Blog 22 Lettus Rejoice

           Blog 22  Lettus Rejoice

I have toured a greenhouse as big as a football field. It contained a table  which was almost as big as a football field.  You couldn’t see it all that clearly. It was covered with green growing things. They were growing Boston Pizzas.

Growing Boston Pizzas? No, that can’t be right. Not Boston Pizzas. It was Boston lettuce. Yes, lettuce.  Sorry, Boston.

And this is good old Boston,

The home of the bean and the cod.

Where the Lowells talk only to Cabots,

And the Cabots talk only to God.

Yes, sorry again, Boston. I know you have seen a lot of history since J. C. Bossidy spoke those lines in 1910. And thanks for the lettuce.

 Well,  back to the greenhouse. It really was growing Boston lettuce. Along one side of the giant table, workers, mostly friendly ladies, were planting little sprouts of lettuce in boxes. The boxes were moving slowly away from them - very slowly. The mechanism underneath the table took about 30 days for a line of lettuce to reach the other side. There another cadre of workers were lifting full grown lettuces off and putting them in crates. On the way across the moving table the plants had their feet in water scientifically laced with nutrients.

Now I would like to make one point about this before moving on.  Think of the number of heads of lettuce this factory could produce, working all year round, compared with an open farm field of the same size.

That is a fruitful thought in these days when farm land is disappearing because of drought, high speed cultivation, urban sprawl, and other contaminants. And us with eight billion mouths to feed.

It is true that part of our problem is in food distribution. (But that is a topic for another day).

My Boston pizza/lettuce interest has just been further galvanized by a TV news report which seemed to picture not just a horizontal concentration of growing plants, but a vertical concentration, too, as the plants also moved up and down. No, the factory was not floating in the clouds, but, with the set-up pictured, it might have grown 40, or 140, times as many lettuce heads as could be grown in a farm field of the same size!

Now this certainly sounds like good news for all of us, but particularly for climate-change-deniers, real or pretended, who can wash their hands of the whole problem of food shortage, and get on with the tired old routine of “growing the economy”, and “restoring prosperity.” (“What did you say was the name of that grow-op company. Is it listed on the stock market yet?”)

             Finally, our last blog promised to name the two advanced countries that could, if their governments chose, implement a Rowbotham-style program to reduce their national indebtedness to private banks, to cushion the gyrations of the economy, and to maintain a stable prosperous nation. 

Neither one of them is the US. The Fed is owned by a consortium of regional private banks and not by the government, as Woodrow Wilson so sadly lamented (Blog 20).

But Britain and Canada both OWN and control their central banks. Any profits are paid out as dividends.  So for nominal charges the governments could create money for infrastructure and for a basic income.

Will they do it? Probably not, until forced by an enlightened (or enraged) citizenry. But freedom from the power of the global banks has to start somewhere with some exercise of national sovereignty. The current fascist government in Canada, if re-elected, certainly won't do it. But in the British Parliament there have been recent debates sparked by monetary reformers, who now understand the principles of non-debt money creation.

Blog 21 Optimum Monetary Stability 2

Any commentator today on the Great Depression of the 1930's is bound to say that the stock market crash in October 1929 did not CAUSE the depression.

So thoughtful commentators have asked a more fruitful question: Why, when there were plenty of skilled workers, lots of industrial capacity, huge supplies of natural resources, and thousands of people in need of the products, why were there so many people unemployed?

The proposed answer at the time was "overproduction" - more goods being produced than people wanted. The correct diagnosis we now know is shortage of money to buy those goods.

So let's turn this apple upside down. Everything was available for prosperity - except money. But for ten years everybody seems to have stumbled blindly along doing the wrong things. The banks called in loans and governments were erroneously persuaded to cut spending, to lower taxes, to balance budgets. We now call that program "austerity'. What's important is that these measures just further reduced the money supply. They still don't work today

The outbreak of World War II loosened the purse strings. Governments taxed and borrowed and created money Banks returned to their preferred occupation - making loans. So the war and its costly resettling aftermath were financed with ease. Peacetime prosperity returned. and 1945 to 1975, in my view, were the best years of the 20th century.

So what have we learned? That in times of trouble, when private money dries up, governments should borrow, and go into debt (the sky will fall!) to keep their economy ticking? No. Not if there is a better plan. And that's what this blog is about.

Sorry for the long introduction. Why don't you get a coffee and leave the next part - the good stuff - till tomorrow.

Dad, why doesn't the government create its own credit money?.
Because the banks tell them it would be inflationary.

                                               Would it?

                                                        No.     

                                               Are banks that much smarter than the government?

Maybe the time has come for governments to make stability their real goal and to provide a larger proportion of the money supply. Enough to have a permanent compensating effect for the ups and downs of the money created by private banks' loans.

Imagine a fish tank. It has a leak at the bottom. Doubtful future for the fish. But give the tank a faucet to keep the water level stable. That seems like a no-brainer. Even your average politician should be able to understand it.

Now let's say the tank's leak represents interest payments on the money supply, and that the intake faucet is government-created  non-interest-demanding, permanent money. So turn on the faucet until a suitable stable balance between non-debt and debt money has been created. At present the ratio is 3% to 97%. History suggests a 25% to 75% ratio works better.

So how to get there? Michael Rowbotham's 1994 book The Grip of Death outlines a process.

I call it The Tidy Two-Step.

Step 1

Count the money in circulation.  (Government economists do it all the time; they call the total, M1, or M2.) Count it for two years in a row. For simplicity, let me start with hypothetical small figures.

2013        $1,000,000  (97% of which is debt-money)

2014        $1,200,000      "     "       "     "   "        "
Difference  $200,000

Step 2  In 2015 inject $200,000 of non-debt money into the money supply.

By the next count at the end of 2015, the percentage of debt-money will be down from 97%, because the government created non-debt money remains in circulation indefinitely, and some bank debt money will have been repaid to the banks during the year, and so taken out of circulation. Get the idea?

Two questions about Step 2

Question 1. How do you create the $200,000 in non-debt money? Same way the banks create debt money - out of thin air. It is a non-interest-bearing issue from the national central bank.

Note: it is not borrowed money and it is not tax money.

Question 2. How does Rowbotham propose to get this money into the economy?

In two ways:

1.  Infrastructure projects (road repair, park development, bridges, dams, railway tracks, sewage plants, seniors residences, etc., etc.) The construction employs workers, who get paid, and spend. Simple?

2, A direct payment to everyBritish citizen over 18 years of age. He calls it a "BASIC WAGE".

Now, hold on. Before you go into a rage and tell us what banks have been saying about such an idea since before Hector was a pup, let me say  that the amount needed for Britain in 1997 worked out to 1500 British pounds per citizen.

That is not enough to create "welfare dependence", and it is not big enough to have an inflationary or shock effect in any one year. Almost nobody is going to hide it under their mattress. It will be spent. Spent.


In Rowbotham's calculation for Britain, the equilibrium point - of bank-loaned debt-money and permanent non-debt money in M1 - will be reached in the eleventh year. The BASIC INCOME amount, decreased each year, will have reached zero.

Well, that's more than enough for one blog. Spare me till the next one to tell you the two countries with the best chance for success in implementing this stabilizing process.

Blog 20 Optimum Stability - a Compensating Money Supply

Blog 20
After that mind-clogging title, let me quote another American President, Woodrow Wilson, who in 1913 signed the Act which established the Federal Reserve Bank, the American counterpart to the Bank of England.

But first.

Most countries now have a central bank whose purpose is 

"to regulate credit and currency in the best interests of the economic life of the nation, to control and protect the external value of the national monetary unit, and to mitigate by its influence fluctuations in the general level of production, trade, prices and employment, and generally to promote the economic and financial welfare of the nation." (from the Bank of Canada Act 1938).

(Read that again. It's written in law-speak, but it is a very good three-point statement-of-purpose for a national agency. 
Never mind, I'll re-write it for you. 1. to regulate the money supply, 2. to maintain the value of the national currency, and 3. to promote the financial and economic welfare of the nation.)

Now to President Wilson, who later wrote:

I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit [money creation system]. Our system of credit is concentrated. The growth of the nation therefore and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the civilized world, no longer a government by conviction and the vote of the majority but a government by the opinion and the duress of a small group of dominant men." 

Hmmmnn. I wonder what he would have said about the Supreme Court's recent Citizens United decisions, which have declared that "money talks in elections" is a principle enshrined in the Constitution?

Well, so much for introduction. On to the recipe for a balanced monetary system to replace the debt-based system we now suffer, and which accounts for about 98% of our money supply world-wide

That's right, about 98% of the money now used by people, businesses, corporations and governments is rented money. And the way they mainly pay the rent (interest) on that debt-based money is by borrowing more of it. Yep.

I'll leave you with a recollection of our friend, Arthur Banks, of Blog 16, who lent his neighbour 200 bucks to buy a poodle for his wife. The pet store took Arthur's little promise-to-pay note and passed it on to pay his own pet-food supplier. Remember? It was just like money. But Arthur did not ask for an interest payment.

Now that could be a real competitor for the rented money created by private banks. What if the governments of the world did that? They used to.

Next blog I'll try to give a simple explanation of a method for governments to get back to it. I'll also name two governments which have the tools to succeed.

Dad, when the government bails out banks

where does it get the money from?

From the banks

!!??!!