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.

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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.

Blog 13 Seat Sale: Money Buys Elections

                                                                      

        The Cogs Blog

Blog 13  Seat Sale:  Money Buys Elections

Election fraud? No, perfectly legal! Three cases on point:

Case 1. U.S. About 20 years ago I came on a report that in two of the 1990's elections, the percentages were 85% and over 90%.

What percentages? the percentage of winning candidates who just happened to be the candidates who had spent the most money on their campaigns. Yes, 90% of the candidates who won were the candidates who had spent the most money.

Case 2. Canada. At the time I was curious because I had in my possession the candidates' expense figures for a provincial election in Canada. Of 103 seats I had the spending figures for 102. (Number 103 was under investigation by the electoral authorities for overspending the legal limits.) I did the arithmetic. The percentage? About 70% (71 of 102) of the seats were won by the candidates who spent the most money.

Case 3  In the small town where I now live, a recent election saw three candidates running for mayor. One of them had obviously spent more than the other two put together: signs everywhere - big signs. Slam dunk? Surprise! That candidate ran third! 

The lesson; in all this? Well, a national electoral district has a very large number of voters; a province or state, a smaller number; and the town, fewer still. Democracy, I would conclude, is more likely to work in a small population.

That should not be surprising. Democracy probably originated in the small city states of ancient Greece about 2500 years ago. There, citizens debated in the marketplace issues of war and peace, civic projects and - taking Athens as an example - whether any single citizen was getting too powerful and needed to be exported for a time. The Athenians had a practice at election time of scratching on a piece of broken pottery the name of one citizen, and throwing the shard into an urn. When the "votes" in the urn were counted, the candidate with the  best score was exiled from the city for ten years. Interesting practice? Any candidates in mind in your town?

The shards were called ostrakoi; and English still has the word "ostracism", meaning banishment, though in a purely social sense.

Could we consider election attack ads on television a perverted descendant of "ostracism"? They both involve a kind of stone throwing.

Well, it is a very short jump from this thought to the shocking opening line of my next blog: "I do not think Americans are going to recover their lost democracy any time soon." But there is one possible hope for a better outcome.

Blog 12 Revisiting "Making Money: 1997

THE COGS BLOG






          Blog 12  Revisiting "Making Money" (1997)


Below is a piece I wrote while learning to explain how bank-created money pops into existence, and goes on to take over the whole economy. You might compare it with recent, Blog 2, The Money Scene, to see if I have improved the explanation.

Making Money

When the cruise ship, Going for Broke, struck a reef, several hundred passengers were put ashore on a tropical island. They camped out for the night, waiting for the tide to lift the lightened ship off the reef. When they looked out in the morning, however, Going for Broke had GONE!

So what did they do? Well, they played "Gilligan's Island", but in earnest. They settled down to stay. Several became expert at hunting the wild pigs. A young couple set up shop making serviceable pigskin shoes. A few entertainers started a theatre. Some Dutchmen grew vegetables.

But this is a story about money. As the division of labour progressed, more money was needed. Everybody said they needed more, especially since the old bills they had brought with them were wearing out. 

Enter Bobbie the Geek. He wasn't too good at gardening; he was hopeless with a spear; and he cut his thumb trying to make himself a pair of shoes. But he knew that money was only paper. So Bobbie tore blank pages out of his diary and wrote on them "$20 Bobbiebucks. Redeemable on rescue. Bobbie." He seemed like a nice guy, so people took his "money" in exchange for shoes, bread and pork chops. In fact, they were soon using Bobbiebucks to buy goods and services from each other. Eventually bobbiebucks became the major medium of exchange. (Bobbie, by the way, always took his change in the old currency, and saved it.)

Still, more money was needed. So Bobbie obliged: he supplied "$20 Newbobbiebucks", which people could borrow simply for promising to pay him back twenty-ONE dollars. As newbobbiebucks in turn became the island currency, Bobbie the Banker became the island's most prominent and powerful citizen. You see, he owned all the money on the island. Everybody was in debt to him. Nice work, Bobbie.

Could it have been done any other way?   

"I always said

keeping a diary

would pay off"

Add caption

                     

Blog 11 Global Birdseye 3

The Cogs Blog

                       Blog 11 Global Birdseye 3   World War III

George Bush talked about "the war on terror" as a permanent war. He didn't quite make the idea stick with most ordinary Americans, who had been burned in Vietnam, and again in Iraq. But other English-speaking prime ministers are now playing the same tired disk and jumping into the Middle East bonfire with guns and rhetoric blazing.

No words can portray the savagery of the murderous ISIL fighters. There is no question that they have become human savages and their antics should be stopped.

However, just to enter a radical thought or two before pursuing that point, one might ask two questions. If these guys had had wives, and jobs befitting their talents, and had seen their children going to schools, would they be acting out in the way they are? And if they had been able to look around the world and not see a grossly unequal distribution of wealth, which excluded them, would they be any different? Don't ask me. I just propose the questions.

But there is a question some really smart number-cruncher might answer. For every ISIL fighter killed in a drone attack how many civilians are "unfortunate collateral damage," and, of those civilians, how many have brothers or fathers or uncles who are now mad as hell at the foreign bombers?

Well, enough rhetorical questions. Here is a serious one Why is no word heard about a rational military approach that would put an end to the problem: namely, to cordon off the ISIL playboys and cut off the supply of arms to them?

I can't believe that the combined military power of America, England, France, Germany - throw in Canada and Australia, if necessary - could not do that. Quarantine ISIL and stop the supply of arms to them. (NOTE: there are TWO steps there.)  They couldn't fight for long with hand-held be-heading tools.

It may have something to do with the fact that these countries - America, England, France, Germany, Canada and Australia are the same countries which have big military export industries. Still, there's the Saudi-Yemen war now. Maybe the Americans, Europeans and Australians ought to jump in there, too, with a few aircraft attacks. It wouldn't matter which side they hit. It would be good for business.

Well, enough said on those grim thoughts. Next time I'll try for a funny blog - seriously. Something simple and about money.

Blog 10 Global Birdseye 2

                                                         


     The Cogs Blog





NO.10 Global Birdseye 2


     It should be clear that earthquakes, floods, tsunamis, hurricanes, and other large-scale public disasters are stimulants for the economy. Money has to be collected, borrowed, or created, and then spent, creating jobs and profits.  

So let's have more disasters!. How about a war? A big one, Like World War II. It was the ultimate cause of the world's recovery from the Great Depression: ten years of depression - and then get a war going, and within a few months the economy was booming!

In Europe for five years or more men were killing each other with lots of collateral damage. In North America women were acting like men, working in factories and shipyards to produce uniforms, ammunition, airplanes, warships (A hit song of the time was "Rosie the Riveter"). Even schoolchildren were into it: students in high school shop classes made parts for model bombers and fighter planes -- the military needed the models for aircraft recognition classes! Really.                                                                                                          

And the law of money - "money goes where money is" - was in high gear, moving wealth from governments to industrial companies and from companies to their shareholders. Along the way workers were fully employed, and at good wages. These were good times -- if the casualty lists published each day in the newspaper didn't bother you.

So what about World War III? It has already begun, it seems to me. From all quarters of the globe we hear of people with guns and airplanes killing other people with guns and airplane. But it is a big subject, with lots of connected cogs to uncover. Better leave it for the next blog.