Blog 15 1 The money scene replayed 2 Democracy or Republic?

Blog 15  In two parts:

Part 1
   Replay of "The Money Scene" (from Blog 2), which explains how our money is created. All of the world's governments and economies are linked (and controlled) by this process. It deserves a review at this point

Part 2
  As promised, "America is not a democracy. It is a republic."  The originals of two concepts of government.

Part 1  The Money Scene (Replay of Blog 2)

In Blog 1 I hope I convinced you, dear reader, that there are two distinct kinds of Canadian (or American, or Chinese) money? 

There is cash, actually printed or minted by the governments, and there is what is known as credit money, created by the banks and rented to us.

You probably use the rented money for almost all of your transactions. As does General Motors or Exxon. It is not printed, except maybe as entries in your bank book. No printing press is needed for credit money. But if you want some, you have to rent it.

So, for the secret: how do the banks create our money supply? It has been said by wiser economists than me, “It is so simple, it’s hard to believe.”

You may have seen those TV ads where a young couple beams as a bank officer - often a well-groomed, well-spoken young lady with the couples’ best interests at heart - tells them what they want to hear. She will give them $25,000 for that new car, or for their daughter’s school fees, or whatever.

What follows (not shown in the ad) is a lot of document signing (and signing, and signing.) In real life one of them might want to read the documents. But he, or she, would have to be a super-fast, intelligent reader, like you, perhaps. At the critical moment, then, after you have signed the documents, the bank agent tells you that $25,000 has just been transferred to your account.

At that precise moment, $25,000 in new money pops into existence and enters the national economy.

It's certainly real money. You write the cheque, and you get your car. The process is so simple: a bank willing to lend makes an agreement with a client willing to borrow. And it is exactly the same process if General Motors or Imperial Oil wants to borrow a billion dollars. It's not cash, but it is real money, ready to be spent. 

And it is new money. The bank does not take it from a stack of cash nor shave it from an ingot of gold in the basement.

So when you repay that loan, $25,000 is taken out of existence. Really.

Of course, you have been paying the rent, the interest. Ah, interest, the wellspring of the banking business.

Part 2 DEMOCRACY or REPUBLIC?

The drafters of the American constitution were educated in the history and language of ancient Athens and ancient Rome. (Universities of the time did not carry courses in American literature or political economy.) So when the fathers of the constitution sat down to work, they had two models. one from Athens and one from Rome. They probably knew more Latin than they knew Greek. So when they came to defining a government, they tended, toward the Roman rather than the Athenian model .The Athenians had a democracy. The Romans had a republic. 

So what is the difference? According to Aristotle, who was an Athenian, democracy means ”the rule of the people”

The Romans, however, recognized two classes of citizens, They called their state “senatus populusque Romanus”,  which means “the Roman Senate and people” The idea survives to this day on ancient Roman buildings in the letters SPQR. and, perhaps we might say, in the American Senate

The Roman senatorial class were a kind of upper class, from which the chief magistrates were largely drawn. It is true that there were in addition three different popular assemblies, but the senators held all the real power.

Finally, to end this little historical rant, it must be admitted that the Athenian democracy came to a bad end by engaging in a distant, futile, foreign war. Something like Viet Nam or Afghanistan. 

The Roman republic, on the other hand, went on, to become a great empire, but no longer even remotely democratic.

How much of this history affected the constitutional congress, I can’t say. But American conservatives have often maintained that America is a republic, not a democracy. Abraham Lincoln, who was not educated in an Ivy League university, may have held different views.

. 

Blog 14 Don't Vote the Money

The Cogs Blog

I regret very much to have to say it, but I do not think America will ever recover its democracy. Maybe some day, years away, the old commitment to “every man (and woman, too) a free equal citizen”, may surface in a new, better world, but…

I say this because of another law - let’s call it the law of elections. As I said in the previous blog, “Money buys elections.”  

This has been declared part of the American constitution by the Supreme Court’s “Citizens United” decision. Restrictions on campaign spending have been labelled a denial of the right to free speech. Yep. Abraham Lincoln must be spinning in his chair. All that work to preserve a great nation…  And the drafters of the Constitution, which they carefully designed to make tyranny impossible, where are they now?

Can something be done about it? Well the politicians who win after accepting big money from generous donors could just ignore their donors’ legislative preferences. They could just go right ahead legislating for the good of all the people who voted for them, or, even, for the good of all the people in their whole constituency, even those who didn’t vote for them. No, forget I said that. Mere theory or once-upon-a-time thinking. 

So what, then? I suggest we could just test that other hallowed principle, “the people are sovereign.” 

How? Well, I hate to introduce money in the same paragraph with “the people”, but if they pooled a lot of their small change, they could use the media, commercial and personal, to mount a “DON’T VOTE THE MONEY” campaign (DVMC), or a VOTE AGAINST THE MONEY campaign (VAMC), or even hire a pricey ad firm to create a really sweet slogan (ARSS). 

The aim would be to match the most lavish politicians, dollar for dollar,  and persuade voters, particularly the not-moneyed majority to vote against the biggest spender. It might take off at the presidential level, and in subsequent state and civic elections produce some interesting results, like independent or (horrors/cheers!) third party candidates! Voting against the money could even become a popular fad and be reported free on commercial television news. Hmmmnn. that idea didn’t go far. I can tell by the look on your face.

But come on now, don’t pull a long face; think positive. Every great human accomplishment began with someone thinking in a new way.

For starters, how about a contest for the best slogan, logo or cartoon for 

The Movement?

Some entries:

Don’t Vote the Dollars

      Don’t watch the political ads. Just time them.
(There must be an app for that.) 
Then vote: for the one who has spent the least.

You’re voting? Money or Merit?

They can’t buy my vote. I’m counting the money spent.

Let's all pull the rabbit our of the money hat. (cartoon?)

A candidate, in order to win, must get a majority of votes. So, voters, you really do have power. Although Mark Twain is reported to have said, sourly, “Whenever you find yourself on the side of the majority, it is time to pause and reflect.” Maybe today he would have said, “Whenever you pause and reflect, you can become part of a democratic majority.”

In the nest blog, perhaps I’ll explain why some Americans during the last two centuries have argued that the United States is not, and never has been, a democracy; they insist it is a republic. What’s the difference? Tune in if you are interested.