Posted on January 17, 2013 by Jean
Far from being a gimmick, having the U.S. Treasury
mint high-denomination coins is a solution that cuts to the root of
America’s financial problems. And Benjamin Franklin would have liked it,
by Ellen Brown
Source: Yes! Magazine
posted Jan 17, 2013
On Friday, January 11, economist and New York Times columnist Paul Krugman urged the White House to
mint a platinum coin worth $1 trillion, as a counter to what was then a
threat to block federal spending that Congress had already approved.
(Republicans made good on that threat yesterday, putting the United States in danger of default.)
We have forgotten the role that money issued directly by the government has played in our history.The White House responded by
saying the trillion dollar coin is off the table, because the Federal
Reserve declared that it “wouldn’t view the coin as viable.”
Even Krugman called the coin idea “silly.” He just thought it was
less silly—and less dangerous—than playing with the debt ceiling.
But it is not silly. We have forgotten the role that money issued
directly by the government has played in our history. The American
colonists did not think it was silly when they escaped a grinding debt
to British bankers and a chronically short money supply by printing
their own paper scrip, an innovative solution that allowed the colonies
Many people believe that the U.S. government creates its own money.
This is not true. Today, the Federal Reserve creates trillions of
dollars on its books and lends them at near-zero interest to private
banks, which then lend them back to the government and the people at
market rates. We have been brainwashed into thinking that it makes more
sense to do this than for the government to simply create the money
itself, debt- and interest-free.
In fact, the trillion dollar coin represents one of the most
important principles of popular prosperity ever conceived: nations
should be free to create their own money without incurring debt. Some of
our greatest leaders, including Benjamin Franklin, Thomas Jefferson,
and Abraham Lincoln, promoted this essential strategy. They realized
that the freedom to print money offers a way to break the shackles of
debt and free the nation to realize its full potential.
While a commoner might get 10 to 20 years for robbing a bank, bank executives get huge bonuses for robbing us.Money creation is an all-important power that has been fought over
for centuries, in a largely secret battle between governments and
private banks. For the last two and a half centuries, the banks have had
the upper hand, making us forget that any other option exists. But we
are learning the great secret of money: that how it gets created
determines who has the power in society—we the people, or they the
bankers. Note that this is not about race or ethnicity. It is about an
organized effort by a professional class to monopolize the power to
It is no secret who has that power today. Witness the great bailout
of 2008 that rewarded banks for making irresponsible and fraudulent
gambles in the subprime mortgage scandal. None of the bankers
responsible served time in jail. Then there was the robosigning scandal,
in which banks skipped important steps in the process of foreclosing on
the homes of ordinary Americans, and came away with a slap on the
wrist. Now we are seeing the LIBOR scandal unfold, in which traders at
the Swiss financial services company UBS were convicted of colluding
with other banks to tweak interest rates for their own financial
benefit. We can make an educated guess as to how this too will turn out
for them (hint: well). While a commoner might get 10 to 20 years for
robbing a bank, bank executives get huge bonuses for robbing us.
We may rail against the banks and demand change, but change will not
come until we grasp the fundamental secrets that are the foundation of
their power: those who create the nation’s money control the nation, and
nearly the entire money supply today is created by banks in concert
with the Federal Reserve.
Remembering our roots
Everyone knows that Benjamin Franklin played an important role in the
founding of the United States. Fewer know his views on the printing of
money. “Experience, more prevalent than all the logic in the World,” he
wrote, “has fully convinced us all, that [paper money] has been, and is
now of the greatest advantages to the country.”
When the British forbade new issues of paper scrip by the colonial
governments, Franklin went to London and argued that issuing their own
money was responsible for the colonies’ prosperity.
The response of the king, leaned on by the Bank of England, was to
ban all issues of paper scrip. Without their paper money, the money
supply collapsed, and the economy sank into a deep recession. The
colonists then rebelled. They won the revolution, but the bankers
retained the power to create money by setting up a banking system like
that dominated by the Bank of England.
Fourscore and six years later, in 1862, President Abraham Lincoln
boldly took back the power to create money during the Civil War. To
avoid exorbitant interest rates of 24 to 36 percent, he decided to print
money directly from the U.S. Treasury as U.S. Notes or “greenbacks.”
The issuance of $450 million in greenbacks was the key to funding not
only the North’s victory in the war but an array of pivotal
infrastructure projects, including a transcontinental railway system.
After Lincoln was assassinated, however, the greenback program was
quickly discontinued. Repeated popular attempts by farmers and laborers
to revive it failed. They were opposed by a wave of banker activism to
maintain the banks’ control over the printing of money, which had been
established by the National Bank Act of 1863.
In 1872, New York bankers sent a letter to every bank in the United States. The letter, as quoted by Lynn Wheeler inTriumphant Plutocracy: The Story of American Public Life from 1870 to 1920, read in part:
Dear Sir: It is advisable to do all in your power to sustain such
prominent daily and weekly newspapers…as will oppose the issuing of
greenback paper money, and that you also withhold patronage or favors
from all applicants who are not willing to oppose the Government issue
of money. Let the Government issue the coin and the banks issue the paper money of the country.
[T]o restore to circulation the Government issue of money, will be to
provide the people with money, and will therefore seriously affect your
individual profit as bankers and lenders .
Bank-created money, including paper bills and now electronic money,
could be rented to the people at a profit. The people’s debt-free money
was limited to coins, which today compose less than one ten-thousandth
of M3, the broadest measure of the money supply.
Lincoln’s assassination and the abandonment of debt-free greenbacks
marked the exchange of physical slavery for what has been called “debt
peonage” or “wage slavery.” Today, as a result, the American government
and American people are so heavily mired in debt that only a radical
overhaul of the monetary system can free us.
Gimmick or game-changer?
This is the real context and backstory of the trillion dollar coin.
The stakes are much higher than just fending off the debt ceiling. We
the people need to take back the power to issue our own money, and we
can’t do it with nickels and dimes. We’re going to need coins bearing
some very large numbers.
The coin could put within the government’s grasp the power to solve its debt problems once and for all.The idea of minting large-denomination coins to solve economic
problems seems to have first been suggested by a chairman of the Coinage
Subcommittee of the U.S. House of Representatives in the early 1980s.
He pointed out that the government could pay off its entire debt with
some billion-dollar coins. The Constitution gives Congress the power to
coin money and regulate its value, and sets no limit on the value of the
coins it creates.
That may have been true then, but in legislation initiated
in 1982, Congress chose instead to impose limits on the amounts and
denominations of most coins. The one exception was the platinum coin,
which a special provision allowed to be minted in any amount for
An attorney named Carlos Mucha, who at the time was blogging under the pseudonym “ Beowulf ,” proposed issuing a platinum trillion dollar coin to
capitalize on this loophole, after he heard me mention the trillion
dollar coin in a Thom Hartmann interview. At first, he said, it was just
an amusing exercise. But with the endless gridlock in Congress over the
debt ceiling, it got picked up by serious economists as a way to
checkmate the deficit hawks.
Philip Diehl , former head of the U.S. Mint and co-author of the platinum coin law, confirmed that the coin would be legal tender:
In minting the $1 trillion platinum coin, the Treasury Secretary
would be exercising authority which Congress has granted routinely for
more than 220 years. The Secretary authority is derived from an Act of
Congress (in fact, a GOP Congress) under power expressly granted to
Congress in the Constitution (Article 1, Section 8).
Warren Mosler, one of the founders of Modern Monetary Theory (MMT), reviewed the idea of the trillion dollar coin and concluded it would work operationally. And Joe Firestone pointed out that
the trillion dollar coin has far greater game-changing potential than
mere political maneuvering. The coin could put within the government’s
grasp the power to solve its debt problems once and for all, replacing
austerity with the abundance enjoyed by our forefathers.
Why Post-Sandy America Needs State Banks More than Ever
If we the people want the sort of security in emergencies that is
available to the owners of Wall Street banks, we need to own some banks
The invariable objection to government-issued money is that it will
lead to hyperinflation. The trillion dollar coin can evoke images of
million-Deutschemark notes filling wheelbarrows. But as economist Michael Hudson points out:
Every hyperinflation in history has been caused by foreign debt
service collapsing the exchange rate. The problem almost always has
resulted from wartime foreign currency strains, not domestic spending.
And as professor Randall Wray observes,
the coin would not circulate in the general economy. Instead, it would
be deposited in the government’s account and held at the Fed, so it
could not inflate the circulating money supply.
As far as spending goes, the fact that the Treasury has money in its
account doesn’t mean Congress could or would go wild spending the funds.
The budget would still need congressional approval. To keep a lid on
spending, Congress would just need to abide by some basic rules of
economics. It could spend on goods and services up to full productive capacity without creating price inflation (since
supply and demand would rise together). After that, it would need to
tax—not to fund the budget, but to shrink the circulating money supply
and avoid driving up prices with excess demand.
Time to take back the money power
The current political stalemate cannot be solved with the thinking
that created it. There is simply not enough money in the system to fund
the services that Americans desperately need, create full employment,
pay down the debt, and keep taxes affordable. The money supply has shrunk by $4 trillion since 2008, according to the Fed’s own website.
The massive push from educational campaigns such as thoseThe only real solution to the unemployment created by this shrinkage
organized by Occupy Wall Street, Strike Debt, and the Free University
is starting to lift the veil from our eyes.
is to add more money to the economy, and that means that someone needs
to create it. Either the Fed does this in the way that it is currently
done, by adding the money nearly interest-free to the balance sheets of
banks to be lent to the government and the peopleat interest; or the Treasury does it and adds the money to the government’s account debt- and interest-free.
After a century of domination by the Federal Reserve, it is time we
tried something new. In flatly rejecting the Treasury’s legal tender,
the Fed as representative of the banks is asserting itself to be more
powerful than the elected representatives of the people. If the Fed
won’t acknowledge the coins created by the government, perhaps the
government needs to charter a publicly owned bank that will.
We have a chance today to end the charade of big money gridlock
politics, as well as the reign of the big banks. But the current
government is so thoroughly captured by the bank-created money of our
time that it is unlikely to take action without pressure from the
people. Our ignorance on these issues has played into the hands of the 1
percent, who are dependent on the current system for their wealth and
power. However, the massive push from educational campaigns such as
those organized by Occupy Wall Street, Strike Debt, and the Free University is starting to lift the veil from our eyes.
We have the power to choose prosperity over austerity. But to do it,
we must first restore the power to create money to the people.
Ellen Brown is an attorney and president of the Public Banking Institute. In Web of Debt,
her latest of eleven books, she shows how a private banking oligarchy
has usurped the power to create money from the people themselves, and
how we the people can get it back. Her bookThe Buck Starts Here: Restoring Prosperity with Publicly Owned Banks will be released this spring. Her websites are WebofDebt.com,EllenBrown.com, and PublicBankingInstitute.org.
Thanks to: http://jhaines6.wordpress.com