Monetary Myths and the Debt Ceiling — 18 Comments

  1. I still think a public controlled currency through the government is a bad idea. The problem with private bankers today is the same problem we have with corporations. They are protected and work together, and the private bankers use the initiation of force of the government to protect them and the monopoly. Private, competing currencies on an open market is the best solution. It’s also the only solution that gives people control over the currency. We have crapped shoved down our throats from the government whether we want it or not, and regardless of how we vote, so putting control over the money to the “people” that way does not solve our problems. Freedom to choose is more powerful than a vote. When people have the freedom to choose a product on an open market, without protection and interference from a government force, that’s always better for the people. I could care less about a symbol of our sovereignty as a nation. I much prefer freedom, choice, and stability, through an open market. An open market fixes stupid fast.

  2. I’ve been listening to your show and I am very grateful to you for your amazing comprehension of the real politik. You’re doing God’s work.
    I’m inundated with so much info, I don’t no where to start to prepare for the inevitable. I know that permaculture is important, but it sounds quite complicated and will require a long time to perfect.

    What are the 10 most important things I need to do for my family of 7 to keep them safe and alive when the system fails. I live in Andover, MA, a good community, but close to Lawrence, MA with a poor, welfare supported society failing in maintaining its police and fire fighting services, struggling with violent drug-related crimes.
    I look forward to hearing from you. God bless you and your family.
    Andy Sukiennik, MD

  3. I’m sorry there’s something I don’t understand. I get that money depends on confidence, that a printed banknote has no intrinsic value, and that money is loaned into existence. But if it is impossible to repay the debt, then how come there have been times in the United States modern history when the size of the US national debt has gone down substantially? I believe the years after WWII was once such period, as was the late 90s.

    Am I wrong? Was this decline just smoke and mirrors?

    I recently watched IOUSA, and those guys certainly understand the scale of the problem, but don’t seem to think it is functionally impossible to reduce it.

    I understand that you can’t see the future any more than the rest of us can, but if this situation continues to get worse as you think it can not but do: at what point do you think the system will collapse under it’s own weight? And what do you see as the consequences for the US and the rest of the world? (As a Brit, you’ll pardon me if the latter is of particular interest to me!)

    Would love to hear your thoughts.

  4. @Spaghetti and Sauce

    I have been waiting for that question, there is really only one time where the national debt appeared to go down and you are correct it was right after WWII, that is the ONLY time and in a long scale graph it looks like what it is, nothing but a tiny blip.

    Yet if we isolate it down from say 1944-1955 we can clearly see a big drop, the issue? It isn’t a drop in US debt only a shit from public government debt to public personal debt.

    Remember banks play the same game, after WWII the government cut spending massively and that helped but the other side was the rise of consumer debt, a real estate boom and spending with easy credit.

    This shifted the creation of new money heavily to the banks. So people bought and were taxed and the national debt (government) declined. But like so many “recoveries” all we did was give the drunk a credit card. We got warnings of it in the 60s and then we got the financial reality smacking us in the face in the 70s.

    Next we totally decoupled from the gold standard fully and started to print even more money, Regan jacks up social security and technology booms. Then we get even more cheap credit, another real estate boom (with government creating it artificially), lots of credit cards and what happens? Clinton claims the deficit is dead, hides it by robbing social security and eventually it all falls apart in multiple phases, dot com, book cooking, real estate bust and investment banking collapse.

    Nothing ever changed, the debt just got moved around. Some is carried by government some by the people. As one pays off their debt the other must inflate to compensate.

    So all those radio guys that think if we act like Ike we can fix everything are just fooling themselves. The constant is simple, every “recovery” is more dramatic in run up and shorter in duration. And every bust therefore is more devastating and the bankers keep making money on the up and the down and the people loose.

    The debt has NEVER gone down even the brief periods with a down mark on the graph are nothing but illusions.

    Sucks don’t it?

  5. A lot to chew over there. Thanks for your prompt response, and keep up the great work on the podcast.

  6. In the video you mentioned notes or references to other sites, but I cannot find them. A little help please. BTW, good job keep it up.

  7. it seems to me that with our system there could be some short term reductions in debt, but that would require reduction in money supply. and of course we would run out of money before we get near paying it off. so what can we do to get rid of this system- we do owe this money…. it seems to me if we get rid of debt -back money supply, then actual value creation over time through production could theoretically pay back this added interest, but as a drag on the economy for years [one more extra tax-the ‘pay off the debt tax’]. Since we cannot do it with our current system, how do we switch over to a backed currency that isn’t loaned into existence? Back in college, the day my finance class covered this subject totally confused everyone- and i said just think of it as money comes ‘from the future’ [future production pays today’s bills through creation of the debt]… unfortunately the future is here..

  8. i can vouch for how great the crash course is. I actually have my wife watching a dvd on economics!! its is very well thought out & informative.

  9. There is a solution – The National Emergency Employment Defense Act (N.E.E.D.) which has been submitted by Rep. Dennis Kucinich. This is a form of the American Monetary Act created by Stephen Zarlenga – see his book ‘The Lost Science of Money’.

    This act would do 3 simple things 1/ Move the Fed Reserve into the Treasury (no longer controlled by the private banking cartel 2/ prohibit fractional reserve banking – banks loan out only the non-debt money deposited (an elegant accounting mechanism will accomplish this painlessly) and 3/ government creates NON-debt money (no repayment to banks w/ interest) and spends it into the economy via public works: transport, education, health, etc.

    See for details, and an excellent FAQ addressing the usual objections – including the false alarm of inflation.

    BTW, this HAS WORKED ALREADY – in colonial America, Lincoln’s Greenbacks; was supported by most economists in the 30’s, etc.

    The Masters of the Universe will never allow this unless we all become ‘Egytians’ – i.e., conditions becomes VERY bad, and ENOUGH of us are knowledgable enough to demand the solution.

    • Actually the Kucinich act is a step in the right direction but one I can’t support until a meaningful cap on the monetary ceiling is added.

      You really should read my book on this subject

      Most of my listeners are shocked at my view of monetary creation. Most support a private monetary system backed by only gold and silver run by private institutions that compete with each other.

      I understand why, two years ago I was convinced this was the only way to go. The more I learned the more I realized how terrible an idea that system was.

      One way to look at a true free market it that the money itself must be NEUTRAL. Every person in the system must have the same access and rules of access to the money. Money should be like “points” in a game, points are not controlled by anyone IN THE GAME players literally create them via actions that fall with in the rules.

      The reason you can’t show me a free market really working as promised is there are currently no free markets in existence. In a private gold system the bankers that are inside the Fed with partial control then have full control. Those that think competition will fix it are misguided, again though I understand I used to believe it too. How can a player in the game have the ability to control points and the game be fair though?

      For a free market we need a public currency, I know it sounds crazy but again if anyone takes the time to cast off the blinders and read my book then go watch “The Secret of Oz” you will learn the world isn’t as cut and dry as we have been told by either the Keynesian or the Austrian.

      The big objection to letting the government control the money is inflation. This is the hole in the Kucinich act. The currency must have a cap, two things set the value of any currency from tally sticks to gold coins and NOTHING MORE.

      1. How much money is in the economy (M3)
      2. The velocity of money (how quickly it moves in the economy)

      If a public currency is going to work there must be a check on the total quantity to avoid run away inflation. The best way to do this is to create a valuation formula for our “national value”. This would include things like gold and silver reserves but also timberland, oil reserves, national economic output, etc.

      What this would mean is earnings for anyone would be limited only by the value they create but that the economy would only expand based on real value. Inflation would be in check and everyone would have the same shot at success.

      Many would still fail and many would succeed, it would be a real free market. However passing the Kucinich act with out a meaningful and strong cap on production would make all of those who object to my call for a public currency correct as our idiots in Washington would print money until it became totally worthless.

  10. BTW, would someone please identify one time/place in history when the ‘free market’ actually worked freely, fairly and effectively? In the real world, it resembles a religious pie-in-the-sky delusion.

    • See my comment above to your other comment. The free market is indeed a solution, just not for creating money. Yet my solution actually lets the individual have the ability to create money in a way, a legitimate way.

      Money should be seen as points. If we have a free market (fair game) none of the players can be aloud unfair access to our control over points (money).

  11. Still, if ‘free market’ isn’t an irresistible belief, please show me a time or place anywhere in history where it has worked. There are instances where non-debt gov-created money/script worked so well that the Bank of England had to take it out (see colonial US, Lincoln’s greenbacks, etc.)

    And inflation can be successfully controlled by controlling the amount $ in circulation – see FAQ’s at

    I’m off to check out your book, et al 🙂 and so glad you’ve seen the error in the goldbugs’ dream (especially, perhaps, the planned profits for gold merchants 🙂

    I think this issue is the heart of the beast – making money from …nothing! Mammon’s eternal quest.

    • The free market works to the level it exists everywhere it is. Like I said there is currently no 100% free market but the US market is more free then any. Take a walk down a US street then take a walk down a Chinese street, if you need more than that you also need some psychological deprogramming.

      Also you need to read what I wrote here, the fact that you stated,

      “And inflation can be successfully controlled by controlling the amount $ in circulation – see FAQ’s at”

      Shows me that you didn’t actually read what I wrote or my objections to the Kucinich act.

      And frankly the Greenback and Continental are both instances of a real free market “working”. The Continental was not ruined because it was fiat, it was ruined because it was counterfeited into oblivion by the British. The Greenback never failed it was “replaced with real money” (gold backed) after the war, this contracted the currency and almost bankrupted the people of the nation. Of course it was just part of the created crisis series that led up to the Federal Reserve.

      I think you are on the right track but I smell a big hint of class warfare bullshit clinging to your beliefs. You wail against the “free market” but what you are looking to have done is actually what would create a free market, AS LONG AS THE CAP IS ADDED. Read the Kucinich act nothing in it really caps the currency with anything other than a token mention of something way to easy to manipulate.

      Like I said add a concrete mathematical cap to it, one we can all understand and CHECK ourselves with some basic arthritic and I would be the first to back it. With out a cap all fiat currencies are doomed to hyperinflation and collapse including fiat currencies that are supposedly back by gold.

      This is so simple but so mis understood, the backing doesn’t matter only the quantity in circulation vs. the economic reality of any given economy.

  12. I did read your response, but my attention does flag. That’s probably the #1 reason why monetary change will never happen – it is tooooo hard to explain to the average Joe (plus too many profiteers who twist to their benefit, ala “just follow the money” to know what’s happening:).

    If we could just devise some brilliant ‘sound bites’, ‘pictures’ that say a thousand words, etc. -to just educate the masses on how our debt money is currently created would be revolutiomary – to overcome the ‘no way!’ befuddlement!