It is otherwise with certain conditions that cause a fever, a fever being the body's defense mechanism to kill an "intruder." The symptom can still kill, but the treatment is to prevent the symptom from destroying the body while at the same time allowing the fever to do its work and get rid of the intruder. With the exception of such "high grade fevers," treatment is frequently not necessary.
The reason for this extended and somewhat incongruous analogy is that the economic powers-that-be (economists and policymakers) are focusing all their efforts on addressing symptoms, especially the stock market, without doing anything to solve the underlying problem — lack of production of marketable goods and services by producers (workers) who are compensated justly for their labor contribution, and share equitably in profits on the basis of their relative ownership stake.
As a result, the United States is in a situation similar to that of France following the Franco-Prussian War. As a result of losing the war, France was forced to pay an indemnity of 5 billion Francs ($1 billion) to Prussia, an amount intended to cripple France permanently. By focusing on increasing production of exports instead of running up more debt, France was able to repay the huge indemnity in two years. This was due in part to the boom in wine exports after the development of the pasteurization of wine by Louis Pasteur — as well as his work finding a cure for anthrax in sheep and cattle, and improvements in the related production of cheese.
To get out from under the colossal burden of debt faced by the United States, the lesson is clear: produce. You can't redistribute by printing money forever — at some point the bill comes due, and simply devaluing the currency is not going to make the problem go away. The United States not only should, but must adopt Capital Homesteading for every citizen as soon as possible. To that end, we have continually been making efforts:
• For a while we've been looking at the economic situation in Ireland, which has a number of similarities with that in the United States. Ireland would be an ideal place to implement Just Third Way reforms, even a full-blown Capital Homesteading program as a realistic and "non-socialist" way to achieve the stated goal of the Easter Proclamation of 1916: "We declare the right of the people of Ireland to the ownership of Ireland, and to the unfettered control of Irish destinies, to be sovereign and indefeasible." The problem is that the financial system of the European Union — and thus Ireland — is not designed in such a way to realize this goal. The European Central Bank does not provide for rediscount of qualified industrial, commercial, and agricultural paper backed by income-generating private sector hard assets. Instead, the system is set up to monetize State debt paper through open market operations. Fortunately, this is simple to correct, although going against a century of entrenched thinking about money, credit, and banking will not be easy. The Irish government may want to consider going to the European Central Bank to, as an "experiment," permit the Bank of Ireland to rediscount commercial paper in accordance with the banking reforms recommended as an integral part of a Capital Homesteading program. Should the European Central Bank balk at implementing rediscounting of commercial paper for Ireland, it might be expedient to take heed of the increasing popular agitation in Ireland to take the country off the Euro and go with a new currency. Of course, such an "experiment" would only be feasible if the Bank of Ireland were to be prohibited from dealing in government securities, primary or secondary, and restricted to rediscounting qualified industrial, commercial, and agricultural paper from the private sector, at the same time instituting a 100% reserve requirement for commercial banks. An important feature would be the requirement that no paper would qualify for rediscount unless, in addition to being properly vetted and adequately collateralized with capital credit insurance and reinsurance, the extension of credit resulted in expanded ownership of the means of production. A "cleaned up" Federal Reserve Act removing the power to deal in government securities, allowing the discounting of bills drawn on "blue chip" non-speculative equity issues, extending the term beyond the traditional 90 days, and taking the original 1913 thirty-one-page text as a model would be a good start to a study of the necessary reforms.Those are the happenings for this week, at least that we know about. If you have an accomplishment that you think should be listed, send us a note about it at mgreaney [at] cesj [dot] org, and we'll see that it gets into the next "issue." If you have a short (250-400 word) comment on a specific posting, please enter your comments in the blog — do not send them to us to post for you. All comments are moderated anyway, so we'll see it before it goes up.
• Norman Kurland, Guy Stevenson, Robert Mason, and John Dondanville met on Monday of this week with Mr. Warren Palmer, Detroit's Director of Planning and Development, to present Capital Homesteading as a possible solution to the present crisis the city is experiencing. Mr. Palmer was very positive, and promised to give the matter serious consideration, suggesting the possibility of a follow-up meeting in the near future as soon as he and his staff have had time to study the proposal.
• On Thursday of this week the CESJ "Summit Council" met via telephone to discuss the meeting in Detroit and plan for the upcoming peaceful rally outside the Federal Reserve in Washington, DC, on April 15, 2010, and the following Second Social Justice Collaborative (Friday, April 16, 2010) and CESJ's annual meeting and anniversary celebration (Saturday, April 17, 2010). A Congressional staffer listened in on the first part of the meeting covering the situation in Detroit, and indicated being impressed with the proposal, even to the extent of giving a private cell number to keep in touch and up to date on developments.
• CESJ's monthly Executive Committee meeting is scheduled for Wednesday of next week at 10:00 am.
• A number of new publications, including a reprint of Dr. Harold Moulton's 1935 classic, The Formation of Capital with a new foreword explaining the relevance of the book today, are in the works. The importance of Dr. Moulton's book is that it shows where the money can come from to finance economic recovery, having been written as the third volume in a four-part series during the Great Depression to present an alternative to the Keynesian "New Deal." Other volumes in the series (which we have no plans to republish) are America's Capacity to Produce (1934), America's Capacity to Consume (1934), and Income and Economic Progress (1935). Consistent with Say's Law of Markets (an application of the real bills doctrine), Moulton pointed out that production, not redistribution, is the answer to economic stagnation. As Jean-Baptiste Say explained to the Dismal Malthus, "As no one can purchase the produce of another except with his own produce, as the amount for which we can buy is equal to that which we can produce, the more we can produce the more we can purchase. From whence proceeds this other conclusion, which you refuse to admit — That if certain commodities do not sell, it is because others are not produced, and that it is the raising produce alone which opens a market for the sale of produce." (Jean-Baptiste Say, Letters to Mr. Malthus on Several Subjects of Political Economy and on the Causes of the Stagnation of Commerce, to Which is Added A Catechism of Political Economy. London: Sherwood, Neely & Jones, 1821, 2.)
• A draft of Supporting Life: An Economic Agenda for the Pro-Life Movement is available in .pdf for review and comment. If you want a copy, send a request to mgreaney [at] cesj [dot] org. At 104 pages total, including index and bibliography, it is a relatively "quick read."
• Drafts of The Political Animal and The Restoration of Property, both appearing first as postings on this blog, are also in process, and should be available for review and comment in .pdf after CESJ's annual anniversary celebration. We anticipate that the current series, "Own the Fed," may also be ready by then.
• Work is also progressing on the "Ferree Compendium," consisting of Introduction to Social Justice (1948) and Discourses on Social Charity (1966), both of which are currently available as free downloads from the CESJ website. Please feel free to review and comment on the short works prior to their publication in hardcopy.
• Father Ferree's The Act of Social Justice (1943), the basis for Father Ferree's other work in social justice and CESJ's approach to economic and social justice, is also in the queue.
• As of this morning, we have had visitors from 47 different countries and 45 states and provinces in the United States and Canada to this blog over the past two months. Most visitors are from the United States, the UK, Canada, Brazil, and India. People in Egypt, Barbados, the United States, India, and Ghana spent the most average time on the blog. The most popular postings are Guy Stevenson's "Expanded Capital Ownership Now," "Ride the Pig," Part I of the Restoration of Property series, Part XX of the Political Animal series and "Thomas Hobbes on Private Property" are the most popular postings.