A third option for creating a self-sustaining government would be for Congress to simply create the money it needs on a printing press or with accounting entries, then spend this money directly into the economy. The usual objection to that alternative is that it would be highly inflationary, but if the money were spent on productive endeavors that increased the supply of goods and services – public transportation, low-cost housing, alternative energy development and the like – supply and demand would rise together and price inflation would not result. The American colonial governments issued their own money all through the eighteenth century. According to Benjamin Franklin, it was this original funding scheme that was responsible for the remarkable abundance in the colonies, at a time when England was suffering the depression conditions of the Industrial Revolution. After the American Revolution, private bankers got control of the money supply; but Abraham Lincoln followed the colonial model and authorized government-issued Greenbacks during the Civil War. Not only did this allow the North to win the war without plunging it into debt to the bankers, but it funded a period of unprecedented expansion and productivity for the country.
Obama would do well to consider these funding solutions for his “smarter” government. He has been quick to assemble his advisers and form policy, but a fast start down the wrong road could do more harm than good. The bailout scheme of the current administration is serving merely to keep a failed banking system alive by draining assets away from the productive economy. The conventional wisdom is that we must continue down the path we are on, because the alternative means frightening, radical change. Financing a new New Deal without putting the country further into insolvency, however, would not be a radical departure from tradition but would represent a return to our roots, to the uniquely American monetary policy advocated by our venerable forebears Benjamin Franklin, Thomas Jefferson and Abraham Lincoln.
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1. Barry Ritholtz, “Bailout Costs More than Marshall Plan, Louisiana Purchase, Moonshot, S & L Bailout, Korean War, New Deal, Iraq War, Vietnam War,”, Global Research (December 2, 2008).
2. G. Edward Griffin, The Creature from Jekyll Island (Westlake Village, California: American Media, 1998), pages 63, 65.
3. “William Engdahl, “Financial Tsunami: The End of the World as We Knew It,” Global Research (September 30, 2008).
4. See Ellen Brown, “The Collapse of a 300 Year Ponzi Scheme,” webofdebt.com/articles, October 16, 2008.
5. See “Sustainable Energy Development: How Costs Can Be Cut in Half,” ibid., (November 5, 2007).
6. Chicago Federal Reserve, “Modern Money Mechanics” (1963, updated 1992), originally produced and distributed free by the Public Information Center of the Federal Reserve Bank of Chicago, Chicago, Illinois, now available on the Internet.
7. Mark Pittman, Bob Ivry, “U.S. Pledges $7.7 Trillion to Ease Frozen Credit,” Bloomberg.com (November 25, 2008).
8. Ellen Brown, “The Fed Now Owns the World’s Largest Insurance Company – But Who Owns the Fed?”, www.webofdebt.com (October 7, 2008); Mark Pittman, et al., “Fed Denies Transparency Aim in Refusal to Disclose,” Bloomberg.com (November 10, 2008).
9. Tami Luhby, “Credit Crisis Hits Main Street,” CNNMoney.com (February 21, 2008); “Bond Failures May Bankrupt Cities,” Marketplace (February 28, 2008).
10. The Bank of North Dakota,” New Rules Project, newrules.org; “Ag PACE,” banknd.com (2007).
11. Richard Sisson, et al., The American Midwest: An Interpretive Encyclopedia (2007), page 41; Liz Wheeler, “Bank of North Dakota Keeps Student Loan Funds Flowing,” Northwestern Financial Review, BNET.com (September 15, 2008).
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