Tuesday, November 12, 2013

617 Obama canvasses $Trillion coin in Press Conference; supported by Yale Prof of Constitutional Law

Obama canvasses $Trillion coin in Press Conference; supported by Yale
Prof of Constitutional Law

Newsletter published on 10 October 2013

(1) Will China and Japan accept the Trillion Dollar coin? - Peter Myers,
October 10, 2013
(2) Yale  Professor of Constitutional Law endorses $trillion coin (2011)
(3) Trillion dollar coin can't work because Fed won't accept it - Ognir
(4) Treasury & Fed reject $trillion coin (Jan 2013)
(5) Obama canvasses Trillion Dollar coin in White House Press Conference
(Oct 8, 2013)
(6) IMF working paper canvasses 100% Reserves, debt-free money (2012)
(7) IMF's epic plan to conjure away debt and dethrone bankers - Ambrose
Evans-Pritchard (2012)
(8) World War I: Britain issues a debt-free currency - Bradbury Treasury
Notes
(9) World War I: the British treasury (not the Bank of England!) issues
debt-free currency notes

(1) Will China and Japan accept the Trillion Dollar coin? - Peter Myers,
October 10, 2013


In a Press Conference of October 8, Obama raised the Trilion Dollar coin
as one possible solution to the Default crisis. He did not highlight it,
merely mentioning it, in passing as it were, yet it was very courageous
of him to do so. He pointed out that this simple solution could fix the
problem, but that it would depend on acceptance by America's creditors.

So who are those creditors?

An unsigned article at rt.com "Demystifying the US debt ceiling: 5
things you should know", edited time: October 09, 2013 19:57, offers a
pie-chart titled Who holds US Debt?, sourced (it says) from the US
Treasury Department.

The article is at http://rt.com/business/debt-ceiling-default-usa-931/
and the pie-chart is at
http://rt.com/files/news/20/b2/b0/00/infographics---copy

The pie-chart gives this breakdown of the ownership of $ Bonds (the
total debt being $16.699 trillion):

China (and Hong Kong) 8.4%
Japan 6.5%
"Oil Exporters" 1.5%
Brazil 1.5%
United Kingdom 1%
All other Foreign Nations 14.6%
U.S. Individuals and Institutions 31.7%
U.S. Social Security Trust Fund 16%
U.S. Federal Reserve 12%
U.S. Civil Service Retirement Fund 4.4%
U.S. Military Retirement Fund 2.5%

The article says, "The US owes about two-thirds of its debt to US-based
creditors, with almost 66 percent of the country's debt held domestically."

To the question "Why can't they simply print more dollars and pay their
debt?", the article replies, "No economy in the world can simply turn on
its printing presses and create as much cash as it wishes, as this would
make its currency worthless."

Well, QE is exactly that - printing money. All of the major Central
Banks of the world have been doing it. The Fed printed Trillions of
Dollars to bail out the Banks during the Financial Crisis.

Further, private banks create money ex nihilo - out of thin air - every
time they make a loan. The public are not aware of this heist, but it is
time that they studied up on it, because their very lives are at risk
over this issue.

China and Japan have been manipulating their currencies to maintain a
Trade (Current Account) Surplus. They have known for years that the US
cannot pay back its foreign debt without resorting to some measure such
as the Trillion Dollar coin. But they have kept the lopsided Pacific
trading system going nonetheless, because, as Eamonn Fingleton pointed
out about a decade ago, it develops their industries and keeps jobs at home.

In an article "Dollars and Dragons", of September 19, 2011, he wrote:

{quote}
As a panelist in a FreedomFest discussion on China, I was asked how long
the dollar might stay aloft before its final flameout. I guessed another
five to ten years. ... the only thing saving the dollar from oblivion is
an ardent desire throughout East Asia to keep it on life support.

Even this desire sometimes seems in question. Chinese spokesmen, with
their occasional hints that they might abandon the dollar, like to kick
sand in Uncle Sam’s face. But in East Asia more than elsewhere, what
matters is not what people say but what they do. Having now invested
more than $1.2 trillion in U.S. Treasury bonds and other U.S. government
securities, the Chinese are clearly walking the walk, even if they don’t
always talk the talk. As for the Japanese, South Koreans, Taiwanese, and
Singaporeans, they too have been doing their considerable best to
forestall a dollar collapse. ...

The truth is that the East Asian governments’ investment strategy serves
their industrial policy. To keep exporting to the United States, they
must finance American consumption, and therefore they must keep adding
to their already gigantic dollar stockpile.
{endquote} http://www.fingleton.net/?p=1285

In "Dethroning The Dollar: The Yuan, The Bitcoin, And Other 'Usurpers'",
of June 30, 2013, he wrote,

{quote}
What we are left with is this: well within the next ten years and
probably within five, America’s creditors – mainly China but also Japan,
Russia, Germany, Saudi Arabia, and Korea – will have to bite the bullet
and move to a new currency system. It will be as big a moment as the
Bretton Woods agreement of 1944. The betting is that the dollar will be
replaced by a basket of currencies. The dollar will retain a role but a
much shrunken one. It will be a similar story for that other perpetual
sick man of the currency markets, the British pound.

The key currencies in the new system will willy-nilly be those of the
surplus nations. How much of the burden of leadership Beijing will have
to shoulder will have to be thrashed out with other surplus nations. An
enfeebled America — the same America that threw away its manufacturing
base — will have virtually no say in the matter.
{endquote}
http://www.forbes.com/sites/eamonnfingleton/2013/06/30/dethroning-the-dollar-the-yuan-the-bitcoin-and-other-usurpers/

China and Japan may decide that now is the time to move to that new
currency system. It's in their hands, not in ours. However, given the
recent divisions between them, they may be unable to agree on a new
common currency, and may accept the $trillion coin solution. After all,
it allows the world trade system to continue, as well as allowing
Americans to get back to life as normal.

We should mint the $trillion coins, deposit them in a bank, and use they
as payment, as Paul Krugman says. Treasury can't refuse to do so,
because it is a government department - it must do what the Treasurer
tells it. If the Fed refuses to accept them, it should be nationalized.

Extending the debt ceiling would only extend the charade, as Peter
Schiff says.

(2) Yale  Professor of Constitutional Law endorses $trillion coin (2011)

http://www.cnn.com/2011/OPINION/07/28/balkin.obama.options/index.html

3 ways Obama could bypass Congress

By Jack M. Balkin, Special to CNN

Editor's note: Jack M. Balkin is Knight Professor of Constitutional Law
at Yale Law School. His latest book is "Constitutional Redemption:
Political Faith in an Unjust World" (Harvard University Press 2011).

New Haven, Connecticut (CNN) -- Very soon, Congress will raise the debt
ceiling. If it does not, it would be the greatest unforced error in
American history, a self-inflicted wound that is as disastrous as it was
avoidable.

Suppose, however, that the tea party gets its way, and the debt ceiling
is not increased. What are President Barack Obama's options?

We are having a debt-ceiling crisis because Congress has given the
president contradictory commands; it has ordered the president to spend
money, and it has forbidden him to borrow enough money to obey its orders.

Are there other ways for the president to raise money besides borrowing?

Sovereign governments such as the United States can print new money.
However, there's a statutory limit to the amount of paper currency that
can be in circulation at any one time.

Ironically, there's no similar limit on the amount of coinage. A
little-known statute gives the secretary of the Treasury the authority
to issue platinum coins in any denomination. So some commentators have
suggested that the Treasury create two $1 trillion coins, deposit them
in its account in the Federal Reserve and write checks on the proceeds.

The government can also raise money through sales: For example, it could
sell the Federal Reserve an option to purchase government property for
$2 trillion. The Fed would then credit the proceeds to the government's
checking account. Once Congress lifts the debt ceiling, the president
could buy back the option for a dollar, or the option could simply
expire in 90 days. And there are probably other ways that the Fed could
achieve a similar result, by analogy to its actions during the 2008
financial crisis, when it made huge loans and purchases to bail out the
financial sector.

The "jumbo coin" and "exploding option" strategies work because modern
central banks don't have to print bills or float debt to create new
money; they just add money to their customers' checking accounts.

The government has not discussed either option publicly. There are three
reasons for this. First, there may be other legal obstacles to using
these options that we don't know about. Second, because these devices
could be used over and over again, they might scare investors and be
politically unacceptable. Third, the president's political strategy has
been to obtain a congressional deal lowering the deficit, and these
solutions would take all the pressure off Congress.

However, that calculation could change if the president believes that
Congress is simply unable to pass anything, a conclusion he has not yet
reached.

Assume that the platinum coin and exploding option strategies are not
available. What else can the president do?

Like Congress, the president is bound by Section 4 of the 14th
Amendment, which states that "(t)he validity of the public debt of the
United States, authorized by law ... shall not be questioned." Section 4
was passed after the Civil War because the framers worried that former
Southern rebels returning to Congress would hold the federal debt
hostage to extract political concessions on Reconstruction. Section 5
gives Congress the power to enforce the 14th Amendment's provisions.
This does not mean, however, that these provisions do not apply to the
president; otherwise, he could violate the 14th Amendment at will.

Section 4 requires the president not to put the validity of the public
debt into question. If the debt ceiling is not raised in time, there
will not be enough incoming revenues to pay for all of the government's
bills as they come due. Therefore he has a constitutional obligation to
prioritize incoming revenues to pay the public debt: interest on
government bonds and any other "vested" obligations.

What falls into the latter category is not entirely clear, but a large
number of other government obligations -- and certainly payments for
future services -- would not count and would have to be sacrificed. This
might include, for example, Social Security payments. ...

It is still unlikely that things will get this far. Our Constitution,
however, was designed to deal with extreme situations when ordinary
politics fails. Let us hope that our institutions do not fail us now.

The opinions expressed in this commentary are solely those of Jack M.
Balkin.

(3) Trillion dollar coin can't work because Fed won't accept it - Ognir

Date: Wed, 9 Oct 2013 14:52:46 +0200 From: Ognir <ognir2@gmail.com>

Trillion dollar coin can't work Peter as the Privately Jewish owned
Federal Reserve Bank said they would refuse it, it's that simple and
people keep thinking it would solve problems, hardly

Comment (Peter M.): Remember that Paul Krugman, who promoted the
Trillion dollar coin in the NYT, is Jewish too.

(4) Treasury & Fed reject $trillion coin (Jan 2013)

http://www.reuters.com/article/2013/01/12/us-usa-debt-platinum-idUSBRE90B0HI20130112

Treasury, Fed kill idea of $1 trillion platinum coins to avert debt crisis

By Steve Holland

WASHINGTON | Sat Jan 12, 2013 6:09pm EST

The U.S. Treasury Department said on Saturday it will not produce
platinum coins as a way of generating $1 trillion in revenue and
avoiding a battle in Congress over raising the U.S. debt ceiling.

The idea of creating $1 trillion by minting platinum coins has gained
some currency among Democrats in recent days as a way of sidestepping
congressional Republicans who are threatening to reject a necessary
increase in the debt ceiling unless deep spending cuts are made.

The Treasury Department and the Federal Reserve, both independent of one
another, each concluded this was not a viable option.

"Neither the Treasury Department nor the Federal Reserve believes that
the law can or should be used to facilitate the production of platinum
coins for the purpose of avoiding an increase in the debt limit," said
Treasury spokesman Anthony Coley in a statement. ...

(Reporting By Steve Holland; editing by Doina Chiacu and Philip Barbara)

(5) Obama canvasses Trillion Dollar coin in White House Press Conference
(Oct 8, 2013)


http://www.whitehouse.gov/the-press-office/2013/10/08/press-conference-president

The White House

Office of the Press Secretary

For Immediate Release

October 08, 2013

Press Conference by the President

James S. Brady Press Briefing Room

2:15 P.M. EDT

THE PRESIDENT: Good afternoon, everybody. I am eager to take your
questions, so I’ll try to be brief at the top.

This morning, I had a chance to speak with Speaker Boehner, and I told
him what I've been saying publicly, that I am happy to talk with him and
other Republicans about anything -- not just issues I think are
important, but also issues that they think are important. But I also
told him that having such a conversation, talks, negotiations, shouldn’t
require hanging the threats of a government shutdown or economic chaos
over the heads of the American people.

Think about it this way. The American people do not get to demand a
ransom for doing their jobs. You don't get a chance to call your bank
and say, “I’m not going to pay my mortgage this month unless you throw
in a new car and an Xbox. If you’re in negotiations around buying
somebody’s house, you don't get to say “Well, let’s talk about the price
I'm going to pay, and if you don't give me the price then I'm going to
burn down your house.”

That’s not how negotiations work.  ...

If Congress refuses to raise what's called the debt ceiling, America
would not be able to meet all of our financial obligations for the first
time in 225 years. ...

Now, the last time that the tea party Republicans flirted with the idea
of default two years ago, markets plunged, business and consumer
confidence plunged, America’s credit rating was downgraded for the first
time. And a decision to actually go through with it, to actually permit
default, according to many CEOs and economists, would be -- and I'm
quoting here -- “insane,” “catastrophic,” “chaos." These are some of the
more polite words.

Warren Buffett likened default to a nuclear bomb, a weapon too horrible
to use. It would disrupt markets. It would undermine the world’s
confidence in America as the bedrock of the global economy.  ...

Roberta Rampton.

Q Thanks. You talked a bit about the hit to credibility around the world
that this impasse has caused. I'm wondering what you and your
administration are telling worried foreign creditors -- China and Japan
-- who are calling and asking about whether the United States is going
to avoid defaulting on its debt.

THE PRESIDENT: Well, I won't disclose any specific conversations. But
obviously my message to the world is the United States always has paid
its bills and it will do so again. But I think they're not just looking
at what I say, they're looking at what Congress does. And that
ultimately is up to Speaker Boehner. ...

Q Do you think you might have emergency powers that you could use after
any default situation?

THE PRESIDENT: We have used a lot of our emergency powers. Jack Lew has
used extraordinary measures to keep paying our bills over the last
several months. But at a certain point, those emergency powers run out,
and the clock is ticking. And I do worry that Republicans, but also some
Democrats, may think that we've got a bunch of other rabbits in our hat.
There comes a point in which, if the Treasury cannot hold auctions to
sell Treasury bills, we do not have enough money coming in to pay all
our bills on time. It's very straightforward.

And I know there's been some discussion, for example, about my powers
under the 14th Amendment to go ahead and ignore the debt ceiling law.
Setting aside the legal analysis, what matters is, is that if you start
having a situation in which there's legal controversy about the U.S.
Treasury's authority to issue debt, the damage will have been done even
if that were constitutional, because people wouldn't be sure. It would
be tied up in litigation for a long time. That's going to make people
nervous.

So a lot of the strategies that people have talked about -- well, the
President can roll out a big coin, or he can resort to some other
constitutional measure -- what people ignore is that, ultimately, what
matters is what do the people who are buying Treasury bills think?  ...

END
3:21 P.M. EDT

(6) IMF working paper canvasses 100% Reserves, debt-free money (2012)
http://www.imf.org/external/pubs/ft/wp/2012/wp12202.pdf

WP/12/202WP/12/202

The Chicago Plan Revisited

Jaromir Benes and Michael Kumhof

© 2012 International Monetary Fund

Authorized for distribution by Douglas Laxton

August 2012

This Working Paper should not be reported as representing the views of
the IMF.

The views expressed in this Working Paper are those of the author(s) and
do not necessarily represent  those of the IMF or IMF policy. Working
Papers describe research in progress by the author(s) and are  published
to elicit comments and to further debate.

Abstract

At the height of the Great Depression a number of leading U.S.
economists advanced a  proposal for monetary reform that became known as
the Chicago Plan. It envisaged the  separation of the monetary and
credit functions of the banking system, by requiring 100%  reserve
backing for deposits. Irving Fisher (1936) claimed the following
advantages for this  plan: (1) Much better control of a major source of
business cycle fluctuations, sudden  increases and contractions of bank
credit and of the supply of bank-created money.

(2) Complete elimination of bank runs. (3) Dramatic reduction of the
(net) public debt.  (4) Dramatic reduction of private debt, as money
creation no longer requires simultaneous  debt creation. We study these
claims by embedding a comprehensive and carefully calibrated  model of
the banking system in a DSGE model of the U.S. economy. We find support
for all  four of Fisher's claims. Furthermore, output gains approach 10
percent, and steady state  inflation can drop to zero without posing
problems for the conduct of monetary policy.  [...]

(7) IMF's epic plan to conjure away debt and dethrone bankers - Ambrose
Evans-Pritchard (2012)


http://www.telegraph.co.uk/finance/comment/9623863/IMFs-epic-plan-to-conjure-away-debt-and-dethrone-bankers.html

IMF's epic plan to conjure away debt and dethrone bankers

So there is a magic wand after all. A revolutionary paper by the
International Monetary Fund claims that one could eliminate the net
public debt of the US at a stroke, and by implication do the same for
Britain, Germany, Italy, or Japan.

The IMF reports says the conjuring trick is to replace our system of
private bank-created money.  Photo: Reuters

By Ambrose Evans-Pritchard

2:31PM BST 21 Oct 2012

One could slash private debt by 100pc of GDP, boost growth, stabilize
prices, and dethrone bankers all at the same time. It could be done
cleanly and painlessly, by legislative command, far more quickly than
anybody imagined.

The conjuring trick is to replace our system of private bank-created
money -- roughly 97pc of the money supply -- with state-created money.
We return to the historical norm, before Charles II placed control of
the money supply in private hands with the English Free Coinage Act of
1666.

Specifically, it means an assault on "fractional reserve banking". If
lenders are forced to put up 100pc reserve backing for deposits, they
lose the exorbitant privilege of creating money out of thin air.

The nation regains sovereign control over the money supply. There are no
more banks runs, and fewer boom-bust credit cycles. Accounting
legerdemain will do the rest. That at least is the argument.

Some readers may already have seen the IMF study, by Jaromir Benes and
Michael Kumhof, which came out in August and has begun to acquire a cult
following around the world.

Entitled "The Chicago Plan Revisited", it revives the scheme first put
forward by professors Henry Simons and Irving Fisher in 1936 during the
ferment of creative thinking in the late Depression.

Irving Fisher thought credit cycles led to an unhealthy concentration of
wealth. He saw it with his own eyes in the early 1930s as creditors
foreclosed on destitute farmers, seizing their land or buying it for a
pittance at the bottom of the cycle.

The farmers found a way of defending themselves in the end. They muscled
together at "one dollar auctions", buying each other's property back for
almost nothing. Any carpet-bagger who tried to bid higher was beaten to
a pulp.

Benes and Kumhof argue that credit-cycle trauma - caused by private
money creation - dates deep into history and lies at the root of debt
jubilees in the ancient religions of Mesopotian and the Middle East.

Harvest cycles led to systemic defaults thousands of years ago, with
forfeiture of collateral, and concentration of wealth in the hands of
lenders. These episodes were not just caused by weather, as long
thought. They were amplified by the effects of credit.

The Athenian leader Solon implemented the first known Chicago Plan/New
Deal in 599 BC to relieve farmers in hock to oligarchs enjoying private
coinage. He cancelled debts, restituted lands seized by creditors, set
floor-prices for commodities (much like Franklin Roosevelt), and
consciously flooded the money supply with state-issued "debt-free" coinage.

The Romans sent a delegation to study Solon's reforms 150 years later
and copied the ideas, setting up their own fiat money system under Lex
Aternia in 454 BC.

It is a myth - innocently propagated by the great Adam Smith - that
money developed as a commodity-based or gold-linked means of exchange.
Gold was always highly valued, but that is another story. Metal-lovers
often conflate the two issues.

Anthropological studies show that social fiat currencies began with the
dawn of time. The Spartans banned gold coins, replacing them with iron
disks of little intrinsic value. The early Romans used bronze tablets.
Their worth was entirely determined by law - a doctrine made explicit by
Aristotle in his Ethics - like the dollar, the euro, or sterling today.

Some argue that Rome began to lose its solidarity spirit when it allowed
an oligarchy to develop a private silver-based coinage during the Punic
Wars. Money slipped control of the Senate. You could call it Rome's
shadow banking system. Evidence suggests that it became a machine for
elite wealth accumulation.

Unchallenged sovereign or Papal control over currencies persisted
through the Middle Ages until England broke the mould in 1666. Benes and
Kumhof say this was the start of the boom-bust era.

One might equally say that this opened the way to England's agricultural
revolution in the early 18th Century, the industrial revolution soon
after, and the greatest economic and technological leap ever seen. But
let us not quibble.

The original authors of the Chicago Plan were responding to the Great
Depression. They believed it was possible to prevent the social havoc
caused by wild swings from boom to bust, and to do so without crimping
economic dynamism.

The benign side-effect of their proposals would be a switch from
national debt to national surplus, as if by magic. "Because under the
Chicago Plan banks have to borrow reserves from the treasury to fully
back liabilities, the government acquires a very large asset vis-à-vis
banks. Our analysis finds that the government is left with a much lower,
in fact negative, net debt burden."

The IMF paper says total liabilities of the US financial system -
including shadow banking - are about 200pc of GDP. The new reserve rule
would create a windfall. This would be used for a "potentially a very
large, buy-back of private debt", perhaps 100pc of GDP.

While Washington would issue much more fiat money, this would not be
redeemable. It would be an equity of the commonwealth, not debt.

The key of the Chicago Plan was to separate the "monetary and credit
functions" of the banking system. "The quantity of money and the
quantity of credit would become completely independent of each other."

Private lenders would no longer be able to create new deposits "ex
nihilo". New bank credit would have to be financed by retained earnings.

"The control of credit growth would become much more straightforward
because banks would no longer be able, as they are today, to generate
their own funding, deposits, in the act of lending, an extraordinary
privilege that is not enjoyed by any other type of business," says the
IMF paper.

"Rather, banks would become what many erroneously believe them to be
today, pure intermediaries that depend on obtaining outside funding
before being able to lend."

The US Federal Reserve would take real control over the money supply for
the first time, making it easier to manage inflation. It was precisely
for this reason that Milton Friedman called for 100pc reserve backing in
1967. Even the great free marketeer implicitly favoured a clamp-down on
private money.

The switch would engender a 10pc boost to long-arm economic output.
"None of these benefits come at the expense of diminishing the core
useful functions of a private financial system."

Simons and Fisher were flying blind in the 1930s. They lacked the modern
instruments needed to crunch the numbers, so the IMF team has now done
it for them -- using the `DSGE' stochastic model now de rigueur in high
economics, loved and hated in equal measure.

The finding is startling. Simons and Fisher understated their claims. It
is perhaps possible to confront the banking plutocracy head without
endangering the economy.

Benes and Kumhof make large claims. They leave me baffled, to be honest.
Readers who want the technical details can make their own judgement by
studying the text here.

The IMF duo have supporters. Professor Richard Werner from Southampton
University - who coined the term quantitative easing (QE) in the 1990s
-- testified to Britain's Vickers Commission that a switch to
state-money would have major welfare gains. He was backed by the
campaign group Positive Money and the New Economics Foundation.

The theory also has strong critics. Tim Congdon from International
Monetary Research says banks are in a sense already being forced to
increase reserves by EU rules, Basel III rules, and gold-plated variants
in the UK. The effect has been to choke lending to the private sector.

He argues that is the chief reason why the world economy remains stuck
in near-slump, and why central banks are having to cushion the shock
with QE.

"If you enacted this plan, it would devastate bank profits and cause a
massive deflationary disaster. There would have to do `QE squared' to
offset it," he said.

The result would be a huge shift in bank balance sheets from private
lending to government securities. This happened during World War Two,
but that was the anomalous cost of defeating Fascism.

To do this on a permanent basis in peace-time would be to change in the
nature of western capitalism. "People wouldn't be able to get money from
banks. There would be huge damage to the efficiency of the economy," he
said.

Arguably, it would smother freedom and enthrone a Leviathan state. It
might be even more irksome in the long run than rule by bankers.

Personally, I am a long way from reaching an conclusion in this
extraordinary debate. Let it run, and let us all fight until we flush
out the arguments.

One thing is sure. The City of London will have great trouble earning
its keep if any variant of the Chicago Plan ever gains wide support.

(8) World War I: Britain issues a debt-free currency - Bradbury Treasury
Notes


http://www.ukcolumn.org/article/bankers-bradburys-carnage-and-slaughter-western-front

Bankers, Bradburys, Carnage And Slaughter On The Western Front

A little known historical fact that will collapse even further the
reputation of the City of London.

ARTICLE | NOVEMBER 19, 2012 - 8:27AM | BY JUSTIN WALKER

{visit the link to see the Bradbury Notes}

[...] With the exception of a few thousand very powerful people, the
entire world’s population, all seven billion of us, are trapped ...
trapped into a criminal debt creating banking ‘system’ that has taken
hundreds of years to perfect and to come to fruition. This ‘system’
results in enslavement and servitude.

[...] Put very simply, the banking dynasties, such as the House of
Rothschild, control the political processes around the world to such an
extent that their network of private central banks have the right to
create money completely out of thin air and then charge interest on that
‘nothingness’. The polite term is ‘Fractional Reserve Lending’ but in
reality it is just simple fraud. The result is that the whole world is
currently drowning in a sea of fraudulent debt.

The USA now has a National Debt of over 16 trillion dollars, whilst the
UK owes its creditors over one trillion pounds. The planned contagion of
spiralling and unlawful debt is now sweeping over Europe with a renewed
vigour. Greece and Spain are being torn apart by appalling austerity
measures to the point that civil war or military intervention are now
being openly talked about on the streets. Italy is giving all the signs
that its economy is now entering into very stormy waters indeed.
Ireland, Portugal, France and Belgium are already in a mess and are
unlikely to see their debts become more manageable. Tens of millions of
people have experienced a major downturn in their quality of life, along
with their prospects for a more secure and better future, as unlawful
austerity measures brought in by corrupt politicians begin to bite. Even
the stronger economies of Germany, The Netherlands and Luxembourg have
now been downgraded by Moody’s, the Rothschild controlled credit rating
agency.

A Simple Solution To End This Madness – The Greenback:

What is happening to all of us is criminal. However, there is a very
simple solution that the banking dynasties do not want you to know about.

At the height of the American Civil War, the US Treasury warned
President Lincoln that further funding would be needed if the Federal
North was to have the resources needed to defeat the Confederate South.
The President initially went to the Rothschilds and the private banks
who wanted between 24 and 36 per cent interest. Lincoln knew that if he
agreed to take loans from the bankers that he would be putting his
country into a debt noose that would strangle the economic prosperity
out of his country and which would be almost impossible to pay off.

On the advice of a businessman with proven integrity, Colonel Dick
Taylor from Illinois, Abraham Lincoln made the decision to print
debt-free and interest-free paper money based on nothing more than the
honour of the American Government. Called ‘Greenbacks’ because they were
coloured green on one side only, the US Treasury issued 450 million
dollars worth of these notes and they were immediately accepted as legal
tender by a willing and grateful nation.

[...] And now we come to a very little known historical episode that I
alluded to at the beginning that takes this concept of the debt-free
‘Greenback’ from America to Britain ... and in so doing exposes the
truly appalling values that are prevalent even today within the City of
London.

The Great War And The Debt-free Bradbury Treasury Note:

Three weeks ago, as part of my ongoing research into the banking elite,
I came across a fascinating book entitled The Financiers and the Nation
by the Rt. Hon. Thomas Johnston, P.C., ex-Lord Privy Seal. It was
written in 1934 and republished in 1994 by Ossian Publishers Ltd.

The text of this quite remarkable and rare book is available here.

In Chapter 6, entitled ‘Usury on the Great War’, I’ve selected the
following paragraphs which I believe are both shocking and self-explanatory:

  “ WHEN the whistle blew for the start of the Great War in August 1914
the Bank of England possessed only nine millions sterling of a gold
reserve, and, as the Bank of England was the Bankers' Bank, this sum
constituted the effective reserve of all the other Banking Institutions
in Great Britain.

The bank managers at the outbreak of War were seriously afraid that the
depositing public, in a panic, would demand the return of their money.
And, inasmuch as the deposits and savings left in the hands of the
bankers by the depositing public had very largely been sunk by the
bankers in enterprises which, at the best, could not repay the borrowed
capital quickly, and which in several and large-scale instances were
likely to be submerged altogether in the stress of war and in the
collapse of great areas of international trade, it followed that if
there were a widespread panicky run upon the banks, the banks would be
unable to pay and the whole credit system would collapse, to the ruin of
millions of people.

Private enterprise banking thus being on the verge of collapse, the
Government (Mr. Lloyd George at the time was Chancellor of the
Exchequer) hurriedly declared a moratorium, i.e. it authorized the banks
not to pay out (which in any event the banks could not do), and it
extended the August Bank Holiday for another three days. During these
three or four days when the banks and stock exchanges were closed, the
bankers held anxious negotiation with the Chancellor of the Exchequer.
And one of them has placed upon record the fact that 'he (Mr. George)
did everything that we asked him to do.' When the banks reopened, the
public discovered that, instead of getting their money back in gold,
they were paid in a new legal tender of Treasury notes (the £1 notes in
black and the 10s. notes in red colours). This new currency had been
issued by the State, was backed by the credit of the State, and was
issued to the banks to prevent the banks from utter collapse. The public
cheerfully accepted the new notes; and nobody talked about inflation.

To return, however, to the early war period, no sooner had Mr. Lloyd
George got the bankers out of their difficulties in the autumn of 1914
by the issue of the Treasury money, than they were round again at the
Treasury door explaining forcibly that the State must, upon no account,
issue any more money on this interest free basis; if the war was to be
run, it must be run with borrowed money, money upon which interest must
be paid, and they were the gentlemen who would see to the proper
financing of a good, juicy War Loan at 31/2 per cent, interest, and to
that last proposition the Treasury yielded. The War was not to be fought
with interest-free money, and/or/with conscription of wealth; though it
was to be fought with conscription of life. Many small businesses were
to be closed and their proprietors sent overseas as redundant, and
without any compensation for their losses, while Finance, as we shall
see, was to be heavily and progressively remunerated.

{photo}
Emergency Bradbury Treasury Notes (printed only on one side)
{end}

The real values of the private bankers and the City of London have been
exposed for all to see. Whilst hundreds of thousands of British soldiers
were dying on the killing fields of Flanders and elsewhere doing what
they saw as their patriotic duty, British bankers, safely out of danger
and not sharing the appalling conditions on the Western Front, were only
interested in one thing – how to make obscene profits from Britain’s
desperate efforts to win the war. To say that the private bankers and
the City of London have the morals of sewer rats is to be extremely
unkind to our little rodent friends. But this is the clincher. As a
direct result of the greed and treason of the British private bankers in
preventing the continuance of the Bradbury Treasury Notes, Britain’s
National Debt went up from £650 million in 1914 to a staggering £7,500
million in 1919.

And this is where it all gets particularly interesting. The following is
an extract from the official and current HM Treasury’s Debt Management
Office website ... and it appears to be completely at odds with the
account given by the Rt. Hon. Thomas Johnston.

  “ The threat of World War One pushed British banks into crisis;
exacerbated further as half the world's trade was financed by British
banks and as a consequence international payments dried up. In response
to this crisis, John Maynard Keynes (the renowned economist), persuaded
the Chancellor Lloyd George to use the Bank of England's gold reserves
to support the banks, which ended the immediate crisis. Keynes stayed
with the Treasury until 1919. The war years of 1914-18 had seen an
increase in the National Debt from £650 million at the start of the war
to £7,500 million by 1919. This ensured that the Treasury developed new
expertise in foreign exchange, currency, credit and price control skills
and were put to use in the management of the post-war economy. The slump
of the 1930s necessitated the restructuring of the economy following
World War II (the national debt stood at £21 billion by its end) and the
emphasis was placed on economic planning and financial relations.

Why is there is no mention whatsoever of the £300 million of Bradbury
debt-free paper Treasury Notes issued in 1914? Instead, it says Lloyd
George, on the advice of John Maynard Keynes, used the Bank of England’s
gold reserves which, according to Johnston, only amounted to £9 million.
What is going on here? Who is telling the truth? Could it be that HM
Government, the puppets of the City of London, don’t want you to know
about the simple but effective concept of debt-free and interest-free
Treasury Notes?

What Do The System-serving Politicians And "Economists" Say About The
issuance Of Treasury Notes?

As soon as the concept of the debt-free and interest-free Greenback
Dollar (and now the Bradbury Pound) is raised in polite conversation
with either a politician or an economist, two immediate knee jerk verbal
reactions occur from these system-servers.

The first is to say that if a government suddenly starts printing its
own money through its treasury based on the credit and wealth of the
country, instead of going through its central bank, we would be heading
towards what happened in the Weimar Republic in Germany in the early
1920s where hyperinflation spiralled out of control and a loaf of bread
was bought with a barrow load of almost worthless paper money.

To this I just say look again at what actually happened in Germany at
that time. It was not the Weimar’s treasury but it was the privately
controlled central bank, the Reichsbank, who was printing the money,
coupled with the extreme actions of currency speculators and foreign
investors that caused all of the problems.

Hyperinflation could not happen as a result of the Bradbury Pound,
because the democratically elected government would actually ‘govern’
... now that is novel! Speculation would be prevented, and most
importantly, the newly created money would be spent on a productive
economy, rather than bankers bonuses.

The second reaction from system-servers is that the country is already
printing its own money – it is called Quantative Easing, that mysterious
cash injection into the economy which only seems to get as far as the
banks and not to where it is actually needed. Only trouble is, it is the
Bank of England doing the printing and not HM Treasury. Based around
government issued Bonds (promissory notes based on the wealth of the
nation), this complex process only increases the National Debt and it
certainly doesn’t solve anything.

The simple truth is that people who serve the system and who have been
‘educated’ by such organisations as the Fabian inspired London School of
Economics (LSE), are not suddenly going to bite the hand that gives them
a very good living. ...

(9) World War I: the British treasury (not the Bank of England!) issues
debt-free currency notes


http://homepage.ntlworld.com/trev.rh/Notes/treasury.htm

TREASURY NOTES

Up until the First World War, gold sovereigns and half sovereigns had
circulated as everyday currency for nearly a century. Following the 1833
Bank Charter Act, Bank of England notes were legal tender in England and
Wales only for amounts of £5 and above.

On 5th August 1914 (the day after war was declared), the Currency and
Bank Notes Act was passed which allowed the treasury (not the Bank of
England!) to issue currency notes of £1 and 10/-. these notes had full
legal tender status and were convertible for gold through the Bank of
England.

BRADBURY
The first notes were produced to a hurried design and, because of the
lack of availability of banknote paper, were printed on paper produced
for postage stamps. The £1 note was issued on Friday August 7th and the
10/- a week later. These are known as the first Bradbury issue after the
Permanent Secretary to the treasury, Sir John Bradbury. John Bradbury
was born in 1872 and entered the Civil Service in 1896, first in the
Colonial Office and then the treasury. After serving under Asquith and
then Lloyd George, Bradbury was appointed one of two permanent
secretaries to the treasury in 1913. Bradbury remained the governments
chief financial advisor during the war and left the treasury on 27
August 1919 to become principal British delegate to the Reparation
Commission.

Within days a new design was being worked on. The design was produced by
Mr. George Eve and the notes were printed on banknote paper. The notes
were issued on 23rd October (£1) and 21st January 1915 (10/-). These
notes are referred to as the second issue. Some of these second issue
notes were overprinted in Arabic, by the treasury, for use by British
forces in the Mediterranean.

A third design, featuring the King's head on the obverse (front) was
soon under way. These were the first national notes to be printed on
both sides. The £1 note had a picture of the Houses of Parliament on the
reverse whilst the 10/- note had a simple design featuring the
denomination within a fancy pattern. The notes were issued on 22nd
January 1917 (£1) and 22nd October 1918 (10/-). The first and second
issues ceased to be legal tender on 12th June 1920.

WARREN FISHER
Fenwick Warren Fisher was born in 1879 and entered the Civil Service in
1903. After spells with the Inland Revenue, an National Health Insurance
Commission he was appointed Deputy Chairman and then Chairman of the
Board. In 1919 he was knighted and as Sir Warren Fisher went as
Permanent Secretary to the treasury where he stayed until his retirement
in 1939. The first issue of notes under Sir Warren Fisher were identical
(other than his signature) to the third issue of Bradbury.

In 1923, a new watermark was introduced into the £1. Notes from this
time are referred to as the second issue.

In 1927, following the Royal and Parliamentary Titles Act, the heading
on the notes was changed to "UNITED KINGDOM OF GREAT BRITAIN AND
NORTHERN IRELAND". Notes from this time are referred to as the third issue.

In November 1928, the Bank of England took over the production of 10/-
and £1 notes, with the treasury notes from the third Bradbury issue
onwards remaining legal tender until the 31st July 1933.

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