THE Global Justice Movement Website

THE Global Justice Movement Website
This is the "Global Justice Movement" (dot org) we refer to in the title of this blog.

Wednesday, March 25, 2015

Why Focus on the Federal Reserve?

Not naming names (YOU know who you are. . . .), but some people have accused the Federal Reserve of being the source of many of our economic ills.  While that might be the case, it can also be the source of the cure.  Of course, the real problem is how the institution is misused, not the institution itself, but if you haven’t gotten that straight by now, well, just assume it’s the case and read on.

Manufacturing the symbols of money.
To explain, the central bank is government’s main instrumentality for controlling the costs and volume of new credit and money extended through the commercial banking system.  The Federal Reserve can play a pivotal role in restructuring the future ownership patterns of the economy and stimulating non-inflationary private sector growth, while leaving the actual allocation of credit in the hands of commercial bankers.

No other institution has the control over money, credit, and interest rates as that exercised by the Federal Reserve, particularly in the person of the Chairman of the Federal Reserve Board of Governors. The Federal Reserve Chairman’s enormous influence over the economy is a fact reported in many studies of the Federal Reserve, most graphically in the best-selling book by William Greider, Secrets of the Temple: How the Federal Reserve Runs the Country.

Main Street versus Wall Street
Although his orientation was based on the currency principle of mainstream economics and not the banking principle of embodied in binary economics, Greider confirmed what Louis Kelso and others have observed for years: the Federal Reserve uses its money-creation powers in ways that favor Wall Street over Main Street. This is not due to evil motivations, as much as from the paradigm from which most economists view the world and shape their policies.

The processes of creating money and credit and controlling interest rates are little understood by the American people, and hardly more by the Congressional committees to which the Federal Reserve reports. Hence, the activities of the Federal Reserve remain a mystery and its money-making powers remain an untapped source for creating more rapid, non-inflationary growth and much more widespread capital incomes for more Americans.

A Treasury Note of 1890, backed by debt to purchase silver.
The monetary proposals we’ve covered many times on this blog are fully consistent with the original intent of the Federal Reserve Act: to provide an adequate, elastic, and stable asset-backed reserve currency and foster private sector growth while retiring the national debt that backed the United States Notes (“Greenbacks”), the National Bank Notes, and the Treasury Notes of 1890. These proposals would allow our country to take full advantage of the immense potential of a properly designed central banking system and an elastic, asset-backed reserve currency.

Reconciled Capital and Labor
They would also restore a more healthy balance between Main Street and Wall Street, and between the non-rich and the already rich. The proposed reforms would shift the focus of the Federal Reserve from support of public sector growth and from indifference to non-productive uses of credit, to support of more vigorous private sector growth, the favoring of productive uses of credit, and broadened citizen access to capital credit.

Most important, the proposed new boost to expanded capital ownership for private sector workers and other citizens would not be constrained by Congressional balanced budget restrictions. It would involve no new tax expenditures or subsidies. Nor would it rely on existing pools of domestic or foreign wealth accumulations. It would be “A Proposal to Free Economic Growth From the Slavery of [Past] Savings” — a shift to what Kelso called “pure credit.”