"Renaissance Thinking About the Issues of Our Day"
Reinvent America's currency, banking system. Nationalize the Federal Reserve. America should print its own money instead of selling debt to the Fed which prints the money to pay for it, and then leverages it by a factor of 10.
[Thom]: And Ellen Brown is with us. Ellen Brown has, over the years, been a guest on the show many times, and her website webofdebt.com, and the author of the book of the same title. And just a brilliantly insightful person into the economics of our nation. Hey Ellen, welcome.
[Thom]: Your most recent article, "Sustainable Government: Banking For A 'new' New Deal". You're suggesting that we go to the most macro, the biggest of the big pictures, and say, 'let's not just', as Barbara Boxer was suggesting, 'let's not just look at building roads and bridges, let's not even just look at bailing out domestic industries and try to keep them alive, let's reinvent our currency, our banking system'. Do I have that right?
[Brown]: Right. Our banking system is bankrupt and by law, those banks should be put into bankruptcy. And by law they could be taken over by the FDIC and nationalized and we would have a national banking system without changing anything. I mean, that's just proceeding according to the laws that we have right now. But I think what we should do is also nationalize the Federal Reserve which, of course, is the head of the private banking system. Right now the Federal Reserve is talking about eight and a half trillion dollars in bail out money. Well, where are they going to get that money?
[Thom]: They're printing it.
[Brown]: Right, but it comes from the 700 billion that was authorized by Congress and then what they're going to do is leverage that by a factor of ten, which is how banking works. You know, all of our money comes from bank loans, money that is created out of accounting entries. It didn't exist until it was lent. So, I assume that's what they're planning to do with this.
[Thom]: Right, I'd like to continue this conversation, Ellen. We have take a break. Can you stick around?
[Thom]: We're talking with Ellen Hodgson Brown the attorney and author, webofdebt.com her website. How do we create a sustainable government? How do we reinvent our banking system to do it? And this, frankly, this may be the most important. This is the debate that Hamilton and Jackson and all had back in the day, but now it's ?.
"As noted by Barry Ritholtz in a December 2 article, the bailout has already cost", already! "cost more than the New Deal, the Marshall Plan, the Louisiana Purchase, the moonshot, the savings and loan bailout, the Korean War, the Iraq war, the Vietnam war, and NASA’s lifetime budget combined".
"Thomas Jefferson", she notes, "realized two centuries ago that there is a way to finance government without taxes or debt. Unfortunately, he came to that realization only after he had left the White House, and he was unable to put it into action."
Ellen Brown, webofdebt.com, what is Jefferson's solution to today's disaster?
[Brown]: The solution is that the government itself should be creating our money supply. And that's where most people think money comes from. If you ask anybody on the street, who makes our money, they think it's the government. In fact it all comes from private banks.
[Thom]: Except for coins.
[Brown]: Except for coins, which is just a token. It's just a remnant of what they put in the constitution, which is that Congress shall have the power to coin money.
[Brown]: In fact I read somebody's opinion, I think it was somebody from the Mint said that you could solve the whole problem by printing, or stamping, ten one-trillion-dollar coins, I mean today, that's what it would be, and then just pay off the debt with these ten trillion dollars worth of coins. Because there's no, it doesn't say in the Constitution what the face value of these coins would be.
[Thom]: Oh, that's amazing! Now, let me just wrap my brain around that for a minute. Here's the, the reason, just to back up a little bit. The reason that the US mint is making coins, and not the Federal Reserve Bank, and the reason why our coins don't say Federal Reserve pennies, they say actually US money, is because our coinage, the Constitution says that the federal government has the exclusive right to manufacture coins.
[Brown]: It says, yeah, Congress shall have the power to coin money, and that's all it says about creating money.
[Brown]: It doesn't say who has the power to print money or to create, obviously, electronic money, or all those forms that we use today.
[Thom]: Right, so what the Fed has done, is it's said, 'okay, government, you guys are in charge of pennies, nickels, dimes and quarters'.
[Thom]: 'And we're in charge of dollar bills on up'.
[Thom]: And so the Treasury Department could simply say, 'okay, we're gonna start making hundred dollar coins, thousand dollar coins, million dollar coins and by the way we'll make a trillion dollar coin, and with ten of these coins which we will print, we will buy the Fed', do I have that right?
[Brown]: Right. Well, you don't even need to buy the Fed; it's in the Federal Reserve Act that Congress could just vote to nationalize it, I mean.
[Thom]: It's in the Act?
[Brown]: Well, the last provision of the Act is that it can be modified by Congress at any time.
[Brown]: So they, yeah, I mean, they gave it the power, they could take back the power.
[Thom]: Sure. So, what would be the practical effect of the Treasury Department saying, 'okay, the Federal Reserve, the Federal Reserve, which is a private corporation which is creating and controlling our money supply is no longer a private corporation, it's now part of the Department of the Treasury. We're going to buy it from its investors, we'll pay whatever the price is, and now we own it'? What, how does that accrue value to you and me?
[Brown]: Well, right now, the Federal Reserve has always bought Federal debt but they haven't been so obvious about it. But right now, right on their books they're stating that they're buying a certain amount of US debt. So, what you have is the government printing these IOUs and then the Federal Reserve printing money and trading it for the IOUs and then we owe the Federal Reserve the money plus interest. Well, if it was our Federal Reserve we wouldn't need to print debt, we could just print money, which is what our debt really is.
[Thom]: But that would immediately inflate our currency, wouldn't it, and decrease the value of it?
[Brown]: No, because what you would do is you would print the dollars instead of the debt. In other words, you would rip up the bonds.
[Brown]: So you would print, every time a bond issue came due, you would print the dollars and pay off the bond issue, as they always do, or they put it into accounts.
[Brown]: But you would rip up the bonds instead of rolling them over. Now what we do is we roll them over and then because nobody else wants our debt, you know, less and less do other people want our debt, the Fed is more and more stepping in to buy the debt.
[Thom]: Right, I mean there's one speculation that one of the reasons the Fed is buying so much federal debt right now is because the Chinese aren't.
[Thom]: But if, but still it seems that this is the Zimbabwe solution. I mean, if a government just prints money; if they say, 'okay, we're going to build a highway infrastructure and we're going to print the money to build it', if, they're increasing the number of dollars in circulation, but they're not increasing the net wealth, so they're decreasing the value of the currency and you would have inflation, would you not?. Although we're going to anyway, by creating money with debt.
[Brown]: Right, when the Federal Reserve buys it, it's more inflationary because the Federal Reserve keeps the bonds and then they leverage those bonds.
[Thom]: Because they leverage it.
[Brown]: Yeah, then they use them as the reserves for ten times that sum in loans.
[Thom]: Right, so the Federal Reserve takes all the dollars that are created by creation of debt at the Fed and multiplies them by ten. And if the Treasury did it, it would be multiplied by one. So it would be one tenth as inflationary, is that what you're saying?
[Brown]: Well, I don't think it would be multiplied at all because you would rip up the bonds, and the bonds themselves are the basis of our entire money supply. Those are the reserves from which our money is created.
[Thom]: Right, so let's just nationalize the Fed. Now we've got to get some senators on board on this, Ellen. Ellen Brown, webofdebt.com, you can read all about it. "Sustainable Government: Banking For A “new” New Deal". We'll be right back. Thank you, Ellen.
[Brown]: Thank you.
Transcribed by Sue Nethercott.