systems, adding technologyinnovations and procedures to ensure a secure, profitable experience for everyone.Participants will typically receive several thousand dollars a year in incentive credits.In this time of economic and environmental crisis, R Credits could even serve as theframework for a new democratic economic system that puts people and planet first -- a modeleasily adopted by individuals and businesses in any community, so that everyone can havehealthy food, a home, healthcare, satisfying work, and a livable world. R Credits is sponsoredby Common Good Finance, a Massachusetts-based nonprofit.

Key Features

Credit, not paper. Like a local currency system, but with computerized bookkeeping

instead of paper currency. We call the credits R Credits to distinguish them from USdollars.

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Modern technology. Use simple cell phone texting or internet, to charge someone, to

pay someone, or to exchange your R Credits for US Dollars or your US Dollars for RCredits.

Incentives. There is no cost to join. Instead, when you join, you get some R Credits to

spend, plus more every time you use the system: a rebate on any amount you pay anda bonus on any amount you receive. Get paid to participate!

Democratic funding. Participating communities discuss and decide what new or oldbusinesses to fund, to become sustainable and to meet everyone's basic needs --knowing that there is money available to fund those decisions. Then the communitycan make grants and loans of R Credits, to put people to work doing what needs to bedone.

How is i

Documents

CGB Understanding Money Booklet Rev 3