First, the proposal.
I have only received feedback from one person on this proposal. He was a very successful financial advisor, and he told me I would cause a ten year global depression. Now, that’s not the outcome I’m going for, so I have continued to try to get more comments, and failed to this point. He would not give me further feedback. My best guess was he thought I failed to address the need for liquidity. I added liquidity. That is why this version is version two. I don’t think he read it, though.
Some things warrant emphasis, though. First, this is not a default. Everyone who we owe money gets paid. As an example, we write the Chinese $9 trillion in checks, and mark the bill paid. This money does not become worthless, because the plan is to revalue it. Once that happens, the Chinese still hold roughly $9 trillion equivalent in the new dollars, that they can use to invest in American industry, use as a reserve currency, or exchange with some other currency. Our government–and the American people whose interests that government supposedly represents–just doesn’t owe them that money any more.
Second, yes, it will be interesting trying to sell this. It is hard to predict market reactions once it is introduced. If sold correctly, in my view, it should be seen as positive by everyone who wants America to be strong economically. It may not seem as if this would be the case, but even the Chinese want us strong, since we are a HUGE export market for them. If we go broke, it will hurt them terribly, for the foreseeable future. And they are not losing their money. They can buy up American businesses, if they like, which capitalizes us for job creation. This is not a bad thing. We just, of course, have to watch the ones working on secret stuff.
Third, something like what I am proposing will be needed to end the Fed correctly. Anyone who studies the situation will grasp IMMEDIATELY that, at a rock bottom minimum, we need to return the control of the Fed to the Secretary of the Treasury, which is where it was before the Fed used the opportunity the Great Depression (which they caused, at least in large part) to get themselves fully independent of supervision and accountability.
More generally, though, the Fed does solve problems that the fractional reserve system creates, specifically the problem of cash flow. [It does also apparently serve as an intermediary for most credit card and, I think, bank transactions, as I understand it, but that can be sourced out to private companies.]
If banks lend out money they don’t have, they always run the risk of not being able to pay that money back out, if enough people ask. That is part of the reason the Fed exists.
Logically, then, if we are going to be thorough, we need to end the practice of fractional reserve banking at the same time as the Fed. My proposal not only does that, but funds it. No banks go bankrupt as a result of this process, although of course if nobody wants to borrow money later, they might. A superabundance of capital can only be called a good thing, even if the benefits of it don’t reach the banks. They have been in effect counterfeiting for centuries, so don’t try and cry me any rivers on their account. They can downsize, or change their business models.
I have not read every book on the Fed, but have read two, by Murray Rothbard and G. Edward Griffin. I plan to read Secrets of the Temple, The House of Morgan, and a couple on the IMF and World Bank, but I think I have the basics well in hand.
The two I mentioned, I did not care for, since they did not take the logic of the thing far enough. They provided useful facts, which I then operated on in a cloud of smoke until I reached understandings which I did find acceptable.
With regard to Griffin in particular, I am neither for nor against conspiracy theories, but simply see them as pointless when the things that are happening in plain sight are manifestly unacceptable; when, to be clear, the action needed is in broad stroke painfully obvious.
One prophecy I will make about the future is that I will keep putting these ideas out in public as often as I can, and as well as I can, until somebody provides me sufficient substantive feedback to further hone them. Then I will put the new ideas out in the same way. This is an important topic, and I will not let it go until this problem is solved.
Creating an idea, a plan, is like creating a work of art. My aim, like that of a good chef, is a balanced combination of aesthetic appeal, taste, and nutritive content. It must work, first and foremost, but as a craftsman I see no reason not to add personal touches here and there.
As I’ve said on a number of occasions, the term I like for myself is “thought worker”. I assemble invisible engines, that nonetheless may one day affect the world we see–in a positive way, if my job has been done correctly and with skill.