Sunday, January 16, 2011

Ellen Brown at The Daily Bell

The interview can be found at:

As has been stated by others, where one falls on this subject depends on one’s belief of acceptable social structure. On the one hand, force, coercion, theft, fraudulent money. On the other hand voluntary relationships, human action, individual freedom.

The feedbackers are easily identifiable in one camp or the other. No need to name names, it is quite obvious who favors force and slavery (with no shame) as opposed to freedom and human action (with great eloquence).

As to Ms. Brown, her comments are quite clear and should leave no doubt as to her viewpoint.

“To be a sustainable system, profits need to be returned to the community rather than siphoned off into private coffers.”

Very communistic. Equally deadly to the masses in the end.

“Their access to credit needn't be contingent on someone else's agreement to give it up. The system would be mathematically sustainable.”

Federal Reserve / Central Banking. And equally (not) sustainable.

“I believe a government could be structured so that it actually served the people; but first, it would have to recapture control of its monetary system.”

I will use the trick others use when free markets / anarchy are proposed as the best solution: Show me some successful examples of such a government. There are at least 100 million dead and countless more displaced in the last century that would disagree. The monopoly of force and violence will ALWAYS attract the people most desirous of abusing this privilege. Always.

“According to the New York Times of September 2010; Per the NY Times; I'll go with the NY Times.”

Economic and financial counsel from the NY Times.

“Loans grow organically in response to the demands of trade, and that credit-money disappears when the loans are paid off.”

Sounds like Real Bills. Equally inflationary.

“Without government you would not have roads, bridges, court systems, etc.”

Not historically true, and certainly naïve.

@Ellen Brown "We're not the enemy. We're all taking potshots at each other instead of presenting a united front against those dark forces that now control banking AND government."

It is not true that the enemy of my enemy is my friend. In a revolution, all may agree they are against the "current" yet not agree on the solution. Your proposal is as bad as the current system ' some plusses, some minuses. But to exchange one man with a gun pointed at my gut for another man with a gun pointed at my gut is not my idea of improvement, and not an idea worth spending one minute's time to support. If there is one system worse than the current, it would be to give politicians complete control of the money supply, as you propose. The only "good" I can see coming from your idea is that it will destroy the dollar that much sooner.

@Julius Abanise, Ingo Bischoff " the comments that you quote were mine, not DB's. Although I understand the confusion, as the fault is due to my internet limitations. Please see the original comments to confirm DB was providing to me a courtesy of posting my response. (I will reply to Ingo in more detail later)

@DB ' have you ever approached Dr. North for an interview?

@Ingo Bischoff

As mentioned above, the comments were mine, not DB's. Please see the commentary at:

"It is critical to understand that there is NO CREDIT involved in creating "Real Bills"."

The distinction may be a valid legal distinction; I do not see it as an economic one. Later in your post, you seem to describe the credit aspects of real bills. For example: "THERE IS NOTHING MORE CREDITWORTHY THAN THE "READY DEMAND" OF CONSUMERS." Please explain...maybe a "real bills for dummies" would help. Is it credit, or isn't it? How can you describe something as "creditworthy" and also state it is not credit? If it is not credit, why do I care if it is creditworthy?

Also, please reconcile your statement with that of Dr. Fekete, where he describes an attribute of real bills as follows: "I made the central point that the source of commercial credit is not saving but consumption." He is describing the source of credit, not the source of clearing (although I recognize he also attributes to RB the latter function as well).

"This can be done by a 90-day Invoice or a "Real Bill"."

This is credit. It is not clearing. Anything beyond COD is credit in economic terms, whatever the legal terms might be.

"The statement by "The Daily Bell" that Real Bills are inflationary is incorrect. The bank notes created against a "Real Bill" expired with the maturity of the "Real Bill"."

Again my statement, not that of DB. So, they are only inflationary for the period they are outstanding. As it is expected that real bills would constantly exist due to the continuance of economic activity, when exactly do they mature as a paper (fiduciary media) instrument? This seems like the same as saying government debt is retired...when in fact it merely rolls over (and grows).

I am open to simple, straightforward explanations regarding real bills. Please see the commentary I posted to Dr. Fekete’s latest editorial at DB. My objections remain.

@Ingo Bischoff, thank you for your detailed and reasoned response.

“The legal distinction between a "Credit Agreement" and a "Real Bill" makes all the difference in the world.”

Not as it relates to inflation. Credit extended without savings is inflation, an unavoidable law of economics. By contract, two parties can agree to anything. However, just as they cannot, by contractual agreement, defy the laws of gravity when jumping off a cliff, they also cannot agree by contract to defy the laws of economics.

“I would be grateful to you, if you could explain what you mean by "legal terms" in contrast to "economic terms" when it comes to "Real Bills" and "Credit".”

In economic terms, anything other than final settlement upon transfer of goods is credit. From a legal standpoint this “agreement” can be accomplished via extended payment terms, the time required for a check to clear, the billing cycle of a credit card, or final settlement in coin via real bills. The legal form is irrelevant to the fact that credit (a delay in final settlement) was extended.

“If "Real Bills" circulate on their own, are they inflationary? Decidedly, they are not.”

Private money not backed by savings (my interpretation of your statement “circulate on their own”) is inflationary just as easily as any other money not backed by savings.


"Yes, North debunks her, and does so thoroughly, but then she rebuts many of his criticisms as well."

Per North, she attempted to debunk only his historical criticisms, to which he replied. She has ignored his economic criticisms, as well she should. See Dr. North's comments today to this Ellen Brown interview at DB:

"That is why we have tried to focus on the larger picture " freedom versus state, in other words."

I agree that this is the larger issue.

@Ingo Bischoff

Once again, my compliments as your explanations are helpful to this discussion.

"Let's assume a worker in a bakery gets paid with script good for "x" number of loaves of bread. A worker in a dairy gets paid with script for "y" number of gallons of milk."

What of the laborers who worked on the intermediate steps of the process? They cannot eat milled flour (bear with me, as I am attempting to work within your example). They can eat bread, but there is as of yet no bread.

There must be a savings of bread somewhere in order to facilitate the miller's life until the flour he milled is eventually turned into bread.

Thus my struggle remains – there must be savings (as excess of prior production over consumption) in order to legitimately provide credit – commercial or otherwise. During the 90 days of the cycle, those working on the intermediate goods must eat from someone else's (or their own) previously "saved" production.

If there is not this excess in terms of real goods having been saved, all the trading paper in the world (real bills or otherwise) will act just as inflation does to a fiat money supply. Pump priming to get the economy going through inflation.

@Ingo Bischoff

To clarify one comment: "...there must be savings (as excess of prior production over consumption) in order to legitimately provide credit..."

By credit, I mean any form of deferment of receipt of a good ready for consumption. By consumption, I mean a finished good (bread) as opposed to an intermediate good (milled flour).


"From the end of the Napoleonic wars until about the beginning of the Great War there was no price inflation."

Those in power have convinced the masses of their desired definition of inflation. It is a nice "rule of thumb" as far as TPTB are concerned; "common sense" to the uninitiated, the rubes, and the pawns; “good enough” for those who like "to speed up the process of finding a solution."

There is a Greek word that describes this type of thinker, this rube for TPTB. It is on the tip of my tongue. Perhaps you can help?

Yes, TPTB have convinced many that inflation is to be measured by prices. They do this so no one watches the money supply. Of course, in an economy based on sound money and with the productivity improvements seen over the centuries, prices would and should fall. But don’t tell the serfs, convince them to watch prices – in fact convince them that a little price inflation is healthy.

Certainly prices were more stable in the era you cite, likely because the money supply was anchored to gold. I believe even those who support RBD say that the critical feature (in fact, RBD cannot work without this) is an ultimate redeemability in gold. The key to a stable money supply is gold, not real bills.

But you knew that already, right? Having an a priori stoush is more fun, right?

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