“Three prominent hard money advocates have endorsed the temporary issuance of fiat money, with two of them particularly endorsing interest-free fiat money.
On September 18, 2011, Nelson Hultberg of the Conservative American Party outlined one of the party’s primary planks, to “enact Milton Friedman’s 4% auto-expansion plan for the Fed.“
On August 17, 2011, monetary reform activist Kirk Mackenzie outlined his transition period of issuing interest-free fiat money, in moving toward a free market monetary system.
On October 2, 2008, Michael Badnarik, 2004 Libertarian presidential candidate said with regard to issuing interest-free fiat money like Lincoln did: “That’d be a step in the right direction.“
Gary North, prominent writer for LewRockwell.com, has curiously stayed quiet by not smoking out these individuals as alleged false-flag infiltrators according to the same standards he used for taking exception with Ellen Brown advocating (interest-free) fiat money. Could it be that Ellen Brown was an easy target, not having any connections into the social circles he travels in, unlike these three other individuals?”
Comment:
Update (Michael Rozeff critiquing Ellen Brown):
“According to Margrit Kennedy, a German researcher who has studied this issue extensively, interest now composes 40% of the cost of everything we buy. We don’t see it on the sales slips, but interest is exacted at every stage of production. Suppliers need to take out loans to pay for labor and materials, before they have a product to sell.”
Brown’s bottom line proposal is that the government create money instead of the banking system. She wants the government to set up its own banks. She says that this would bypass “the interest tab”. We have seen that this doesn’t bypass the cost of capital at all, not when that capital comprises real resources and the government absorbs these resources. But Brown has another fallacy in mind which is that fiat currency will eliminate the capital cost. She wants the government banks to issue fiat currency which is non-interest bearing and in this way fund projects at what she thinks is a zero capital cost.
Picture a government printing press for currency. Citizens are required to accept the newly-printed paper in payments for goods. Obama’s lieutenants take the paper currency and spend it for their favorite projects. All this amounts to is a different kind of taxation scheme by which the government absorbs (seizes) resources that are in limited supply. The opportunity costs of these seized resources still do not vanish no matter whether the resources are seized directly, taxed through the IRS, or obtained by spending new pieces of green paper.
Brown is committing the same fallacy as the Communists who attempted in vain to get rid of interest. It is an impossibility. The interest measures the postponement of consumption and arises because of it. If there are to be any production processes, they require capital and non-consumption. There will have to be interest. If interest is forcibly suppressed, capital will flee and people will engage in greater consumption. Capital will be consumed and the economy will go downhill. Government printing presses amount to taxes on capital. They will have the same results.”
Lila:
Frankly, I have had this conversation with Ms. Brown many times on this blog. Ellen Brown has the establishment’s ear and thus one must suppose that this is what is in the works.
However, my point is different. I am not suggesting that this is a proposal that would be viable long-term. I am just broaching the possibility that some compromise might work as a temporary fix at the local level.
If it were left to me, I’d decentralize banking, require gold reserves, cut taxes across the board to one number, says 10-15%, lift all subsidies, send most of the funding of universities and related programs to the states or to private hands, free up licensing in healthcare, teaching, and law, and ease legal immigration.
That would take care of the problem of monitoring tax-shelters and money-laundering. It will not happen. We are going to get printing one way or other. That being the case, it seems moving to a decentralized banking system (much lower than the level of state banks) might be a start. We are talking about temporary measures here. And yes, it is communistic. But so is everything else going on.
Is Rozeff suggesting that whole-sale looting of the treasury by the state and its clients is capitalistic? So, when everything is completely corrupt and collectivist, a small amount of collectivism on behalf of local communities, through a decentralized system, is not bad.
Ellen Brown doesn’t understand economics, true. But she does get one thing many free market economists don’t seem to get.
We don’t have a free market. We are already communist/collectivist. Already. Thus redistributions within this system are only a matter of supporting one power bloc over another, fighting for the spoils of savings. The financiers have been looting so far. Now the populace wants a bit. My thinking is, yes, it’s wrong, but it might shift the power-balance a bit temporarily.
In any case, there are people who think similarly, with more cogent arguments, like Bill Still or Nelson Hultberg, and it seems that at least some experimentation in thinking in that direction might be helpful.
ORIGINAL COMMENT
I should quickly state that I read and like the writing of both North and Brown and think there is room for a via media, if we pay attention to language. So my question, before everything else, is this: Is interest-free money the same as interest-bearing credit (which is not money, although the piece doesn’t make the distinction)?
The simple anwer is no. See here for some interesting ideas for community banking and decentralized use of money, that might be a temporary fix for some communities.
Will it be inflationary in the same way. The likely answer is not quite. Will it be completely non-inflationary? Not likely. But it will depend on how it enters the market, what other adjustments are made, whether the economy grows, and whether we also cut spending so we can service previous debt.