12: Valley of the Dollars

This is Chapter Twelve of my book, How to Dismantle an Empire, from Section Four: Attack of the Petrodactyls. I explain why money's speed of egress is more important than quantity, how the FIRE economy leaves us with the ashes of 'equity' and why the GDP is the 'fever chart of our consumption.' With Wendall Berry, I look at the commonwealth as the foundation and practical means of sovereignty.

Debt, n. An ingenious substitute for 
the chain and whip of the slave driver. 

—AMBROSE BIERCE, THE DEVIL’S DICTIONARY

. . . experience demonstrates that there may 
be a slavery of wages only a little less galling 
and crushing in its effects than chattel 
slavery, and that this slavery of wages 
must go down with the other.

—FREDERICK DOUGLASS

. . . although we are not slaves in name, 
and cannot be carried to market and sold 
as somebody else’s legal chattels, we are 
free only within narrow limits.
For all our talk about liberation and 
personal autonomy, there are few choices 
that we are free to make. What would be 
the point, for example, if a majority
of our people decided to be self-employed?
The great enemy of freedom is the 
alignment of political power with wealth.
This alignment destroys the 
commonwealth—that is, the natural wealth 
of localities and the local economies of 
household, neighborhood, and community—
and so destroys democracy,
of which the commonwealth 
is the foundation and practical means.

—WENDELL BERRY, THE ART OF THE 
COMMONPLACE: THE AGRARIAN ESSAYS

valley of the dollars

The United States could be compared to the walled city of a medieval fiefdom. The serfs are those in other countries who work for the export market; the products of their labor go into the walled city surrounding the manor houses. These products aren’t special enough for the lords of the manor but they supply the vast city of servants who do the masters’ bidding.

The terraced city is composed of circles within circles with guarded ladders in between. In the outermost ring are the serfs who’ve scaled the city wall, who live in constant fear of being deported. They may still labor in the fields or work inside the servants’ buildings on the plumbing, the masonry, the carpentry, the dishwashing, or the kitchen prep, but their children will be citizens. They serve the servants, these undocumented workers without whom the city economy would grind to a halt.

Next are the minimum-wage servants, who sell serf-made products in fast food chains and big box stores—“face-jobs” that aren’t available to serfs but can still be easily replaced. On their meager pay, however, they are dependent on the cheap products they sell. Like the city-serfs, they pay a tribute to the manor lords with every fiat coin they earn but also receive social services.

As they move up, the concentric circles get closer and closer to the lords of the manor. The outer rings are patrolled with weapons, both outside and inside the wall, making sure the serfs don’t rebel and servants can’t jump the rings without the right papers. The inner circles contain the overseers: corporate managers, police chiefs, school superintendents, and government officials. But the lords of the manor are above money and the law, both of which they create. Their power is in how many people they control.

What is the measure of a successful economy: how well it provides for its members or how well its participants are able to provide for themselves? To rephrase this using the analogy, does a successful economy reward its citizens with ample serf-made products, secure protection from disgruntled servants, and mobility based on service to the lords, or does it take back everyone’s right to their own labor?

Economic reforms often call for a higher minimum wage, universal healthcare, free universities, taxes on the 1%, or debt forgiveness for poor nations. These still leave the neofeudal structure intact and the labor of all people serving the lords.

Radical reform recognizes that we-the-servants are being bought off with the products of other people’s labor. It targets the legitimacy of the rules by which the commonwealth has been stolen from our communities, taking away our ability to work with our hands and have our labor serve our own interests. This is everyone’s right, even when their labor serves us.

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fuel for the fire

As Wendell Berry points out, the commonwealth is the “foundation and practical means” of a society in which most people would be self-employed most of the time. To reclaim our own labor we need to reclaim the natural wealth of localities and the local economies of household, neighborhood, and communities. Our current economy, however, fosters neither independence nor productivity. Economist Michael Hudson writes about the FIRE economy—Finance, Insurance and Real Estate—which aligns political power with wealth. He states:

Industry and agriculture, transport and power, and similar production and consumption expenditures account for less than 0.1 percent of the economy’s flow of payments. The vast majority of transactions passing through the New York Clearing House and Fedwire are for stocks, bonds, packaged bank loans, options, derivatives and foreign-currency transactions. The entire stock-market value of many high-flying companies now changes hands in a single day, and the average holding time for currency trades has shrunk to just a few minutes. The value of these financial transactions each day exceeds that of the entire annual U.S. national income.

By his calculations, this leaves 99.9% of the monetary payments in the United States not involved in the production of food, goods, or energy. This money flow is created out of nothing and creates nothing. More is spent in a single day speculating in the unproductive economy than pays for all the productive labor of the US for a year.

The FIRE economy has made lives in the developed world extremely precarious. The Finance sector has ensnared young workers in usurious student debt and older workers in shaky 401K vehicles. Insurances have outsourced health and security from communities to multinational corporations. Real Estate has swallowed up home ownership and replaced it with the ashes of “equity.” Every tangible asset has become fuel for the FIRE.

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two things are certain: debt and taxes

In Debt: the First 5000 Years, anthropologist David Graeber writes extensively about how the moral obligation of debt came to override all other social relationships. The super-priority given to debt justifies such villainous actions as depriving families of shelter, food and livelihoods, stealing land, water and resources, and enslaving men, women and even children. No ethical judgment is made of the social mechanisms by which the debt was imposed in the first place.

Likewise today, beneath abstractions like interest-swap derivatives, retirees lose their security and healthcare, families lose their homes, streets are without lights, and people are dying before emergency services can reach them. The city of Detroit has been made into an object lesson for all other struggling municipalities: “There, but for the grace of Goldman Sachs, goes thee.”

The shell game practiced by the bankers shuffles pension funds between financial vehicles that also harbor private investments. Whenever the public gets fed up, and looks to disrupt the game and expose the con, they find that the first cup they knock over holds the retirement accounts of their own teachers and firefighters. They can’t penalize the banks without robbing their own communities of the pensions they’ve built with their own taxes.

When FIRE money jumps over borders or executes the lightning-fast trades that now dominate the stock market, there are no tax consequences. But every time that hard-earned money contributes to the Gross Domestic Product, or GDP, debt and taxes ensure that a dwindling amount continues to circulate in the economy.

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iou’s move in mysterious ways

How does the GDP relate to the money supply? The ratio between the two is a good measure of the degree to which people are self-sufficient rather than dependent on government, corporations, or banks. The GDP takes every exchange between people as a unique event of money creation and adds them all together. In a healthy economy, the GDP should multiply the total credit issued by ten times or more, since this credit would move between people at least once a month without leaving the community. Even when collected in taxes, it would go right back out again to fuel services and production. There would be no need for the currency to increase unless there was growth in the population.

The following table shows the rise of the US GDP over the course of 74 years, during which it multiplied 165 times, roughly doubling each decade. M2, a measure of currency and bank accounts excluding large deposits and institutional accounts, followed the same pattern. During this century of our experiment with the Federal Reserve, the GDP is less than double the total amount of money in circulation: on average, money changed hands twice a year before being siphoned out.

YEAR      US GDP          PER CAPITA   M2

1940      $103 billion     Unknown       Unknown
1950      $300 billion     $15,000         Unknown
1960      $540 billion     $17,000       $300 Billion
1970      $1 trillion          $23,000       $700 billion
1980      $2.9 trillion      $29,000       $1.5 trillion
1990      $6 trillion         $35,000       $3.2 trillion 
2000     $10 trillion       $44,500        $5.0 trillion 
2010      $15 trillion       $48,000       $9.0 trillion 
2014      $16.8 trillion   $51,000        $11.6 trillion

Looking at 2014, for instance, the GDP was $16.8 trillion while M2 was $11.6 trillion. Therefore the money in potential circulation was exchanged about 1.5 times. This low ratio means that money is not being used for the exchange of goods and services but sucked out to nontaxed accounts. The rest of what could have been trade value, fostering production with each cycle, was consumed by the FIRE economy—taking bank credit out of the public domain and putting it in private stockpiles, often held overseas. This money serves no function in facilitating trade between people or accomplishing community goals by organizing labor.

In addition, the stated purpose of the Federal Reserve System was to control inflation. Each decade that the money supply doubled, the cost of housing went up and therefore so did services and locally produced goods. Inflation diluted the value of money held in savings, as measured by how much it would buy. Yet per capita GDP or average income, which had risen over 20% a decade, dropped to less than 8% from 2000 to 2010, losing ground precipitously. In order to stay even with the cost of housing, wages needed to rise proportionally.

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a country without a currency

When bank credits have been monetized—backed by labor and goods—in the real world and returned to the FIRE economy through mortgages or insurance payments, they become the vast reservoirs of monopoly money that swoop down to pull the natural, physical, and human capital out of communities all over the world. Earned income becomes indistinguishable from speculative gains or, worse, predatory accumulation. Bank credit has become the engine that drives the depletion of global capital from community ownership.

The US government doesn’t actually produce a national currency other than coins— the economy is run on bank credits that have been exported as the world’s default currency. Since 1960, the global GDP has been on track to double every decade, in line with the US GDP. In 2014 it was $77 trillion and is predicted to reach $98 trillion by 2020. [Update: It was $85.52 trillion, lower than predicted due to lockdowns and economic disruption.]

Other than the magical creation of money, there’s no logic for the exponential growth of the global GDP. In the forty years from 1960 to 2000 the world’s population has doubled once, so the rise in credit hasn’t been needed to serve an exponentially increasing population. Does it reflect an increase in the amount of goods and services being exchanged? On the contrary, according to reports from the United Nations. They show a sharp decline in economic growth for most countries from 1980 to 2005. The report goes on to ask:

The question that we raised ten years ago, and is still relevant, is: how much of this growth slow-down can be attributed to the policy reforms that characterized the post-1980 era? For most low- and middle-income countries, these reforms included tighter fiscal and monetary policies (including inflation-targeting regimes and increasing independence of central banks); a large reduction of tariffs and non-tariff barriers to trade; financial deregulation and increased opening to international capital flows; privatization of state-owned enterprises; increased protectionism in the area of intellectual property; and the general abandonment of state-led industrialization or development strategies.

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the speed of egress

From the UN report it seems that the exchange of money and goods within countries has been thwarted, lowering or stagnating the standard of living, while the flow of money and goods out of countries has been accelerated. Like domestic bank credit, the increase in global credit has not focused labor and resources on accomplishing goals within societies. Instead it increased the monopolization of capital by individuals. The late statesman, Robert F. Kennedy, illustrates how the GDP (called the GNP at the time) measures the wrong things:

Our Gross National Product, now, is over $800 billion dollars a year, but that Gross National Product—if we judge the United States of America by that—that Gross National Product counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for the people who break them. It counts the destruction of the redwood and the loss of our natural wonder in chaotic sprawl. It counts napalm and counts nuclear warheads and armored cars for the police to fight the riots in our cities. It counts Whitman’s rifle and Speck’s knife, and the television programs which glorify violence in order to sell toys to our children. Yet the Gross National Product does not allow for the health of our children, the quality of their education or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile.

What does the GDP really measure then? Wendell Berry gives an answer:

We have a system of national accounting that bears no resemblance to the national economy whatsoever, for it is not the record of our life at home but the fever chart of our consumption.

The GDP shows the velocity or speed at which bank credits travel as they return to the banks, corporations, and central government. A GDP of $17 trillion over an M2 amount of $11.5 trillion equals one and a half times that the money circulates before flying out of the active economy. In many ways the volume of money is irrelevant; what matters is the speed of its egress.

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m&m’s

In the US, where the dollar originates as the world’s default exchange instrument, there are five measures of the money supply: M0, MB, M1, M2, and M3. This matters because it shows the amount of government-issued credit to bank-issued credit. Debt is a pledge of future labor in exchange for others’ past or current labor—a house or an education. To whom do we owe our labor? This abstract concept determines how we’re forced to spend our lives in order to exist.

M0 is the narrowest definition, which are the coins and bills in circulation as the currency. Of all the forms of money or credit, only coins are permitted to be issued by the government, and then only at the Federal level. Treasury bills are exchanged for the Federal Reserve Notes we call dollars before they go into use. According to the Federal Reserve, the total amount of cash in circulation is $1.2 trillion, but between half to two-thirds ($600-$800 billion) is held overseas. Dollar bills, because they represent loans from the Federal Reserve to the government, are really bank credits in tangible form.

MB is the monetary base, which includes currency in circulation plus vault cash and Federal Reserve Bank credit held in reserve, neither of which enter the economy.

M1, M2, and M3 consist of currency and bank credits that are in circulation. M1 includes M0 plus travelers’ checks, bank demand deposits, and credit union accounts, which all totaled $3 trillion in May of 2015. M2 includes M1 and M0 plus money market accounts, savings accounts, and CDs under $100,000, which was almost $12 trillion. Significantly, at the height of the housing bubble in 2008, mortgage debt was $11 trillion, roughly equivalent to M2.

M3 includes M2, M1, and M0 plus large deposits, institutional money funds, “repurchase liabilities issued by depository institutions” or repo’s, and Eurodollars held by US citizens overseas. Since March of 2006 the Federal Reserve has stopped reporting M3 with the claim that they don’t have the budget to track it and that it can be derived from other measures. Of course, they don’t bother to do that.

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high grade monetary heroin

Most money is created through mortgages using double-entry bookkeeping. It generates the loan as a credit on one side of the ledger and the principal as a debit on the other, so the books balance. As the principal of the loan is repaid, it evaporates—credit-extended cancels out credit-returned and they self-destruct. But the interest payments stay in the bank as retained earnings or are given out in executive bonuses and compensation.

In other words, future labor is pledged to the banks in return for the products of past labor (houses and their infrastructure) by members of the community. This pledge of future labor is then given to the home-seller calibrated as dollars, which they can use to buy goods and services within the same web that includes the home-buyer. At least that’s how it works in theory, except for the small matter of interest.

If total interest is equal to the total principal, which it is at 5.3% over 30 years, all the money that was issued for the loan would be owed back to the bank as interest. The labor of the home-buyer would monetize the bank credit by backing it with goods and services. The bank would retain the interest portion of the mortgage as units of stored labor. Once disbursed to the bank owners, it’s as if they themselves had performed the work done by all the mortgage-holders and were therefore owed a reciprocal value of labor in return—or a hundred times more if spent in a third-world country.

Now remember that all of the money, except the coins of M0, is created through debt. After 15 years, all of the money created would have found its way back to the banks. This means that all of our labor ultimately returns to the bankers, no matter what we’ve done to earn our money or whether we pay a mortgage. They create the credit as dollars and we back the dollar with our labor. We turn the cogs of the machine that returns every dollar (but not every penny) as a unit of stored labor—our labor!

However, new money has to be created through new loans so that old loans can be paid; if there were no debt, there would be no money. Now that the limits of debt creation have been reached through lowering the interest rate, because the Fed funds rate is at zero, more creative means are needed to prime the money pump. Quantitative easing is a central bank policy that aims to increase the supply of money by increasing excess reserves of its member banks, under the reasoning that they will lend them out and therefore inflate the economy.

Market Ticker’s Karl Denninger calls QE “the largest tax ever imposed on the American people . . . Goldman Sachs believes that Bernanke will impose a total tax through [QE] of more than four trillion dollars over the next two years, or more than fifty-seven times the Bush tax cuts.” David Stockman, a director under Reagan, explained, “Fed QE is injecting high grade monetary heroin into the financial system of the world, and one of these days it is going to kill the patient.” Or maybe the host of this parasite.

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take an interest

The Federal Reserve’s twelve branches are 100% owned by private, for-profit banks with no government oversight. In 2010 the first audit of the Fed by the Government Accountability Office was ordered by a Congressional bill authored by then-House Representative Ron Paul and paralleled in the Senate by his son Rand Paul and Bernie Sanders. It uncovered $16 trillion that had been issued in secret loans to bail out banks and corporations in the US and abroad, from South Korea to Scotland. This is equal to handing out the entire annual gross earnings of every business in the US to banks and insurers to cover their gambling losses.

In addition the audit revealed severe conflicts of interest: the CEO of JP Morgan Chase sat on the Board of the New York Fed while his bank received $390 billion in bailouts. The President of the NY Fed held investments in AIG and General Electric, two major benefactors. The Fed outsourced the operations of the bailouts to private contractors like JP Morgan, Morgan Stanley, and Wells Fargo in no-bid contracts, while they received trillions in near-zero interest loans.

A second audit in October of 2011 focused on these enormous conflicts of interest. It found that many of the Fed’s directors were current or former executives of the same banks regulated by the Fed or were shareholders. They had the power to elect their successors (much like the Areopagus of ancient Greece) and to oversee salary and personnel decisions. They could decide which banks would get Federal Reserve credit and be rated “healthy” or “hazardous” and at what rate of interest. When conflicts of interest were waived, there was no need to disclose the conflicts to the public or even to the Federal Government.

Some of the significant players include Stephen Friedman, a board member of Goldman Sachs who, as chairman of the NY Fed, approved their application to be a bank holding company with access to cheap loans. Jeffrey Immelt was board director of the Fed and CEO of General Electric when they were given $16 billion in emergency funding. And then there’s Jamie Dimon, board director of the NY Fed and CEO of JP Morgan Chase when they received $29 billion to buy Bear Stearns after the Fed took risky mortgages off their balance sheet. No conflict of interest there.

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big game hunters and the pinstripe army

But this, believe it or not, still isn’t the big game. In a seminal book called Treasure Islands, Nicholas Shaxson uncovers the secret world of offshore banking and tax havens. He begins with the Franco-African scandal that became known as the Elf affair. When France “granted” oil-rich French colonies their independence, the empire went ceremoniously out the front door only to come in from the side window.

France made sure their candidates were elected, like Omar Bongo in Gabon, who handed over the oil fields to French state-owned Elf Aquitaine. The country became known as Elf’s private hunting ground. As in the Cote d’Ivoire, several hundred French paratroopers were connected to the palace by tunnels.

But what Gabon supplied was more than oil, it was a giant slush fund where deposits into secret Swiss accounts controlled French politics, intelligence services, and high society. It also greased palms from Venezuela to Germany to Jersey to Taiwan, easing the way for lucrative corporate contracts through untraceable bribes. Although eight years of investigation finally led to 31 convictions, the spidery web of offshore money is perfectly intact. Shaxson clarifies:

The offshore world is all around us. Over half of world trade passes, at least on paper, through tax havens. Over half of all bank assets, and a third of foreign direct investment by multinational corporations, are routed offshore. Some 85 percent of international banking and bond issuance takes place in the so-called Euromarkets, a stateless offshore zone . . . Nearly every multinational corporation uses tax havens, and their largest users—by far—are on Wall Street.

... [a] GAO report from December 2008 provides a clue as to their power, showing that Citigroup had 427 tax haven subsidiaries, of which 290 were in the British spiderweb. The next biggest user was Morgan Stanley with 273 offshore subsidiaries (of which 220 were in the British zone), then News Corporations with 152, of which 140 were in the British zone.

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to the moon and back

How much money is pirated away? In 2005 the Tax Justice Network estimated that tax havens accounted for $11.5 trillion and by 2012 they upped their estimate to at least $21 trillion and possibly $32 trillion. If $11.5 trillion in hundred dollar bills were placed end-to-end, they’d stretch 23 times to the moon and back. The taxes on it could triple the global aid budget to developing countries. And according to Global Financial Integrity, “for every dollar that we have been generously handing out across the top of the table, we in the West have been taking back some $10 of illicit money under the table.” Developing countries are estimated to lose $1.2 trillion a year, compared to which $100 billion in combined annual foreign aid is just a rounding error.

The capital of world finance is the City of London, a square mile in the heart of London with its own Lord Mayor, jurisdiction, police force, and exemption from British law. The Corporation of London runs the City as a tax haven with 9000 voting residents and 32,000 voting businesses. It holds more foreign banks than any other location and is the hub of an offshore network from the nearby islands of Jersey, Guernsey, and the Isle of Man to British territories like the Cayman Islands to zones of influence like Hong Kong, Singapore, Dubai, and Vanautu.

The Caymans alone host 80,000 companies in name only, register three-quarters of the world’s hedge funds and have $1.9 trillion on deposit. Yet, as Shaxson points out, for all this paper population, they have only one movie theater. In 1976, the Confidential Relationships Law was passed, making it a crime punishable by five years in prison to reveal financial or banking arrangements in the Caymans, or even to just ask for the information.

Directors sit on the boards of multiple companies, sometimes several hundred for a price of $20,000 each, with their identities protected by layer upon layer of secrecy. So even if a magistrate was able to serve a subpoena without going to jail, they wouldn’t know whom to serve.

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empire rot

Some of the techniques for evading tax were developed by the Mafia. Money skimmed from the casinos would be smuggled offshore and kept in a shell company. That company would lend the amount back to the casino owner so that the principal of the loan would be tax-free and, on top of that, the interest paid to itself would be deductible.

Another widespread technique has been transfer pricing. Products made in third- world countries are bought cheap, incurring little tax in the country of origin. Then they’re sold through a hypothetical subsidiary in a zero-tax zone like Liberia or Panama, which resells them at high, nearly retail prices to first-world marketing outlets. The cargo vessel never needs to land but the paper trail takes a circuitous route where the price jumps aboard mid-ocean.

Companies may legally hold their profits tax-free overseas in deferral, where they wait for a White House to offer amnesty, as George W. Bush did at 5% to repatriate funds. Within the US, Nevada and Wyoming, among others, provide “bearer bonds” that can be traded by the holder without information on ownership. Arkansas, Oklahoma and Oregon funnel illicit money from eastern Europe and Russia, while Texas and Florida are the havens of choice for Latin American crooks.

But tiny Delaware takes the cake as a refuge for financial capital:

Over half of U.S. publicly traded companies and nearly two-thirds of its Fortune 500—Coca-cola, General Motors, ExxonMobil, you name it—are incorporated here; the little state hosted over 90 percent of all IPOs in the United States in 2007.

Delaware’s lure is the lack of regulation, allowing the subprime mortgage CDOs that were at the heart of the 2008 crisis. One building in Wilmington alone houses 217,000 companies. Shaxson went there to find a yellow brick low-rise with a scruffy parking lot that was home to Ford, GM, KFC, Intel, Google, HP and more, all of which reside cozily in metal file cabinets. In 2008 Delaware hosted 882,000 businesses and just about the same number of residents.

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false profits

The ultimate purpose of this highly technical chapter is to convince the reader once and for all to give up on the quick fix: no monetary redistribution, tax reform or debt relief will solve the problem. Corruption and secrecy are endemic to the system. The monopolization of money has concentrated too much power to ever wrestle it away through gradual means.

Even if a redistribution of dollars were possible, the dollar represents the rights of consumers to take away the products of producers without giving anything back. To solve a social problem through the redistribution of money is to think like an empire about the rights of citizens excluding the colonies and serfs.

Only Wendell Berry’s solution holds promise—to reclaim the commonwealth that’s the practical means of democracy, and the foundation of the local economies of family, neighborhood, and community. If true wealth were taken back, there would be no value behind all the financial instruments. It wouldn’t matter where the money went if it couldn’t buy the land out from under the people.

When people talk about human rights, they’re often talking about consumer rights: the right to food, education, healthcare, housing, water, and power. But one person’s right to consume is another’s obligation to produce, requiring a centralized state to decide to whom to distribute the goods and from whom to steal the resources and labor.

If we looked at producer rights, rather than consumer rights, each community would control its own land and its own FIRE economy of finance, insurance, and real estate. In this case the FIRE could be tamed to become the hearth of the city, gathering people in the fellowship of labor and providing energy to sustain their commonwealth.

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CHAPTER 12 EXERCISES

Using examples from the book, or from your own research, logic, and experience, comment on the following and what it means today:

Paradigm Shift #12A

The objective of a free society is not a good-paying job but the ability to create a secure and useful life independent of employers.

The objective of a free society is not high employment, rewarded with consumer goods and benefits, which is merely paying the servants of empire in the products of slaves and serfs.

The objective of a free society is high self-employment with most people able to take care of themselves and theirs, with the added capacity to help others, extending relationships and reciprocity.

Paradigm Shift #12B

The problem is not the regulation of credit but who is authorized to issue it.

Bank-issued credit was created to usurp wealth
and concentrate labor-power in the hands of the few.

Community-issued credit could protect community wealth and empower the many to control their own labor.

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Lexicon

Explain how the following definitions change the dialogue around social problems. Give an example of the term. Is this concept used in discussion of the examples to which it applies? If not, how does this affect the potential solutions?

commonwealth: the natural wealth of localities and the local economies of house- hold, neighborhood, and community; the foundation and practical means of democracy.

finance, insurance, and real estate (FIRE) economy: the ways in which money is made from money without proportional labor extended or any tangible product produced.

monetized: when a fiat currency with little or no inherent value becomes backed by labor, usually because of taxes or debt that must be paid in the same currency. It’s also used when natural, physical, or human capital is assigned a speculative value in order to be sold on the global market.

tariff : an import tax.

“barriers to trade” or protectionism: policies that favor internal production and consumption over imports and exports; terms invented by transnational monopolists to disparage movements to foster local or national self-reliance.

financial deregulation: allowing money to cross borders without inhibition and be used to claim ownership over capital including natural resources, land and properties, public systems, and for-profit businesses.

trade liberalization: allowing goods and materials to cross borders without inhibition so that local producers have no advantage and local consumers have no priority.

privatization: allowing a public system in which profits are reinvested into improvements in the service or the society to be converted permanently into a private revenue stream in exchange for a one-time infusion of international bank credit.

intellectual property: the “right” of corporations to own ideas, even generated through public universities; the monopolization and monetization of the global legacy of ideas and knowledge.

state-led industrialization and development: the use of public credit to improve commerce, production, and public infrastructure.

M0: the measure of US currency, made up of coins minted by the US Treasury and notes printed by the Federal Reserve that circulate in exchange for US Treasury Bills. Most of the $1.2 trillion of currency in circulation is held overseas.

MB: the monetary base of the money supply that includes M0 plus the vault cash and Federal Reserve credit that never enters into circulation but determines the amount of bank credit and currency that can be generated by private banks in a pre-determined ratio.

M1: M0 plus traveler’s checks, credit union accounts, and bank demand deposits (checking accounts available for immediate withdrawal). Estimated at $3 trillion in 2015.

M2: M1 plus money market accounts, savings accounts, and CD’s under $100,000. Estimated at $12 trillion in 2015 or roughly equivalent to mortgage debt.

M3: M2 plus large deposits, institutional accounts, “repo’s” or repurchase liabilities issued by depository institutions, and Eurodollars held overseas. No longer reported since 2006.

quantitative easing: the creation of central bank credit by the Federal Reserve starting in 2009 and issued to private banks to increase their reserve funds, depleted by predatory lending in the 2008 mortgage scheme.

Euromarkets: a British spiderweb of international tax havens that are outside of the jurisdiction of England or any other government.

tax haven: a place to store accumulated bank credits so they can usurp assets or organize labor for private gain without surrendering any power to the public in taxes so they can organize their own labor.

Confidential Relationships (Preservation) Law (CRPL): a 1976 Cayman Island law placing criminal sanctions on revealing or inquiring about identities and banking arrangements held within their jurisdiction. Self-reported as repealed by the 2016 Confidential Information Disclosure Law (CIDL), although tax justice analysts remain skeptical.

shell company: a corporation whose only function is as a cover for financial transfers and secret accounting and expenditures.

transfer pricing: a fictional cost jump set in a zero-tax jurisdiction so that neither the country in which the product is manufactured nor the country in which the product is sold will be given back control over their own labor in proportion to the tax.

bearer bonds: anonymous certificates representing large sums of cash that may be traded without any record of ownership.

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Questions for Reflection and Discussion

The Latin American theologian, Ivan Illich, concludes that the socialization of welfare has deprived society of the deep networks of generosity, gratitude, and reciprocity on which relationships are based. It also, perhaps, creates dependence on and tolerance of a system that’s rendered everyone insecure and unable to control their own futures. The needs are so many and so expensive that they discourage person-to-person help. What do you think of Illich’s claim?

The UN report quoted details several fiscal “reforms” imposed on countries by the IMF, supposedly to spur economic growth, which had the opposite effect. These included:

• tighter fiscal and monetary policies

• increasing independence of central banks

• a large reduction of tariffs and non-tariff barriers to trade

• financial deregulation and increased opening to international

  capital flows

• privatization of state-owned enterprises

• increased protectionism in the area of intellectual property

• the general abandonment of state-led industrialization or

  development strategies

Choosing two of these strategies, explain why these economic policies would reduce the standards of living within the country.

The GDP captures every taxed exchange of bank credit between residents, so its ratio to the small-money supply is one measure of the economic activity generated by the bank credit. If a commonwealth could create its own digital credit backed by mortgages, with no tangible currency, how could they measure the economic activity generated by it? Could they increase this ratio more if they also controlled the taxes?

Discuss the implications of tax havens and secrecy jurisdiction. Is there any way you can think of that a country could protect its currency? Could they protect their assets and labor in this environment?

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The purpose of money is to steal our time. The bankers usurp ownership of the properties and issue debt against them, for which we pay with our lives. It's not interest that's usury, it's usurping the right to issue the money. Banks and corporations are seen as heroes because they give us money, government as parasites because they take it—but it's actually the exact opposite. We're subject to a geistheist, the stealing of our spirit, our soul, our purpose. That's what we have to change.

Explains why inflation is really dilution and your house is not worth more, your money is worth less. Gives examples from my book, How to Dismantle an Empire, on how the interest rate affects the price of a house and how they fluctuate it for the bankers' benefit. Cites Ellen Brown and Matt Ehret on bail-ins and reads passages from my book on how the bond rating sunk Cyprus. Begins with dramatic and personal illustrations of inflation—the hospital bill when I was born and my college scholarship.

Responding to Russell's interview of Edward Snowden, called The Greatest Conspiracies Are In Plain Sight, I give my list of the three biggest conspiracies: tax havens, financial derivatives and money itself. I explain what Mafia techniques are used with tax havens, how one building in Delaware houses 280,000 companies, why the interest rate makes me hot, and who stole the right to make money out of nothing and own your home for free. But to start, I find a common 'rub' between pole dancing, online dating, and capitalism.